Difficulty: ★★★ | High-yield focus: Learn business law definition, sources of law in Nepal, and importance of legal environment for business. Key exam mastery: Evaluate the constitutional foundation of business freedom and property rights under Article 25 and 34 of Nepal’s Constitution.
Part 1: Core Concepts (2 Marks)
Definition of Law
According to Sir John Salmond (★), “Law may be defined as the body of principles recognized and applied by the State in the administration of justice.”
According to John Austin, “Law is the command of the sovereign, backed by the threat of sanction or punishment.”
The Doctrine of Precedent (Stare Decisis)
Under Article 128(4) of the Constitution of Nepal (2072), the legal principles declared and interpreted by the Supreme Court of Nepal in the course of judicial proceedings are binding upon all subordinate courts, public offices, and citizens throughout Nepal.
The Rule of Law (A.V. Dicey)
- Supremacy of Law: Absolute supremacy of regular law as opposed to arbitrary or discretionary executive power.
- Equality Before Law: Every citizen and commercial enterprise is subject to the ordinary law administered by ordinary courts without exception.
- Predominance of Legal Spirit: Individual rights and corporate liberties are protected through judicial precedent rather than authoritarian decrees.
Part 2: Structural Frameworks (10 Marks)
1. Court Hierarchy & Judicial Administration in Nepal
JUDICIAL HIERARCHY IN NEPAL
- SUPREME COURT (Apex Constitutional Court)
- Final court of appeal; establishes binding legal
- precedents under Article 128 of Constitution.
- HIGH COURTS (7 Provinces)
- Appellate jurisdiction over subordinate courts;
- issues extraordinary writs (Habeas Corpus, etc.)
- DISTRICT COURTS (77 Districts)
- Original trial court of general jurisdiction for
- civil contract breaches, property, & criminal.
- SPECIALIZED TRIBUNALS & COURTS
- Labor Court (Industrial disputes & terminations)
- Debt Recovery Tribunal (BFI default recovery)
- Revenue Tribunal (Tax assessment disputes)
Part 3: Distinction Tables
Comparison: Substantive Law vs. Procedural Law
| Basis of Comparison | Substantive Law | Procedural (Adjective) Law |
|---|---|---|
| Core Function | Defines, creates, and regulates legal rights, duties, obligations, and liabilities. | Prescribes the machinery, court processes, and steps to enforce substantive rights. |
| Core Question | Asks What are my legal rights and liabilities? | Asks How do I enforce my legal rights in a court of law? |
| Primary Examples | Muluki Civil Code 2074, Companies Act 2063, Labor Act 2074, Contract Law. | Muluki Civil Procedure Code 2074, Evidence Act 2031, Arbitration Act 2058. |
| Independent Existence | Cannot be effectively enforced without procedural rules. | Exists purely to serve and give practical effect to substantive rights. |
Part 4: Worked Problems & Exam Traps
Common Board Exam Trap: Do not confuse Special Tribunals (like the Labor Court or Debt Recovery Tribunal) with Administrative Departments (like the Department of Industry or IRD). Special Tribunals exercise judicial and quasi-judicial authority presided over by judicial officers, whereas administrative departments exercise bureaucratic executive powers.
Students lose marks here because they confuse statutory law (parliamentary acts) with administrative delegated legislation, regulations, and bylaws.