Business Law

1.

Define Business Law. Or What is Business Law?

Business : its meaning and scope in brief
There are various kinds of activities going on in our society and business constitutes
one of them and for its governance, the role of law comes into the scene.
Business law can be divided in two parts for our understanding.
a) Business &
b) Law
In a wider sense, the word business means work, efforts and acts of people, which
are connected with the production of wealth.
Functionally, by business we mean those human activities, which involve
production or purchase of goods with the object of selling them at a profit. In
essence, therefore, business concerns with producing and selling for profit or it may
be said to be any activity, which makes, distributes or provides any article or
service, which other members of the community need.
Business being an all embracing term, it includes trade, commerce and industry.
Business may, therefore, be classified into two broad categories:
1) Industry - concerned with the production of goods
2) Commerce (including trade) concerned with distribution of what is
produced.
Business and its relation with law
The term law means and includes different things in different societies. Also the
different schools of thought have defined law from different angles. But above all,
the definition of law must cover all aspects so as to be a perfect definition.
Law is a dynamic concept and being a social science, the scope of law has been
always changing. Therefore, it is a very difficult for a definition of law given at a
particular time to remain valid for all times to come. Generally speaking, the
following definitions give an overall view of law.
Law according to the Oxford English Dictionary means rule made by authority
for the proper regulation of a community or society or for correct conduct in life.
The term basically denotes rules and principles either enforced by an authority or
self-imposed by the members of a society to control and regulate peoples behavior
with a view to securing justice, peaceful living and social security.

From the primitive age to this modern age, in one or the other form, there has been
the existence of law. But with the advancement of the time, the necessity of new
laws has been arising. Two decades ago, had any one ever thought about the
necessity of law to govern the widespread use of computers and its associated
problems like cyber crimes which are prevalent now?
The civilization has given the world a multidimensional character. It has also given
rise to different kinds of activities, which demand different sets of rules and
regulations and not uniform one. Hence there are several branches of law, such as
Constitutional Law, International Law, Criminal Law, Business Law, Civil Law etc.
As one of the branches of law, Business Law in this modern age, holds a very
important place. For our understanding, it may be defined as that branch of law,
which comprises laws concerning trade, industry and commerce.
With the increasing activities and the complexities of the business world, the scope
of business law has greatly widened. It specially includes the laws relating to
Contracts, Partnership, Companies, Negotiable Instruments, Insurance, Insolvency,
Income Tax, Arbitration, Sale of Goods etc. Every person engaged in economic and
commercial activities must be familiar with the basic principles of these existing
business laws. Hence the importance of the business law is growing every day.
The development of laws is directly proportional to the stage of the development of
a country. In the developed countries the laws are fully developed. Whereas in the
developing and under developed countries like Nepal the laws are still at a
developing stage. The necessity of new laws goes parallel with the development
stage of a country.
The main characteristics of Business Law are as follows:

Business Law is primarily a branch of civil law. They are similar in many
aspects like compensation, property etc.

Business Law basically regulates all the matters related to industry, commerce
and trade.

Business Law gives equal treatment to all the persons including individuals or
firms or corporate bodies involved in business. The laws are applied without
any discrimination among them.

The role of Business Law is to maintain peace, order, security and uniformity
in the business community and create a good environment.

Business Law is dynamic in nature. It keeps on adapting changes that take

place in the business world.

Business laws are regulatory as well as punitive. Violation of business laws

may invite severe punishment including fines and imprisonment.
The role or functions of Business Law are as follows
Defines and creates awareness about the rights, duties and liabilities of the
business persons, institutions and the government agencies.

Regulates industry, trade and commerce.

Regulates the different business activities in the state.
Protects rights and interests of business communities.
Brings uniformity in the conduct of the businesses.
Encourages business communities by providing facilities.
Provides guidelines to the business firms in carrying out their businesses.
Provides mechanisms for settlement of disputes through judicial and non
judicial like mediation, conciliation or arbitration.
Punishes those who violate the rules and regulations prescribed by the laws for
the proper governance of the business activities.
Creates harmony among the different sectors of the business.
Means for the creating a positive environment for the prosperity of business.

Sources of Business Law

A source means an origin or resource or cause from where law originates. The
term sources of law has several meanings. The general meaning of the word
source is origin. There is a difference of opinion among the jurists about the
origin of law.
The sources of business law differ from country to country. Especially an
underdeveloped country like Nepal where the corporate history is very short,
it is difficult to determine the sources.
Sources of business law are as follows:
a) Custom and usage
Custom or usage of a particular trade also guides the courts in deciding
disputes arising out of business transactions, but such a custom or usage must
be widely known, certain and reasonable. It also must not be opposed by any
laws. It should not also oppose any morality and public policies. Such
business is obligatory to that particular place which makes business person
accustomed.
b) Statute laws
When a bill is passed by the parliament and sealed by the King, it becomes an
'Act' or 'Statute'. Statutory laws are the outcome of demands of people and
need of the time. They are made after fulfilling a series of discussions by the
lawmakers e.g. Contract Act 2056, Arbitration Act 2055, Company Act 2053
etc.
c) Judicial decisions or case laws
Judicial decisions are usually referred to as precedents and are binding on all
courts having jurisdiction lower to that of the court, which gave the judgment.
They are generally followed by those of competent jurisdictions in deciding
similar issues. However the precedents must be reported cases in the record of
the Supreme Court. Judicial decisions are also called case laws.
d) Commercial agreements, treatises or conventions
This is the most important source of modern business law. International
business organizations are more active in national, regional and international

e)

trade, like GATT, WTO, EU and SAFTA. These bilateral and multilateral
treatises and bilateral agreements between the nations and conventions among
the nations are very sources of business laws e.g. Indo-Nepal Transit Treaty,
Nepal India Trade Treaty etc.
English mercantile law
England was leading country in the area of commerce and trade. Nepal is
much influenced by India which was under the rule of England for more than
hundred years. Some of the favourable laws as introduced by the English
people to India were largely adopted by our Nepalese legal system also.

Other laws which come into operation:

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Company Act 2053 B.S, HMG-N

Nepal Rastra Bank Act 2058 B.S., HMG-N
Bank and Financial Institution Ordinance 2061 B.S., HMG-N
Property Tax Act 2047 B.S., HMG-N
Foreign Employment Act 2042 B.S., HMG-N
Excise Duties Act 2058 B.S., HMG-N
Essential Commodities Regulation Act 2017 B.S., HMG-N
Foreign Exchange Regulation Act 2019 B.S., HMG-N
Black Marketing and other Social Crimes and Penalty Act 2032 B.S., HMG-N
Standard Measurement and Weighing Act 2025 B.S., HMG-N
Food Act 2023 B.S., HMG-N
Copy Right Act 2059 B.S., HMG-N
Patent Design and Trade Mark Act 2022 B.S., HMG-N
Income Tax Act 2058 B.S., HMG-N
Custom Duties Act 2019 B.S., HMG-N
Securities Exchange Act 2040 B.S., HMG-N
Nepal Agency Act 2014 B.S., HMG-N
Child Labour (Prohibition and Regulation) Act 2056 B.S., HMG-N
Prohibition on Investment in Foreign Countries Act 2021 B.S.,
HMG-N
Negotiable Instrument Act 2034 B.S., HMG-N
Bonus Act 2030 B.S., HMG-N
Hotel Management and Liquor Sales and Distribution (Regulation) Act 2023
B.S., HMG-N
Labour Act 2048 B.S., HMG-N
Insurance Act 2049 B.S., HMG-N
Nepal Quality Control Act 2037 B.S., HMG-N
Insolvency Act 2063 B.S.
Secured Transaction Act 2063 B.S.