Law is, no doubt, a means by which the human conducts are regulated in a particular way. The human activities are of different kinds. Such as business activities, family related activities, banking activities, political activities, criminal activities, etc. All these activities are regulated by law and law is named by different names like Business law, Corporate laws, Banking law, Constitutional law, Criminal law, Family law or Insurance law, etc. It is just a matter of naming the law on the basis of its function or area of regulation. Thus, business law is the law that regulates the business and commercial activities and manages all the transactions of business community.
Business law is a branch of civil law or private law which makes certain rules for business transactions. Thus, the law which deals with business activities of people and provides various provisions for commercial world is known as business law. It is also known as mercantile law or commercial law. The business law lays down various rules which must be followed by the business community, a businessman, a business firm and its managers or personnels, and a consumer while conducting the business or their activities. There is no any single statute or law-book that we can give the name business law but it is a combined name of different laws wherein significant provisions are made to regulate most of the business activities. In totality, company law, contract law, agency law, arbitration law, consumer protection law, fiscal law, banking law, insurance law, law of carriage, sale of goods, industrial law, labour laws, negotiable instrument law, environment (protection) law, industrial enterprises law, insolvency law, income tax law, monopoly control law, etc. are known as business law.
Importance of Business Law
Business law as we just described above is a branch of law which regulates the human actions relating to trade or commercial activities. It is the law which provides different provisions and principles to the commercial world or business community. In fact, there is no any single law or statute (Act) to which we can call as a business law. It is a combined form of the different laws or rules regulating the numbers of business activities in the different field of trade or commerce. Therefore, it is the law of those activities which come in the area of business or trade and commercial activities.
Business law is an important for an individual, a business organization or the state. As the business activities are the prominent human actions, these are to be regulated for the benefit of the people, society and the welfare of the nation. An individual or business community must know the business law to protect their rights and interests involved in the commercial transactions. Similarly, it is an important means to regulate business dealings and activities for the greater benefit of the greater number of people in a society and development of the nation. The reason is simple that the development and welfare of state depends on the economic development and it depends on the trade or industry, and for the sound industrial environment or business activities, business law is the basis. All the business activities in a state are run within the framework of legal environment of business.
The importance of business law can be stated as follows:
1. It provides legitimacy, peace and security:
Legality or validity of a business transaction or commercial dealings depend upon and determined by the business law. Whether a transaction is valid, therefore, parties involved in it are protected or not is decided by the provisions of business law. If a commercial dealing is not valid even the innocent party or party dealing in good faith cannot be protected by law. Therefore, business or industrial security and protection of the people involved in this field is guaranteed by the business law. It provides such a system or mechanism by which state guarantees the validity of business transactions, security of the business man and the industrial peace for the betterment of business sector.
2. It regulates the commercial activities:
Business law is an instrumental to regulate the business or commercial activities in a particular country. It provides the different provisions and procedures to be followed by the business communities including trade persons, owner of industries, workers, government authority or the consumers. A businessman and his staff or officer must have knowledge of the provisions of business law prevailing at a specific period of time. Non-compliance of the legal provisions may result some sort of legal consequence, i.e., punishment or some detrimental action.
3. It governs the trade and commerce or business sector:
Business is not only an act of producing and providing goods and services to the consumer as per their satisfaction but it is also a means of national development. In fact, this field is the basis of strong economy and no state go ahead without development of commerce, business or industry. To create an environment to enhance commercial activities, to control them to ensure social justice and direct them for the national interest, the state has enforced the business law as an important means. Overall business policies are determined through business law, therefore, it is involved in making, shaping and enhancing the business activities.
4. It determines punishment and reward:
The business law provides such a ground in which law breakers are punished and law abiders are rewarded. If a business activity or an industry is deemed harmful to the public or is against the human health or environment, the state prohibits such industry or business and imposes punishment to those involving in such transactions or business. Similarly, the law followers or those carrying business as per the law and assisting to meet the national priority, they are rewarded by giving tax deductions and other facilities. Punishment may also reflect through imposition of various penalties, increased tax ratio or some sort of punitive method, i.e. fine, cancellation of business or imprisonment, etc. Incentive may amount reward, honour, or facility and other benefits.
5. It establishes business ethics and social responsibility:
Business ethics are the norms and values to be followed by the business communities. In general these ethics are development and followed by the trade persons. But these business ethics get certainty and binding character through business law. Similarly, a company or business association or industry has to fulfill their social responsibilities to as they are running and getting profit doing business within the society or community. As the society or community helping to run the industry it becomes the obligation of the industry to discharge its social responsibility by allocating some of its profit for the welfare of the society or community including education, health, security and protection of environment and their economic development as well.
6. It protects industrial interests:
One of the major objective and importance of business law is to protect industrial interest or legalizing commercial dealing. While protecting the industrial interests, the business law protects the national interest also. For the expansion of trade and commerce to create greater jobs to the people, it becomes duty of the state to protect and enhance the industrial interest by issuing various laws, policies or instructions to protect and strengthen the industrial interest. This expression also includes the protection of labour and consumers interest as well.
7. It creates the institutions for the betterment of business communities:
To regulate, making, shaping and promoting the trade and commerce, the state creates various states organs through which any trade related issues can be handled in sound manner. To promote Nepali industry and their product in the foreign land, to ease in importing raw materials, to attract foreign investment and to diversity trade and industry for the balance development of the nation the law forms the various government institutions and offices, e.g. Department of Industry, Office of the Companies Registrar, Investment and Industrial Investment Board, One Stop Service Centre, etc.
8. It establishes the dispute resolution system:
In business activities disputes are unavoidable consequences. The dispute does not only involve two parties but it includes the government, community, society and international communities too. To solve the disputers in time to protect the interest of an industry or interest of state such organ becomes helpful. These organs are in charge of hearing and deciding disputes within the business community and they have authority to enforce the rights and interest and impose the duties or obligations of the commercial world, i.e. trade persons, government bodies, labours, stake holders, consumers and communities, etc. For example, Commercial Bench, Debt Recovery Tribunal, Revenue Tribunal, Arbitration Tribunals, etc.
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