Anaya Nolan
Commercial law, also known as business law, is a body of law that governs the rights, relations, and conduct of persons and organisations engaged in commercial and business activities. In India, commercial law has its origins in the Mercantile Law, which was enacted with the Indian Contract Act of 1872. This law revolutionised commercial transactions in India, which were previously governed by personal laws such as Hindu Law and Mohammedan Law. Since then, numerous laws have been enacted to regulate commercial transactions, and the Indian Mercantile Law has evolved from various sources, including English Mercantile Law and Common Law. Today, commercial laws in India continue to provide a comprehensive legal framework for business and trade-related activities, with the establishment of specialised Commercial Courts to efficiently handle commercial disputes. This paragraph introduces the topic of commercial law in India, highlighting its historical development, current applications, and the ongoing efforts to ensure a fair and efficient legal environment for businesses in the country.
| Characteristics | Values |
|---|---|
| Commercial law is also known as | Mercantile law, trade law, or business law |
| Commercial law is a branch of | Civil law |
| Commercial law deals with issues of | Private law and public law |
| Commercial law includes | Principal and agent; carriage by land and sea; merchant shipping; guarantee; marine, fire, life, and accident insurance; bills of exchange, negotiable instruments, contracts, and partnership |
| Commercial law is concerned with | The rights and obligations of traders arising out of commercial transactions |
| Commercial law is governed by | A valid agreement between the parties to the contract, which can be express or implied |
| Commercial law is a repository of all the laws included in a company to | Handle or look after its commercial activities |
| Commercial law is a generalised term for the entire | Legal body |
| Commercial law is a combination of | Various laws and principles of individuals having legal knowledge to resolve various issues in the company |
| Commercial law regulates | Commercial activities of the economy |
| Commercial law is influenced by | English Mercantile Law, Common Law, Equity, Law Merchant, and Statute Law |
| Commercial law sources include | Statutes or Acts of Parliament, Judicial Decisions or Case Law, Customs and Trade Usages |
| Commercial law in India is governed by | The Commercial Courts Act, 2015, which established specialised courts dedicated to handling commercial disputes |
| Commercial law in India includes | The Indian Contract Act, 1872; Sale of Goods Act, 1930; Companies Act, 2013; Partnership Act, 1932; GST Act, 2017 |
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What You'll Learn
The influence of English Mercantile Law
Mercantile law, also known as commercial law, is a broad term for the legal code that governs agreements, copyrights, contracts, patents, shipping and transport, and other transactions between banks and businesses of all types. It covers all aspects of commerce, including the legal issues related to the creation, operation, and management of a business, such as company formation, taxes, and internal governance.
Indian Mercantile Law has its origins in English Mercantile Law. India was under British control for a long time, and this has had a direct influence on its law. The Indian Mercantile Law is derived from the English Mercantile Law, and even today, Indian judicial heads refer to English Mercantile Law when faced with unresolved issues.
English Mercantile Law is an unwritten, generalized law of England that deals with customs and judicial activities. Its sources are equity law, merchant law, common law, and statute law. Common law is an unwritten law that consists of judicial decisions and customs. Over time, common law became rigid, leading to the development of equity law. Statute law, on the other hand, is a written law enacted by the Parliament of England, and it always overrides unwritten law.
In India, before the enactment of the Indian Contract Act in 1872, commercial transactions were governed by the personal laws of the contracting parties, such as Hindu Law or Mohammedan Law. The Indian Contract Act of 1872 was the first attempt to codify Mercantile Law in India, made by the British. Since then, numerous laws have been enacted to regulate commercial transactions, and these form the basis of Indian Mercantile Law.
In addition to English Mercantile Law, other sources of Indian Mercantile Law include statutes or acts of parliament, judicial decisions or case law, and customs and trade usages. These sources work together to regulate commercial activities and transactions in India.
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The Commercial Courts Act, 2015
Mercantile Law, also known as Commercial Law, is a broad term encompassing all the laws in India that govern trade or commerce. The Indian Mercantile Law has developed from many sources, including English Mercantile Law, to which Indian Law has a high degree of dependence.
The Commercial Courts Act of 2015 is one such piece of legislation that falls under the ambit of Mercantile Law. This Act pertains to the establishment and functioning of Commercial Courts, Commercial Appellate Courts, Commercial Divisions, and Commercial Appellate Divisions.
Chapter II of the Act outlines the establishment of these courts and divisions, specifying their jurisdiction and powers. It establishes that each state shall have at least one Commercial Court to adjudicate commercial disputes exclusively.
Chapter III of the Act defines the "Specified Value," which is a threshold amount set for suits to be filed in Commercial Courts. This value is determined by the High Court for its respective jurisdiction, and suits filed under this chapter must have a value exceeding the specified amount.
Chapter IIIA introduces the concept of pre-institution mediation and settlement, encouraging disputing parties to resolve their differences through mediation before approaching the courts.
Chapter IV of the Act outlines the process of appeals, providing the right to appeal against any judgment, decree, or order of a Commercial Court to the Commercial Division of the High Court.
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The Companies Act, 2013
Mercantile Law, also known as Commercial Law, governs the commercial activities of the economy. It is a broad term that encompasses all of the laws in India that govern commercial transactions. These transactions necessitate a valid agreement between the contracting parties, which can be explicitly or implicitly stated. Mercantile Law deals with the rights and obligations of traders arising from commercial transactions. The trader can be an individual, a partnership, or a corporation.
The Act covers various aspects of corporate regulation in India and has undergone significant amendments to enhance compliance, transparency, and corporate governance. One notable reform is the introduction of a tiered penalty system that differentiates penalties based on company size, reducing the burden on smaller companies and startups while imposing stricter penalties on larger firms. The Act also mandates real-time compliance disclosures, requiring companies to update statutory filings within 7 days.
Furthermore, the Act promotes transparency by requiring the preparation of transparent financial statements, auditor's reports, and annual returns. It also addresses Corporate Social Responsibility (CSR), requiring certain corporations to allocate a percentage of profits to social responsibility initiatives. Overall, The Companies Act, 2013, plays a crucial role in regulating and governing corporate entities in India, ensuring compliance, transparency, and accountability.
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The Indian Contract Act, 1872
Mercantile Law, also known as Commercial Law, is a broad term encompassing all the laws in India that govern trade or commerce. The Indian Contract Act, 1872, is the principal legislation regulating contract law in the country. It outlines the circumstances under which promises made by the contracting parties become legally binding.
The Act defines a contract as an agreement that is enforceable by law. It was enacted on 25 April 1872 and came into force on 1 September 1872. The Act originally had 266 sections, divided into 11 chapters. The first chapter covers the General Principles of Law of Contract, with sections on offer and acceptance, consideration, and free consent.
Section 13 of the Act states that "two or more persons are said to be in consent when they agree upon the same thing in the same sense (consensus-ad-idem)". Furthermore, section 14 defines free consent as consent that is not caused by coercion, undue influence, fraud, misrepresentation, or mistake. Section 15 provides a definition of coercion, which includes committing or threatening to commit any act forbidden by the Indian Penal Code or unlawfully detaining or threatening to detain property.
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The Sale of Goods Act, 1930
Mercantile Law, also known as Commercial Law, governs the commercial activities of the economy in India. It is a broad term that encompasses all the laws in India that govern commercial transactions. These transactions necessitate a valid agreement between the parties to the contract, which can be express or implied. Mercantile Law covers the rights and obligations of traders arising from commercial transactions. The trader can be an individual, a partnership, or a corporation.
The Indian Mercantile Law has developed from many sources, including English Mercantile Law, which has had a direct influence on Indian Law due to the country's history of British rule. The other sources of English Mercantile Law are Common Law, Equity, Law Merchant, and Statute Law. Common Law, or judge-made law, is the preliminary source of Indian Law. It consists of judicial decisions and customs and became rigid over time, leading to the development of Equity in England.
The first attempt to codify Mercantile Law in India was made by the British in 1872 with the enactment of the Indian Contract Act. Since then, numerous laws have been enacted to regulate commercial transactions, including the Partnership Act and the Negotiable Instruments Act. Customs and Usages played a vital role in regulating commercial transactions in India before codified laws were established.
One notable case involving the Act is Marwar Tent Factory v. Union of India (1989). In this case, the plaintiff argued that under Section 61(2) of the Sale of Goods Act, they were entitled to reasonable interest, even in the absence of a contract. The goods were supplied until September 18, 1962, and the defendant should have paid within a reasonable amount of time, but the payment was over a year late. The Rajasthan High Court permitted interest at 6% annually, considered a reasonable rate.
Another principle covered by the Act is the risk of loss or damage to goods. According to Section 26, the ownership of the goods remains with the owner, and the goods are at the risk of the buyer if the property has been transferred to them. If there is no explicit provision in the contract regarding this, then this clause will apply.
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Frequently asked questions
Commercial law, also known as business law, is the body of law that governs the rights, relations, and conduct of persons and organisations engaged in commercial and business activities.
The sources of commercial law in India include English Mercantile Law, Statutes or Acts of Parliament, Judicial Decisions or Case Law, and Customs and Trade Usages.
Examples of Acts of Parliament that form the basis of commercial law in India include the Indian Contract Act, 1872, the Sale of Goods Act, 1930, the Companies Act, 2013, the Partnership Act, 1932, and the Commercial Courts Act, 2015.
Commercial Courts in India have been established to handle commercial disputes efficiently and expeditiously. These courts have reduced litigation delays and provided cost-effective dispute resolution for businesses. The enhanced enforcement of contracts has also boosted investor confidence and attracted greater foreign investment into the country.
