Meaning and Sources of Business Law by PudasainiKshitiz

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									                 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
• 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
• 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
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.
• 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
• 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
• 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
• 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
• Regulatory methods, which are appropriate in one
  environment may differ in another.

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