What is Transactional Law – Here’s What You Need to Know

Businesses are the heart of any thriving economy, and even if you aren’t in business yourself, you probably have some involvement with them. Maybe your employer is a corporation, or perhaps you have money invested in stocks or mutual funds. You may have applied for credit to pay for your home or car at some point, or maybe you even shop online. You may not see it in your everyday life, but a vast network of legal agreements and business transactions surrounds you. This is where transactional law comes in.

Transactional law governs the formation, interpretation, and dissolution of contracts concerning business transactions between different businesses or individuals. In short, transactional law “deals with what people do, rather than what they think,” according to the American Bar Association. This article will give a transactional law overview and describe some of the more common legal transactions under its purview. It will also provide examples of standard transactional agreements and explain what a lawyer practicing commercial law does.

Transactional Law Defined

According to Merriam-Webster’s Collegiate Dictionary, a transactional agreement is “a contract by which parties exchange mutual promises or performances.” This broad definition can refer to any legal agreement that comes into being when you make a promise in return for what you are being given.

Transactional Law in Business

A contract is what transactional law often deals with, and there are many different types of contractual agreements that businesses enter into regularly. For example, corporations must purchase products from their suppliers. When they make this type of transaction, the supplier enters into what’s known as a “firm” or “spot” contract with the corporation.

This agreement, which attorneys like to call executory, stipulates what will be done in return for what is promised. If the supplier fails to deliver what was agreed upon, the company may file suit against them (if they haven’t already). If what was contracted for is something other than a physical object, such as the supply of services, then what’s being exchanged may be called “intangible.” Because this agreement does not involve the transfer of goods, it cannot be enforced by law through what’s known as a remedy. Remedies can consist of either what’s known as “specific” or what’s called “constructive.”

A specific remedy is typically seen in a firm or spot contract, where the non-breaching party is refunded what they paid. However, if what was exchanged is something more abstract, such as a promise to provide a service, what’s known as a “constructive” remedy is what attorneys will instead pursue. This approach consists of what the law deems equitable and can make the breaching party pay what essentially amounts to liquidated damages for their wrongdoing.

Transactional Law in Business Dealings

Not all examples of what transactional law applies to are what you would typically think of as contractual agreements. For instance, if two companies merge, transactional attorneys will use what’s known as a “stock purchase agreement” to outline the transition process.

Business lawyers may also draft “shareholder agreements” upon the sale of a company to ensure what is being promised by what’s known as a merger. They will also draft an “assignment agreement” whenever a piece of property, such as trademark or intellectual property rights, is transferred from one party to another. In addition, transactional lawyers may use “agency agreements” whenever a company wants to hire what’s known as a “third-party representative.”

Transactional Law Issues Involved in Business Transactions

To properly draft what has been described above, commercial lawyers must understand the business transaction. In addition, what attorneys often need to put these agreements together is what’s known as “business context.”

Transactional Law in Personal Transactions

Transaction attorneys don’t just deal with business transactions, however. They also often draft what transactional lawyers call “personal transactions” to ensure what is being exchanged between parties. For example, when a couple divorces or settles their assets if one of them dies.

A divorce lawyer will typically use an “agreement for separation” to arrange what they believe is fair regarding how they divide up their property or handle child custody issues. On the other hand, a transactional lawyer specializing in transactional law, known as estate planning, will use an “estate settlement agreement” to arrange how their estate gets divided up or what happens if they die.

Transactional Law Translated: What Are the Basics?

It can seem like a complex endeavor, but it’s relatively straightforward. This lawyer drafts agreements between two parties for what they believe is what both sides want. Whether for personal reasons, such as property division, or business transactions like mergers, transactional law attempts to provide clarity when there may be confusion; this is what transactional lawyers will call a “fairness opinion.”

In addition, transactional lawyers and transactional law attempt to provide certainty, which can help both parties be confident that what they agree upon will not change.

Transaction Law in a Nutshell

Lawyers try to make things clear if you’re looking for clarity and fairness in your agreements. This type of lawyer drafts business and personal agreements, such as those involving divorce or estate planning.

What lawyers try to do with what they draft is ensure the stability and certainty of a contract, so neither party may be subject to what transactional law calls “changing circumstances,” which can include a change in tax laws or what transactional lawyers call “contingencies.”

Transactional Lawyers: Why They Matter and How They Can Help

While what lawyers do seems straightforward, what the law attempts to provide you goes beyond that. What this lawyer does and what transactional law tries to accomplish is essential for businesses and individuals.

Transactional lawyers put together an agreement that works well for the two parties involved, whether it’s a written contract like a shareholder agreement or an oral one such as a prenuptial agreement.

The goal that transactional lawyers and transactional laws strive for is what transactional lawyers will call fairness and certainty, which can help you sleep at night. So, if what a transactional lawyer does interests you, check out what transactional law provides next time the opportunity arises.

Is a Transactional Lawyer the Same as a Litigation Lawyer?

The answer is no. Litigation law deals with what transactional lawyers use to resolve disputes. Transactional lawyers use litigation law to resolve disputes if one party believes the other hasn’t upheld what they agreed to.

Summary

Transactional law is the body of law that governs the formation, interpretation, and dissolution of contracts between different businesses or between individuals concerning business transactions. In short, transaction law “deals with what people do, rather than what they think,” according to the American Bar Association.

• Transaction attorneys are lawyers who specialize in this type of law. They help clients negotiate and draft contracts as well as mediate disputes that may arise from contractual agreements.
• Some everyday legal transactions under transaction law include contract drafting and negotiation, mergers and acquisitions, real estate transactions, and bankruptcy proceedings.
• A lawyer practicing transaction law typically reviews documents and researches case law.