UNIT 1

Introduction to Business
Introduction to Business Laws
• Ignorantia juris not excusat-Ignorance of law is not an excuse
• Contract act 1872
• Sale of goods act 1930
• The company’s act 1956
• Consumer protection act 1986
• The Information Technology Act 2000
How a bill becomes an act
Sources of Law
• The main sources of law in India are the Constitution, statutes
(legislation), customary law and case law. Statutes are enacted by
Parliament, State legislatures and Union Territory legislatures.
Sources of Law
• The main sources of law in India are the Constitution, statutes (legislation), customary law
and case law.
• Statutes are enacted by Parliament, State legislatures and Union Territory legislatures.
Besides, there is a vast body of laws known as subordinate legislation in the form of rules,
regulations as well as bye-laws made by Central/State governments and local authorities
like municipal corporations, municipalities, gram panchayats and other local bodies. This
subordinate legislation is made under the authority conferred or delegated either by
Parliament or State or Union Territory legislatures concerned.
• Judicial decisions of superior courts like Supreme Court and High Courts are important
sources of law. Decisions of Supreme Court are binding on all courts within the territory of
India.
• Local customs and conventions which are not against statute, morality, etc., are also
recognised and taken into account by courts while administering justice in certain spheres.
LAW AND ITS SOURCES
• Introduction
• Man is by nature a social being. He comes into contact with other
individuals in different capacities. These contacts or associations are
the inevitable consequence of modern civilization. In all these
associations, he is expected to observe a Code of Conduct or a set of
rules. The object of these set of rules is to make human associations
possible; and ensure that members of the society may live ; and
work together in an orderly and peaceful manner.
What is Law?
• The word `law` is a general term and over a period of time attained different
connotations to signify varied purposes. Persons carrying different vocations prefer
to identify `law` as to the purpose the prescribed set of rules are intended to achieve:
-
• (i) A Citizen may think of law as a set of rules, which he must obey.
• (ii) A Lawyer who `practices law` may think of law as a vocation.
• (iii) A Legislator may look at law something created by him.
• (iv) A Judge thinks of law as a guide and principles to be applied to making decisions.
• (v) A Social Scientist may think of law as a means of social control.
• (vi) A Legal Philosopher may consider law as `dictate of reason` or `right reasoning. It
is often preceded by an adjective to give it a more precise meaning e.g. Commercial/
Mercantile law,
Types of Law
• Civil law, Criminal law, Industrial law, International law. In the legal
sense with which we are concerned in our study of Commercial Laws,
the definition of `law` includes all the rules and principles which
regulate our relations with other individuals and the State and which
are enforced by the State.
• DEFINITON OF `LAW` - ARTICLE 13 (3) OF CONSITTUTION OF INDIA
Clause 3 of Article 13 of the Constitution of India defines `law` as
under (a) `law` includes any Ordinance, order, bye-law, rule,
regulation, notification, custom or usage having the force of law; An
amendment to an existing law is also law. `Law` in the context of the
provisions of the Constitution of India may also be defined as – “It is
an Act passed by the legislature and assented to by the President of
India or Governor of a State.” [Arts 111 and 200 of the Constitution of
India].
LAW` AND `STATUTE`

• The Constitution of India does not use the term 'Statute' but it uses
the term 'law'. The statute has been defined as `the written will of the
legislature.’
• Thus, Statute or law generally means the laws and regulations of
every sort without considering the source from which they emanate.
It is because of this the terms `law` and `statute` are sometimes used
interchangeably.
NEED FOR KNOWLEDGE OF `LAW`

Ignorntia juris non excusat` is a familiar maxim. This means `ignorance

of law is no excuse`. Although it is not possible for a layman to be
aware of every branch lf law, yet he must acquaint himself with the
general principals of the law of the country.
FUNCTIONS AND PURPOSE OF `LAW `
• 1 Justice
• 2 Continuity and uniformity
• 3 Impartiality
LAW IS NOT STATIC
 LAW & SOURCES
Although origins of law in any society may be traced in antiquity, yet
law is not static. As circumstances and conditions in a society change,
laws are changed to fit the requirements of the society.
CLASSIFICATION OF LAW

• 1. PUBLIC LAW – It is that law which determines and regulates the

organization and functioning of the State. It also determines the relation
of the State with its subjects. The following laws form part of the public
law: - a) Constitutional law – It is the basic and fundamental law of the
land, which determines the nature of the State and the structure of the
Government. It may be written (as in India, USA and most other
countries) or unwritten (as in England).
• b) Administrative law – It is the law, which deals with the structure,
functions and powers of the organs of the Government.
• c) Criminal law – It deals with various offences, and has for its object their
prevention by providing for and prescribing certain punishments for them
• PRIVATE LAW - It is the law, which regulates relations of the citizens
with one another, which are of public importance. In this sense, the
State through its judicial organs adjudicates the matters in dispute
between them. Private law comprises the following fields.
• a) Personal laws - It is a special law applicable to a class of people.
• b) Law of property – It is law relating to transfer of (immovable)
property.
• c) Law of obligations – It is law relating to Contract; Quasi contract
and Torts
• SOURCES OF LAW  `Source` means `origin` which something is
ultimately derived and often refers to the causes operating before the
thing itself comes into being. Jurists (legal expert) differ widely s to
the origin of law. One of the legal commentator traces its origin in
general awareness of the people at any point of time.
• CLASSIFICATION OF SOURCES
• 1. Formal sources – These are the sources from which the law derives its force and
validity. Of course, the only authority from which laws c spring and derive force and
validity is State. an
• 2. Material sources – `Material sources of law` refer to the various processes, which
result in the evolution of the materials, which are the constituents of law. Material
sources may be divided into: a) Legal sources - These are the sources, which are
recognized by the law itself as authoritative e.g. i. Statute law - having its force in
legislations; ii. Case law - having its source in precedents; and iii. Customary law -
having its source in customs. b) Historical sources - The sources, which have no
binding, force and which are nor recognized by law are referred to as historical
sources e.g. (i) Juristic writings; (ii) Literary works; and (iii) Foreign decisions.
SOURCES OF INDIAN LAW
• The main sources of the Indian law may be summarized as follows: -
• (A) PRINCIPAL SOURCES OF INDIAN LAW
• I. CUSTOMS OR CUSTOMARY LAW
• Custom is the most ancient of all the sources of law and has held the most important
place in the past though it is importance is now diminishing with the growth of legislation
and precedent.
• Custom is a habitual course of conduct observed uniformly and voluntarily by the people
concerned. No custom shall have the force of law if it in manner violates the
Fundamental Rights. Requisites of a valid custom
• In order to be valid and have a binding force as a law, a custom must have the following
requisites: - (i) Antiquity (ii) Reasonableness (iii) Continuous observance (iv) Conformity
with Statute law and public policy (v) Consistency (vi) Obligatory force. (vii) Peaceable
enjoyment
• II. JUDICIAL PRECEDENTS Doctrine of `stare decisis`
• This doctrine means adherence to the earlier decision and not unsettling things,
which are already decided.
• This doctrine is based on expediency and public policy. Why precedents are
recognized.
• The practice of following precedents is necessary to secure the certainty of and
predictability of decisions. This creates confidence in the minds of the litigants and
the administration of justice becomes fair.
• Hierarchy of Courts
The general rule of doctrine of precedent as regards hierarchy of Courts is that each
Court is absolutely bound by the decisions of the Courts superior to it. As regards
higher Courts, they are, to a certain extent bound by their own decisions.
• Supreme Court – This is the highest Court in India. Its decisions are binding on
all Courts within the territory of India (Article 141 of the Constitution). The
decisions of the Full Bench are binding on the smaller Benches of the Court.
• CASE EXAMPLE In Golaknath Vs. State AIR (1967) SC 1643, the Supreme Court
by a 6-Judge Bench gave a decision that Fundamental Rights are not
amendable. Six years later, the Supreme Court in Kesavananda Bharti Vs. State
of Kerala (1973) SCC 225 by a 13-Judge Bench overruled the Golaknath Case.
• High Courts – the decisions of a High Court are binding on all the Courts
below it, within its jurisdiction (District Courts/Court of Sessions).
• Subordinate or District Courts – These Courts are in districts. They are bound
to follow the decisions of the higher Courts.
• SOME IMPORTANT JUDICIAL DOCTRINES ratio decidendi (reasoning behind the decision)
• A decision of a Court can be seen from two aspects viz 1. What does the case decide
between the parties? and 2. What principle or rule of law does it lay down?
• In delivering judgment the judge gives reasons for his decisions, and it is these reasons
which may be important as precedents in future cases. No two cases, which come
before the courts, are exactly alike, and to discover whether there is a binding
precedent it is necessary to establish the ratio decidendi, that is, the exact reason or
reasons for the decision. obiter dictum (an incidental or collateral opinion by a judge)
• It means an incidental or collateral opinion which is uttered by a judge while delivering
a judgment and which is not binding. These are peripheral statements that may be
found in the main decision but which do not deal with the central issue.
• Obiter dicta are not binding, but they may be treated as of quot; persuasive authority
quot;
• CASE EXAMPLE – obiter dicta In D Cowasji & Co. Vs. State of Mysore (AIR 1975 813), the
petitioner claimed refund of a huge amount of Excise duty paid by it several years after
the duty was paid. The Court rejected the claim for refund pointing out that it would be
unjust to require its refund after such lapse of time because the Government would
have, spent the amount for governmental purposes. By this decision the dispute was
settled. But the Court went a step further and added a sentence in judgement as obiter
dicta that “nor is there any provision under which the court could deny refund of tax
even if the person who paid it has collected it from his customers and has no subsisting
liability or intention to refund it to them or for any reason it is impracticable to do so.”
This observation of the Court contained an implication. Excise duty is collected by the
manufacturer from a large number of customers and paid it to the Government. The
manufacturer does not pay a pie from his pocket. If the duty paid by him is ordered to
be refunded the beneficiary of refund would be the manufacturer because he may not
be in a position to pay back the Excise duty collected by it to the customers.
• It would be impossible for the manufacturer to trace out the customers who were
in thousands or perhaps lakhs. Though the manufacturer had claimed refund of
that amount to himself no opportunity had been given by the Court to the
Government to argue on the tenability of the claim. What obviously weighed with
the judge in ordering the refund was the “the dharma of the situation”. He
assumed that since the excess duty was paid by the manufacturer belonged to
him. While in fact it did not belong to him. It only unjustly enriches him. This
observation of the Supreme Court i.e. obiter dicta was noticed by many High
Courts. Taking the view that since this expression of opinion was of the highest
court of the land and should receive respect, they treated this as ratio and started
giving refund orders to a number of manufacturers. In course of time the refund
amounted to hundreds of crores of rupees. Later on, the legislature had to rectify
the situation by bringing amendments to the stature.
III. STATUTE LAW OR LEGISLATION

1 LAW & SOURCES

It is a law that is created by legislation – Parliament or State Assembly. Legislation
is that source of law, which consists in the declaration, or promulgation
(transmission) of legal rules by an authority duly empowered by the Constitution in
that behalf.
It is some times called jus scriptum (written law). Some prefer to call it as `enacted
law`.
In modern times, `legislation` is the most important source of law in all the
countries. Types of Legislation 1) Supreme Legislation
A legislation is said to be supreme when it proceed from the supreme or sovereign
power in the State – Parliament or the State Legislature- and is incapable of being
repealed, annulled or controlled by any other legislative authority.