Business Law applies to the rights, relations, interactions, and conduct of persons and businesses engaged in commerce, merchandising trade, and sales. Many companies will hire business law attorneys if a legal situation arises.
Understanding how business law works helps to think of the entire legal system as a series of rules. No single entity exists outside or above the law, whether individual, company, government, or otherwise. Business law within the legal system functions much like a traffic code. Just as no one gets to drive wherever they want, whomever they want, whenever they want, business law has rules in place to guide the behavior of businesses and their owners.
Business Laws such as contracts and sales agreements are rules designed to facilitate the efficient exchange of goods and services. The contract is a legally binding agreement between two commercial parties which outlines what will be delivered, when it is to be paid, how much it will cost, who is responsible for payment, and what will happen if payment is not completed.
An enforceable system of business laws benefits the economy and provides for more efficient transactions. For example, a supplier who sells goods on credit can be confident that the buyer will honor the agreed payment terms. As long as the contract is drafted and executed following that particular jurisdiction's well-established business laws, the supplier knows ahead of time that it can enforce the agreement against the buyer if necessary.
Business Formation and Internal Agreements
Starting a new business can be an exciting but stressful time. It requires careful planning ahead of time. And many entrepreneurs will need the assistance and guidance of a business law attorney from the beginning.
Businesses can be formed as corporations, limited liability companies (LLCs), partnerships, or other entitiesall of which can be customized to meet the company's needs. For example, corporations may be formed as "S-corps" to achieve tax savings, and partnerships may be formed as "limited partnerships" to allow some owners to participate as investors only.
Choosing the proper business structure for your company can be a time-consuming and complicated process. However, an attorney can make this process easier and ensure that you, as the business owner, take full advantage of the various options available.
Business Law attorneys are also available to draft agreements that will control the management and operation of a new company. These agreements, often called internal documents, typically include an operating agreement. This document governs how the company's owners will share profits and losses, make critical business decisions, and where applicable transfer their ownership rights.
There are a bunch of steps involved in a complex transaction. There's a lot of back and forth, which can be time-consuming and challenging for bank staff to keep up with. Sifting through the information manually can also create errors.
Some commercial transactions can be handled without the help of a lawyer. For instance, transactions that involve the sale of low-value physical goods within the business owner's local area are within their ability. However, when more significant amounts of money or highly-regulated goods/services are involved, business owners would be wise to seek the guidance of an experienced attorney.
Even for savvy business people, problems can develop when emotions become involved. Attorneys can provide valuable insight into a transaction, not only because of their legal training but also because of the objective nature of their analysis. This allows them to spot issues overlooked by business owners and managers who may be too emotionally invested in seeing the deal go through.
If a business can anticipate legal issues before they arise, it can prevent them from leading to expensive litigation. Business law attorneys provide counsel around creating agreements and structuring transactions to minimize a company's exposure to litigationknown as "transactional legal" skills.
Consider the example of a professional services company providing services nationally. The company might hire an attorney to draft customer agreements that require customers to follow specific dispute procedures.
This means customers must follow specific dispute procedures, such as allowing the company to remedy deficient services before making a legal claim. They must also provide that disputes must be submitted to arbitration in the company's home state.
In every industry, business attorneys have many opportunities to save their clients money and provide them with a more significant competitive advantage.