The Australian legal system is based upon the English Common Law (with modifications), wherein state, federal and local legislation regulates various business activities. In the absence of any applicable legislation, the English Common Law also relies upon case law precedents. In some areas of law, English case law precedents have been developed over centuries. Some of these case law precedents are relevant under to Australian law.
Under civil law (as opposed to criminal law), an essential division is concerned with defending freedoms and rights, upholding the law, settling disputes and establishing guidelines for commercial interests in their interactions with the government and private citizens.
This division is called Commercial Law, which is also called business law or corporate law. The rules that control business, trade, sales and merchandising, as well as the organisations and people who engage in such activities, are the subject of commercial law.
A commercial law firm helps clients navigate and handle issues concerning the business field. These may include, but are not limited to, regulation and compliance, globalisation, tax reform, trade relationships and/or deregulation.
In this article, we discuss the importance of commercial law, how its regulation and enforcement affect the business climate in Australia, and why understanding the clauses and mandates under the law is crucial when facing commercial law litigation. We also discuss the purpose and function of commercial law.
What Is Commercial Law and Its Functions?
Commercial law is a relevant practice area that includes regulations and statutes that apply to businesses and individuals and how this significantly defines their role as business owners, employees and consumers. This particular area of the law is also encompassing and broad. It includes a large range of topics, such as banking and finance, taxation, trade practices, consumer, corporation and securities law.
In particular, because of its breadth, Australian commercial law derives its authority and statutes from various sources. A significant regulatory body is the Australian Securities and Investments Commission (ASIC), which administers many pieces of legislation including the Insurance Contracts Act 1984 Business Names Registration Act 2011, the Corporations Act 1991 and the National Consumer Credit Protection Act 2009. These various laws mandate how business enterprises and companies come to fruition, including their internal operating procedures and how they conduct their businesses with other entities.
To better understand the nature of commercial law, a description of its purpose and function will assist. Here are some of its essential functions:
- Establishes a taxation system and provides taxation enforcement guidelines and systems in place for various businesses.
- Relates to business ethics, procedural law, substantial law and other court system structures as being foundational.
- Protects intellectual property rights. such as patents, trademarks and copyrights, to prevent infringement, plagiarism and piracy.
- Sets the procedures and guidelines for establishing new corporations or establishments.
- Sets guidelines and penalties for competition and antitrust businesses.
- Mandates how employers interact with their employees, including employees’ rights and responsibilities, minimum wage, workplace safety, insurance and overtime compensation.
- Recently encompasses environmental laws that aim to regulate and mitigate the impact of businesses on the environment. It places environmental responsibility and penalties on corporations that fail to minimise pollution, environmental toxicity and destruction.
- Deals with business organisation laws, such as partnerships, sole ownership, limited liability companies and corporations.
- Includes statutes for contracts, such as drafting, rights assignment, transactions, agreements, breach of contract, breach of trust and remedies for breach.
- Recently includes computer law that regulates the impact of digitalisation on areas of business law.
Commercial law has changed substantially over recent years, and continues to evolve, because of the impact of globalisation and the ease by which business transactions are conducted via online platforms. Legislators constantly review and uphold amendments and new legal guidelines to keep up with the times. Cryptocurrency is the latest area of business and investment activity which is being considered for legislative regulation, both in Australia and globally. Some market participants in cryptocurrency are actively seeking legislative regulation in order to avoid or reduce market manipulation and consumer frauds. These reforms are crucial to avoid inconsistencies, gaps and loopholes that may damage the integrity of free trade and commerce.
What Is the Importance of Commercial Law?
In tandem with the purposes and functions of commercial law, it is also relevant to know the importance of this practice area. The primary concern is to avoid commercial disputes that can harm a business, its owners and consumers.
Commercial law ensures that entities, such as the government, public and private corporations, owners and consumers, all form a harmonious relationship and collectively build acceptable standards to maintain order.
Here’s a short list of why commercial law is essential:
- Commercial law is vital for business formation. If you’re looking to put up your own business, then commercial law should serve as your foundation for understanding the legal procedures that come with establishing your business. Licensure and the code of conduct in any industry, including the risks and benefits, are outlined in its clauses.
- An understanding of specific compensation issues is relevant under commercial law. Commercial law oversees the financial system to prevent entities from abusing their rights, given the massive amount of money circulating in commerce. Violations under this clause will be punished accordingly.
- Commercial law protects the rights of different stakeholders in the company.
The Branches of Commercial Law
As mentioned in the previous sections, commercial law encompasses various topics. Hence, there are multiple branches of this practice.
Here are some of the areas of law coming under the generic description of commercial law:
- Contract Law—This law seeks to regulate and enforce the obligations and rights when forming and signing contracts. In the event of a breach of contract, the contract law outlines specific remedies to avoid commercial disputes between parties.
- Property Law—This law regulates transactions, such as sales, transfers, leases and rentals of different property types. It also seeks to safeguard the rights of property owners, including its sellers. There is a distinction between interests in land (referred to as ‘real property’) and interests in chattels (referred to as ‘personal property’).
- Business Regulations Law—This law provides authority to government and regulating bodies to oversee trade unions, labour and business organisations.
- Corporate Law—This law regulates the power of corporations and includes its formation, management and termination. It also oversees the provisions and mandates on mergers and acquisitions, transfer of powers, the election of boards, distribution of dividends and shares and capital increase.
- Intellectual Property Law—Whilst it is under the clause of Property Law, it deals with intangible assets, such as ideas for trademarks, inventions and creative works to prevent infringement, plagiarism and piracy. This law protects the original works of its authors and their exclusive rights for commercial gains.
- Tax Law—This law regulates, enforces and reviews the tax systems in a particular business. It also prevents issues of tax evasion and money laundering.
How Madison Marcus Can Help You
Commercial law is undoubtedly complex because of the sheer amount of scope under its umbrella. However, understanding its importance could help you and your business maintain amicable relationships with other entities and thus avoid commercial disputes.If you need more clarifications and have enquiries about commercial law, contact us at Madison Marcus. We have commercial law experts that could help you with your legal needs.
