UNIT-I Sessions - 1
Introduction to Legal Environment of
Business
What is Law?
Instrument of Social Justice
regulates the external actions of human
beings not their minds
Enforcing authority is the State
Law must go along with the fundamental
rights declared by the Constitution of India
In case of any conflict between the legislation
and the Fundamental rights – FRs prevail
Caselaw
Maneka Gandhi vs. Union of India (1978)
Articles 14 (Right to equality)
Article 21 (personal liberty)
Passport was impounded and She was not allowed to
move out of the country without providing appropriate
reasons
It was observed that law means valid law, procedure
established by law means only that procedure which
is established by valid law must be just, fair and
reasonable
What is the Basic Purpose of Law?
To maintain order and secure justice in the
society
Secure social justice supported with the power of
state
Uniformity and certainty
Sources of Law
Immediate or direct author of law – Sovereign
in the country
Historical documents – law evolved -
Causes which have brought into existence
the rules which later on acquire the force of
law.
…Contd sources of law
Formal Sources: From which law derives its
force and validity
Material Sources: From which law derives
matter or materials of which it is composed i.e.
legal and historical sources
Legal Sources: These are the sources which
are recognized by the law itself as authoritative
Ex: Statute law, customary law
….Contd Sources of law
Historical Sources: Which have no binding
force and which are not recognized by the law.
Ex: Juristic writings, literary works, Foreign decisions
Legislation: Law making. It includes all
methods of law-making and therefore include
laws made by judges also. It is important
source o law
Classification of law
Imperative law. Ex: Command of a King
Physical or Scientific laws. Newton’s law
Natural law or Moral law
Conventional law (agreement)
Customary law (religion)
Practical or Technical law (Architecture)
Civil law
Law of Contracts
Torts
Tort is a civil wrong
Breach of civil duty
Not all civil wrongs constitute tort
Tort = wrongful act + illogical behaviour
(Reasonable care, due diligence)
….Contd Tort
Tortious act is explained in terms of:
Malfeasance (actual commission of unlawful
act) – without driving licence
Misfeasance (improper performance of a
lawful act) – Rash driving
Non-feasance (failure to perform legal duty) –
Doctor fails to operate on the fixed date.
Contract and Tort
Consent
Privity of contract
Right in personam; Right in rem
Gratuitous undertaking
Duty imposed by will and consent – by law
and is owed to community at large
Breach of contract - Mental element-
sometimes considered under torts
…Contd contracts and torts
Purpose of damages – compensation for
breach – while under torts it is the only
remedy (exemplary damages)
Liquidated damages – unliquidated usually
decided by the Court
Limitation period – from the breach; from the
time the damage occurred.
Crime and Tort
(P.Rathinam Nagbhusan Patnaik Vs. UOI, SC differentiated Torts from
Crime)
Wrong against –society; Individual
Action initiated by State; by the victim
Prosecution – Suit
Punishment to the accused – Compensation
to the victim
Perspective –Accused; Victim
Non-compoundable; Compoundable offence
Fine –State; Compensation to Victim
General Conditions of liability in To
There must be a wrong committed by a
person
Wrongful act must result in damage
A legal remedy in the Form of an action for
damages – Nuisance – remedy - injunction
but not damages
Preventive Injunction against potential nuisance
Kuldip Singh vs. Subash Chander Jain 2000 SOL
Case No. 193
Ubi Jus Ibi remedium (cardinal
principle of law)
‘Where there is a right there is a remedy’
The term ‘Jus’ implies ‘legal authority’ to do or
demand something
The term ‘Remedium’ is the ‘right of action’
Real significance of legal damage is explained
by two important maxims:
Injuria Sine Damno
Damnum Sine Injuria
Injuria Sine Damno
‘Injuria’ means injury
‘Sine’ means without
‘damno’ means damage
Landmark Cases –
Ashby vs. White – refrained from casting his
vote
Marzetti vs. Williams – refused to honour
customer’s a/c despite sufficient funds.
Damnum Sine Injuria
Damage without legal injury
No action lies even when actual and
substantial loss occurs if there is no
infringement of any legal right
Landmark case:
Gloucester Grammar School case – though the
plaintiff suffered loss there was no legal
injury- no damages (compensation)
Land mark cases
Ushaben vs. Bhagyalakshmi Chitra Mandir
Filed for permanent injunction – to restrain
him from exhibiting the film named ‘Jai
Santoshi Maa”
Godesses saraswathi, lakshmi and parvathi
were picturized to be jealous of each other
and were ridiculed – the plea was rejected.
National Law
Law of the land
Constitution of India is the Supreme law of
the nation
It was adopted after independence (1950)
It lays down the structure, organization and
defines the duties powers and functions of the
organs of the state.
….Contd national law
It includes various laws made by the State
and its instrumentalities
The inter-relationship of the constitution and
general laws is governed by the constitutional
principles.
The state legislations must be in consonance
with those of the Supreme law
In case of any conflict between the state laws
and the constitution, constitution shall prevail.
Features of Indian Constitution
It is written constitution, implies it establishes
a “limited government”
The powers of the organs of the state are
limited by the constitution.
Organs of the government – Legislature,
Executive and Judiciary are limited by the
constitution itself Features of Indian
Constitution
…Contd Features of Indian Constitution
Constitution is Supreme and the organs of the
state are subordinate to it
Judiciary is entrusted with the final authority
to interpret the constitutional provisions
The constitutional validity of the acts of the
organs are adjudged by the supreme Court
(Apex)- Judicial Review
International Law
National Law – (Municipal Law)
International Law is the law of Nations (Law
of Nations)
The term law of nations was introduced by
Bentham in 1789
It is a body of customary rules and principles
regulating the conduct and relations of the
sovereign civilized nations.
Definition
International law is the body of rules which
are legally binding on the states while
performing the transactions with each other
International law is considered to be weak as
it is based on the national law (Fundamental
law of that particular nation)
There is a Debate whether International law is
really a law? (code of rules of the conduct of
moral force only)
….Contd International law
International law is growing in its stature.
The growing majority of the member states
are relying on international law for their
mutual benefit.
The factors may be attributed to:
1. National and domestic policies of the State
2. Self-interest of the State
3. Foreign policy decisions and
4. Power politics in the international arena.
….Contd International Law
They may regarded as the rules to restrain or
as a common language or as a normative
guidance in decision making
International law has a significant role to play
in contemporary problems
Contemporary areas of International law:
Negotiations on trade, convention, curbing terrorism,
mechanism for peaceful settlement of disputes,
debates with regard to international institutions like
UN, UNESCO, ILO etc to arrive at consensus
….Contd International Law
Contracts entered into by transnational
companies, legal formalities to be fulfilled by
MNCs, IPRs, Settlement of disputes and
conflict in law etc.
Violation of Human Rights
Mercantile Law
In 18th Century Merchants had their separate
courts to settle the disputes; presided by
merchants well versed in those customs,
usages and practices.
The common law courts in England
recognized the customs, usages and practice
of the merchants, which became part of the
England common law (Law Merchant)
Sources of Mercantile Law
Lex mercatoria (law merchant) – An Unwritten
law
Legislation (Acts of Parliament or Statutes)
Common law and
Principles of equity – (Natural Justice)
Indian Scenario
Indian Contract Act, 1872
Prior to the enactment, the Courts applied
their personal laws where the parties belong
to different religion (defendant’s personal law)
Based on the principles of justice, equity and
good conscience
International Business Law
International trade relations are regulated by
the policies of the government based on
social, technological, economic and political
factors of the particular country.
Instruments of trade policies:
1. Tariff is a tax imposed on imported products.
2. It is a protectionist measure
3. GATT (WTO) – reducing tariff barriers so as
to enable
Kinds of Tariffs
Specific (fixed charge for each unit)
advalorem (portion of the value of the goods)
Reasons for imposing tariffs:
Consumption effect
Protective effect- increases domestic production
Balance of trade – improves
Revenue effect –generated
The welfare effect (economic welfare)
WTO
Global International Organization dealing with
rules of trade between nations
Facilitates free flow of international trade
Settlement of disputes
Agreements MTAs– implementation,
administration and operation
Objectives of WTO
Raising the Standard of living
Ensuring Full Employment
Expanding the production of trade in goods
and services
Principles of WTO
Trade without discrimination
Most Favoured Nation Treatment
No national Special treatment
Free trade
Promoting Fair competition
Benefits to member countries
The System helps promote peace
Disputes are handled constructively
Free trade cuts the cost of living
Dispute-free trade raises income
Governments are shielded from lobbying
Supreme Court
Supreme Court is the Apex court in the Indian
Judicial System (Court of Record).
As the central court of the country, it deals
with all types of cases.
The Chief Justice of India heads the Supreme
Court.
The President on the advice of the Prime
Minister will appoint the Chief Justice and
other judges.
High Court
The High Court occupies a second place in
the hierarchy of courts. (Every state has a
HC)
All the subordinate courts will be under the
control of the High Court (Court of Records) .
the President of India will appoint the Chief
Justice of the High Court after consulting the
Chief Justice of Supreme Court and the State
Governor.
Subordinate Courts
Subordinate courts come last in the hierarchy.
Their number will be fixed according to the
state population.
Judges are appointed by the Governor of the
State concerned after consulting the High
Court.
HC has control over the sub-courts in matters
like posting, promotion, granting leave and a
variety of other matters.
Civil Courts
To administer the civil law disputes, every
state has a hierarchy of civil courts both at
city and district levels, subordinate to their
respective High Courts.
The civil courts are assigned a particular
territory in a city or a district of the state to
entertain the cases of a particular pecuniary
limit, i.e. the limit of the monetary value.
The hierarchy and the classification of the
civil courts vary from state to state.
Criminal Courts
Every state has subordinate criminal courts to
administer criminal disputes at both the city
and the district levels (Sessions Court).
The criminal courts are assigned to award
punishments to the convicted.
Impose both fines and Punishment.
Tribunals
These are the courts under a special statute.
These courts deal with problems related to
taxation, labor disputes, land reforms,
consumer disputes, administrative litigations
etc. (independent tribunal).
Any appeal from this tribunal is made directly
to the High Court.
The main purpose for establishing these
tribunals is – speedy disposal of matters.
Central Administrative Tribunal
(CAT)
These tribunals are established to adjudicate
disputes, or complaints relating to service
matters (Controlled by union government).
The administrative tribunal can declare a
statute as unconstitutional (Question of law)
for example, resjudicate, judicial review.
Punishment is imposed based upon the
discretion of the disciplinary authority. (SAT at
State level) - Appeal to SC
Industrial Tribunals
These tribunals are constituted to adjudicate
the matters relating to industrial disputes
Established by the central government, one
or more for each state.
Appeal in the general court system.
For promotion of the settlement of industrial
disputes - Board of conciliation and where the
number of employees is more than 50, they
must provide a grievance authority (GA)
represented by workers and employers.
Labour Tribunal
To provide quick, easy and inexpensive means
to settle disputes between the employer and
the employee.
The tribunal hears the cases, related to
compliance ordinances .
An appeal shall lie before the High Court. If the
High Court feels that there is a question of law
of general public importance, it will either
consider the appeal, or refuse it and its
decision is final.
Consumer Dispute Redressal
Tribunal
Established to protect the consumer’s rights.
Right to claim for damages from the unfair
supplier/manufacturer.
quick disposal - saving the time of
complainant.
The jurisdiction, powers and authority here
are same as those of a civil court, such as the
issue of summons, examination of witness,
order of production of documents, etc.
