Types or Branches of Law • A quick reminder: Law is those recognized rules and principles which govern and regulate social conduct and observance of which can be enforced in courts. • It operates to regulate the actions of persons in respect to one another and in respect to the entire social group or society. Types of Law: There are a number of ways in which the law may be classified. The most common (or important) are: • Public and Private Law: • Public law consists of those rules which regulate the relationship between the state and the individual. Within this branch of the law further subdivisions can be found – for example, constitutional law, administrative law and criminal law. • Private law consists of those rules of law that govern the relationship between private individuals. An ‘individual’ in this sense also includes private organisations such as limited liability companies. Branches of Law contd.. Branches of Public Law: • Constitutional Law: It is concerned with defining the powers of and the relationship between the principal institutions of state. This part of the law is also concerned with the relationship between the state, its institutions and the individual citizen and, in particular, the fundamental rights of citizens. • Administrative Law: It is that branch of the law which deals with the operation of government as it affects the individual citizen. • Criminal Law: It deals with conduct on the part of the individual which the state regards as harmful to society generally and for the control of which the state assumes responsibility. Branches of Private Law: • Property Law: It lays down the rules regulating the rights a person may enjoy in or over the various forms of property. • Contract Law: It is concerned the recognition and enforcement of the obligations arising from an agreement made between two or more persons. Contd.. • Law of Torts: It imposes on each and every individual certain obligations, breach of which will produce legal consequences. The term ‘tort’ basically means a civil wrong for which the law provides a remedy (damages) • Family Law: It is concerned with matters relating to family life. Thus, the law relating to marriage and divorce, custody of children, financial support, matrimonial property, inheritance and succession etc. would be included under this heading. Civil and Criminal Law: Criminal Law is concerned with forbidding certain forms of wrongful conduct and punishing those who engage in the prohibited acts. Substantive and Procedural Law: Substantive Law consists of the rights and obligations that each individual has in a society. Procedural Law deals with the processes to be followed in the protection and enforcement of rights and obligations. Municipal and International Law: Municipal Law operates within a state, while International Law governs the relationship of states. Business Law • Business law is designed for conducting business activities in a systematic manner. The term describes a wide body of laws that govern business transactions. • It consists of the rules that govern from the establishment of a business to the operation, development or extension and dissolution of it. It covers all the laws which apply to the rights, relations and conduct of persons and businesses engaged in commerce, merchandising, trade, and sales. • Moreover, it also regulates the relationship between the business persons and government. It is a set of rules and principles to regulate the business activities. • Business law is also known as mercantile law or commercial law. • It is a branch of civil law. • It includes within its scope the contract law, law of sales of goods, law of negotiable instrument, law of agency, banking law, law of insurance, law of indemnity and guarantee, law of business organizations (sole proprietorship, partnership and companies), law of trade, intellectual property etc. Meaning and Sources of Business Law • According to Roy Goode, “commercial law is that branch of law which is concerned with rights and duties arising from the supply of goods and services in the way of trade”. • According to M.C. Sukla, "mercantile law may be defined as that branch of law which deals with the rights and obligation of mercantile persons arising out of mercantile transactions in respect of mercantile property”. • According to M.C. Kuchhal, "the term mercantile law may be defined as that branch of law which comprises laws concerning trade, industry and commerce”. • Characteristics of Business Law • Business law is concerned with the economic activities. • It regulates trade, industry, commerce and business. • It also regulates relationship between national and international business persons and government. • Business law protects rights and interests of business persons. • It is formulated for the purpose of fair business environment. Importance of Business Law • Business world can not continue without law to regulate the conduct of people and to protect their property and contract right. • Business law creates uniformity to establishment, operation and dissolution of business activities. • It helps to increase and maintain business transactions. • It provides environment to develop capital market. • It protects consumers. • It helps to create employment and remove poverty. • It creates favourable environment for investment. • For Business Students: The business law covers the most common and important legal rules related to business. It does not provide in depth knowledge about the laws of the business but gives an overview of what kinds of problems a businessman/woman can get into and how she/he should approach those problems legally. Principle Sources of Business Law 1. Legislation (Statutory laws): Legislation is a primary source of business law in Nepal. Statutory law means the rules enacted by Parliament or legislature. Legislature is a place where numbers of business laws are formulated such as Contract Act and Banking Act etc. Part 8 of the Interim Constitution, 2006 (Articles 84-88). 2. Custom and Usages: Custom and usages are also one of the main sources of business law. Business persons established formulate rules to settling down disputes and to regulate transaction in the business activity. With the pace of time such rules become part and parcel of business and established as custom. State recognizes these customs while creating laws. They are also recognized and applied by the court if it is not contradictory or opposed to the existing law of the country. Large part of the business law is derived form customs usages in any country. Contd.. 3. Precedents (Judicial decisions): It is impossible to regulate each and every activity of daily business by the statutory law. For this reason, the courts of the countries have power to interpret law and make binding decisions while settling disputes. These decisions are applicable to the same types of subsequent cases. So far as Nepalese business law is concerned, decision made by the Supreme Court is a source of law according to Article 116 (2) of the Interim Constitution of Nepal, 2006. 4. Commercial Treaties and Agreements: Treaties and agreements made between two countries for the purpose of conducting business activities are also important sources of business law. According to Sec. 9.1 of the Treaty Act, 2047, any treaty made by Nepal shall prevail over the national law. Contd.. • 5. Opinion of Experts: Opinion of experts and the text book writers on business law sometimes work as a source of law. Although there is no authority of the state behind them and there is no binding force except a persuasive value, they are consulted by the courts and are sometimes followed by them to settle a dispute. Legal Environment of Business: • Business Environment: • Factors or constraints, within which a business enterprise or firm and its management need to operate and largely external and generally beyond the control of them. • Poses threats or offers immense opportunities for potential market exploitation. • Many factors and constraints: Political, Economic, Technological, Social, Legal, Global or International etc. Legal Environment of Business What is Legal Environment of Business? • A framework of law and regulation derived from custom and practice, from the judicial decisions of the courts and from statutes and regulations enacted by Parliaments and governments. • A set of rules constituting a means of regulating and controlling the activities of individuals and groups, and of enforcing minimum standards of conduct. • The framework of rules and the institutions through which they are formulated and enforced represent the regulatory environment of business, which invariably evolves over time in response to changing social, economic and political circumstances (e.g. the influence of pressure groups). • Any legal provision or institutional framework that has business and economic significance and implications. • The Constitution. • Statutes or Acts of Parliament. • Rules and Regulations. • Bye-laws and Directives. • And the Institutions which formulates and implements the above. Importance of Legal Environment of Business Importance: • Businesses operate within a framework of laws and regulations which has a significant impact on various aspects of their existence. • Constraining Influences: As one of the constraining influences on business organisations, it constrains and regulates a firm’s operations. • Enabling Mechanism: It provides an enabling mechanism through which a business enterprise or firm is able to pursue its objectives, particularly the achievement of profits through entrepreneurial activity. • Therefore, it has a key influence on the business organisation and an important area of study for students of business. Contd.. • Laws and regulations usually govern, among other things, the status of the organisation, its relationship with its customers and suppliers and certain internal procedures and activities . • They may also influence market structures and behaviour. Since laws emanate from government (including supranational governments) and from the judgments of the courts, some understanding of the relevant institutions and processes is desirable. • A well-defined legal framework is a precondition for business. It provides legal certainty. To have a good environment for business, a country must provide an adequate legal infrastructure that clearly defines rights and properly enforces them. • Regulatory methods, which are appropriate in one environment may differ in another.
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