The document discusses the legal environment for business in Nepal. It outlines the main sources of law, which include legislation passed by the legislative body, judicial precedents from court decisions, treaties between nations, and some ordinances and regulations passed by the executive body. Legislation is the primary source of law and is created by elected representatives through a legislative process. Judicial precedents also help develop the law by establishing principles to address legal vacuums. International treaties and agreements further provide sources of law governing international business relations. An understanding of applicable laws is important for businesses to avoid legal non-compliance.

1. Legal Environment for Business in Nepal
24 October 2016
Saroj Shrestha 1

2.  Legislation
 Legislation is the law made by the legislative body
of the government.
 Latin term ‘Legis’ + ‘latern’ denote ‘Law + making’.
It means that the lawmaking body of the
government is legislature.
 It is the main source of law in the modern states.
 Legislative: Legislative is a body of elected
representatives from among the general public,
who are empowered to make rules of the country.
Saroj Shrestha 2

3.  The law passed by the legislative body of the
government is called legislation or statutes.
 It makes amends and ratifies the laws and is
called statute. It is made according to the change
of time and is the outcome of long series of
discussions among the representatives of the
people. e.g. Contract Act, 2056, Company Act,
2063
 The law relating to business is made in the
parliament, where representatives of the people
do participate. They make a law after fulfilling a
long series of discussion.
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4. • Judicial decisions are known as
precedents. ‘A precedent is a judicial
decision which contains in itself a
principle’. Such principle is created in the
course of verdict, which fulfils the vacuum
of law.
• Such a principle is regarded as the law for
cases of the same nature and is binding to
the subordinate courts.
• Law is that what the justice says in his
decision.
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5. 5
 It is another important source of law.
 Agreement between the nations is called treaty.
 International laws are the collections of such
conventional laws and agreements such as law of
sea, law of land, law of war etc.
 International business organizations are more active
in national, regional and world business nowadays.
e.g. GATT, WTO, EU, SAFTA treaties.
 Bilateral Agreements between nations and
conventions of the business communities are the
significant sources of national and international
business laws. e.g. Nepal India Transit Treaty and
Nepal India Trade Treaty

6. • An executive body also makes laws in the name of
ordinance, order and regulations.
• It also fulfils the vacuum of law and is more useful to
maintain day to day administrative function of the
executive.
• This power of the executive body (Council of
Ministers) is derived from express delegation of
legislative of the government.
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7.  Business law has a vital role in creating, developing,
conducting, regulation, controlling, enhancing and
systemizing the business activities.
 It is common knowledge that ignorance of law is not
excused. Law breaching activities are regarded as
crimes.
 The businessperson also needs to be acquainted
with the legal principles and provisions that are
connected with the business.
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8. 8Saroj Shrestha
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