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Guide to Commercial Law

For all UK businesses, the field of commercial law is central. It deals with all of the legal rules that affect business, commerce (including e-commerce) and trade. Robust commercial laws are required for an economy to function well and thrive. 

What is commercial law?

There is no statutory definition of commercial law, and it would not be easy to formulate one. It is a complex body of law that encompasses several substantial legal areas. The common denominator is that all of these are involved in regulating the conduct of individuals and companies engaged in business, commerce and trade. 

Which areas of law are included?

The most common areas of commercial law, which themselves consist of well-refined systems of legal rules and regulations, include (but are not limited to):

  • Corporate Law (or Companies Law)
  • Contract Law
  • Competition Law
  • Consumer Law
  • Employment Law
  • Intellectual Property Law
  • Insurance Law
  • Environmental Law

Commercial law also constantly interacts with other important areas of law like EU law, Trusts Law, Criminal Law and Property Law. 

As one person put it, commercial extends to "all those legal principles, from whatever branch of law they are drawn, which regularly surface in commercial disputes." (Goode, Commercial Law, 1982). 

Important historical context

Modern Commercial law in the UK is highly respected worldwide, is the foundation of many other jurisdictions commercial laws, and has had a far-reaching impact. 

Its roots are found in the successful merchant communities that existed in medieval times. Special laws, specifically designed to support trade, were developed by the merchants called Lex Mercatoria (the Law Merchant). Trade disputes would be heard and decided by special merchant-elected judges, and decided in accordance with trade customs. 

Until the 18th century, this merchant or trade law was a separate body of law, distinguishable in England from the common law. This would have created a challenging split, and trade disputes were likely not common before the ordinary courts.

Lord Chief Justice Mansfield, often referred to as "the father of modern commercial law", radically altered this state of affairs in the late 18th century. He is chiefly responsible for integrating Lex Mercatoria with the common law in such a way that it was accessible to both merchants (business people) and lawyers. As a result, key principles from merchant law were adapted and integrated into English common law making modern commercial law decisively oriented towards the facilitation of commercial activity, and aimed at being predictable, flexible and pragmatic. These principles are very much alive today. 

What is involved for a business engaging with commercial law?

 Businesses commonly engage with commercial law, often on a daily basis, in some of the following ways:

  • When setting up the company (if there is one), electing shareholders and directors, managing the company, raising finance, and winding it down when that needs to happen. (Corporate Law)
  • In entering into agreements with other businesses or consumers for the sale and purchase of goods or services. In these cases, businesses will need to be aware of the general legal rules in the UK around contracting. In the main, parties in the UK are given the freedom to choose their own contractual terms; however, there are important exceptions that businesses will need to be aware of. For example, detailed rules must be adhered to when contracting with consumers. Furthermore, several legal provisions are automatically implied in all contracts, e.g. unfair contract terms, data protection regulations and others. (Contract Law)
  • In making sure that the business is not breaching the law by engaging in any anti-competitive actions or agreements, such as price-fixing or adopting a dominant position in the market. (Competition Law) 
  • In ensuring that they are treating consumers fairly and in accordance with legal requirements. The Consumer Rights Act 2015 and Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 are two important pieces of legislation whose provisions businesses must be aware of to avoid breaches. (Consumer Law)
  • In acting in accordance with its duties to employees and in accordance with statutory UK employment protection rights. (Employment Law)
  • In making sure that it is adequately insured for all types of business risks, e.g. property damage risk, workers compensation, professional liability, cyber risk etc. (Insurance Law)
  • Adequately protecting and monitoring any intellectual property it is creating. (IP Law). 

All of the above demonstrates why, in large law firms, the commercial law department will often be split into different specialisms, or different industry focuses. Commercial lawyers will also commonly focus either on the transactional nature of commercial law (providing advice on legal requirements and drafting contracts) or on handling commercial law disputes. 

The information on this website is intended as a guide and does not constitute legal advice. Vardags do not accept liability for any errors in the information on this website, nor any losses stemming from reliance upon the statements made herein. All articles and pages aim to reflect the legal position at time they were published, and may have been rendered obsolete by subsequent developments in the law. Should you require specialist advice, tailored to your situation, please see how Vardags can help you.

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