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Unit Three Introduction Business law is an important part of legal system. Most legal issues confronted by businesses fail into one of business law: contract, tort, property, agency, commercial or bankruptcy law. These areas cover a wide range of business activity. Text 1 Business law—also called commercial law, or mercantile law—is not recognized specially as a branch of common law, but, in popular usage, is frequently an omnibus term given to titles of textbooks and academic courses on such commercial subjects as contract, agency, commercial transactions, bankruptcy, and labour. 7 The liability of a principal for his agent’s torts in the ordinary course of his employment depends upon the existence of a master-servant relationship. If the principal and agent stand in a master-servant relationship to each other, the master is vicariously liable for his servant’s tortuous conduct committed within the course of his employment irrespective of any personal fault on his own part. This doctrine of respondent superior arose from the belief that since the head of the household or economic enterprise exercises control, he should pay for the harm caused by its members. The other major limitation to the doctrine is that the servant’s tortuous conduct must be committed within the servant’s course of employment. 8 If no master-servant relationship exists between the parties, the principal’s liability for the torts of his agent is far more restricted. For example, a principal is not liable of the harm caused by the negligent physical conduct of his nonservant agent. He is liable, however, for any other torts of his agent that either are authorized or the commission of which normally are made possible by the agent’s position. 1. common law 2. deceit, fraud and undue influence 3. agent 4. principal 5. apparent authority 6. right of remuneration 7. right of indemnity
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