Business law is the body of law that controls the rights, relations, obligations, and conduct of individuals and entities engaged in commercial activities, including corporations, partnerships, and sole proprietorships. The primary function of business law is to specify rules and regulations that protect the interests of the parties involved in business transactions, including customers, employees, suppliers, shareholders, and other owners.
What is Business Law?
Business law includes several areas of law, such as:
- Business associations
- Contracts
- Intellectual property
- Securities law
- Labor and Employment law
- Tax law
- Bankruptcy
Many of the areas of law are covered by state law, though some, like bankruptcy, are federal.
Business association law deals with the legal framework of different types of business organizations. These include the familiar ones, like corporations, partnerships, and limited liability companies. This area of law includes the rules for the formation, management, governance, and dissolution of these institutions. It also covers their relationships with other individuals and businesses.
Right from the get-go, your business had to make an important decision related to business association law – what type of legal formation to start with. Liability shielding, taxation, complexity, and other factors influenced whether you chose a corporation or partnership, or which type of each. When you close a business, the rules related to dissolution will be found in this area of law.
Contract law is another important branch of business law. It covers the formation, interpretation, and breach of contracts. A contract is an agreement between two or more parties that creates a legally binding obligation to perform specific actions or exchange specific goods or services. Contract law is important for all types of businesses, as contracts are integral to business transactions, like sales, leases, and employment agreements. This area of law establishes the important rules that govern the creation and enforcement of contracts without which trade and commerce would be unpredictable and inefficient.
Related to property law, intellectual property law protects inventions and creations that have economic value, such as inventions, literary and artistic works, names, images, likenesses, and designs. The protection is provided through a variety of legal instruments, such as patents, copyrights, trademarks, and trade secrets. Each of these types of protection possesses a unique set of requirements and protections. For example, patent protection requires that an invention is novel and does not exist in the marketplace. If the requirements of patent protection are met, the government confers a right to be the sole user of the patented material and excludes others from using it. Without intellectual property law, much research and development would not take place.
Securities law is more specialized than the other types of business law mentioned above. Generally, it only applies when a business is issuing securities and trading on a public market. For example, a business may have a mandatory affirmative issuer disclosure required by the Securities Act of 1933 and the Securities Exchange Act of 1934. Violations of security law can include civil and criminal consequences. Insider trading is a common topic that is covered by securities law.
Other areas include disclosure requirements, rules regulating brokers and investment advisors, cybersecurity, shareholder liability, and investors. Without securities law, people would not have confidence in investing in publicly traded companies, and the stock market would not be as expansive as it currently is.
Business law determines the formal process of establishment of a business organization and regulations related to the selling of corporate entities. It also includes rights assignment, drafting, work delegations, breach of contract, transactions, contracts, and penalties for violation of the agreement. The purposes and functions of business law include maintaining order, protecting rights and liberties, establishing standards, and resolving disputes when it comes to businesses and their interactions with individuals, government agencies, and other businesses.
Do I Need Legal Representation for My Business?
It is highly recommended that you have a legal representative that you can rely on for important decisions and to analyze risk. An attorney or law firm can provide you with critical legal advice that can save you significant time and money and protect resources, such as employees and key assets. It is often better to have representation and not need it than not have it and need it.
How Can Hiring a Business Attorney Benefit Me?
In most circumstances, hiring a business attorney can help by providing effective legal representation and advice tailored to your specific needs and the objectives of your business. It can help you stay focused on your operational strengths, such as production and marketing, and leave distractions to individuals with legal training and experience to deal with it quickly and cost-effectively. As a consumer or stock investor, a business attorney can help make sure that investments and purchases that you make are legitimate.
How Can My Attorney Help?
Understanding business law is critical for assuring that businesses can compete in a fair and lawful environment, and for protecting the rights and interests of all parties involved. Professionals often have some legal experience or education but need to consult with experienced business law attorneys when important decisions with a legal basis or are being made. Business law knowledge and legal counselors help entrepreneurs, business owners, managers, and professionals make informed decisions and comply with legal requirements.
For business professionals who are engaged with running a business, making investments, or creating a vision, your time is too valuable to try to learn the law. Laws change yearly, as court decisions that interpret the law are issued regularly. Please do not hesitate to contact one of our experienced lawyers for legal advice. Call the trusted attorneys at Lowthorp Richards at (805) 981-8555 or fill out our online contact form. We operate primarily in the Tri-Counties area – Ventura, Santa Barbara, and San Luis Obispo.