Mercantile Law is a repository of all the Laws included in a company to handle or look after its commercial activities. It is a generalized term for the entire legal body. All the other acts like the company act, limitations act, Indian contract act, etc. are subsidiaries of the Mercantile Law. And the acts are known as Mercantile Law acts.
It deals with all the commercial transactions of the trader, whether it is an individual or an organization or maybe a joint venture. The commercial transactions include the agreements between both parties, operational activities, the delegation of work, financial transactions, memorandum of associations, etc. So let us understand the meaning of Mercantile Law and its sources, scope.
Mercantile law is a combination of various laws and principles of individuals having legal knowledge to resolve various issues in the company. But in 1872, all these laws are joined and termed as mercantile law and from then to regulate various issues of your company several acts are formed respectively such as the Indian contract act, the company act, the limitations act, etc. from the definition of mercantile law it is clear that it has a very wide scope.
Mercantile Law, also known as Commercial Law, governs the commercial activities of the economy. It is a broad term that encompasses all of the Laws in India that govern commercial transactions. Such a transaction necessitates a valid agreement between the contract's parties. It can be explicitly stated or implicitly stated.
It is concerned with traders' rights and obligations arising from commercial transactions. The trader can be an individual, a partnership, or a corporation. The Mercantile Law of India encompasses all Indian Acts that govern trade or commerce. For example, the Indian Contract Act of 1872, the Sale of Goods Act of 1930, the Companies Act of 2013, and so on.
Principal Sources of Mercantile Law
Law Merchant: The main source of Mercantile Law is the Law merchant. It refers to the customs and rules that govern traders' and businessmen's dealings and transactions with one another.
Statute Law: Legislation creates Law, which is referred to as statute Law. A statute is a written formal act of the legislature. It has also evolved into a significant source of Mercantile Law.
The Principle of Equity: The principle of equity refers to a set of rules that are not based on customs or statutory Law. As a result, equity rules were formed based on the basis of conscience dictates decided in chancery courts.
Common Law: Common Law is a set of rules defined by customs, judicial decisions, and old scholarly works on the subject. It is an unwritten English Law that applies to everyone in the country. In this context, common law refers to legal principles developed by judges through case decisions.
Principal Sources of Mercantile Law
The Indian Mercantile Law has various sources similar to that of English Mercantile Law. Some of the principal sources of Mercantile Law are-
English Mercantile Law
English Mercantile Law is an unwritten, generalized Law of England to deal with customs and judicial activities which has equity Law, merchant Law, common law, and statute Law as its sources.
As India was under the control of the British for a longer time, the Indian Mercantile Law is derived from the English Mercantile Law meaning. All the concepts, formats can be taken from it English Law. Even in recent times also if any issues are unsolved, our judicial heads will take help from the English Mercantile Law.
Enacted Acts by Indian Legislature
Some of the acts involved in the Mercantile Law are enacted by the Indian legislature. These acts are listed below-
The Carriers Act(1865)
Indian Contract Act(1872),
Negotiable Instruments Act(1881)
The Presidency Town Insolvency Acts(1909) and
Provincial Insolvency Act (1920)
Sale of Goods Act(1930),
Indian Partnership Act(1932)
The Insurance Act(1938)
The Arbitration and Conciliation Act(1996)
Judicial decision refers to the decisions made by individuals having judicial powers. It means that judges available in the courts will form certain rules and ask their subordinates to follow. And it is fixed and constant for all the cases. The Indian government has given authority in such a way that if the high court makes a judgment, it should be obeyed to all its subsidiary courts whether they are favorable or against.
Similarly, if the judgment has been given by the Supreme Court, it should be followed by all the courts of India except itself because it is the highest state of the Indian judicial body. The judgment will be common and will be in a written format which sets as a prerequisite for various cases in the future. The limitation is as the case may vary from one to another, the organization may vary from one to another; the judgment will be constant.
Customs and Trade Usage
It is a significant source of Mercantile Law. The Indian legal bodies give high priority to customs and trade. The codified Law also supports it. It provided all the powers required for the customs department, and section 1 of the Indian contract act is the best example to understand the importance of customs and trade usage as a major source of Mercantile Law.
"Nothing herein contained shall affect any usage or ……….inconsistent with the Act." it is completely bound by the customs, and it is not against the public policy. So the legal body considered it and registered it as a legal obligation.
Similarly, we can understand all the principal sources of Mercantile Law only with the Mercantile Law examples.
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Hence, by observing the meaning of Mercantile, we came to know easily that the scope of Mercantile is very wide, and each source of Mercantile Law plays a predominant role. As it deals with all commercial activities of your company or an individual, it is good to have sound knowledge of all other acts which are included in the Mercantile Law.
FAQs on Mercantile Law
1. What is the origin of Mercantile Law?
The Indian Contract Act of 1872 paved the way for the development of Indian Mercantile Law. Previously, all commercial transactions were governed by the contracting parties' Laws. For example, Hindu Law, Islamic Law, and so on. With the passage of the Indian Contract Act in 1872, the British made the first attempt to codify Mercantile Law in India. Since then, numerous Laws governing commercial transactions have been enacted in India, including the Partnership Act, the Negotiable Instruments Act, and so on.
2. What are the objectives of Mercantile Law?
In a socialistic country like India, wealth should be distributed equitably to bridge the gap between the rich and the poor. To accomplish this goal, the Law regulates various business transactions.
3. What is a Quasi-contract in Mercantile Law?
Quasi-contracts are legal agreements that outline one party's obligation to another party if the former possesses the latter party's property, i.e., something is acquired by one party at the expense of another.
4. Is Mercantile Law the same as business Law?
Mercantile Law is a broader term; business Law is a more specific term. Business Law is more limited in that it governs contracts, taxes, and commercial transactions. Although the two terms are not formally distinct, business Law is a subset of the vast field of Commercial Law.
5. Where can Commerce students find detailed information about the Sale of Goods Act of 1930 on Vedantu?
Students can find Important Commerce Topics and Study Materials for Classes 11 and 12 on Vedantu, which has a chapter-by-chapter analysis of topics such as the Sale of Goods Act, 1930, and many more. Subject matter experts prepare the specific responses. Commerce textbook solutions for classes 11 and 12 are available for free download in PDF format.
6. What are the Sources of English Mercantile Law?
The English Mercantile has four major sources. Each source is explained as follows-
Merchant Law: It deals with the rules and regulations of traders which they may use in their trading activities and also customs applicable to the business people.
Statute Law: It is a formal document where the act of the legislature is written properly.
Common-Law: It is similar to judicial decisions. It has a set of common rules and regulations designed and formed by the judges of their local legal bodies. It doesn't have any written documents.
Equity: These rules were formed by the dictates of conscience in the premises of the court of chancery.
7. What are the Functions of Mercantile Law?
The basic functions performed by the Mercantile Law are -
It formulates the rules and regulations based on the acceptance and rejection of society after observing several situations.
It helps to protect the rights and Powers of both the parties of an agreement without any partiality.
It concentrates on resolving disputes that occurred due to several reasons which lead to the breach of a contract.
It tries to maintain all the citizens of the society to be in a single order of discipline.
It has numerous subsidiary Laws and acts which helps to regulate every aspect of that particular contract or a dispute.
8. What is a Contract and What are Its Types?
The contract is a formal agreement between two or more individuals or companies with mutual concern, all the obligations to be performed by both of them are written, completely verified, and adjusted by the legal bodies of the respective act.
The nature of the contract may vary, but the elements are the same for all the contracts. They are mutual consent, understanding of both parties, offers, acceptance, obligations to be performed, dates if necessary, not to violate the public policy. As the contracts are of several types. They are as follows-
Contract with Seal