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Teaching and Learning Resources

The Legal Environment of Business
Contracts
Sales and Lease Contracts
Negotiable Instruments
Debtor-Creditor Relationships
Business Organisations
Government Regulation
Property and Its Protection
International Environment

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Case Studies

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Business Law Today

Rationale

Commercial law (sometimes known as business law) is the body of law which governs business and commerce. It is often considered to be a branch of civil law and deals both with issues of private law and public law. Commercial law regulates corporate contracts, hiring practices, and the manufacture and sales of consumer goods. Many countries have adopted civil codes which contain comprehensive statements of their commercial law. In the United States, commercial law is the province of both the United States Congress under its power to regulate interstate commerce and the states under their police power. Efforts have been made to create a unified body of commercial law in the US; the most successful of these attempts has resulted in the general adoption of the Uniform Commercial Code.

Various regulatory schemes control how commerce is conducted. Privacy laws, safety laws (i.e. the Occupational Safety and Health Act in the United States), food and drug laws are some examples.

See also

External links

Commercial Law - Articles & Definitions
topical listing of US commercial law from Cornell's Legal Information Institute
100s of Answers to Basic Business Law Questions

Companies law

Basic forms:
Sole proprietorship
Partnership (General · Limited · LLP)
Corporation
Cooperative
United States:
Business trust · LLC · LLLP Series LLC Delaware corporation Nevada corporation
United Kingdom / Commonwealth / Ireland:
Limited company (By shares · By guarantee) (Public · Proprietary) Community interest company
Civil law countries:
AB · AG · ANS · A/S · AS
K.K. · N.V. · OY · S.A. · GmbH
European Company Statute
Doctrines
Corporate governance
Limited liability · Ultra vires
Business judgment rule
Internal affairs doctrine
De facto corporation and corporation by estoppel
Piercing the corporate veil
Rochdale Principles
Related areas of law
Contract · Civil procedure

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The Legal Environment of Business

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Readings

Constitutional Law is the study of foundational laws that govern the scope of powers and authority of various bodies in relation to the creation and execution of other laws by a government. A constitution binds a government or governments, limiting the contexts in which rules may be created, interpreted and force may be applied. Constitutions may reference various bodies, including organizations, associations, stateless peoples and nation-states.

Most commonly constitutional law is the law of these foundational laws, customs, and constitution a conventions in regard to nation-states. Not all nation-states have constitutions, though all such states have a jus commune, or law of the land, that may consist of a variety of imperative and consensual rules, that may be customary law, oral law and written law that apply in the various jurisdictions of such state. Of those nation-states that do have constitutions, not all are considered strictly written constitutions, as the laws that govern such issues may not be consolidated into one single constitution document or instrument. The constitutional law may be the fact of interpreting a variety of text which may also be informed by history, custom and unwritten constitutional conventions . Compare, for example, the written Constitution of the United States with British constitutional law, which arises from multiple sources including Magna Carta, the common law, and other customary sources. In some countries, the constitution is known as the Basic Law.

Constitutional laws may often be considered second order rulemaking or rules about making rules of exercise power. One of the key tasks of constitutions within this context is to indicate hierarchies and relationships of power. Thus, for example, in the case of a unitary state, the Constitution will vest ulitimate authority in one central administration and legislature, and judiciary, though there is often a delegation of power or authority to local or municipal authorities. Whereas when a constitution establishes a federal state, it will identify the several levels of government coexisting with exclusive or shared areas of jurisdiction over lawmaking, application and enforcement.

Contracts

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A contract is a "promise" or an "agreement" that is enforced or recognized by the law. In the civil law, contracts are considered to be part of the general law of obligations. This article describes the law relating to contracts in common law jurisdictions.

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External links

Sales and Lease Contracts

Tutorials

Readings

UCC: uniform commercial code

A contract of sale is a legal contract an exchange of goods, services or property to be exchanged from seller (or vendor) to buyer (or purchaser) for an agreed upon value in money (or money equivalent) paid or the promise to pay same. It is a specific type of legal contract.

An obvious ancient practice of exchange in many common-law jurisdictions it is now governed by statutory law that is designed to make transactions among merchants and consumers straightforward and easy to understand. See commercial law.

Contracts for sale involving goods are governed by Article 2 of the Uniform Commercial Code in most United States and Canadian jurisdictions, however in Quebec such contracts are governed by the Civil Code of Quebec as a nominate contract in the book on the law of obligations.

Negotiable Instruments

Tutorials

Readings

Negotiable instruments

Under the Code, the following are not negotiable instruments, although the law governing obligations with respect to such items may be similar to or derived from the law applicable to negotiable instruments:

1. letters of credit, which are governed by Article 5 of the Code

2, bills of lading and other documents of title, which are governed by Article 7 of the Code

3. securities, such as stocks and bonds, which are governed by Article 8 of the Code

4. deeds and other documents conveying interests in real estate, although a mortgage may secure a promissory note which is governed by Article 3

5. IOUs

Debtor-Creditor Relationships

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The Debtor-Creditor Relationship

Business Organisations

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Organization and Government Regulation

Most legal jurisdictions specify the forms of ownership that a business can take, creating a body of commercial law for each type.

The major factors affecting how a business is organized are usually:

1. The size and scope of the business firm and its structure, management, and ownership, broadly analysed in the theory of the firm. Generally a smaller business is more flexible, while larger businesses, or those with wider ownership or more formal structures, will usually tend to be organized as corporations or (less often) partnerships. In addition, a business that wishes to raise money on a stock market or to be owned by a wide range of people will often be required to adopt a specific legal form to do so.

2. The sector and country. Private profit-making businesses are different from government-owned bodies. In some countries, certain businesses are legally obliged to be organized in certain ways.

3. Limited Liability Companies (LLC), limited liability partnerships, and other specific types of business organization protect their owners or shareholders from business failure by doing business under a separate legal entity with certain legal protections. In contrast, unincorporated businesses or persons working on their own are usually not so protected.

4. Tax advantages. Different structures are treated differently in tax law, and may have advantages for this reason.

5. Disclosure and compliance requirements. Different business structures may be required to make less or more information public (or report it to relevant authorities), and may be bound to comply with different rules and regulations.

Many businesses are operated through a separate entity such as a corporation or a partnership (either formed with or without limited liability). Most legal jurisdictions allow people to organize such an entity by filing certain charter documents with the relevant Secretary of State or equivalent and complying with certain other ongoing obligations. The relationships and legal rights of shareholders, limited partners, or members are governed partly by the charter documents and partly by the law of the jurisdiction where the entity is organized. Generally speaking, shareholders in a corporation, limited partners in a limited partnership, and members in a limited liability company are shielded from personal liability for the debts and obligations of the entity, which is legally treated as a separate "person". This means that unless there is misconduct, the owner's own possessions are strongly protected in law if the business does not succeed.

Where two or more individuals own a business together but have failed to organize a more specialized form of vehicle, they will be treated as a general partnership. The terms of a partnership are partly governed by a partnership agreement if one is created, and partly by the law of the jurisdiction where the partnership is located. No paperwork or filing is necessary to create a partnership, and without an agreement, the relationships and legal rights of the partners will be entirely governed by the law of the jurisdiction where the partnership is located.

A single person who owns and runs a business is commonly known as a sole proprietor, whether that person owns it directly or through a formally organized entity.

A few relevant factors to consider in deciding how to operate a business include:

1. General partners in a partnership (other than a limited liability partnership), plus anyone who personally owns and operates a business without creating a separate legal entity, are personally liable for the debts and obligations of the business.

2. Generally, corporations are required to pay tax just like "real" people. In some tax systems, this can give rise to so-called double taxation, because first the corporation pays tax on the profit, and then when the corporation distributes its profits to its owners, individuals have to include dividends in their income when they complete their personal tax returns, at which point a second layer of income tax is imposed.

3. In most countries, there are laws which treat small corporations differently than large ones. They may be exempt from certain legal filing requirements or labour laws, have simplified procedures in specialized areas, and have simplified, advantageous, or slightly different tax treatment.

4. To "go public" (sometimes called IPO) -- which basically means to allow a part of the business to be owned by a wider range of investors or the public in general—you must organize a separate entity, which is usually required to comply with a tighter set of laws and procedures. Most public entities are corporations that have sold shares, but increasingly there are also public LLCs that sell units (sometimes also called shares), and other more exotic entities as well (for example, REITs in the USA, Unit Trusts in the UK). However, you cannot take a general partnership "public."

Mergers and acquisitions

The phrase mergers and acquisitions or M&A refers to the aspect of corporate finance strategy and management dealing with the merging and acquiring of different companies as well as other assets. Usually mergers occur in a friendly setting where executives from the respective companies participate in a due diligence process to ensure a successful combination of all parts.

On other occasions, acquisitions can happen through a hostile takeover by purchasing the majority of outstanding shares of a company in the open market. In the United States, business laws vary from state to state whereby some companies have limited protection against hostile takeovers. One form of protection against a hostile takeover is the shareholder rights plan, otherwise known as the "poison pill". See Delaware corporations.

Historically, mergers have often failed to add significantly to the value of the acquiring firm's shares. Corporate mergers may be aimed at reducing market competition, cutting costs (for example, laying off employees), reducing taxes, removing management, "empire building" by the acquiring managers, or other purposes which may not be consistent with public policy or public welfare. Thus they can be heavily regulated, requiring, for example, approval in the US by both the Federal Trade Commission and the Department of Justice.

Government Regulation

Tutorials

Readings

Administrative law is the body of law that arises from the activities of administrative agencies of government. Government agency action can include rulemaking, adjudication, or the enforcement of a specific regulatory agenda. Administrative law is considered a branch of public law. As a body of law, administrative law deals with the decision-making of administrative units of government (e.g., tribunals, boards or commissions) that are part of a state regulatory scheme in such areas as international trade, manufacturing, the environment, taxation, broadcasting, immigration and transport. Administrative law expanded greatly during the twentieth century, as legislative bodies world-wide created more government agencies to regulate the increasingly complex social, economic and political spheres of human interaction.

See also

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Activity

Market Power, Competition and Regulation: Anti-Competitive Behaviour

Image: Pubs have come under scrutiny as being
examples of where businesses with monopoly
power can limit competition and choice for
the consumer. Copyright: Patrick Zangerlé

Property and Its Protection

Tutorials

Readings

Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of potential financial loss. Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium and duty of care.

See also

Lists

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International Environment

Tutorials

International Law in a Global Economy

Readings

Public international law, commonly referred to simply as international law, is the body of law that "regulates the activities of entities possessing international personality". Traditionally, that meant the conduct and relationships of states. However, it is now well established that international law also concerns the structure and conduct of international organizations, and, to a certain degree, that also of multinational corporations and individuals.

According to the President of the International Court of Justice, Rosalyn Higgins, international law is a normative system "harnessed to the achievement of common values - values that speak to us all, whether we are rich or poor, black or white, of any religion or none, or come from countries that are industrialised or developing".^[1] The necessity for international law arises from the need to ensure a process that regulates competing demands and establishes the framework for predictable and agreed community behaviour.

The term "public international law" should be distinguished from "private international law". Both are supranational systems of law. However, public international law regulates the relationship between states and international entities, whereas private international law selects between conflicting municipal systems of law to regulate the relationship between persons, both legal and natural.

See also

Recommended Texts

Business Law Today: Text & Cases - E-Commerce, Legal, Ethical, and International Environment, Comprehensive
Edition 6e
by Roger LeRoy Miller and Gaylord A. Jentz

Check the availability and buy your books from our Bookshop.

The Legal and E-Commerce Environment Today
3rd Edition
by Roger LeRoy Miller and Frank B. Cross

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Resources

Law
Legal subjects	Constitutional and Administrative law · Criminal law · Contract · Tort · Property · Trusts and Equity · Public international law · Conflict of laws · Supranational law
Further disciplines	Labour law · Human rights · Procedure · Evidence · Immigration law · Family law · Wills · Commercial law · Corporate law · Intellectual property · Unjust enrichment · Restitution · Tax law · Banking law · Competition law · Consumer protection · Environmental law · International criminal law · Admiralty law · Military law · Product liability
Legal systems	Common law · Civil law · Religious law · Socialist law · Comparative law
Legal theory	History of law · Philosophy of law · Economic analysis of law · Sociology of law
Legal institutions	Judiciary · Legislature · Executive · Military and Police · Bureaucracy · Legal profession · Civil society