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Introduction Why should a management student study Business Law? Needs to recognise that certain pieces of law demand • that business people regulate their dealings with their employees • act in a particular way when marketing their products or services. To become aware of the legal ramifications that can follow from their decisions in the day-to-day happenings of the business world Help formulate policies of risk management. To help in conducting business in such a way to avoid legal challenges. 7/8/2017 santhi naryanan 2 INTRODUCTION What is business? 7/8/2017 What is the relation between business and law? santhi naryanan 3 What is business?????? • When civilization began……. business began…… • Development in the world is directly linked to business in turn linked to the wealth of the country • Enriches life of people by enhancing the functional capacity of the available resources 7/8/2017 santhi naryanan 4 Business and it environment Social Environment National and International Environment Business Legal Environment 7/8/2017 Economic Environment Technological environments santhi naryanan 5 Interest groups Consumers/ government Suppliers/distri butors/dealers Business Employers/em ployees Competitor s/owners 7/8/2017 santhi naryanan 6 Law and business Law-A universal human need. No society can exist without a legal order Society closely interlinked to business This in turn makes law and business closely interlinked disciplines- Complimentary to each other A major factor in decision making Law is the foundation for the regulation and business conduct and decisions 7/8/2017 santhi naryanan 7 Why business law?? Extensive economic liberlisation and globalisation creating new realms of business Legal impact of business decisions vs costs of litigation Having legal awareness will help in making better and accurate decisions in business transactions Timely compliances of law leads to harmony in business, better productivity 7/8/2017 santhi naryanan 8 WHAT IS LAW? 7/8/2017 santhi narayanan 9 LAW • Since time immemorial every society has its own law. • Law is a social science – grows with society. • Law means different things in different times – highly dynamic concept with core values • Dharma (Hindu), Hukum (Islamic), Jus (Roman), Droit (French), Richt (German) 7/8/2017 santhi narayanan 10 Law is -----• A mechanism of regulating human conduct in society - harmonious co-operation of members increases leading to a peaceful coexistence • an instrument of social justice of the state that seeks to provide justice, stability & security in the society Main Characterisitics Mandatory LAW Permissive Prohibitive Effectiveness of Law Damages for injury Completing an obligation after failure to perform Preventing disobedience Administering some form of punishment Limitations Unique Features Everybody enjoys equal protection under laws(Equality before Law) No man is above the law Law of the land is important ‘IGNORANCIA JURIS NON EXQUISITE’ – ignorance of law is no excuse 7/8/2017 santhi narayanan 16 Sources of law Legislation Precedent Custom Opinions of experts Morals and equity 7/8/2017 santhi narayanan 17 Customary law • A custom that is observed continously for a very long period of time. 7/8/2017 santhi narayanan 18 Our India…….. 7/8/2017 santhi narayanan 19 Legislation • Promulgation of legal rules by an authority which has the power to do so. (Parliament, Legislatures, President, Governor, King/Queen etc.). Also known as Supreme Legislation. It is also known as statutes. 7/8/2017 santhi narayanan 20 Draft Bill to Act • Every Act is a piece of legislation made into law after passing the process of enactment. 7/8/2017 santhi narayanan 21 Procedure A Bill (draft form of the law)is introduced say in the lok sabha by a member of parliament Lok Sabha takes it for discussion A Bill can be accepted, rejected or referred to a select committee for necessary revision 7/8/2017 santhi narayanan 22 Making of an Act If it is accepted or passed, it is sent to the other house of the Parliament The Rajya Sabha can accept it or reject it with modifications The bill is sent to President for giving his assent 7/8/2017 santhi narayanan 23 ContdThereafter the Bill becomes an Act After publishing in the Official Gazette, the Act comes into operation either from the date of publication or on a date as may be specified in the Act Thus, a new law come into being by Parliament Activity 7/8/2017 santhi narayanan 24 Contd--• Acts provide overall framework and delegates the function of providing details to the executive. • Executive provide the details for the working of an Act by making rules, notifications regulations and government orders 7/8/2017 santhi narayanan 25 Case Law • Acts are written in a given context within certain horizons. • Over period of time Act remains the same but the contexts differ • Hence, reading the text becomes crucial to decide the working of law • Courts create law by giving new meaning to the legal provisions. 7/8/2017 santhi narayanan 26 Case Law Judicial decisions or judgments are writings giving the decisions of a case Created by judges Interpertations of law Judgments collectively form the case law 7/8/2017 santhi narayanan 27 Res judicata Precedent Case Law Ratio decidendi 7/8/2017 Stare decisi Obiter dicta santhi narayanan 28 Precedent • According to Oxford Dictionary, Precedent is a previous instance or case which is, or may be taken as an example of rule for subsequent cases, or by which some similar act or circumstances may be supported or justified. • Precedents are the results of creative role of the judges while dealing cases. 7/8/2017 santhi narayanan 29 Contd--• Res judicata- A matter already settled in court; cannot be raised again- is an instance of precedent. • Stare-decisi- stand by decided cases • Ratio decidendi - law declared or law laid down • Obiter dicta- “said by the way” cannot be considered as a precedent 7/8/2017 santhi narayanan 30 Sources of Business Law Lex Mercatoria Statute Law Common Law Principles of equity Sources……. The differences in the Law of India and England are primary on account of their different business environment, customs and trade practices. • a. b. - c. d. - English common Law : It is unwritten or the non- statutory Law. These are found in the reported decisions of the courts of Law. Equity : It refers to that branch of the English Law which develops separately from the common Law. It is based on the principle of the fairness. Law Merchants : It refer to the usages of customs of merchants and traders that have been ratified by the courts of Law. Statute Law : This Law refers to the Law laid down in the act of Parliament. It is superior to and overrides any rules of common Law, Equity or Law Merchants. Sources of Indian Business Law General Classification of Law • Public Law – Law that determines and regulates the organization and functioning of states + Relation of the state with its subjects – Constitutional Law – Administrative law – Criminal law • Private Law – Regulates the relations of citizens with each other ex: law of contract, property 7/8/2017 santhi narayanan 34 Classification of law • Criminal law: Certain offences are considered as wrong doings against the state and are punishable by the state. Ex: Murder, Acts of terrorism • Civil Law: Concerned with the rights and duties of individuals towards each other ex: Law of Tort – monetary damage are sought for the damage or injury caused. 7/8/2017 santhi narayanan 35 Contd……. • Substantive law: law on a specific subject: Deals with the Legal rights, obligations and relationships of people versus people or between them and the state. • Procedural law: It lays down methods by which substantive Law is made and administered. 7/8/2017 santhi narayanan 36 Classification of Law • International Law; It is a set of generally accepted rules and regulations controlling the conduct of nations, international organizations and individuals. • International Court of Justice • World Trade Organization (Governing International Business transactions) • GATT • Accepted rule of territorial limit: 12 nautical miles from the coast 7/8/2017 santhi narayanan 37 Different Laws that you as manager will come across……….. {Indian context} • • • • • • General Laws, Procedural Laws Commercial & Corporate Laws Environmental Laws Labor and Industrial Laws Taxation Laws 7/8/2017 santhi narayanan 38 General Laws • The Constitution of India [395 Articles divided into 22 Parts and 12 Schedules – fundamental rights, directive principles,) • The Indian Penal Code, 1860 [ General Penal code contained in 511 sections divided into 23 chapters) • Family Laws /Personal laws (Hindu, Muslim & Christian – governing majority, adoption, inheritance of property, marriage, divorce, guardianship etc. in different Acts) 7/8/2017 santhi narayanan 39 Procedural codes • The Code of Civil Procedure, 1908 [158 sections and 51 Orders ] (Amendments made) • How feasible is to have a Common Civil Code?.....Ponder Over • The Code of Criminal Procedure, 1973 [484 sections divided into 38 chapters with 2 schedules – 1st schedule about classification of offences and 2nd schedule contains various forms used in following the procedure.] 7/8/2017 santhi narayanan 40 Contd • The Indian Evidence Act, 1872 [167 sections divided into 11 parts) • Facts are the basis on which the rights and liabilities are ascertained to determine the case before hand. • Deals with proving facts by evidence–oral or written or circumstantial. • All types of evidence is neither relevant nor admissible in courts. 7/8/2017 santhi narayanan 41 Commercial & Corporate Laws • • • • • • • • The Indian Contract Act, 1872 The Indian Partnership Act 1932 The Negotiable Instruments Act, 1881 The Companies Act, 1956 The Foreign Exchange Management Act, 1999 The Competition Act, 2002 The Securities Exchange Board of India Act, 1992 The Consumer Protection Act, 1986 7/8/2017 santhi narayanan 42 Environmental Laws: • • • The Water (Prevention and Control of Pollution) Act, 1973 The Air (Prevention and Control of Pollution) Act, 1981 The Environment (Protection) Act, 1986 7/8/2017 santhi narayanan 43 Direct & Indirect Taxation Laws: • • • • • • 7/8/2017 The Income Tax Act, 1961 The Customs Act, 1962 The Central Excise Act. 1944 The Central Sales Tax Act, 1956 & concerned State General Sales Tax Acts. Host of State Acts & Rules relating to sales, excise etc. NOW GST………… santhi narayanan 44 • Each Act is identified with a Title such as “The Indian Contract Act, 1872”, “The Companies Act, 1956” etc. • The year at the end of the name of the Act signifies the year in which it is enacted as law. • Below the Title of Act, a preamble will be there which gives the purpose or object for which that Act is enacted. 7/8/2017 santhi narayanan 45 Layout • The entire text of the Act is divided into various Sections and some Acts may also have Schedules with cross reference to a particular Section of the Act 7/8/2017 santhi narayanan 46 The 1st Section of any Act contains three subsections, namely: (i) Short Title (This Act may be called …”The Indian Contract Act, 1872”) (ii) Extent (it extends to the whole of India or to any part of the country or a State) (iii) Commencement (it gives the date from which the Act commences its operation or a power is given to the Government to declare any date in future to give effect to the provisions of the Act). 7/8/2017 santhi narayanan 47 Contd• Section 2: Interpretation or Definitions (of certain terms and words used in the text of the Act are interpreted or defined and that definition should be relevant for interpretation of any matter dealt in the Act). • Subsequent Sections sometimes create certain authorities to enforce the provisions of the subject matter of that Act (Income Tax Officers, Company Law Board, Enforcement Directorate, etc.) 7/8/2017 santhi narayanan 48 Contd• Appellate Authorities are created within the Act to provide a chance to appeal against the actions or orders of the Enforcement Authorities of the Act. • When no Enforcement Authorities or Appellate Authorities are stated in the Act, then normal Civil Courts of the country deal with such cases. (As in the case of Contract Act, Sale of Goods Act, Partnership Act etc.) 7/8/2017 santhi narayanan 49 Indian Context • India adopted the Constitution on 26 January 1950 • Highest law of the land • Constitution providing the governing mechanism of the country 7/8/2017 santhi narayanan 50 Constitution of India • Fundamental Law of the Land • Preamble – Socialist, Secular, Democratic, Republic • Constitution provides for separation of powers Executive- Applies law 7/8/2017 Legislature-makes laws santhi narayanan JudiciaryInterprets law 51 Constitution of India • Fundamental rights – Right to equality – Right to freedom of speech – Right to life and personal Liberty – Right against exploitation – Right to freedom of religion 7/8/2017 • Directive Principles of State policy – Equal justice and free legal aid – Organisation of village Panchayats – Protection and improvement of the environment santhi narayanan 52 Fundamental duties • Respect the National Flag, National anthem • Value and preserve the rich cultural heritage • Safeguard public property 7/8/2017 santhi narayanan 53 Validity of Law • The validity of law passed by the legislature can be questioned in any court of law – whenever the law has violated any provisions of the Constitution – violation of fundamental right • The courts can declare a law to be unconstitutional (concept of ultra vires) 7/8/2017 santhi narayanan 54 Indian Judiciary Supreme Court High Courts Subordinate courts 7/8/2017 santhi narayanan 55 Subordinate courts Civil CourtsDistrict judge Criminal Courtssessions judge Civil judge Assistant sessions judge Munsif Chief judicial magistrate Magistrate 7/8/2017 santhi narayanan 56 Civil Case/Suit • Plaintiff vs. Defendant Ramprasad 7/8/2017 Baldeo Parties santhi narayanan 57 Criminal Case • State vs Accused Charles Shobraj Country Parties 7/8/2017 santhi narayanan 58 Commonly Used terms……. • FIR- First Information Report • Accused – A person who has committed a crime • State- Country (protector of your rights) • Investigation-looking into the matter • Dying declaration – Last statement of the victim before death. To be recorded in the presence of a magistrate 7/8/2017 santhi narayanan 59 Commonly used terms….. • Trial – Examination of the case • Judgment- Judge giving decision after hearing of the matter • Conviction – An accused is awarded punishment • Acquittal – A person is freed from the charge • Appeal- Approaching a higher court 7/8/2017 santhi narayanan 60 Basic Legal Concepts • Concept of Legal Entity. Law applies only to persons. Thus, persons are the subjects of law. A person is an entity which is clothed with rights and duties. There are two kinds of persons. A person may be a natural or an artificial person. On the other hand, an artificial person is a metaphysical body, intangible and invisible. Contd• Concept of Legal Rights. Some of these are: (i) A right is always vested in a person but not in an inanimate being or animal or even a dead person. (ii) A right is generally correlative of a duty in relation to the fulfillment of a right. (iii) The right must relate to a subject matter, namely the objects. (iv) The nature of a right may be to get something done from another or to refrain him to do something. (v) Every right can be traced to a source which may be a contract, a custom, a natural law, etc. Contd• Different types of rights. Rights may be (i) Personal or proprietary; (ii) in personam or in rem. • Concept of Property. There could be no such thing as business law, or even business, if there were no such thing as property. Thus the concept of property is very important in business law. • Different types of property. Property may be classified as (i) Tangible or intangible; (ii) Real or personal; and (iii) Public or private. Contd• Concept of Ownership i. Ownership is an intimate relationship between a person and object. ii. Law does not permit any vacuum in ownership. iii. There are certain rights which are generally included in ownership. iv. Ownership cannot exist without law. v. The ownership of property is exclusive. • Concept of Possession. It is said that law attaches great importance to mere possession even without ownership. Even a wrongful possession is protected. Case law and citations • The judgments of court - important source of law. • Large number of judgments are pronounced daily • Law journals print these judgments • All judgments are not printed. Only those judgments that have a wider interest are reported. Contd-• Lawyers and judges while referring to a prior judgment have to refer to the volume and page number of the journal where the judgment of a particular case has been printed. • Referencing to a case in a journal is called citation Citation • United Breweries Ltd vs State of Andhra Pradesh AIR 1997 SC 1316 Journal Year Parties to the matter Court Page Number Parties to the matter