Foundations of Business Law
At the heart of business law in general is the regulation of business entities. This regulation includes a broad range of corporate and contract law subjects. The ability for individuals to engage in business stems from our contractual principles which make up the basis of business law. In addition, our ability to create business entities which can exist as legal entities separate from their owners is also a core principle of our business law. Contract law governs the interactions between business parties. For example, we need contract law to enter into binding contracts with other parties to establish agreements (i.e., a binding contract) . This can include loan agreements to buy property, employment agreements, investment agreements as a shareholder, purchase agreements, or even sales. Non-compete agreements with the intention to protect business assets are also involved in business and contract law. Corporate law is involved in regulating business entities and can grant businesses rights similar to people. For example, as an individual you have the right of free speech, as well as the right to obtain a home. Corporations and LLCs have been granted similar rights as a legal entity. In addition corporate law involves the rights of shareholders to manage the business interests of the company (to be run for the benefit of the owners).
Current Trends in Business Law
In an age defined by rapid innovation, the field of business law is no exception. Technology has not only infiltrated every industry, but has become a major force in shaping the way legal services are provided and how businesses interact within the global marketplace. The effects of digital transformation and e-commerce management will likely be seen in the coming middle to later part of the decade, and as we are still in the digital transformation phase at many organizations, knowledge and analysis will be fundamental to success. As evolving technologies change the way companies do business, they must also adapt their technology networks and methods. While advancements in technology burden companies with data storage and remote server compliance issues, they also provide relief with digital alternatives to many downtrodden practices such as paper contracts and traditional shareholding records. The digital transformation trend has created a demand for cloud storage services, with companies like Amazon and Microsoft leading the market. However, overreliance on virtual services and a lack of attention to digitally archived documents has created its own set of liabilities. Cybersecurity breaches involving company emails and hacker activity on private files has led to closer examination and greater concern over data protection protocols. E-commerce management and security-restricted platforms such as blockchain provide businesses with the digital protection needed to ensure data privacy and protect corporate information from cyber threats. As the concept of digital transformation continues to evolve, so will the way companies are operated. Companies must adapt to changing regulations regarding privacy protection and data management, particularly for businesses with a global footprint. From key technological trends, like virtualization and the cloud, to data storage and collection, markets are adapting at a rate previously unheard. Inevitably, digital innovations will command a lot of legal attention, since so much is at stake for businesses that invest in technological infrastructures. From liability protection to contract and third-party agreements, there are innumerable legal considerations that must be navigated, monitored and updated as new advances are published, maintained and applied across business networks.
The Function of Business Law in Corporate Management
Business law plays a pivotal role in the realm of corporate governance, providing a framework for addressing a wide range of issues related to shareholders, boards of directors, and the overall ethical conduct of organizations. These laws are critical for ensuring shareholder rights, director responsibilities, and ethical business conduct, thereby promoting accountability and transparency within corporations.
Shareholder rights and protections are cornerstones of business law. They ensure that shareholders have a voice in how corporations are run and that they have the ability to protect their investments. This includes the right to vote on certain corporate matters, access financial information, and in some cases, bring legal action against the company if they believe their rights have been violated. Business law provides the legal framework for these rights and the mechanism for enforcement.
Similarly, business law heavily influences director responsibilities. The law outlines the fiduciary duties of directors, which require them to act in the best interests of the corporation and its shareholders. This includes the duty of care, which requires directors to inform themselves of all material information reasonably available prior to making a business decision, and the duty of loyalty, which requires directors to put the interests of the corporation ahead of personal interests. When directors fail to uphold these duties, they can be held personally liable for any resulting harm to the corporation.
Ethics is another area where business law has a significant impact. Many countries have enacted laws and regulations that require corporations to act ethically and responsibly, both in terms of their business practices and in their dealings with shareholders, employees, and the broader community. For example, the Sarbanes-Oxley Act in the United States established new rules to protect shareholders from fraudulent corporate accounting and to ensure that corporate financial disclosures are accurate and reliable.
Ultimately, business law serves as a crucial tool for shaping the behavior of directors and corporations, helping to ensure that they fulfill their responsibilities and act in the interests of their shareholders and other stakeholders. It also provides a mechanism for shareholders to hold directors accountable and seek recompense in cases of breach of duty or misconduct.
Intellectual Property Issues Facing Businesses
Intellectual property laws have always been and will continue to be a critical aspect to operating a business under the law. In the business world of today, however, intellectual property laws are becoming ever more important. Issues regarding patents, trademarks and copyright have intensified as the prevalence of technology has increased. Primary issues concerning inventors and creators of new technologies include, but are not limited to, patenting inventions, protecting trademarks and enforcing copyrights, amongst others. These topics are especially pertinent to the protection of companies’ and individuals’ intellectual property, such as their "big ideas."
Business Employment Law and Its Effect on Business
For any business owner who employs others, or who is involved in managing a business and its employees, employment law and how it impacts businesses is a vital subject for in-depth study. At the core, employment law can determine whether a company’s business is done fairly and safely for both themselves and their employees. But on a much bigger scale, the economy also relies on good employment laws that are enforced for the long-term success of the marketplace as a whole.
Like all of the other business topics listed above, employment laws are very broad, as they encompass a wide range of different themes and issues that are often included in business law research. Amongst the most important areas of employment law that impact business on a daily basis include workplace safety regulations, employee rights in the workplace, laws against discrimination, wage regulations, workers’ comp, and more. All of these subjects and issues impact business owners as well as any employees that work for those businesses, making stronger employment laws an important subject for in-depth business law research.
Trends in Business Litigation And Related Case Studies
As businesses expand and evolve, the complexities of their legal landscape continues to grow. A number of recent trends have emerged in the area of business litigation, reflecting the ongoing need for sound legal representation across a range of challenges. Some of these trends include: Litigation around data breaches and cybersecurity issues continues to be on the rise. This is something we touched on in detail in a previous article, but in general, the increase in data breaches and new EU data privacy laws has meant that fighting for and enforcing information privacy continues to be an important legal battleground. Price-fixing schemes, price discrimination, price fixing between competitors and other price-related litigation have been on the rise among anti-trust lawyers. Once again, this is something we penned an entire article about already. The increase of business acquisitions, especially through merger and acquisition (M&A) deals, is one of the hottest topics in business law. One impressive study we read from Fenwick & West LLP showed that M&A activity in the software industry, and specifically the SaaS industry, for the first half of 2018 was at its highest level since 2015. With the passage of the Tax Cuts and Jobs Act reducing tax rates for U.S. businesses, tax-related legal disputes with state and federal governments are surging. The most common legal woes for businesses revolve around complex business torts, shareholder and contract disputes, and bid disputes. Additionally, class-action lawsuits increasingly tie into contractual issues targeting fraudulent business practices or false advertising .
Example Case: Miller v. Intuit This is a case that drew national attention at the start of 2019 when it forced Intuit to change how it handles its TurboTax brand. The company faces a lawsuit from California taxpayers who claim TurboTax lured them into paying for services and using terms like "free version" and "free tax advice" as part of false advertising. The complaints allege that the company deliberately hid its free tax preparation software behind a confusing interface and loopholes, forcing users to go through unnecessary steps to find and use the free version. A former employee claimed this was a deliberate attempt to generate more revenue from existing customers, especially those who became paying customers in the first few weeks of using the product. The result was a surprise for most users, many of whom believed they had already received clear guidance and in many cases, were unable to get refunds for their unused TurboTax fees boxed into a single click. In the end, the California-based company agreed to a multimillion-dollar settlement with taxpayers who had been affected by the scheme. It also agreed to a series of changes in how its products marketed themselves as free and how its guidance provided users with easy access to free use of the software, including through changes in the way it evaluated the customer perceptions of pricing on its software. While the case itself ended in a settlement, it is nonetheless a case study in the importance of clear contract terms and the risks of using false advertising techniques.
The Intersection of Environmental Law and Business
Environmental law plays a critical role in establishing a framework within which businesses and other organizations must operate when they produce waste materials or have an impact on the natural world through their normal activities. Such environmental law may impose specific legal obligations towards minimizing their impact, and has recently become a secondary risk factor that accompanies many of the biggest corporate M&A deals.
Of course, environmental law affects the actual management of many business operations. There are many ways in which a business must comply with environmental law, but the main obligation – one that is common to all types of businesses regardless of sector – is around the generation of waste. Business have an obligation to reduce the amount of waste they produce, through reusing, recycling or composting as much of it as possible, as well as ensuring that any unwanted materials must be disposed of in a certain manner. Failure to comply with these laws can result in significant fines, on top of reputational damage.
However, increasing pressure from investors as well as consumers has resulted in growing interest on sustainable business practice, which goes beyond the minimum environmental law requirements and suggests that businesses should start to look towards operating in a manner which is more likely to achieve a net positive impact, which may include producing no waste at all.
International Business Law: A Guide to Global Trade
The evolution of international business law in recent years has created a complex legal landscape for companies that operate across borders. The expansion of global trade and the rise of multinational corporations have resulted in a multi-layered regulatory environment that encompasses trade agreements, foreign investment laws, intellectual property protection, employment regulations, anti-bribery and corruption compliance, and dispute resolution mechanisms. Multiple players are active in regulating international business, including nation-states, regional blocks, and multilateral institutions. Within these frameworks, businesses must navigate the intersection between a myriad of local regulations and the overarching obligations created by international law. The World Trade Organization (WTO) Trade Facilitation Agreement and the United Nations Convention on Contracts for the International Sale of Goods (CISG) provide binding common standards to facilitate international transactions, while the United Nations Convention Against Corruption creates obligations to combat graft. Cross-border transactions involve complex tax, securities, and corporate governance considerations. Globalization has spurred the formulation of regional and bilateral trade and investment treaties championing zero-tariff regimes, but not all countries have embraced free trade or eased restrictions on foreign investment. The United States and United Kingdom have both launched regional and bilateral trade deals, while China, the EU, and Japan have also been actively pursuing such arrangements. Even in a world governed largely by free trade agreements, businesses must comply with anti-dumping, countervailing duties, and antidumping laws, and be prepared to navigate trade tensions and retaliatory tariffs. Similarly, businesses with a global footprint need to account for disparate tax systems, including duties on local expenditures, withholding taxes, and transfer pricing amendments, as trade and digital services taxes. Foreign investment restrictions also require attention, such as consulting CFIUS where the business is operating in the United States. Finding the right balance within international business law requires an astute awareness of ever-evolving regulations and treaties, the ability to decipher opaque agreements, and the willingness to engage deeply with complex dispute resolution processes, including investor-state arbitration. To effectively navigate the international business law system, businesses should seek competent legal counsel with expertise in trade advice, FCPA compliance, export/import controls, international joint ventures, and outward investment. Understanding the international business law landscape is critical for businesses of all sizes that operate beyond their country’s borders.
Impact of Technology on Business Law
Technology continues to redefine boundaries, create opportunities, and pose significant challenges, all of which in turn raise a host of legal issues that can only be addressed through a thorough understanding of the new technologies as well as the law. For example, some of the hot button issues today surrounding information technology are data breach incidents and data privacy laws. Whether you do business exclusively online, only have an online presence, or have brick and mortar locations with e-commerce components , your company is likely to be impacted by these developments.
While some companies did not bother to develop or update information security policies and procedures because they did not believe they were at high risk for a breach event, changes in the legal landscape have made such policies a necessity. In addition to that, these changing laws and regulations require a significant effort by affected companies to get up to speed with the latest information security practices or risk non-compliance and the resulting legal exposure.
