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7 Introduction to Commercial Law



A number of individuals have heard or are even able to understand the meaning of civil law or criminal law but very few are familiar with commercial law. If they were to be asked, they would refer commercial law to a law governing the day to day activities of individuals or transactions that are conducted locally and within the society. However, commercial law refers to any legal issues or problems that come about as a result of business and commerce (Walston-Dunham 2008). In other words it refers to a body of law governing the broad and at times vague areas of consumer transaction, commerce and business (Stuhmcke 2001). Majority of countries tend to operate under civil codes that are based on detailed statements regarding this particular law.

Some of the aspects and transactions that are covered under commercial law, which is at times also referred to as Business Law include bookkeeping and financing, management and operations, buying and selling business entities together with their components, taxes, contracts, bankruptcy, labor relations and sales (Bell 2006). Commercial law comprises of a number of fields for instance employment law which is charged with the responsibility of regulating the legal rights of workers. Under this particular area businesses are required to not only ensure that their workers are being paid correctly but also that they are protected against discrimination (Kotz & Zweigert 1998). Contracts are also under commercial or business law and they refer to legally binding agreements which are in form of a document. Despite the fact that majority of individuals do not take verbal agreements to be forms of contracts they too are considered legally binding (Lewis & Sargeant 2004). Contracts can include agreements with customers or clients.


Commercial law is of great importance within any given state as it is responsible for maintenance of peace, order and security contained by the economy (Bradgate & White 2007). It is essential for monitoring the changing requirements of a particular economy especially that of a developing country and the moral values (Cavendish 2002). Commercial law also serves as business law thus helps in governing enterprises while giving a regulatory control over the commercial transactions thus saving the interests of businesses and the society as a whole (Davies 2005). When it comes to work related issues the Employment Law falls under this particular category with regards to commercial law. It is stated that since all employees have a right to have a good time at the work places no employer is expected to mistreat any of them. Employment Law is meant to protect the workers from any form of torture that can be administered by the superiors (Bradgate & White 2007).

Contract of service under Employment Law means any agreement whether expressed orally or in writing or implied where the employer agrees to employ and the employee agrees to be employed and includes an apprenticeship contract (Lewis & Sargeant 2004). An employee or a worker refers to any individual who has entered or works under a contract of employment. In a situation where an employee starts working with an employer and for a period of more than a month the employee must be given a written contract of employment having particulars of the terms and conditions of employment including the notice period required to terminate the contract of employment (Walston-Dunham 2008).

The above mentioned case study shows damages resulting from negligence on the College’s part regarding mentioning the fact that Wes had gotten into some sort of problem with the law at some point and was warned before. Uni-Garage is also at fault as its management did not care to interview Wes or look at his file but rather relied on the report submitted by the college which had omitted some important information to begin with (Bradgate & White 2007). Employment law cannot be applicable in this particular situation as it is not the employee who has been wronged but rather the employer. Thus, the tort of negligence in regards to employment is most applicable. A tort usually refers to a civil wrong even though in particular situations it is also treated as a criminal case for instance in cases of assault (Bell 2006). A tort of negligence is a legal idea that is utilized to acquire compensation for injuries suffered or damages caused as a result of behaving in a manner that lacks the legality or protection of other people against foreseeable risks (Walston-Dunham 2008). In the aforementioned case study, Mechania College failed to protect Uni-Garage against foreseeable risks involved with hiring Wes as an employee of the company, given his past records.

Uni-Garage should be aware of the fact that in order for a case of tort of negligence to be successful a number of elements have to be present for instance a close and direct relationship between the parties (thus establishing legal proximity), where it is just, fair and reasonable to impose a duty of care upon the party that has lead to reasonably foreseeable loss or damage to the other party and reasonable foreseeability of loss or damage to a party caused by the act or omission of another (Stuhmcke 2001). If even one is not satisfied then the plaintiff will not be able to establish that the defendant was actually negligent. In the case study, all of the factors are present thus granting Uni-Garage an opportunity to file for losses. Mechania College as well as RightPay owed a duty of care to Uni-Garage as the former undertook to provide a service for the latter knowing that the recipient reasonably relied on their professional competence and judgment (Kotz & Zweigert 1998). Had RightPay insisted on going through Wes’s file and asked for any information omitted by the College, they would have been aware of his past criminal offense and thus been protected from recommending him to any other company due to possibility of occurrence of the crimes he had previously committed.

Under the duty of care especially in regards to employment the key concepts are that the individual performing the act or giving advice is a professional, as is with RightPay’s case and that the claimant, in this case being Uni-Garage, has relied on that individual’s professional judgment and competence (Davies 2005). In Australia the duty of care by a professional to his client is considered a duty where reasonable skill and care is to be exercised. This is however not a quest for perfection and therefore does not necessarily require that the professional guarantee a particular result (Lewis & Sargeant 2004). The case of Caparo Industries PLC v Dickman (1990) I All ER 568 575 saw a ruling that determined whether a professional has exercised reasonable care and skill (Cavendish 2002). It was argued that in advising the client who employs him a professional individual owes a duty to exercise that standard of care and skill appropriate to his professional status and will be liable in contract as well as in tort for all losses suffered by his client by reason of any breach of that particular duty (Bradgate & White 2007).

If Uni-Garage should go ahead and file for a suit against RightPay and Mechania College, the Court most probably will find that they had accepted what they had been told to begin with by the former concerning Wes and had not done any due diligence or any independent investigation into the history of Wes or the people involved. In situations where a professional’s actions have strayed outside their area of expertise, as mentioned above, then the standard of care which they are expected to meet is perceived as the standard of care applicable to the profession into which they have strayed (Bell 2006). RightPay and Mechania College owed a duty of care to Uni-Garage and since they failed to mention their respective knowledge of Wes’s past criminal record, they breached a tort of negligence and a duty of care for that matter. Uni-Garage is liable to be awarded for the damages and loss incurred as a result of employing Wes.


From what has been observed, commercial law incorporating employment law and tort of negligence is very important to a society and any given state as it is responsible for the maintenance of peace, order and security contained by the economy. It is also charged with the responsibility of giving a body of law to businesses as a way of governing them while having a regulatory control over commercial transactions thus saving the interests of businesses and the general society.


Bell, A. C. (2006). Employment Law. 2nd Edition. London: Sweet & Maxwell.

Bradgate, R., and White, F. (2007). Commercial Law. London: Oxford University Press.

Cavendish. (2002). Commercial Law. 3rd Edition. New York: Routledge.

Davies, I. (2005). Issues in International commercial law. Vermont: Ashgate Publishing, Ltd.

Kotz, H., and Zweigert, P. (1998). An Introduction to Comparative Law. 3rd Edition. Oxford: Clarendon Press.

Lewis, D., and Sargeant, M. (2004). Essentials of Employment Law. 8th Edition. London: CIPD Publishing.

Stuhmcke, A. (2001). Essential tort law. 2nd Edition. New York: Routledge.

Walston-Dunham, B. (2008). Introduction to Law. 5th Edition. Cengage Learning.