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
- When Buying from Foreign Sources, What Can You Do if the Seller Does Not Send Your Product?Buyers large and small have begun purchasing from foreign sources. Sites like alibaba.com have revolutionized the international market for consumers, while the Internet in general has made it easier for companies to interface and conduct business with others around the world.
- Statute of Limitations for Collecting DebtFor torts, crimes and even the collection of debt, there are laws regarding how long a claim is actionable. These laws help provide a sense of finality for affected individuals so that they do not have to forever be worried about potential adverse effects.
- Are Verbal Agreements Binding?Verbal agreements are contracts even though they were not memorialized in a writing. Assuming that the contract is valid, the verbal agreement between two parties is binding. However, verbal contracts may have unique complications to them.
- Planning for the Unplanned - Does Your Business Have an Exit Strategy?In an another article that I recently published, "5 Common Legal Missteps That Small Business Owners Make," I provided a general overview of each of the listed mistakes, as well as some advice for how to avoid, or overcome, them. Some of those mistakes, however, including number 2 on the list – not discussing and executing a buy-sell agreement or exit strategy – deserve more in-depth treatment and discussion.
- 5 Common Legal Missteps Many Small Business Owners Make and How to Avoid ThemWhether you are just beginning to think about forming your own business, or you've been "in the game" for years, there are 5 legal missteps that anybody can make, and that are made all too often. Luckily, however, these common missteps are also fairly easy to avoid, with just a bit of knowledge and planning!
- Critical Change for Serving Preliminary 20-Day Notices for Arizona Public ProjectsOn April 30, 2015, Arizona’s most common construction industry practice for serving a Preliminary Twenty Day Notice (“Prelim”) on an Arizona public project—first class mail with certificate of mailing—was invalidated by the Arizona Court of Appeals in Cemex Construction Materials South, LLC v. Falcone Brothers & Associates, Inc.
- Used Car Does Not Run, What Can You Do?Attorneys frequently receive questions regarding defective used cars. All too often, people purchase a used vehicle with verbal assurances that everything works fine and that it will be quite reliable, only to discover that neither is the case. What can you do when this happens to you?
- Singapore The Island Nation with Global SignificanceSingapore is a hub for international arbitration. Learn more about the city-state and what to do to prepare for an upcoming arbitration.
- Finding Out About the Defendant's AssetsPlaintiffs will want to know whether the defendant has the means to pay off a judgment before going to trial. Additionally, plaintiffs will want to know about the defendant’s assets if they have received a judgment against the defendant. There are several legal avenues that plaintiffs can pursue to determine the location and value of the defendant’s assets that may eventually be used to satisfy a judgment.
- What Are the Elements of a Contract?Two individuals or entities may reach an agreement regarding any course of business and put this agreement in the form of a contract. If one of the parties does not uphold his end of the bargain, the non-breaching party may pursue legal remedies for this breach. In order to prevail with such a lawsuit, the moving party must establish certain legal elements.
- 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