Concept of Law and sources of Law

Ms. Urvi Shah

Assistant Professor
Unitedworld School of Law

Assignment
Q.1

Discuss different kinds of

meetings as per the Companies
Act 2013. (10 Marks)
Q.2 A Company meeting must
be duly convened and properly
constituted. Discuss. (10 Marks)
Q.3 Explain Doctrine of Ultra
Vires. (10 Marks)
Q.4 Explain Doctrine of
Constructive Notice. (10 Marks)

Submission

date of Assignment:
16th February 2015.
No submission will be entertained
after this date in any
circumstances.
Copied assignments will get
less marks.
Out of these 40 marks your
internal marks will be given.
Assignment should be
handwritten.
If you are absent on 16th, then

Meaning of Law
The

system of rules which a

particular country or community
recognizes as regulating the
actions of its members and which
it may enforce by the imposition
of penalties.

Law

is also often described as the

binding rules of human conduct.

Classification of Law
i.

International Law ii. Municipal Law

International law is an important branch
of law. It deals with those rules and
regulations of nation which are
recognized and are binding upon each
other through reciprocity.
Municipal laws are basically domestic or
national laws. They regulate the
relationship between the State and its
citizen and determines the relationship
among citizens

International Law can be further

classified as:
Public

International Law
This branch of law relates to the body of
rules and regulations which governs the
relationship between nations.
Private International Law
Private International law is that part of law
of the State, which deals with cases having
a foreign element. Private International law
relates to the rights of private citizens of
different countries. Marriages and adoption
of individuals belonging to different nations
fall within its domain.

Municipal Law

Public Law

1.

Constitutional Law: Constitutional law is considered to be the

basic as well as the supreme law of the country. The nature of
any State is basically determined by its Constitution. It also
provides the structure of the government. All the organs of
states derive their powers from the Constitution.

2.

Administrative Law: Administrative law mainly deals with the

powers and functions of administrative authorities government departments, authorities, bodies etc.

3.

Criminal Law: Criminal law generally deals with acts which are
prohibited by law and defines the prohibited act as an offence.
It also prescribes punishments for criminal offences. Criminal
law is very important for maintaining order in the society, and
for maintaining peace. It is considered a part of public law, as
crime is not only against the individual but against the whole
society.

Municipal Law (Contd)

Private

Law
This branch of law defines, regulates, governs
and enforces relationships between individuals
and associations and corporations.
Much of the life of a society is regulated by this
set of private laws or civil rights.
1. Personal Laws
2. Property Laws
3. Law of Obligations

Substantive law and Procedural

Law

Procedural law comprises the set of rules that

govern the proceedings of the court in criminal
lawsuits as well as civil and administrative
proceedings. The court needs to conform to the
standards setup by procedural law, while during the
proceedings. These rules ensure fair practice and
consistency in the "due process".
Substantive law is a statutory law that deals with
the legal relationship between people or the people
and the state. Therefore, substantive law defines the
rights and duties of the people, but procedural law
lays down the rules with the help of which they are
enforced. The differences between the two need to be
studied in greater detail, for better understanding.

Sources of Law
Customs
Constitution
Judicial

Precedents
Legislation/Statutory Law
Principles of Equity

Customs
Custom

can simply be explained as those

long established practices or unwritten rules
which have acquired binding or obligatory
character.
Custom was the most important source of
Law in ancient India.
After independence, the importance of
custom has definitely diminished as a source
of law and judicial precedent, and legislation
has gained a more significant place. A large
part of Indian law, especially personal laws,
however, are still governed by the customs.

Constitution
Constitution

is the supreme law of the

land.
The most important source of law is its
written constitution and the laws
that have been passed under the
authority of that constitution.
The Acts of the state legislature
made in contravention of the state
constitution may be struck down by
the courts.

Statutory Law
Statutory

law is a written law enacted by the

legislature or other authorized governing body
such as the executive branch of the
government. Statutory law contains all laws
enacted to facilitate, regulate or clarify the
process of governance, to improve civil order,
codify or amend existing laws, or to grant
special treatment to an individual or company.
In the Indian context, all laws are statutory.
When a Bill passed by the Parliament is
signed by the President of India, it becomes
an Act or a Statute.

Judicial Decisions
The

past judicial decisions or precedents of

courts are important sources of law.
Sometimes existing statutory provisions are
not adequate enough to resolve an issue.
In
such cases the court adjudicates
according to past precedents on similar
matters. The precedents set by the higher
courts have a binding force on lower courts
and the precedents set by the courts of the
same status like High Courts of different
states, exercise a persuasive power over
each other.

Equity
The

term 'equity' literally means 'just',

'fairness' and according to 'good
conscience'.

When

the existing law is inadequate or

silent with regard to a particular case,
the judges generally apply their
common sense, justice and fairness in
dealing with such cases. Thus, without
'equity' the term law will be devoid of
its essential quality.

Types of Business Organizations

Sole proprietorship
2. Partnership
3. Limited Liability Partnership
4. Company (Private and Public)
1.

Sole proprietorship
The

sole proprietorship is a form

of business that is owned,
managed and controlled by an
individual. He has to arrange
capital for the business and he
alone is responsible for its
management.

Advantages of Sole Proprietorship

Ease

of formation and
dissolution.
Low start-up costs and low
operational overhead.
Ownership of all profits.
Sole proprietorships are typically
subject to fewer regulations
No corporate income taxes.

Disadvantages of Sole
proprietorship
Unlimited

Liability
Limited Life
It may be difficult for an
individual to raise capital. Its
common for funding to be in the
form of personal savings or
personal loans.

Partnership
Partnership

is an association of persons who

agree to combine their financial resources and
managerial abilities to run a business and
share profits in an agreed ratio. Since the
resources of a sole proprietor to finance, and
his capacity to manage a growing business is
limited, he feels the need for a partnership
firm.
Partnership business, therefore, usually grows
out of the need for expansion of business with
more capital, better supervision and control,
division of work and spreading of risks.

Advantages of Partnership
Synergy-

more individuals
combining strengths
Partnerships are relatively easy
to form.
Partnerships are subject to fewer
regulations than corporations
Strong potential of access to
greater amounts of capital.
No corporate income tax.

Disadvantages of Partnership
Unlimited

Liability
Limited Life
Real possibility of disputes or
conflicts between partners which
could lead to dissolving the
partnership.

Limited Liability Partnership

Limited

Liability Partnership (LLP) is a new

corporate structure that combines the flexibility of
a partnership and the advantages of limited
liability of a company at a low compliance cost.
In other words, it is an alternative corporate
business vehicle that provides the benefits of
limited liability of a company, but allows its
members the flexibility of organizing their internal
management on the basis of a mutually arrived
agreement, as is the case in a partnership firm.
LLP is governed by the provisions of the
Limited Liability Partnership Act 2008

Advantages of Limited Liability

Partnership
Easy

to form in comparison to Company.

LLP is organized and operates on the basis
of an agreement.
Liability of the partners is Limited. LLP exists
as a separate legal entity from your personal
life.
Provides flexibility without imposing
detailed legal and procedural
requirements.
Enables professional/technical expertise and
initiative to combine with financial risk taking
capacity in an innovative and efficient manner.

Disadvantages of LLP
Regulated

form of Business
Amendment in LLP Agreement
Lack of recognition
Transfer of interest

Difference between LLP and

Company
A

basic difference between an LLP and a

company lies in that the internal governance
structure of a company is regulated by statute
(i.e. Companies Act, 1956) whereas for an LLP it
would be by a contractual agreement between
partners.
The management-ownership divide inherent
in a company is not there in a limited liability
partnership.
LLP has more flexibility as compared to a
company.
LLP has lesser compliance requirements as
compared to a company.

Public Company
According

to Section 2 (71) of the Companies

Act, 2013
Public Company means a company which
(a) Is not a private Company
(b) Has a minimum paid up share capital of five
lakh rupees or such higher paid up capital as
may be prescribed:
provided that a company which is a subsidiary
of a company, not being a private company,
shall be deemed to be public company for the
purposes of this act even where such subsidiary
company continues to be private company in its
articles;

Private Company
According

to Section 2(68) private

company means a company having a
minimum paid up share capital of Rs. One
lakh or such higher paid up share capital as
may be prescribed, and which by its articles,
i) restricts the right to transfer its shares
ii) except in case of One person Company,
limits the number of its shares to two
hundred:
iii) prohibits any invitation to the public to
subscribe for any securities of the company