Introduction to Law

1. Meaning and Definition of Law Prepared by Yam Bahadur Magar

Law means rule or systems of rules that regulates the actions of the people in the
society. The rule is that which regulate the conduct of individuals, business activities and
other organization. Law is the law; it does that what a law does. Law is a rule of human
conduct imposed and enforced by the state. It deals with the rules concerning external
behavior of subjects. Law of every society derives enforcement authority form formal
institution, i.e. state. The essential goal of all human societies is framed and reframed by
the quest for peace, safety and progress of all members. Law promotes freedom and
liberties and restrains unlimited exercise of freedoms and liberties.

The law is rule which is made by state to distinguish the just and unjust, right and
wrong in the society. The term law means ‘a set of rules’ which are made and applied by
the state or sovereign authorities. Law is the product of human civilization. Human
civilization has developed law for regulating conduct of human beings in certain matter.
In this sense the law of nature is not law in our context. Similarly it is concerned about
the conduct of human being and not beyond that being a product of human civilization. it
is created by human being. In this way, the laws of god or religious rules are not law in
this sense. A law is rule that is enforced by force. No one members of the society has
option to follow it or not. In this sense society means state. The society in its corporate
makes the law and enforces it. The power of corporate capacity (to make law and enforce
it) is exercised differently in the different systems of Governments. In democratic form of
government representatives of the people make the law and independent judiciary enforce
it. In autocratic form of government, even a single person makes law and enforces in his
own way.
“Ignorance of law is no excused”. This is a famous maxim. it means ignorance of law is
no excuse. Although it is not possible for lay man to learn every branch of law, he can not
get the excuse of ignorance of law. Person must acquaint himself with the general
principle of the law of the country.
According to R.A. Myren:

Law is tool used by individuals, groups, institutions and societies to achieve a variety
of ends one which is justice1. According to chief justice mukharjee, “ in the garden of
forest of jurisprudence there are many fruits: law natural law custom. Law is a contract,

1
Bisnu subedi, philosophy and manual of justice, part 2, sagarmatha afset press, page no. 4.
law is command of human sovereign. Law is a social fact. Law is a union of primary and
secondary rules law is prediction, law is experience. Law is an unrealizable ideal. Law is
a practical and realizable compromise. Law is a balance of social and individual interest.
Law is morality. Law is what judge say from the bench. Law is tradition. The law is
different from the laws. Confusing as all this may appear and which confusion led
someone to say that law is an ass, if the law is like the beast of burden, it is because law
has to bear many burdens of human life in action, old new, predictable and
unpredictable.”2 According to Austin:- defines law as a general command that a state or
sovereign makes to those who are subjects to its authority by laying down a course of
action enforced by judicial and administrative tribunal.
a. Law is made by sovereign /state
b. Taw is in nature of command
c. The command is of general nature
d. The command is backed by sanction
According to Holland:- defines laws as rules of external human action enforced by the
sovereign political authority I. e. the state. According to Salmond: - law is the body of
principles recognized and applied by the state in the administration of justice.
According to Savigny, law is a rule of human action and conduct sanctioned by
National usages.
Law is the finding of reality- plato
Law is the system and of rights and obligation which the state enforces- T.H. Green
Law is the instrument of social engineering- Dean Roscoepound.
The whole system of rules that every one in a country or society must obey- Oxford
Dictionary.
The law refers to the body of philosophy, principles, standards and rules which the
courts apply in deciding cases brought before them- Lawrence, Robert and Peter3

2. Characteristics of Law
a. Law is the set of rules.
b. It is made and enforced by state or sovereign authority.
c. It regulates external human action.
2
Ibid.
3
Satya Narayan kalika, Principles of Business Law, fifth edition 2012, Buddha publishers and Distributers Pvt.Ltd,
Kathmandu, Nepal, page No. 3
 d. It maintains the peace and justice in the society. It also protects life, liberty and
property of the people.
e. If the law is not followed, then the person will be punished according to the law.
f. A law always treats all equally.
g. The interpretation of law is interpreted by the court.
h. Law has a supreme nature.
i. Law is not static, it is dynamic.

3. Evolution or Development of Law

Evolution or development of law is not in the fix time. It is developed according to the
development of society and science. Law is the oldest discipline among the social
sciences. Its origin and evolution dates back from ancient natural law school to modern
economic law school.
Natural law school of law was in existence since 300 B.C. it was based on “just” and
“unjust”, “Right and Wrong” reason behind moral theory. There exists certain legal value
or value judgments. The value judgment can be determined by human reason and guided
by human laws. Law has been defined by scholarly thinkers from different philosophy
about how the law is developed? Such as, Natural law school, Historical School,
analytical school, sociological school, realist school, critical legal studies, feminist school
and law and economic school etc.

3.1 Evolution of Legal System in Nepal

For a long time the justice system in Nepal carried within it the feudal legacy dispensing
justice based on caste, creed and values of Hindu religion. The court and tribunals applied their
jurisdiction only to people who did not belong to the ruling class. This got the serious blow
during the people’s movement of 1950. However a serious study of the existing corpus juris –
The Muluki Ain (National Code) took several years4.

Nepalese legal system was really developed independently in two fold basis over a long
period of time in her own history. The stage of uncodified law, it was kirat era, lichhibi era,
malla era, shah era prior 1910 BS. Junga bahadur promulgated the first codified law ‘muluki ain
1910 B.S. in Nepal. In the very beginning time Nepalese system was more advanced and

4
Shreekrishna Mulmi, Research and National Judicial Academy: A short Note, (National Judicial Academy, NJA Law
Journal, Vol.1, Number 1, 2007), 239-240.
comprehensive than that of the western legal system as the law was classified in civil and
criminal.

Now in this modern time, domestication process of int’l law and int’l human right plays a
vital role to modernize the states who are the party to the convention and treaties. We have mix
or hybrids system of legal system existing now in Nepal. Apex court plays a vital role to decide
the case which is related and direct concern to the public and has been exercising discretionary
power to PIL issues as the common law system.

After restoration of democracy, Nepal has been adopting the concepts of liberalization and
globalization. Several statutes such Britton Woods Contract Act, 2018, Foreign Investment and
Technology Transfer Act, 2049, The Privatization Act, 2050, New Industrial Enterprises Act,
2050, International Financial Transaction Act, 2054, Consumer Protection Act, 2054, Company
Act, 2063, Contract Act, 2056, Security Investment Fund (Trust) Act, 2053, Copy Right Act,
2059, Act Relating to Financial Arbitration Institutions 2055, Bank and Financial Institution's
Debt Recovery Act, 2058, Bank and Financial Institution's Act, 2063, Ordinance Relating to
Bank and Financial Institution 2061, Ordinance Relating to Private Sector Investment on
Infrastructure,2061 are related to development, economy and finance. Tourism Act, 2035;
Labour Act, 2048; Insurance Act, 2049; Trade Union Act, 2049; Food Act, 2052; Income
Tax Act, 2058;are some other related with hospitality law. These early stated statute shows
that Nepal has gradually made efforts to adopt internationally recognized and practiced
principles.

Similarly, Nepal is the party of various International Conventions such as CEDAW, ICCPR, and
UN Human Right Declaration etc. In Rina Bajracharya's case5, our apex court recognized
CEDAW; similarly, even in the controversial Robinson's case6 the court has stated provision of
ICCPR to release the accused. Supreme Court has recognized these International Instruments as
similar to National Law. In the conflict between treaty and prevailing law, treaty supersede law,
according to section 9 of Treaty Act, 2047 but in the case of Chandrakanta Gyawali v. Cabinet

5
Rina Bajracharya v. Cabinet Secretariat and others, Nepal Kanoon Patrika, 2057 pg 376 Decision No. 6898
6
Gordan William Robinson v. HMG, Criminal Appeal No. 3142 of 2059 B.S. Decided on 2061/1/11/6
Secretariat and others Supreme Court has clearly stated that it cannot be said that provision of
treaty gets priority to constitutional provision. On other hand, we have, Civil Aviation Act, 2015,
Facility and Immunity of Foreign State and Diplomatic Representative Act, 2027, Human Right
Commission Act, 2053, Environment Protection Act, 2053, Torture Relating Compensation Act,
2053 which are made for fulfilling obligation of international treaties. We have recently acquired
WTO membership and have committed to make and amend several laws with compatible to
provision of WTO agreement.

In essence, above stated plenty numbers of Acts which are made for accomplishing obligation of
international treaties, show that Nepalese Legal System is quietly influenced by international
obligation.

4 SOURCES OF LAW
The source of law is wider term. First it means from where the rules of law
originate? Secondly, from where the rules of human conduct are originated acquire
legal force. In fact both processes are necessary for a rule of law to be legally binding.
It may be any place, institution, material, incidence or cause from where the law
emanates.
There are various source of law. Salmond says that a formal source of law is that
from which a rule of law derives it’s force and validity. The sources of law can be
classified as following:
1. Legislation
2. Precedent
3. Custom and Usage
4. Agreements and Conventions
5. Foreign Judgments and Laws
6. Professional Opinion
7. Natural law school
8. Historical Documents
9. Legal Documents
LEGISLATION:-legislation is the process of making law by parliament. In another
sense the law made by parliament is called legislation. So that legislation is a source
of law or law itself in another sense.
 Latin term ‘legis’ + ‘latern’ denotes ‘Law +Making’. It means law making body of
state or parliament. Law passed by the legislative body is called legislation or statutes.
It is superior to all sources of law. Law is makes, amends and ratifies according to the
time, situation or need of society. Judges must enforce the law in the courts even if it
is contrary to the binding precedent. It is made according to the change of time or
situation and is outcome of a long series of discussion among lagislatures, e.g. Labour
Act, 2048, Contract Act, 2056, Company Act, 2063 etc. It also includes the policy or
decisions of government of the state.
Legislative law is the most important source in our legal system. If any law is
contrary to the constitution, any Nepali citizen may file a suit in the Supreme Court
declaring the law void. If the Supreme Court finds the law not consistent with the
constitution it declares it ultra virus to the constitution.
Precedent:- precedent means the earlier decision of the court that is taken as a rule for
the cases that come later. As a source of law the principle laid down by the Supreme
Court is binding upon all the courts and authorities. The legal principle laid down by
the Supreme Court is a source of law. According to Salmond, ‘a precedent is a
judicial decision which contains in principle itself.’ such principle is created in the
course of verdict, which fulfils vacuum of law. Such verdict is regarded as the law for
cases of the same nature and binding to lower courts of hierarchy. When a judgement
is delivered the judge gives the reason for his decision that is the principle binding for
future cases.
Where there is legislative law the court is to follow it. In specific case the Supreme
Court may interpret the provision of law. The interpretation is binding in future cases.
Where there is no legislation the Supreme Court may introduce principle to solve the
problem. According to the Article 128(4) of Nepal Constitution, 2072, ‘the
interpretation of constitution and law or the legal principles propounded by the
Supreme Court in relation to court cases must be followed by all.’7
Custom & Usage:- In earlier times, custom was the most important source of law. For a
very long period of time a common minimum ethos (social value) of society practicing
continuously, that value is recognized by society as law in the society. There are so
many provisions in country code of Nepal adopted from custom and religion. Essential
requirement of valid custom are as following:
a. Immemorial antiquity
b. Reasonableness
c. Continuity
7
Nepal Constitution, 2072, Article 128(4)
 d. Peaceful enjoyment
e. Certainty
f. Consistency
g. Binding force for that community
Agreement and Convention:- Agreements made by persons to act in certain way also
are equally enforceable by law. Here agreement means enforceable by law is contract. it
may be the different, agreement between the members of community or an
organization is called convention. And agreement between the states is called treaty or
conferences. U.N, SAARC, ASEAN, WTO etc.
According to black's law dictionary, agreement is ' a mutual understanding between two
or more persons about their relative rights and duties regarding past or future
performances. It is manifestation of mutual assent by two or more persons. Every
promise and set of promises forming the consideration for each other is agreement, is
the source of law.
Foreign Judgments and Laws: sometimes foreign judgments of states are also the
sources of law.
Professional Opinion or Opinion of Expert: Judges can get opinion of expert at the
time of decision in the court. In some cases, it is vital to deliver the decision. For e.g.
DNA test for conform of relation between debated relatives. It is opinion given by the
expert in the report. Explanation of Dr. Report of Postmortem Report in the Murder
cases, opinion of lawyers etc.
NATURAL LAW SCHOOL:- according to this school, law has a divine origin. Every
law is the gift of God.
HISTORICAL: - like; custom, Koran, Veda, Bible etc.
LEGAL Documents: - Legal Documents are also sources of law etc.

5. Classification of Law
Classifications of Laws are as following:
1. Substantive law and Procedural law
2. Public and private law
3. Civil law and criminal law
4. National (municipal) law and international law

Substantive law and Procedural law

 Substantive law creates and defines the right and obligation of the person(s). If
these rights are taken away or any person broke those rights, the procedural law will
show the path or way to get back those rights. Not only this, if any body fails to
perform his obligation, than the other party can come through the way of procedural
law, to compel that person to perform his obligation.
Procedural law states the way and manner of achieving remedies when the
relation established by substantive law, the procedural law guides an individual to get
remedy. Where one has to go? How he has to go? Within what period of time he can
go for remedy are concerns of procedural law. How he can prove his claim also is the
subject matter of procedural law.

Public Law and Private Law

Public law is that part of law which defines the form of government, the power of
government and rights of individuals as well as procedure for exercising these powers
and enforcing rights. The rights of people against the government also are the concern
of public law. It is regarded that the public law regulates and affects the society as a
whole not an individual(s) as a segment of society.
Private law defines relationship between individual members of society. The
members of society have to fit their relationship within the frame work of private law.
It defines the relationship as well as remedy and procedure for getting remedy. Law of
contract, law of property, is some example of private law.
Private law is mostly concerned with in business activities but public law also plays
vital role for formation of business policy.

Civil Law and Criminal Law

Civil law and criminal law are classified on the basis of duties of an individual
member of a society. Criminal law is concerned to the protection to the society as a
whole. All members of society have public duty to protect society. The acts which are
injuries to the society are defined by law as crime and law dealing about crime is
called criminal law. The main objective of Criminal law is; (a) to discourage the crime
and criminals, (b) To prevent the crime, (c) To improve the character of criminals, (d)
it is related to criminology (cause of crime) and Criminal policy of state.

 It is enacted by state
 Administered by state
 It is political
  it is Punishable
It is said that ‘if state enacted the law the child whose eyes are blue shall be killed,
then the child by birth with blue eye is crime.’
In addition to the duties to the society as a whole certain duties of an individual
are directed towards other individuals of certain relations. That relation is created by
law in certain circumstances or by agreement of the parties in other circumstances, but
it is not created as a member of the society in general. The rights and duties of
individual nature are regulated by civil law.
Municipal Law (National) Law and International Law
National law regulates relation between individual as well as between individuals and
state. International law regulates relation between the states themselves. National
(municipal) law is enacted by state parliament. But international law consists of
treaties agreed by the states and customary practice of the states. There is fixed and
effective enforcement agency to enforce law breaking of the state law. There is no
effective enforcement machinery in international law, but international business
activities are guided by law that is acceptable in most of the countries. International
rules are passed by conferences binding for member states.
International law is body of rules, principles and standards which regulates the
international relations. It is the relations between international organizations with
states and between the international organizations e.g. SAARC and UN. The general
principles as per UN charter are enshrined in article 1 and 2 of the charter as
following:
a. Principle of Sovereign equality
b. Pacta sunt survenda (every signatory state bound to oblige to terms and
conditions of convention or treaty)
c. Peaceful settlement of International dispute.
d. Non-use of force or threat of use of force.
e. Principle of non-interference in the essentially domestic jurisdiction of any
state.

6. Legal Environment of Business

 A business is an organization involved in the trade of goods, services or both to
consumers. The etymology of “Business” related to the state of being busy either as an
individual or society as a whole, doing commercially viable and profitable work. The
term “Business” has at least three usages, depending on the scope of the singular usages
to mean a particular organization; the generalized usage refer to a particular market
sector, the music business and compound forms such as agribusiness; and the broadest
meaning, which encompasses all activity by the community of suppliers or goods and
services. Only the business is sustainable when all the business is guided by law. so it is
essential of laws to protect the interest of business persons and institutions where they
can promote the business activities according to law.
The general meaning of environment is the whole combination of system, conditions,
influence, rules etc. that make up a situation in which something exists or develops. For
e.g. natural environment, political environment, social environment, legal environment,
(a kind of legal framework)etc. even some talks of law are concerned with natural,
cultural, social and human activities but also environment and legal environment has got
the difference.
The legal environment of business is legal framework of business. In other word it is the
effects of law on business activities. According to Kuntz and Fulmer, ‘legal
environment are the various laws, court decisions and government regulations that
influences over lives and business operations.’ According to Prof.Dr. Prem R. pant,
‘The legal environment refers to the framework of laws, regulations and court decisions,
intended to encourage, guide and control business activities.’ 8 according to MC Carthy
and Baby, legal environment of business generally include,
a. An introduction of the fundamental legal institution and processes in the
concerned state.
b. And overview of the private law fields of contract, tort, property law, which
directly affect many business transactions.
c. An examination of specific areas in which there is significant regulation of
business activities. These includes labour and employment laws, securities and
regulation, consumer protection laws and environment policies.
d. An analysis of relationship between law and discussion of social responsibility of
business firms.
The legal environments of business are generally concerned with the study of legal
institutions and processes and with the law affect the atmospheres of environment in
8
Satya Narayan kalika, Principles of Business Law, fifth edition 2012, Buddha publishers and Distributers Pvt.Ltd,
Kathmandu, Nepal, page No. 31
which the business activities are conducted. It is comprehensive study of the existing law
of business. In Nepal legal environment of business are promulgated by Nepal
parliament. For e.g. Alcohol(Liquor Act, 2031; Tourism Act, 2035; Labour Act, 2048;
Insurance Act, 2049;Trade Union Act, 2049; Foreign Investment and Technology
Transfer Act, 2049; Food Act, 2052; Environment protection Act, 2053; Consumer
Protection Act, 2054; Contract Act, 2056; Income Tax Act, 2058; Company Act, 2063;
Bank and Financial institution Act, 2063;
6.1 Importance of Legal Environment of Business
The law plays an important role to handle day to day human activities. All the people
must know which work to be done or not, which work is legal or illegal? Besides these,
what types of facilities and privileges are provided for legal work and what type of
punishment for illegal work? must be known to every people. some importance make
effort to discuss are as following:
1. Importance for the operation of Business.
2. To established and regulate the Business.
3. To develop capital market.
4. To create employment and remove poverty.
5. For stability of the business.
6. For dynamism of business.
7. For expansion of business relation.
8. For adaption of business.
9. To create environment for investment.
10. For regulate the behavior of business sector.
7. Hospitality Law
Hospitality law is body of law relating to the food service, travel and lodging
industries. That it is the body of law governing the specific nuances of hotels, restaurants,
bars, spas, country clubs, meeting and convention planners, and mores… hospitality law
does not just involve one area of law. It encompasses a wide variety of practice including
contracts, antitrust, tort law and more. Hotels, Duty to guests, Duty to guest property,
Restaurants are it’s subjects. International hospitality law referred to as the travel and
tourisms industry or the tourism industry. Several global organizations are in place to
improve and promote the global travel industry, including the WTO, ICAO and the
WHO.
Hospitality law is a legal and social practice related to treat of a person's guests or
those who involve a place of business. Hospitality laws are intended to protect both hosts
and guests against injury, whether accidental or intentional. Knowledge and  skills  in
specific  hospitality  management  subjects on ground of General  Objectives of
Hospitality law. Hotels and other business operators are expected to "act prudently and
use reasonable care" to ensure that their premises are free of risk. The business owner
ensure his guests are safe, most jurisdictions interpret 'prudent and reasonable' to include
foreseeable dangers, such as tripping hazards or unsecured shelving. Alcohol(Liquor Act,
2031; Tourism Act, 2035; Labour Act, 2048; Insurance Act, 2049;Trade Union Act,
2049; Foreign Investment and Technology Transfer Act, 2049; Food Act, 2052;
Environment protection Act, 2053; Consumer Protection Act, 2054; Contract Act, 2056;
Income Tax Act, 2058; Company Act, 2063; Bank and Financial institution Act, 2063 are
some laws relating to hospitality in Nepal.

Content of hospitality law are:

1. Introduction to Contemporary Hospitality Law

2. Legal Procedures:  Journey of a Case through the Courts

3. Civil Rights and Hospitality Business

4. Contract Law and the Hospitality Industry

5. Principles of Negligence and the Hospitality Business

6. Guests and Other customers

7. Protecting customers’ Property

Rights of Innkeepers and Rights of Guests

8. Court Hierarchy System in Nepal

Hierarchy means Chain of command. Court Hierarchy System means Commanding
System of Court in Nepal. There are 3 type of court hierarchy system in Nepal. They are
Supreme Court, High court and District court System in Nepal. There are also quasi-
judicial bodies in district level and special courts too.
There are number of courts in each country. But there is no uniformity of courts structure
in each country. Article, 127 of Nepal constitution, 2072; there shall be the following
Courts in Nepal.
1. Supreme Court
2. High Court
 3. District Court
Supreme Court: the Supreme Court is the highest judicial tribunal of Nepal. All
the courts and tribunals are under this court. Order and decisions of the Supreme Court is
binding for lower courts and it has power to give order to make or amend the laws to the
parliament. It is the court of record. According to article 129 of Nepal constitution 2072,
there is one chief Justice and maximum of 20 other judges in Supreme Court. The
Supreme Court has two type of Jurisdiction:
a . General Jurisdiction
b. Extraordinary Jurisdiction: any Nepali citizen may file a petition in the supreme court
to have any law or any part thereof declared void on the ground of inconsistency with this
constitution because it imposes an unreasonable restriction on the enjoyment of the
fundamental rights conferred by this constitution or on any other ground or any law
formulated by the provincial assembly is inconsistent with the law formulated by the
provincial assembly is inconsistent with the law formulated by federal parliament or any
law formulated by municipal assembly or village assembly is inconsistent with the law
formulated by federal parliament or provincial assembly, and extra ordinary power shall
res withd the supreme court to declare that law void either ab initio or from the date of its
decision if it appears that the law in question is inconsistent.
Article 133(3) of Nepal Constitution 2072 , The Supreme Court may issue appropriate
orders and writs of habeas corpus, mandamus, certiorari, prohibition and qua warranto.

High Court: High Court is second hierarchy in court system of Nepal. It is also
called the court of appeal. It is superior to district court. Purpose of hearing appeal is
rectifying error committed by the lower court. According to article 139 of Nepal
constitution 2072, there shall be a high court in every province. Like wise, article 139 (3)
in addition to the chief judge, every high court shall have judges in the number as
provided in the federal law. The jurisdiction of high court is to hear appeal against the
decision of all the district court and other tribunals within the territorial jurisdiction.
According to article 144(2) of Nepal Constitution 2072, the high court may issue
appropriate orders and writs of habeas corpus, mandamus, certiorari, prohibition and qua
warranto.
District Court: District Courts are the trial court or court of first instance. People can
file the case in the district court under its territorial jurisdiction. In the first stage district
court try cases. Almost all cases are tried by district courts. There are 75 district courts in
Nepal. One district judges in the district court and other judges are appointed as required
of work load. According to article 151 of Nepal Constitution 2072, the district court have
jurisdiction to hear original cases and hear petition of habeas corpus, prohibitory order
and other petition according to the law. It has jurisdiction to hear appeal over the
decisions taken by the quasi-judicial bodies, hear appeal over the decision of the local
level judicial institutions established according to the law of province.

9. Court Procedure
Civil Procedures:-
The process to secure civil rights and interest or procedure for enforcement of Civil
Law is called civil procedure. The objects of civil law and criminal law are different.
In the same way civil and criminal procedures are also not same. There are some
similarities and dis-similarities between them. In some countries there are different
courts for administration of Civil and criminal law and different procedures to be
followed in the two types of courts. But in our Judicial system there is only one
structure of court. Judicial committee of (Municipality, village municipality and
Metro-politancity), District courts, High Court and the Supreme Court administer civil
and criminal law at the same time. The Muluki Civil and criminal procedure code
describes procedure of Civil as well as criminal Law. But within that code there are
some different procedures prescribed for different cases. Most parts of them are
similar but slightly different. Now we will discuss civil procedures.

Pre-suit Considerations:
Formally it is not a court procedure but a person Ready to invoke the civil procedure
of court must consider something before filing a suit. He must consider something
which court is competent to the case. If more than one court is competent he can
choose which is convenient as well as effective to him. Whether he wants to file suit
in his own or through attorney (lawyer), is the case fit for judicial proceeding or not as
well as whether it is expired by law of limitation are important matters to be
considered in this stage.
Pleading:
The object of pleading is to secure for all the parties to a case. An Opportunity of
presenting themselves before the court and making their case heard. The stage for
pleading begins within filing of suit. The party who files the suit first is called
plaintiff. In some countries before filing a suit a notice to the other party is necessary,
but in our judicial system it is not required. The court after a suit is dully filed
 summons the other parties to fill a response within a period of time. Ordinarily the
time is of 21 days. The person against whom the suit is filled is called defendant. If
defendant fails to fill response within the said period the court decides the case
hearing one side; the plaintiff. If defendant accepts the allegation made by the plaintiff
against him, the court decides the case at this time. Where both of parties agree to
settle the dispute without court verdict they can compromise the case in the court. It is
called mediation and both of the parties can submit the application according to
sec.193 of Muluki civil procedure code, 2074 of Nepal. It is equally effective as
verdict of the court.
Where parties want decision of the court to settle their dispute, the court after
hearing both sides finds out what are the real facts in issue in the case that need to be
decided. Then court proceeds to get proof.

Collection of Proof:
Collection of proof provides necessary information to the Court to decide the
dispute. As already stated the court asks the parties to furnish proof to prove their
claims. They can supply necessary documents and witness to the court for disputed
facts. Both parties are given opportunities to test whether the proofs supplied by other
party are genuine or false. Witnesses may be cross examined by other parties.
Judgment:
Judgment is the decision of court. In a Judgment the court has to decide the dispute.
For resolving dispute the court has to decide mainly- dispute of facts and dispute of
law. The court decides the disputed facts on the basis of evidential information
supplied by the parties. If there is any disputer of law; that is there is conflict of
opinion of the parties about interpretation of law that also is to be decided by the
court. But it is not necessary there is always dispute of law in a case. In some cases
both disputes are involved but only one dispute is sufficient for a case. The court
decides the disputed facts on the basis of evidential information supplied by the
parties. If there is any dispute of law; that is there is conflict of opinion of the parties
about interpretation of law that also is to be decided by the court. But it is not
necessary there is always dispute of law in a case. In some cases both disputes are
involved but only one dispute is sufficient for a case. The court decides the dispute of
law after hearing arguments from both sides.
Appeal:-
Appeal is request to a superior court made by a party of a dispute that is decided by
an inferior court. The request is to remove error made by the inferior court in deciding
 the case. The court system of Nepal allows first appeal as a matter of right. All
decisions of district courts are appeasable in High court. The decision of High court in
an appeal is appeasable in the Supreme Court only in the cases where the decisions in
district court of appeal substantially differ.

Execution of Judgment:
Where the final Judgment of a court is executed by parties voluntarily there is end of
the case and a state power is not necessary. If any party who has to execute the
decision fails to discharge the order of court in his part. Another party may apply to
the execution section of the district court for that purpose. The court executes the
decision by force. The nature and quantity of force depends upon the nature of things
to be carried out.

Basic Concept of Constitution and Fundamental

Rights.
10. Meaning and Definition of Constitution
Constitution means a set of principles according to which a state or organization is
governed. The constitution is the fundamental law of state. Generally constitution may be
based on democratic norms and values including the people's competitive multiparty
democratic system of governance, civil liberties, fundamental rights, human rights, adult
franchise, periodic elections, full freedom of the press, and independent, impartial and
competent judiciary and concept of the rule of law. The constitution may be promulgated
by two ways: by the state or by the revolution
The future of state is determined by 3 important elements: first one is how is the
constitution of state? Second one is, what the function of constitution is work? And third
one is, how constitution is created and its implementation including the respect of
constitution of people? According to K.C. where: “constitution is in its wider sense refers
to the whole system of government of a country, the collections of rules which establish
and regulate or govern the government.” According to Salmond; “… constitution law as
the body of those legal principles which determine the constitution of a state that is to
say, the essential and fundamental portions of state organization.”

The Constitution of Nepal promulgated in 20 September 2015 (2072.6.3). the

preamble of constitution stated that, “ We, the Sovereign People of Nepal, Internalizing
the people's sovereign right and right to autonomy and self-rule, while maintaining
freedom, sovereignty, territorial integrity, national unity, independence and dignity of
Nepal,
Recalling the glorious history of historic people's movements, armed conflict, dedication
and sacrifice undertaken by the Nepalese people at times for the interest of the nation,
democracy and progressive changes, and respecting for the martyrs and disappeared and
victim citizens, Ending all forms of discrimination and oppression created by the
feudalistic, autocratic, centralized, unitary system of governance, Protecting and
promoting social and cultural solidarity, tolerance and harmony, and unity in diversity by
recognizing the multi-ethnic, multi-lingual, multi-religious, multi-cultural and diverse
regional characteristics, resolving to build an egalitarian society founded on the
proportional inclusive and participatory principles in order to ensure economic equality,
prosperity and social justice, by eliminating discrimination based on class, caste, region,
language, religion and gender and all forms of caste based untouchables,
and Being committed to socialism based on democratic norms and values including the
people's competitive multiparty democratic system of governance, civil liberties,
fundamental rights, human rights, adult franchise, periodic elections, full freedom of the
press, and independent, impartial and competent judiciary and concept of the rule of law,
and build a prosperous nation, in order to fulfill the aspirations for sustainable peace,
good governance, development and prosperity through the federal, democratic,
republican, system of governance.”
According to articles 1, Constitution as the fundamental law. Any law inconsistent with
this Constitution shall, to the extent of such inconsistency, be void. It shall be the duty of
every person to observe this Constitution. Article 2, The sovereignty and state authority
of Nepal shall be vested in the Nepalese people. It shall be exercised in accordance with
the provisions set forth in this Constitution. Article 3, All the Nepalese people, with
multiethnic, multilingual, multi-religious, multicultural characteristics and in
geographical diversities, and having common aspirations and being united by a bond of
allegiance to national independence, territorial integrity, national interest and prosperity
of Nepal, collectively constitute the nation.
Article 4, (1) Nepal is an independent, indivisible, sovereign, secular, inclusive,
democratic, socialism-oriented, federal democratic republican state. For the purposes of
this Article, "secular" means religious, cultural freedoms, including protection of religion,
culture handed down from the time immemorial. Article 5, (1) Safeguarding of the
freedom, sovereignty, territorial integrity, nationality, independence and dignity of Nepal,
the rights of the Nepalese people, border security, economic wellbeing and prosperity
shall be the basic elements of the national interest of Nepal.

Fundamental Rights

There are 33 fundamental rights promulgated by Nepal constitution, 2072 ( part-3 ),

series of articles, from article 16 to article 48 are as following:
Article, 16. Right to live with dignity: (1) Every person shall have the right to
live with dignity. (2) No law shall be made providing for the death penalty to any one.
Article, 17. Right to freedom: (1) No person shall be deprived of his or her
personal liberty except in accordance with law.
(2) Every citizen shall have the following freedoms:
(a) Freedom of opinion and expression,
(b) Freedom to assemble peaceably and without arms,
(c) Freedom to form political parties,
(d) Freedom to form unions and associations,
(e) Freedom to move and reside in any part of Nepal,
(f) Freedom to practice any profession, carry on any occupation, and establish and
operate any industry, trade and business in any part of Nepal.
Article,18. Right to equality: (1) All citizens shall be equal before law. No person shall be
denied the equal protection of law. (2) No discrimination shall be made in the application of general
laws on grounds of origin, religion, race, caste, tribe, sex, physical condition, condition of health,
marital status, pregnancy, economic condition, language or region, ideology or on similar other
grounds. (3) The State shall not discriminate citizens on grounds of origin, religion, race, caste, tribe,
sex, economic condition, language, region, ideology or on similar other grounds.
Provided that nothing shall be deemed to prevent the making of special provisions by law for the
protection, empowerment or development of the citizens including the socially or culturally backward
women, Dalit, indigenous people, indigenous nationalities, Madhesi, Tharu, Muslim, oppressed class,
Pichhada class, minorities, the marginalized, farmers, labours, youths, children, senior citizens,
gender and sexual minorities, persons with disabilities, persons in pregnancy, incapacitated or
helpless, backward region and indigent Khas Arya.

Article,19. Right to communication: (1) No publication and broadcasting or

dissemination or printing of any news item, editorial, feature article or other reading,
audio and audio-visual material through any means whatsoever including electronic
publication, broadcasting and printing shall be censored.
Article, 20. Rights relating to justice: (1) No person shall be detained in custody
without informing him or her of the ground for his or her arrest.
(2) Any person who is arrested shall have the right to consult a legal practitioner of his or her choice
from the time of such arrest and to be defended by such legal practitioner. Any consultation made by
such person with, and advice given by, his or her legal practitioner shall be confidential. Provided this
clause shall not apply to a citizen of an enemy state.
Explanation: For the purpose of this clause, "legal practitioner" means any person who is authorized
by law to represent any person in any court.
(3) Any person who is arrested shall be produced before the adjudicating authority within a period of
twenty-four hours of such arrest, excluding the time necessary for the journey from the place of arrest
to such authority; and any such person shall not be detained in custody except on the order of such
 authority. Provided that this clause shall not apply to a person held in preventive detention and to a
citizen of an enemy state.
(4) No person shall be liable for punishment for an act which was not punishable by the law in force
when the act was not committed nor shall any person be subjected to a punishment greater than that
prescribed by the law in force at the time of the commission of the offence.
(5) Every person charged with an offence shall be presumed innocent until proved guilty of the
offence.
(6) No person shall be tried and punished for the same offence in a court more than once.
(7) No person charged with an offence shall be compelled to testify against him or herself.
(8) Every person shall have the right to be informed of any proceedings taken against him or her.
(9) Every person shall have the right to a fair trial by an independent, impartial and competent court or
judicial body.
(10) Any indigent party shall have the right to free legal aid in accordance with law.

Article, 21. Right of victim of crime: (1) A victim of crime shall have the right
to get information about the investigation and proceedings of a case in which he or
she is the victim.
Article, 22. Right against torture: (1) No person who is arrested or detained
shall be subjected to physical or mental torture or to cruel, inhuman or degrading
treatment.
Article, 23. Right against preventive detention: (1) No person shall be held
under preventive detention unless there is a sufficient ground of the existence of an
immediate threat to the sovereignty, territorial integrity or public peace and order of
Nepal.
Article, 24. Right against untouchability and discrimination: (1) No
person shall be subjected to any form of untouchability or discrimination in any
private and public places on grounds of his or her origin, caste, tribe, community,
profession, occupation or physical condition.
Article, 25. Right relating to property: (1) Every citizen shall, subject to law,
have the right to acquire, own, sell, dispose, acquire business profits from, and
otherwise deal with, property.
Article, 26. Right to freedom of religion: (1) Every person who has faith in
religion shall have the freedom to profess, practice and protect his or her religion
according to his or her conviction.
Article, 27. Right to information: Every citizen shall have the right to demand
and receive information on any matter of his or her interest or of public interest.
Provided that no one shall be compelled to provide information on any matter of
which confidentiality must be maintained in accordance with law.
Article, 28. Right to privacy: The privacy of any person, his or her residence,
property, document, data, correspondence and matters relating to his or her character
shall, except in accordance with law, be inviolable.
Article, 29. Right against exploitation: (1) Every person shall have the right
against exploitation. (2) No person shall be exploited in any manner on the grounds of
religion, custom, tradition, usage, practice or on any other grounds.
(3) No one shall be subjected to trafficking nor shall one be held in slavery or
servitude. (4) No one shall be forced to work against his or her will.
Article, 30. Right to clean environment: (1) Every citizen shall have the right
to live in a clean and healthy environment.
(2) The victim shall have the right to obtain compensation, in accordance with law, for
any injury caused from environmental pollution or degradation.
Article, 31. Right relating to education: (1) Every citizen shall have the right
of access to basic education. (2) Every citizen shall have the right to get compulsory
and free education up to the basic level and free education up to the secondary level
from the State. (3) The citizens with disabilities and the economically indigent
citizens shall have the right to get free higher education in accordance with law.
Article, 32. Right to language and culture: (1) Every person and community
shall have the right to use their languages. (2) Every person and community shall have
the right to participate in the cultural life of their communities. (3) Every Nepalese
community residing in Nepal shall have the right to preserve and promote its
language, script, culture, cultural civilization and heritage.
Article, 33. Right to employment: (1) Every citizen shall have the right to
employment. The terms and conditions of employment, and unemployment benefit
shall be as provided for in the Federal law.
(2) Every citizen shall have the right to choose employment.
Article, 34. Right to labour: (1) Every labourer shall have the right to practice
appropriate labour.
Explanation: For the purposes of this Article, "labourer" means a labourer or worker
who does physical or mental work for an employer in consideration for remuneration.
(2) Every labourer shall have the right to appropriate remuneration, facilities and
contributory social security. (3) Every labourer shall have the right to form and join
trade unions and to engage in collective bargaining, in accordance with law.
Article, 35. Right relating to health: (1) Every citizen shall have the right to
free basic health services from the State, and no one shall be deprived of emergency
health services. (2) Every person shall have the right to get information about his or
her medical treatment.
 (3) Every citizen shall have equal access to health services.
(4) Every citizen shall have the right of access to clean drinking water and sanitation.
Article, 36. Right relating to food: (1) Every citizen shall have the right relating
to food. (2) Every citizen shall have the right to be safe from the state of being in
danger of life from the scarcity of food. (3) Every citizen shall have the right to food
sovereignty in accordance with law.
Article, 37. Right to housing: (1) Every citizen shall have the right to an
appropriate housing. (2) No citizen shall be evicted from the residence owned by him
or her nor shall his or her residence be infringed except in accordance with law.
Article, 38. Rights of women: (1) Every woman shall have equal lineage right
without gender based discrimination.
(2) Every woman shall have the right to safe motherhood and reproductive health.
(3) No woman shall be subjected to physical, mental, sexual, psychological or other
form of violence or exploitation on grounds of religion, social, cultural tradition,
practice or on any other grounds. Such act shall be punishable by law, and the victim
shall have the right to obtain compensation in accordance with law.
Article, 39. Rights of the child:
(1) Every child shall have the right to name and birth registration along with his or her
identity. (2) Every child shall have the right to education, health, maintenance, proper care, sports,
entertainment and overall personality development from the families and the State.
(3) Every child shall have the right to elementary child development and child participation.
(4) No child shall be employed to work in any factory, mine or engaged in similar other hazardous work.
(5) No child shall be subjected to child marriage, transported illegally, abducted/kidnapped or taken
in hostage. (6) No child shall be recruited or used in army, police or any armed group, or be
subjected, in the name of cultural or religious traditions, to abuse, exclusion or physical, mental,
sexual or other form of exploitation or improper use by any means or in any manner. (7) No child
shall be subjected to physical, mental or any other form of torture in home, school or other place and
situation whatsoever.
(8) Every child shall have the right to juvenile friendly justice.
(9) The child who is helpless, orphan, with disabilities, conflict victim, displaced or vulnerable shall
have the right to special protection and facilities from the State. (10) Any act contrary to in clauses
(4), (5), (6) and (7) shall be punishable by law, and a child who is the victim of such act shall have the
right to obtain compensation from the perpetrator, in accordance with law.

Article, 40. Rights of Dalit: (1) The Dalit shall have the right to participate in all
bodies of the State on the basis of the principle of proportional inclusion.
Article, 41. Rights of senior citizens: The senior citizens shall have the right to
special protection and social security from the State.
Article, 42. Right to social justice: (1) The socially backward women, Dalit, indigenous
people, indigenous nationalities, Madhesi, Tharu, minorities, persons with disabilities, marginalized
communities, Muslims, backward classes, gender and sexual minorities, youths, farmers, labourers,
oppressed or citizens of backward regions and indigent Khas Arya shall have the right to participate
in the State bodies on the basis of inclusive principle. (2) The indigent citizens and citizens of the
communities on the verge of extinction shall have the right to get special opportunities and benefits in
education, health, housing, employment, food and social security for their protection, upliftment,
empowerment and development. (3) The citizens with disabilities shall have the right to live with
dignity and honour, with the identity of their diversity, and have equal access to public services and
facilities.

Article, 43. Right to social security: The indigent citizens, incapacitated and
helpless citizens, helpless single women, citizens with disabilities, children, citizens
who cannot take care themselves and citizens belonging to the tribes on the verge of
extinction shall have the right to social security, in accordance with law.
Article, 44. Rights of the consumer: (1) Every consumer shall have the right to
obtain quality goods and services. (2) A person who has suffered injury from any
substandard goods or services shall have the right to obtain compensation in
accordance with law.
Article, 45. Right against exile: No citizen shall be exiled.
Article, 46. Right to constitutional remedies: There shall be a right to obtain
constitutional remedies in the manner set forth in Article 133 or 144 for the
enforcement of the rights conferred by this Part.
Article, 47. Implementation of fundamental rights: The State shall, as
required, make legal provisions for the implementation of the rights conferred by this
Part, within three years of the commencement of this Constitution.
Article, 48. Duties of citizens: Every citizen shall have the following duties:
(a) To safeguard the nationality, sovereignty and integrity of Nepal, while being loyal
to the nation,
(b) To abide by the Constitution and law,
(c) To render compulsory service as and when the State so requires,
(d) To protect and preserve public property.

Laws relating to Business

11. Meaning and Definition of Company
Company means a number of people gathered together. Company is an artificial
person that is created, operated and ended by the law. It is wider than the partnership
business. The term ‘company’ is an amalgamation of two latin terms, ‘com’ and ‘panie’
which means together and bread. Thus company referred to a group of person who took
meal together. That group who invests for profit motive in the company can share profit
according to that share. The preamble of company Act, 2063 is; to bring about dynamism
in the economic development of the country by promoting investment in the industry,
trade and business sectors through economic liberalization and make the incorporation,
operation and administration of companies much easier, simpler and more transparent;

According to sec. 2(a) of company Act, 2063; “Company” means a company

incorporated under this Act. Sec. 2(b) “Private Company” means a private company
incorporated under this Act.
Sec. 2(c) “Public company” means a company other than a private company.
Sec. 2(d) “Holding company” means a company-having control over a subsidiary
company.
Sec. 2(e) “Subsidiary company” means a company controlled by a holding company.
Sce.2 (f) Foreign Company means a company incorporated outside Nepal.
Sec. 2(g) “Listed Company” means public company which has its securities listed in the
stock exchange.
Sec. 2(h) “company not distributing profits” means company incorporated under Chapter
19 on conditions that it shall not be entitled to distribute or pay to its members any
dividends or any other moneys out of the profits earned or savings made for the
attainment of any objectives.
Sec. 2(i) “Promoter” means a person who, having consented to the matters contained in
the memorandum of association and the articles of association to be furnished in the
Office for the incorporation of a company, signs the same in the capacity of promoter.
Sec.2(j) “Officer” includes director, chief executive, manager, company secretary,
liquidator and any employee undertaking departmental responsibility of the company.
Sec.2(k) “Memorandum of association” means the memorandum of association of a
company.
Sec.2(l) “Articles of association” means the articles of association of a company.
Sec. 2(n) “Share” means the divided portion of the share capital of a company.
Sec. 2 (r) “Shareholder” means a person having ownership in the share of a company.
Sec. 2(u) “Register” means a register of shareholders or debenture-holders maintained
under Section 46.
Sec.2(v) “Seal of company” means the seal of a company to be used by it.
Sec. 2(w) “Securities Board” means the securities board established under the prevailing
law to regulate and manage securities.
Sec. 2(x) “Securities” means any shares, bonds, debentures or stocks issued by a
company, and this term includes the receipt relating to deposits of securities and the
rights and entitlement relating to securities.
Incorporation of Company
Incorporation of company means establishment of company. There are certain
prescribed legal formalities to establishment or formation or company. According to sec.
3(1) of company Act, 2063, any person desirous of undertaking any enterprise with profit
motive may, either singly or jointly with others, incorporate a company for the attainment
of one or more objectives set forth in the memorandum of association.
There shall be a minimum of seven promoters for the incorporation of a public company.
Seven promoters shall not be required for the incorporation of another public company by
any public company. Some company which desires to establish as non profit motive or
non-profit objective is called non-profit distributing company.
Application to be made for incorporation of company:
 According to sec. 3 (1) Any person desirous of incorporating a company shall
make an application to the Office, in such format and accompanied by such fees as
prescribed, and along with the following documents, as well:
 The memorandum of association of the proposed company,

 The articles of association of the proposed company,

 In the case of a public company, a copy of the agreement, if any, entered into
between the promoters prior to the incorporation of the company,
 In the case of a private company, a copy of the consensus agreement, if any,
entered into,
 Where prior approval or license has to be obtained from anybody under the
prevailing law prior to the registration of a company carrying on any particular
type of business or transaction pursuant to the prevailing law, such approval or
license,
 Where the promoter is a Nepalese citizen, a certified copy of the citizenship
certificate and where a corporate body is a promoter, a certificate of registration of
incorporation, decision of the Board of directors, regulating The incorporation of
the company and major documents regarding incorporation.
 Where the promoter is a foreign person or company or body, permission obtained
under the prevailing law to make investment or carry on business or transaction in
Nepal,
 Where the promoters is a foreign person, a document proving the country of his
citizenship,
 Where the promoter is a foreign company or body, a certified copy of the
incorporation of such company or body and major documents relating to such
incorporation.
Registration of Company
According to Article 5 (1) where an application is made for the incorporation of a
company the Office shall, after making necessary inquiries, register such company within
15 days after the date of making of the application and grant the company registration
certificate to the applicant.
 After a company has been registered, the company shall be deemed
incorporated.
 The office shall maintain companies register in the format as prescribed.
  After the incorporation of a company under this Section, subject to this Act, the
matters contained in the memorandum of association and the articles of
association shall be binding on the company and its shareholders as if these
where the provisions contained in separate agreements between the company
and every shareholder and amongst its shareholders.
 Without registering a company under this Act, no person shall use the name
company and carry on any kind of transaction by the name of any firm or
institution.
Refuse to Register Company
According to article 6(1) of Company Act, 2063, The Office may refuse to register a
company in any of the following circumstances:
 If the name of the proposed company in identical with the name by which a
company in existence has been previously registered or so resembles the name
of that company as it might cause misleading,
 If the name or objective of the proposed company is contrary to the prevailing
law or appears to be improper or undesirable in view of public interest,
morality, decency, etiquette etc. or reflects criminal motive ,
 If the name of the proposed company is identical with the name of a company
of which registration has been cancelled pursuant to this Act or that of a
company which has been insolvent under the prevailing law or so resembles
such name as it might cause misleading and a period of five years shall not
expired after such cancellation of registration or insolvency,
 If the requirements for the incorporation of a company under this Act are not
fulfilled.
 If the office refuses to register company in any of the circumstances as referred
to in Sub-section (1) it shall give a notice there of, accompanied by the reasons
therefore, to the applicant no later than 15 days after the date of application
made for the incorporation of company pursuant to Section 4.
Issue of Certificate
After the necessary steps are taken, the registrar registers the company and issues a
certificate of incorporation in a determined format.
Commencement of Business
A public company can commence its business activities only after obtaining certificate of
commencement of business. After the fulfillment of some additional formalities as
accordance to the company law, e.g. allotment of shares in minimum number subscribed
issue of prospectus of the company.

Law of Contract
12. Meaning and Introduction:
 Contract is an agreement between two or more parties for to do or not to do something. It is a
rule or rights and obligation created by them for themselves. No one can go beyond the terms
and conditions of the contract. The party who violate the terms of contract should liable to pay
compensation or repudiate the contract. Every day we hear and involves in hundreds of the
contract with each other. When we go to the supermarket to buy goods, or to go to the ride bus,
not only this, when we carry out the international business for import and export goods or
service, at that time, contract is an essential for regulate the business activities. Therefore,
contract is most important for national and international business. Parties to the contract are
equally responsible to perform their obligation.
Contract law is vital for business activities. A contract is the basis of business and a kind of
private law. It is not a minor but a major part of the business law. Every business activity is
determined and guided by the agreement of the parties concerned. The law which guides the
parties to a contract is law of contract. In fact, the law of contract is concerned with every
individual and business organization. In every aspect of the business is concerned with the rights
and obligations of the parties entered into it.
According to Civil code 2074, Contract means an agreement between two or more parties to do
or not to do something which is enforceable by law.9
According to Indian contract Act 1872, Contract is an agreement enforceable by law.
According to Salmond, Contract is an agreement creating and defining obligations between the
parties.
Salmond “An agreement creating and defining obligations between two or more parties is a
contract”.
Frederick Pollock “Every agreement and promise enforceable at law is a contract”.
In International Trade Law, ‘The main issues relating to the International character of the
sale contract and the financial arrangements enabling the seller and buyer to secure payment and
finance regardless of the distance and boarders between them.’10

Therefore explained above definition, contract is made for to perform any duty according to
law and if the contract is against the law it cannot be enforceable. So it creates obligation in
business transaction to perform the duties between the parties.
According to sec. 2(1) of the SOGA (U.K. sale of goods Act) 1979 a contract of sale of
goods is 'a contract by which the seller transfers or agrees to transfer the property in goods to the
buyer for a money consideration called price'. The contract is made by offer and acceptance. The
main purpose of sale is to transfer of the ownership from the seller to the buyer.
offer and acceptance, contractual legal relation, contractual capacity, lawful consideration,
formalities, written and registration, payments, price etc. on the other hand certain terms and
9
Sec. 504 of Civil code, 2074.
10
Simone Schnitzer, Understanding International Trade Law, (Universal Law Publishing Co. Pvt. Ltd, New Delhi,
2010), 1.
conditions (price, modes of payments, warranty of goods, transportation, export licensing,
inspection, order, cancellation and Arbitration) are very important factors to form a international
sale contract. Nepal is already member of WTO and some Acts already promulgated. And some
others are going on process.
In England the business practice among businessmen were recognized by Royal Private
Courts and latter on these were recognized by Royal courts. In England there is no uniform law
of contract. Indian contract Act 1872 had been enacted it is enforceable law in India. In Nepal
Contract Act, 2023 had been enacted which has been repeated by contract Act, 2056 now Civil
Code, 2074 is existing law of Nepal.

Importance Law of Contract:

A contract is the basis of business. Law of contract is the most important branch of business
law. Without such a law, it is difficult to carry out all types of business transactions. Not only the
business organizations, but also individuals are concerned with the law of contract. In modern
complexities of business field, contract is a vehicle for the carry out business transaction. The
following figure presents an example how a businessman comes into contract with other persons.

Produce
Principal

Employee Attorney

Consumer
Banker
Agent
In other words almost all business transaction creates contractual relations. Where there is
contractual relation each party enjoys right and undertakes responsibility. The law of contract
providers remedy in case of failure to perform responsibility. The law of contract is the
foundation upon which the super structure of modern business is build. Therefore contract is so
important for modern business and to be enforceable by law.
 Contract is vehicle for the carry out of business transactions.
 Contractual party can enjoy rights and undertakes responsibility.
 Generally it is used to trade, industry and commerce.
 It helps and supports economy of the country.
 Contract is important for all the principal, agent, customer, employee, producer,
company, bank, institution etc.
 It plays bridge role for National and International business.
  It plays vital role from establishment of company to ending up of the company.
 Each party should fulfill the obligation mention in the contract.
 The law of contract providers remedy in case of failure to perform responsibility.
Classification of Contract:
The contract concluded between parties by creating certain rights and duties are legal or
enforceable. There are various types of contract which can be classified on the basis of carious
elements. The classification will help the student to understand various natures of contract.
1. Valid contract
2. Voidable contract
3. Void contract
4. Unenforceable contract
5. Unilateral contract
6. Bilateral contract
7. Express contract
8. Convention and group contract
9. Employment contract
Kinds of contract form the point of view of enforceability
1. Valid contract
The contract that meets all the requirements of a binding contract is valid contract. It is an
agreement enforceable by law. This kind of contract is concluded with the free consent of parties
with a intention to establish legal relationship and also create some legal rights and duties of the
parties of the contract.
2. Voidable Contract:
Void able contract is that agreement which is neither declared void nor valid but lacks certain
elements of contract as discussed above.
In this type of contract one party of the contract must have done some wrongs and another party
of the contract may accept or avoid the contract. According to section 518 of Muluki Civil Code
2074, a contract concluded by following is voidable contract.
Coercion, (use of force or pressure), Undue Influence, Misrepresentation, fraud and
Mistake: The party at whose option, a contract becomes voidable must reject contract within
reasonable time and before right of third party intervened.
3. Void contract:
The contract that doesn’t meet all the requirements of valid blinding contract is valid
agreement. Law clearly states that certain types agreement are void, According to Section 517 of
Muluki Civil Code 2074,11 following agreements are void:
(a) Contract is restrain to anyone involves on trade and profession or
occupation.
11
Section 517 of Muluki Civil Code 2074.
 (b) Contract in restrain of marriage.
(c) Contract in restrain common facilities used by general public.
(d) Contract in restrain of legal proceeding.
(e) Immoral contract and contract against public policy.
(f) Impossible contract.
(g) Ambiguous Contract.
(h) Contract entered by incapable person.
(i) Contract for illegal object and consideration.
4. Express contract: When a contract is made by express word of parties either written
or oral , it is called express contract. Offer and acceptance are made clearly through the various
modes of communication by email, written, phone, etc.
In this type of contract promises between parties are exchanged through the mutual consent
and create legal rights and duties.
5. Implied contract: Implied contract is relating to Acts or conduct of the parties. It is generally
used to symbol by the parties. Something contracts are formed not only by expressing language but
also from the conduct of parties in the circumstances. The element of acceptance and offer may
be seen from the conduct of the parties. An agreement can be inferred from the conduct alone,
inference is more or less easily drawn in the circumstances.
(3) Indirect Contract: In certain situation, without express or implied intention to create
contractual relations law provides contractual remedies presuming that there is.
6. Convention and group contract:
Convention is derived from Latin word ‘co venire’ means to come together, generally an
assembly or meeting of delegates to achieve a particular civil, political or social purpose. If a
hotel or restaurant is entered into an agreement with the organizer in order to provide convention
hall, facilities associated with it (for ex. LCD projector drinking water, lighting, sound system)
along with the facilities and service in the rate determined by agreement. Both the parties to the
agreement are found to it. Generally in the convention, the participants are approximately fixed
by the organizer and there may still be possibility of increasing and decreasing participants for
the seminar. So, it has to be clearly maintained in the agreement about the rate of food and
requirement of service. However, hotel must provide services to all in this situation.
Hotel or Restaurant and organizer may fix the menu and quantity of the food and other
services applicable only for the convention or seminar. If separate menu is fixed, the hotel must
serve this menu and organizer must not take other things. But other things can be served as extra
change on request.
7. Employment Contract:
Among many responsibilities that a hotel or any kind of enterprises must have to bear toward
society as a whole, Certain to the relationship with its employee, workers, labour or all kinds of
staffs. As we know that business can run, so it is one of the foremost important aspects of the
hospitality business in Nepal. In order to project right and interest of the worker or labour
working in the hotel or other enterprises in any terms and condition. Labour Act 1992 and
Regulation 1993 contains the provision relating to the terms and condition of employment,
service and facilities to be provided to the employees and workers in an enterprise.

Difference between agreement and contract

An agreement which is enforceable by law is a contract. There are some similarities and
dissimilarities between these two terms. On the basis of definitions of contract law, an effort has
been made to discuss some dissimilarity between them.
Basis Agreement Contract
A. On the basis of A. all contracts are agreements. A. all agreements are not
definition contracts
B. On the basis of Scope B. wider scope B. limited, certain or more
specific
C. Legal obligation C. It may or may not legal C. It must create legal
obligations. obligations
D. on the basis of remedy D. may or may not have legal D. victim or aggrieved
remedy for victim party (hurt) party is entitled (free)
to the right of legal remedy
E. On the basis of E. all agreements are not E. all contracts are
enforceability enforceable by law enforceable by law
F. Essential elements F. the basic elements of contract F. essential elements must
are not necessary be present
G. On the basis of G. not determined by law G. Determined by law.
capacity

Essentials Elements of a Valid Contract:

It is already discussed that contract is an agreement. And the agreement should have certain
elements to formation of new contract. Parties can be creating enforceable right and liability
where there should be needs of such elements. In absence of the elements it does not recognize
agreement as contract. Thus, without essential elements, contracts will not be in forced and
parties are unable to perform the contract according to eye of law. Generally these elements are:
ii. Two or More parties
iii. Offer and Acceptance Anu Electronic Enterprises Offer
iv. Free Consent. to buy Samsung Galaxy Mobile
v. Intention to create legal relation.
vi. Capacity of parties (competent parties)
from his Enterprises in the market.
The Price of each of one is Rs
21000.00. If “A” buy one from
that Enterprises, Acceptance is
 vii. Lawful consideration.
viii. Possibility of performance.
ix. Certainty and clear.
x. Subject matter of legality.
xi. Formalities.
xii. Not expressly declared void.
xiii. Written and registration.
xiv. others
(I) Two or More parties (Offer and Acceptance)
Existence of two parties is the first essential elements of a valid contract. For making an
agreement there must be at least two parties. Which one party offers something and another party
accepts it, in the same sense. One, who offers something, is called ‘offeror’ and the person, who
accepts such offer, is called ‘offeree’. Offer alone does not form of a contract. The agreement
involves a valid offer by one party and a valid acceptance of the offer, by the other party. An
offer and an acceptance must be free or meeting of the mind between of the both parties. From
contractual point of view, offer without acceptance is incomplete and acceptance without offer is
meaningless. Therefore, offer and acceptance is an essential element of valid contract.
(II) Intention to Create Legal Relation:
In day to day life persons do agree on various matters e.g. one agrees to attend a dinner party
invited by his friend, to fulfill demands of family members or so on. But such type of agreements
do not form valid contract It is a settle principle of law of contract that to create a contract there
must be a common intention of the parties to inter into a legal relation. Where there is no such
intention there is no contract. In family and social matters there happens no such intention and
business matter it generally happens.
(III) Free Consent
Free consent is another essential element of a valid contract. Consent means that the parties
must have agreed upon the same thing in the same sense. Where there is absence of free consent
or if the agreement is made by Coercion, undue, influence, fraud, Misrepresentation, and
Mistake, the contract is said to be lack of free consent. It does not apply the meeting of the mind
between the parties. This type of contract is also said to the voidable contract.
(IV) Lawful Consideration:
Business transaction takes to get and lose something. And parties of a contract expect to lose
and gain something. The element of loses and gain is said consideration. Lawful consideration
means law doesn’t prohibit it and enforce remedy for such consideration. The contract for
unlawful consideration is not allowed in the valid contract. The contract for unlawful
consideration is void.
(V) Capacity of parties (Competent Parties):
 The capacity of parties means that the law recognizes certain person incapable to enter into
the contract. If parties of the agreement are in capable, law doesn’t recognize it. Section 506 of
Muluki Civil Code 2074, states a person:
i. Who is Minor, and
ii. Who is of unsound mind or disqualified persons are incapable to enter into the contract. If
other specific law provides additional disqualification for certain specific contract
whether law gives permission or not it depend upon prevailing law of a country.
(VI) Possibility of performance:
Contracts are made by parties with expectation to perform. Law also provides remedy incase
of failure to perform. Section 527(e) states contract impossible to perform is void. E.g. A agrees
with B to discover treasure by magic. The agreement is void.
(VII) Certainty and Clear:
The terms of contract must be clear to know what it means. If it is not explicitly clear it must
be able to be made clear by interpretation.
(VIII) Subject Matter should be Legal:
Another element of contract is that the subject- matter of contract must be legal. Certain acts
are forbidden by law. The contracts against public interest or public policy or for immoral
purpose are void.
(IX) Not Expressly Declared Void:
A valid contract must not be expressly declared void. Certain contracts are expressly declared
to be void by law.
(X) Formalities (Written and Registration):
Contract may be oral or written but law requires certain type of contract must be coupled
with formalities to be enforceable. For example, the contract to sell or mortgage land must be in
writing and registered in registration of office.
Unwritten or unregistered contracts in these subjects are unenforceable similarly section
575 of Nepalese contact Act states the contract of bailment of goods that worth more than Rs.
25000 must be in written. If is is not written it is not enforceable in the court. Similarly, section
88 of the same Act provides that if the other existing laws provide for specified formalities are
required for certain kinds of contract, the contract, and the contracts entered without fulfilling
these procedures shall not be valid.
Assignment for BHM Fifth semester

1. Assignment of Topic on Law

2. Assignment of Topic on Legal Environment
3. Assignment of Topic on Court Hierarchy System in Nepal
4. Assignment of Topic on Essential element of valid contract
5. Assignment of Topic on formation of Hotel company
6. Assignment of Topic on Future scope of hotel and tourism in Nepal
7. Assignment of Topic on Law