Business relationships and transactions are often based on the contract law. Businesses deal with leases, contracts with suppliers, loan agreements, employment contract and contracts with customers – on a daily or regular basis. Therefore, when you visit the local grocery store, you are in effect entering into a contract. If you do not understand the law, you could easily enter into an invalid contract. According to the law, invalid contracts cannot be enforced. You need to enter a contract that will not place on you an unfair burden or cause you to become liable for damages. It is in the interest of everybody to understand business law in the following circumstances:
· Registering a business
To ensure a legal business, it is important to register the business according to the law. Before starting a business, it is important to know the terms of reference, laws and codes. Regardless of the size and form of business, the law applies. Whether a sole proprietorship, a company, a corporation or any other type of business you must be aware of the law. Once the business is registered legally, it is authorized to conduct all the necessary transactions. Contrary to this, the business can be considered an illegal body. As a result the owner(s) can be held liable for breaking the law.
· Running the business
The law, including the hiring of employees, bidding for tenders and trading in the local/international market, covers all the aspects required in running a successful business. The law provides the necessary regulations that every organization must take into consideration. To run the business effectively and within the law, businesses may need to hire the services of a lawyer. Business lawyers play an important role in drafting and analyzing the terms and conditions contained in the contract, to recommend the way forward and avoid huge losses. In the bidding of tenders, the lawyer comes up with various proposals to be presented.
· Expanding the business
If you are considering the option of expanding your business, possibly through a merger, it is important to know what the law has to say about this. The law provides a set of rules and regulations that need to be followed. A partnership must adhere to the law that requires the business to decide the investment needs and profit/loss sharing ratio prior to registering the business. Ideally, a written contract that is signed by all parties, as a sign of consent, is recommended.