Imagine you put your 100% in your business but there is no guarantee or force of it being protected from fraudulent acts of other parties involved in your business. Imagine doing business without any protection of your rights and liabilities. Imagine not having any uniform framework or guidelines that can be applied while you are progressing in your business. Imagine getting betrayed on the product you purchase but there is no scope of recovery. Probably your worst nightmare, isn’t it? Well, business law handles all of that. It is one of those laws which tends to be taken for granted unless something goes wrong. To further understand how business law is setting the framework for economies in every society, we have to first dive into the nature and framework of business law; once that is done we can easily find out how it is impacting the economies of every society.
Commercial law is a broad domain. It deals with the relationship among individuals and also of individuals with the state. Thus it is both private and public law. It governs the rights, action, liability, and relationships in commerce, sale and merchandising trade. Commercial law has its origin in the middle ages’ lex mercatoria or merchant law. Substantially over the years, the common law courts took over the majority of mercantile litigation. It was after World War two that the concept of the welfare state has risen and people shifted away from free-market and contract sanctity to more socially responsible and protection towards the weaker section of the society. In the 20th century, the framework of law took a full three-sixty degrees back to the Middle Ages, but now the merchants are replaced by the entrepreneurs.
The laws were with time made in accordance with the system of commercial activities or vice versa.
- Maintain Order And Resolve The Dispute Among Parties – From simple hunting-gathering to Barter system to money and banking, investment, stocks, the world has evolved into various other complexities. These exchanges and transactions have resulted in commercial disputes and subsequently overhaul of arbitration, negotiation, and other methods as the Alternative Dispute Resolution (ADR) method. These methods prevent overcrowding and delay in the justice system and demand for quick solutions. The latest act that governs this method of dispute resolution is the Arbitration and Conciliation (Amendment) Ordinance, 2015 (“Arbitration Ordinance”) and the Commercial Courts, Commercial Division and Commercial Appellate Division of the High Court’s Ordinance, 2015 (“Commercial Courts Ordinance”) is also an initiative to segregate and speed up the matters related to commerce.
- Establishing Generalities- Earlier the customers, investors, and businessmen suffered a lot to purchase, invest, or start with a business due to the absence of proper law that could define the rights, duties, and liabilities of the owners. With the establishment of the business law, there are standards set throughout the world, which accelerates the pace of growth because of less confusion and more conformity. A very good example of generality is the Standard form of Contracts in the Indian Contract Act 1872 where the large-scale contracts are concluded in standard forms and are made on a uniform and standardized terms and conditions. This lessens the work and saves time. For example, the Indian Railway Administration makes numerous contracts of carriage thus contracts like this makes the process less cumbersome.
- Protect Rights And Liabilities- In India we have acts such as the Companies Act 2013, The Indian Partnership Act, 1932, Sale of Goods Act, the Indian Contract Act of 1870, et cetera, to protect the rights of the parties who get involved in some contract mostly for commercial purposes.
- Redistribution Of Wealth – Taxes can play a very important role in the decentralization and accumulation of wealth. Alongside, land- reforms can also aid in the distribution of land for welfare purposes.
- Limits Frauds – Today’s world does not accept any form of a relationship without a written statement and an authorized stamp on it, indicating that the agreement has been sanctioned. This gives a surety that all rights and duties impose obligations that are backed by the law. Distributing consumer-related information, preventing deceptive marketing is therefore ensured.
- Prevents Monopoly – If the market is set to be free in the current times of globalization, there must be a high chance of monopoly. Monopoly is when the economic power comes into the hand of few. This can be prejudicial to the public and also harmful for the economy in the long term. Therefore, to prevent such things to happen in a socialist country, the Indian government has introduced the Monopolies and Restrictive Trade Practices Act 1969 (MRTP Act). Later in 2002, the parliament introduced the Competition Act to regulate the business practice and avoid the adverse effect of competition.
- Consumer Grievances – Every individual on Earth, living in any form of society is consuming to sustain. However, in the market, there might be various instances where consumers are not able to satisfy their needs or require some aid as the sellers are only intending to increase their property. There must be some law and framework to help prevent the consumers from getting affected by profit-driven sellers. Consumer forums are introduced by the Consumer Protection Act of 1986 and then 2015.
By Zoya Hossain