Canadian Commercial Law: The Operation Of Corporations

Canadian commercial law is the branch of private law that deals with the supplying of goods and services by for profit businesses and merchants. The range of topics included in commercial law typically varies from source to source, however these topics tend to include sale of goods, carriage of goods, bailment, banking, secured credit, documents of title and negotiable instruments, and bankruptcy law.

How it all works 

These individual topics can typically be linked to commercial law through an originating transaction. An example of this would be:

  • First a seller sells goods to a buyer at a distant location. In order to complete the sale, the merchant must make arrangements to ship it. Whether it is by land or sea, shipping the order requires a contract of carriage for conveyance of goods.
  • The carrier of the shipment will then provide the seller with a bill of lading or a document of title.
  • The seller will cover the goods being transported with an insurance policy to protect them against loss, damage and theft.
  • The buyer makes their payment to the seller using a check that is drawn from the buyer’s bank and made out to the seller. This is considered means of a negotiable instrument. If it is an international transaction the payment might be arranged through a letter of credit from the bank.
  • The seller has the ability to extend credit to the buyer for a short period of time if they cannot make an immediate payment.
  • The seller can also choose to sell their product under the basis of a conditional sale. This would involve the seller offering the buyer an extension of credit for a longer period of time. The seller then reserves the title until the buyer pays them for the goods.
  • If the buyer goes bankrupt before the goods are paid for, the seller must try to recover their goods or arrange a claim against the bankrupt’s estate.

How is commercial law regulated?

In Canada, commercial law is regulated by both the federal and the provincial government, so it is important to be familiar with both sets of laws. Certain provinces further complicate commercial law. For example, in Quebec, commercial law is derived from the French Civil Code, but in the English speaking provinces, the laws are based on English law.

Changes in commercial law

Due to changes in the way business is conducted Canadian commercial law is quickly beginning to change. For example, the courts and legislatures are beginning to realize that many retailers are a conduit for the actual manufacturer.

The manufacturer makes the goods, and finds buyers for the products through advertising. This has caused lawmakers to consider holding the manufacturer responsible to the buyer if the products are found to be defective, despite the fact that a formal agreement has not been made between the two parties.

The negotiable instruments law has also been affected by the recent widespread use of credit and debit cards as opposed to checks. These two methods of payments are greatly altering laws, as well as a need for increased financial security.