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CMA Foundation · Fundamentals of Business Laws and Business Communication · Legal Methods and Court System in India

A trade association in Surat has followed a practice for decades that is reasonable, certain, and not contrary to any statute. A dispute arises over this practice. Which source of law does the practice represent, and what is its status?

The practice is custom. Courts recognise a custom as a source of law when it is ancient, certain, reasonable, continuously followed and not contrary to any statute or public policy. A trade association's habit is neither legislation nor precedent merely because it is followed.

  1. ACustom, which courts may recognise if it is ancient, certain, reasonable and not against statuteCorrect
  2. BDelegated legislation, which is binding because the association framed it
  3. CPrecedent, which is binding because a High Court once noted it
  4. DStatute, which is binding as soon as it is followed for ten years

Explanation

A long-standing practice followed by a community or trade is custom. Courts enforce a custom if it is ancient, certain, reasonable, continuous and not opposed to statute or public policy. The association is not a legislature, so its practice is not delegated legislation, and no fixed ten-year rule converts practice into statute.

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