Understanding the difference between commercial law and corporate law can help business owners to avoid breaking the law and can also eliminate unnecessary costs. While these two areas of law both have a significant impact on the way businesses operate, they have distinct aspects. The common theme between these practice areas relates to issues arising from contract law.
Many people make a confusion between commercial law and corporate law
Corporate law is a legal field that governs the formation of companies, shareholder rights, mergers, and acquisitions, while commercial law is a legal field that deals with the sale and distribution of goods. In order to be able to better differentiate commercial law and corporate law we discuss each of them separately.
Corporate law is an area of law that governs the establishment and operation of corporations and it is related to contract and commercial law. Corporations are business entities that are build up in accordance with the laws of the state of incorporation. In the United States, different states have different laws regulating the formation, operation and dissolution of corporation. Delaware is the state where most corporations choose to be incorporated, due to its business-friendly legal framework. A corporation is a legal entity separate from its shareholders and has standing to enter into contracts, sue and be sued, and perform other tasks necessary to keep a business running.
The corporation is a taxable entity that protects the shareholders from being personally liable for the debts and liabilities of the corporation
The federal government also has laws that govern corporations. Corporations in some industries, such as public transportation and communications, are required to comply with federal regulation and licensing laws. The federal government passed the Securities Act of 1933 to regulate the issuance and sale of corporate securities, such as stocks and bonds.
Commercial law, also known as trade law, is the body of law that applies to the rights, relations and conduct of persons and businesses engaged in merchandising, trade, sales and commerce. In the United States, commercial law is the province of both the United States Congress, under its power to regulate interstate commerce, and the states, under their police power. There is an initiative to create a unified body of commercial laws in the United States.
The Uniform Commercial Code (UCC) has been adopted in all the states, with some modifications in some state legislatures, even though it is not binding on the states to base their laws on the UCC. The UCC is a model set of laws regarding the sales of goods, leases of goods, negotiable instruments, and secured transactions. Commercial law is also related to contract and corporate law. Commercial includes a broader range of practice areas such as franchising, intellectual property and sometimes litigation.
Contact us or schedule a consultation with your international business attorney in Miami, Florida USA, to assist you with your commercial law and corporate law needs and help you understand the difference between commercial law and corporate law.
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