Importance of Business Law 1. To define Basic Setup of a business. Business law defines different types of business for setup, such as – Partnership, Proprietorship, Corporation (Private and Public), etc. Such definitions of types of business help clarify ownership of the business entities.
2. To define Regulations for Business Operations. There needs to be certain rules and regulations to carry on various timely operations in any business regardless of the type of business. For industries – regulation may be those related with production, for services oriented organization – they may be about providing services, for import/export business – they may be about certain procedures for doing international transaction of goods and finances, etc.
3. To provide means by which probable Disputes can be resolved. During business operations, disputes may occur due to difference in interests or some other reasons amongst the stake holders such as – owners, employers, suppliers, different entities, government, etc. So for justified arbitration of such disputes, business law plays a vital role.
4. To protect Intellectual Property of business entities. Business laws also provide unauthorized use of intellectual property of the business entities. Such property may be patents, trade secrets, symbols, copyrights, name, etc. Some times such properties may be of more value than any material property of the entity. Infringement of such properties without consent might be very harmful for any business. Nowadays, we can see a lot of struggle between businesses for protection of such assets.
5. To protect Consumer Rights. Consumers are one of the major stake holders of any businesses. Consumers’ right for valued and quality goods and services are also provided by business laws. Otherwise most of the time the business owners may be cheating consumers through unethical and unlawful acts to maximize profits.
6. To provide reliable Financial Information of entities. Business law also defines guidelines for providing reliable financial information such as financial statements of business entities. Such information is required by all stakeholders of the business organization. For example, government may seek information for taxation, consumers may seek information regarding stability of organization for long term services, share holders may be interested in profit, other business may be interested in security of their debt, supplies and liabilities, etc.
7. To protect Employee and Employer Rights. Employees’ rights for various factors such as rightful remuneration, working environment, safety, etc all are protected with employment laws. Similarly, provision for employers’ rights are also necessary for their protection against unlawful demands and claims from workers.
8. To provide Business Security. From time to time we can read and hear about business scandals involving unethical and unlawful acts and exploitation of loop holes in regulations. Business law also provides security for business entities against such acts.