Legal Environment – Business Law

The framework of laws, rules, and legal systems that affect businesses and make sure they function morally and within the law is known as the legal environment. It covers topics like consumer protection, employment law, contracts, and environmental regulations.

A subset of the legal environment, Business law is concerned with the laws and rules that control business operations. It addresses topics like trade laws, taxation, intellectual property, and corporate law.

Concept and Importance of Legal Environment

Definition of Law

• John Austin says: A law is a rule of conduct imposed and enforced by the sovereign.
• According to Salmond: Law is the body of principles recognized and applied by the state of administration of Justice.
• According to Justice Holms; Law is that what Justice says in his decision.
• According to Roscoe Pound; Law is the body of principles, recognized or enforced by public and regular tribunals in the administration of Justice.
• Lawrence, Robert and Peter; The law refers to the body of philosophy, principles, standards and rules which the Courts apply in deciding cases brought before them.

Law denotes rules and Principles either enforced by an authority or self-imposed by the members of a society to regulate and control the people behaviour with a view to securing the justice, peaceful living and social security- M.C Kuchhal
The term ‘LAW’ can be defined as a set of principles, rules, regulations and usages which are made, recognized and enforced by supreme authority of the state and self imposed by the members of society for maintaining peace, order, harmonious relations and justice in the society.

Nature of Law

Nature means; Inborn quality, Inner quality, Distinguishes from others, It may be found in capability, objectives and characteristics.

• Law is the set of rules of conduct.
• Law is self imposed or enforced by state authority.
• Equal treatment, uniformity in action (Non-discrimination between all)
• Law is more powerful than the law-makers.
• Law derived from sovereign power.
• It should be based on reason and rationality.
• Law is not rights alone or might alone. But it is a perfect combination of them.
• It is the tools of just and fair society.
• Law is the tools of social integration.
• Law is administered by the court.
• It is backed by sanction of painful consequences incase of violation.
• Ignorance of law is no excuse.
• Aim of law is peaceful living, protection of Property and personal dignity.

Purpose of Law

• To maintain the peace and security in society.
• To maintain the social and political stability in the society.
• To maintain the social solidarity and harmony in the society.
• To contribute for strengthening the public welfare, national economy and individual and commercial interest.
• To prohibit criminal activities and harmful human conduct in society.
• Contribute to make developed, prosperous and civilized country in the international community.

Types of Law

National / State law

National law deals the role of individual as well as society and state. All Nepalese laws are bundle of National Laws. National laws are called municipal. It governs within the national boundary. It is also call the territorial law. It regulates the people to people or people to state relations. National laws are also divided into various category.

International law

International law is law of Nations, which deals relation and dispute raised between two or more than two parties. It creates rights and duties of State and International Institutions. International Treaties, Conventions are example of International Law. International law has divided into two category one is public International law and another is private international law.

Substantive law

The substantive law is that part of law which deals about rights, duties and liabilities of people. It is main sources of rights, duties and obligation of person. Substantive law is based on the legal principles and subject matters.

Procedural law

Procedural law is belong with proceeding of legal matters. It governs the process of dispute settlement. It deals with how the content of law is implemented? It analyzes the process of remedy provided by substantive law. For example; Civil Procedural Code 2074

Civil law

Civil law deals about rights, duties, status, position and property of person and group of persons. It does not include the criminal matter. Property, Family and Positional matters are regulated by civil law.

Criminal law

Criminal law defines the right or wrong and determines the crime and punishment in the system of law. It describes crime against individual, society, and state. It imposed the penalty and imprisonment guilty person and reparation for victims. Criminal law define the punishment up to life imprisonment on the gravity of crime.

Public Law

Public law is concerning to public affairs or interests. It deals crime, punishment including national issues and concern. The constitution of the kingdom of Nepal is a best example of public law.

Private Law

Private law is related with individual activities and interests. It creates position, claim, rights, property etc. Law of contract is an example of private law.

Source of Law

Source means a place from where something emerges, commence, come into existence of origin.

Source of law means origin authority and causes of existence of law.

Primary Sources

• Legislation: (Enacted Laws by Parliament)
• Legislation is the main source of law in the modern states. It enjoys the law making power of country. It is made according to the change of time and it is the outcome of a long series of discussions among the representatives of people. It is made by legislative body and enforced by the supreme power.
• Precedent: (Case law/ Produced by Court)
• Precedent is the judicial decision which contains itself principle. Such principle which creates in the verdict (decision) of apex court and is applicable to other similar future cases of the same nature of case.
• Ordinance and regulation: (By laws/ formulation by Executive)
• An executive body also makes laws in the name of the ordinance, order and regulations. It also fulfills the vacuum of law and is more useful to maintain day to day administrative functions of state. In absence of law and by deligated authority executive can enact the laws.
• Custom and Usage: (Customary law)
• Custom is habitual behavioral system of the human society. It must be immemorial, reasonable, continuously observed certain and definite. Those custom, which are not oppose principles of morality and existing law, is called a valid custom in present and regarded as a source of law.
• Convention: (Treaty making by parties)
• Convention means agreement between two or more parties for their dealings. Conventional law is derived form the convention and treaty and it is binding for concerned parties.

Secondary Sources

• Morals and equity: In the ancient period, there was not any distinction between law and morality. In the western countries, principle of equity had been exercised as morality. It is not concrete source of law however it encourages making law to fulfill the vacuum of law.
• Opinion of experts: Opinions of the legal experts can also play vital role as secondary sources of law, which proved clear ideas for making law.
• Foreign laws/ Research reports: Foreign laws are reference matters of National laws. Research reports may play role to adopt the new laws to address the problems.

Meaning and Source of Business law of Nepal

Meaning of Business Law

• According to A.K Sundran; Business law provides legitimacy, security, control and incentives to business activities. It also protects rights and interests of consumers or labors, and business and society.
• M.C. Kuchhal sates; The term mercantile law may be defined as the branch of law which comprises laws concerning trade, industry and commerce.
• Thus business law is that part of law which deals with all the laws connected with every activity of business and rights and obligations of business persons and business firms arising from the business transactions. It helps the business community to carry it’s transactions without any fears and with certainty and confidence.

Scope of Business Law

• Scope: area, limitation, domain, demarcation, field, Significance importance
• “To extent of the area of subject matter that something deals with of to which it is relevant”.
• Business means activities of making, buying, selling and supplying of goods and services for money.

Business means:

• Commerce: Commerce means business between Country to country and cross boarder.
• Trade: The activities of buying and selling or exchanging goods or services between people to people and people to country.
• Industry: Industries denotes the meaning of production of goods from raw materials, especially in factories.

• Regulation, Control and Management of any Business organization.
• Dealing rights, duties and obligations of business firm and Businessmen.
• To Establishment, Operation, Development, Expansion and dissolution of any business organization.
• To organize the Enterprises and Companies.
• To develop the Industrial Sectors.
• To develop the society.
• To growth the economic Activities.
• Effective development of business sectors.
• To aware legal obligations of business firm and Businessmen.
• To regulate, control and manage the Commerce, Trade and Industry.

Features of Business Law

Business law is the fast growing part of law.
It regulates industry, trade and commerce.
It regulates every business activities of business community.
It includes the law of contract, company, agency, banking, insurance, arbitration.
It protects rights and interest of business community.
It is most important means to create positive environment for the prosperity of business.

Sources of Business Law

• Legislation (Law made by Parliament)
• Precedents (Law made by court)
• Ordinance ( Law made by Executive)
• Custom and Usages
• Commercial Treaties and Conventions
• English Mercantile Law
• Legal Writing and Experts Opinion

Importance of Business Law

• To establish and run the business activities.
• To increase and maintain business transactions.
• To develop capital market. How to collect and how to use capital.
• To develop the economic activities.
• To prepare the foundation for national development.
• To create employment and support the national interest.
• To create the proper environment for investment.
• To regulate the behavior of businessmen and officials of the business sectors.
• To develop the new principle of business.
• To increase the knowledge of international business.
• It helps to protect public health, safety and environment Protection.
• To settle the commercial disputes.
• To aware and caution to obligations and duties of businessmen and firms.

Frequently Asked Questions (FAQ)

Related Contents

Contract Law

Court System