Business Law - Unit 1

Introduction; Nature of law; Meaning and Definition of Business law; Scope and Sources of Business law

1. Mr.T.SOMASUNDARAM
DEPARTMENT OF MANAGEMENT
KRISTU JAYANTI COLLEGE
BENGALURUUnit 1 –Introduction 1

2. UNIT 1: INTRODUCTION
Introduction;Natureoflaw;
MeaningandDefinitionof
Businesslaw;Scopeand
SourcesofBusinesslaw
Unit 1 –Introduction 2

3. Introduction
Meaning:
Law can be defined as a definite rule of conduct and human
relations.
Italsomeansauniformruleofconductwhichisapplicable
equallytoallthepeopleoftheState.
Lawprescribesandregulatesgeneralconditionsofhuman
activityinthestate.
“Law” means “rule made by authority for the proper
regulation of a community or society or for correct conduct in
life”
-Oxford English Dictionary
Unit 1 –Introduction 3

4. “Lawisthebodyofprinciplesrecognizedandapplied
bythestateintheadministrationofjustice”. -Salmond
‘Law’denotesrulesandprinciples
eitherenforcedbyanauthorityor
self–imposedbythemembersofa
societytocontrolandregulatepeople’sbehaviourwitha
viewtosecuringjustice,peacefullivingandsocialsecurity.”
“Lawisthatportionoftheestablishedhabitandthought
ofmankindwhichhasgaineddistinctandformalrecognition
intheshapeofuniformrulesbackedbytheauthorityand
poweroftheGovernment.” -WoodrowWilson
Unit 1 –Introduction 4
Definition

5. Nature/ Features/Characteristics of Law
Lawmustbeapplicabletoall.Everyoneintheeyesoflaw
isequalandnoonecanescapefromtheeyesofthelaw.
Lawisuniforminnature.Powerofmakinglawliesinthe
handofthestate.Statepassesthoselawswhichare
consideredtobeforhumanwelfare.
Thestatehasagovernmentwhichalsohelpsinmakinglaw
andthroughwhichlawsareenforced.
•Lawsaresaidtobereliableandjustforeveryindividual
presentinthestate.Thesearerulesforeveryindividual.
•Everystateneedsthelawasitisbelievedtobethemost
importantelementwhichhelpsthestatetofunction
smoothly.
Unit 1 –Introduction 5

6. Nature/ Features/Characteristics of Law
Lawcanbethethreattothosewhoarewillingtodowrong
insocietyandoncetheycommitanythingwrongare
severelypunished.
Thepunishmentswhicharegiventotheguiltyarealso
decidedbythelaw.
Eachcountryhasthecourtwhichsettlesanyissuestaking
placeinastateaccordingtothelawsformulated.
Lawactasashieldtoeveryindividualinthestate.Ithelps
peopleco-existharmoniouslyandprotectthemselvesfrom
anywrongorevildoings.
Theselawsaremadebytherepresentativesofthecitizen.
Thenthislawalsorequirespublicopinionandshouldalso
functioninaccordancewithpublicneeds.
Unit 1 –Introduction 6

7. Lawissaidtobeblindasitdoesnotbelieveinany
discrimination.Allareequalinfrontofthelaw.
(E.g.)
1.Ifagroupofmengetstogetheroneafternoontoplaya
gameofbaseball,certainrulesgoverntheconductofthe
game.Theserulesarenotlaws.
2.Ifamanagreestopurchaseaguitarandtakespossession
ofit,hemaybeusedforwhateveramountofmoneyhe
agreedtopayfortheguitar.Thepersonisliabletopaythe
amountfortheguitar,whichhehaspurchased.
3.Ifthiefrobs,ajudgemaysentencehimtoprison.These
arealllaws.
Nature/ Features/Characteristics of Law
Unit 1 –Introduction 7

8. Meaning:
BusinessLaworCommercialLawisthebodyofrulesthat
regulateandcontroltheeverydayactivitiesofexchange.
Itisabranchoflegalsystem,whichregulatesbusiness
activities.
Businesslawisthatportionoflegalsystemwhich
guaranteesanorderlyconductofbusinessaffairsand
settlementoflegitimatedisputesinajustmanner.
Itestablishesasetofrulesandprescribesconductthat
enablesustoavoidmisunderstandingandinjuryinour
businessrelationships.
Business Law
Unit 1 –Introduction 8

9. “BusinessLaw/Mercantilelawmeansthat
branchoflawwhichisapplicabletoorconcernedwith
tradeandcommerceinconnectionwithvarious
mercantileorbusinesstransactions”
-S.RDavar
Itisdefinedasthatbranchoflaw
whichcompriseslawsconcerning
trade,industryandcommerce.”
Unit 1 –Introduction 9
Definition

10. Thescopeofmercantilelawisverywideandvaried.
Itisindeedvast.
Itincludeslawrelatingtocontracts,partnership,sale
ofgoods,negotiableinstruments,companies,
insolvency,insurance,carriageofgoods,licences,
issuesofsecurities,property,foreignexchangeandits
management,guarantees,consumerinterest,business
crimes,customsclearance,importofcapitalgoods,
pollutioncontrol,etc.
Theseaspectsandotherthingsarecoveredby
legislationsenactedbyCentral,Stateorlocalbodies.
Unit 1 –Introduction 10
Scope of Business Law

11. Classification or Types of Law
Unit 1 –Introduction 11

12. 1.SubstantiveandProceduralLaw:
SubstantiveLaw–includesthelawsthatcreate,defineand
regulaterightsandobligations.
(E.g.)Apersononewhoagreestorentanapartmentfor
accommodationduringhisworkingperiod,legalrightsand
obligationsforstayinginanapartmentwillbedeterminedby
ownerasperlaw.
ProceduralLaw–specifiesthemethodsofenforcingrightsand
obligationscreatedbysubstantivelaw.
(E.g.)Ifthestudentfeelsthattheowneroftheapartmenthas
somehowviolatedtherulesorstudentsrights,hemayfilesuitin
courtaspertheprocedurallaw(i.e.)howtofile,inwhichcourt,
howjudgementwillbe,etc.(E.g.)CriminalProcedureCode,1973.
Classification or Types
Unit 1 –Introduction 12

13. 2.PublicandPrivateLaw:
PublicLaw–dealswiththerightsandpowersof
government.
(E.g.)CriminalLaw–thestudentwhoisstayinginapartment
basedonmutualagreementbetweenhimandowner,ifstudent
attacktheownerbyengaginginrudebehaviour,thenthe
studenthasviolatedthecriminallawsofthestatewhereheis
living.
PrivateLaw–itisadministratedbetweenprivatecitizens.
(E.g.)Ifthestudentfailstopayrent,theownermayfilesuitto
collectit.Thecaseisgovernedbyprivatelaw,because
governmentisnotinvolved.
Classification or Types
Unit 1 –Introduction 13

14. 3.CivilandCriminalLaw:
CivilLaw–dealswiththeviolationagainstaninjuredparty.
Thepurposeofcivillawsuitistocompensatetheinjuredperson.
(E.g.)Mr.Harishpurchasedanewmotorcyclefromadealerfor
Rs.42500.ThedealerdeliveredthemotorcycletoMr.Harish,who
agreedtopayRs.7500permonthtodealer.Aftergetting
motorcycle,Harishrefusedtomakepayments.Nowdealercould
fileacivilcaseagainstHarisheitherforpayingRs.42500orto
forcehimtoreturnmotorcycle.Atthesametime,thedealerhasto
provethecourtthatHarishagreedtopurchase&payfor
motorcycle,thencourtwouldorderHarishtopayRs.42500or
returnthemotorcycletodealer.
Dealer(Plaintiff)–isapersonwhobringslawsuit.
Harish(Defendant)–apersonbeingsued.
Classification or Types
Unit 1 –Introduction 14

15. CriminalLaw–establishesthedutiespeopleoweto
society.
Criminalcasesarebroughtbygovernment(local,stateor
central)againsttheaccused.
(E.g.)Thepoliceorprosecutorfilesthecaseonbehalfof
government.Incriminalcase,ajudge/magistratemayimpose
fineandimprisonmenttermagainstaccused/criminalas
punishmentforviolatingthelaw.
Classification or Types
Unit 1 –Introduction 15

16. TheimportantsourcesofIndianlaware–
Constitution
Legislation/Statute
Custom
Caselaw/Commonlaw
Naturallaw
Englishlaw
Ordinances
Administrativelaw
Dharma
LawmerchantandEquity
Sources of Law
Unit 1 –Introduction 16

17. a)Constitution:
Aconstitutionisthefundamentallawofanation.Itwas
writtenwithspecificgoalsinmind.Ithasthreebranchesof
government–legislative,executiveandjudicial.
b)Legislation/Statute:
Astatuteisalawpassedbyalegislativebody.Astatuteis
definedasthewillofthelegislature.
Legislationisthecommonsourceoflaw.Bothparliament
andstateassemblieshaveenactedano.oflegislationsthatcover
variousaspectsofbusiness.
c)Custom:
Asubstantialpartofbusinesslawiscustomary,not
withstandingadvancesmadeinscience&technology.Acustom,
whenacceptedbycourtsandincorporatedinjudicial
interpretations,becomesalaw.
Sources of Law
Unit 1 –Introduction 17

18. d)CaseLaw/CommonLaw:
RelianceorjudicialdecisionsisknownasCaselawor
Commonlaw.CommonlawisoriginatedinEnglandand
referredtoabodyoflawthatwascommonthroughout
England.Caselawisusefulinasmuchasithelpscourtsto
renderuniformitywithregardtointerpretation.
e)NaturalLaw:
Naturallawornaturaljusticeisanothersourceoflaw.
Naturaljusticethatnomencanbepunishedtwiceforthesame
crimeisaguidingprincipleforanylegislation.
f)Englishlaw:
OurbusinesslawsarelargelybasedonEnglishActs
applicableinEngland.
Sources of Law
Unit 1 –Introduction 18

19. g)Ordinances:
Lawarealsopassedbylocalauthoritieslike
Municipality,ZillaPanchayats,etc.Itisapplicabletosmall
geographicalareas,businesspeopleshouldawareof
ordinanceswheretheyoperate.
h)AdministrativeLaw:
Itisoneofthemajorbranchesofpubliclaw.Itadjust
differencesarisingfromdisputesbetweenadministrative
officialsofgovernmentalagenciesandgeneralpublic.
i)Dharma:
Dharmawasthemainsourcesoflawduringancient
periodsanditcontinuestobeinmainspiritbehindeverylaw
eventoday.Itcontributestobetheguidingprincipleofjustice.
Sources of Law
Unit 1 –Introduction 19

20. j)LawMerchant:
Thisincludedefiniterulesforhonouringcontracts,
purchaseandsalesagreementsandenforcingshipping
requirementsinallcommercialcountries.Itisapplicableto
individualtrader,tradingfirmsandtradingcities.
k)Equity:
InU.K.,U.S.A.,Indiaandothercourtshearbothlaw
andequitymatters.Peoplewhowenttolawcourtswanted
monetarydamages.Peoplewhodesiredsomeremedyother
thanmoneywenttoequitycourts.
(E.g.)InIndia,SpecificPerformanceAct1963whichensures
equitableremedy.
Sources of Law
Unit 1 –Introduction 20

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