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CS Executive · Jurisprudence, Interpretation and General Laws · Sources of Law

Two companies, Arav Textiles Ltd. and Bharat Dyes Ltd., sign a supply agreement stating that disputes will be resolved by arbitration in Surat. From a jurisprudence viewpoint, how is this agreement best described as a source of law?

The agreement is conventional law: a private source of rules binding only the parties who made it. It is not statute, custom or precedent, because it is not enacted by the legislature, does not arise from long usage and does not bind outsiders to the contract.

  1. AConventional law that binds only the parties who made it, as a private source of rulesCorrect
  2. BStatutory law binding on all textile companies in India
  3. CCustomary law binding on the whole trade by long usage
  4. DJudicial precedent binding on all courts in Gujarat

Explanation

An agreement creates rights and duties only between the parties who entered into it, so it is treated as conventional (agreement-based) law. It is not enacted by the legislature, does not arise from long usage, and is not a court decision. Hence the claim that it binds all textile companies is wrong.

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