Commercial Law vs Contract Law- Key Differences

The field of Law is quite vast with a variety of disciplines but the rapidly increasing competition has made it difficult to achieve success with a basic Law degree. To scale heights in this field, it has become necessary to specialize in any legal discipline. People looking for a legal solution are now preferring to take the experts' opinion for various matters. Therefore, students aspiring to become a Lawyer should decide well in advance, which legal discipline they want to specialize in. However, there are many legal disciplines that cover different legal aspects even after belonging to the same domain. Often students get confused about such disciplines and end up taking the wrong decision. Commercial Law and Contract Law are also two such disciplines which cover different legal aspects of same domain. This article provides an insight about the differences between Commercial Law and Contract Law. 

Commercial Law 

Commercial Law is also called Mercantile Law or Trade Law. This branch covers laws relating to trade, industry and commerce. Cases such as breach of contract, advertising and marketing disputes, unfair competition, consumer complaints and protection of intellectual property etc. are resolved through Commercial Law. This discipline is related to Business Law, in which students are taught about the working modalities of business firms when entering into a contract or making any deal. This topic focuses on the enforcement and use of Law in business. 

Commercial Law Subjects 

Many institutes or universities offer Commercial Law courses at the Postgraduate level. Although Commercial Law courses vary by college/university, some subjects are commonly taught in all institutions. Such as: 

• Legal Research 
• Comparative Public Law 

• International Business Law 
• Competition Law 
• Commercial Arbitration 
• Intellectual Property Law 
• Investment Law 
• Corporate Law and Governance

Contract Law 

A contract is basically a legally enforceable agreement, in which each party involved has to fulfill its legal obligation. Generally, the contract is signed by two or more parties in different circumstances, such as while buying property, giving employment, taking any kind of loan etc. Action is taken on the basis of this Law when one of the parties does not fulfill the conditions included in the contract. 

In simple terms, contract law can be defined as a law that clarifies the rights and obligations of two or more parties involved in a formal relationship related to business or commercial activities. The objective of this law is to help parties involved in contracts avoid and resolve conflicts based on their roles, responsibilities, rights and obligations. 

Contract Law Subjects 

The following subjects are taught in Contract Law courses in various colleges and universities: 

Difference between Commercial Law and Contract Law 

Commercial law is used to manage the relationship between an agent and a principal in international trade and trade in local markets. An agent-principal relationship refers to a legal relationship in which a business organisation or person, who is called the principal, appoints another organisation or person (an agent or agency) to act on their behalf. When a contract is breached in this type of relationship based on contract law, the conflicts created by this breach are resolved through commercial law. Thus, contract law manages an agent-principal relationship or a legal relationship between two parties. However, commercial law helps manage disputes caused by a breach of contract law. Commercial law helps in ensuring the enforcement of contract law.

Both Contract Law and Commercial Law are intertwined. In fact, Contract Law comes under the umbrella of Commercial Law. Commercial law deals with the exchange of goods and services between traders and transactions between buyers and sellers. It covers all aspects related to business, whereas Contract Law refers to a contract entered into in the course of a business transaction. All the parties have to agree to the terms in the contract. Therefore, it can be said that Contract Law is a subdivision of Commercial Law itself.  

Main Difference between Contract Law and Corporate Law

Aspiring lawyers can easily understand the differences between commercial law and contract law based on specific dimensions, including context, aim, areas, and the applicability of the two types of laws. 

Application in Real Life

Commercial law applies to a wide range of business activities, from small transactions to complex corporate operations. For example:

• A company forming a partnership or joint venture must adhere to commercial law regulations.
• A business entering into a sales contract for the supply of goods is governed by both commercial law and contract law.
• Intellectual property laws protect a company’s brand and products from infringement.

Commercial law also governs the behavior of businesses in terms of competition, trade practices, and corporate governance.

Contract law applies to all kinds of agreements, both formal and informal, in various sectors. For example:

• A business hiring a service provider will draft a contract outlining the terms and conditions of the service, which falls under contract law.
• A rental agreement between a landlord and tenant is governed by contract law.
• Employment contracts specifying the duties and rights of employees and employers are part of contract law.

Legal Enforcement and Remedies

In cases of disputes related to business activities, commercial law provides various remedies. These may include:

• Damages (compensation) for financial losses due to unfair trade practices or breaches.
• Injunctions to stop unfair or illegal business practices.
• Regulatory penalties for companies that violate business laws or fail to adhere to legal standards.

When a contract is breached, the injured party may seek remedies under contract law, such as:

• Damages: Monetary compensation for losses suffered due to breach of contract.
• Specific Performance: A court order requiring the party in breach to fulfill their contractual obligations.
• Rescission: Cancelling the contract and restoring parties to their pre-contractual position.
• Reformation: Modifying the contract to reflect the true intentions of the parties.

Eligibility Criteria for Commercial Law and Contract Law 

Candidates can study Commercial Law and Contract Law at both Undergraduate and Postgraduate level. However, the basic eligibility criteria are different for both the levels. At UG level candidates can pursue five-year integrated Law courses like BA LLB, BBA LLB, BSc LLB, BCom LLB etc. or three-year LLB degree. To take admission in five-year integrated law courses, it is mandatory to have passed 12th class from any stream (Science, Commerce, Humanities) with minimum 45-50 percent marks. Whereas, the three-year LLB degree course can be done after graduation in any discipline. To take admission in PG level courses like LLM, candidates must have LLB degree with minimum 50-55 per cent from a recognized college/university.

Required Skills for Commercial Law and Contract Law 

Many Law firms emphasize good academic results when hiring Law graduates, but they also consider other personality traits before making any decisions. Therefore, interested candidates must focus on the following skills: 

• Good judgment skills 
• Commercial awareness 
• Analytical skills 
• Good project management skills 
• Research oriented skills 

• Communication skills

 Entrance Exams for Commercial Law and Contract Law 

Candidates seeking admission to Commercial Law and Contract Law courses offered in various universities/colleges have to appear in national, state or college level entrance examinations. Some of the popular Law entrance exams are given below: 

• Common Law Admission Test (CLAT) 
• All India Law Entrance Test (AILET) 

• Law School Entrance Test - India (LSAT India) 
• Delhi University LLB Entrance Exam (DU LLB Entrance Exam) 
• Maharashtra Common Entrance Test for Law (MH CET Law) 
• Telangana State Law Common Entrance Test (TS LAWCET) 
• Telangana State PG Law Common Entrance Test (TS PGLCET) 

• Andhra Pradesh Law Common Entrance Test (AP LAWCET) 
• Andhra Pradesh PG Law Common Entrance Test (AP PGLCET) 

Career Prospects for Commercial Law and Contract Law 

There are many job opportunities in the field of Law for candidates who have successfully completed Commercial Law or Contract Law courses. Such candidates can work in various positions in corporate companies. Few of the profiles are as follows: 

• Legal Manager 
• Contract Lawyer 
• Legal Contract Manager 
• Contract Attorney 
• Legal Advisor 
• Legal Researcher 
• Legal Assistant 
• Contract Specialist
• Company Secretary 
• Corporate Advisor
• Compliance manager

Read more:

• Distance Learning Courses Offered in Law Stream

• Difference Between Business Law and Corporate Law