Today in the arena of perfection, in professionalism, the role of Business/Commercial Law is at its pinnacle. The knowledge of it is mandatory for every proficient. It has its substance and bloodshed in its absence. Without any delay, we can structuralize it with a great thought:-
“‘Para’s’ are like protoplasm for the ‘clause’ leaf, ‘subsection’ act as their factions, linked with the branches of ‘section’, bound with the stem ‘Act’ and it lives in the root of ‘Law’”.
Let us ungroup and study it-
What is Law?
“Common sense often makes good law” –William O. Douglas
As a dictionary meaning, Law comprises of rules under which people live but it’s not enough in the court of experts. They need it in their language and for them ‘Law is an anthology of Acts, includes, rules, regulations, guidelines, principles, which seek to regulate relations of citizens with the state.’ It has its different kinds like Mercantile Law, Business Law, Criminal Law, Civil Law, Hindu-Muslim Law etc.
In our profession of Chartered Accountancy, we need to study the ‘Business Law’ for the easy run of commercial activities.
What is Business Law?
For the better understanding of business law, first, we have to understand the term ‘Business’.
Business: Business is an economic, social and human activity in which goods and services are produce, distribute and exchange for profit motive and social satisfaction, a part of earned profit is re-invested into the business.
Business Law: (Business + Law) Rules and regulations dealt with the activities of production, distribution and exchange (contracting activities) of goods and services for profit motive and social satisfaction are known as Business Law.
In nutshell, the laws that govern and regulate trade and commerce are commonly known as ‘Business Laws’.
As diagrammed above, Law contains Acts. Acts are the collection of sections, subsections and clauses which includes a detailed agenda of rules and regulations pertaining to a field. Business Law contains, generally, these acts:
a. The Indian Contract Act, 1872
b. The Negotiable Instruments Act, 1881
c. The Payment of Bonus Act, 1965
d. The Employees’ Provident Funds & Miscellaneous Provisions Act, 1952
e. The Payment of Gratuity Act, 1972
f. The Sale of Goods Act 1930
g. The Indian Partnership Act, 1932
Role of Business Law:
· In today’s scenario, naturally, every activity involves trade (business) and where comes the trade (contract), there comes the law.
· There is a universal applicability of business law i.e. every profession has activities which creates contract weather for goods or services.
· Today in the world of fast, every businessman and professional wants to make their payments and to receives their fees through the shortest medium i.e. cheque, promissory note, e-transfer etc. and here arises the role of law again.
· Tax is a keyhole for every professional; if he wants to carry out its activities smoothly, he has to open the gate by paying it. Law has its dais in paying Tax.
· Companies with their activities like amalgamation, join venture, consignment, needs the knowledge of business law.
King of Corporate World:
It’s not wrong to pronounce business law as the king of this corporate world. Throw some light on the mechanism of business law for this corporate globe:
1. Business Law includes a complex web of state, federal and municipal statute which provides an aid to the corporate world.
2. It provides rules through which the stakeholders, directors, employees and consumers, the business community and the environment interact with each other.
3. It also defines the internal rules of the company through which it will work flawlessly. (Payment of Bonus, Payment of Gratuity, Provident Funds etc.)
4. It makes clear the relation between the board of directors and the employees and shareholders of that business.
5. Intellectual property law is also the part of it which saves a business from copyright infringement, patents and trademarks related matters.
6. Finally, by providing different Acts it bounds each and every organization to follow the pre-described rules and provisions. For e.g. In Partnership Act, it provides some rights to the unpaid seller as against the goods and buyer through which he/she can defend himself from deceive. Or make provisions regarding the payment of Gratuity in the Payment of Gratuity Act for the interest of the employees.
“Business Law works as grease in the archetypal behaviour of this corporate world.”
Bloodshed, In Absence
“As same as the gun is useless without its bullet, this business is useless without its Law. It (business) is harmful as same as an empty gun without its Law.”
In the dearth of any important/key thing, it is very difficult to work. These are some destructive effects of business, if we make it in the absence of law:
a. Starts breaching of contracts between the parties/businessman’s.
b. Big losses to the small firms and their identity will have been covered by the dark clouds (big companies).
c. There is no dais left in the interest of stakeholders, employees, workers and partners.
d. The word ‘Deed’ fails here and anybody can do anything which they wants, results deceives others.
e. Provision of punishment for illegal use of copyrights and prohibited means of business, works no more here.
f. Banned possessions are again getting pace and reach the peak.
We can name it: “Twilight Business: No Moon”
Chartered Accountant: At perfection
As the worlds know that the Chartered Accountants of India are very keen in their profession, they are expert in each and every aspect of business and I don’t think that I have to mention them.
The advisory role of chartered accountant’s for business transactions needs an expert knowledge of Business Law. A C.A. can help a business or his profession, without a second thought, if he has a good knowledge of B.L.
In today’s scenario, the role of these advisors increasing day by day. Indirectly the demand of C.A’s increasing as same. So a C.A. has to be perfect in the field of B.L. through which he can uphold the prestige and standard of this profession.
Business is a very wider term and it is much wider in its practical sense. To handle such a big thing, one definitely needs some rules and regulation for the easy flow of work. In the end, not forever, “The Role of Business Law In Corporate” begins.
“There is a need of some standards to work, pillars to stay and roofs to protect; it is such a gift for us under work for, with integrity and honesty”.
· Text book of CPT- Mercantile Law issued by ICAI.
· Text book of IPCC- Business Law, Ethics and Communication issued by ICAI.
· URLs: www.nbea.org/newsite/curriculum/standards/law.html,
By: Madhusudan Mishra