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Commercial law or business law is the body of law which governs business and commerce and is often considered to be a branch of civil law and deals with issues of private law and public law. Commercial law regulates corporate contracts, hiring practices, and the manufacture and sales of consumer goods. Business or commercial law regulates the many transactions in any of the various operations of a trade or industry and creates a norm of fairness and cooperation within a commercial deal usually having a financial gain as the objective.
Many countries have adopted civil codes which contain comprehensive statements of their commercial law. In the United States, commercial law is the province of both the Congress under its power to regulate interstate commerce, and the states under their police power. Efforts have been made to create a unified body of commercial law in the US: the most successful of these attempts has resulted in the general adoption of the Uniform Commercial Code.
UCC
The Uniform Commercial Code (UCC or the Code) is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions in all 50 states states within the United States of America. This objective is deemed important because of the prevalence today of commercial transactions that extend beyond one state (for example, where the goods are manufactured in state A, warehoused in state B, sold from state C and delivered in state D). The UCC deals primarily with transactions involving personal property (moveable property), not real property (immovable property).
The UCC is the longest and most elaborate of the uniform acts. It has been a long-term, joint project of the National Conference of Commissioners on Uniform State Laws (NCCUSL) and the American Law Institute (ALI). Judge Herbert F. Goodrich was the Chairman of the Editorial Board of the original 1952 edition [1], and the Code itself was drafted by some of the top legal scholars in the United States, including such luminaries as Karl N. Llewellyn, Soia Mentschikoff, and Grant Gilmore. The Code, as the product of private organizations, is not itself the law, but only recommendation of the laws that should be adopted in the states. Once enacted in a state by the state's legislature, it becomes true law and is codified into the state’s code of statutes. When the Code is adopted by a state, it may be adopted verbatim as written by ALI/NCCUSL, or may be adopted with specific changes deemed necessary by the state legislature. Unless such changes are minor, they can affect the purpose of the Code in promoting uniformity of law among the various states.
Various regulatory schemes control how commerce is conducted, privacy laws, safety laws (i.e. OSHA in the United States) food and drug laws are some examples.
Topics in business law
Contracts
Contract law governs the formation and elements of a contract including the agreement process or offer and acceptance, valuable consideration, and the defenses to a contract formation. There are rights and obligations of the non-parties, and the performance of the contract or the maturing and/or breach of contractual duties.
Corporate law
Corporate law considers the characteristics of a corporation and the sources of corporate power. There are formalities of incorporation and stock sales along with creating the corporate management with contracts, directors, officers and shareholders. Secondary stock sales involve restrictions on insider trading, and corporate distributions involving dividends, redemptions, and repurchases. Corporations may have mergers and acquisitions, and they may be dissolved and liquidated.
Real property law
Real property law involves estates in land and the classification and validity of all interests in the property. There are landlord and tenant isues on the types of tenancies, and the obligations owed both landlord and tenant. Easements, profits, covenants and servitudes are types of interests in the land and there is a determination as to how they were created with what reasonable use and whether all requirements have been met for the burden or benefit to run. There are conveyance issues within a contract of sale with deed, recording and covenants for title factors. Additionally, there are the issues of adverse possession and prescriptive easements to be considered.
Intellectual property
In law, intellectual property (IP) is an umbrella term for various legal entitlements which attach to certain names, written and recorded media, and inventions. The holders of these legal entitlements may exercise various exclusive rights in relation to the subject matter of the IP. The term intellectual property reflects the idea that this subject matter is the product of the mind or the intellect. The term implies that intellectual works are analogous to physical property and is consequently a matter of some controversy.
Tax law
Tax law is the codified system of laws that describes government levies on economic transactions, commonly called taxes.
Primary taxation issues in the United States would include taxes on: income, capital gains, retirement accounts, estates, gifts, corporations, LLCs, partnerships, or taxes on specific investment products or types.
Negotiable instrument
A negotiable instrument is a specialized type of contract for the payment of money which is unconditional and capable of transfer by negotiation. Note that a negotiable instrument is not a per se contract as contract formation requires an offer, acceptance and consideration, none of which are elements of a negotiable instrument (in the US). The rights of the payee (or holder in due course) are better than those provided by ordinary contracts.
Letter of credit
A letter of credit is a document issued mostly by a financial institution which usually provides an irrevocable payment undertaking (it can also be revocable, confirmed, unconfirmed, transferable or others e.g. back to back: revolving but is most commonly irrevocable/confirmed) to a beneficiary against complying documents as stated in the Letter of Credit. Letter of Credit is abbreviated as an LC or L/C, and often is referred to as a documentary credit, abbreviated as DC or D/C, documentary letter of credit, or simply as credit (as in the UCP 500 and UCP 600). Once the beneficiary or a presenting bank acting on its behalf, makes a presentation to the issuing bank or confirming bank, if any, within the expiry date of the LC, comprising documents complying with the terms and conditions of the LC, the applicable UCP and international standard banking practice, the issuing bank or confirming bank, if any, is obliged to honour irrespective of any instructions from the applicant to the contrary. In other words, the obligation to honour (usually payment) is shifted from the applicant to the issuing bank or confirming bank, if any. Non-banks can also issue letters of credit however parties must balance potential risks.
Business law case examples
United States Supreme Court decisions
- Legal Services Corp v. Velazquez, 164 F.3rd 757, affirmed
- Atherton v. Federal Deposit Insurance Corp., 519 U.S. 213 (1997)
- Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158 (2001)
ReferencesISBN links support NWE through referral fees
- Emerson, Robert W., Business law, Hauppauge, NY: Barron's, 2004. ISBN 0-764-11984-2
- Mann, Richrd A.; Roberts, Barry S.; Smith, Len Young, Smiht & Roberson's business law, Australia; Cinn. OH: West Legal Studies in Business, 2000. ISBN 0-585-37472-4
- Steingold, Fred; Bray, Ilona M., Legal guide for starting and running a small business, Berkeley, CA: Nola, 2001. ISBN 0-585-40992-7
External links
- Commercial Law — Articles & Definitions Retrieved September 2, 2007.
- topical listing of US commercial law from Cornell's Legal Information Institute Retrieved September 2, 2007.
- a similar site posted by Georgetown Law Center Retrieved September 2, 2007.
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