CMA Foundation · Fundamentals of Business Laws and Business Communication

Sources of Law: formula sheet

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Key formulas

Core idea of law: Law = rules of conduct + made or recognised by the State + enforced by sanctions; Use this to test any statement. If State enforcement is missing, it is not law.
Law vs morality (enforcement): Law: State enforces, with legal penalty | Morality: conscience and society, no legal penalty; A moral wrong, such as not helping a friend, is not always a legal wrong.
Law vs justice: Law = the rules as they stand | Justice = the ideal of fairness the rules aim to achieve; Law is a means; justice is the end. A law can exist and still be seen as unjust.
Purposes of law: Order, protection of rights, dispute settlement, fairness, social change; Pick the option that matches the function described in the question.
Public law vs private law: Public law = State and individual; Private law = individual and individual; Criminal law is treated as public law because the State prosecutes.
Civil law vs criminal law: Civil = private right, compensation or remedy; Criminal = wrong against society, punishment; In a civil case the injured party sues. In a criminal case the State prosecutes.
Substantive law vs procedural law: Substantive = defines rights and duties; Procedural = method of enforcing them; Substantive law says what; procedural law says how.
Municipal law vs international law: Municipal = law within a country; International = rules between nations; Municipal law is made and enforced by the State itself.
Core list of sources: Constitution + Legislation + Case law (precedent) + Custom + Personal laws; Some texts add others such as international treaties or books of authority. Answer by the options given.
Supremacy rule: Constitution > Statute > Delegated legislation; A lower rule that conflicts with a higher one is invalid to that extent.
Binding precedent: Supreme Court law binds all courts in India; High Court decisions bind subordinate courts in that High Court's jurisdiction only.
Valid custom tests: Ancient, certain, reasonable, continuous, not against statute or public policy; A custom failing these tests is not enforced as law.
Delegated legislation: Parent Act gives power → rules/regulations/bye-laws made; It must stay within the power given by the parent Act.
Legislation: Legislation = law enacted by the legislature (Act or statute); Written, formal and made by Parliament or a State Legislature. Also called statute law or enacted law.
Delegated legislation: Delegated legislation = law made by an authority under power given by a parent Act; Includes rules, regulations, bye-laws, orders and notifications. It is subordinate to the parent Act and can be struck down if it exceeds that power.
Doctrine of precedent: Stare decisis = follow earlier decisions on similar facts; Higher court decisions bind lower courts. Supreme Court law binds all courts in India under Article 141.
Ratio decidendi vs obiter dicta: Ratio decidendi = binding reason; obiter dicta = passing remarks; Only the ratio binds. Obiter dicta have persuasive value only.
Statute law vs case law: Statute law = made by legislature; case law = made by judges through decisions; Statute law is written in an Act. Case law is found in law reports.
Tests of a valid custom: Ancient + Continuous + Certain + Reasonable + Obligatory + Not against statute or public policy; A custom failing any one test will not be enforced by courts as law.
Custom vs usage: Custom = binding as law; Usage = binding only if adopted by the parties; Usage is common in trade and must not contradict the contract or the law.
Personal laws: Apply by religion or community to family matters; Marriage, divorce, succession, adoption, maintenance.
International conventions: Treaty binds India internationally; domestic force needs Parliament's law; Signing alone does not change Indian law.
Secondary sources: Books, commission reports, expert opinions = persuasive, not binding; They explain or suggest law; they do not make it.

Quick revision

Law is a set of rules of conduct enforced by the State.
Public law deals with the relation between the State and individuals; private law deals with relations between individuals.
Criminal law deals with wrongs against society; civil law deals with private rights and remedies.
Substantive law defines rights and duties; procedural law lays down how they are enforced.
The Constitution is the supreme source of law in India.
Legislation is law made by Parliament or a State Legislature.
Delegated legislation is made by an authority under power given by a statute.
A judicial precedent is an earlier court decision followed in later similar cases.
A custom is a long-followed practice that has gained the force of law.
A custom must not be against statute or public policy to be accepted by courts.
When a question describes who made a rule, use that to identify the source.
There is no negative marking, so attempt every question.

Common mistakes

Treating every moral duty as a legal duty. Fix: Remember that morality has no legal sanction. Only State-backed rules are law.
Saying law and justice mean the same thing. Fix: Law is the set of rules; justice is the ideal. A law can be criticised as unjust.
Calling criminal law private law because a person is harmed. Fix: Remember that crime is a wrong against society and the State prosecutes, so it is public law.
Treating the Code of Civil Procedure as substantive law because it has 'civil' in its name. Fix: Look for the word 'procedure'. Procedural codes lay down method, not rights.
Treating delegated legislation as a separate source unrelated to Acts. Fix: Remember it is made under power given by an Act, so it sits below the Act.
Saying a custom can override a statute. Fix: Custom is accepted only if it is not against statute or public policy.
Treating delegated legislation as made by Parliament. Fix: Remember that the maker is an authority given power by the Act. Parliament only grants the power.
Thinking delegated legislation cannot be challenged. Fix: It is subordinate. If it goes beyond the parent Act or conflicts with the Constitution, courts can declare it invalid.
Treating custom and usage as the same thing. Fix: Remember that custom has the force of law, while usage binds only if parties adopt it.
Thinking an ancient custom overrides an Act. Fix: A custom must not be against statute or public policy. If it is, the Act prevails.

Exam tips

Expect direct definition and characteristic questions. Learn the list of traits and the enforcement test.
Law vs morality vs justice is a favourite comparison. Remember the one-line label for each.
Watch for options that give a moral feature but call it law.
No negative marking applies, so always attempt every question after elimination.
Do not spend more than a minute on a conceptual question; mark your best guess and move on.
Expect direct 'which of the following is' questions and short scenario questions. Learn one example for each type.
Learn which Acts are substantive and which are procedural, since examples are a common way to test this.
Beware of options with 'always' or 'only'. Real classes of law overlap.