Chapter 1:

BUSINESS LAW: An Introduction

MEANING OF LAW:

In common usage, the term law points towards those rules and regulations which
the government announces and enforces. In a formal sense, law may be described
as a system of rules in a society for people to be followed under the enforcement
by the state. If laws are violated, the state power will come into play to force the
violators to either adhere to law or face adverse consequences. The members of a
society are expected to know the law of a land.

BRANCHES OF LAW:

The term law may refer to the entire legal system of the society , or it may refer
to the individual units or enactments operative in the system. Each individual law
regulates a particular aspect of society’s life. Therefore the individual laws can be
grouped under several branches or categories of law, each branch indicating a
broad aspect of society’s life. Accordingly following branches of law can be as:

(a) Constitutional law: This branch includes laws which build and run the political
system governing the society, regulate the relationship between the different
organs of the state and determine the mutual rights and duties between the
rulers and the ruled.

(b) Civil law: This branch includes numerous laws which regulate the private
relationships between members of society. The individual members of a society
may find themselves in bilateral or multilateral relationships or may consciously
create such relationships for numerous purposes, like marriage, employment ,
business, membership in a family etc. These relationships can give rise to causes
for grievances of one against the other. Such laws which protect the rights of
individuals against each other are part of civil law.
(c) Mercantile law or Business Law: Mercantile or business relationships between
individuals are governed by specialized laws which too seek to protect individual
rights of one against the other. In that sense mercantile law can be considered as
a part of civil law also.

(d) Criminal law: This branch of law includes laws which deal with crimes, their
ascertainment and their punishment and the procedures required for the same.

SOURCES OF BUSINESS AND CORPORATE LAW:

The following sources can be said to have contributed to the evolution of Business
law:

(a) Common law: A very frequently used term in British legal world , common law
refers to that part of law which was created by court judgments’ based on the
commonly accepted codes of conduct and social practices in Britain. Such codes
and practices evolved in the British society over a long period of time and gained
wide acceptability after a lot of social scrutiny. In course of time, judges started
basing their judgments on these common practices to determine the conflicts
among various parties. This judicial sanction to common practices gave rise to
common law.

(b) Equity: Where common law was found t o be deficient in providing justice to
parties, the judicial officers took recourse to their own wisdom and sense of
justice to decide cases. Such judicial pronouncements became another source of
fresh law for society and were called equity.

(c) The law merchant: In course of time, trading communities evolved their own
peculiar codes of conduct applicable exclusively to their trading activities. Courts
started giving recognition to these trading practices also in their judgments giving
rise to another source of law called the law merchant.

(d) The statute law: A statute is a formally codified law or the written law of the
land announced by an authorized law making body in the society. A statute is an
Act of Parliament. When a statute is created by parliament, it takes into account
the entire judicial experience accumulated till date on the matter to give to the
society the most comprehensive piece of legislation. In course of time, however,
this law is further expanded through judicial pronouncements and
interpretations.