Module - 1

INTRODUCTION

Introduction:
Law is a main contributory factor for man’s welfare and well-being. Every
individual and even more a business man needs even more through knowledge of
the law than the person not so engaged.
As he carried business, he is confronted with problems arising out of contract,
sale of goods, bailment, agency, negotiable instruments, cyber-crimes,
environmental issues, international dealing and so on. At present situation
business are facing a lot of problem as every activity of the business is vigilantly
watched by the public and law.
This made compulsory to study ‘business law’ or to the knowledge of various
legal aspects as a part of commerce, management and business study curriculum
with different titles.
Meaning of law:
Law is a rule of action evolved to regulate social life and to avoid conflict of
interests. Law is enacted or customary in a community and recognised as
commanding or avoiding certain action.
Law is:
• Commanding or influencing of certain actions.
• Collectively as a social system or subject of study.
• Binding force on individuals or society.
• Rule of action and procedure.
• Regularity in natural occurrences.
• Judicial remedy.
Objectives of law:
1. To incorporate uniformity and social security among all category of people
of the society.
2. To establish socio-economic justice and remove the existing imbalances in
the socio-economic structure.
3. To impose social justice on the basis of social change by considering all
round welfare and improvement of the community, through welfare and
 well-being of the citizens individually and collectively from material,
moral and spiritual stand points.
4. To create awareness of law among the citizens, its contents, purpose,
requirements, regulations and manner involves which its serves them. It is
able to make them follow the law and respect it.
5. To make a strong government or state to implement the law positively for
the benefit of human being and for the welfare and well being of the
society.

Need For Law:

1. To Maintain Order: Laws prevent chaos by regulating behavior and setting
clear rules for society. They provide a framework to resolve conflicts and disputes
peacefully.
2. To Ensure Justice: Laws uphold fairness by protecting rights and ensuring
accountability for wrongdoing. They ensure that all individuals are treated
equally before the law.
3. To Protect Rights and Liberties: Laws safeguard fundamental human rights,
such as freedom of speech, religion, and property ownership. They prevent abuse
of power and protect individuals from exploitation or harm.
4. To Promote Social Stability: Laws create predictability and consistency,
allowing individuals and businesses to function effectively. They provide
mechanisms to address grievances and maintain harmony.
5. To Resolve Disputes: Laws establish courts, arbitration, and other systems for
resolving disagreements between individuals, groups, or institutions.
6. To Regulate Economic Activity: Laws create rules for trade, commerce,
taxation, and employment to ensure fair competition and consumer protection.
They encourage economic development and prevent corruption.

Meaning of business law:

Business law is a section of code that is involved in protecting liberties and rights,
maintaining orders, resolving disputes, and establishing standards for the
business concerns and their dealings with government agencies and individuals.
Or
Business law, also known as commercial law, refers to the body of law that
governs business and commercial activities. It encompasses the rules, regulations,
and legal principles that apply to the formation, operation, and regulation of
businesses.
Definition of business law:
Business law defines as a branch of law that “regulates relations that originates
from conducting economic activities or that are in a close subject or functional
relation with such activities”.

1. English mercantile law: English Mercantile Law refers to the body of

laws that govern trade, commerce, and business transactions in England.
The four sources of this law are:
• The Law of Merchant (Lex Mercatoria): This refers to the customs and
practices developed by merchants over time to regulate trade. It originated
from medieval times when traders from different regions needed a common
set of rules. Even today, some principles of Lex Mercatoria influence
modern commercial law.
• Common Law: This is law developed through judicial decisions and
precedents rather than written statutes. Judges interpret past cases to
determine the outcomes of new cases, ensuring consistency in legal
decisions. Many contract and tort principles in commercial law stem from
English common law.
• Equity: Equity refers to a body of law that developed to supplement
common law where it was too rigid or unfair. It ensures fairness and justice,
providing remedies like injunctions and specific performance in
 commercial disputes. Courts of Equity were historically separate from
Common Law courts, but they have now merged in most jurisdictions.
• Statute Law: These are laws enacted by Parliament to regulate commerce
and trade. Statutes override common law and equity where applicable.
Examples include the Sale of Goods Act, the Companies Act, and the
Partnership Act.
2. Statute of Indian Legislation
• Indian Contract Act, 1872: Governs contracts in India, defining their
formation, performance, and enforceability.
• Sale of Goods Act, 1930: Regulates the sale and purchase of goods,
including rights and duties of buyers and sellers.
• The Indian Partnership Act, 1932: Governs partnerships, outlining the
rights, duties, and liabilities of partners.
• The Companies Act, 2013: Regulates company incorporation,
management, and corporate governance in India.
3. Judicial decisions:
It referred to something done or said that may serve as an example or rule to
authorize or justify an act. Judicial decisions are usually referred to as precedents
and are binding on all courts having jurisdiction power to that of court which give
the judgement which is popularly known as case laws.
• Case laws: originally case laws are considered as very important source of
the English mercantile law. It is built upon previous judicial decisions.
They are also generally followed even by those of equal jurisdiction in
deciding similar points of law.
4. Customs and usages: Customs and usages refer to long-established practices
that have gained legal recognition over time. They play a crucial role in shaping
commercial laws, especially in areas where formal statutes or written laws are
absent.
a) Based on principles of justice and public utility: Business customs
evolve to ensure fairness and benefit the public. If a custom is unjust or
unreasonable, courts may reject it.
b) Rational expectation: These customs arise because traders and
businesspeople expect them to be followed. They provide
predictability and consistency in commercial dealings.
 c) Observance over a long period: A practice must be followed
continuously for an extended time to be legally recognized. It
should be widely accepted in a particular trade or industry.
d) Interest of society: Customs and usages must align with the broader
interests of society. If a business practice harms public welfare, it may
not be upheld in court.
Significance of Business Law:
1. Compensation issues: Business law is essential to handle various
compensation issues in an organization. It is the responsibility of the
attorney to ensure that his or her client does not violate compensation and
benefits laws at any cost.
2. Safeguard the rights of shareholders: An experienced business law
attorney can successfully handle such issues along with conflicts related to
minority shareholders, constitutional documents, and resolution by
arbitration, and more.
3. Business formation: Establishing business includes a lot of legal
processes, leasing and permits. A business law attorney is well-versed with
all the relevant regulations, and can help the concern establish its
operations successfully.

Functions of Business Law:

1. Establishing Legal Frameworks
Business law provides the legal structure for forming and operating businesses,
such as partnerships, corporations, and sole proprietorships. It outlines rules for
governance, ownership, and liability.
2. Regulating Contracts
Ensures the enforceability of contracts and agreements between parties. Protects
the rights and obligations of parties involved in commercial transactions.
3. Protecting Intellectual Property
Safeguards innovations, trademarks, copyrights, patents, and trade secrets.
Encourages innovation and fair competition.
4. Ensuring Fair Competition
Prevents monopolies, unfair trade practices, and anti-competitive behavior.
Regulates mergers, acquisitions, and market competition.
5. Facilitating Dispute Resolution
Provides mechanisms for resolving disputes through courts, arbitration, or
mediation. Ensures that disputes are resolved fairly and efficiently.
6. Promoting Ethical Business Practices
Sets standards for businesses to operate responsibly and ethically. Protects
stakeholders, including employees, customers, and investors.
7. Protecting Consumer Rights
Ensures businesses provide safe, quality goods and services. Prevents fraudulent,
deceptive, or unfair practices.
8. Regulating Employment Practices
Protects the rights of employees, including wages, workplace safety, and anti-
discrimination laws. Ensures businesses comply with labor laws.
9. Taxation and Financial Regulations
Establishes rules for the taxation of businesses and their transactions. Regulates
financial reporting, accounting, and audits.
10. Promoting International Trade
Facilitates cross-border business operations by regulating imports, exports, and
foreign investments. Ensures compliance with international trade laws.
11. Providing Stability and Predictability
Creates a predictable legal environment for businesses to plan and operate
effectively. Reduces uncertainties and risks in commercial activities.
12. Encouraging Social Responsibility
Imposes regulations on environmental protection, corporate governance, and
community impact. Encourages sustainable business practices.

Types of Business Law:

1. Employment law: Governs the relationship between employers and
employees, ensuring fairness and compliance in workplace practices.
2. Immigration law: It refers to the legal rules, regulations, and policies that
govern the movement of people across borders, including entry, stay, and
removal from a country.
3. Consumer goods sales law: Covers the sale of goods to consumers,
ensuring transactions are fair, transparent, and meet legal standards.
 4. Contract drafting/ negotiations/ litigation: Focuses on creating,
negotiating, and resolving disputes related to business agreements.
5. Antitrust law: Ensures fair competition by preventing monopolies, price-
fixing, and other anti-competitive practices.
6. Intellectual property law: Protects creations of the mind, such as
inventions, trademarks, and creative works, to encourage innovation and
creativity.

1. Employment law: Governs the relationship between employers and

employees, ensuring fairness and compliance in workplace practices.
• Employment contracts and agreements.
• Employee rights, including wages, benefits, and working conditions.
• Workplace safety regulations (e.g., OSHA compliance).
• Anti-discrimination and harassment laws (e.g., Title VII, ADA).
• Termination procedures and wrongful termination claims.
2. Immigration Law: It refers to the legal rules, regulations, and policies that
govern the movement of people across borders, including entry, stay, and removal
from a country. It covers areas such as:
• Visas (tourist, work, student, etc.)
• Permanent residency (Green Card in the U.S.)
• Citizenship and naturalization
• Asylum and refugee status
• Deportation and removal proceedings
• Each country has its own immigration laws, which are enforced by
government agencies to control who can enter, remain, and become a
citizen.
3. Consumer Goods Sales Law: Covers the sale of goods to consumers, ensuring
transactions are fair, transparent, and meet legal standards.
• Uniform Commercial Code (UCC) provisions for the sale of goods.
• Consumer warranties (express and implied warranties).
• Fraud prevention and disclosure requirements.
• Returns, refunds, and defect liability.
 • Consumer protection laws like the Magnuson-Moss Warranty Act.
4. Contract Drafting/Negotiations/Litigation: Focuses on creating,
negotiating, and resolving disputes related to business agreements.
Drafting clear and enforceable contracts.
• Negotiating terms to protect client interests.
• Resolving contract disputes through litigation, mediation, or
arbitration.
• Addressing breaches of contract and remedies.
• Types of contracts: employment agreements, leases, partnership
agreements, and vendor contracts.
5. Antitrust Law: Ensures fair competition by preventing monopolies, price-
fixing, and other anti-competitive practices.
• Sherman Act and Clayton Act enforcement.
• Mergers and acquisitions compliance with antitrust regulations.
• Investigation of price-fixing, market allocation, and monopolistic
behavior.
• Promoting healthy competition in industries.
6. Intellectual Property (IP) Law: Protects creations of the mind, such as
inventions, trademarks, and creative works, to encourage innovation and
creativity.
• Patents: Protection for inventions and innovations.
• Trademarks: Protection for brand names, logos, and slogans.
• Copyrights: Protection for original creative works like books,
music, and films.
• Trade Secrets: Safeguarding confidential business information.
• IP litigation and licensing agreements.