UNIT - I

INTRODUCTION TO BUSINESS LAW

 LAW
Law refers to the principles and regulations established by a
Government , applicable to people and enforced by judicial
decision.
Law is a system of rules that are created and enforced
through social or governmental institutions to regulate
behaviour.
Law is generally associated with the word “rules” or rule that
can be enforced by the courts
NATURE OF LAW
❖It is a conduct, culture, tradition and religion development by human beings

❖It creates rights and duties

❖It ensure all the people have specific power and responsibilities

❖It maintains peace and security

❖It provides justice and gives punishment

❖It regulates day to day activities

❖It is defined by the court.

 Purpose/Objectives of Law
1. To Establish Standards

2. To Maintain Order

3. To Resolve Disputes

4. To Protect Liberties and Rights

MEANING AND DEFINITION OF BUSINESS LAW
Business law is that portion of the legal

system which guarantees an orderly conduct

of business affairs and the settlement of

legitimate disputes in a just manner.

It establishes a set of rules and prescribes

conduct to order to avoid misunderstandings

and injury in our business relationships.

 Objectives of Business Law
1. To lay the framework in order to carry out the commercial transactions of individuals,
partnership concerns or joint stock companies

2. In case the legal rights of the business has been violated, the issue could be raised to legal and
semi legal authorities. It helps the merchant avoid and settle their conflicts.

3. Business law also has the social objectives, to serve the country at large. The anti-competition
law, pollution law, environment protection laws are some of the laws through which the
government protects the interest of the society at large.

4. Business law strive towards equitable distribution of wealth, by preventing the concentration
of economic power in the hands of few business houses.

5. It facilitates the business to achieve their goal faster.

 SOURCES OF BUSINESSS LAW
The first efforts to pass an Act constituting mercantile/ business law in India were made in 1872 through the
passing of the Indian Contract Act. From that time a large number of statutes have been enacted relating to
matters coming within the purview of mercantile / business law. For example, the Sale of Goods Act,1930, the
Partnership Act, 1932, the Companies Act, 1956, etc.
 The Important Sources of Business Law Are:
(1) English Mercantile Law

(2) Statute Law

(3) Judicial Decisions

(4) Customs and Usage

1. The English Law: The English law is the most important source of Indian mercantile law. It
constitutes the foundation on which the main structure of Indian Mercantile Law has been
constructed. The sources of English law are:
► (a) Law Merchant: It is also one of the important sources of English mercantile law. A lex
mercatoria or law merchant consists of legal principles based on customs and usage. They
developed first as a separate system of law and subsequently became part of the common law.

► (b) Common Law: This law is known as judge made law. It is based upon customs and
practices handed down from generation to generation It is the oldest unwritten law. The
English Courts developed these over centuries.

► (c) Equity: Equity is also unwritten law. Itis based upon concepts of justice developed by the
judges whose decisions become precedents. It grew as a system of law supplementary to the
common law and covered the deficiencies of the common law. Its rules were applied in cases
where the rules of common law were considered harsh and oppressive. The Judicature Acts of
1873 and 1875 abolished the distinction between Common Law and Equity so that they are
now applied to all cases.

► (d) Statute Law: Statute law is one, which is laid down in the Acts of Parliament. Hence, it
acts as the most superior and powerful source of law. It overrides any rule of common law or
Equity.
2. Statute Law: A Bill passed by the parliament and signed by the President becomes a "Statute" or an Act.
Most of the Indian laws are embodied in the various Acts passed by the Central as well as State legislators. The
following are some of the examples of the statute law.

(a) The Indian Contract Act, 1872: Prior to this English law of contract was followed in India. It has XI
chapter. Law of contract creates jus in personnel and not in jus in rem. The Indian Contract Act consists of the
following two parts:

(a) General principals of the Law of Contract.

(b) Special kinds of contracts.

The general principals of the Law of Contract are contained in Sections 1 to 75 of the Indian Contract Act. These
principles apply to all kinds of contracts irrespective of their nature. Special contracts are contained in Sections
124 to 238 of the Indian Contract Act. These special contracts are Indemnity, Guarantee, Bailment, pledge and
Agency.

(b) The Sale of Goods Act, 1930: Indian Sale of Goods Act 1930 is a Mercantile Law.1 Sale of Goods Act is a
kind of Indian Contract Act. It came into existence on 1st July It is a contract whereby the seller transfers or
agrees to transfer the property in the goods to the buyer for price.
 (c) The Indian Partnership Act: Partnership is one of the specific contracts which was a part of
the Indian contract act1872. In 1930, however, the provisions relating partnership contract were
repealed and a separate Act called The

d) The Companies Act, 2013 :The Companies Act 2013 is administered by the Government of
India through the Ministry of Corporate Affairs and the Offices of Registrar Companies, Official
Liquidators, Public Trustee, Company Law Board, Director o Inspection, etc. The Act is 658
sections long. The Act contains provisions about Companies, directors of the companies,
memorandum and articles of associations, etc

3. Judicial Decisions: Judicial decisions are also called as case laws. They referred to as
precedents and are binding on all Courts having jurisdiction lower to that of the Court, which gave
the judgement. The Courts in deciding cases involving similar points of law also follow them. Case
Law: This is also an important source of the English mercantile law. It is built upon the decisions
of the Judges. It is based on the principle that what has been decided in earlier case is binding in
similar future case also unless that there is a change in the circumstances of the case
4. Customs and Usage: Customs and usage plays an important role in regulating business transactions. A
well-recognized custom or usage can even override the statute law. Most of the business customs and usage
have been already codified and given legal sanctions in India. Some of them have been ratified by the decisions
of the competent Courts of law.

(a) Based on principal of justice and public utility: The natural conscience may well be accepted by the court
as an authority to guide. Such of the custom should also obtain the sanction of law. The custom must be
acknowledged and approved not by the power of the state but by the public opinion of the society at large.

b) Observance over a long period: Customs are observed by a large number of people over long period
acquire the force of law. Thus the custom of granting three days of grace in calculating the date of maturity of
bills of exchange has come to have the force of law.

(c) Interest of a society: Customs rests on the popular convictions that it is in the interest of the society. This
conviction is so strong that it is not found desirable to go against it. Indian Parternship Act 1932 was passed
which is in force till today
Types of Business Law
EMPLOYMENT LAW
Employment law is the section of laws that govern the relationship between an employee and
their employer, including the rights and responsibilities of both parties. It helps to ensure that a
workplace is safe and appropriate to work in, govern the hours that an employee can work and
determine the wages that an employee can receive. Included in employment law are many
regulations from all levels of government. Due to how extensive employment law is, it's often
divided into different areas, such as workplace safety, wages, benefits, family and medical
leave, unemployment and workplace conduct.
IMMIGRATION LAW
Immigration Law is the law which exclusively governs immigration in a nation. So far as
foreign citizens are concerned, Immigration Law is related to Nationality Law of a nation
governing the matters of citizenship. International Law regulates Immigration Law concerning
the citizens of a country
The objective of immigration is gaining citizenship or nationality in a different country. In
India, the law relating to citizenship or nationality is mainly governed by the provisions of the
Constitution. The Constitution of India provides for single citizenship for the entire country.
CONSUMER GOODS SALES LAW
The Law of Sale of Goods provides such guidelines and liabilities for the safety and security of
the consumers. Any firm or person entering into the business of selling goods to consumers
should be aware of the fact that the law will impose certain terms and conditions on each
transaction.
CONTRACT LAW
Law of contracts in India defines Contract as an agreement enforceable by law which offers
personal rights, and imposes personal obligations, which the law protects and enforces against
the parties to the agreement. The general law of contract is based on the conception, which the
parties have, by an agreement, created legal rights and obligations, which are purely personal in
their nature and are only enforceable by action against the party in default.

Section 2(h) of the Indian Contract Act, 1872[2] defines a contract as "An agreement enforceable
by law". The word 'agreement' has been defined in Section 2(e) of the Act as ‘every promise and
every set of promises, forming consideration for each other’
THE ANTITRUST LAWS

The antitrust laws prescribe unlawful mergers and business practices in general terms, leaving courts to
decide which ones are illegal based on the facts of each case. Courts have applied the antitrust laws to
changing markets, from a time of horse and buggies to the present digital age. The antitrust laws have
had the same basic objective: to protect the process of competition for the benefit of consumers,
making sure there are strong incentives for businesses to operate efficiently, keep prices down, and
keep quality up.

INTELLECTUAL PROPERTY LAW

Intellectual Property law deals with laws to protect and enforce rights of the creators and owners of
inventions, writing, music, designs and other works, known as the "intellectual property." There are
several areas of intellectual property including copyright, trademarks, patents, and trade secrets.
BUSINESS FORMATION LAW.
Companies Act 2013
The Companies Act 2013 regulates the formation and functioning of corporations or companies
in India. The first Companies Act after independence was passed in 1956, which governed
business entities in the country. The 1956 Act was based on the recommendations of the Bhabha
Committee. This Act was amended multiple times, and in 2013, major changes were introduced.
By Section 135 of the 2013 Act, India became the first country to make corporate social
responsibility (CSR) spending mandatory by law.
Companies Act 2013 Highlights
► The major highlights of the 2013 Act are given below:
► The maximum number of shareholders for a private company is 200 (the previous cap was at
50).
► The concept of a one-person company.
► Company Law Appellate Tribunal & Company Law Tribunal
► CSR made mandatory
End of chapter - I