Commercial law is the body of law which governs business and commerce. It is often considered to be a branch of civil law and deals both with issues of private law and public law. Commercial law regulates corporate contracts, hiring practices, and the manufacture and sales of consumer goods.



The existence of a corporation requires a special legal framework and body of law that specifically grants the corporation legal personality, and typically views a corporation as a fictional person, a legal person, or a moral person. As such, corporate statutes typically give corporations the ability to own property, sign binding contracts, pay taxes in a capacity that is separate from that of its shareholders. Learn more about this with the North Carolina commercial lawyer.

The legal personality has two economic implications. First it grants creditors priority over the corporate assets upon liquidation. Second, corporate assets cannot be withdrawn by its shareholders, nor can the assets of the firm be taken by personal creditors of its shareholders. The second feature requires special legislation and a special legal framework, as it cannot be reproduced via standard contract law.

The regulations most favorable to incorporation include: the Limited Liability and the Perpetual Lifetime.

In Limited Liability, shareholders of a modern business corporation have "limited" liability for the corporation's debts and obligations which is unlike those of partnership or sole proprietorship. As a result their potential losses cannot exceed the amount which they contributed to the corporation as dues or paid for shares.

Limited liability regulations enable corporations to socialize their costs for the primary benefit of shareholders. The economic rationale for this lies in the fact that it allows anonymous trading in the shares of the corporation by virtue of eliminating the corporation's creditors as a stakeholder in such a transaction. Visit the North Carolina commercial lawyer to learn more about limited liabilities.

Perpetual Lifetime allows for stability and accumulation of capital, which thus becomes available for investment in projects of a larger size and over a longer term than if the corporate assets remained subject to dissolution and distribution. It is important to note that the "perpetual lifetime" feature is an indication of the unbounded potential duration of the corporation's existence, and its accumulation of wealth and thus power.

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