What is Business Law?

Business Law

What is Business Law?

Business law is a discipline and law that protects corporate freedom and rights, maintains market order, resolves business-related disputes, and defines standards for transactions between government agencies and companies. Companies and government agencies can set and operate business standards through business law. For this reason, employees and owners in business must always be aware of the business law to comply with the laws and regulations of business activity areas. Many countries have independent business laws. The enacted laws, including commercial laws, have developed with civilization over the centuries. In addition, laws have been modified or amended appropriately according to the changes of the times.

As business types diversify, the scope of business law has expanded and can be divided into various types.

• Employment Law

Regardless of the number of employees held by the company, all companies must comply with the Employment Act. Discrimination or unfair treatment of employees may result in legal action in violation of the Employment Act. Unlike other laws, breaches of employment laws related to human rights can greatly hurt the company’s image, so caution is required. In addition, the Employment Act also defines welfare standards such as employee wages and insurance. The amount less than the minimum wage set by the Employment Act can lead to fines for violations of the Company’s Employment Act.

• Immigration Law

Surprisingly, many modern companies often violate immigration laws. It is because it is an insufficient measure for foreign workers hired by the company. Companies must review this bill and conduct business activities in compliance with immigration laws when hiring foreign workers.

• Consumer Sales Law

Consumer sales law is a rather complex type. The Consumer Sales Act is related to many types of commercial law, such as contract-related bills and transaction laws. For this reason, lawyers hired by companies usually spend a lot of time complying with consumer sales laws and making business activities possible. Corporate advisors strive to ensure high productivity while complying with consumer sales laws.

• Laws related to contracts, negotiations and lawsuits

Business law also includes regulations related to agreements and negotiations with other companies or government agencies in corporate activities. Business law pertaining to contracts helps contracts such as real estate rental or product sales negotiate between trading parties within the scope prescribed by Commercial Act.

• Antitrust law

Antitrust laws guarantee equal competition between different companies in the market. Some companies may use expedients or unfair activities to monopolize market share. It should be possible to determine whether competitors’ strategies and business activities in the market violate antitrust laws. Identifying whether one’s business activities violate antitrust laws in the market also helps ensure that business activities are ethically operated.

• Intellectual Property Rights

How would you feel if your competitor sold your company’s products on the market? Intellectual property is one of the most important parts of a company’s growth and maintenance. To claim the rights of a company’s products, it must apply for a patent and protect it. In addition, the company’s symbol logo and name should also be applied for copyright protection to prevent theft.

• Tax Laws

The larger the size of the company, the more diverse the tax laws to be paid and observed. Although the types of taxes vary depending on the kind of company, companies and stakeholders who benefit from the business are obligated to report their income. It differs slightly from country to country, but it is the same that everyone has to pay taxes on income. Taxes usually include sales taxes on products or services, property taxes on all real estate owned by a company, etc. In addition, capital gains tax is incurred when selling real estate or selling ownership of a company. Taxes on resources needed for business activities should also not be forgotten.

The Impact of Contract Law

Contract law refers to a law related to contracts signed with other companies. Contract law has a relatively very complex system than general contracts and embraces a wider range. The contract law can be said to be a measure of transactions related to all product sales and service provisions between companies. Moreover, the person responsible for the company’s management should know how the contract law affects the business method and development field of the company along with the commercial law. Understanding whether contract law affects business and business activities is an essential factor for business people because contract law affects all business areas related to services or products provided by a company. Companies must notify customers of the contract law involved in the transaction through terms and conditions.

EU and UK Contract laws

With the UK’s withdrawal from the EU, many changes are also taking place in trade transactions between existing EU member states and the UK. With the full completion of the UK’s withdrawal process, the EU treaty is no longer applicable to the UK, affecting many commercial transactions. The UK is expected to incur more costs in dealings with companies in the EU due to Brexit, and it is necessary to review the contracts currently concluded and proceed with new agreements that comply with contract laws. Identifying the scope of the agreement through a contract review and changing the agreement based on the contract law is the priority of the UK’s work to be done. Finally, when a long-term commercial contract, such as a service contract between a British company and an EU member state, is signed, the agreement should be changed following the revised law, taking into account the change of law due to Brexit.

Intellectual Property Rights

Intellectual property rights refer to a generic term for copyrights for industrial property such as inventions, trademarks, and designs. It also includes works such as culture, music, and art.

Types of Intellectual Property Rights

There are four main types of intellectual property rights. The four types are patent rights, trademark rights, copyrights, and trade secrets.

• Patent: A patent refers to the granting of property rights to products produced by one’s own company. In other words, it protects other companies from copying their products and obtains exclusive rights. Patents include design patents such as product shapes, emoticons, fonts, new plant patents made by combining existing plants, and utility patents for products made for practical purposes such as vehicle safety systems and computer software.
• Trademarks: A trademark is a logo representing the company’s image. The brand may also include sound, words, colors, etc. People can distinguish which company this product is from by looking at the trademark. For example, wherever you go in the world, if you look at the yellow m on a red background, most people will recognize that this store is McDonald’s. If a patent is a device that protects a single product, a trademark is a device applicable to multiple products.
• Copyrights: Copyright law refers to a law to protect the rights of intellectual property inventors or producers. The difference between copyright and patents is that copyrights must be tangible. For example, songs and poems can be recorded and copyrighted, but ideas cannot be requested.
• Business Secrets: Trade secrets prevent information or knowledge held by a company from leaking to the outside, and intellectual property rights of trade secrets include recipes or production processes of products that dominate the market competition. For example, Coca-Cola’s recipe is an intellectual property that maintains trade secrets. Patents have been registered, but recipes are not disclosed to anyone except the company owner. By keeping trade secrets, overwhelming market share can be held.

Trade Descriptions Law

The Trade Descriptions Act of 1968 is a regulation that requires companies to correct inaccurate descriptions of products produced and expand the Commodity Labeling Act. In other words, the Trade Descriptions Act ensures that true information about products or services is provided. The following circumstances violate the Trade Descriptions Act.

1. Companies that provide products violate the law if they apply false trade descriptions without using accurate trade explanations. If the evidence proves that the product’s description was wrong, it will not only hurt the company’s image but also cannot avoid financial responsibility. For this reason, companies must provide detailed characteristics of products such as quantity, size, manufacturing time, and processing method.
2. It is also illegal when an organization providing a specific service or accommodation presents false trade descriptions about this facility. For example, a hotel advertised that it allows for Wi-Fi to all rooms, but Wi-Fi is not provided.  Local Trade Standards authorities have the authority to inspect and seize facilities to check whether they comply with the law.

Consumer Protection

Consumer protection refers to protecting consumers’ consumption activities from dishonest market practices. The Consumer Protection Act guarantees consumer rights, prevents unfair behavior by companies over competitors, and prohibits misleading consumers. In addition, it also protects the public who might be affected by the product even if they are not buyers of the product. In particular, government regulations on consumer protection may require companies to disclose information on products in compliance with the Trade Descriptions laws in food-related fields and automobiles that are related to the safety of the public. Institutions that promote consumer protection include government organizations and non-governmental organizations such as consumer organizations that encourage consumer protection laws. Representative rights of consumers are satisfying needs, safety, choice, clean environment, consumer education, etc. In addition, consumer protection laws can affect not only purchasing activities in the market but also in the financial sector. Consumer protection laws also protect consumers from predatory loans, securities fraud, and unethical practices in the financial sector.

The Importance of Consumer Protection Laws (Consumer Safety Laws)

Consumer Safety Laws

The Consumer Product Safety Act prohibits the sale and distribution of products that do not comply with safety regulations. Violation of safety regulations can result in legal punishment for companies. The Consumer Product Safety Act has rules set for each product in a specific industry. For example, tires and seat belts in the automobile industry and medicines in the medical device sector are subject to the Consumer Product Safety Act. To ensure consumer safety, some institutions regulate each field based on the Consumer Safety Act. In the United States, the Consumer Product Safety Committee is an organization that sets overall safety standards and conducts research to prevent consumer injuries caused by harmful consumer products that do not comply with safety laws. The committee may demand consumer product safety warnings and product recall from product producers. Another institution is the Occupational Safety and Health Administration. The agency regulates industry and construction and protects whistleblowers who accuse unsafe industrial processes. Representative industries involved by the Occupational Safety and Health Administration include the aviation industry, the consumer product industry, food safety, and public transportation. Meanwhile, the Environmental Protection Agency regulates various sectors. It includes natural resources, energy, agriculture, construction, and transportation. This institution manages environmental factors and plays a role in regulating industries. The Food and Drug Administration sets standards for food, medicines, medical devices, etc. The agency may warn consumers about unsafe foods or force food recall. Finally, the U.S. Highway Traffic Safety Administration establishes vehicle safety standards. It provides information on collision ratings and also reviews car defects. If a flaw in the car is found, notify the company and inform the recall. If a consumer who purchased a vehicle finds a problem in the car, he or she can report it to this agency. In addition to the institutions described above, consumer product safety institutions exist in various ways throughout many industry fields.

The importance of the Consumer Protection Act is as follows:

• Consumers: They have the right to know accurate information about the products or services. Through consumer protection laws or policies, individuals can make the best choices about buying and prevent unfair treatment from companies. For this reason, the Consumer Protection Act is one of the factors that promote consumer welfare.
• Companies: Businesses that conduct business in compliance with consumer protection policies and laws are bound to gain a good reputation from people. It is the basis for enhancing corporate profits and improving market competitiveness. In other words, consumer protection policies cause constant competition and inspection of companies.

Formation of The Company

Companies that compete in the market and engage in business activities are created through the stage of developing companies with proper configurations. The process of forming a company can be largely divided into four phases. The following is the fourth stage of company formation.

1. Promotion stage: It is a step in which ideas about the establishment of a company are put into practice, and the formation of a company is started. Identify business opportunities to determine business types. Based on the feasibility study of the selected business type, economic, legal, and technical aspects are identified to measure the success possibility of the business. Finally, it is the stage of investigating creative ideas, capital, and other necessary procedures for business execution.
2. Registration stage: This stage is when the company is registered under the Company Act, and now the company exists. To complete this registration step, several paperwork must be completed. First, the founders of the company must sign a memorandum. In the case of private enterprises, signatures from two or more founders are required, and public enterprises need signatures from seven or more. Another document necessary for the company’s registration is the articles of association. The articles of incorporation require the signatures of the founders who signed the memorandum. If these two documents are ready, the next step is to prepare a list of the company directors and submit it to the company registration authority. It is also a necessary procedure to prepare documents that the company directors agree to become directors and submit them to the Registrar of Companies. In addition, in the company registration stage, the company’s address must be represented. In other words, you need an address to register legally. The key factor of this stage is to prepare documents necessary for registration and submit them to the Registrar of Companies for approval.
3. Certificate of Incorporation: If the documents submitted at the registration stage are approved, a certificate will be issued. It is a document proving that the company has been legally established.
4. Certificate of commencement of business: This document is necessary for the business execution of public enterprises, and in the case of private enterprises, the essential documents are certificates of incorporation. For a public company to obtain a certificate of commencement of business, if the minimum number of stock issuances required after obtaining a corporate certificate has been sold, it must be sent to the registration agency along with a document stating that it has received money for stock sales. After reviewing the documents at the registration agency, a certificate of commencement of business may be issued.

The Nature of The Company

The composition and characteristics of the company are classified by various criteria. If a company with more than seven people is established, it is called a public company. If two or more people have found the company, it is called a private company, and if the company is established by only one shareholder, it is called a one-person company. Moreover, it is divided according to the number of founders described above. It can be divided into three categories: a corporation limited by shares, the corporation limited by guarantees, and an unlimited company according to its investigation reporting procedure and financial structure. Finally, there are two types of companies classified by applying legal standards. The first is a statutory company. It is a company established by special laws of Congress or the country. These companies do not apply the Company Act and have an independent characteristic of being statutory companies. A representative example of a statutory company is the Life Insurance Corporation. Another type of company classified by legal standards is registered companies. As explained above, a registered company is a company created following the procedures of the company Act.

 Roles of Management in The Company

Various departments within a company must have the expertise and the ability to perform appropriately according to the business needs of the company. However, company managers have to manage various departments and play a wide range of close roles. The management of company managers requires not only expertise but also the ability to recognize structural and procedural problems necessary to achieve various business goals. The French managerial scholar, Henri Fayol, defined the functions and roles of company managers as five factors. Still, now the roles and functions that managers should perform are defined as four.

1. Planning

One of the main roles of managers is to establish plans for the company’s project implementation. This role includes allocating resources necessary for the company’s business activities and creating project completion schedules and schedules. In addition, plans not only establish a framework for corporate activities for corporate goals but also require continuous monitoring to offset variables. Appropriate communication in the process of project planning is also an important factor. Managers can set priorities necessary for planning through effective communication with the team leaders of each department and the company’s management.

2. Organizing

Along with planning, another role of company managers is to organize. Organizing helps the smooth operation of departments within the company. The main function of the organization is to identify employees or teams with the ability necessary to carry out the project, place them in the right place, and build the internal structure of the company. In addition, company managers should be flexible in reorganizing new teams for new projects or challenges or re-establishing project plans.

3. Leading

Among the roles of company managers, leading is essential. Managers must be confident in directing employees in organizing and planning a company. The manager’s determination is required when making the necessary decisions for the company’s project. In addition, managers also need their leadership in modeling elements that will motivate employees.

4. Controlling

Controlling is the fundamental role of managers in many aspects of the company. For all managers’ roles and functions described above to be successful, controlling must be the basis.

Employment Law and Termination of Contracts

What is employment law?

Employment law simply refers to a law enacted to define employers’ responsibilities and protect employees’ rights. Employees can be protected from unilateral and unfair dismissal of the company by employment law and are protected from improper treatment or discrimination within the company. Termination of contracts between companies and workers must also be made by the Employment Act. If not, unfair termination of the agreement could lead to violation of the employment law of the company or worker.

Termination of Contracts

A legitimate termination of a contract under the Employment Act is the case of a lack of ability or failure to qualify for a worker hired by the employer, a worker’s cheating, and a worker’s overlapping phenomenon due to structural and organizational changes. If the contracting party dies before the end of the contract period or is judged ineligible for work due to professional medical findings, the contract can also be terminated. However, if the reason for termination of the contract is to join a labor union, file a legal complaint against an employer for violating labor laws. If it is such as personal privacy of workers such as gender, race, religion, etc., it will be considered unfair and subject to legal punishment. The period during which the contracting party must notify the termination of the contract depends on the labor contract period. For example, workers employed under a weekly contract must be notified at least a week in advance. In addition, workers with a contract period of fewer than three years must be notified at least two weeks in advance. In the case of a contract period of more than that, it must be notified one month in advance. If the parties to the contract terminate the contract without complying with the notification period, they must pay wages for the minimum notification period. For example, if a worker with a contract period of fewer than three years is notified of dismissal on the same day, two more weeks of wages must be paid. Notification of termination of the contract must be made in writing, and the date of information is also included in the notification period.

Agency Laws

The Agent Law refers to a series of contracts carried out by contracting with an agent dealing with legal issues on behalf of the principal when the principal forms a relationship with a third party due to legal problems. In other words, it can be said that the principal implicitly authorizes the agent to work on the behalf. The agent may negotiate with a third party as a representative of the principal or lead the contract between the principal and the third party. The authority and legal responsibility between the principal and the agent reflect legal realities and commercial factors. On the other hand, a third party should know if the agent reveals that he or she is the principal’s agent. It is also important to determine if an agent has the authority to act as a representative of the principal. If the agent works outside of his or her jurisdiction or is not the principal’s agent, the agent cannot avoid legal liability. The authority of the agent is specified in the listing contract.

There are three types of agent.

1. Universal Agents act on behalf of customers who employ them, and the authority of agents is broad.
2. General agents carry out a series of transactions related to customers who employ them for a continuous period rather than a specific period and have relatively limited authority.
3. The special agent has only the authority related to the transaction specified in a limited period.

The agent’s authority is limited to the extent requested by the principal. In other words, only the law and related authority between the principal and the third party is allowed. The agent’s authority can be largely classified into two categories: Actual power and apparent authority.

Actual authority can be divided into two. The first type of actual authority is that the process in which the agent was authorized by the client is expressly. Some documents can be proved, and the authority is limited to the contents specified in the contract or power of attorney. It is called the express authority. Next, there is implied authority as a type of actual authority. It is also called habitual authority and refers to the incidental powers necessary for the agent to perform express authority. Implied authority can be inferred from the status of the agent. In addition, this authority is usually given verbally. Customary authority, another form of implied authority, can generally be seen in transactional relationships.

Apparent authority is a slightly different concept of authority. In short, it refers to a person who does not have agency authority introducing himself as an agent and acting. It occurs in situations where the person does not have the authority of representation but is in a relationship with the principal or in a case that is reliable as an agent. In other words, if the subject is somewhat related to a person who is an agent and a third party believes that the person is an agent, the effect of the act of representation is attributed to the principal under civil law.

Liability

If the agent has the authority, the agent is not responsible for the relationship between the agent and the principal and for actions in the area where the identity is disclosed. However, if the agent is not disclosed, the agent and the client are legally liable for the act. If the agent does not have the actual or apparent authority, the agent shall be liable to a third party for violating the law. Meanwhile, when the agent pretends to be the principal’s agent without actual authority, and if the agent has apparent authority and the principal is bound to be involved, the agent must compensate the principal for losses arising from his/her actions. Finally, the part to which the principal is responsible for the agent’s actions is cost-related. If costs are incurred for acts within the scope of the authority granted by the agent, the principal is obligated to reimburse the expenses incurred by the agent.

Agent relationships can be found in many areas of modern society. Agent relationships exist in various fields, such as employment-related to employees, contracts or negotiations in art culture and sports. For example, agents involved in real estate transactions are commonly known as real estate agents.

Competition Laws for Market Condition

What is competition law?

The Competition Act is a device that prevents companies from engaging in unfair economic activities in the market and maintains market competition. The goal of the Competition Act is to provide fair market conditions to consumers and producers by sanctioning companies’ unethical economic activities. The name and content of this law enacted to maintain market competition vary slightly from country to country. In the case of the United States, it is known as the Antitrust Law, the United Kingdom is called the Trade Practice Act, and China is called the Anti-Monopoly Act. Representatively, the aspect, in which competition law is involved, is market pricing. For example, if the company with the largest market share imposes an extreme price on a product or service, it can cause a threat to the market competition system. Competition laws exist to prevent factors that threaten these markets. The beginning of competition law began with the Roman Empire. As the times passed, competition laws also evolved and established a framework to suit the market conditions of each era. Thus, competition laws of the modern era have developed competition laws in each country, focusing on the domestic market. However, as the market size expands internationally, institutions dealing with international trade provisions have been created, regulating competitive exchanges between countries. The representative organization is the WTO. As explained above, the contents of the competition law vary slightly from country to country. However, the representative foundations that make up the competition law can be divided into three categories. First, the Competition Act prohibits agreements restricting trade and competition between companies. In particular, it prevents acts of suppressing free-market competition by forming cartels through collusion between companies. The second is to prohibit the abuse of economic power or unfair economic behavior of companies with high market share. Typical dishonest economic activities include predatory pricing, inflation, and refusal to trade with specific companies. The last major factor that constitutes the competition law is overseeing the acquisition or merger of companies. It refers to judgment by the Competition Act to prevent unreasonable consequences for market competition due to mergers between large corporations or acquisitions of companies.

The elements and practices of competition law vary from country to country. However, it will be the same worldwide that it is intended to help consumers’ economic activities take place in a fair market and encourage many companies to compete fairly in the market.

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