Definition of Mercantile Law or Business Law

Mercantile law may be defined as that branch of law which consists of laws relating to trade,
industry and commerce. It is one of the important branches of Civil Law. It is also called as
Commercial Law.
Scope of Mercantile Law
The scope of mercantile law is very wide and varied. It includes law relating to contracts,
partnership, sale of goods, negotiable instruments, companies, insolvency, insurance, carriage of
goods, etc.
Mercantile law is concerned with the study of rights and obligations arising out of mercantile
transactions between mercantile persons. Mercantile persons are persons who carry on
commercial transactions. They may be individuals, partnership concerns or joint stock
companies.
Knowledge of mercantile law is essential to merchants. It helps the merchants to avoid conflicts
with the persons with whom he comes into business contacts.
Main sources of Mercantile Law
Indian mercantile law is based largely upon the English mercantile law. Prior to the enactment of
the various Acts constituting mercantile law, the personal laws of the parties to suit regulated
mercantile transactions. The rights of Hindus were governed by the Hindu Law and that of
Muslims by the Mohammedan Law.
In case of persons other than Hindus and Muslims, the Courts applied the principles of English
Law. Further, where laws and usage of Hindus or Muslims were silent on any point, the
principles of English Law were applied.
The first efforts to pass an Act constituting mercantile law in India were made in 1872 by the
passing of the Indian Contract Act. From that time a large number of statutes have been enacted
concerning matters coming within the purview of mercantile law. For example, the Sale of
Goods Act, 1930, the Partnership Act, 1932, the Companies Act, 1955, etc.
The main sources of Indian Mercantile Law are:
1. English Mercantile Law.
2. Statute Law.
3. Judicial Decisions.
4. Customs and Usage.

1. English Mercantile Law

The English law is the most important source of Indian mercantile law. Many rules of English
law have been incorporated into Indian law through statutes and judicial decisions. The sources
of English law are:
1. Common Law
This law is known as judge made law. It is based upon customs and practices handed down from
generation to generation. It is the oldest unwritten law. The English Courts developed these over
centuries.
2. Equity
Equity is also unwritten law. It is based upon concepts of justice developed by the judges whose
decisions become precedents. It grew as a system of law supplementary to the common law and
covered the deficiencies of the common law. Its rules were applied in cases where the rules of
common law were considered harsh and oppressive.
The Judicature Acts of 1873 and 1875 abolished the distinction between Common Law and
Equity so that they are now applied to all cases.
3. Statute Law
Statute law is one, which is laid down in the Acts of Parliament. Hence, it acts as the most
superior and powerful source of law. It overrides any rule of common law or Equity.
4. Case Law
This is also an important source of the English mercantile law. It is built upon the decisions of
the Judges. It is based on the principle that what has been decided in earlier case is binding in
similar future case also unless that there is a change in the circumstances of the case.
5. A Lex Mercatoria or Law Merchant
It is also one of the important sources of English mercantile law. A lex mercatoria or law
merchant consists of legal principles based on customs and usage. They developed first as a
separate system of law and subsequently became part of the common law.