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Meaning and Definition of Commercial Laws
Commercial Law, also known as Business Law or Mercantile Law, is a legal field that encompasses the rules and regulations governing business activities, transactions, and trade. It forms a branch of General Law and deals with various aspects of commerce, trade, and industry.
Commercial Law addresses matters such as contracts, the sale of goods, partnerships, negotiable instruments, companies, cooperative societies, joint-stock companies, carriage of goods, insolvency, and arbitration.
The definition of Commercial Law can be summarized as follows:
Commercial Law prescribes a set of rules for the governance of certain transactions and relationships among the following entities:
- Businesspersons themselves.
- Businesspersons and their customers, dealers, suppliers, etc.
- Businesspersons and the state.
In the words of legal experts:According to S.R. Davar, "Business law means that branch of law which is applicable to or concerned with trade and commerce in connection with various mercantile or business transactions."
Commercial Law is essential for maintaining the order and fairness of business activities and ensuring that legal protections are in place for all parties involved in commercial transactions. It provides a framework for resolving disputes, enforcing contracts, and facilitating the smooth functioning of the business world.
Scope of Commercial Law
In the modern age, commercial law extends beyond the business community and applies to all members of society. The Contract Act is as applicable to non-business individuals as it is to businesses. People in their day-to-day lives enter into various contracts, and commercial law is integrated into numerous Acts.
These laws, while inspired by English Business Law, are adapted to the unique conditions in India. Business law has a wide scope, and the government establishes rules and regulations to ensure the smooth operation of business activities.
The following laws fall under mercantile laws:
- Contract Act
- Sale of Goods Act
- Partnership Act
- Companies Act
- Negotiable Instruments Act
- Banking Companies Act
- Insurance Companies Act
- Carriers and Carriage of Goods Act
- Commercial Securities
- Patents and Copyright Act
- Insolvency Act
- Arbitration Act
Sources of Commercial Law
English Mercantile Law: Lex mercatoria, meaning 'law merchant,' evolved from trading principles used by medieval European merchants. It served as the international law of commerce and was enforced through merchant courts. The Indian Mercantile Law is built upon the foundation of English Mercantile Law.
Statutory Law: Statutory law is written law enacted by legislatures or other authorized governing bodies, including the executive branch of the government. In India, all laws are statutory. When a bill passed by Parliament is signed by the President, it becomes an Act or Statute. The majority of Indian Mercantile Law is statutory.
Judicial Decisions: Past judicial decisions or precedents are essential sources of law. When statutory provisions are insufficient to resolve an issue, courts rely on past precedents. Higher court precedents have a binding force on lower courts, and precedents from courts of the same status hold persuasive power.
Customs and Usages: Business and trade often rely on customs, usages, and practices related to specific trades. These practices can have legal force on the parties involved, but they must be certain, reasonable, and well-known to be binding.
Importance of Commercial Law
Business laws define how businesses are established, how taxes apply, registration requirements, documentation, and various business terms, by-laws, and articles of organization, among other aspects.
Business law provides a framework for conducting business activities. It allows businesses to enforce their rights and ensure compliance with legal rules and statutes.
Businesspersons can seek redress through judicial and quasi-judicial authorities if their legal rights are violated by the government.
Certain laws facilitate business operations, such as company incorporation, providing advantages like a separate legal entity and limited liability.
Business law helps prevent the concentration of economic power and facilitates the resolution of individual claims.
It supports the survival and development of organizations and aids management in decision-making.
Business law offers remedies in cases of contract breaches.
It provides regulatory frameworks for conducting commerce, addressing manufacturing, sales, marketing, and product distribution. Each country has its own regulations and laws governing these aspects. Laws and regulations are intended to bring order and stability to society, impacting business plans and operations inevitably.