Business law refers to a body of rules, principles, and regulations that governs business activities. This includes different concepts like what constitutes a breach of contract, liability of directions, and things like an organization’s fiduciary duty to its shareholders. The purpose of business law is to provide a framework that can be used to run businesses. It covers the formation of companies, how companies should handle their dealings with other companies, customers, and employees, and the selling and termination of businesses. Are you interested in learning more about the role and function of law in business? Read on.
Categories of Business Law
Business law has different elements that are split into two parent categories. Within these categories, you will find various agreements, contracts, and court proceedings. The first category is civil law. The area covers any laws used to govern civil obligations and rights and any other regulations that affect civil obligations and rights. Examples of civil disputes include those involving contracts, property, and debts. There’s also a branch of business law that deals with crime. This addresses and regulates things relating to theft and fraud, among other things.
Functions of Business Law
Also known as mercantile or commercial law, business law outlines the regulations used to govern commercial matters. It also encompasses the regulations that provide guidance on how you can set up a business and run it in a legit manner. Apart from that, it also defines the laws that describe how a business is managed, sold, or closed. Additionally, business law covers laws of commercial papers, corporations, secure transactions, intellectual properties, income tax, and any other business-related dealings and transactions.
Each business is expected to comply with respective legal regulations. Here are some of the most significant functions of business law that apply to most businesses.’
- Laws related to court system structure, business ethics, procedural law, and substantive law.
- Taxation systems for different types of companies and businesses
- Antitrust and the level of competition.
- Regulations governing workplace safety, employee rights, overtime, privileges, and minimum wages.
- Environmental impact-related laws that regulate pesticides, chemical usage, water, and air pollution.
- Formal processes of business establishment and selling of corporate entities.
- Rights assignment, work delegation, drafting, and breach of contract, transactions, and penalties for agreement violation.
- Laws related to partnerships, sole proprietorships, entities, corporations, and liability companies.
- Business and real property laws.
Business law also analyzes the general impact of technology on different business domains. This is one of the most important areas when it comes to the role and function of law in business. It includes laws that are linked to the governance of securities and bankruptcy. Additionally, it also plays a crucial role in the regulations of corporate financing, commercial litigation, and regulatory compliance.
Professionals Who Deal With Business Law
Some of the major players in business law are business lawyers. A business lawyer is responsible for helping corporations with legal matters. Their job is to ensure that all things being done by a business are in line with the law and above board. Real estate lawyers also deal with lots of business clients. Businesses are constantly acquiring and selling properties, so there is a need for someone who understands the ins and outs of real estate law. Sometimes real estate lawyers may work under a real estate company. In such instances, a business will find all the services they need under one roof.
When dealing with the criminal law side of things, a criminal lawyer is usually involved. These are professionals who specialize in criminal law and how to deal with cases where a crime has been committed. Business attorneys handle lots of criminal cases related to fraud and theft. They often work as part of larger law firms. A workplace injury lawyer can also be considered a business attorney. However, instead of corporate law, they mainly focus on workplace injury cases.
Business Formation Law
Before you can begin operations, you need to set up your company. This includes the filing of incorporation documents and selecting the proper business structure for your company. This is one of the most important areas when it comes to the role and function of law in business. There are several business types you can choose from. This includes partnerships, sole proprietorships, corporations, and liability companies. Each type of business varies in the level of legal protection for the owners. There are also differences in the type of responsibilities each type has at both state and federal levels.
For instance, you will find that corporations generally have stricter rules concerning meetings of shareholders, while Limited Liability Companies may be held liable for the debts of their members. Additionally, there are fees that may be required by some states when registering different types of businesses. This usually applies to professional service companies like accountants and attorneys.
Employement Law
Once you have established your company, you will now need to start hiring employees. This requires compliance with different labor laws. This is one of the most important areas when it comes to the role and function of law in business. The purpose of these laws is to ensure that your workers work legally. They also ensure that you do not violate workers’ rights and any protections they are afforded by federal law. This includes things like protection from harassment, workers’ compensation, wrongful termination, and harassment.
Did you know that employees must be paid at least minimum wage? Paying less than minimum wage goes against employment law unless such workers are exempt due to their job status and duties. For instance, the laws may not apply to non-salaried executives, interns, and consultants. In addition, you should also follow overtime rules if workers put in more than 40 hours per week on the job.
Intellectual Property
A business needs to protect its interests when dealing with intellectual property rights. This includes things like trademarks which helps identify a business’s services and goods. The subject of intellectual rights also covers patent that protects new products, processes, and copyrights for computer code, business web design, instruction manuals, and trade secrets for sensitive information like customer lists and instructional manuals. This is one of the most important areas when it comes to the role and function of law in business. One of the best ways to protect IPs is to have them registered with the United States Patent and Trademark Office (USPTO). An unregistered trademark can jeopardize your ability to utilize your selected chosen name if another person goes before you and registers it first.
Business Contracts
Businesses must be careful when drafting contracts in order to reduce the risk of misunderstandings regarding the terms and conditions of the agreement. This is crucial when one business is outsourcing work to another through staffing agencies. For instance, if one company is working with a recruiting agency or staffing firm to get talent. In such instances, it’s common for businesses to end up with lots of misunderstandings about the duties, payment agreements, and responsibilities of workers. This is why business owners must never sign any agreement before sitting with a lawyer.
Privacy Laws
Every business that transacts online must ensure that it complies with data privacy laws that dictate how they handle and process information they obtain from its clients. This is one of the most important areas when it comes to the role and function of law in business. For instance, a business is expected to honor ‘Do Not Track requests that stop the transfer of personal data to other websites for the purposes of advertising. Furthermore, social media sites like Facebook can request consent when they want to share user information with other websites that use tracking tools like the ‘like’ buttons or custom ads that are based on browser history. Each business must ensure that it’s in compliance with data privacy laws so that it can avoid severe penalties and criminal charges.
Non Compete Law
Even when you are not planning to incorporate your business, you must still stick to your state’s non-compete laws before you can bring on any employees. This is one of the most important areas when it comes to the role and function of law in business. A non-compete agreement restricts former employers from picking up an employee within a certain geographical area and time period after they have left their job. This incentivizes them to stay with their current employer to avoid facing restrictions on who they can work with moving forward. Some states may allow exceptions based on specific circumstances. For instance, if a former employee agrees that they won’t use any confidential information they learned while they were employed by another firm.
Employee Classification
Business law defines the different categories under which various jobs fall. This is one of the most important areas when it comes to the role and function of law in business. For instance, employees are classified as exempt if they are administrative, executive, or professional. However, businesses may have a difficult time deciding which jobs fall under these three categories. In such instances, a business owner is required to contact the Department of Labor before they take action. For instance, regulations regarding overtime pay for workers vary depending on whether or not they meet the necessary job duties and earn a salary of over $455 weekly.
Importance of Business Law
The main aim of business law is to maintain order and establish a set of accepted standards used to resolve disputes and protect liberties. It also ensures that rights are observed when it comes to businesses and their relation to customers, other businesses, and government authorities. This is one of the most important areas when it comes to the role and function of law in business.
In the past, there was no proper set of laws and regulations used to safeguard customers, their interests, and the money they invested in businesses. This results in customers suffering a lot. As you might imagine, this was primarily because there was no law to maintain order, safeguard rights, and regulate standards. Most business owners came up with their own standards that saw them making as much money as possible without considering the quality of service they delivered. With the establishment of business law systems, businesses all over the globe now have to follow a set of standards that safeguard customers and other businesses.
Another benefit of business law is that it helps maintain equilibrium. The existence of laws and regulations that govern how businesses should operate creates a sense of security and satisfaction among customers. Without business law, each business would establish its own regulations and laws, and it made it difficult for customers and sellers to establish deals that benefit everyone. This problem was solved by business law, and transactions are no easier and smoother.
Because of the standards put in place by business law, entrepreneurs and business owners are able to make a better decisions. They now know how and when to seek legal help. Each business is expected to maintain ethical conduct. However, there are several businesses that may disobey such conduct in a bid to make more profits. Business law is put in place to prevent that from happening. The idea is to keep the business satisfied, and this results in a good business image. As such, business law is important not only to customers but to business owners as well.
These are some of the things you need to know when it comes to the role and function of law in business. It’s crucial to ensure that you fully understand how business law impacts your business. However, because this is such a vast subject, you will have better luck if you work with a team business of business attorneys. You must identify all the professionals you need to ensure that you are not found on the wrong side of the law and penalized.
