19 Jan 5 Basic Commercial Law in India every Businessman should know.
Commercial law is also known as mercantile laws is associated with the rights, relations and legal binding between the parties involved in a business. It makes them liable to each other in case any one of them comes into violation of the clauses and provisions of the law. It deals with private law and public law issues and often considered a branch of civil law.
The law of contract is the foundation upon which the superstructure of modern business is built. Commercial law consists of a principal and an agent. It is trivial knowledge that in business often promises are made and deals are struck within different parties. In such a situation, if either of the parties were free to go back on its commitment without incurring any liability, there would be endless complications, and it would make it cumbersome to carry on business and trade.
Commercial laws are a substantial part of the business or dealing with any party. Sooner or later, you will have to enter into some kind of exchange in business and it is inevitable to not enter into a contract. A contract further seals the deal between parties leaving no scope for fraud or error as the action of one party is legally binding on another party.
Commercial law includes within its compass such titles as principal and agent; carriage by land and sea; merchant shipping; guarantee; marine, fire, life, and accident insurance; bills of exchange, negotiable instruments, contracts, and partnership. Many of these categories fall within Financial law, an aspect of Commercial law about financing and the financial markets. It can also be understood to regulate corporate contracts, hiring practices, and consumer goods’ manufacture and sales.
Many countries have adopted civil codes that contain comprehensive statements of their commercial law.
Some Important Commercial Laws Of India
Business Law governs the world of commerce. We call all these rules Business Law or Commercial law. The Business Law governs all dealings of businesses and the conduct of people associated with such companies. In India, some of the Business Laws followed are from the pre-independence era. However, newer Business Laws are always being passed. Let us educate ourselves about the Business Laws of India.
The Important Business or Commercial laws are-
- The Indian Contract Act, 1872
It is the most prominent business law to exist in our country. It came into effect on 1st September 1872 and applied to the whole of India, with the exception of Jammu and Kashmir. It constitutes 266 sections. The Indian Contracts Act,1872 defines the essentials through various judgments in the Indian judiciary. Specific points for valid contracts are Free consent, consideration, competency, eligibility, etc. A valid contract must include at least two [arties, or it will be deemed as null and void.
- The Sale of Goods Act,1930
Contracts and agreements regarding the sale of goods and services are governed under the Sale of Goods ACT, 1930. The sale of commodities constitutes one of the essential types of contracts under the law in India. India is one of the largest economies and a great country where and thus has adequate checks and measures to ensure its business and commerce community’s safety and prosperity. Here we shall explain The Sale of Goods Act, 1930, which defines and states terms related to the sale of goods and exchange of commodities.
- The Indian Partnership Act,1932
The Indian Partnership Act 1932 defines a partnership as a relation between two or more parties to agree to share a business’s profits, either all or only one or more persons acting for them all. A partnership is contractual in nature. As the definition states, a partnership is an association of two or more persons. So a partnership results from a contract or an agreement between two or more persons. A partnership does not arise from the operation of law. Neither can it be inherited. It has to be a voluntary agreement between partners. A partnership agreement can be written or oral. Sometimes such an arrangement is even implied by the continued actions and mutual understanding of the partners.
- The Limited Liability Partnership Act, 2008
LLP stands for a Limited Liability Partnership. Limited liability partnership definition is an alternative corporate business form that offers the benefits of limited liability to the partners at low compliance costs. It also allows the partners to organize their internal structure like a traditional partnership. A limited liability partnership is a legal body liable for the full extent of its assets. The liability of the partners, however, is limited. Hence, LLP is a hybrid between a company and a partnership. It is not the same as a limited liability company LLC.
- Companies Act,2013
With an unprecedented change in the domestic and international economic landscape, India’s Government decided to replace the Companies Act, 1956, with the new legislation. The Companies Act, 2013, endeavors to make the corporate regulations in India more contemporary. In this article, we will focus on the meaning and features of a Company.
The Companies Act, 2013, completely revolutionized India’s corporate laws by introducing several new concepts that did not exist previously. One such game-changer was the introduction of the One Person Company concept. This led to the recognition of an entirely new way of starting businesses that accorded flexibility which a company form of entity can offer, while also providing the protection of limited liability that sole proprietorship or partnerships lacked.
Thus, as we can see, commercial contracts are a very essential part of the business world. Any business during its operation needs to follow all these laws, whether willfully or not. Thus, a person with any venture needs very substantial legal assistance so that any clash in legal matters won’t harm your endeavors.
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