Understanding the fundamentals of business law

Whether you are running a big corporation or starting up as a small business, it’s best to abide by the rules and play fair, and understand the fundamentals of business law. Also known as commercial law, business law is a branch of civil law that governs how commerce is undertaken by the various stakeholders of society. While a startup or small business might not necessarily be required a very deep understanding of the ins and outs of commercial law, it pays to know the fundamentals and the basics, to keep abreast of the requirements of the law.

Students of business law usually refer to the civil code and previous court decisions to arrive at a determination of what is legal and what is not, in the realm of business. For our purpose of discussing the fundamentals, here are a few main concepts behind business law.

Contracts and the Nature of Business

In most countries, the law recognizes the need of businesses to transact, and therefore commercial transactions are encouraged, because these are viewed as beneficial to the economy and, therefore, to the society at large. For this purpose, the law protects parties who enter into contracts or agreements, and makes sure that whatever is agreed upon would be enforced and carried out by both parties. Business law also provides for taxation—this makes government eligible to have a share of whatever benefits earned by businesses.

Crimes and Ethics

Business law also governs what is legal and illegal in the realm of business. However, what is legal may not always be ethical, and part of business law is differentiating the two. For instance, some companies might be running businesses that, while sticking to all legal requirements, might not be doing the right thing. Some examples might be those that pose risks to health and the environment. In these cases, the rulings of the courts might be subjective, and depending on the judgment of those who enforce the law. The concept of crime in business also includes cyber crimes like online fraud, identity theft, and the like.

Intellectual Property

The law recognizes the need for people to be able to earn from their original inventions and ideas, and for this purpose countries have established intellectual property bodies. Authors and artists also have copyrights to their original works. This means that original bodies of work cannot just be copied or sold off without consent by (and usually compensation for) the artist.

Banking and Finance

The law also recognizes the need of businesses to have monetary and investment instruments. This includes provisions for publicly selling shares of a company’s stock, debt and credit, and also monetary instruments like payment mechanisms, and credit.

Employment

A big part of business law is the relationship of an employer with employees. This governs various concepts like the rights of employees, the responsibilities of businesses to the people it hires, and vice versa. Many landmark lawsuits in the developed world involve employees airing out improprieties and unfair practices by corporations and businesses. The law also regulates how businesses may hire people. For instance, some states require industries to be unionized. Most would have equal-opportunity laws, which state that no prejudice should be given to race, color, sex, or even age when hiring a potential employee.

The law has been set in order to create a fair playing field for businesses and individuals alike. While legalese is a language difficult o learn, a small business owner should at least have a grasp of the general concepts of business law, so that when one encounters a possible conflict or issue, these can be addressed and resolved more easily.