Commercial purposes: Overview, definition, and example
What are commercial purposes?
Commercial purposes refer to activities or actions that are undertaken with the goal of generating profit or benefiting a business. This term generally refers to the use of goods, services, or intellectual property for activities such as selling, marketing, advertising, or otherwise promoting business interests. Essentially, when something is used for commercial purposes, it is intended to make money or contribute to business operations, rather than being used for personal, educational, or charitable purposes.
In simpler terms, commercial purposes are actions taken to make money or support a business.
Why are commercial purposes important?
Commercial purposes are important because they define how a business operates and generates revenue. For example, businesses need to ensure that the products or services they offer are used in ways that align with their commercial goals. Whether it’s using marketing materials to sell a product, renting commercial property, or licensing intellectual property, the goal is always to generate income. Understanding what constitutes commercial purposes helps businesses set boundaries, comply with laws, and clearly distinguish between personal and business use.
For SMB owners, understanding what qualifies as commercial purposes helps ensure that their operations are legally compliant and aligned with their revenue-generating goals.
Understanding commercial purposes through an example
Let’s say your business manufactures software and licenses it to other companies. If you allow someone to use your software for personal use, that would not be for commercial purposes. However, if they use the software within their business to enhance productivity or generate profits, that is considered a commercial purpose. As the software creator, you may charge the company licensing fees for the commercial use of your product.
In this case, using the software to run a business or make money is the commercial purpose, while personal use does not qualify.
Example of a commercial purposes clause in a contract
Here’s an example of what a "commercial purposes" clause might look like in an agreement:
“The Licensee agrees not to use the licensed product for personal or non-commercial purposes. The Licensee may only use the product for commercial purposes within the scope of their business operations, as outlined in this Agreement.”
Conclusion
Commercial purposes refer to activities or uses that are aimed at generating profit or supporting business operations. For SMB owners, understanding and clearly defining what constitutes commercial purposes helps set the right expectations with customers, partners, and other stakeholders, ensuring that business activities align with legal, financial, and operational goals. By distinguishing commercial use from personal use, businesses can better protect their interests and ensure compliance with contracts and regulations.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.