UNIT-1

INTRODUCTION

Meaning and Definition of Business

Business is an economic activity, which is related with continuous and regular production and
distribution of goods and services for satisfying human wants.

(or)

Business is a "complex field of commerce and industry in which goods and services are created
and distributed... in the hope of profit within a framework of laws and regulations."

Lewis Henry defines business as, "Human activity directed towards producing or acquiring
wealth through buying and selling of goods."

Meaning and Definition of Law

Meaning and Definition of Law The law is a system of rules that a society or government
develops in order to deal with crime, business agreements, and social relationships.

Law is a system of rules that are created and enforced through social or governmental
institutions to regulate behaviour.

Salmond defines law as the “body or principles recognised and applied by the state in the
administration of justice”. According to Austin, “Law is a rule of conduct imposed and
enforced by the state."

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Nature of Law

Law is the result of continuous effort through a workable set of rules in the society. It is not
pure science based upon unchanging and universal truth. It affects every activity of the
individual. The nature of law are as follows:

1. Justice is an aim of Law- Justice is always provided through law. The law means to provide
justice to people.

2. Create a peaceful and harmonious relation between people living under society-Law is made
for keeping peace and harmonious relation by providing security.

3. The law is pervasive (spreading or spread throughout)- Every person is presumed to know
it.

4. It regulates human activities- It regulates human behaviour in three ways: Prohibitor,

mandatory and permissive.

5. Ignorance of law is not excused.

6. It is a set of rules which is set by the state.

7. It regulates the human conduct.

8. It is created and maintained by the state.

9. It has the certain amount of stability, fixity and uniformity.

10. It ensures all the people have specific power and responsibilities.

11. Its violation leads to punishment.

Meaning and of Business Laws

Business law, also called commercial law or mercantile law, the body of rules, Commercial
law or business law is the body of law which governs business and commerce and is often
considered to be a branch of civil law and deals both with issues of private law and public law.
Commercial law regulates corporate contracts, hiring practices, and the manufacture and sales
of consumer goods.

Business law is also known as commercial law and is that branch of law that deals with the
legal rights, duties, liabilities of parties involved in any kind of business transactions related to

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commerce, trade, sales and merchandising. It is a branch of civil law and includes public as
well as private law.

Commercial law or business law deals with legal aspects such as the laws of principal and
agent, carriage by sea or land, laws of indemnity and guarantee, laws of insurance (marine, fire,
life, accident insurance), laws of banking, partnership and much more. Business law is a very
broad term by itself and has many divisions and types of law to be studied under it.

Definition of Business law

Business Law defines as a 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”.

Characteristics of Business law

1. Defining general rules of commerce

2. Protecting business ideas and business assets
3. Providing mechanisms that allow business people to determine how they will participate in
business ventures and how much risk they will bear
4. Ensuring that losses are borne by those responsible for causing them.
5. Facilitating planning by ensuring that commitments are honoured.
6. It is the law of commerce or commercial law as it deals with all the aspects of entering into
selling and purchasing agreements.
7. It includes the study of the law of contract which is important in agreements or contracts
that involve two or more parties buying and selling things in exchange for a consideration
or purchase price.
8. Business law clearly explains the rights, duties, liabilities and legal obligations of the
parties involved in a contract of sales, purchase or any other kind of contract or agreement
entered into in relation to any kind of business or commercial activity.
9. It includes intellectual property law (patents, trademarks, copyrights, etc.) and consumer
protection law.
10. Business law will also apply to anyone who plans on opening or starting a business of their
own.
11. Business law also deals with banking law, finance law and other important civil laws.

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Sources of Business Law

The main sources of Indian Mercantile Law are:

1. English Mercantile Law.

2. Statute Law.

3. Judicial Decisions.

4. Customs and Usage.

5. Expert opinions

1. English Mercantile Law

The English law is the most important source of Indian mercantile law. Many rules of English
law have been incorporated into Indian law through statutes and judicial decisions. The sources
of English law are:

a. 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.

b. Equity

Equity is also unwritten law. It is 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.

c. 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.

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d. A Lex Mercatorian or Law Merchant

It is also one of the important sources of English mercantile law. A Lex Mercatorian 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.

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 Indian contract act 1872

• The sale of goods act 1930
• The companies act 1956
• The Negotiable instrument act 1881
• The Indian partnership act 1932

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.

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.

5. Experts opinion

The experts can help us to make good business rules. Our law makers take opinion and
guidelines from the exports before making business rules. If we have good business rules our
businessman can managed, regulate and lead business organization successfully. The experts
are the manufactures helping WTO create good business environment in the business
community so experts are considered as a source of business law. 6. Commercial treaty and
agreement: - WTO, etc. Commercial treaty and agreement are business understanding and

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compromise between or among the organization and countries. After making business
agreement all the members of that follow its provisions as its business rules. Commercial
agreement is always made with a view to develop and extend business relation between or
among the business organization or countries. The member countries or organization should
make business rules according to provisions of that agreement. For example, member countries
of WTO etc. should follow its rules as their business rule. Therefore, it is also considered is a
source of business law.

Significance of Business Law

1. Maintenance of Equilibrium.
2. Less Chance of Fraud.
3. Presence of Ethical Conduct.
4. Protect right of both consumer and Business.
5. A Universal set of standards.

TYPES OF BUSINESS LAW

1. Employment Law:
Especially in today's modern workplace, it is vital for any company with even one employee
to stay abreast of current employment laws. Are you required to offer health insurance or
workers' comp insurance? Has your business discriminated against an employee, or stood by
while one employee committed sexual harassment against another? There are many areas
where your company could face major financial liability, not to mention the potential loss of
reputation when treating employees unfairly.

2 Immigration Law:
There are more and more occasions where Immigration law becomes an issue in modern
businesses. Temporary employees, full-time employees, and special event workers may be
from other countries. You need to know if you are following the law when dealing with foreign
labor.

3. Consumer Goods Sales:

The Uniform Commercial Code contains the laws governing financial transactions in the
United States. The Code deals with everything from contracts to fraud to leases to secure
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transactions. Ambitious in its aim to consolidate the laws in one place, the Code is actually
quite complex. Lawyers spend a lot of time learning about how to apply the UCC to actual
business practice and can give businesses advice on how to stay compliant with the laws while
staying productive.

4. Contract Drafting/Negotiations/Litigation:
Whether for a property lease or for a product sale, contracts help make sure that the parties who
are making a deal are on the same page. Attorneys can help make sure your best interests are
represented when your business enters into a contract

5 Antitrust:
Antitrust laws help make sure the different businesses in a marketplace are operating on a level
playing field. Some companies use unfair or deceptive practices in order to get a larger share
of the market, and it may be difficult to identify unfair behavior in your own company. A
business lawyer can help you make sure that your business is operating ethically while helping
protect you from unfair actions by other companies.

6. Intellectual Property Law:

Businesses may need to patent unique products in order to protect that work in the marketplace.
Otherwise, anyone could sell a product your company worked hard to make. Copyright laws
will protect creative work, and you will need to file for protection if your business is identified
by a unique logo.

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DIFFERENCE BETWEEN LAW AND ETHICS

BASIS FOR LAW ETHICS

COMPARISON
Meaning The law refers to a systematic Ethics is a branch of moral
body of rules that governs the philosophy that guides people about
whole society and the actions the basic human conduct.
of
its individual members.
What is it? Set of rules and regulations Set of Guidelines
Governed By Government Individual, legal, and Professional
Norms.
Expression Expressed and Published in They are Abstract
writing
Violation Violation of law is not There is no punishment for
permissible which may result in violationof ethics.
punishment like imprisonment
or fine or both.
Objective Law is created with the intent to Ethics are made to help people
maintain social order and peace decidewhat is right or wrong and
in the society and provide how to act.
protection to all the citizens.
Binding Law is legal binding Ethics do not have a binding nature

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