Business Laws

MODULE 1
What is law?
Law is the command of Sovereign Austin
It denotes the principles and rules that
govern and regulate social conduct and
the observance of which can be enforced
through courts.
It is a set of rules and regulations that has
the authority of the sovereign and can
enforced in a court of law.

Law is a system of rules, usually enforced through a set of
institutions. It shapes politics, economics and society in numerous
ways and serves as a primary social mediator of relations between
people.
Contract law regulates everything from buying a bus ticket to
trading on derivatives markets.
Property law defines rights and obligations related to the transfer
and title of personal (often referred to as chattel) and real property.
Trust law applies to assets held for investment and financial
security, while tort law allows claims for compensation if a person's
rights or property are harmed. If the harm is criminalized in a
statute, criminal law offers means by which the state can prosecute
the perpetrator.
Constitutional law provides a framework for the creation of law, the
protection of human rights and the election of political
representatives. Administrative law is used to review the decisions
of government agencies, while international law governs affairs
between sovereign nation states in activities ranging from trade to
environmental regulation or military action.
Writing in 350 BC, the Greek philosopher Aristotle declared, "The
rule of law is better than the rule of any individual."

Legal systems elaborate rights and responsibilities in a variety of
ways. A general distinction can be made between civil law
jurisdictions, which codify their laws, and common law systems,
where judge made law is not consolidated. In some countries,
religion informs the law. Law provides a rich source of scholarly
inquiry, into legal history, philosophy, economic analysis or
sociology. Law also raises important and complex issues concerning
equality, fairness and justice.
In a typical democracy, the central institutions for interpreting and
creating law are the three main branches of government, namely an
impartial judiciary, a democratic legislature, and an accountable
executive. To implement and enforce the law and provide services
to the public, a government's bureaucracy, the military and police
are vital. While all these organs of the state are creatures created
and bound by law, an independent legal profession and a vibrant
civil society inform and support their progress.

Business law (commercial law, merchantile law)
It deals with the rights and obligations of
commercial persons and organizations emerging
from commercial transactions in respect of
commercial property.
Every business organization whether a
proprietary concern or a partnership firm or a
company has to work in a legal environment. It
is subject to the business laws in force.
Eg: Contract Act, Partnership Act, Sale of goods
Act, Companies Act, Negotiable Instruments Act,
Competition Act, FEMA, Patents, Designs, Trade
Marks, Copyright Laws, Tax Laws, etc

Commercial law (sometimes known as business law)
is the body of law that governs business and commercial
transactions. It is often considered to be a branch of civil
law and deals with issues of both private law and public
law.
Commercial law includes within its compass such titles
as agreements, contracts, principal and agent; carriage
by land and sea; merchant shipping; guarantee; marine,
fire, life, and accident insurance; bills of exchange and
partnership. It can also be understood to regulate
corporate contracts, hiring practices, and the
manufacture and sales of consumer goods. Many
countries have adopted civil codes that contain
comprehensive statements of their commercial law.

Relevancy of law to management
Todays managers are entrusted with varied
responsibilities. They need to know everything
relating to business activities. One of the
important responsibilities that might be
entrusted to managers is the compliance with
legal formalities pertaining to the activities of the
organization. Further they need to understand
the legal implications of the decisions taken by
them.
Eg: In the case of new product development ie
from inventing the new product to launching it
into the market, not less than 20 laws become
applicable

Legal dimensions of business
Business has to function in varied kinds of
environment, of which legal environment
is one of them. The laws in force influence
the working of business organizations to a
very great extent. Almost every activity of
business is governed by some legal
aspects.

Corporate functioning and law
The corporate world is subject to the corporate laws.
Companies have to function within the legal framework
applicable to them.
Since companies are legal entities by themselves,
there is greater responsibility cast upon companies to
comply with a lot of legal compliances. Moreover, the
interest of many stakeholders is involved in corporates
and there is a need to cater to all of them and this can
made possible only by compliance with various corporate
laws.
Eg : Companies Act, SEBI Regulations, FEMA,
Competition Act, Intellectual Property Laws, Environment
Protection Laws, etc. c

Sources of law
Custom: It is a habitual course of conduct observed uniformly and
voluntarily by the people concerned. It is based on popular practice.
Judicial precedents: It means guidance or authority of past
decisions for future cases. The doctrine of stare decisis says a court
decision becomes a precedent to be followed in similar cases.
Legislation: It consists of declaration of legal rules by an authority
duly empowered by the constitution in that behalf. Acts of
Parliament of or of State Legislatures constitute legislation.
Personal laws: Hindu law, Muslim law are the personal laws by
which the Hindus and Muslims are respectively governed.
Justice, equity and good conscience: In the absence of any of the
above, courts apply the principles of justice, equity and good
conscience.

The Constitution of India

It is the supreme law of the land
containing provisions for the governance
of the country. It declares India to be a
Sovereign, Socialistic, Secular, Democratic
and Republic country. All public authorities
viz Legislature, executive and Judiciary
derive their powers directly or indirectly
from the Constitution.

Constitution of India Features
1. It lays down the framework defining fundamental political
principles, establishing the structure, procedures, powers and
duties, of the government and spells out the fundamental rights,
directive principles and duties of citizens.
2. Passed by the Constituent Assembly on 26 November 1949, it
came into effect on 26 January 1950.
3. It declares the Union of India to be a sovereign, socialist, secular,
democratic republic, assuring its citizens of justice, equality, and
liberty and to promote among them all fraternity;
4. India celebrates the adoption of the constitution on 26 January
each year as Republic Day.
5. It is the longest written constitution of any sovereign country in
the world, containing 395 articles in 22 parts, 12 schedules and 94
amendments for a total of 117,369 words in the English language
version.
6. Being the supreme law of the country, every law enacted by the
government must conform to the constitution.

Fundamental Rights
The Constitution confers on its citizens the following
fundamental rights
Right to equality: The State shall not deny to any person
equality before law or the equal protection of laws. Two
persons similarly situate shall be treated alike.
No discrimination shall be made on the ground of
caste, religion, race, sex or place of birth.
Right to freedom: Citizens of India shall enjoy freedom
of speech and expression, freedom of religion, freedom
of residence, freedom of movement and freedom to
practice any profession, trade or occupation.
No person shall be deprived of his life and personal
liberty except according to the procedure established by
law.

Right against exploitation: Traffic in human beings, begar and
other forms of forced labour are prohibited. Also employment of
children in factory or mines or hazardous processes is prohibited.

Right to freedom of religion: Every citizen is free to follow the
religion of his choice & to form organizations to profess &
practice his religion.

Cultural and educational rights: Institutions can be set up by any
section of people for the promotion of culture and education.

Right to constitutional remedies: fundamental rights would have
no meaning if there was no efficient enforcement mechanism. In
case of violation of fundamental rights Supreme court or the High
courts can be approached by a writ petition to get relief.

Fundamental duties

It shall be the fundamental duty of every citizen

To abide by the Constitution and respect its ideals, the National Flag
and National Anthem.
To cherish and follow the noble ideals which inspired our national
struggle for freedom
To uphold and protect the sovereignty, unity and integrity of India
To defend the country and render national service when called upon
To value and preserve the rich heritage of our culture
To promote harmony and spirit of common brotherhood amongst all
the people transcending religious, linguistic and regional diversities
To protect and improve natural environment
To develop scientific temper and spirit of inquiry
To safeguard public property and to abjure violence
To strive towards excellence in all spheres of individual and
collective activity so that the nation constantly rises to higher levels
of achievement.

Organs of Indian Democratic

Legislature which makes laws
Executive which implements the laws
Judiciary which interprets the laws

Federal Structure

The constitution provides for distribution of powers between the
Union and the States.
It enumerates the powers of the Parliament and State Legislatures
in three lists, namely Union list, State list and Concurrent list.
Subjects like national defense, foreign policy, issuance of currency
are reserved to the Union list. Public order, local governments,
certain taxes are examples of subjects of the State List, on which
the Parliament has no power to enact laws in those regards, barring
exceptional conditions. Education, transportation, criminal law are a
few subjects of the Concurrent list, where both the State Legislature
as well as the Parliament have powers to enact laws. The residuary
powers are vested with the Union.
The upper house of the Parliament, the Rajya Sabha, which consists
of representatives of States, is also an example of the federal nature
of the government.

Parliamentary Democracy
The President of India is elected by the Parliament and State
Legislative Assemblies, and not directly by the people. The President
is the Head of the State, and all the business of the Executive and
Laws enacted by the Parliament are in his/her name. However,
these powers are only nominal, and the President must act only
according to the advise of the Prime Minister and the Council of
Ministers.
The Prime Minister and the Council of Ministers enjoy their offices
only as long as they enjoy a majority support in the Lok Sabha, the
lower house of the Parliament, which consists of members directly
elected by the people. The ministers are answerable to both the
houses of the Parliament. Also, the Ministers must themselves be
elected members of either house of the Parliament. Thus, the
Parliament exercises control over the Executive.
A similar structure is present in States, where the directly elected
Legislative Assembly enjoys control over the Chief Minister and the
State Council of Ministers.

Independent Judiciary
The Judiciary of India is free of control from either the
executive or the Parliament. The judiciary acts as an
interpreter of the constitution, and an intermediary in
case of disputes between two States, or between a State
and the Union. An act passed by the Parliament or a
Legislative Assembly is subject to judicial review, and
can be declared unconstitutional by the judiciary if it
feels that the act violates some provision of the
Constitution.
Constitutional remedy against any action of the
government is available in a High Court or the Supreme
Court, if the action violates any of the fundamental
rights of an individual as enumerated in the Constitution.


Role of Government in business

As Entrepreneur : Most of public sector undertakings are owned and
controlled by the Govt.
As promoter : By providing fiscal and monetary incentives to certain
sectors
: By providing assistance by way of subsidies
: By developing infrastructure for industrial and
commercial activities
As planner of Indian Economy : By framing policies for economic
growth
As regulator : By laying down the rules and regulations according to
which the business activities should be conducted