Common questions on ‘Commercial Laws’
- What is commercial law?
- Is there any difference between commercial law and business law?
- What is the difference between corporate law and commercial law?
- What is the role of a commercial advocate?
- What are governing rules or acts to establish commercial law in India?
What is commercial law?
Commercial Law does not have a fixed meaning in India. Broadly speaking there is not much distinction between a commercial and a non-commercial contract. Specialised Commercial Courts do not exist however for purposes of expeditious adjudication special courts are set up from time to time. As a matter of general practice, commercial laws include all the laws that can be attracted as per the factual nature of the commercial setting, i.e. the applicable laws vary from case to case.
Commercial Laws could have been derived from multiple sources. The Legislature is evidently the most prominent source as it has a clear binding nature which is beyond questioning in practice. English Mercantile Law influences Indian Commercial Laws, for example, Lex Mercantoria influences Indian policies. Judicial Precedents act as a guiding force and can have the same powers as a legislation is the legislative policies are silent on a particular issue. Customs and standard business practices are given importance in the domain of commercial laws, customs can also get legal recognition by Courts accepting them in a precedent or a legislation giving validity to a custom.
However, from the wide plethora of laws that can be applied in the domain of commercial laws, some of the prominent ones include:
- The Indian Partnership Act 1932 - A partnership firm is not a distinct legal entity apart from the partners constituting it, i.e. a partnership firm is not a ‘person in law’, but is merely an association of individuals.
- The Companies Act 1956 – A company is a juristic person. This Act regulates Companies in India.
- The Income Tax Act 1961 – regulates income tax in India. Provides for the method, reliefs etc. available in income taxes
- Goods and Services Tax - Goods & Service Tax is a comprehensive tax mechanism wherein all the major indirect taxes have been clubbed as one. It aims at the reduction of the cascading effects of taxes. GST eases the process of doing business.
- Indian Contract Act 1872 - Contracts are basically agreements that have the power of legal enforceability and protection. As per Section 2(e) of the Indian Contract Act 1872, agreements refer to ‘every promise and every set of promises, forming consideration for each other’. As per Section 2(h) of the ICA, a contract is “an agreement enforceable by law”. Contracts are governed as per this Act
- Negotiable Instruments Act – this Act regulates negotiable instruments which are commonly used in commercial activities. For example, Section 138 of this Act deals with the issue of cheques bouncing.
- Consumer Protection Act 1986 - Consumer protection laws aim at the protection of the interests and rights of consumers. These laws aim at changing the mentality of the market from “Caveat Emptor” (let the buyer beware) to “Caveat Venditor” (let the seller beware).