Small Business Laws

There are various definitions for law. In the words of Austin a law is a rule of conduct imposed and enforced by the sovereign. In the words of Salmond law is the body of principles recognized and applied by the state in the administration of justice. But the ordinary meaning of law as understood by a common man is that law is a command of a sovereign the disobedience of which will be followed by punishment. In this connection one must understand the meaning of the term sovereign power.

Sovereign power is nothing but an authority conferred on individual or a body of individuals to exercise it for common welfare. In this present age of democracy, sovereign power always vests with the elected bodies, namely, the legislature. The legislature represents the sovereignty of the people. Hence an act passed by the legislature is the law for the country.

According to modern writers, law is a social as well as a moral science and that it is concerned with the behaviour of human being in society. In the said society, every one is expected to follow certain rules of conduct in order to run a smooth and peaceful life. Unavoidable conflicts and controversies arise among people. The aid conflicts and controversies have to be resolved amicably and peacefully. To achieve this goal the state regulates the conduct of its people by a system of rules. Such rules of conduct, which are recognized by the state and enforced through courts, are termed as Law. The purpose of the law is to enable man to live together amicably in society and to provide solutions whenever mans wishes come into conflict. Further the object of law is to create and protect the legal rights of a man.

Classification of Law

Law can be classified into

a) Public Law and

b) Private Law

a) Public Law Public Law deals with the constitutional and administrative powers of the state and also certain relation between the state and the individual, it includes,

a. Constitutional Law which deals with the organization and function of the state itself.

b. Social Security Laws and

c. Criminal Law whereby certain acts are made directly punishable by the state.

b) Private Law Private Law on the other hand, deals with the rights and duties of the individuals towards one another. Law of property contracts, Law of Civil wrongs are Private Laws. Private Law is enforced at the instance of the individuals concerned and not at the instance of the state. Commercial and industrial law also comes under the category of private law. It is considered to be one of the important of civil law.

What is commercial Law

Commercial Law is the name given to those branches of law which is generally applied to cases arising out of commercial transactions. Some authors define it as a branch of law concerned with business, trade and commerce. Commercial law denotes the aggregate body of those laws which are connected with trade and commerce like the contract act, Partnership act, sale of goods act, company law, law of agency, law of insurance, law of arbitration. Thus it is a compendious for the entire body of commercial laws which are mentioned between traders or mercantile persons. The mercantile person may be a single individual or an association or group of individuals acting collectively and carrying a trade as in the case of a partnership firm or a joint stock company. businessman is expected to know the commercial law in order to avoid the pitfalls into which they may fall out of ignorance.

Commercial transactions relate to movable property

Commercial transactions mostly relate to movable property or goods. It does not deal with immovable property. Movable property can be divided into corporeal movables, like a bag of cement, a table of chair and incorporeal movables, having no material for example, a debt due from a person, or a share from a company. Thus movable property is of two kinds.

1. Chose-in-possession and

2. Chose-in-action

CHOSE-IN0POSSESSION (That which can be physically possessed)

Chose-in-possession means a corporeal movable whose possession can be maintained by a person who is entitled to have it. He can retain the possession even by using reasonable force. Even if the person lost it, he can also file a suit on the court of law for recovery of possession of that identical movable property.

For example:

If a thief attempts to snatch away the wrist watch the person-in-possession can resist and retain the possession even by using reasonable force. If, inspite of his resistance, he lost the possession of his wrist watch, he can recover the same through court of law.

CHOSE-IN-ACTION (Thing in action)

It is nothing but a claim which can be enforced by an action only through a court of law.

For instance,

If A executes a promissory note in favor of B for Rs1000 and A is found walking along the road with Rs 1000 in his pocket, it is not open for B to snatch it by force. The only remedy which B has is to file a suit on the foot of the promissory note in the court of law and recover the amount. Thus, negotiable instruments (promissory notes, cheques) shares and debentures in a company and insurance policies are all chose-in-action. It is also interesting to note that even invisible thing like gas and electricity comes under the purview of movable properties. Thus, sale of gas and electricity are also deemed to be commercial transactions.

Sources of Indian Commercial Law:

Though and act of the legislature i.e. statute if the main source of any branch of law, it is not the only source there are many other sources also namely, customary law, principles of equity and decisions of court. In India, in all mercantile transactions, the English principle of mercantile law is applied. There is no separate commercial law in India to be found in the ancient texts. During the British regime, there was a well established system of administration of justice throughout the country. The courts in India used to follow and apply the English principles of law in various branches. Indian commercial law is largely commercial law. Hence, the sources of Indian commercial law are nothing but the sources of mercantile law in England. Hence we have to trace the sources of the English Mercantile law.

They are as follows:

1. The law merchant

2. Common law of England

3. Statute law

4. Principles of Equity and

5. Roman law

1. The law merchant The law merchant was the stepping stone of the English mercantile law. It is a very important source of commercial law. It is mainly based on customs and usages prevailed among the merchants and traders. It developed during the 14th and 15th centuries. The said customs and usages were gradually recognized by the common law courts of England. It is a well known principle of law that a custom in order to be binding on the parties, must have along usage and a time immemorial antiquity. When the custom is accepted by a court and is incorporated in its judgment, it becomes a legally recognized custom, with the passage of time, fresh customs grew up amongst traders and the said customs, after acquiring general usage become part of law merchant. It is an ever growing branch of law expanding and modifying itself with the changing needs of trade and commerce. The law merchant is the origin of much of the law relating to negotiable instrument, trade marks, partnership and insurance. It later merged with common law.

2. Common law of England It is the law gathered from the decisions of the courts in England. The phrase common law of England convey those unwritten legal doctrines embodying English customs, and traditions which have been developed by the English courts, the judge who were empowered to decide the disputes, have their judgments and thereby they indirectly gave the law also. The said judgments were subsequently followed by the courts in deciding similar points of law. This is also called judge-made law or unwritten law. Even now the whole law of contract in England is a part of the common law of England. It is not a codified law as in India. Common law existed in England even prior to the creation of the parliament.

3. Statute law The Statute law means acts of parliament. It is very important source of any branch of law and as such of commercial law. It is the most superior and powerful source. It is nothing but a law made by the elected representatives, in the parliament. It overrides any rule of the common law of equity.

4. Principles of equity The courts in England were following a strict and scientific system of procedure with peculiar forms of writs and actions. Such courts were called common law courts. The common law courts were empowered to grant relief only by way of damages or compensations in terms of money. They granted remedies only to those cases which came under the purview of their rules. Hence, the aggrieved person who could not obtain suitable remedies in the common law courts applied to the king of England, who in turn referred them to the chancellor directing him to grant suitable relief. The chancellor as the representative of the king popularly known as keeper of the kings conscience granted relief which was equitable and just and which cannot otherwise be granted by the common law of England.

For example,

A and B enter into a contract by which B agrees to sell his house to A for Rs.1,00,000/-. Later on B not only refuses to sell his house to A, but also he makes an attempt to sell his house to C for a higher price. In this case there are two remedies open to A.

1. A can claim damages against B for breach for contract or

2. He can seek the aid of the court to compel B to sell the house only to him and not to C.

The first remedy is known as common law remedy and the second is known as equitable remedy. According to the law in vogue then the common law courts in England were only empowered to grant relief by way of damages or compensation in terms of money.

If A is satisfied with compensation in terms of money, he can get the same in common law court. On the other hand, if he is very particular of getting the same house from B he must approach only the chancellor to get suitable remedies. Because, the common law courts were not empowered to grant the remedy of injunction to prevent B from selling his house to C and had no machinery to compel B to sell the house only to A under specific performance of contract.

The chancellor granted those remedies on the basis of justice, equity and good conscience. The rules applied by the chancellor were known as equity. The courts presided over by the chancellor were known as the chancery or equity courts. The power of equity courts were very limited and governed by certain principles namely he who seeks equity must do equity and he who comes to equity must come with clean hands. After the passing of the judicature act of 1873 separate existence of the two classes of courts were abolished and the courts of England were empowered to grant both common as well as equitable remedies according to the circumstances of each case.

5. Roman law Another important source is the old Roman law and many a Latin maxim has found out only in English law but also in the Indian law. Apart from sources mentioned above the following are the additional sources of the Indian commercial law.

a) Statute law The statutory laws of commercial law in India are the Indian contract act 1872, sale of goods act 1930, partnership act 1932, companies act 1956. The laws relating to negotiable instruments, carriers, railways are dealt with by separate acts in India.

b) Customs and usages A custom which is ancient, reasonable and uniformly recognized in the ordinary course of business will bind the parties. When a court accepts a particular custom and the same if incorporated in a judgment, it becomes a legally recognized custom.

c) Judicial decisions The judges who were empowered to decide the disputes gave their judgments and thereby they indirectly gave the law. The judgments given by the highest courts like, High courts and Supreme Court were followed by the lower courts in deciding similar points of law.

Other Articles

business is required to pay are also important in determining the approval
Today all big or small piece of work are being done through Internet.
business to companies buying and selling computer parts.