Keith Mack
Mercantile law, also known as commercial law, is a legal code that governs commerce, trade, and business transactions. In India, the main sources of mercantile law include English mercantile law, Indian statutes (such as the Indian Contract Act of 1872), judicial decisions, and established trade customs. Before the country's current statutes were passed, mercantile traditions in India were governed by religious law, specifically Hindu and Mohammedan law. The English Law served as the most important source for the development of Indian Mercantile Law, with concepts and formats borrowed from it. Statute law, which is written law enacted by Parliament, is another vital source of Mercantile Law in England and India. The Indian Mercantile Law has various sources similar to that of English Mercantile Law, including Common Law, Equity, Law Merchant, and Statute Law.
| Characteristics | Values |
|---|---|
| Origin | English Mercantile Law |
| Sources of English Mercantile Law | Common Law, Equity, Law Merchant, Statute Law |
| Common Law | Unwritten law of England that consists of judicial decisions and customs |
| Statute Law | Written law of England enacted by the Parliament of England |
| Equity | A set of rules that are not based on customs or statutory law |
| Indian Mercantile Law Sources | Indian Statutes, Judicial Decisions, Trade Customs |
| Indian Statutes | Indian Contract Act, Sale of Goods Act, Companies Act, Indian Partnership Act, Negotiable Instruments Act, The Arbitration and Conciliation Act, The Insurance Act, The Carriers Act, The Presidency Town Insolvency Acts, Provincial Insolvency Act |
| Trade Customs | Customs and Usages that regulate commercial transactions |
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What You'll Learn
Influence of English mercantile law
Indian Mercantile Law has its origins in English Mercantile Law. India was under British rule for a long time, and this has had a direct influence on its law. Indian Mercantile Law is derived from English Mercantile Law, and its concepts and formats are based on English Law. Even today, in the absence of any provision related to an issue, Indian judicial heads refer to English Mercantile Law.
The 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 is the unwritten law of England, consisting of judicial decisions and customs. Over time, Common Law became rigid, leading to the development of Equity in England. Statute Law, on the other hand, is the written law of England enacted by the English Parliament and always overrides Common Law and Equity. It is a vital source of Mercantile Law of England, with examples such as the English Partnership Act of 1890 and the Sale of Goods Act of 2015.
The influence of English Mercantile Law is evident in the Indian legislature as well. Many of the Acts involved in the Mercantile Law are enacted by the Indian Parliament, bringing uniformity to Indian Law. These include key legislations like The Indian Contract Act of 1872, The Sale of Goods Act of 1930, and The Partnership Act of 1932. Judicial decisions play a crucial role, with judges interpreting the law and putting it into practice. The decisions of higher courts, such as the High Court and the Supreme Court, are binding on all subsequent decisions unless overruled by a larger bench or a higher court, respectively.
Customs and trade usages also have a significant influence on Indian Mercantile Law. Before codified law existed in India, customs and usages regulated commercial transactions. Even today, customs and trade usages are recognised by Indian courts and can override existing statutes. For example, Section 1 of the Indian Contract Act states that customs and trade usages consistent with the Act shall not be affected. Thus, English Mercantile Law and its components of Common Law, Equity, Law Merchant, and Statute Law have had a profound and lasting influence on the development and practice of Indian Mercantile Law.
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Indian statutes
Indian Mercantile Law has evolved from various sources, with a significant influence from English Mercantile Law due to India's colonial past. Indian statutes, or acts of parliament, form a crucial part of the country's mercantile law framework. These statutes provide a legislative framework for regulating commercial activities and transactions.
One of the key Indian statutes in mercantile law is the Indian Contract Act of 1872. This act plays a pivotal role in governing business transactions and contracts by defining the rights and obligations of contracting parties. It provides a legal remedy in cases where one party fails to honour their commitments, thereby ensuring certainty and trust in commercial exchanges. The Indian Contract Act is a foundational piece of legislation that sets out unified principles applicable to various business dealings.
Another important statute is the Sale of Goods Act, introduced in 1930. This act specifically addresses agreements involving the transfer of ownership of goods from the seller to the buyer for a price. The Sale of Goods Act sets out the rights and duties of both parties in such transactions, providing clarity and protection to traders.
In addition to the above, there are several other Indian statutes that contribute to the body of mercantile law. These include the Companies Act of 2013, the Indian Partnership Act of 1932, the Negotiable Instruments Act of 1881, the Arbitration and Conciliation Act of 1996, the Insurance Act of 1938, the Carriers Act of 1865, and the Presidency Town Insolvency Acts of 1909, along with the Provincial Insolvency Act of 1920. Each of these acts governs specific aspects of commercial activities, providing a comprehensive regulatory framework for businesses and traders.
The Indian Parliament's ability to enact legislation ensures uniformity in Indian Law. The statutes passed by Parliament bring consistency to the legal system and enable effective implementation through judicial interpretation. These statutes, or acts, form the backbone of Indian Mercantile Law, providing a solid foundation for the country's commercial landscape.
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Judicial decisions
Indian Mercantile Law is heavily influenced by English Mercantile Law, which itself draws on Common Law, Equity, Law Merchant, and Statute Law. Common Law, in turn, is shaped by customs, judicial decisions, and old scholarly works.
In India, judicial decisions are also influenced by the historical decisions of the Privy Council and House of Lords, which are referred to as precedents in deciding certain cases and interpreting statutes.
In the context of Mercantile Law, judicial decisions are based on the interpretation of various acts enacted by the Indian legislature, such as the Indian Contract Act, the Sale of Goods Act, the Companies Act, the Indian Partnership Act, the Negotiable Instruments Act, the Arbitration and Conciliation Act, the Insurance Act, the Carriers Act, the Presidency Town Insolvency Acts, and the Provincial Insolvency Act.
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Customs and trade
Indian Mercantile Law, which governs business transactions, contracts, and trade practices, has its origins in English Mercantile Law. India's long period of British rule has meant that Indian law has been heavily influenced by English law. In the absence of any provision related to an issue in Indian law, the default is to refer to English Mercantile Law.
The Indian Customs Act of 1962 governs import and export tariffs and sets the rules for customs valuation. The Central Board of Indirect Taxes and Customs is the apex body for customs, excise, and goods and services tax-related matters in India.
Most business customs and usage in India have already been formally codified and granted legal sanction. Some have even been ratified by the courts and given extra weight. The business environment has evolved significantly due to technological advancements and globalisation, influencing how mercantile law operates today. Key modern developments include e-contracts and digital signatures, strengthened consumer rights, cross-border transactions, and emerging data privacy and security regulations.
In addition to customs and trade, there are several other sources of Indian Mercantile Law. These include Indian statutes such as the Indian Contract Act, Sale of Goods Act, Indian Partnership Act, Negotiable Instruments Act, The Arbitration and Conciliation Act, The Insurance Act, The Carriers Act, The Presidency Town Insolvency Acts, and Provincial Insolvency Act. Judicial decisions or case law, which refer to judgements from courts that set precedents for future cases, are also a source of Indian Mercantile Law.
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Religious law
Indian Mercantile Law, also known as Commercial Law, is a legal code that governs trade and commerce. It deals with business transactions and operations like agreements, contracts, copyrights, franchising, insurance, licensing, patents, shipping, transport, trademarks, etc. The Indian Mercantile Law has developed from many sources, including religious law.
Before the Indian Contract Act of 1872, mercantile traditions were governed by religious law, specifically Hindu and Islamic law. In 1772, Warren Hastings created provisions prescribing Hindu law for Hindus and Islamic law for Muslims for litigation relating to personal matters. This was an attempt at "legal pluralism", where people in the same region were subjected to different civil and criminal laws based on their religion. This divided Indian society, and the law in India was deemed to require reform.
The British colonial government pursued a path of least resistance, relying on local intermediaries, who were mostly Muslim and some Hindu. They adapted to local law practices, sustaining pre-colonial religious and political law and conflicts. In the early 19th century, there were debates in the House of Commons about the effectiveness of the East India Company in the administration of justice and law-making. A "Select Committee" was formed, and the consensus was that the conflicting laws and religious laws of the East India Company were not conducive to unity.
From 1828 to 1855, a series of British parliamentary acts were passed to revise the Anglo-Hindu and Anglo-Muslim laws. In 1832, the acceptance of religious fatwa as a source of law was abolished. A new criminal code was created to replace the existing conflicting mixture of Muslim and Hindu texts, which was ready by 1855. These changes were welcomed by the Hindu law reform movement but were considered an abrogation of religion-defined rules within Muslim law. They triggered discontent and became partly responsible for the 1857 Indian revolt.
After independence, efforts have been made to modernise various aspects of personal law and bring about uniformity among religions. Recent reforms have affected custody and guardianship laws, adoption laws, succession laws, and laws concerning domestic violence and child marriage.
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Frequently asked questions
The sources of Indian Mercantile Law are rooted in English Mercantile Law, Indian statutes, judicial decisions, and established trade customs.
English Mercantile Law has heavily influenced Indian Mercantile Law due to the country's long history of British rule. Indian Mercantile Law borrows its concepts and formats from English Mercantile Law, which comprises Common Law, Equity, Law Merchant, and Statute Law.
Examples of Indian statutes that are sources of Mercantile Law include the Indian Contract Act (1872), the Sale of Goods Act (1930), the Indian Partnership Act (1932), the Negotiable Instruments Act (1881), and the Companies Act (2013).
