CHAPTER I

COMMERCIAL LAW

1. Commercial law includes all laws, common and statutory, which relate to persons engaged in commercial pursuits and their rights to property. Originally commercial law was composed almost entirely of common law. Gradually, however, the common law has been superseded by statutory laws in many of the states, all of which laws conform, however, in a general way to the common law, for the reason that commercial law is less local and more general in its character than any other. Where the common law has been changed by statutes in any particular state, it is necessary for the student of law to consult those statutes.

Many of the maxims and rules of commercial law are of great antiquity and of the highest value and authority. Briefly, it is a body of rules for the regulation and direction of those engaged in commerce and industry, commanding that which is right and prohibiting that which is wrong.

2. Importance of commercial law. The importance of commercial law arises from the fact that "Ignorance of the law excuses no one." No professional or business man can afford to neglect the study of commercial law. He should be sufficiently familiar with it to protect himself in his business dealings, and to be able to exercise due caution and avoid error and trouble in entering into legal relations. Otherwise, in his ignorance he may imperil his property and reputation through his failure to properly safeguard his legal rights or by neglecting to protect himself by taking the proper legal steps. A business man must know the law or suffer the consequences.

Since the subject of law is so intimately involved in any business transaction, it is but the essence of wisdom to acquaint oneself with the information necessary to avoid needless and foolish blunders. Therefore, the purpose of a text such as this is to provide the means of keeping the business man out of trouble

rather than to get him out of trouble after he is in. Hence, the fundamentals of business law are treated and not the technical knowledge required for lawyers in the handling of cases in court. It is dangerous for the layman to seek to know too much law with the idea of depending upon his own judgment in matters of critical importance. The advice of an attorney in such instances should be sought invariably.

The transactions of commerce are of great variety and differ in many respects, and yet they are all common in that each transaction requires at least two parties to it and is based upon a contract or agreement in some form between them, either expressed or implied. This contract always refers to the doing or not doing of something by one or both of the parties to the contract, and it is with the validity of such contracts and the rights and duties of the parties thereto that commercial law is principally concerned. This leads us naturally to the subject of contracts which is treated in the following chapter.

CHAPTER II
CONTRACTS

3. Definition. A contract is an agreement between competent parties, upon a legal consideration to do or not to do some particular lawful thing. The four fundamental essentials necessary to the making of a legal and binding contract are, as follows:

1. Agreement.

2. Competency of parties.

3. Legal consideration.

4. Legality of subject-matter.

İllustration: (1) A and B meet on the highway. A says to B, "I will give you 50 cents per bushel for 50 bushels of corn." B replies, "I will sell you 50 bushels at 50c per bushel." This conversation constitutes a valid contract for the sale of 50 bushels of corn.

Although all contracts are in the form of agreements, express or implied, yet all agreements do not constitute contracts.

Illustration: (2) A agrees to accompany B to a dance, but later refuses to go. Such an agreement does not constitute a contract. It does not contemplate any legal relations, but is merely a social engagement.

4. Scope of subjects. Contracts in a broad and comprehensive sense include the entire field of commercial law. Each of the subjects to be treated in this book is in some way dependent upon the principles involved in the study of contracts. The hiring of a clerk, the appointment of an agent, the sale of a farmer's crop, the loaning of a horse, entering into a partnership, the formation of a corporation, the writing of insurance, the leasing of real estate, and borrowing money, are all based on the principles of contracts. From riding on a street car for five cents to the formation of a billion dollar corporation, the transactions are controlled by the principles involved in the formation of an ordinary contract. Hence, it is supremely important that the principles of contracts should be well learned.