What Are the Types of Business Law?

What Are the Types of Business Law?

In our world, we are surrounded by countless laws and guidelines that we must abide by. From putting our seatbelt on in the car to paying taxes, and even drinking at the required age, laws provide a framework for how we live our lives from day to day. Just like us, businesses are also compelled in their actions by law. How a business is formed, operated, and even how a business ends is regulated and affected by laws. Although people and businesses must follow laws they are not the same. So then, what are the types of business law? 

Business law, also called commercial law, governs commercial entities and their commercial transactions. The types of business law include formation law, employment law, intellectual property law, contract law and negotiations, taxes, lawsuits, bankruptcy laws, and anti-trust laws.

What Is Business Law?

What Is Business Law?

Business law refers to the guidelines and body of rules that govern commercial activities. There are two main divisions that business law governs. These divisions cover the entity and body of a business itself and also its activities and dealings.

  • the regulation of commercial entities
  • the regulation of commercial activities

The regulation of commercial entities sets guidelines and provisions over a business itself. So as an individual entity there are laws that a business must adhere to and follow as an organization in itself. This means, how a business is incorporated and more that we will discuss below.

The regulation of commercial activities refers to actions that are done by a business. Businesses have to adhere to a set of rules that exclude and prohibit certain actions. An example of this is found in public, stock traded companies. Publicly traded companies have to follow standards set forth by the Securities and Exchange Commission (SEC) in regards to how they disperse and manage their company stock as well as the transparency that they provide to the public.

Types of Business Law

Formation Law

Formation law refers to the laws that a business must follow in order to be incorporated and recognized as an official business by law. Without proper legal recognition by the law a business cannot legally conduct activities.

Many of the elements of formation/incorporation law is filling out the right paperwork and meeting the requirements to ensure a proper business classification. Businesses must choose a specific classification and decide how they will want to operate.

This is one of the most important legal actions that a business can take. Primarily because it affects all aspects of a business. Depending on what type of business is formed affects a businesses required taxes, management structure, and its federal and state guidelines that must be followed along with much more.

Employment Law

Employment law refers to the responsibilities and rights between employers and their employees. Within the field of employment law the topics that are discussed include sexual harassment, workplace conduct, wages, discrimination, workplace safety, and wrongful discrimination.

Employees of a business and even interviewees of a business have certain rights and privileges that must be honored. Employment law both sets the guidelines for these laws and also deals with situations and businesses when they failed to properly practice the set employment laws.

Intellectual Property Law

In our growing digital world, there are many new creative and unique ideas arising. Due to the large nature of new ideas emerging, businesses want to make sure that their idea is not copied or thought of by someone else.

Intellectual property is defined as inventions, literary and artistic works, designs, symbols, names and images used in commerce. Intellectual property law allows businesses to protect their unique ideas. Within intellectual property law, there are subsets such as copyrights and trademarks.

  • Copyright: protects original works and is automatically generated by an original works conception. Includes items such as computer software, research, and architecture.
  • Trademark: covers words, phrases, symbols, or designs that distinguish a particular brand (or source of goods) in comparison to others. Includes items such as logos, slogans, business and brand names.



While there are many unique and diverse businesses that differ, the point where they all come together is in paying taxes.

Taxes are financial charges levied and regulated by the federal and state government. Taxes are not optional and businesses will have to pay their fair share or else receive huge consequences. These consequences include steep fines and or significant jail time.

  • Sales Tax: In the US each state has a different requirement for the amount of sales tax. Businesses will have to pay state taxes that vary based on where their company operates. Also, companies will have to pay state tax for transactions made in other states as well if their business operates across state lines.
  • Employment and Payroll Tax: Payroll taxes are taxes that are imposed on the salaries and wages of employees. Payroll taxes are used to finance social security and medicare.
  • Income Tax: This refers to the tax that businesses must pay based on how much income they received. The amount required to pay in income taxes will be based on the profit of a business for the previous year.
  • Property Tax: Taxes on all the property owned by a business. Property taxes are handled on a state level and include factors such as the type of building, the base property value and much more.

Contract Law and Negotiations

The creation, implementation, and handling of contracts between businesses fall into the category of contract law. Business contract law facilitates the agreements between businesses and groups.

Contract law is a very important area in business law. Since many companies and businesses engage in various agreements and negotiations it is vital to get someone who can handle the task of meeting the needs and wants of all parties and help them form an agreement.

Many high profile and successful businesses have what is called an “in house counsel”. An in house counsel is a group of lawyers that work primarily for a business itself. Rather than hire lawyers from outside firms, businesses that have in-house counsel simply refer to their own legal teams when drafting contracts and handling negotiations.

Antitrust Laws

Antitrust laws are guidelines that seek to help maintain fair competition between businesses. The goal through antitrust laws is to provide a playing field that is equal to all the players, or businesses in a specific industry. These laws are set in place to help combat businesses that gain too much power and act unfairly to the disadvantage of others.  

Things Antitrust Laws Act Against are:

  • Market allocation: When two businesses agree to stay in their locations and not branch out to disrupt each other’s business. Instead they scheme to keep their products and services to customers in a single region and deny the access of it by others outside of it.
  • Price fixing: Normally prices for a product are set by what the market will pay for it. Price fixing is when the price of a product or service is set by businesses instead. So in a normal market for fast food the price of a cheeseburger will be set by whatever consumers will pay for it. This encourages companies to work to get a product that they can sell at a price customers will pay.

Price fixing would be all fast food burger restaurants deciding that cheeseburgers across the board will be $20 a piece. Now customers will have to pay a set price if they want a cheeseburger.

  • Monopolies: A monopoly is a company that dominates a single industry to the point where competition is cut out or diminished substantially.


One of the more disastrous and messy aspects of business law is the area of lawsuits. A lawsuit is a claim/dispute brought against another person or party to court before a judge. Businesses can be taken to court in lawsuits as well as file lawsuits themselves.

More often than not businesses end up on the receiving end of a lawsuit on behalf of a disgruntled customer.

The most common way that lawsuits are handled is by settling out of court. A business will make an agreement with the party who is bringing a lawsuit against them to avoid the arduous and costly legal process. Or a business will go to court and put the decision in the hands of a court to claim their innocence.

Bankruptcy Laws

Bankruptcy Laws

Although no one wants to do it, filing for bankruptcy as a business is a situation some have to experience. Filing for bankruptcy presents a business with several options that each have their own pros and cons. Part of the legal process for filing for bankruptcy means choosing the best option that will help the business in need.

Bankruptcy falls under federal law. When a company decides to declare bankruptcy they must go before a court to declare and restructure its debts.

The Foundation of a Business Is Built Upon Laws

Businesses of all kinds share the one similarity in that they are required to abide by the necessary laws and guidelines. Whether it’s formation laws at the inception of a business or bankruptcy laws that will help a business meet its demise, the entire lifeline of a business is built upon laws and guidelines that regulate it and give it structure as well.

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