This document provides an overview of business law and the legal system in Sri Lanka. It discusses how business law regulates commercial transactions and entities. It also explains that Sri Lanka has a mixed legal system, incorporating elements of English common law, Roman-Dutch civil law, and customary laws. The legal system encompasses laws, legislatures, judiciaries, prosecution, police, and prisons. Major legal traditions of common law and civil law are also summarized.

1. HND in BM
Unit 7: Business Law
Batch: 32 & 33
Semester: July 2021 – November 2021
Note: 01
Salmah Kaleel Page 1 of 3
Student Notes
LAW & THE LEGAL SYSTEM
LAW AND ITS PURPOSE
Law can be defined as a system of rules used for controlling formal human behaviour and
human activities in a community or in a country. Every society should be ruled according
to a specific law. It is the responsibility of the citizens of a country to respect and obey
the law.
The prime aim of the law is to control human behaviour by which justice is ensured so
that life, rights and property of the people are safeguarded. Along with this, law is
necessary to maintain order, resolve disputes, and establish standards in a state.
BUSINESS LAW
 Business law is made up of the laws that set out the rights, duties and obligations of
people in business.
 It balances the interests of those in business and people like producers and
consumers, buyers and sellers, lenders and borrowers.
 It regulates business transactions under the law of contract, which explains when an
agreement will be legally enforceable as a contract and is updated by competition
and consumer law.
 It regulates those engaged in business (companies, partnerships, etc), their names,
their funding (finance, credit), their banking and their insurance.
 Many aspects of criminal law (especially property offences) and tort (especially the
law of negligence) impact on business.
EVOLUTION OF LAW
The evolution of law began before history was recorded with laws built up one by one as
disputes were settled. In fact, the development of rules in society predates both courts
and the written law. For thousands of years, customary and private legal systems alone
ordered human activities. The power of customary law is found in the fact that it is
reflected in the conduct of people toward one another.
LEGAL SYSTEM
A legal system in a country is a system that embodies both the laws of that country and
the institutions and mechanisms the country has in place for regulating and enforcing
those laws. Therefore a legal system incorporates:
 The country's laws. This includes a written or oral constitution, primary
legislation (statutes), by laws, customs applied by the courts on the basis of
traditional practices and principles or practices of civil, common roman, or other
code of law.
 The legislature: the law-making body.
 The judiciary (or judicature): the body that sits in judgment on disputes about
laws.

2. HND in BM
Unit 7: Business Law
Batch: 32 & 33
Semester: July 2021 – November 2021
Note: 01
Salmah Kaleel Page 2 of 3
Student Notes
 The prosecution system: the system that seeks to ensure the criminal law is
enforced and that people who break the law are prosecuted.
 The police: the body that seeks to enforce the law and to protect the public.
 The prison system: the system that ensures that people who have broken the
criminal law are detained in accordance with their sentence.
Two major ‘families’ of legal systems are common law and civil law systems.
Common Law
 The common law legal tradition has its roots in developments in England in the 11th
century.
 The common law systems operate on the basis of ‘binding precedent’ so that judges
in a particular case must follow the decisions of judges in earlier similar cases.
 Judicial decisions are binding and decisions of the highest court can only be
overturned by the same court or through legislation.
 There is not always a written constitution or codified laws, everything is permitted
that is not expressly prohibited by law.
 Common law systems developed in England, but have been exported to many former
British colonies, including Australia, Singapore, Malaysia, India and the United States
of America.
Civil Law
 Civil law is the oldest surviving legal tradition in the world. It had its origin in Roman
law and later developed in Continental Europe and around the world.
 A key distinguishing feature of civil law is that it is a ‘codified’ system.
 Jurisdictions with civil law systems include France, Germany and Japan.
 They have comprehensive, continuously updated legal codes that specify all matters
capable of being brought before a court, the applicable procedure and the
appropriate punishment for each offence.
Some countries have a ‘mixed system’ that include some elements of the common law
as well as some elements of civil law – for example parts of Africa, India, parts of the Far
East and Sri Lanka.

3. HND in BM
Unit 7: Business Law
Batch: 32 & 33
Semester: July 2021 – November 2021
Note: 01
Salmah Kaleel Page 3 of 3
Student Notes
LEGAL SYSTEM OF SRI LANKA
The Sri Lankan legal system is a ‘mixed’ legal system. This is because it is a combination
of English common law, Roman-Dutch civil law (which is the common law of Sri Lanka)
and Customary Law. These customary/personal laws are:
1. Kandyan Law
2. Tesawalamai
3. Muslim Law
Kandyan Law
It was in operation during the time of ancient Kandyan Kingdom. During the period of
British rule, this law was restricted only to the Sinhalese living in Kandyan territories.
Today, this law controls marriage, divorce, intestate succession etc. Kandyan Sinhalese
are free to contract marriages under the General Law of the country. The relevant laws
on this topic are mostly in the Kandyan Declaration and Amendment Ordinance, and
the Kandyan Marriages and Divorce Act.
Tesawalamai
It means the custom of the land. This law had its origin in the customs of the Tamils
resided in Northern Province. All those customs were codified into a law in 1706.
Tesawalamai law governs only pre-emption and intestate succession.
Muslim Law
This is applicable to anyone who follows Islam. Al-Quran, Al-Hadees, Sunnahs, Ijma and
Kiyas are the documents that are considered as sources of Islamic law. Muslim
marriages and divorce, intestate succession, adoption, maintenance etc. are governed
by this law. Muslims are governed by the Marriage and Divorce (Muslim) Act, no.13 of
1951, and any subsequent amendments. Issues related to interstate succession and
donations, involving Muslims, are dealt with under the Muslim Interstate Succession
Ordinance No.10 of 1931, and any subsequent amendments.
Areas of Sri Lankan Law that are governed by Roman Dutch Law (Civil Law) are:
 Law of Property
 Family Law
 Law of Delicts
Areas of Sri Lankan Law that are governed by English Law (Common Law) are:
 Commercial Law
 Law relating to Civil and Criminal Procedure
 Law of Evidence
 Administrative Law