(HR) The Legal Environment of Business Lesson

The Legal Environment of Business

Business could not exist without some laws to protect and direct it. The business legal environment includes elements of criminal law, contract law, property law, computer law, and financial law. On top of that, there is a whole element of employment law (which we will address in the next lesson) that addresses issues like discrimination, disability, and harassment. Not only are there laws in place that affect business, but also there are multitudes of rules and regulations from national, state and local agencies that direct business activities.

Business Crime

Crimes committed against businesses are numerous. View the interactivity below to learn more about some of the crimes businesses face and a few tips on crime prevention.

According to an article in the Journal of Marketing and Management Research Source Links to an external site., "The best strategy to defend against business crime should focus on preventive measures. For many businesses, simple actions such as improving security lighting or requiring employee identification may reduce crime. Crime preventive actions can be categorized into external measures, to include security lighting, surveillance cameras, locks, and key control; employment policies that include background checks, drug testing, employee identification, and separation of duties; computer defenses that include secure websites, access authorizations through secure passwords, computer firewalls, and secure Internet payments. Finally, everyday work practices such as keeping minimal amounts of cash on hand, requiring employee identification, paying everything by check and not delegating check signing provide basic defenses against internal and external crime."

Contract Law

A contract is a written or spoken agreement between two parties that is enforceable by law. For a contract to be binding and therefore enforceable, certain elements must be in place including:

Offer - One of the parties made a promise to do or refrain from doing some specified action in the future.

Consideration - Something of value was promised in exchange for the specified action or non-action.

Acceptance - The offer was accepted unambiguously. Acceptance may be expressed through words, deeds or performance as called for in the contract. Generally, the acceptance must mirror the terms of the offer. If not, the acceptance is viewed as a rejection and counteroffer.

Mutuality - The contracting parties had "a meeting of the minds" regarding the agreement. This means the parties understood and agreed to the basic substance and terms of the contract.

While contracts can be both oral and written, by law some contracts need to be written to be legally binding including contracts for the purchase of goods for more than $500 and ALL contracts involving real estate.

Property Law

Property law encompasses both real and personal property and designates the the rights of ownership and tenancy for these items. Real property consists of what is commonly known as real estate (i.e. land, buildings). Personal property is considered to be that which is movable. The right to own property and to decide on the disposal of that property are considered basic to the exercise of the free enterprise system. Property law defines how the property is held and who has the right to pass on ownership.

Computer Law

Computer law crosses into many different areas of law including intellectual property, privacy, hacking, and SPAM. With so much information available on the Internet, intellectual property laws focus on things like copyright, patents, and trademarks. Privacy issues focus on protecting sensitive information the company has as well as monitoring the way employees use the Internet and email systems. Hacking laws focus on unauthorized access to computer systems. SPAM is more than a nuisance since email SPAM can contain viruses and spyware that poses a danger to the business and its customers. Computer law changes as technology changes and it is important for a business owner to keep up with the changes.

Financial Law

Financial law incorporates everything from taxes to insurance to bankruptcy. Financial laws exist at the national, state, and local level and cover the types and amount of taxes a business needs to pay, the types of insurance coverage required, and the debt remedies through bankruptcy law.

Licenses and Permits

To legally run your business, there are federal, state, and local licenses and permits you will need to obtain. Specific licenses are required by the federal government in some business fields: agriculture, alcohol and tobacco, aviation, firearms, ammunition and explosives, fish and wildlife, marine transportation, mining and drilling, nuclear energy, radio and television broadcasting, and transportation and logistics. Each type of license or permit is issued by a regulatory or taxing entity. State agencies will often issue licenses for certain professions from accounting, to construction to cosmetology. Be sure to check to see if one of these licenses is required by your business. Local governments issue the business license for business within their area. In some areas, licensing requirements are stringent and complicated so it is wise to consult an attorney.

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