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What is Business Law?
Business Law is also known as Commercial law or corporate law, is the body of law that applies to the rights, relations, and conduct of persons and businesses engaged in commerce, merchandising, trade, and sales. It is often considered to be a branch of civil law and deals with issues of both private law and public law.
Table of Contents
Introduction to Business Law
Business law encompasses all of the laws that dictate how to form and run a business. This includes all of the laws that govern how to start, buy, manage and close or sell any type of business. Business laws establish the rules that all businesses should follow.
A savvy businessperson will be generally familiar with business laws and know when to seek the advice of a licensed attorney. Business law includes state and federal laws, as well as administrative regulations.
Business Law Definition
Business law defines as branch of law that regulates relations that originate from conducting economic activities or that are in a close subject or functional relation with such activities.
Business Law Meaning
Business Law originated in the common law system, particularly the one in the United States of America. By its content, it is a counterpart of the term “commercial law”.
The reasons to adopt the term “business law” are the following:
- In our area, commerce is understood as the exchange of goods for money rather than as an equivalent of all economic activities;
- the term “economic law” is not common in market economies as it reminds of an enforced legal administrative framework of conducting economic activities;
- “social property” as a proprietary basis of “economic law” has disappeared.
Business Law of India
Prior to the enactment of the various Acts constituting Business Law, business transactions were regulated by the personal laws of the parties to the suit.
The rights of Hindus and Muslims were governed by their respective laws and usages. Where both parties were Hindus, they were regulated by the Hindu Law and where both parties were Muslims, the Mohammadan Law was applied.
Gradually, the need for the enactment of a uniform law regulating the contracts was realised and this gave birth to the Indian Contract Act, 1872.
The sources of business law in India are generally the English laws which, in turn, have their roots in the following:
English Mercantile Law
The English Mercantile Law constitutes the foundation on which the super-structure of the Indian Business Law has been built.
The Statute Law
When a Bill is passed by the parliament and signed by the President, it becomes an ‘Act’ or a ‘statute’. The bulk of Indian Business Law is Statute Law.
The Indian Contract Act, 1872; The Negotiable Instruments Act, 1981; The Sale of Goods Act, 1930; The Indian Partnership Act, 1932; The Companies Act, 1956 are instances of statute Law.
Judicial decisions or case law are usually referred to as precedents and are binding on all courts having jurisdiction lower to that of the court which gave the judgement.
They are also generally followed even by those of equal jurisdiction in deciding similar points of law. Whenever an Act is silent on a point or there is ambiguity, the judge has to decide the case according to the principles of justice, equity and good conscience.
Customs and Usages
Custom or usage of a particular trade also guides the courts in deciding disputes arising out of mercantile transactions, but such a custom or usage must be widely known, certain any reasonable, and must not be opposed to any legislative enactment.
Business law encompasses all of the laws that dictate how to form and run a business. This includes all of the laws that govern how to start, buy, manage and close or sell any type of business.
The word ‘Law’ has been derived from the Teutonic word ‘Lag, which means ‘definite’. On this basis, Law can be defined as a definite rule of conduct and human relations. It also means a uniform rule of conduct which is applicable equally to all the people of the State.
There are various branches of law like International law, constitutional law, criminal law, civil law, business law or mercantile law.
The main sources of business law in India are English law, Judicial decisions, Customs and Usages and Indian statutes.
Business Law Book References
- Goel, P. K. (2006). “Business Law for Managers” Wiley
- Sheth, T. (2017). “Business Law” (2ed.) Pearson.
- Kuchhal. M.C. & Prakash. “Business Legislation for Management” (2ed.)
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