LEGAL ASPECTS OF BUSINESS

• Law – the word law is a general term n has different connotations

for different people; eg.,
• 1. A citizen may think of law as a set of rules which he must obey.
• 2. A lawyer who practises law may think of law as a vocation.
• 3. A legislator may look at law as something created by him.
• A judge may think of law as guiding principles to be applied in
making decisions.
However, in the legal sense, law includes all the rules and principles
which regulate our relations with other individuals n with the
State. State regulates the conduct of its people by a set of rules.
• A/c to Salmond, “Law is the body of principles recognized and applied
by the State in the administration of justice.”
• Woodrow Wilson has defined law as “that portion of the established
habit n thought of mankind which has gained distinct n formal
recognition in the shape of uniform rules backed by the authority n
power of the govt.,
• Object of law : the object of law is order, n the result of order is that
men are enabled to look ahead with some sort of security as to the
future.
• Need for the knowledge of law : Ignorantia juris not excusat.
Ignorance of law is no excuse. Although it is not possible for a layman
to learn every branch of law, yet it is to the advantage of each member
of the community to
Know something of rules n regulations by which he is governed.
Nature of mercantile law :
Mercantile law denotes that branch of law which is concerned
with matters as are usually the subject of what may be called
mercantile transactions i.e., it deals with contractual
situations n the right and obligations arising out of mercantile
transactions b/w mercantile persons. M person may be a
single individual, a partnership, or a joint stock company.
Sources of ML : bulk of Indian ML is based on English ML. in the
absence of any particular law, usage or custom on a particular
point arising before a Court, rules of the English
 Nature of contract
Object of the law of contract – the law of contract is that branch of
law which determines the circumstances in which promises made
by the parties to a contract shall be legally binding on them. Its
rules define the remedies that are available in a court of law
against a person who fails to perform his contract, n the
conditions under which the remedies are available. Most
important branch of business law.
The Indian contract Act, 1872 –
The Act is not exhaustive- the ICA does not profess to be a
complete n exhaustive code. It deals with the general principles
of the law of contract n with some special contracts only.
 Nature of law of contract
• Law of con differs from other branches of law in an important
respect. It doesn’t lay a number of rights n duties which the law
will enforce; it consists rather of a number of limiting principles,
subject to which, the parties may create rights n duties for
themselves which the law will uphold.
• Defn of contract- a contract is an agreement made b/w two or
more parties which the law will enforce. Sec.2 (h) defines contract
as an agreement enforceable by law. Its based on Pollocks defn-
every agreement n promise enforceable at law is contract.
• a/c Salmond a contract is an agreement creating n defining
obligations b/w the parties.
• Agreement =Offer + Acceptance
• An agreement is defined as every promise,
forming consideration for each other.
• Promise a/c to Sec.2 – when a person to
whom the proposal is made signifies his
assent thereto, the proposal is said to be
accepted. Once accepted becomes a promise.
An agreement is an accepted proposal.
• Essential elements of a valid contract -