Definition of Mercantile Law or Business Law
Mercantile law may be defined as that branch of law which consists of laws relating to trade, industry and commerce. It is one of the important branches of Civil Law. It is also called as “Commercial Law”.
According S.R. Davar,
Mercantile law means that branch of law which is applicable to or concerned with trade and commerce in connection with various mercantile or business transactions.
Scope of Mercantile Law
The scope of mercantile law is very wide and varied. It includes law relating to contracts, partnership, sale of goods, negotiable instruments, companies, insolvency, insurance, carriage of goods, etc.
Mercantile law is concerned with the study of rights and obligations arising out of mercantile transactions between mercantile persons. Mercantile persons are persons who carry on commercial transactions. They may be individuals, partnership concerns or joint stock companies.
Knowledge of mercantile law is essential to merchants. It helps the merchants to avoid conflicts with the persons with whom he comes into business contacts.
Main sources of Mercantile Law
Indian mercantile law is based largely upon the English mercantile law. Prior to the enactment of the various Acts constituting mercantile law, the personal laws of the parties to suit regulated mercantile transactions. The rights of Hindus were governed by the Hindu Law and that of Muslims by the Mohammedan Law.
In case of persons other than Hindus and Muslims, the Courts applied the principles of English Law. Further, where laws and usage of Hindus or Muslims were silent on any point, the principles of English Law were applied.
The first efforts to pass an Act constituting mercantile law in India were made in 1872 by the passing of the Indian Contract Act. From that time a large number of statutes have been enacted concerning matters coming within the purview of mercantile law. For example, the Sale of Goods Act, 1930, the Partnership Act, 1932, the Companies Act, 1955, etc.
The main sources of Indian Mercantile Law are:
- English Mercantile Law.
- Statute Law.
- Judicial Decisions.
- Customs and Usage.
1. English Mercantile Law
The English law is the most important source of Indian mercantile law. Many rules of English law have been incorporated into Indian law through statutes and judicial decisions. The sources of English law are:
1. Common Law
This law is known as judge made law. It is based upon customs and practices handed down from generation to generation. It is the oldest unwritten law. The English Courts developed these over centuries.
Equity is also unwritten law. It is based upon concepts of justice developed by the judges whose decisions become precedents. It grew as a system of law supplementary to the common law and covered the deficiencies of the common law. Its rules were applied in cases where the rules of common law were considered harsh and oppressive.
The Judicature Acts of 1873 and 1875 abolished the distinction between Common Law and Equity so that they are now applied to all cases.
3. Statute Law
Statute law is one, which is laid down in the Acts of Parliament. Hence, it acts as the most superior and powerful source of law. It overrides any rule of common law or Equity.
4. Case Law
This is also an important source of the English mercantile law. It is built upon the decisions of the Judges. It is based on the principle that what has been decided in earlier case is binding in similar future case also unless that there is a change in the circumstances of the case.
5. A Lex Mercatoria or Law Merchant
It is also one of the important sources of English mercantile law. A lex mercatoria or law merchant consists of legal principles based on customs and usage. They developed first as a separate system of law and subsequently became part of the common law.
2. Statute Law
A Bill passed by the parliament and signed by the President becomes a “Statute” or an Act. Most of the Indian laws are embodied in the various Acts passed by the Central as well as State legislators. The Indian Contract Act, 1872, the Sale of Goods Act, 1930, the Companies Act, 1956 are some of the examples of the statute law.
3. Judicial Decisions
Judicial decisions are also called as case laws. They referred to as precedents and are binding on all Courts having jurisdiction lower to that of the Court, which gave the judgement. The Courts in deciding cases involving similar points of law also follow them.
4. Customs and Usage
Customs and usage plays an important role in regulating business transactions. A well-recognized custom or usage can even override the statute law. Most of the business customs and usage have been already codified and given legal sanctions in India. Some of them have been ratified by the decisions of the competent Courts of law.