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Definition of Business Law

Business law encompasses all of the laws that dictate how to form and run a business. This includes all
of the laws that govern how to start, buy, manage and close or sell any type of business. Business laws
establish the rules that all businesses should follow. A savvy businessperson will be generally familiar
with business laws and know when to seek the advice of a licensed attorney. Business law includes state
and federal laws, as well as administrative regulations. Let's take a look at some of the areas included
under the umbrella of business law.

What Is Business Law?

Business law is a body of rules, regulations, and principles that governs the activities of a business. It
includes concepts such as an organization's fiduciary duty to shareholders, the legal ways in which
directors can be held accountable for their actions, and what constitutes a breach of a contract.

Business law provides the framework through which businesses are run. The scope of business law can
be found in international treaties and domestic regulations. The United States is one of the few
countries that does not have any domestic regulation governing business law.

Elements of business law include contracts, agreements, and court proceedings. Business law can be
divided into two main categories:

1) Civil law - This consists of any laws that govern civil rights and obligations or any regulations that
affect civil rights and obligations. Examples of this include disputes involving property, contracts, torts,
debts, marriage relations.

2) Criminal law - This is any law that is used to prosecute someone who has committed a crime as well as
regulate other types of crime such as theft or fraud.

Definition of Business Law

Business law encompasses all of the laws that dictate how to form and run a business. This includes all
of the laws that govern how to start, buy, manage and close or sell any type of business. Business laws
establish the rules that all businesses should follow. A savvy businessperson will be generally familiar
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with business laws and know when to seek the advice of a licensed attorney. Business law includes state
and federal laws, as well as administrative regulations. Let's take a look at some of the areas included
under the umbrella of business law.Examples of Business Law

Every business owner needs to know how to navigate the legal landscape. Business law is a broad and
highly diverse field, with different sets of laws that apply depending on the type of business or industry.
This includes employment law, intellectual property law, contracts law, and limited liability.

Employment Law: The concept of employment is simple. You have an employee, hire a company, and
they work within the company's premises for an agreed-upon amount of time. An employer has the
responsibility to provide a workplace that is safe and conducive for work, as well as any benefits that are
required by law.

Intellectual Property: Intellectual property refers to creations of human intellect such as new products,
ideas, or information that can be used without permission from their creator or owner. A person can
create an intellectual property by writing a book, designing a website, designing a game, or designing
clothes.

Contracts: Consumers often make use of contracts to protect their rights and interests in a transaction.
A contract is a legally binding agreement between two or more parties that establishes the terms under
which they will interact with each other. The terms can include the rights and obligations that each party
has in relation to one another, as well as any other relevant information pertinent to their relationship.
Contracts can vary widely in complexity from a simple handshake agreement to an elaborate multi-page
contract involving several different parties and several different types of objects.

Limited Liability: A limited liability or an L.L.C. helps companies to increase their capital, invest in risky
projects and virtually create new ventures without incurring any financial risk. The potential of lower risk
may encourage companies or persons to invest in endeavors or start a company. The most common
types of L.L.C's are partnerships, general partnerships, limited partnerships, and corporations, but any
business entity can be formed as an L.L.C.-such as an LLC or a cooperative- if formed according to the
law of the state where it was formed.

Business law is a vast field that is divided into different branches within the different processes.

Branch 1: Starting Business

The process may involve the creation of articles of incorporation, by-laws, and other documents that
establish how the entity will operate, pay debts and taxes, finance capital needs, elect directors and
officers, provide for shareholder protection, resolve disputes among
shareholders/directors/officers/employees, etc., share ownership benefits among shareholders, etc.
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Branch 2: Buying Business

There are many legal and financial implications that come with buying a business. Some of the factors
considered before purchasing another business are costs, legal issues, taxation, and human resources.

The process for buying a business includes the following branches:

1) Due Diligence: The buyer must perform their own due diligence to find out as much information as
possible about the seller, such as financials, background, current operations, and industry knowledge.

2) Due Offer: After performing due diligence, the buyer presents its offer to the seller. This is considered
a conditional offer that can be accepted or rejected by either party. After rejection, both parties will
present counteroffers until they reach an agreement on the price and terms of sale.

3) Negotiation: The negotiation is now going to be focused on price adjustments and other aspects such
as delivery time, delivery location, etc.

Branch 3: Managing Business

The process of managing a business involves clearly understanding the various branches of law that
apply to the company, such as how to properly deal with contracts, managing finances, dealing with
liabilities, and many more.

Branch 4: Closing Business

There are two ways to close a business - either by liquidation or reorganization.

1) Liquidation: Liquidation occurs when a company has no debts and the owner sells all the assets.
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2) Reorganization: Reorganization occurs when there is debt on the books and the owner wants to pay
off creditors before closing down.

Forming a Business

The first step to starting a business is deciding on the type of business entity to form. The type of entity
will determine what legal obligations the business will have and any potential liability.

Types of Business Law:

Sole Proprietorship

Sole proprietorship is an economic term that refers to an unincorporated company that consists of the
sole proprietor who owns 100% of the company's assets and liabilities. A sole proprietor may also be
referred to as a "self-employed" or "independent" contractor. The owner owns all assets, liabilities, and
profits or losses. Sole proprietorships are taxable entities and can operate as either an S-Corporation or
C-Corporation.

Partnership

A partnership is a relationship between two or more entities that are legally recognized as a single entity
for the purpose of carrying out an activity with a view to earning profit. It is typically formed to advance
shared interests, goals, etc. A partnership is one of the most common business types in the USA and
Canada. In the USA, a partnership is recognized as a legal entity with limited liability protection offered
by the government.

The word "partnership" has many meanings and can refer to a number of different relationships of an
economic nature. Some common types include:

1) General Partnership: A general partnership may be formed when all the partners agree on being
equal partners in the business and share in risk taking and profits equally.

2) Limited Partnership: A limited partnership is a type of partner with fewer than all general partners in
total number (limited partners).
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3) Joint Partnership: A joint partnership is a business type that refers to a pair of related companies, one
of which has an indefinite life and the other which has a limited life. Joint partnerships are often used in
mergers, acquisitions, or divestitures.

Corporation

A business is a corporation that is created by a group of individuals who share in the ownership and
profits of the company. A business partnership is a form of a joint venture in which two or more parties
agree to pursue one or more businesses together.

A corporation is defined as an entity that is owned by stockholders and exists under a charter granted by
the government. These types of businesses are created for profit and should not be confused with
nonprofit organizations.

Corporations are often seen as having two main legal forms: general partnerships and limited
partnerships. These two types have different taxation laws and are designed for different purposes.

Limited Liability Company

An LLC is a limited liability company that is designed for business owners to have protection of their
personal assets in case of a lawsuit. The owner of the entity will be liable only up to the amount they put
into it while all profits and losses are treated as separate entities on paper. This helps reduce the risk for
one enterprise while also creating tax advantages, especially when the company makes more profit than
it's required to pay taxes on.

S-Corporation

S-corporations are a type of corporation that is exempt from certain taxes, allows for great flexibility,
and has no mandatory retirement. The S-Corp is the ideal entity for businesses that have a few owners
or partners.
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A typical S-Corporation has three types of owners: (1) stockholder, (2) employer, and (3) members. The
employers are the members and must be incorporated or recognized for for-profit or nonprofit
purposes. The stockholders can be individuals, corporations, trusts, estates, partnerships, associations,
and cooperatives.

Buying a Business

Potential buyers should first decide whether they want a sole proprietorship or an incorporated
company structure. The second option is much more complicated but also offers more protection for
the purchaser in case of disputes with employees or other stakeholders.

When buying a business, there are key aspects that need to be considered such as liability for personal
injury and other claims and ownership rights to intellectual-property assets such as patents and
trademarks.

Starting a Business

Much of business law addresses the different types of business organizations. There are laws regarding
how to properly form and run each type. This includes laws about entities such as corporations,
partnerships and limited liability companies. For example, let's say I decide to start my own pet
grooming business. I need to decide what type of business I want to be. Will this be a partnership? Will it
be a sole proprietorship? What papers do I need to file in order to start this business? These questions
fall under the laws that govern business entities, which are state laws. The type of entity I pick will also
affect how I pay my federal income taxes. These, of course, are federal laws.

Next, what will my business be called? Let's say I decide on Barks & Bubbles as a name for my dog
grooming company. Now I need to know if anyone else already has that name. This is a trademark
question. Patents, copyrights and trademarks are part of intellectual property law. The federal law
governs most intellectual property law. Then I need to know if I'll require any special type of license for
this business. Do groomers need a license? Am I allowed to have animals on my property, or do I need
some sort of special permit? I'll need to check my local and state laws to find out. How will I advertise
my business? Am I allowed to say that I'm the 'best in town?' This question falls under consumer
protection law, which can be federal or state law. Wow. That's a lot of business law, and I'm not even
open for business yet!
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Buying a Business

Now let's say I decide to buy a business instead. I'm going to buy Patty's Pampered Pooches from my
Aunt Patty. There are many business laws that govern how to buy a business. If I buy Patty's business, do
I now own the actual store? This is a real estate law question. Do I own the pet grooming equipment in
the store? This is a property law question. Both of these fall under state law. Am I now the boss of
Patty's employees? This is an employment law question.

Can I start hiring my own employees and ordering supplies? This will involve contract law, since I'll be
making new agreements with people regarding my business and determining which of Patty's
agreements I need to uphold. Contracts are legally binding agreements made by two or more persons,
enforceable by the courts. Businesses are involved in many different types of contracts, and as a result,
there are many interesting cases involving breach of contract. A breach of contract is when one party
doesn't hold up his or her end of the bargain. It's common for parties to dispute the terms of a business
agreement or disagree on how the agreement should be performed.

For instance, consider the famous case of Locke v. Warner Bros., Inc. Sondra Locke was a longtime
girlfriend of Clint Eastwood. When the two broke up, Locke sued Eastwood for support. As a part of their
settlement, Eastwood negotiated a contract for Locke with Warner Bros. Locke was given a director's
contract, where Warner Bros. would pay Locke for any projects she directed or produced. Locke
proposed more than 30 projects, but Warner Bros. never hired her. She sued Warner Bros. for breach of
contract, saying that Warner Bros. never intended to hire her in the first place. After a court ruled that
Locke had enough evidence to proceed with her case, the parties settled.

This case demonstrates the importance of making good contracts. A wise businessperson will be sure to
enter contracts with a good understanding of the content and a good faith interest in upholding the
contract.

Managing a Business

There are many laws that concern managing a business because there are many aspects involved in
managing. As you can already see, running a business will involve a lot of employment law and contract
law. For my new business, I'll need to know how to hire, what my contracts should look like, what kind
of benefits I have to provide, how to pay employee insurance and taxes and even how to properly fire an
employee. Many of these employment and benefit laws are federal laws and regulated by government
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agencies. For example, the Equal Employment Opportunity Commission is a federal agency that enforces
employment discrimination laws.

If I also decide to sell things as part of my pet grooming business, like dog collars or dog treats, then I'll
need to be familiar with the laws on sales. For businesses that conduct sales, it's especially helpful to be
familiar with the Uniform Commercial Code, or UCC. This publication governs sales and commercial
paper and has been adopted in some form by almost all states.

What happens if I provide services but have trouble getting paid? Let's say I groom several dogs for
Victor's Vet, but he won't pay my bill. Can I demand payment or report him to the credit reporting
agencies? This is a debt collection law question. Debt collection laws are mostly federal laws. For
instance, many of our debt collection laws are found in the Fair Debt Collection Practices Act, or the
FDCPA, which is enforced by the Federal Trade Commission.

What is an example of business law?

An example of a business law is the Sherman Antitrust Act. This Act was created to prevent monopolies
from forming in the US by preventing monopolies from controlling an entire industry or any significant
part of it.

Specifically, the Act makes it illegal for any company to: monopolize a market, fix prices or sell at
unreasonably low prices, or buy up companies that produce goods that compete with their own
products.

What is the purpose of business law?

The purpose of business law is to make sure that businesses operate legally and ethically. It also ensures
fair competition between businesses, protects consumers, provides a safe environment for employees,
and preserves public trust in a business.