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It might surprise you to learn that you likely interact with commercial law on a day to day basis. In this article, volunteer Rehan explains what commercial law is, and why you should know about it.

What is Commercial Law?

The trademark of a civilised society is to have laws which safeguard and protect our rights. What ‘safe’ means will differ depending on the situation. But one thing is clear, although laws may vary; they will always impact us in some shape or form.

Whether you’re purchasing that delicious KitKat Chunky from your local newsagent, or registering a game changing patent for a new invention, both activities are regulated by commercial law. Commercial law is a broad term covering a variety of legal fields, regulating the behaviour of people and businesses engaged in trade, sales and commerce, including e-commerce. Whilst this may seem very business focused, commercial law also covers consumer protection and contracts, including employment contracts.

Why is Commercial Law important?

Commercial Law is sometimes also referred to as Business Law or Trade Law and defined as a ‘body of law which governs commercial and business activities’. The purpose of commercial law is to allow commercial activity to meet the demands of the business community. The legal system provides certainty to the process by giving effect to transactions, trade customs and market prices. Very simply, commercial law enables trade and avoids fraudulent activity, a core feature of a well-functioning and democratic society. This attracts national and international business which establishes a strong economy.

How does it affect our daily lives?

From the cradle to the grave, law is always around us at all times unbeknown to most people.

Let’s play out a little scenario of our daily lives (maybe not currently but thinking about the pre-covid days). You get up bright and early in the morning and take a shower (hopefully), unknown to you the law of contracts is at work governing the sale of the bed you purchased and the service agreement you have with your water provider ensuring there is water in your pipes each time you turn on the tap. You then choose to wear some new trendy shoes you purchased. The law of contracts is concerned here with the sale of the shoes — delivering a suitable level of quality and outlining warranty for defective products.

All these actions happen invisibly and only really become visible when things go wrong. Our daily lives are entangled by legal rules which involve wide application of commercial transactions we make numerous times a day.

Areas covered under Commercial Law

By now you are well acquainted with the expansive nature of commercial law, particularly its application to any part of law which involves regulation of companies and individuals taking part in transactional activities.

The commercial umbrella is broad and below is some examples of the types of laws it covers:

Antitrust (Competition Law)
Business Regulation
Copyright Law
Consumer Protection
Contract Law
Environmental Law
Etc.

To avoid complexity, in most countries comprehensive practice guidance and information is found in civil codes which reflect the enforceable law at present. However, you must remember that commercial law does not exist unconnected, like other areas of law, it intersects with other practice areas too.

What do Commercial Lawyers do?

For lawyers practising within the area of commercial law, they usually either carry out transactional work or act as litigators. Lawyers focusing primarily on transactional work have responsibilities assisting transactions through advice and making sure arrangements are legally valid. Day to day duties will revolve around contract drafting, changing contract conditions and reviewing agreements for errors that give rise to potential conflicts. Within the litigator realm, duties involve seeking remedial action through litigation when a company or individual has been wronged.

A lawsuit can be filed against companies as well as individuals, leading to compensation or a cease and desist order once an outcome has been determined. In basic terms the role of a commercial lawyer is to make sure that business is conducted in line with regulations and laws of the jurisdiction they operate within, representing the best interests of their clients by minimising present and future risks.

Why should you know about Commercial Law?

In the modern era many businesses and individuals operate in what can be seen as litigious times, where an agreement cannot simply rely on a handshake or a verbal agreement. For businesses, commercial law plays a vital role in enabling best practice by providing compensation to affected parties, safeguarding shareholder rights and providing a framework for business formation.

So, commercial law protects businesses, but why is it important to me? Consumer protection is a fundamental area of commercial law which affects us all. Statistics illustrate that UK consumers spend on average £90 billion a month on shopping (1). With such a large number of transactions, it is inevitable that disputes will arise and in such situations knowledge of commercial law is not only handy, but beneficial for those seeking remedies.

When considering how many commercial activities we are involved in daily, being oblivious to your rights and obligations under commercial law could prove to be a costly proposition.

By Rehan Ahsan

Glossary box

Service Agreements - This is a contract that you have with a provider. They provide a service of some kind and you provide them money (usually). In this case, the service is supplying water to your home.

Remedial Action - Just taking an action to seek a remedy to the problem you have. I.e. if you were sold a broken phone and they refused to take it back, you might take them to court as a remedial action.

Cease and Desist Order - This is a legal order to stop someone from doing something.

Jurisdiction - The area in which the law applies, i.e. the jurisdiction of England and Wales.

Litigious times - Litigious means being quick to use the law to settle a dispute. The expression is used to suggest that often people will seek legal remedies above everything else.

References:

Parliament Documents - https://researchbriefings.files.parliament.uk/documents/SN06186/SN06186.pdf

Leducate Explains: What is Commercial Law?