U.S. commercial law is designed to meet the legal needs of both newly established and existing businesses. This field of law governs how businesses interact with other businesses, the public, customers, and regulatory authorities. When evaluating commercial law and its legal processes, it is helpful to consider a business as a separate entity from its owners or employees. Businesses, like individuals in society, are subject to legal requirements that ensure fair opportunities for all market participants.
Business formation involves taking steps to ensure compliance with commercial law. One of the most common requests commercial law attorneys receive is assistance in preparing and submitting the necessary documents for establishing a new business.
Some clients may require additional help in selecting the most appropriate business structure. The best choice depends on various factors. The most common business structures include:
Sole Proprietorship
General Partnership
Limited Partnership (LP)
Limited Liability Partnership (LLP)
Limited Liability Limited Partnership (LLLP)
Corporation
Nonprofit Corporation
Limited Liability Company (LLC)
Except for sole proprietorships and general partnerships, most business structures aim to protect the owner from personal liability related to the company’s operations. Commercial law attorneys assist in establishing and customizing these business structures to meet specific needs.
A contract is more than just a signed document; it serves as a tool for protecting a business’s legal rights.
A contract defines the responsibilities, terms, conditions, timelines, and financial arrangements between the parties involved. Each clause of a contract must be carefully drafted to ensure legal security. Breach of contract can lead to unforeseen and significant losses.
A legally binding contract should include the following key elements (among others):
Definitions: Clear and precise definitions of terms used in the contract
Scope of Work: Description of the tasks or services to be performed
Obligations and Commitments: Duties and financial responsibilities of each party
Termination: Conditions under which the contract may be ended
Validity Period: Duration of the contract
Intellectual Property Protection: Provisions related to intellectual property, if applicable
Force Majeure: Clauses addressing unforeseen and unavoidable events
Dispute Resolution: Procedures for handling disputes
Penalties for Breach: Consequences of violating the contract terms
Governing Law: Legal framework governing the contract
Survival Clause: Provisions that remain effective even after contract termination
Performance Time and Location: When and where the work or service will be performed
Confidentiality Clause: Obligations regarding the protection of sensitive information
Non-Compete Clause: Agreement to refrain from competition
Amendment Procedures: Methods for modifying the contract
During the business formation process, one of the responsibilities of commercial law attorneys is drafting corporate bylaws. These bylaws determine how the business will be managed, how profits and losses will be shared, how major decisions will be made, and how shares can be transferred. Since these documents are crucial, they must be prepared meticulously.
What is a Commercial Representation Agreement?
A commercial representation agreement is a contract that allows a company to authorize a commercial representative to act on its behalf in a foreign market.
This agreement enables the representative to engage in promotional activities, secure customers, negotiate contracts, and manage business transactions.
Benefits of a Commercial Representation Agreement
Access to New Markets: A company can enter a foreign market more efficiently by leveraging the representative’s knowledge and experience.
Cost and Risk Reduction: Partnering with a commercial representative eliminates the need for establishing a foreign office or subsidiary, reducing associated costs and risks.
Local and Cultural Knowledge: The representative has valuable insights into local market practices, consumer preferences, and cultural barriers. This knowledge allows businesses to tailor their marketing and sales strategies to specific market needs.
A well-structured commercial representation agreement provides clarity and protection for both the principal and the representative, fostering effective and sustainable international business collaboration.
