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Business Laws and Management · Introduction to Law

Meaning, Nature and Sources of Law for CSEET

Updated 11 October 2026 · Fact-checked

Law is a set of rules made or recognised by the State, binding on everyone in society and enforced through courts and penalties. Its main sources are custom, judicial precedent, legislation (statutes), and also agreements and books of authority. For MCQs, identify the keyword in the option and match it to its source.

Understand Meaning, Nature and Sources of Law

Start with a simple idea. People living together need rules so that disputes are settled peacefully. Law is that body of rules. It is made or recognised by the State and applies to everyone within its reach. If you break it, the State can force you to obey or punish you.

Law has certain features. It is a general rule of conduct, not an order to one person. It is binding, so you cannot opt out. It is backed by the sanction of the State, such as fines, imprisonment or damages. It also changes with society, so it is dynamic. Many writers add that law aims at justice, order and social welfare.

Law also performs functions. It maintains order and peace, protects rights and liberties, settles disputes through courts, and acts as a tool of social change and justice. In business, it gives certainty to contracts, companies and trade.

Now the sources of law, meaning where law comes from. The main ones are: Custom, which is a long-followed practice that society accepts as binding and courts recognise if it is ancient, certain, reasonable and continuous. Judicial precedent, where earlier court decisions guide later cases; higher courts bind lower courts. Legislation, which is law made by a competent authority such as Parliament or a State Legislature; it is the most important source today. Other sources include agreements, equity and justice, and juristic writings.

A statute is an Act passed by the legislature. Legislation can be supreme (made by the sovereign body) or subordinate (rules, regulations and bye-laws made under power given by an Act).

Key formulas to remember

Definition of law
Law = rules of conduct + made or recognised by the State + binding on all + enforced by sanction
Use these four elements to test any statement about what law is.
Main sources of law
Custom, Judicial precedent, Legislation (statutes)
Agreements, equity and juristic writings are further sources in many texts.
Conditions for a valid custom
Ancient + Certain + Reasonable + Continuous + Not against statute or public policy
A custom that violates a statute is not enforced.
Precedent rule
Higher court decision binds lower courts
The binding part is the ratio decidendi, not the passing remarks (obiter dicta).
Legislation types
Supreme legislation (Parliament or State Legislature) and Subordinate legislation (rules, regulations, bye-laws)
Subordinate legislation is valid only within the power given by the parent Act.

How to solve Meaning, Nature and Sources of Law questions

Questions on this topic are mostly definition, feature and source based. Use this method for MCQs and short written answers.

  1. 1Read the question and mark the keyword: define, nature, function, custom, precedent, legislation.
  2. 2Decide whether it asks for meaning, a feature, a function or a source.
  3. 3Recall the matching point from your list: four elements of law, three main sources, custom conditions.
  4. 4For a source question, ask who created the rule: society (custom), judges (precedent), legislature (statute).
  5. 5Eliminate options that mix up two sources or overstate, for example saying custom always overrides a statute.
  6. 6In a written answer, give the definition first, then points in short bullets, then one example.
  7. 7Recheck that your answer uses the exact term asked, not a near-synonym.

Quickest way: Who made the rule? Trick

When to use it: Use it for any MCQ asking which source of law a given situation reflects.

  1. Practice long followed by people and accepted as binding: Custom.
  2. Earlier court decision followed in a later case: Judicial precedent.
  3. Act passed by Parliament or a State Legislature: Legislation.
  4. Rules made by a minister or authority under an Act: Subordinate legislation.
  5. If two options look right, pick the one that matches the maker of the rule.

Common mistakes in Meaning, Nature and Sources of Law

  • Saying law and morality are the same.

    Both guide behaviour, so they seem alike.

    Fix: Remember that law is enforced by the State with sanction; morality is enforced by conscience and society.

  • Treating every old practice as a legal custom.

    Students forget the conditions.

    Fix: Check the conditions: ancient, certain, reasonable, continuous and not against a statute.

  • Thinking all remarks of a judge bind later courts.

    Precedent is learned as 'judges' words are law'.

    Fix: Only the ratio decidendi binds. Obiter dicta only persuade.

  • Confusing a statute with subordinate legislation.

    Both are written laws.

    Fix: A statute is passed by the legislature; rules and bye-laws are made under authority given by a statute.

  • Writing that a lower court binds a higher court.

    The hierarchy is reversed in a hurry.

    Fix: Draw the hierarchy: decisions flow downward in binding force.

Worked examples

Example 1

A trade in a market town has followed a practice for generations. Everyone regards it as binding, it is clear and reasonable, and no Act forbids it. Which source of law is it, and will a court enforce it?

Show the solution
  1. The practice has been followed for generations, so it is ancient and continuous.
  2. It is clear and reasonable, so it is certain and reasonable.
  3. No Act forbids it, so it does not conflict with a statute.
  4. All conditions of a valid custom are met.

Answer: It is a custom, and a court will recognise and enforce it.

Example 2

Which of the following is a feature of law? (A) It is voluntary to follow (B) It is binding and backed by State sanction (C) It applies to one person only (D) It never changes. Choose the correct option.

Show the solution
  1. Law is binding, so (A) is wrong.
  2. Law is a general rule for all, so (C) is wrong.
  3. Law changes with society, so (D) is wrong.
  4. Law carries State sanction, so (B) fits.

Answer: Option (B).

Exam tips

  • Learn the three main sources by who creates each one, and expect MCQs that give a situation and ask for the source.
  • Memorise the five conditions of a valid custom; options often drop or change one.
  • Know ratio decidendi versus obiter dicta in one line each.
  • Paper 4 has no negative marking, so attempt every question.
  • Read all four options before choosing; look for words like 'always' or 'only' that overstate a rule.

Practice questions from Introduction to Law

Meaning, Nature and Sources of Law in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Meaning, Nature and Sources of Law: frequently asked questions

What is the meaning of law for CSEET?

Law is a set of general rules of conduct made or recognised by the State, binding on all and enforced by sanction. Exam options usually test these elements.

What are the main sources of law in India?

The main sources are custom, judicial precedent and legislation. Legislation, meaning statutes passed by Parliament and State Legislatures, is the most important today.

What is the difference between custom and precedent?

Custom grows from long public practice accepted as binding. Precedent comes from earlier court decisions that guide later cases.

Is a custom valid if it goes against an Act?

No. A custom must not conflict with a statute or public policy. If it does, the court will not enforce it.