This document provides an introduction to business law in India. It defines what law is and explains the need for laws in society. The key branches of law are described as constitutional law, administrative law, criminal law, civil law, and commercial law. Sources of business law in India are identified as statutory law, case law, natural law, English mercantile law, and customs and usage. Principles of natural justice like rules against bias and hearing the other side are also summarized.

1. Introduction to business law
1

2. 1: What is Law ?
• The law is a set of legal rules that governs the way
members of a society act towards one another.
• Law is “ that portion of the established habit and thought
of mankind which has gained distinct and formal
recognition in the shape of uniform rules backed by the
authority and power of the Government”.
• – Woodrow Wilson
• Laws are required in society to regulate the behaviour of
the individual, to correspond with what is acceptable to the
majority of individuals,
2

3. NEED FOR LAW
• Without law, life and business would become a matter of
survival, not only of the fittest but also of the most
ruthless.
• Laws are required in society to regulate the behaviour of
the individual, to correspond with what is acceptable to the
majority of individuals,
• Law is the potential tool of social change. In fact law and
society are complementary. No society can exist without
law. It is essential for up keeping of peace in the society.
3

4. BRANCHES OF LAW
• CONSTITUTIONAL LAW
• ADMINISTRATIVE LAW
• CRIMINAL LAW
• CIVIL LAW,
• COMMERCIAL LAW
4

5. CONSTITUTIONAL LAW
 Is the law which regulates the structure of the
principal organs of the government and their
relationships to one another and determines
their principal functions.
 The rules consist both of legal rules and of
usages, commonly called conventions, which
without being enacted are accepted as binding
by all concerned with the government
5

6. ADMINISTRATIVE LAW
• It is the law that governs the executive branch
of the government.
• It is as old as the executive.
6

7. CRIMINAL LAWS
• Are the laws which wrong doers are punished.
• At the same time, civil laws are those laws
with which the private rights of an individual
are enforced
7

8. MERCANTILE LAWS
It deals with the rights and obligations of
Commercial persons emerging from
commercial transactions in respect of
commercial property.
8

9. SCOPE OF BUSINESS LAW
The scope of the business law has enormously widened
due to the increasing complexities of the modern
business world.
It usually covers topics of contracts, bailment, Agency,
sale of goods, partnerships, companies, negotiable
instruments, insurance, pollution control etc.
These and other topics are covered by legislations
enacted by Central and State Governments.
9

10. SOURCES OF BUSINESS LAW
1. Statutory law
2. Case law
3. Natural law
4. English mercantile law
5. Customs and usage
10

11. Legal Positivism
• Law is the supreme will of the State that
applies only to the citizens of that nation at
that time.
• Law, and therefore rights and ethics, are not
universal. The morality of a law, or whether
the law is “bad or good,” is irrelevant.
11

12. Legal Realism
Jurisprudence that holds law is not simply a
result of the written law, but a product of the
views of judicial decision makers, as well as
social,economic, and contextual influences.
12

13. Stare Decisis
Stare decisis is a Latin phrase meaning “to
stand on decided cases.”
– Makes the law stable and predictable.
– Increases judicial efficiency by relieving courts of
having to reinvent legal principles for each case
brought before them.
13

14. Stare Decisis and Precedent
• Stare decisis is “judge made law” based on
precedent.
• Precedents are judicial decisions that give rise to
legal principles that can be applied in future cases
based upon similar facts.
• Precedents and other forms of positive law, such as
statutes, constitutions, and regulations, are referred
to as binding authority and must be followed.
14

15. Cases of “First Impression”
In cases of “first impression” where there is no
precedent, the court may refer to
– positive law,
– public policy, and
– widely held social values in order to craft the best
new precedent.
15

16. Legal Reasoning
• Method used by judges to reach a decision.
• Many courts and attorneys frame decisions
and briefs using the IRAC format: Issue, Rule,
Application (Analysis), and Conclusion.
16

17. Civil vs. Criminal
• Civil law defines the rights between
individuals or individuals and governments.
• Criminal law defines an individual’s obligations
to society as a whole.
17

18. Substantive vs. Procedural
• Substantive law defines or creates the rights
and obligations of persons and
governments.
• Procedural law provides the steps one must
follow in order to avail oneself of one’s legal
rights or enforce another’s legal obligations.
18

19. Business persons
and the Law
• Laws regulate all areas of business.
• Factors business owners must consider:
– Is contract enforceable?
– Contract for goods vs. services?
– What happens if someone breaches the
contract?
– Dispute Resolution?
19

20. Civil Criminal
Person
commencing the
action:
Plaintiff Government
Outcomes:  Damages
 Specific performance
 Injunction
 Imprisonment
 Fines
 Good behaviour
bonds
 Community service
order
Standard of proof: On the balance of
probabilities
Beyond a reasonable
doubt
Burden of proof: Plaintiff Prosecutor
20

21. CLASSIFICATION OF LAW
1.Public Law and private law
Public Law is applicable to state/Govt.
It is concerned with the legal relationship with
state and individuals and Aims at
Promoting social objectives and protection of
collective interests.
eg. Criminal law, constitutional law.
2.Private Law-For protection of individual
interests eg.Law of contracts,property law etc.

22. Civil Law & Criminal Law
• Civil Law of the state provides remedies to
individual victims recognized by statutes
• Criminal Law means law relating to crimes and,
Civil law means all the rest.
• Civil law provides the framework of rights and
obligations of individuals and their dealings
with one another.eg.Law of contract and, torts.
• Criminal law deals with offences and their
punishments

23. National Law and International Law
• Internal rules of a country is national law
• External rules regulating the relationship of a
country with other countries is international
law.
• International law arises in the form of Treaties,
Conventions and Agreements

24. Statute and Common Law
• Statutes refers to Laws laid down by Acts of
Parliament or Assemblies. A legal rule in a
statute can be changed only by another
statute.
• Common law consists of principles and
usages .It includes unwritten laws and usages
which changes according to the needs of the
society.

25. General Law and Special Law
• General laws are applicable to all persons and
things in a country.
• Special laws are applicable only to special
circumstances which is to be justified and
proved by the parties concerned

26. Special Laws- classification
• Natural law-the principles of natural right and
wrong-the reasoning firmly fixed and
developed in human mind
• Customary Law- rules and principles in a
particular community for a long time.
• Physical Law/Scientific Law-describe general
nature and principles according to which
physical phenomenon act under given
conditions.eg.Laws of gravitation

27. Special Laws cntd..
• Moral Laws or Ethical laws-rules of conduct
which lays down an ideal standard for human
behaivour-includes the principles of right
conduct, right means to achieve good ends,
principles of natural justice and fair play.
• Conventional laws-rules voluntarily agreed by
parties for regulation of their conduct towards
each other . Eg.associations,clubs.trade union,

28. Special Laws ..cntd
 Constitutional law-Basic and fundamental law
Governing the structure and formation of various
organs of Govt.
 Administrative Law-Law relating to the
organization and services performed by various
administrative organs of govt.
 Martial Law-law administered by the court
maintained by Military authorities
 Mercantile law- Law merchant or lex mercatoria
Eg.law of contract,parnership,company’s Act

29. PRINCIPLE OF NATURAL JUSTICE
Applies to Administrative authorities with
quasi-judicial functions. Natural justice are
primarily concerned with procedures rather
than outcome.Three important principles of
natural justice are-
1.Rules against bias
2.Hear the other side(Audi alteram partem)
3.Reasoned decision or speaking order

30. Rules against bias
Decision should be Impartial and free from bias.
Bias is present if
1.Pecuniary interest in subject matter of the
dispute (pecuniary bias)
2.He has a relative /friend /enemy in one of the
disputing parties(personal bias)
3.General interest in the subject matter.(official
bias)

31. Maxims of rules against bias
• 1.No man shall be a judge in his own
cause.(Nemo debet esse judex in propria sua
casusa)
• 2.justice should not only be done but seem to
be done.People should feel that it is not
influenced by anger,passion etc.
• 3.Judges should be above suspicion-own
decision-not influenced by others

32. HEAR THE OTHER SIDE(audi alteram
partem)
A fair hearing necessitates-
1.Notice to show cause against proposed action.-
containing date,time,place and nature of hearing
2.Opportunity of hearing to both parties.
a.)To produce all documents in support of case
b.)Authority must disclose all materials/evidences
placed before it.
c.)material/evidence produced by one party cannot
be utilized by the other.
d.)Should not take evidence in the absence of other
party.

33. Hear the other side cntd.
• e).representation through advocate cannot be
claimed as part of natural justice unless the
right is confirmed by the statute.
• f).if hearing is not given to the person
concerned, the principles of natural justice are
violated and the order is void.

34. Reasoned Decision(speaking order)
The order containing the reasons for the
decision is called speaking order
Advantages of reasoned decision are-
• 1.concerned party gets an opportunity to
appeal against wrong decision
• 2.minimises the chance of arbitrary decision
and ensures fairness
• 3.ensures clarity in the decision and gives
satisfaction to the affected party

35. CONSTITUTION OF INDIA
• Adopted by the Constituent Assembly on 26th
Nov.1949.
• Came in to force from 26th jan.1950.
• Dr.B.R.Ambedkar,Chairman of constituion
committee.
• A.Krishnaswami Iyer,Gopalaswamy
Ayyankar,K.M.Munshi,T.T. krishnamachari etc.
are members.

36. Preamble of the constitution
• We the people of India having solemnly resolved
to constitute India in to a SOVERIGN SOCIALIST
SECULAR DEMOCRATIC REPLUBIC and to secure
its citizens
• JUSTICE, social economic and political
• LIBRETY of thought,expression,belief,faith and
worship
• EQUALITY of status and opportunity
• FRATERNITY assuring the dignity of individual
and the unity & integrity of the nation.

37. SALIENT FEATURES OF CONSTITUTION
• It declares India as a soverign,socialist secular,
democratic republic.
• It establishes parliamentary form of
government
• Federal structure of government in normal
times and unitary in times of emergency.
• The executive and legislative powers have
been divided between the Union and the
states.

38. Constitution- features cntd.
• It provides for single judiciary, single set of
rights and obligations, single citizenship,
uniformity in civil and criminal laws
• Provides to the people justice, equality and
fraternity
• Lengthiest constitution having 395 Articles
and 12 schedules
• It is rigid, but certain level of flexibility in
amending its articles.

39. Constitution- features cntd
• Written constitution- guarantees fundamental
rights to all citizens and Directive Principles of
state Policy.
• It abolishes untouchability and provides
reservation of seats fro minority groups
• Doctrine of judicial review is a special
characteristic of constitution.

40. Judicial infrastructure in India
Supreme court
highest interpreter of the
constitution and the apex court.

41. Kinds of jurisdiction of Supreme court
• Original Jurisdiction
• Appellate jurisdiction
• Advisory jurisdiction
• Special jurisdiction

42. Original jurisdiction
• Decide all disputes between a) Union
Government and states b) Disputes between
states
• Enforce fundamental rights guaranteed by the
constitution
• Issue direction/orders on prerogative writs

43. Appellate jurisdiction
• Hears appeals from judgement of high court
on cases involving interpretation of
constitution
• Hears appeals from judgements of high courts
in criminal and civil cases involving substantial
question of law or general importance.
• Has jurisdiction over all courts and Tribunals in
India and can grant special leave to appeal
against their judgements

44. Advisory jurisdiction
Advisor to President of India on important
questions of law and facts.
Special jurisdiction.
a) To decide disputes relating to the election of
president and Vice-President of India
b)To enquire in to the misconduct of the
chairman and members of the UPSC

45. High Courts
• One High Court in each states except-
Manipur,Meghalaya,Tripura and Nagaland.
• Punjab, Haryana and Union Territory
Chandigarh have common High court at
Chandigarh

46. Powers of High Courts
• Head of Judicial administration in the state.
• Issue orders on prerogative writs.
• Powers of supervision over all subordinate
courts and tribunals.
• Interpret the constitution as provided in the
civil procedure code.
• Appellate jurisdiction over District judges and
presidency magistrates.

47. Subordinate courts
• Deal with all disputes of civil and criminal
nature
• Each state is divided in to judicial districts
presided over by District and Sessions judge.
• Below him Municif’s court- for civil cases and
Chief judicial Magistrate and judicial
magistrates of first class and second class for
criminal cases.

48. Attorney General& Advocate general
• Attorney general for Government of India is
appointed by President for advice on legal
matters.
• Advocate general is appointed by the state
and there are additional advocate general and
government advocates below him.

49. PREROGATIVE WRITS
• HABEAS CORPUS
• MANDAMUS
• CERTIORAI
• PROHIBITION
• QUO WARRANTO
Under Article 32 Supreme court has power to issue
these writs for enforcing fundamental rights.
Under.Article.266,High court has power.

50. Prerogative writs
• They are intended to provide
Remedies not available under the ordinary law
or if it is in adequate.

51. HABEAS CORPUS
• Literally means ‘produce the body’
Issued when a person is detained by another
illegally or with out any legal justification.
Mandamus-order of the court commanding a
person or a public authority to do or refrain
from doing something in the nature of public
duty

52. CERTIORAI
• Issued to nullify an order made without
jurisdiction or in violation of natural justice.
PROHIBITION-
Issued to prevent an inferior court or tribunal
from exceeding its jurisdiction or against
natural justice.

53. QUO WARRANTO
• Means what is your authority
Challenging the authority of a person holding
public office – who is not legally entitled to
hold.

54. Family courts
• Established under the Family Courts Act of
1984.It contains suits for-
• Decree of nullity of marriage, Judicial
separation or dissolution of marriage
• Declaration as to validity of marriage
• Declaration of properties of the parties
• Maintenance, guardianship of minor
• Injunction in case of a marriage relationship

55. Lok Adalats
• Statutory status under Legal services
Authorities act 1987
• They can determine or compromise or
settlement between parties in civil, criminal or
revenue courts or tribunal
• TRIBUNALS
• They deals with special disputes like industrial
disputes, debt recovery, taxation etc.

56. INDIAN CONTRACT ACT 1872
INTRODUCTION
There are numerous transactions in business
These transactions are made in the form of contracts creating rights and
obligations.
The rights of one party would be obligations of other party and vice- versa.
Indian contract Act was enacted to regulate and settle these transactions

57. Indian contract Act
• The Act came in to force from 1st Sept.1872
• It is the foundation of business law in India
• It contains 266 sections.
• Section 1-75 deals with general principles
regarding formation and performance of
contract.
• Sections 124-238 deals with special contracts
• Section.73-123 and 239-266 merged with Sale of
Goods Act and Partnership Act

58. Limitations of Indian Contract Act
• It creates right in personam ie,right only against a
particular person or party.
example-A lends Rs.5000 to B. A gets the right to
recover the money only from B and not from
others
• Agreements and obligations which are not
contractual in nature are not covered in the Act.
• Example-A invites B for a dinner agreed, but does
not turn up for dinner. In this case the
relationship is personal and social in nature

59. Right in Rem
• It is a right in respect of a thing.
• Right in rem refer to those rights associated
with conveyance or enjoyment of a property.
Example-A owns a plot of land and B is the
owner of the adjacent plot. A has got an un-
interrupted possession and enjoyment of that
land not only against B, but also against every
member of the public.

60. CONTRACT DEFINED
• Sir William Anson- Contract is a legally
binding agreement made between two or
more persons by which rights are acquired by
one or more acts or forbearances on the part
of other”
• Sir John Salmond –An agreement creating and
defining obligation between the parties”.
• Sir Federic Pollock-Every agreement and
promise enforceable at law”

61. Major components of contract
Section 2 (h) defines a contract as “ an
agreement enforceable by law” thus to make
a contract there must be
1.An agreement
2.The agreement shall be enforceable by law.
3.All agreements are not enforceable by law
4.and therefore, all agreements are not
contracts.

62. AGREEMENT
According to Section 2(e) an agreement is defined
as “ every promise and every set of promises
forming the consideration for each other”.
A promise is defined as an accepted proposal as
Section 2(b) says “ a proposal when accepted
becomes a promise “ Therefore it can be said that
an agreement is an accepted proposal.
In an agreement there is a promise from both the
sides. For example, A promises to deliver his
radio to B and in return B promises to pay a sum
of Rs. 500 to A , there is said to be an agreement
between A and B

63. Agreement and contracts
An agreement is regarded as a contract when it is
enforceable by law.
In other words, an agreement that the law will enforce
is a contract.
The conditions of enforceability are stated in Section 10.
According to this section “ all agreements are
contracts if they are made by the free consent of
parties competent to contract, for a lawful
consideration and with a lawful object, and are not
hereby expressly declared to be void.”

64. OFFER /PROPOSAL
The term proposal has been defined in section
2(a) as follows:
• “ When one person signifies to another his
willingness to do or abstain from doing
anything with a view to obtaining the assent
of that other to such act or abstinence, he is
said to make a proposal.”

65. Promise
• A proposal when accepted, results in an
agreement. It is only after the acceptance of the
proposal that a contract between the two parties
can arise.
• According to Section 2 (b) : “ when the person to
whom the proposal is made signifies his assent
thereto, the proposal is said to be accepted. A
proposal, when accepted, becomes a promise “
• The person making the proposal does not
become bound thereby until acceptance. As
soon as his proposal is accepted that is known as
promise whereby both the parties become bound

66. Contract elements
• Offer+ Acceptance=Promise
• Promise+ consideration= Agreement
• Agreement+ Enforceability= Contract
Section 10 “All agreements are contracts if they
are made by the free consent of the parties
competent to contract, for a lawful
consideration and with a lawful object and
are not hereby expressly declared to be void”

67. Elements of Contract
• Agreement
• Consensus ad idem
• Capacity of parties
• Free consent
• Consideration
• Lawful object
• Not declared to be void
• Certainty and possibility of performance
• Intention to create legal relationship

68. Consensus ad idem
• The parties to a contract must agree up on
the same thing in the same sense (Section13)
• Identity of minds among the parties regarding
the subject matter of the contract.

69. Agreement Vs Contracts
Agreement
• Offer and acceptance
constitute an agreement
• All agreements are not
contracts
• May not create legal obligation
• Every promise & set of
promises forming
consideration for each other
• Agreement is a genus
• Not binding contract
contracts
• Agreement enforceability
constitute a contract.
• All contracts are agreements
• Necessarily creates legal
obligation
• Agreement enforceable at law
• Contract is a species of an
agreement
• Contract is concluding and
binding.

70. Capacity of parties(section 11,12)
• Parties of a contract must have legal capacity
to enter in to contracts.
• Minors,insolvents,drukards,persons of
unsound mind etc. are not competent

71. Free consent ( S.14)
• Consent of parties must be free consent.
• Consent is not caused by :-
• coercion, undue influence
• fraud, misrepresentation or mistake

72. Lawful object (S.23)
• The object of an agreement must be lawful
• It must not be illegal ,immoral or opposed to
public policy
• The contract becomes void if the object is
unlawful

73. Agreement not declared to be void
• The agreement which is void has no legal
sanctity.
• It might not have been expressly declared void
by any law in the country.
Example. A agrees to supply liquor to B,
subsequently prohibition Act comes in to
force. The agreement becomes void from the
date of effect of prohibition order.

74. Certainty and possibility of
performance(S.29,56 )
• The terms of the contract should be clear
• Contracts which are vague cannot be enforced
on the ground of ambiguity
• An agreement to do an act impossible in itself
is void.

75. Intention to create legal relationship
• To have a binding agreement, there should be
an intention between parties to create a legal
relationship
• Mere informal promise are not to be enforced
• Social agreements are not creating legal
relationship and not enfrocable.eg.an
agreement to have dinner.

76. CLASSIFICATION OF CONTRACTS
Contracts are broadly classified based on;-
• Enforceability
• Formation
• performance

77. Classification based on Enforceability
or legal validity
• Valid contract
• Void agreement
• Void contract
• Voidable contract
• Illegal agreement
• Unenforceable contract.

78. Contracts classified on legal validity
• Valid contract- is one which satisfies all the legal
requirements under S.10 of the Act.
• It is an agreement which is binding and enforceable.
• Void Agreement;-S.2(g)An agreement not enforceable
by law is said to be void. eg.agreement with a minor
• Void contract;-S.2(J)A contract which ceases to be
enforceable by law becomes void when it ceases to be
enforceable”
• Eg.A promises to marry B,later B died and the contract
becomes void on the death of B

79. Legal validity of contracts cntd…
• Voidable contracts;S2(i)”An agreement which
is enforceable by law at the option of one or
more of the parties thereto, but not at the
option of other or others is a voidable
contract”.
Such a contract is affected by coersion,fraud,
misrepresentation or undue influence and is
valid until the aggrieved party avoided it by
exercising his option.

80. Legal validity cntd…
• Illegal contract(S.23) is one the consideration
of which is :-
• Forbidden by law or
• Fraudulent or
• If permitted it would defeat the provisions of
any law or
• Involves injury to the person or property of
another or
• The court regard it as immoral or opposed to
public policy

81. Legal validity cntd..
• Unenforceable contract-is one which cannot
be enforced in a court of law due technical
defects
• Eg.there are special provisions of law which
require some formalities such as ,the contract
must be in writing, it must be registered, must
be properly stamped or attested.
• When technical defect is removed the
contract can be enforced.

82. Classification based on formation
• Express contract-S.9-The terms of the
contract stated in words spoken or written.
• Implied contract(Tacit contract)-the terms of
the contract is inferred from the conduct of
the parties
eg: A enters in to a restaurant and took a cup
of coffee. Here an implied contract that he will
pay for the coffee even though there is no
express promise to do so.

83. Formation cntd..
• Quasi contracts.- Arises under certain
circumstances when, law itself creates legal rights
and obligations.
Although quasi contract is not a contact at all it is
based on the law and resembles a contract. It
prevents a person enriching unjustly at the
expense of another.
Eg:X supplied Y, a lunatic necessaries of life. X has
the right to reimburse from Y’s property.
Money given by mistake, finder of lost property.

84. Classification based on performance
• Executed contract-both the parties to the
contract have completely performed their
respective obligations
Eg.In cash sales the contract is executed at
once.
• Executory contract-In this contract the
obligations of parties are to be performed at a
later time.

85. Performance cntd..
• Unilateral contracts-One party has to fulfill his
obligations, whereas the other party has already
performed his obligations(one sided contract/contract
with executed consideration)
Eg:-A has lost his son and offers by advertisement a
reward of Rs.10 lakhs to any one who will bring his son
safely to home.B finds the boy and brought him to his
home. As soon as B does this act, a contract comes in
to being.
Bilateral contracts-is one in which obligations of both the
parties are outstanding. Similar to executory contract

86. Classification of contracts in English
Law
• Formal contracts-Validity of formal contracts depends
upon their form and they are valid even without
consideration. Two types of formal contracts.
• Contracts under seal and
• Contracts of record.
Contracts under seal are in writing and signed by the
parties and includes the following.
a)Contracts without consideration,
b)Contracts of corporations) contracts with British
shipping d)Lease of land for more than 3 years.

87. English law cntd..
• Contracts of records Obligations under these
contracts arise out of court judgements and
not under contracts.
• Simple contracts-All contracts other than
formal ones are called simple or parol
contracts. They may be made orally, in writing
or implied by conduct.

88. Distinction between void agreement
and voidable contract
Void agreement
• Agreement not enforceable
by law is void agreement
• Agreement lacks any one of
the essentials of a valid
contract
• Void when it is made
• Parties cannot claim any
compensation fro loss
suffered
Voidable contract
• Enforceable by law at the
option of one party only
• If consent of one of the
party had not been free
• Becomes void when it is
declared void by aggrieved
• If caused by fraud,
compensation for any loss
suffered

89. Distinction between void and illegal
agreements.
Void agreement
• Lacks any one of the
essentials of a valid contract
• Wider in scope and includes
illegal agreements
• Void from the beginning.
Sometimes valid contract
may become void.
• Do not attract any
punishment for parties
Illegal agreement
• If the object or purpose of
the contract immoral/ illegal
• Used in a narrow sense as
the object is illegal
• Void from the very
beginning.
• If done illegal act ,may be
punished or prosecuted