Business Law – SS3 Commerce Lesson Note (First Term)

Business law, also called commercial law or mercantile law, is the body of rules that governs dealings between persons in commercial matters.

Behavioural objectives

1. Explain the meaning of business law.
2. State the sources of business law.
3. Describe the branches of business law.
4. List the elements of a valid contract.
5. Give reasons why business law is important to traders and customers.

Instructional techniques

• Identification: students pick out business situations that involve the law.
• Explanation: the teacher explains each branch with examples.
• Questions and answers: short oral questions check understanding.
• Demonstration: students act out a simple offer and acceptance.
• Videos: short clips from a reliable source.

Instructional materials

• Videos
• Loudspeaker
• Textbook
• Pictures

What is business law?

Business law is the set of rules that govern dealings between persons in commercial matters.

• Origin of the rules: they may come from convention, agreement, or national or international legislation.
• Other names: commercial law and mercantile law.
• Convention: a custom or practice that traders have accepted over time.
• Agreement: a promise between parties that the law will enforce, such as a contract.
• Legislation: laws made by a lawmaking body, such as the National Assembly or a State House of Assembly.
• Commercial matters: buying, selling, hiring, lending, banking, insurance and running a company.

What are the sources of business law?

There are five main sources of business law: statutes, case law, customs and trade usage, agreements, and international conventions.

• Statutes (legislation): written laws made by the National Assembly or State Houses of Assembly, for example the Companies and Allied Matters Act.
• Case law (judicial precedent): decisions of higher courts that lower courts follow in similar cases.
• Customs and trade usage: long-standing practices that traders accept as binding.
• Agreements: the terms parties set in their own contracts, within the limits of the law.
• International conventions: rules agreed between countries to guide cross-border trade.

What are the branches of business law?

There are six branches of business law: property law, contract and commercial law, law of tort, inheritance law, family law and corporate law.

1. Property law

• Meaning: deals with the use and ownership of property.
• Real property: land and buildings, such as a shop plot or a factory.
• Personal property: movable items, such as goods, vehicles and money.
• Example: a landlord and tenant agreement for a shop.

2. Contract and commercial law

• Meaning: deals with agreements between people that the law can enforce.
• Example: a trader agrees to supply 50 bags of rice to a retailer at a stated price.
• Breach of contract: failure to do what the contract requires, which may lead to damages.

3. Law of tort

• Meaning: deals with civil wrongs that cause injury or loss to a person, by an individual or a company.
• Negligence: failure to take proper care, such as a shop leaving a wet floor unmarked.
• Defamation: a false statement that harms a person’s good name.
• Trespass: entering another person’s land or property without permission.
• Nuisance: an act that interferes with another person’s use of their property, such as constant loud noise.

4. Inheritance or succession law

• Meaning: deals with the rights to inherit property when the owner dies.
• Will: a written statement of how a person wants property shared after death.
• Intestate: a person who dies without a valid will.

5. Family law

• Meaning: governs the legal aspects of a family.
• Marriage: the legal rules for joining two persons as husband and wife.
• Divorce: the legal ending of a marriage.
• Adoption: the legal process of taking a child as one’s own.

6. Corporate law

• Meaning: deals with businesses and shareholders.
• Formation: rules for registering a company, which in Nigeria is done with the Corporate Affairs Commission.
• Shareholders: owners of a company’s shares, whose rights and duties the law sets out.
• Directors: persons who manage the company and must act in its interest.

How do the branches of business law compare?

The table below shows what each branch deals with and gives one example.

What makes a contract valid?

A valid contract is an agreement that the law will enforce, and it has seven elements.

1. Offer: one party states the terms on which they are willing to deal.
2. Acceptance: the other party agrees to those terms without change.
3. Consideration: each party gives something of value, such as money or goods.
4. Intention to create legal relations: both parties mean the agreement to be legally binding.
5. Capacity: the parties are legally able to contract, for example they are adults of sound mind.
6. Genuine consent: no force, fraud or serious mistake affected the agreement.
7. Legality: the purpose of the contract is lawful.

What are the remedies for breach of contract?

A remedy is the action a court may order when one party fails to keep a contract.

• Damages: money paid to the injured party to make up for the loss.
• Specific performance: a court order that the party must do what the contract promised.
• Injunction: a court order that stops a party from doing something forbidden by the contract.
• Rescission: the contract is cancelled and the parties are restored to their earlier positions.

Why is business law important?

Business law is important because it gives traders and customers clear rules and a lawful way to settle disputes.

• Order: it sets clear rules for how traders and customers deal with each other.
• Protection of rights: buyers, sellers, workers and owners can seek a remedy when wronged.
• Settling disputes: it gives a lawful way to resolve disagreements, such as through the courts.
• Trust: people trade more freely when agreements can be enforced.
• Fair practice: it discourages fraud, cheating and unsafe products.

Evaluation

1. Define business law.
2. State three sources of business law.
3. Discuss any three branches of business law.
4. List four elements of a valid contract.
5. Give two reasons why business law is important.

Assignment

Choose three branches of business law. For each, write its meaning and one example from a business in your community.