Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. In contrast, companies that fail to play by the rules (or fully understand them) can face steep penalties and significant reputational harm. Resolving business litigation and contract disputes becomes essential when legal issues arise despite preventive measures.
Understanding What Is Business Law
In broad terms, business law is a category of law that includes the rules, regulations, and legal principles that govern businesses and their activities. This body of law, which includes local, state, and federal regulations, is intended to establish clear guidelines for business operations, promote fair business dealings, and provide a framework to resolve disputes.
While the terms are often used interchangeably, corporate law is distinct from business law. Corporate law is a specialized sub-set of business law that deals with the formation and governance of corporations.
Main Types of Business Law
Business law is a diverse field that covers a wide range of topics. Below are some of the most common types of business law:
Corporate Law: Law governing the formation, operation, and dissolution of corporations, including corporate liability, shareholder rights, and regulatory compliance. Corporate governance explained provides detailed insights into proper business management and oversight structures.
Entity Formation: The law governing the selection and formation of business entities (partnerships, limited liability corporations, and corporations), including the preparation and negotiation of the necessary organizational documents.
Contract Law: Law related to the drafting, negotiation, and enforcement of various business agreements, including operating agreements, shareholder agreements, non-disclosure agreements, and vendor contracts. Breach of contract consequences can significantly impact business operations when agreements are violated.
Finance Law: Law governing and regulating the finance sector, including money management, banking, investments, credit, financial securities, and various financial transactions.
Employment Law: Law governing the employer/employee relationship, including employment agreements, employee policies, regulatory compliance, and employment lawsuits
Environmental Law: Law related to environmental protection and compliance, including permitting, site remediation, and reporting
Commercial Litigation: Law governing the defense and prosecution of business-related suits, including partnership disagreements, breach of contract suits, and insurance coverage disputes
Alternative Dispute Resolution: Law governing alternative-dispute resolution, including mediation, arbitration, and settlement negotiations
Real Estate Law: Law governing real estate transactions, including commercial leasing, property development, and sales and acquisitions
M&A Law: Law governing mergers, acquisitions, leveraged buyouts, and other commercial restructurings
Securities Law: Law governing public and private securities offerings, including IPOs, secondary offerings, PIPE and convertible debt transactions, and trading in securities.
Tax Law: Law governing compliance of businesses with tax laws and reduction of tax liabilities
Bankruptcy Law: Law governing legal proceedings related to businesses and individuals facing financial distress or insolvency.
Intellectual Property: Law governing the protection of intellectual property rights, including copyrights, trademarks, patents, and trade secrets
Technology Law: Law governing technology collaboration agreements, joint development projects, technology transfers, licensing and computer law, strategic sourcing agreements, and the procurement of computer systems.
Data Privacy: Law governing the collection, storage, and use of personal data and security, including regulatory compliance and enforcement
Why Is Business Law Important?
Whether you own a small business or serve as a chief executive for a large corporation, a solid understanding of what is business law is needed to protect your company's interests. Business law serves a variety of important purposes. Below are just a few examples:
- It helps create fairness and an even playing field in business transactions.
- It protects the rights of individuals who interact with businesses, such as customers and shareholders
- It provides guidelines for responsible behavior
- It promotes economic stability through legal certainty
- It creates a legal system for resolving conflicts, as well as legal remedies
Partner With an Experienced Business Lawyer
Business lawyers are vital in dealing with complex commercial legal matters. From selecting the proper legal structure to acquiring a competitor to planning an exit strategy, Scarinci Hollenbeck's business attorneys can guide you through the process and minimize the risks to you and your business.
As a full-service law firm, we are uniquely positioned to guide businesses through every phase of their life cycle and offer seasoned attorneys in all of the types of business law practice areas discussed above. We also work with entities of all sizes, from start-ups just getting off the ground to multi-national corporations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
