Mercantile Law: Everything You Need to Know
Mercantile law deals with all the practices, customs, and regulations that govern commerce at both the local and international level.3 min read
Mercantile law deals with all the practices, customs, and regulations that govern commerce at both the local and international level. It's not an entirely separate body of law; rather, it is a legal code that governs the operations of all manner of businesses and banks. It regulates:
- Intellectual properties
- All other aspects of buying and selling between parties
Because of this, anyone writing a business contract must know about this area of law. It's designed to provide guidelines for dealing with all forms of business transaction. It also standardizes all the legal concepts that underlie those transactions. The end result is a great deal of consistency in dispute resolution.
The Roots of Mercantile Law
Mercantile law is also known as commercial law or business law. Mercantile law doesn't come from the theories of jurisprudence from which other laws originate. Rather, it comes from a long-standing tradition: the practices of traders throughout history.
Mercantile law was originally created in Europe to govern transactions between merchants. Over time, it has evolved as case law and trends have changed and as laws have been established and grown. In the United States, the U.S. Uniform Commercial Code, or UCC, governs most commercial law.
The Scope of Mercantile Law
Mercantile law concerns the obligations and rights that come out of business transactions. It relates to partnerships, sales of goods, contracts, insolvency, insurance, and the like. Essentially, anyone who carries out commercial transactions, whether that be a person, partnership, or joint stock company, is governed by mercantile law.
Such people and entities must be well-versed in mercantile law. This will help them avoid conflicts in their business dealings.
Origins of Mercantile Law
Mercantile law comes from other traditions throughout history. Many countries base their business law upon the laws of other nations. In India, for example, mercantile law comes from four main sources:
- English mercantile law
- Statute law
- Judicial rulings
- Common usage and customs
Before the country passed its current statutes, mercantile traditions were governed by religious law — specifically, Hindu and Mohammedan. For those who were not Hindu or Muslim, the courts used English Law as a basis. It wasn't until 1872 and the passing of the Indian Contract Act that business law in the nation was codified, with a number of statutes further codifying regulations over many years since then.
Again, it's important to remember that commercial law is not a separate body of law. Rather, it is a legal code that governs agreements, copyrights, contracts, patents, shipping and transport, and other transactions between banks and businesses of all types.
English Law: The Root of Mercantile Law
English law is the root of most commercial and business law across the world. At its core, English law has several main sources. These include:
- Common law, based on customs and practices over generations.
- Equity, or concepts of justice based on legal precedent and decisions.
- Statute law, which is laid down by acts of government (Parliament, in English law).
- Case law, also built on court decisions, which holds a court decision binding in future similar cases.
- Lex mercatoria, which is based on customs that developed as separate legal systems and were later incorporated into common law.
How Mercantile Law in India Functions
In India, any bill passed by the parliament and then signed by the president is an Act or a Statute. Most Indian laws are embodied in these Acts, which either central legislators or state legislators can pass. Some of the most important statute laws relating to mercantile regulation include:
- The Indian Contract Act of 1872
- The 1930 Sale of Goods Act
- The 1956 Companies Act
Judicial decisions also come down as case laws. These precedents are binding to all lower courts. Any courts that decide cases involving similar legal points follow these cases. In addition, usage and customs form an important role in regulating business transactions. Well-recognized customs can be used to override existing statutes.
Most business customs and usage in India have already been formally codified and granted legal sanction. Some have even been ratified by the courts and given extra weight.
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