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Mercantile Laws-I

Notes 1.1 Meaning of Mercantile Law

Mercantile Law may be defined as that branch of law which prescribes a set of rules for the

governance of certain transactions and relations between: (i) Business persons themselves,
(ii) Business persons and their customers, dealers, suppliers, etc., and (iii) Business persons and
the state. In the context of Indian business some of these transactions and relations concern the
following:
1. Regulation of restrictive and unfair business practices,

2. Foreign exchange management and regulation,
3. Insolvency of business persons,
4. Promotion of conciliation, and arbitration for settlement of business disputes,
5. Regulation of companies incorporated under the Companies Act, 1956.

Nature of Law

1. Negotiable instruments,
2. Patents, trademarks and copyrights,
3. Actionable claims, factoring and forfeiting,
4. Import and export regulation,
5. Contracts, sale of goods, guarantee, indemnity, bailment, pledge, charge, mortgage,
partnerships, insurance, carriage of goods,
6. Prevention of food adulteration, regulation of essential commodities,
7. Regulation of stock exchange and fi nancial securities,
8. Regulation and development of industries,

9. Economic offences,
10. Conservation of foreign exchange and prevention of smuggling activities,
11. Regulation of foreign contributions, foreign capital,
12. Excise, import and export duties, tax on income, wealth, etc.

1.1.1 Objectives

From the description of the nature and meaning of business law, it can be inferred that the subject
has many objectives to achieve. Firstly, law lays down the framework within which business
activities shall be carried out. For example, X Company issues an advertisement disparaging
the products of its rival – Y Company. Further X Company prohibits its dealers to deal in the
products of Y Company. Company is not in conformity with some legal rules prescribed by some
statute or the other. Thus Y Company can enforce their rights which have been infringed by the
X Company.
Secondly, a business person can resort to various judicial and quasi-judicial authorities against
the government in case his legal rights have been violated.
Thirdly, some laws are made to facilitate the business persons to achieve their goals smoothly.
For example, business has been extended the facility of doing business by getting a company
incorporated, deriving all the advantages of incorporation, such as separate legal entity, limited
liability, etc.

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