Business Law and Its Components

Introduction

Businesses and organizations around the world are subject to laws, regulations, and standards which govern their business operations. The body of knowledge that sets these rules and regulations for businesses to use is referred to as business law. Business law is defined as a set of regulations and guidelines that are directed towards governing the operations of a business enterprise or organization. The main purpose of business law is to monitor the functions of a company to ensure it prescribes to the laid down procedures when it conducts its business operations. Companies usually create a constitution that will be used to govern their operations where the various provisions under the constitution are developed to reflect the ordinances of business law (Beatty & Samuelson, 2010).

An example of a business law that is commonly used to establish and guide the business activities of corporations is the Companies Act of 2006 (CA2006) which provides provisions for incorporating corporations and businesses within the United States. People wishing to start a company need to first establish whether they want to run a limited or unlimited company or a partnership.

The Companies Act 2006 provides the various meanings and definitions of such companies and also how business law can be applied in the day-to-day functions of the company. Apart from providing managers with legislative procedures and protocols for legally managing a company, business law ensures the operations of a company are in line with the various areas of law that fall under the field. Such areas include contract law, intellectual property, income tax, pensions and benefits, labor and employment law (Beatty & Samuelson, 2010).

Philosophy of Law

Philosophy in law deals with analyzing and assessing laws on a philosophical basis. Legal philosophy or philosophy of law refers to the abstract questions that are used to explain how laws and legal systems function in the execution of laws in society. Legal philosophy also deals with justifying the existence of various legal institutions in the world that are charged with maintaining law and order. Philosophy of law deals with abstract issues and questions that are related to political philosophy and also the application of ethics in legal matters. The philosophy of law is divided into three broad categories that will be identified and discussed in the following paragraphs (Wacks, 2006).

Analytic jurisprudence deals with analyzing the basic essence of law by looking at the aspects that differentiate law from other norms, values, and belief systems that exist in both social and legal institutions. Analytic jurisprudence deals with the theories of natural law, the various theories that exist on positivism such as conventionality, separability, and social facts. jurisprudence Normative on the other hand deals with probing the nature of normative law by analyzing the prescriptive issues that exist on general law such as the obligation by every member of the society to obey the law, the restrictions on freedom that exist in some laws, and the punishable offenses under the law.

The philosophical part of normative jurisprudence seeks to answer questions such as to what extent do laws restrict the freedom of citizens and also what is the nature of an individual when it comes to following laid down laws (Wacks, 2006).

The critical theories of law challenge the traditional thoughts on legal philosophy by assessing them under the current legal environment. These theories of law focus on critically evaluating legal studies to determine the line of thinking that is used in most scholarly articles and journals written on the law. Examples of critical theories include the legal realism theory which deals with the realistic application of the law on legal disputes as well as criminal cases, critical legal studies which deal with expanding the radical aspects that exist in legal realism theories by emphasizing the role of ideologies and the law economics theory which deals with assessing the value of economic analysis in law (Wacks, 2006).

The ethical role of philosophy in law deals with defending and recommending corrective actions that will be used in determining the right or wrong concepts for behavior. Ethical theories have been developed by researchers to explain the role of ethics in legal philosophy. Some of the ethical theories that have been developed to explain the aspect of ethics in philosophy include normative ethical theories, applied ethics, and metaethics. Normative ethics deals with the process of developing moral standards that will allow people to be able to differentiate right from wrong. This ethical theory in legal philosophy acts as a litmus test for proper behavior within society. The basic assumption that guides this theory is that there is only one criterion that can be used to govern moral conduct (Fieser, 2003).

The theory of applied ethics focuses on the moral issues that exist within a society that is deemed to be socially wrong and controversial. An example of such issues includes abortion, infanticide, circumcision, and euthanasia. Applied ethics has been broken down into various groups and categories that explain the various moral issues that exist in social, legal, and corporate contexts. Examples of these categories include business ethics, ethics in medicine, environmental ethical issues, and sexual ethics.

For applied ethics to exist there has to be a controversial issue where a significant number of people within the society are either opposed to the issue or support it. The theory of metaethics deals with an entire review of the aspect of ethics in legal philosophy. It studies the origin and meaning of ethical concepts such as the issues related to the existence of morality in humans and the psychological issues that form the mental basis of our moral judgment and behavioral conduct (Fieser, 2003).

Importance of Business Ethics

Many managers around the world will admit that running a business requires considering various aspects whether they are legal, ethical, or moral aspects. As the business grows in significance and importance, the impact that it has on the general society begins to be noticeable by aspects such as employment, wealth creation in the society, and the creation of better standards of living. An important aspect that needs to be considered by managers and organizations when engaging in these practices is understanding the general concept of business ethics within an organization. Businesses have to involve the use of business ethics to ensure that they do not gain a bad reputation when conducting activities that involve the general society which might ruin the business (Ferrell et al, 2009).

Business ethics according to Ferrell et al (2009) refers to the principles and standards that are used to guide the behavior of corporations and organizations in the world of business. The various stakeholders of an organization (suppliers, investors, customers, employees, the society) usually determine whether a certain action is classified as either right or wrong. Business ethics is important for an organization as it ensures that the company achieves business success through corporate social responsibility programs that are designed to aid the moral and ethical activities of the business.

It becomes equally important when dealing with customers in activities such as building client relationships and maintaining integrity which is an integral part of business ethics. Customers are important components of a business and the success or survival of a business will be pegged on the business ethics practices used by an organization to maintain the client base. Business ethics, therefore, plays an important role in the success and growth of a company (Ferrell et al, 2009).

Important and Requirements of a Contract

A contract can be explained as an accord made between two or more parties and which is recognized by law. For a contract to meet this requirement, it has to possess the essential components of a valid contract which include offer and acceptance, the intention to create legal relations, the capacity of the parties, and lawful consideration. The requirement of offer and acceptance stipulates that there has to be a lawful offer and lawful acceptance of the offer which will result in a legal agreement. For the offer and acceptance to be lawful, it has to satisfy the general rules and requirements of a contract (Miller & Jentz, 2008).

Another essential requirement of a contract involves the intention to create legal relations where the parties demonstrate their intention to participate in a legal agreement that has legal obligations and consequences. The intentions of either party have to be made clear before they enter into a legally binding contractual agreement that will require them to exercise the requirements of the agreement.

Another essential requirement for a contract to be termed as valid is lawful consideration which refers to the price that is paid by one party for the promise of taking into account the legal needs of the other party. A contractual agreement is only enforceable when each of the parties gives and receives something, where the item to be given or received, is known as consideration. Consideration could be in the form of a title deed, property, or money. The other essential requirement of a contract is the capacity of the parties involved in the contract where contractual agreements require the participating parties to be competent and able to carry out the obligations of the contract (Miller & Jentz, 2008).

The capacity of parties in a contract refers to the age of the parties and also their soundness of mind where they have to demonstrate competence in carrying out the obligations of the contract. If any of the parties within a contract is below the age majority or is not of sound mind (suffers from lunacy, madness, or drunkenness) then the contract cannot be enforceable by law. Other essential requirements of a valid contract include a lawful object which refers to the item that will be used to make a contractual agreement between the various parties of a contract. The lawful object has to not be fraudulent illegal or opposed to any public policies that are underlined by legal obligations (Miller & Jentz, 2008).

Real property which is also known as real estate, realty, or immovable property refers to any subset of land that has been legally defined and has undergone some improvements by human inhabitants. Different types of real property exist in the world and some of the most common examples include buildings, walls, dams, mines, and roads. All these items once placed on the land are immovable which leads to real property being referred to as immovable property.

Personal property on the other hand refers to property that is not part of the land which can be moved. Examples of personal property include livestock, furniture, clothing, and other household goods that can be easily moved from one place to another. Properly distinguishing between real property and personal property is important as the various laws and legal obligations that deal with both properties are different. For example, the rights of a person on movable or personal property are usually more attenuated when compared to the rights that a person has on immovable property (Miller & Jentz, 2008).

Apart from the difference in individual rights that a person should have on these two types of property, another important issue of real and personal property is that the property rights or real estate are usually enforceable for a longer period while the property rights for personal or movable property usually last for a shorter period. Under the common law, it is possible to place a mortgage against real property and also personal property where the kind of mortgage that is secured for real property refers to a house mortgage while that secured for personal property refers to chattel mortgage or security interest (Miller & Jentz, 2008).

Concepts of Employment Law and Liability

Employment law which is also known as labor law refers to a conglomerate of legal obligations and precedents which are usually used to address the lawful rights of employees who belong to organizations operating under various industries. Employment laws are used to act as a mediator for any disputes that might arise between an employer and employee in the event the employee does not belong to a trade union. Collective labor laws also stipulate the legal procedures and laws that will be used to manage this tripartite relationship. The aspects that are dealt with under collective law include strikes, picketing, trade unionism, and the workplace involvement of employees.

The individual labor laws deal with the rights of employees to work in a clean and healthy environment for decent pay. The aspects that are dealt with under individual labor law include contracts of employment which offer the terms and conditions work, minimum wage and working time, health and safety of the employee in the working environment. Employment laws are important as they govern the terms and conditions of work that an employee and employer will be subject to during the working relationship (Miller & Jentz, 2008).

The concept of liability is the legal status that is used to protect the shareholders of a company from any financial burden they might experience in the event a company makes a loss. The liability losses of shareholders are usually determined by the amount of money they originally invested into the organization before it suffered a loss or bankruptcy. Liability in companies is meant to protect shareholders from any inherent risks that accompany investments.

Investing in businesses is usually a risky affair given the unstable financial market and the external environment of most companies. The economic growth of a country, political instability, technological innovations, and socio-cultural differences usually hurt the investment options of a shareholder. Liability considers all these details by offering the stakeholder a landing pad in the event a company is affected negatively by either of these factors (Miller & Jentz, 2008).

Role of International Law

International law refers to the rules, principles, and laws that govern international business and the conduct of businesses in the international world context. It deals with the rules of law related to the function of international institutions and organizations as well as their relations with other foreign companies in the world. International law plays an important role in determining how businesses will operate in the worldwide legal system as it outlines the national legal systems that exist in property, employment, contractual agreements, obligations, and company tort.

The primary sources of law include customary and conventional law where customary law deals with the legal obligation of companies to follow certain practices in a consistent while conventional international law is generated from international agreements which might take any form that the contracting parties agree upon (Miller & Jentz, 2008).

Another role of international law is to impose certain duties on businesses and organizations to ensure that they do not violate the international rules of managing employees. The international standards of justice include various provisions that can be used by organizations to ensure that the rights of the employee have not been infringed upon. International law also fosters the relationship that exists between countries as guides how various countries will relate to each other when undertaking business transactions and other important business activities (Miller & Jentz, 2008).

Conclusion

The thesis statement for this research was “to provide an overview of business law and also the various concepts that makeup business law”. The research paper has focused on the various concepts that make up business law such as the philosophy of law and the theories of legal philosophy. Other aspects that have been covered in the discussion include the importance of business ethics, the essential considerations that need to be made in a contract, employment laws, real and personal property, the concept of liability, and the role of international law. All these topics along with others make up the integral parts of business law which are applied in every facet of the business.

References

Beatty, J.F. & Samuelson, S.S., (2010). Introduction to business law. Mason, Ohio: Southwestern Cengage Learning.

Ferrell, O.C., Fraedrich, J., and Ferrell, L., (2009). Business ethics: ethical decision making and cases. Mason, Ohio: Cengage Learning.

Fieser, J., (2003). Ethics. Web.

Miller, R.L., & Jentz, G.A., (2008). Business law today: the essentials. Mason, Ohio: Cengage Learning.

Wacks, R., (2006). Philosophy of law: a very short introduction. New York: Oxford University Press.