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
- Hacking and Duping: Legal Risks in Do-It-Yourself Crafting and AlterationsSomeone recently asked about the legal implications of altering something yourself, such as piece of furniture, of selling the altered furniture in person, of selling the altered furniture via the Internet, of making a copy of the furniture, of instructing others on how to perform these alterations. In the current vernacular, some people call these efforts, a hack or a “mod” (as in modifying) or a “dup” (as in duplication).
- Electronic Discovery in Civil Law: Considerations for Business OwnersTexas enacted electronic discovery laws in 1999, and these laws allowed discovery in civil suits to include information stored electronically, such as emails, e-calenders, voice mails, instant messages and chat room conversations, as well as more traditional business communication such as memorandum and contracts. Data stored on personal electronics and hand-held devices can be made part of discovery during a civil suit.
- Guide to Purchasing an Existing BusinessWhen someone has considered buying an already established business, there are various factors that must be researched, understood and put into motion. This means knowing the company, contacting the right persons and seeking to build a relationship with the current owner so that a mutually beneficial sale may take place.
- Equifax, Should I Sign Their Waiver?The need for consumers to sign a waiver before providing information and monitoring services may be legal, but this could prevent someone from any type of action against the company. It is important to understand what this means and to consult a lawyer before signing any type of contract or agreement to avoid certain activity in the future.
- Foreign LLCs Doing Business in CaliforniaForeign LLCs should qualify and register with the California Secretary of State before conducting business in California. Failure to do so may have negative repercussions on the LLC.
- OSHA Rolls Back Safety Rule Relating to BerylliumThe safety rollback will create more exposure to beryllium to industrial workers and may lead to more beryllium lawsuits.
- Overview of Business Development Company (BDC) InvestmentsA Business Development Company (“BDC”) is a form of investment company that invests in small and mid-sized businesses. Investors can buy shares in a BDC, and the money from their investments is used to fund the businesses. In turn, investors can profit from dividends paid on their investments, or, in some cases, the sale of their shares.
- Three Deal-Breakers in Franchise AgreementsA franchise may be the perfect way for budding entrepreneurs with little capital and/or little experience in operating a business to get started with their own business.
- What Entrepreneurs Need to Know about California Commercial LawFor the new California entrepreneur, one consistent piece of advice you are likely to hear is to retain the services of an experienced commercial law attorney. While this is certainly good advice, the reasons why this is so may not be as readily apparent. This is because most new entrepreneurs – and even some seasoned business owners – do not fully comprehend the scope, purpose or objectives of commercial law.
- Guidelines for Protecting Proprietary InformationProprietary information is business information that has independent economic value from not being disclosed to competitive businesses or the general public.
- 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.
- 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.
- SBA - 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.
- 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