Source refers to a place, person, or thing from which something originates or can be obtained. Sources of Business law refers to the authority from which the business law is derived.
SOURCES OF BUSINESS LAW
a. Legislation or Statutory Law
Legislation is the most important and direct source of law. It is made after fulfilling a long series of discussions by the lawmakers/representative of the general people.
E.g. Contract Act 2056, Company Act 2063, Labor Act 2074, etc.
b. Precedent
Judicial precedents refer to the decisions given by courts in different cases. A judicial decision has a legal principle that is binding on the subordinate courts. Once a court has delivered a judgment on a particular case, the courts subordinate to it must abide by the precedent while deciding on similar cases with similar facts.
All decisions of the court are not considered as precedent but those decisions which provide or establish principles are considered as precedent.
Factors increasing the authority of a precedent:
The rank of the judges constituting the bench that makes the decision.
- A unanimous decision has more weight.
- Approval by other courts, especially the higher courts.
- The enactment of a statute that carries the same law subsequently.
c. Custom and Usages
Large part of our business rules are influenced by that culture and tradition. Before making business rules our law makers follow their customs and tradition.
All customs can’t be considered as sources of law to be a valid source of law customs must fulfill the following requirements:
Reasonability: The custom must be reasonable or practical and must conform with the basic morality prevailing in the modern-day society.
Antiquity: It must have been practiced for time immemorial.
Certainty: The custom must be clear and unambiguous on how it should be practiced.
Conformity with statutes: No custom must go against the law of the land.
Continuity in practice: Not only the custom must be practiced for time immemorial, but it should also be practiced without interruption.
Must not be in opposition to public policy: The custom must adhere to the public policy of the state.
Must be general or universal: There must be unanimity in the opinion of the community or place in which it is practiced. Hence, it should be universal or general in its application.
d. Commercial Treaties and Agreements
Commercial treaty and agreement are business understanding and compromise between or among the organization and countries. After making business agreement all the members of that follow its provisions as its business rules. The member countries or organization shall make business rules according to provisions of that agreement. For example, member countries of WTO, SAFTA, EU etc. should follow its rules as their business rule. Therefore it is also considered as a source of business law.
e. Writings and Opinion of Scholars
The opinions and explanations made by professionals such as lawyers, works of eminent jurists, experts of concerned field, may give proper instructions to the lawmen. The judge may use opinions of experts in course of making a verdict.
This source is not an authoritative but more useful to observe the contemporary need and status of business law.
f. British Mercantile Law
In the initial phase, British businessmen developed the rules and principles for business transactions in India. Later on, it was converted in mercantile law. During the period of colony, Indian industry, trade, and commerce were developed on the basis of British rule. Due to geographical, cultural, and commercial linkage it influences the Nepalese business law indirectly.
Most notable or common sources of law divides it into legislation, precedent, and custom. Precedent refers to the previous judicial decisions. The legislation refers to the statutory rules enacted by the legislature. Custom refers to the age-old practices of a community that has solidified its presence so much that it becomes the law.
Though legislation seems to be the agency through which we get laws, it is just the primary source. Many laws that we have are a reflection of what we as a society have followed for generations. Also, many cases show how sometimes the law of the land is inadequate or incapable of predicting what issues could arise in subsequent disputes. This calls for the judiciary to elaborate or interpret the law of the land, setting judicial precedents for several issues. All the sources of law help the judiciary in making a proper and correct decision.