Indian Business Law

Business laws in India are as old as Barter System. It is not that there were no business laws under the monarchy system, but the timeline of modern business laws in India starts from 1600 A.D. Still traces of these laws can be found today and are exercised in the court of law.

The foundation of the east India Company was the major landmark in the Indian legal history. The company was set up under the British Crown’s charter of 1600.The charter conferred corporate character and juristic personality of the company. It granted power to make laws for its government and to impose such fines and penalties as might be necessary to impose these laws.

Sources of Indian Business Law:

1. English Mercantile Law: Lex mercatoria is the Latin expression for a body of trading principles used by the merchant throughout Europe in the medieval. Meaning literally ‘law merchant’, it evolved as a system of customs and best practice, which was enforced through a system of merchant courts along with main trade routes. It functioned as the international law of commerce.

The English Mercantile law constitutes the foundation on which the superstructure of the Indian Mercantile law has been built.

2. Statutory Law: Statutory law is written law set down by the legislature or other governing authority such as the executive branch of the government in response to the perceive need to clarify the functioning of the government, improve civil order to codify existing law, or for an individual or company to obtain special treatment.

In context to India, all laws are statutory i.e when ‘Bill’ is passed by the Parliament and signed by the President of India; it becomes an ‘Act’ or a ‘Statute’. The bulk of Indian of Indian Mercantile law is a statutory law.

3. Judicial Decisions: The past judicial decisions of courts are important sources of law. Sometimes there is no statutory provision which can answer a legal question raised in a law suit. In such cases the court will look into the previous court decisions on similar matters to find the relevant law.

The precedents set by the higher courts have a binding force on lower courts and the precedents set by the same courts of the same status like High Courts of different states have persuasive value for each other.

4. Customs and Usages: Customs and usages of a trade play an important role in business dealings of that trade. As a matter of fact they have a binding force on the parties, like by the mercantile usage prevailing in the Delhi Iron Market among big merchants, no interest can be charged on the unpaid price for transactions before 1917. To have a binding force, the custom or usage must be certain, reasonable and well known.