An Introduction to Business Law: What Businesses Need to Know

When it comes to business, understanding the legalities involved is not only essential in order to remain compliant. A thorough understanding of the complex legalities involved in running a business can allow business owners to build a solid foundation that will support growth, mitigate risk, and enhance operational efficiency.

This article aims to make sense of the complexities of business law, providing business owners of both large and small businesses, managers, and leaders with insights that will assist with building an understanding of the legal intricacies that surround the world of business.

What is Business Law? 

Business law encompasses all laws that regulate the formation, governance, and operations of businesses. 

Business laws are crucial – they exist to protect all parties involved in general operations and trade, including customers, clients, employees, suppliers, and the business itself. These laws also outline the standards for responsible, ethical conduct that all business must follow in their interactions with all other parties. 

Business law as a definition is extremely broad, thus there are various subfields. These include corporate law, commercial law, tax law, contract law, property law, and many more. This article will focus on two areas of law that are particularly important to build an understanding of: corporate law and commercial law. 

Corporate Law Vs. Commercial Law: What is the Difference?

It isn’t uncommon to see people use the terms ‘corporate law’ and ‘commercial law’ interchangeably in order to describe any laws and regulations directly relating to business. However, these terms actually describe two related yet different areas of business law.

Corporate law focuses more on high-level governance, regulation, financing, and structure. It essentially relates to any laws that a company must comply with in order to function effectively and correctly as a legal entity.

Commercial law, on the other hand, focuses less on the business itself and more on the commercial activities that a business takes part in. Generally, commercial law covers a wide range of laws relating to businesses, including contract law, trade and international trade, and labour laws. 

Both areas of law are absolutely crucial when it comes to building a strong legal foundation for a business. It is therefore important that those involved in the legalities of running a business understand this distinction well. This is particularly important if a business is looking to hire a legal advisor, as the company will need to know what specific type of advisor it should be looking for. 

In order to aid this understanding further, this article will look into each area in more detail. 

More examples of Corporate Law

As explained in the previous section, corporate law relates to the laws and regulations that control how a business as an entity behaves.

Corporate law is relevant from the very beginning of a business’s lifecycle. All laws that regulate the formation of a business, including the registration process and the decision of how the business will be structured, fall under the banner of corporate law. In the same vein, when a company decides to go through restructuring or makes the decision to cease operations, all legalities involved in these decisions also fall under corporate law. 

Corporate law also covers matters of compliance, particularly with regard to governance and directors’ duties. This involves ensuring ethical standards are being followed in company policy and how directors conduct themselves, and ensuring that directors are exerting their powers and judgement in ways that serve their business and only when necessary. 

Corporate law also relates to the legalities behind mergers and acquisitions. Both of these processes can be complex, and as both pertain to the status of one or multiple corporate bodies, a legal professional that deals with corporate law would be best suited to advise on these processes. 

More examples of Commercial Law

Commercial law is much broader than corporate law and tends to focus more on the actions of a business than on the business itself. 

Contract law falls under the banner of commercial law and is one of the most important areas of law in the business world. Contracts can determine how two companies work together, how employees are hired, and their relations with key suppliers. Commercial law covers the formation of contracts, the contents of the contract, the consequences of the contract being broken, and who may enter into a contract. 

Commercial laws also cover all legal issues related to the protection and management of intellectual property. This means all laws pertaining to checking patents and copyright, drafting commercial agreements that may grant others permission to use protected assets, and handling any infringement of a business’s protected assets. 

Employment law is another section of business law that falls under the category of commercial. This section of the law governs what employees and employers can and should expect from each other. It also includes the drafting of employee contracts, handbooks, and policies.

In more contentious situations, employment law also covers employee grievances, disputes between employees or with employers, disciplinary matters, and situations involving employee negligence. 

Why Consider Getting Advice from a Legal Professional? 

Business law is extremely broad and, at times, quite complex. It can sometimes be difficult to know where to start looking for advice, especially if you’re unsure what area of the law your inquiry falls under. 

However, building a positive relationship with one or multiple legal advisers early in a business’s life is essential and provides countless advantages. 

Having a legal adviser in your corner who is able to navigate the complexities of contracts, trade, competitor laws, and employment will take a lot of pressure off the shoulders of directors and managers and ensure that leaders have more time to do what they do best – lead. 

They can also ensure businesses are compliant with all relevant laws and regulations. This will prevent businesses from facing severe legal repercussions in the event that their policies are found to be lacking  and ensure that operations continue to run smoothly without dispute or confusion.

Our team at Tann Law is willing to help with all of your business needs, from registration on to whichever path you choose to take as a business owner – whatever you decide, we can be your trusted legal advisors through it all. 

If you’re interested in what we can do to assist you and your business, you can click here to see our services. You can also click here to get in touch directly for more information.