Unit-I Introduction to Business Law
Meaning of law:
In a simple words law is an official rule of a country or state that defines what people can and
cannot do. In essence, law refers to “The system of rules recognized by a specific country or
community to regulate the actions of its members.” Overall, laws create a framework for society,
directing behavior, resolving conflicts, and ensuring justice. They offer a structure that maintains
order and safeguards the rights and well-being of individuals and communities.
Business law:
Business law, also known as commercial law, is the set of legal rules and regulations that govern
the activities of businesses and commercial transactions. It covers various aspects, including
contracts, sales, employment law, intellectual property, and corporate governance. Business law
ensures that companies operate fairly, resolve disputes, protect their assets, and comply with
regulations. It provides a legal framework that helps businesses interact with customers, other
businesses, and the government effectively and ethically.
Importance of business law:
1. Regulation and Compliance
Laws ensure that businesses and individuals follow certain rules to operate legally and ethically.
They help maintain order by requiring everyone to adhere to established standards, such as
paying taxes and following safety regulations.
2. Protection of Rights
Laws protect the rights and freedoms of individuals and organizations. They ensure that
everyone is treated fairly and justly, safeguarding rights such as freedom of speech, property
ownership, and privacy.
3. Dispute Resolution
When conflicts arise between individuals, businesses, or other entities, laws provide a structured
way to resolve them. Courts and legal procedures help settle disputes fairly and ensure that
justice is served.
4. Formation and Structure
Laws outline the procedures for forming and operating various types of organizations, such as
corporations, partnerships, and nonprofits. They define how businesses should be structured,
governed, and dissolved.
5. Consumer Protection
Laws protect consumers from unfair practices, such as false advertising, unsafe products, and
fraudulent activities. They ensure that consumers have access to safe, quality goods and services
and that they have legal recourse if they are wronged.
6. Employment Law
Employment laws regulate the relationship between employers and employees. They establish
standards for working conditions, wages, benefits, and rights, ensuring fair treatment and safety
for workers.
7. Mergers and Acquisitions
Laws govern the processes involved in the merging of two companies or the acquisition of one
company by another. They ensure that these transactions are conducted fairly, transparently, and
in compliance with antitrust laws to prevent monopolies.
8. Bankruptcy and Insolvency
Laws provide a framework for dealing with businesses or individuals that cannot repay their
debts. They outline procedures for restructuring or liquidating assets to pay off creditors, offering
a fresh start or an orderly resolution of financial difficulties.
9. International Trade
Laws regulate trade between countries, ensuring that transactions are conducted fairly and
legally. They cover aspects like tariffs, trade agreements, and import/export regulations,
promoting smooth and lawful international commerce.
Classification of Law
1. Natural Law:
Natural law is a philosophy that suggests there are inherent laws and moral principles found in
nature and human reasoning, which are universal and apply to all people regardless of culture or
society. These laws are not created by humans but discovered through reason and reflection. For
example, the belief that it is inherently wrong to kill an innocent person is a principle of natural
law. This principle exists regardless of whether a specific society has written laws against
murder; it's considered universally true based on human nature and reason. Natural law forms the
basis for many human rights and ethical frameworks around the world.
2. Positive Law (Political Law):
Positive or political law refers to the rules and regulations created by governments or other
authorities to govern society. These laws are written and enacted by legislative bodies, like
parliaments or congresses, and are enforced by courts and law enforcement agencies. Unlike
natural law, which is based on inherent moral principles, positive law is established by human
decisions and can vary from one society to another. For example, traffic laws that regulate speed
limits and driving behavior are positive laws created to ensure safety on the roads. These laws
are specific to each country and must be followed by its citizens.
* Positive/Political law divided into two parts (A) National Law (B) International law
(A) National Law:
National law, also known as domestic law, refers to the set of rules and regulations that govern
activities within a specific country's borders. These laws are created and enforced by the
government or legislative bodies of that nation and apply to all individuals, organizations, and
entities within its jurisdiction. National laws cover a wide range of issues, including criminal
offenses, civil disputes, contracts, property rights, and administrative regulations. They ensure
order, protect rights, and define responsibilities for citizens and residents. For example, national
laws in a country may include tax regulations, labor laws, environmental protections, and rules
governing commerce and trade. Compliance with national law is mandatory for all those living
or operating within the country's boundaries and violations can lead to legal consequences.
* It is further divided into 2 parts (i) Constitutional law (ii) ordinary or
common law.
(i) Constitutional Law:
Constitutional law refers to the fundamental principles and rules that establish the framework
of a government and define the relationship between the government and its citizens. It is
based on a country's constitution, which is typically its highest legal document.
Constitutional law outlines the powers and duties of government institutions such as the
executive, legislative, and judiciary branches. It also guarantees fundamental rights and
freedoms to individuals, like freedom of speech, religion, and the right to a fair trial. Changes
to constitutional law often require a special procedure, such as amendments or judicial
interpretations, to ensure stability and adherence to the principles laid out in the constitution.
Constitutional law serves as the supreme law of the land, guiding the governance and
ensuring the protection of citizens' rights within a nation.
(ii) Ordinary or Common Law:
Ordinary or common law refers to the body of laws developed through judicial decisions and
precedents established over time, rather than through statutes or legislative enactments. It is
based on the principle of stare decisis, which means "to stand by things decided." In common
law systems, judges interpret laws and make decisions based on previous rulings in similar
cases, creating a consistent and predictable legal framework. This type of law is flexible and
evolves gradually as new cases are decided, reflecting societal changes and values. Common
law covers various areas of law, including contracts, torts, property, and civil rights. Unlike
statutory laws, which are explicitly written down, common law is largely unwritten and relies
on legal principles and reasoning applied by judges. It is a significant aspect of legal systems
in countries like the United States, England, and India, where judicial precedent plays a
crucial role in shaping legal interpretations and outcomes.
* It also divided into 2 parts (I) Public law (II) Private law
(I) Public Law:
Public law refers to the set of legal rules and principles that govern the relationship between
individuals and the state, as well as the structure and operation of government itself. It includes
constitutional law, administrative law, and criminal law. Constitutional law defines the
framework of government, including the powers and rights of citizens. Administrative law
regulates government agencies and their actions, ensuring they operate within legal bounds and
adhere to procedural fairness. Criminal law deals with offenses against the state and provides
punishments for unlawful acts. Together, these branches of public law establish the foundation
for how governments operate, how laws are enforced, and how citizens interact with their
governing institutions. Public law ensures accountability, protects individual rights, and
maintains order within society.
(II) Private Law:
Private law, also known as civil law, governs the relationships between individuals and private entities,
such as businesses or organizations. It includes rules and regulations that outline rights and duties among
individuals in areas like contracts, property ownership, torts (civil wrongs), and family law matters such
as divorce and child custody. Unlike public law, which deals with the state and its institutions, private law
focuses on disputes between private parties. For example, if someone breaches a contract by not fulfilling
their obligations, private law provides mechanisms for seeking compensation or other remedies through
civil litigation. Private law aims to resolve conflicts and regulate interactions between private individuals,
ensuring fairness, predictability, and protection of rights within private relationships and transactions.
(B) International Law:
International law refers to the rules and principles that govern relations and interactions between
countries or international organizations. It encompasses agreements, treaties, and conventions
that countries voluntarily enter into to regulate issues such as diplomacy, trade, human rights,
and environmental protection on a global scale. International law aims to promote peaceful
cooperation, resolve disputes between nations, and establish standards of conduct that countries
should follow. It includes both customary practices that have evolved over time and formal
agreements negotiated and ratified by countries. International law is enforced through diplomatic
negotiations, international organizations like the United Nations, and occasionally through
sanctions or intervention by the international community to uphold global norms and principles.
Indian Judiciary System
Indian administration is guided by three pillars – Legislature, Executives, and Judiciary. In India,
we have an independent judiciary.
Independent Judiciary-
The other organs (legislature, executive) of the government cannot interfere with the functioning
of the judiciary
Legislature- a group of people who have the power to make and change laws
Judiciary- the part of a country's government that is responsible for its legal system and that
consists of all the judges in its courts of law.
The judiciary is the branch of government responsible for interpreting and applying the law. It
ensures justice, resolves disputes, and upholds the rule of law. Judges preside over courts and
tribunals to make legal decisions that protect individual rights and maintain the integrity of the
legal system.
Indian Judiciary System:
The Indian judiciary system oversees the legal framework of the country, ensuring justice and
upholding the rule of law. It consists of different levels of courts: the Supreme Court at the apex,
High Courts in each state, and subordinate courts at the district level. The Supreme Court
interprets the Constitution and resolves disputes between states or involving constitutional rights.
High Courts handle appeals from lower courts and have jurisdiction over significant civil and
criminal cases within their state. Subordinate courts are responsible for cases at the district level.
Judges are appointed based on recommendations from a collegiums system to maintain their
independence from the executive and legislative branches. The judiciary plays a critical role in
protecting fundamental rights, reviewing laws, and ensuring fair trials across India.
Structure of Indian Judiciary System:
1. Supreme Court
The Supreme Court of India is the highest judicial authority in the country. It serves as the
final court of appeal and has the power to interpret and uphold the Constitution. The Supreme
Court hears cases of national importance, settles disputes between states, and ensures that
laws passed by Parliament adhere to constitutional principles. Its decisions are binding on all
lower courts and government authorities, making it a crucial pillar of India's legal system for
safeguarding justice and protecting fundamental rights.
2. High Court
The High Court is the highest court in each state of India. It has the authority to hear appeals
from lower courts and has original jurisdiction over significant civil and criminal cases
within its state. High Courts ensure that laws are correctly applied and provide guidance on
legal matters. They play a critical role in interpreting state laws, protecting individual rights,
and overseeing the administration of justice within their respective regions.
3. District Court:
District Courts are the primary trial courts in India, located in each district. They handle both
civil cases (like disputes over property or contracts) and criminal cases (ranging from minor
offenses to serious crimes). District Courts ensure justice is served at the local level, applying
laws and resolving disputes based on evidence presented in court. They are essential for
maintaining law and order, protecting rights, and delivering fair judgments within their
geographic areas.
4. Subordinate court:
Subordinate courts in India are the lower-level courts that operate under the authority of higher courts
such as District Courts, High Courts, and the Supreme Court. They handle a range of legal matters,
including civil disputes and criminal cases, based on their jurisdiction and the seriousness of the
offenses. Subordinate courts play a crucial role in delivering justice at the grassroots level, ensuring
that legal proceedings are fair, transparent, and accessible to the general public.
