About Business Law
As a rule of thumb, any law that affects how a business is run in America can be considered part of business law in the US.
This area of the law draws on a variety of legal disciplines, including, amongst others: tax law, intellectual property, real estate, sales, employment law & bankruptcy. Many business law attorneys specialize in transactional work, meaning they do not represent clients in court. In fact, business lawyers are oftentimes hired for the purpose of avoiding future litigation.
The role of business law is best understood by viewing businesses as separate from their owners and employees. Businesses are subject to legal rules designed to give every participant in the marketplace a fair opportunity to succeed.
Key topics that form the core of U.S. business law are as follows.
Business associations are the laws that regulate the formation, functioning and demise of a business. The key focus in business organizations is with publicly held companies, including the requirements of formation, the role and duty of directors and company officers, and the power of shareholders.
Business organizations also include the laws surrounding partnerships, limited liability corporations, and closely held companies.
A corporation is a legal entity created through the laws of its state of incorporation. Individual states have the power to enact laws relating to the creation, organization and dissolution of corporations.
Many states follow the Model Business Corporation Act. Thus, state corporation laws require articles of incorporation to document the corporation’s creation and to provide provisions regarding the management of internal affairs. Most state corporation statutes also operate under the assumption that each corporation will adopt bylaws to define the rights and obligations of officers, persons and groups within its structure.
There has also been a significant component of Federal corporations law since Congress passed the Securities Act, which regulates how corporate securities are issued and sold.
The law treats a corporation as a legal “person” that has standing to sue and be sued, separate from its stockholders. The legal independence of a corporation prevents shareholders from being personally liable for any corporate debts. It also allows stockholders to sue the corporation through a derivative suit and makes ownership in the company easily transferable. The legal “person” status of corporations gives the business perpetual life; deaths of officials or stockholders do not alter the corporation’s structure.
Corporations are taxable entities that fall under a different scheme from individuals. Although corporations have a “double tax” problem. Both corporate profits and shareholder dividends are taxed, corporate profits tend to be taxed at a lower rate than the rates for individuals.
Corporate finance deals with the fundamental principle of what a company and its stock worth. The law outlines what financial tools are used to determine value, the duties that directors have to ensure value and the legal rights that various parties, including shareholders, have in regard to securities and dividend payments.
Intellectual Property Law
Often, a company’s main source of revenue is the result of a product or process that it exclusively designed or manufactured on its own. Intellectual property law regulates how a company can protect itself from the theft or unauthorized use of its creations. Key areas include copyright, trademark and patent law.
Securities regulation focuses on how stocks or securities are issued and managed. Specifically, the Securities Act of 1933, which details, among other points, what a company must do in preparation to offer stocks (initial public offering), and the Securities and Exchange Act of 1934, which created the Securities and Exchange Commission and regulates what companies report and how they manage their stocks after the initial public offering.
Tax law deals with all the rules, regulations and requirements as set forth in the US federal Internal Revenue Code as well as specific state tax codes. Without a deep understanding of tax laws, a business may find itself in violation of the law, whether underpaying corporate income tax or unable to take advantage of a benefit allowed in the law such as the “pass through tax” of an S-corporation.
What Do Business / Corporate Lawyers Do?
The role of a business / corporate lawyer is to advise clients of their rights, responsibilities, and duties under US Federal & State law.
When a corporate lawyer is hired by a corporation, the lawyer is representing the corporate entity, not its shareholders or employees or management.
Corporate lawyers tend not to go to court. Rather most of the work they do is considered “transactional” in nature. That means they spend most of their time helping a corporation to avoid litigation.
Specifically, corporate lawyers spend their time on the following:
- Contracts Reviewing, drafting, and negotiating legally-binding agreements on behalf of the corporation, which could involve everything from lease agreements to acquisitions.
- Corporate Governance Helping their clients create the framework for how a corporation is directed and controlled, such as by drafting articles of incorporation, creating bylaws, advising corporate directors and officers on their rights and responsibilities, and other policies used to manage the company.
- Mergers & Acquisitions Conducting due diligence, negotiating, drafting, and generally overseeing “deals” that involve a corporation “merging” with another company or purchasing another company.
- Securities Advising on securities law compliance, which involves the complex regulations aimed at preventing fraud, insider training, and market manipulation, as well as promoting transparency within publicly-traded companies.
- Venture Capital Helping startup or existing corporations find capital to build or expand the business, which can involve either private or public financing.
Business Law Cases
Justice Brennan delivered the opinion of the Court. The Racketeer Influenced and Corrupt Organizations Act imposes criminal and civil liability upon those who engage in certain “prohibited activities”. Each prohibited activity must include, as one necessary element, proof either of “a pattern of racketeering activity” or of “collection of an unlawful debt”… click to see more
Continental Illinois Bank’s financial distress during the 1980s left many victims. Those were composed of taxpayers, equity investors, some of its officers and insurers… click to see more
Justice Stewart delivered the opinion of the Court. This case presents the question whether a party who has had issues of fact adjudicated adversely to it in an equitable action may be collaterally estopped from relitigating the same issues before a jury in a subsequent legal action brought against it by a new party. The respondent brought this stockholder’s class action against the petitioners in a Federal District Court. The complaint alleged that the petitioners, and 13 of its officers, directors, and stockholders … click to see more
MR. JUSTICE REHNQUIST delivered the opinion of the Court.The question presented is whether § 6 (b)(1) of the Consumer Product Safety Act, 15 U. S. C. § 2055 (b)(1), governs the disclosure of records by the Consumer Product Safety Commission pursuant to a request under the Freedom of Information Act. We granted certiorari to review a judgment of the Court of Appeals for the Third Circuit because of the importance of the question and because of a conflict in the Circuits…. click to see more
Justice Powell delivered the opinion of the Court. In these cases involving alleged damage to fishing grounds caused by discharges and ocean dumping of sewage and other waste, we are faced with questions concerning the availability of a damages remedy based either on federal common law or on the provisions of two Acts — the Federal Water Pollution Control Act (FWPCA) and the Marine Protection, Research, and Sanctuaries Act of 1972… click to see more
Business Law Case Summaries
In United States Securities and Exchange Commission v. Terraform Labs Pte Ltd, the appellant challenged a District Court ruling that required compliance with investigative subpoenas
(Md. Ct. Spec. App., July 27, 2021, No. 0760, 2021 WL 3173263) Not Reported in Atl. Rptr. Overview A contract dispute arose between business partners
Case Name: Cara Miller v. Honkamp Krueger Financial Court: United States Court of Appeals for the Eighth Circuit Date of Opinion: August 24th, 2021 Judges:
Business Law Stories
AUTHOR Peter Jerome Ankura Consulting Group LLC What are the key considerations in the appointment of both ‘clean’ and ‘dirty’ experts in formal dispute resolution?
AUTHORS Baldassare Vinti, Jeffrey Warshafsky & Jana A. Ruthberg Last month, the FTC announced that it reached a $62 million proposed settlement with Opendoor Labs, related to the
Washington Supreme Court Strikes Down A “Claims-Made” Policy Issued To A Contractor On Public Policy Grounds
Preferred Contractors Insurance Company Risk Retention Group, LLC v. Baker and Son Construction, Inc., 2022 Wash. LEXIS 426 ( Aug. 11, 2022) Traditionally, general liability
Is A Spouse Required To Give Prior Notice When A Business Sells All Or Substantially All Of Its Assets?
AUTHOR Keith Paul Bishop Section 1100 (d) of the California Family Code provides that, subject to two exceptions, “a spouse who is operating or managing
Eighth Circuit Adopts Stricter But-For Causation Standard for False Claims Act Claims based on Anti-Kickback Violations
In a significant win for False Claims Act (FCA) defendants, the Eighth Circuit recently reversed a district court decision that defendants violated the FCA premised
Most of the 50 states (and the District of Columbia) have a specific statutory regime for nonprofit corporations. Some states, such as Delaware, regulate nonprofit
Incident Resulted in the Deaths of Five Workers A Florida corporation was sentenced in federal court in the Middle District of Florida after pleading guilty
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