What Clients Should Know About Business Transaction Law

Given the American legal system places a strong emphasis on the role of corporations in commerce, business transaction law is also a critical part of the system. It's important to understand what it is and what a business transaction law services provider can do for you. Let's look at three key aspects of this topic.

What Sorts of Business Transactions Are Involved?

You might hear the term business transaction law and assume it involves things like business-to-business deals. Those issues are largely the domain of contract law.

That isn't to say that this branch of law excludes everyday B2B dealings, but it is largely focused on the higher level sorts of transactions. Organizational transactions feature in this field, covering things like mergers and acquisitions, reorganizations, stock offerings, and reorganization or liquidation. Asset purchases are also in this category, as are deals involving licenses, trademarks, patents, and copyrights.

In other words, companies make announcements about these kinds of deals. Sometimes, the company itself is the thing being sold as part of the arrangement.

Non-Adversarial

Unlike many fields of law, business transactions rarely involve adversarial proceedings. If something does end up in court, it's unlikely that there will be a plaintiff and a defendant. That is the case at least as long no one sues anyone else, and legal scholars consider that sort of litigation a separate branch of law.

Primarily, business transaction law services involve scenarios where mutual benefit is the goal. While it's certainly still wise to have attorneys present to protect your rights and interests, the assumption is that the parties to any matter are gaining something they desire from these transactions.

Good Consideration

A central feature of business transaction law is the notion that both sides are receiving good consideration. This is a legal concept that means the benefits of a deal are relevant. If one party acquires a license to use another party's patent, for example, the law sees that as one half of good consideration. The acquiring party then has to provide something of value to the licensing party. As the term transaction implies, the value must flow in both directions.

What counts as consideration is fairly broadly defined. As is the case often in life, cash is always appreciated, but consideration could also include assets, marketing support, or even the right to license something the other party owns. A company acquiring another business might count the assumption of the acquired one's debts as fair compensation for the deal.