What is Business Law?
Business law deals with the creation of new businesses and the issues that arise as existing businesses interact with the public, other companies, and the government. This area of the law draws on a variety of legal disciplines, including tax law, intellectual property, real estate, sales, employment law, bankruptcy, and others. Business law attorneys specialize in transactional work, meaning they do not represent clients in court. In fact, business lawyers are often hired for the purpose of avoiding future litigation.
To understand the role of business law within the legal system, it helps to view businesses as entities separate from their owners and employees. Just like individuals living together in society, business entities are subject to legal rules designed to give every participant in the marketplace a fair opportunity to succeed.
An enforceable system of business laws also benefits the economy as a whole and provides for more efficient transactions. For example, a supplier who sells goods on credit can be confident that the buyer will held to the agreed payment terms. As long as the contract is drafted and executed in accordance with the Uniform Commercial Code (UCC) adopted in that jurisdiction, the supplier knows ahead of time it will be able to enforce the contract against the buyer if necessary.
Business Formation and Internal Agreements
New companies must take steps to comply with the law even before opening their doors for the first time. Business law attorneys are routinely asked to form new entities on behalf of their clients by filing the necessary documents with the Secretary of State. Clients may also need assistance choosing the business entity best suited for their enterprise.
Businesses can be formed as corporations, limited liability companies (LLCs), partnerships, and other entities. Most of these business forms can be further customized to meet the needs of the company. Examples include corporations formed as “S-corps” in order to achieve tax savings, and partnerships formed as “limited partnerships” to allow some owners to participate as investors only.
While the selection of the appropriate business entity will depend on numerous factors, the primary purpose of most entities is to shield owners from individual liability. Operating a business that is not set up to provide limited liability means that the owners are putting all of their personal assets within reach of the business’s creditors. By working with an attorney at the inception of the business, this situation can easily be avoided.
Business law attorneys are also available to draft the internal agreements that will control how a new company is managed. A common example is an LLC operating agreement. This document should be drafted with care, as it governs how the company’s owners will share profits and losses, make important business decisions, and transfer their ownership rights.
Navigating Complex Transactions
Some commercial transactions are within the ability of business owners to handle on their own. Others are not, especially when a deal touches on complicated and evolving areas of the law, such as securities regulation or internet commerce. In heavily-regulated industries in particular, companies rely on their in-house or hired lawyers for advice regarding the latest legal developments affecting their businesses.
Even for savvy business people, problems can develop when emotions become involved. Attorneys can provide valuable insight into a transaction, not only because of their legal training, but also because of the objective nature of their analysis. This allows them to spot issues overlooked by business owners and managers who may be too emotionally invested in seeing the deal go through.
Preemptive Measures to Avoid Litigation
One way to distinguish business law as its own field of practice is to take note of when these issues arise. Business law provides rules and guidance for companies to follow before disputes occur. Attorneys who practice in this area are experts at structuring transactions to minimize the company’s exposure to litigation. This sort of strategic legal maneuvering can end up saving the company huge amounts of money.
Consider the example of a services company headquartered in one state, with customers all across the nation. The company might hire a lawyer to draft customer agreements that require customers to follow specific dispute procedures, such as giving the company an opportunity to remedy deficient services before a legal claim is made, or providing that disputes must be submitted to arbitration in the company’s home state. In every industry, there are opportunities for business attorneys to save their clients money and provide them with a greater competitive advantage.
Hiring Legal Counsel
If you operate an existing business or plan to launch a new one, your success may depend on obtaining the right legal advice. Attorneys are available to assist with everything from simple buy/sell agreements to mergers and acquisitions of publicly-traded companies. Schedule a consultation with a business law firm today.
Know Your Rights!
- Understanding the Differences Between Corporations, LLC's, and Partnerships
Congratulations on your decision to start a new business. The question you may be asking, though, is what kind of business you should form? What is the difference between a corporation, an LLC, and a partnership? Why form one and not another?
- What is the Statute of Frauds?
When dealing with a contract dispute, particularly in the case of an oral contract, one may hear the term “statute of frauds” used. This does not refer to the commission of an actual fraud, but rather, whether the contract had to be in writing or not. So what is the statute of frauds and when does it apply?
- When a Business Folds, Who Is Responsible for Its Debts and Other Obligations?
A common question among small business owners is who will be responsible for debts and other obligations if a business entity folds or reorganizes. Many things can happen in the life of a business entity, whether a corporation, LLC, partnership, or sole proprietorship, and this can lead to questions about who will be left holding the bag.
Articles About Business Law
- Exceptions to No Damages For Delay ClauseThe majority of construction contracts include a provisions referred to as the "No Damages For Delay" clause; a well-drafted clause can limit a party's exposure to damages in the event of a delay on the project's schedule. Despite these provisions, there are exceptions to their enforceability.
- Common Contract ClausesThis article intends to highlight and decipher some of the most common clauses that appear in a typical business contract. These basic provisions, called boilerplates, are included in agreements to protect the contracting parties. They typically follow a standard format and they are worded carefully in order to hold up in a court of law. Even though most contracts include these boilerplates, many people do not read nor understand what they are signing.
- Less Talk, Less LiabilityDon’t say it if you don’t have to, and never in writing.
- Who Owns the Patient’s Medical Records in CA?Who gets the patient medical records after a physician leaves a group medical practice? Here's a proposed structure that is fair and resolves the problem up-front for all sides.
- How Are Private Investigators Paid?Like lawyers, private investigators may charge in a variety of ways. In order to have a clear understanding, ask for a written explanation of fees.
- The Tao of DiscoveryMore than two thousand years ago, the Chinese warrior-philosopher Sun-Tzu wrote a treatise on military strategy called The Art of War. Since that time, this legendary text has become required reading throughout Asia. Whether in business school, the armed forces, or in law school, it is likely that every student is familiar with the fundamental principles of Sun-Tzu’s masterpiece.
- Inherited IRAs and Creditor ProtectionYour IRA is protected from creditors if you have to file bankruptcy, but what happens to that IRA if you die and leave it to a child? Many assumed that the inherited IRA retained that creditor protection in a child’s bankruptcy. The United States Supreme Court ruled otherwise in Clark v. Rameker, 134 S. Ct. 2242 (2014).
- Who Bears Risk of Non-Payment Between General and Sub-Contractor in Ohio?A recent decision by the Supreme Court of Ohio highlights the importance of having clear terms in contracts between general contractors and subcontractors, especially in regard to payment provisions.
- It's OK, I've Got it in Writing - Michigan's Uncertain Treatment of Dual Source Supply ContractsParties to a contract usually feel a sense of security knowing that their agreement is embodied in a written, properly executed document containing all of the agreed upon terms. However, if such an agreement is a “dual source” supply contract executed under Michigan law, the parties may not be as secure as they believe.
- Piercing the Corporate VeilJust how limited is your liability if you own a limited liability company?
- All Business and Industry Law Articles
State Business Portals
Business Law - US
- ABA - Section of Business Law
Serves the public and profession by furthering the development and improvement of business law, educating and helping members to serve their clients competently, efficiently and professionally.
U.S. Small Business Administration helps small businesses understand their legal requirements and locate government services from federal, state and local agencies.
- Commercial Law / Business Law - Wikipedia
Commercial law (sometimes known as business law) is the body of law that governs business and commercial transactions.
- DOL - Employment Law for Businesses
E-tools that provide easy-to-understand information about a number of federal employment laws.
- DOL - Self-Employment Assistance
Self-Employment Assistance offers dislocated workers the opportunity for early re-employment by encouraging and enabling unemployed workers to create their own jobs by starting their own small businesses.
- Legal Information for Small and Large Businesses
Material on business laws, regulations, structuring, capital, taxes, securities, employment, contracts, labor & more.
- Model Business Corporation Act
A corporation is a legal entity created through the laws of its state of incorporation. States have the power to regulgate laws relating to the creation, organization and dissolution of corporations.
- Partnership Law
A partnership is a for-profit business of two or more persons. Each partner shares directly in the organization's profits and shares control of the business operation.
- Small Business Administration (SBA)
The U.S. Small Business Administration (SBA) aids, counsels, assists and protects the interests of small business concerns; preserves free competitive enterprise and maintains and strengthens the overall economy of our nation.
- Small Business Advocacy
Office of the advocacy provides an independent voice of small business in the federal government.
- Small Business Financing - Loans and Grants
Federal, state and local governments offer a wide range of financing programs to help small businesses start and grow their business.
- Uniform Commercial Code
The Uniform Commercial Code (UCC or the Code) is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions all across the USA.
- US Department of Commerce
The U.S. Department of Commerce advances economic growth and jobs and opportunities for the American people.
Organizations Regarding Business Law
- Association for Corporate Growth
- Association of Business Trial Lawyers
- Better Business Bureau (BBB)
- Center for Corporate Policy
- Legal Information for US Business Organizations - Free Management Library
- Minority Business Development Agency (MBDA)
- National Women's Business Council
- United States Business and Industry Council