Commercial Law




What is Commercial Law?

Commercial law provides the rules that merchants and others involved in commerce must follow as they conduct business amongst themselves and with consumers. It governs the sales of goods and services, negotiable instruments, security interests, leases, principal and agent relationships, contracts of carriage, and much more. In a broad sense, commercial law also encompasses related issues like business bankruptcy and tax planning.

Because various legal issues may be included or excluded from the subject of commercial law depending upon how expansively it is defined, it may be more helpful to consider the matter in terms of timing. Commercial law covers legal issues that arise prior to the initiation of a lawsuit. By contrast, once a lawsuit is filed, the same issues are more properly characterized as litigation. Thus, commercial law attorneys help their clients negotiate and enter into business deals. Litigation attorneys help their clients defend their interests in court when deals go bad.

Elements of a Contract

The ability to form contracts represents the foundation of modern commercial law. Without contracts, sellers and buyers would be unable to enter into transactions, as they would have no guarantee that the other side will honor its half of the bargain. That is not to say that contracts are based on the goodwill or trustworthiness of parties in the marketplace. Rather, contracts are based on a system of rules for forming agreements that, if followed, allows parties to rest assured that the terms of their agreements will be enforced by the legal system if necessary.

Contracts are formed when the following three elements are present: an offer, an acceptance, and consideration. For an offer to be valid, specific rules must be followed. The offer must be made to an identified party, and it must set forth definite and certain terms. The offer must also demonstrate a present intent to enter into an agreement. Similarly, the other party must properly accept the offer in order for a contract to be formed. In most situations, a valid acceptance must mirror the offer. A purported acceptance that adds new terms to the deal will not count. Instead, it will be treated only as a counteroffer.

The final element required to form a contract is known as consideration. Consideration refers to a bargained-for exchange. It means that the person who promises to do something must receive a benefit in return. Otherwise, the promise is merely gratuitous, and there is no contract. For example, if the owner of a lawnmower promises to lend it to a neighbor, no contract exists and the owner can later refuse. But if the neighbor pays the owner $10 in consideration for the right to borrow the lawnmower, a contract has been formed and the owner must honor it.

The Uniform Commercial Code (UCC)

Because commercial law is primarily found in state statutes, there is a potential for states to enact conflicting rules, thereby disrupting the flow of interstate commerce. The UCC was created to remedy this situation. It was drafted by a non-governmental body to provide a standardized set of statutes dealing with commercial law, which each state is free to adopt if it chooses. All states have now adopted some form of the UCC.

Not all commercial transactions are governed by the UCC, however. It applies to the sale of “goods.” This includes just about any movable object, but it does not include services or real estate. The UCC also provides special rules for those who regularly deal in the type of goods at issue, as opposed to non-merchants who only buy or sell them occasionally. Another unique aspect of the UCC is known as the “perfect tender rule.” General commercial law principles only require parties to substantially perform their contractual duties to avoid breach. Under the UCC, a contract will be breached if the goods (or their delivery) fail to conform to the agreement in any way.

Third Party Contract Issues

In today’s complex marketplace it is not unusual for a contract to affect the rights of a third party – that is, someone other than the parties who created the contract. This can create a number of legal issues. Consider the example of a bank who lends money to a borrower. After making the loan, the bank sells its right to collect the loan to another company. Is the borrower obligated to pay the company, even though the borrower never contracted with them directly? And if the borrower fails to pay, can the company turn around and sue the bank for breach of contract? Commercial law provides answers to these and other such questions involving third parties.

Contact a Commercial Law Attorney

If you are struggling with a commercial law issue, there is no reason to handle the matter on your own. An experienced attorney can explain how the law applies to your situation and suggest a course of action designed to protect your legal rights. Schedule a consultation today.

Copyright HG.org

Articles About Commercial Law

  • Florida Franchise Law: Do I Want to Be Part of a Franchise?
    There are a number of good reasons to be part of a franchise relationship. For prospective franchisees (the person buying on a franchise), one initial consideration may be the minimization of start-up costs. In exchange for upfront payments and/or monthly fees, the franchisor provides a ready-made business foundation.
  • When a Trademark is Considered Offensive
    Before modifications were made to trademark application and acquirement for intellectual property protections, it was not possible to obtain a trademark if it was considered offensive. This could be to an individual group, to the nation as a whole or a local or regional offensive symbol or phrase.
  • 3 Reasons Why You Need Attorney Advice for Your Business
    Many times, businesses make the mistake of waiting until they are in deep legal troubles before hiring an attorney. Usually, when you find yourself in court, it’s too late to hire the services of a lawyer and chances are you will pay more to get yourself out of legal trouble.     
  • The “Pop-Up-Keyboard" Defense: How Apps, Mobile Phones, and "Terms of Use" Work Together
    Unlike the Blackberry keyboards of yesteryears, your smartphone probably has a pop-up touch-screen keyboard. Recently, the Northern District of California took issue with this modern design, and denied Uber’s motion to compel arbitration because a pop-up keyboard blocked Uber’s Terms and Conditions from view while a user registered for the app.
  • Buyers: Make Sure You're Getting What You Bargained For
    Businesses often buy equipment, supplies, and other materials on a contract basis. The contract itself often is not standard, but instead, is written up to reflect the results of prior negotiations. If that contract is truly written up properly, all should go well.
  • Chief Financial Officers Can Be Held Liable
    CFO and corporate accountants must be aware that the improprieties of their superiors could lead to their own personal liabilities. This is because Courts have found that corporate officers can breach their fiduciary duties to a company if they are involved in conduct that benefited their superior officers by approving or concealing improper expense reimbursements.
  • What to Look for in a Business Start Up Law Firm
    Along with your investors and startup management team, you will want to have the services of an experienced and knowledgeable California business startup law firm by your side.
  • How "Red Penciling" and “Blue Penciling” Affects Covenants Not to Compete?
    Many businesses choose to have employees sign covenants not to compete in order to protect their proprietary information. However, simply signing an agreement of this nature is only the first step. The real test occurs when such an agreement is put in front of a court to determine whether or not the agreement is enforceable. Depending on the rules of the state, a finding of unenforceability can result in different consequences.
  • Steps an Employer Can Take when an Employee Violates a Non-Compete Agreement
    In order to protect certain business interests, some employers may choose to have employees sign a non-compete agreement. This agreement can prohibit certain conduct, such as working for a competitor for a specified period of time. However, sometimes employees violate the terms of such agreements and the business must consider how to react to this violation.
  • What Happens in a Legal Mediation Proceeding?
    There are several ways that a California business dispute can be resolved, but litigation is usually not the preferred method for doing so.
  • All Business and Industry Law Related Articles

Commercial Law - US

  • Bureau of Economic Analysis

    BEA is an agency of the Department of Commerce. Along with the Census Bureau and STAT-USA, BEA is part of the Department's Economics and Statistics Administration. BEA produces economic accounts statistics that enable government and business decision-makers, researchers, and the American public to follow and understand the performance of the Nation's economy. To do this, BEA collects source data, conducts research and analysis, develops and implements estimation methodologies, and disseminates statistics to the public.

  • Commercial Law - Definition

    Commercial law (sometimes known as business law) is the body of law which governs business and commerce. It is often considered to be a branch of civil law and deals both with issues of private law and public law. Commercial law regulates corporate contracts, hiring practices, and the manufacture and sales of consumer goods.

  • US Commercial Service

    The U.S. Commercial Service is the trade promotion arm of the U.S. Department of Commerce’s International Trade Administration. U.S. Commercial Service trade professionals in over 100 U.S. cities and in nearly 80 countries help U.S. companies get started in exporting or increase sales to new global markets.

  • US Department of Commerce

    The U.S. Department of Commerce has a broad mandate to advance economic growth and jobs and opportunities for the American people. It has cross cutting responsibilities in the areas of trade, technology, entrepreneurship, economic development, environmental stewardship and statistical research and analysis. The products and services the department provides touch the lives of Americans and American companies in many ways, including weather forecasts, the decennial census, and patent and trademark protection for inventors and businesses. The development of commerce to provide new opportunities was the central goal at the department's beginning in 1903 and it remains a primary obligation today.

Commercial Law - International

  • Commercial Law International

    The goals of this site will be to inform; give opinions; at times be controversial; and to provoke insightful discussions about the latest, most interesting and sometimes stranger developments that affect the commercial world. In other words, our aim is to expand commercial awareness – that is the economic, social, political and legal dynamics – of well known and not so well know regions of the world.

  • European Judicial Network in Civil and Commercial Matters

    Information about the Member States, Community law, European law and various aspects of civil and commercial law.

  • International Trade Administration (ITA)

    The International Trade Administration (ITA) strengthens the competitiveness of U.S. industry, promotes trade and investment, and ensures fair trade through the rigorous enforcement of our trade laws and agreements. ITA works to improve the global business environment and helps U.S. organization compete at home and abroad. ITA supports President Obama’s recovery agenda and the National Export Initiative to sustain economic growth and support American jobs.

  • Pace Institute of International Commercial Law (IICL)

    Founded in 1991, the Pace Institute of International Commercial Law has played an instrumental role in the evolution of teaching and scholarship in the fields of international commercial law and international arbitration, by creating the award-winning CISG Database and founding the Willem C. Vis International Commercial Arbitration Moot.

Organizations For Commercial Law

  • Better Business Bureau

    BBB’s mission is to be the leader in advancing marketplace trust. BBB accomplishes this mission by: * Creating a community of trustworthy businesses * Setting standards for marketplace trust * Encouraging and supporting best practices * Celebrating marketplace role models, and; * Denouncing substandard marketplace behavior

  • Commercial Law Development Program

    The Commercial Law Development Program (CLDP), a program of the U.S. Department of Commerce Office of the General Counsel, is uniquely tasked with providing technical assistance in the commercial law arena to the governments and private sectors of transitional countries in support of their economic development goals.

  • Commercial Law League of America

    The Commercial Law League of America ("CLLA") is a respected organization of attorneys and other experts in credit and finance actively engaged in the field of commercial law, bankruptcy and insolvency. Since 1895, The CLLA has been associated with the representation of creditor interests, while at the same time seeking fair, equitable and efficient administration of bankruptcy cases for all parties in interest.

Publications For Commercial Law

  • ABA - Commercial Law Newsletter

    The UCC Committee is continually striving to provide its members on a timely basis with important information about developments in commercial law and commercial practice.

  • Electronic Library on International Commerce Law

    Pace Law School database on the CISG and International Commercial Law. The CISG is the United Nations Convention on Contracts for the International Sale of Goods, the uniform international sales law of countries that account for two-thirds of all world trade.

  • Journal of International Commercial Law and Technology

    The Journal of International Commercial Law and Technology ( JICLT) is a peer-reviewed free open-access scholarly journal dedicated to furthering the understanding of international commercial law and technology. It is published by the International Association of IT Lawyers (IAITL) . The journal is a quarterly publication in online formats. By publishing on-line, a scholar’s research is made available more quickly and is available to those who do not have access to a well stocked research library.




Find a Lawyer

Find a Local Lawyer