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DURU Onyekachi Free Law Lecture Series: No. 3

Business Law*

Introduction

This course is designed to introduce students to some important aspects of Business Law,

particularly, the Law of Contract and Commercial Law. The aspect of the law of contract will

include definition and sources of law of contract, formation and ingredients of a valid contract,

contractual capacity, vitiating elements and remedies for breach of contract. While the aspects of

commercial law will include sale of goods, law of agency and Hire purchase.

Course Justification

Commercial agreements have come to be a part of man’s daily activities. While some

agreements are legally binding others are not necessarily binding, depending on the intention of

the parties to such agreement. For an agreement to be legally binding, some elements need to be

present which may be hitherto unknown to the intending parties to contract. It therefore becomes

imperative to deal with those important elements in order to distinguish agreements that are

legally binding from those that are not. Be that as it may, it is therefore necessary to introduce the

students to specific principles guiding the formation of contractual agreements between the

parties.

1.3 Course Objectives

The general objective of the course is to introduce students to the basic principles of law

within the scope of business law. At the end of the semester, students are expected to:

1. Understand some aspects of business law in Nigeria.

2. Appreciate that the law recognizes the freedom of individual to enter into

contractual and commercial transactions.

*
Onyekachi Wisdom Duru Esq. (Contact: Email: onyekachiduru@gmail.com; Tel.: +234-8037707496; +234-
8022148248)
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3. Appreciate the working of the guiding principles of business law derived from the

case law.

4. Understand the role of law of contract as the basis or foundation of business

transaction in Nigeria.

Lecture One

Definition, Scope and Sources of Business law

Objectives of Lecture One: At the end of lecture one, students should be able to:

1. Explain the meaning and nature of business law.

2. Outline the Scope of Business Law.

3. Analyze the functions and importance of Business Law.

4. Identify the sources of Business Law in Nigeria.

Meaning and Nature of Business Law

What is Business law?

Business law is the body of enforceable principles, rules, regulations and practices

governing the various interactions between parties to a commercial transaction. In other words,

business law is the legal framework through which economic and business activities are

conducted and regulated.

Scope of Business Law:

Business law pervades different aspects of law, including the following:

a. Law of Contract: This is the branch of business law which regulates the formation, terms,

performance, discharge and remedies for breach of enforceable agreements (contracts)

between parties.

b. Law of Agency: Law of agency is an area of commercial law dealing with a set of

contractual, quasi-contractual and non-contractual relationships that involves express or

implied derivation of authority by one party, the agent, from the other party, the principal.

It is the branch of business law which regulates the relationship between principals and
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agents. The law of agency itself deals primarily with the relationship which arises where

one person, expressly or implied employs another or is by law deemed to have employed

such person, to perform some tasks for and on his behalf.

c. Sale of Goods: This is the aspect of business law which regulates the contract of sale of

goods. By Section1 (1) of the Sale of Goods Act 1893, it is a contract whereby the seller

transfers, or agrees to transfer, the property in goods to the buyer for a money

consideration called the price. The essence of a Sale of Goods Contract is that the parties

intend to transfer ownership of property in the goods from the seller to the buyer.

d. Hire Purchase: The hire purchase law is a branch of business law that regulates the

formation of a hire purchase contract and the respective rights and liabilities of the parties

to the transaction. A hire-purchase agreement is an agreement under which the owner of

goods hires them to another person called the hirer, the agreement also providing that the

hirer shall have the option to buy the goods if and when the number of installments

specified in the agreement had been paid.

e. Law of Partnership: The law of partnership is the branch of business law that regulates

the rights and liabilities of the partners among themselves and their rights and liabilities in

dealing with third parties.

f. Company Law: Company law is a branch of business law which regulates the formation

and dissolution of various types of business organizations, such as companies, business

names, partnerships and incorporated trustees. Company law regulates the process of

incorporation, management and financing of the company, the extent of the powers of the

company and its officials.

g. Industrial Law: This branch of business law governs the relationship between employer

and employees and the regulation of their rights and liabilities. Industrial law also covers

the formation and regulation of the activities of trade and employers unions and their

members in other to achieve industrial peace and harmony.

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h. Insurance Law: This branch of business law regulates the establishment and the conduct

of the insurance business and the contract between the insured and the insurer as well as

their rights and liabilities. Thus a contract of Insurance is one whereby a person or

company (the insurer) agrees in consideration of a single or periodical payment (called the

premium) to pay a sum of money to another person or company (the insured) on the

happening of a certain event or to indemnify against loss caused by the risk insured

against.

i. Law of Banking and Negotiable Instruments: This is the aspect of business law

regulating the establishment, management and control of banks and the different modes of

effecting payment for goods and services in form of cheques and other types of bill of

exchange.

Take notice that apart from the foregoing, the scope of business law also includes Law of

Taxation, Intellectual Property, Shipping and Admiralty, and Alternative Dispute Resolution.

Further take notice that the Law of Contract is the foundation or ‘mother’ of business

law. This is because a contract lies at the root of any business or commercial relationship, be it in

the sphere of agency, sale of goods, insurance, banking, hire purchase, industrial law, etc. As a

matter of fact, all other branches of business law represent an adaptation of the general rules and

principles of the Law of Contract to the peculiarities of the relationships.

Functions of Business Law

The principles and rules of business law have been developed over the years to achieve certain

objectives, including the following;

a. Ensuring orderliness in the various interactions and dealings between parties to

commercial contracts.

b. Promotion of justice in commercial transactions through the balancing of the conflicting

interests of all the parties to commercial contracts.

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c. Provision of appropriate remedies where a party has suffered injury due to the action or

inaction of the other, example in cases of breach of contract.

d. Protection of certain classes of people like infants and illiterates from being exploited or

defrauded in a contractual relationship because of their special circumstances.

e. Promotion of trade and commerce within a particular society.

Importance of Business Law

It is imperative for a business man to study business law for the following reasons;

a. To enable a business man take a quick and snap decision under a pressing situation,

without necessarily consulting a solicitor.

b. A knowledge of business law will enable a business man discuss matters intelligently with

his solicitors and properly appreciate any legal advice proffered.

c. Knowledge of business law will enable the businessman to run the business as much as

possible, in a litigation-proof manner and avoid the cost, inconvenience and sometimes the

embarrassment of litigation.

d. The more a business man is knowledgeable in business law the more he will be helpful to

the lawyer in the conduct of the case.

e. Business law will enable a business man breach the gap between the rule of law and the

knowledge of the business through his knowledge and experience.

From the foregoing, it is clear that it is imperative for a business man to have a fairly good

knowledge of the principles of business law notwithstanding that he may have legal staff,

department or external solicitors.

Sources of Business Law: The primary and secondary sources of business law in Nigeria are as

follows;

Primary Sources: These include;

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a. The received English law (comprising of the Common Laws of England, the Doctrines of

Equity and the Statutes of General Application that were in force in England as at 1 of

January, 1900).

b. Nigerian Legislation (Comprising of our Constitution, Acts, Laws, Decrees, Edicts, Bye

Laws, Orders in Council, Proclamations, Directives and Government White Papers,

among others.)

c. Case Laws or Judicial Precedent.

d. Delegated Legislation

Secondary Sources: These Include;

a. Customary Law

b. International Law such as International treaties, Charters, etc.

c. Books, Legal Dictionaries, Periodicals, Newspaper Reports, etc.

Revision

1. What is business law?

2. What is the scope of business law?

3. What are the functions and importance of business law?

4. What are the sources of business law?

Suggestions for Further Reading

1. A. O. Sanni, Introduction to Business Law (Lagos: Malthouse Press Limited, 2005).

2. Ezejiofor, Okonkwo & Illegbune, Nigerian Business Law (London: Sweet & Maxwell,
1982).

3. M. O. Adesanga and E. O. Oloyede, Business Law in Nigeria (1985)

4. M. O. Sofowora, General Principal of Business and Co-operative Law (Lagos: Soft

Associates, 1999).