CORPORATE AND BUSINESS LAW
Some knowledge of law is necessary to a greater or lesser extent for all persons.
Ignorance of law is no excuse.
An individual is confronted almost daily with situations that demand legal information for correct action.
Life in general and the business world in particular could not continue without law to regulate the
conduct of people and to protect their property and contract rights.
Without law life and business would soon become a matter of the survival not only of the fullest but also
of the most ruthless.
Without law, our rights would not be secure because we would not know whether rights existing today
would be respected tomorrow.
Definition of Law:
A rule or method according to which phenomena or actions co exists or follow each other.
Law, in the generic sense, is a body of rules of actions or conduct prescribed by controlling authority,
and having binding legal force.
Which must be obeyed and followed by citizens, subject to sanctions or legal consequences.
Law is a solemn expression of the will of the supreme of the state
power
Body of principles, standards and rules promulgated by Government, State.
Commands which obliges a person or persons and obliges generally to act or forbearances of a class;
constitution or un constitutional provisions.
General rules of human actions, taking cognizance only of external acts, enforced, and among human
authorities is that which is paramount in a political society.
Law is either PUBLIC or PRIVATE LAW.
PUBLIC: concerns the public as a whole and is divided into three classes:
1). Constitutional Law,
2). Administrative Law
3). Criminal Law.
PRIVATE: pertains to individuals.
1). Contract,
2). Agency
3). Sales
4). Suretyship
5). Negotiable Instruments'.
Private Laws are termed as BUSINESS LAW or COMMERCIAL LAW or MERCANTILE LAW.
SOURCES OF LAW.
There are large number of sources of Law.
I. FORMAL SOURCES: they are the laws of states manifested by statutes or decisions of the courts.
II. MATERIAL SOURCES: They are such sources from which the law derives its matter. These sources may
be:
a) Historical Sources: these consists of such sets of rules framed traditionally in an unauthorized way but
later they have been adopted and accepted as rules or principles by usage. Such sources have framed
COMMON LAW 7 EQUITY.
b) Legal Sources: these are in fact the instruments of the state by which legal rules are framed.
Legal sources are:
Legislatures: It is a part of a state formed by the parliament. Members of parliament present the bills
which are discussed in parliament and when after voting they are passed in consultation of Senate, they
become LAW. (ACTS)
Precedent: It is a judgment of the court in court decision which is cited and referred to as an authority
for deciding identical cases, the precedents serve as authority for legal principals.
Customary Conducts: It so happens that the initial source of law is based on the customary conducts of
community life. Society life creates customs and when these customs become old and popular or well
established then majority of the members of the society assume the customs to be respectful and
matter of honor and prestige.
Agreements: In all sorts of contracts the parties incorporate a number of stipulations voluntarily which
become binding on the contracting parties in the duration of performances of contracts.
CORPORATE & BUSINESS LAW
LEGAL SYSTEM OF PAKISTAN.
Pakistan has inherited the well-established legal system of British. The constitution, which is the main
source of the law is also based upon the principals of British unwritten constitution.
Democratic value and parliamentary system of government as a paramount importance in it. But after
adding a new article in the constitution of Islamic injunctions based upon the HOLY QURAN and SUNNA.
No law contrary to the injunction of the Quran or Sunna can sustain in the legal structure of Pakistan.
Present legal system has undergone and exercises through the Federal Sharia Courts, as a result of this
exercise now the legal structure although basically it remains on the foundation of the British legal
system yet its characteristics are Islamic based upon the GOLDEN PRINCIPLES OF ISLAM:
FOUR CURRENT SOURCES OF LAW IN PAKISTAN:
1. HOLY QURAN: The primary source of laws in Islam is QURAN E PAK., which revealed to Muhammad
(PBUH) through Angel Gabriel.
The revelation has been of two kinds internal (batin) and manifest (zahri)
Manifest revelation consisted of communication which were made by the angel Gabriel under the
direction of God to Muhammad (PBUH) either,
In the very words of God, or
By hints, and
Of such knowledge as occurred in the mind of Prophet (PBUH) through the inspiration (Ilham) of God.
The Holy Quran is composed of such manifest revelation as were made in the very words of God.
Matters, which formed the subject of manifest revelation by hints from Gabriel or by inspiration, or
internal revelation, are known as AHADITS.
Holy Quran revealed during a space of twenty-three years.
It is divided into Suras or Chapters, each having separate designation, and is composed of Ayat or
Verses.
Most of the verses, which embody rules of law, were revealed to settle questions that actually aroused
for decision, some in order to repeal objectionable customs like INFANTICIDE, GAMBLING, USURY AND
UNLIMITED POLYGAMY.
Some for effecting social reforms as by raising the legal status of WOMEN. Settling the question of
SUCCESSION and INHERITENCE on an equitable basis, providing protection for the rights of MINORS and
other persons under DISABILITY, and some by lay down the principal of PUNISHMENT for the purpose of
securing peace and orders.
The Holy Quran also contains general injunctions, which have formed the basis of importance juristic
inference.
IJMA: is defined as agreement of the jurists among the followers of Muhammad (PBUH) in a particular
case on a question of law.
IJTIHAD: literally means striving, exerting and as a term of jurisprudence it means the application by a
lawyer (faqih) of all his faculties to the consideration of the authorities of the law (i.e. the Quran, the
Trading and the Ijma) with a view to find out what in all probability is the law (that is, in a matter which
is not covered by the express words of such texts and has not been determined by Ijma. In other words
Ijtihad is the capacity for making deductions in matter of law in cases to which no express text or a rule
already determined by Ijma is applicable.
2. PRECEDENT.
It is the policy of the courts to stand by the ratio of decidendi that is, the rule of law and not to disturb a
settled point. This policy of the courts is conveniently termed as the doctrine or rule of stare decisions.
The rational behind this policy is the need to promote certainty, stability and predictability.
Article 189, 201 and 203 GG of the Constitution enact doctrine of precedent. “any decision of the
Supreme Court shall, to the extent that it decides a question of law or is based upon or enunciates a
principle of law, be binding on all other courts in Pakistan."
“any decision of a High Court shall, to the extent that it decides question of law or is based upon or
enunciates a principle of law, be binding on all the subordinate to it."
"any decision of the Federal Shariat Court in the exercise of its jurisdiction, shall be binding upon a High
Court and on all courts subordinate to a High Court."
In general terms this means that when judge try cases they will check to see if a similar situation has
come before a court previously. If the precedent was set by a court of equal or higher status to the court
deciding the new case than the judge in that case should follow the rule of law established in the earlier
case.
Four points are to be kept in mind while making a Precedent.
Question of law should be same
Question of facts should be same
Ratio decidendi should be same. (reasoning for the decisions)
[Link] court has a higher or equal status to that of the later court.
3. LEGISLATION
Parliament elected in 1970 framed the 1973 Constitution of Pakistan which was passed on 12th April,
and promulgated on 14th August 1973. It provides for a parliamentary form of government with Two
Houses, Upper (Senate) and Lower (NA).
There shall be a Majlis-e-Shoora (Parliament) of Pakistan consisting of President and two houses.
The Constitution of the Islamic Republic of Pakistan provides for a Federal Parliamentary System of
government, with President as the Head of State and the popularly elected Prime Minister as the Head
of the Government. It is composed of National Assembly and the Senate.
It is part of a state formed by the parliament of Pakistan. National Assembly, (Lower House) and other
bodies to whom working of framing laws has been delegated. The MNAS present the bills which are
discussed in parliament and when after voting they are passed in consultation of Senate (Upper House)
they become 'LAW'.
National Assembly of Pakistan is the country's sovereign legislative body, governed under democratic,
multi-party Federal Parliamentary System.
The members of the National Assembly are to be elected by direct and free vote.
The Senate is a permanent legislative body with equal representation from each of the four provinces of
Pakistan. (Now Five after Gilgit and Baltistan). There are representatives from the FATA and from
Islamabad Capital Territory.
The Chairman of the Senate is the next in line to act as President during casual vacancy.
Both the Senate and the National Assembly can initiate and pass legislation except for Finance Bills
which only NA can approve.
President may refuse to approve bills passed by both the houses but the joint sitting of both houses
overrules the president by a majority of members of both houses PRESENT and voting.
President can dissolve NA but not Senate.
NA keeps a check over the Executive and ensure that the government functions within the parameters
set out in the Constitution does not violate the fundamental rights of citizens. NA has the authority to
scrutinize public spending and exercises control of expenditure incurred by the government.
To save the time in Parliament, Acts usually contain a section which power is given to a minister or
public body such as a local authority to make subordinate or delegated legislation.
When assembly is not INTACT, law can promulgate through ORDINANCE passed by President. It can be
ratified by new assembly.
When assembly is INTACT but not in session, law can be promulgated through ORDINANCE passed by
President, but it will have an effect of 120 days within which it has to be ratified by the parliament
otherwise it will be lapsed.
When assembly is in session:
1. Money Bills. After Cabinet approval, Senate discuss it and sent it to NA for approval from simple
majority.
2. Non-Money Bills. Cabinet approval, then approval of both houses are required by simple majority of
members present.
4. CUSTOM
Any uniform behavior that establishes itself in any society is called usage, and when the usage is
observed by the community in general and for long years, it becomes Customs.
Customs are important source of law. The law which is based on custom is termed as customary law.
The customary laws in Pakistan are greatly amended and substituted by Sharia Law.
There are some good customs being practiced in the society and some bad. Good customs normally get
the shape of statute by promulgation of new laws and against bad custom the laws are made.
Karo Kari, etc. bad laws.