BUSINESS LAW

BBS Third Year

Course Outline
Unit 1 Unit 2 Unit 3
Introduction to Law and The law of contract and other
Contract of Bailment and Pledge
Business Law Liabilities

Unit 4 Unit 5
Contract of Sale of Goods Contract of Agency
Course Outline

Unit 6 Unit 7 Unit 8

Contract of Indemnity and
Contract of Carriage Law of Company and Insolvency
Guarantee

Unit 9 Unit 10
Dispute Settlement Systems Law of Intellectual Property
Unit 1: Introduction
to Law and Business
Law
We will cover these topics:
• Concept, Nature and Characteristics of law
• Classification and Sources of Law
• Meaning, characteristics and sources of
Nepalese Business Law
• Changing Dimensions of Business Law and
Constitutional Provisions
Concept of Law
◦ Rules, regulations and principles exist in the society for guiding and governing
conduct or behavior of its members.
◦ Established by members of same society who are subject to such rules and
principles
◦ Law is valid Instrument to provide recognition to human conduct or affairs to
regulate society in a prescribed way, and govern society.
◦ As per Hindu Philosophy, law is not separated from religion, and it is inextricably
linked with religious rules. Likewise, law is recognized as religion and morality in
the Muslim Society.
Concept of Law (Cont.)
◦ A binding principle or rule made by competent authority or state to control,
systematize and regulate human conduct or activities.
*Competent Authority is any person or organization that has legally delegated or invested authority,
capacity or power to perform a designated function
◦ Treats equally to everyone.
◦ Defined differently by different scholars.
◦ No uniform definition of the term “Law”
◦ There are different school of thoughts to define it.
Different School of Thoughts in Law
◦ The Natural Law: believes that law is will of almighty , and it is universal. It is the product of
reason, intuition, nature, moral and ethics
◦ The Analytical or Practical School of Thought: It tried to separate morality from law and regards
that law is the command of sovereignty backed by sanction.
◦ The Historical School: Emphasizes tradition, practice and lives of people and says that the
customary laws are true laws.
◦ The Sociological School: has developed the functional approach and has considered the law as a
form of social control or engineering.
◦ The Socialist or Economic School: says that law is an instrument to exploit the suppressed class
by the ruling class.
◦ The Realistic Thought: has believed that law is made by the court while deciding the dispute in the
adjudication.
Some Significant Definition
◦ Black Law’s Dictionary: Law is that which must be obeyed and followed by
citizens subject to sanction and legal consequences.
◦ Oxford English Dictionary: Rule made by the authority for the proper
regulation of a community or society for correct conduct in life.
◦ Austin: A law is a rule of conduct imposed and enforced by the sovereign.
◦ Salmond: Law is the body of principles recognized and applied by the state in
the administration of justice.
◦ Savigny: Law is a rule of human action and conduct sanctioned by national
usage.
◦ Hooker: Any kind of rule or canon whereby actions are framed is the law.
Some Significant Definition – Cont.
◦ Holland: A law is a general rule of external human action enforced by a sovereign
political authority.
◦ Blackstone: Law in its most general and comprehensive sense signifies a rule of action
and is applied indiscriminately to all kinds of actions whether animate or inanimate,
rational or irrational.
◦ Justice Holms: Law is that what the justice says in his decision.
◦ Green: The system of rights and obligations which the state enforces.
◦ Roscoe Pound: Law is the body of principles, recognized or enforced by public and
regular tribunals in the administration of justice.
◦ Laski: Law is not merely command but it is rooted in individual conscience.
Nature and Characteristic of Law
Law is inextricably linked with society as it is integral part. It is the standard rule to
maintain the relationship between the society and its members. In the absence of
law, no society exists to the desired standard, and lawlessness created insecurity,
trespass, painfulness and anarchy. Therefore, law is the foundation of the state.
◦ Promulgated by competent authority
◦ It should follow the principle of natural justice. It should be based on reason and
rationality.
◦ Reflection of Social Interest. It is based on common interest of society and it
tries to maintain the balance of interest for social solidarity and harmony.
◦ It is rigid and not the subject matter of day to day change
Nature and Characteristic of Law – Cont.
◦ It is equally enforceable to everyone in the society
◦ It is changeable with the pace of time and on basis of common need.
◦ It has uniformity in action.
◦ It is backed by sanction of painful consequences in case of violation. Law is
always supreme in position.
◦ It is correlative with justice
◦ It is administrated by the court.
Types of Law
◦ Civil Law and Criminal Law (On the basis of jurisdiction)
◦ National and International Law (On the basis of territorial limits)
◦ Public and Private Law (On the basis of subject matter of law)
◦ Substantial and Procedural Law (On the basis of nature of law)
Civil Law
◦ Law is related to property and position of a person in the society
◦ For example: Land Law, Contract Law, Commercial Law
◦ It secures the right of people to enjoy in their daily life and ensures remedy in the
case of violation.
◦ It is forgivable.
Criminal Law
◦ The part of law related to control the undesirable conduct and activities in the
society for keeping peace and security.
◦ Defines the human conduct as crime and declares punishment for it.
◦ Criminalization, decriminalization and recriminalization of human conduct are
the subject matter of criminal law. (for e.g. validation of weed)
◦ Some crimes such as rape and murder are universal and some are territorial like
killing cow.
◦ General Principles applied in criminal law:
◦ No one can be punished without criminal act and such act should be declared by law
◦ Liability of burden of proof goes to prosecutor party
◦ Crime dies with criminal
◦ Retrospective effect is not allowed
National and International Law
◦ All the laws under national legal system which are enacted within the territorial
jurisdiction are known as National Law.
◦ International law can be defined as a set of rules and principles recognized and
accepted by the sovereign nations which governs and regulates their behavior.
◦ It is made for states for establishing their relationship and is binding for them.
◦ Because it is no sovereign power to enforce law, it is considered to be weaker in
comparison to national law
Public and Private Law
◦ Public laws are laws intended for general application, such as those that apply to the nation as a
whole or a class of individuals. For example: constitution, criminal law, etc.
◦ Private laws are enacted for the benefit of a particular individual or small group, such as claims
against the government or individual immigration / naturalization matters, violation of
agreement/contract.

The main difference between private and public law is the scope of the problem that is being
addressed. Private law deals with issues that are specific to individuals, such as contract negotiations
or property disputes. Public law, on the other hand, deals with issues that are important to society as
a whole, such as human rights or national security.
Substantive and Procedural Law
◦ Substantive law establishes the rights and obligations that govern people and
organizations; it includes all laws of general and specific applicability.
◦ It defines what a particular act is, when is it applicable/not applicable, what
happens if it is breached and so on.

◦ Procedural law establishes the legal rules by which substantive law is created,
applied and enforced, particularly in a court of law.
◦ It defines timeline to reach out relevant authority, how to claim for remedies, what
is the process for filing claim and so on.
Difference Between Substantial and
Procedural Law
Substantial Law Procedural Law
It is known as law of rights and duties It is known as remedial law
It contains rights and remedies of the It contains mode and conditions to restore
victim party rights of victim party
Related to objective of law Related to medium to achieve objective of
law
It determines rights and relationship of It determines the relation between court
the party and the parties to a particular case
Substantive law comes in operation first Procedural law follows the substantive law
Sources of Law
◦Binding/Primary sources of Law:
◦ Legislation: The term legislation is derived from Latin term “Legis”
which means “law” and “latum” which means to make, put or set.
Hence, legislation means making or setting of law. Legislation is a written
law passed by legislature and implemented by court.
◦ Precedent: It is a body of principles developed by supreme court in the
process of hearing and deciding a case. It is also called Judge made law.
Article 128 (4)of the constitution provides the power of making
precedent to supreme court and the principles constituted there must be
followed by lower courts.
Sources of Law – Cont.
◦ Customs or Usages: Law based on customs are known as customary law. In
primitive society, lives of human being are regulated by customs. For example:
marriage in keen relative is prohibited in Nepal but Muluki Ain provides that no
one shall be punished for a marriage or sexual intercourse in keen relation and
such marriage should be considered valid with their tradition followed in their
caste.
◦ Contract or Agreement: will study further in next unit
◦ Treaty or Convention: convention is an agreement between two or more than
two countries. It is an agreement by which two or more than two countries try to
establish relationship between them governed by international law. Nepal has
accepted various convention like CRC, CEDAW, etc.
Sources of Law – Cont.
◦Persuasive/Secondary Sources of Law
◦ Foreign law
◦ Decision of foreign court
◦ Opinion of experts/jurist
◦ Textbooks, journals, etc.
◦ Moral rules
◦ Religious books
Meaning of Business Law
◦ Business law may be defined as that branch of law connected which is concerning to
trade, industries and commerce. It is concerned with establishment, operation,
development, expansion and winding up of any business activities. It regulated the
relation between business entities in regard to contracts, sale of goods, partnership,
companies insurance, insolvency, carriage of goods, arbitration and so on.
◦ It is a part of civil law. It deals with right and obligations of businessman of business
firms that arises out of the business transaction.
◦ 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 states, the term mercantile law may be defined as the branch of law
which comprises laws concerning trade, industry and commerce.
Characteristics of Business Law
◦ Business law is 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 the most important means to create positive environment for the
prosperity of business
Sources of Business Law
◦Law made by parliament
◦Custom and Usages
◦Precedents
◦English Mercantile Law
◦Opinion of Professional and Experts
◦Business agreements and conventions
Importance of Business Law
◦ Business law facilitates the business community
◦ It is important to create good environment for the business
◦ Strong economy
◦ It brings uniformity in the system
◦ Systemization in business
◦ Justice is an end of business law
Changing Dimensions of Business Law
◦ Social Dimension
◦ Religious Dimension
◦ Political Dimension
◦ Economic Dimension
◦ Technological Dimension
◦ International Dimension
◦ Moral Dimension
Some Past Questions
◦ What is Business Law? Explain the sources of Nepalese Business Law [2063]
◦ Define Business Law. Explain its importance. [10/15] [2061/62/66/68]
◦ What is Law. Explain the importance of Business Law. [10][2079/80]
◦ What is procedural Law? [2] [2075]
◦ Define Business Law. [2] [2074]
◦ What is substantive law? [2] [2073]
◦ State any two nature of Law. [2]
◦ Distinguish between substantive law and procedural Law. [2][6]
Some Past Questions – Cont.
◦ What is legislation? [2] [2079]
◦ When does a custom become a binding source of law? [2]
◦ State and explain the characteristics of Nepalese business law. [ 10] [2075, 2073]
◦ Explain the law classifies on the basis of nature of law. [10] [2074]
◦ Explain the major sources of business law. [10] [2070]
◦ Discuss the various types of law. [10]
END OF UNIT 1
Happy Learning!!