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CMA Intermediate · Business Laws and Ethics · Introduction to Law and Legal System in India

A trade custom in a local grain market has been followed for generations. In a dispute, a party relies on it, but it directly conflicts with an express provision of a statute applicable to the transaction. Which position is correct?

The statute prevails. Custom is a source of law only so long as it does not contradict an express statutory provision, because legislation made by the competent legislature overrides conflicting custom, however old or well established the custom may be.

  1. AThe custom prevails because it is older than the statute
  2. BThe custom prevails because trade usage always overrides legislation
  3. CThe statute prevails, as a valid custom cannot override an express statutory provisionCorrect
  4. DBoth apply equally and the court must split the outcome

Explanation

Custom is a recognised source of law but is subordinate to legislation. Where a statute expressly provides otherwise, the statutory rule prevails. Age of the custom does not give it priority, and courts do not divide outcomes between conflicting rules.

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