Mercantile law is a body of law or a legal code that deals with international commerce, business transactions and operations like agreements, contracts, copyrights, franchising, insurance, licensing, patents, shipping, transport, trademarks, etc.
Mercantile law is a very general term which encompasses the whole collection of business laws. The most important aspect of any business transaction is the agreement between the two parties, which is either implied or expressed.
Origin of Mercantile Law
Mercantile Law was the name given to that law which evolved in England from the years of customs and rules between businessmen and traders relating to their transactions, which evolved over the years. It gradually became part of the Common Law of England.
Browse more Topics under Introduction To Law
- Various Definitions of Law
- Principle Sources of Indian Law – Customs
- Principle Sources of Indian Law – Judicial Decisions
- Principle Sources of Indian Law – Statutes and Legislation
- Principle Sources of Indian Law – Personal Laws
- Secondary Sources of Indian Law
- Sources of Indian Mercantile Law
- Understanding Case Citation
Sources of Mercantile Law
- Law Merchant: Law merchant is the main source of Mercantile law. It refers to those customs and rules that apply to traders and businessmen on their dealings and tradings with each other.
- Statute Law: Statute law is that law that has been created by the legislation. A statute is a formal act of the legislature in written form. It has also become an important source of Mercantile law.
- The Principle of Equity: The principle of equity refers to a set of rules, which neither originated from customs nor statutory law. Thus, equity rules were formed on the basis of dictates of conscience which had been decided in the courts of chancery.
- Common Law: Common law consists of a body of rules, which have been defined by customs, judicial decisions and old scholarly works in the law. It is the unwritten law of English which applies to everyone in the country. Common law, in this case, refers to the principles of law that have been evolved by judges through their case judgments.
Mercantile Law in India
Before the year 1872, business transactions were regulated by the personal law of individuals who were in involved in legal matters. During 1872, the Indian Contract Act was brought into existence, which codified and recognised unified principles of mercantile law. Since then, many Acts have been introduced to regulate transactions that relate to monetary transactions, partnerships, the sale of goods, etc.
Sources of Indian Mercantile Law
The sources of Indian Mercantile Law constitute of the following:
English Mercantile Law
The Indian mercantile law is heavily based on the English one. Although, necessary changes made to suit the context of Indian conditions, local customs, and rules.
It is very dependent on English mercantile Law, as even now, in the absence of laws relating to any matter in the Indian law, the courts use English law to make their decisions.
Acts enacted by Indian Legislation
The major acts that have been enacted by the Indian legislation which are related to mercantile law are:
Indian Contract Act(1872), Sale of Goods Act(1930), Indian Partnership Act(1932), Negotiable Instruments Act(1881), The Arbitration and Conciliation Act(1996), The Insurance Act(1938), The Carriers Act(1865), The Presidency Town Insolvency Acts(1909) and Provincial Insolvency Act (1920)
In terms of business law, judicial decisions or precedents are past decisions of the court that are used to solve cases with similar characteristics, where there is a conflict of interest and no clear judgment can be made.
Thus, judicial decisions or precedents often become new rules or laws. The judicial decisions are universally considered as a source of law.
Customs and Trade Usages
A very large part of Indian Law has finally been codified. However, many Indian statutes make special provisions. Thus, the effect of rules laid down in a particular act is conditional to any special custom or usage of trade.
Let’s try and understand this with an example. Section 1 of the Negotiable Instruments Act, 1881 says this. ‘Nothing herein contained…affects any local usage relating to any instrument in any local language’.
Solved Question for you
Which of the following Act relating to Mercantile Law was enacted during the year 1872?
- Sale of Goods Act
- Indian Contract Act
- Provincial Insolvency Act
- Negotiable Instruments Act
Answer: 1. The Indian Contract Act was the Act that was enacted during the year 1872.