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

A trading association has followed a practice for decades. A dispute arises and one party relies on it. Which condition must the practice satisfy to be recognised as a valid custom source of law?

A custom is recognised as a source of law only if it is ancient, continuous, certain, reasonable, and not opposed to any statute or public policy. It needs no parliamentary approval, and a short-lived practice or a mere majority preference does not qualify.

  1. AIt must be ancient, certain, reasonable and not opposed to statute or public policyCorrect
  2. BIt must be approved in writing by Parliament before use
  3. CIt must have been followed for at least one year in one town
  4. DIt must be supported by a majority of traders in the association

Explanation

For a custom to be recognised as law it must be ancient, continuous, certain, reasonable and not contrary to statute or public policy. Parliamentary approval is not required, and a short usage of one year is insufficient. A majority vote does not make a practice a legal custom.

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