Conquering the Intersection of Law and Business: A Practical Guide

A Guide to the Legal Environment of Commerce and Business

The legal environment of business refers to the legal frameworks within which businesses operate and how those frameworks interact with the day-to-day activities of the business. At the foundation of any business, there are laws, rules, and regulations that dictate how the business must be conducted. From the sale of goods and services to employee rights and workplace safety, the legal environment of business covers a signficiant amount of ground.
Nevertheless, in many ways, the legal environment defines how the various components of a business fit together. For example, it is the law that creates the framework for the relationship between a business and its employees. Those laws provide various rights and obligations that both the employer and employee must adhere to in order for the employment relationship to function properly. In this way, those laws knit two unrelated groups of people – the employer and the employee – into one cohesive unit: the business.
However, the legal environment of a business does not stop at the business’s employees. It also provides the same framework to other groups that are essential to the operation of the business. For instance, the customer-base of a business has various rights and obligations that are provided by both private laws and government regulations. Among many other things, these laws and regulations might impose certain requirements on any goods or services that the business sells to its customers. If those requirements are not met , it might provide the customer with various legal remedies. For example, under the private law of contract, a customer might have the right to seek certain remedies, such as money damages or even a rescission of the contract. In addition, under government regulations (such as consumer protection laws, most notably the Commercial Codes), the customer might have other remedies, such as the right to a refund.
The legal environment of business also impacts how a business’s credit providers relate to the business. On the one hand, the bank or other credit provider may have rights and obligations under the private law of contract. For example, a loan agreement might contain provisions governing the default by the borrower. On the other hand, a credit provider may also have rights and obligations under government regulations (such as licensing or bonding requirements), or other private laws (like torts, which govern the liability of the credit provider related to the loan).
In short, understanding the legal environment of business (including how it relates to other people and entities) is critical to the success of your business. First, without a proper understanding of the legal environment, you cannot know what your business can and cannot do. Second, without a proper understanding of the legal environment, your business could be exposed to liability, fines, or other sanctions.

Essential Legal Topics for Businesses

Successful navigation of the legal environment requires a solid grasp of fundamental legal concepts. A business owner or manager should be able to have a business conversation without using a lawyer during the discussion, and that is only accomplished through understanding. With that goal in mind, here are some of the key legal concepts we think are important for business professionals to understand:
Contract Law
It should come as no surprise that contracts are at the heart of the modern business law environment. Nearly every relationship that exists between a business and its suppliers, customers, distributors, landlords, and even its employees are subject to rights and obligations set out in a written contract or in applicable law. From simple purchase orders to complex and multi-million dollar ground leases, the terms of the contract will govern and define the deal. Various types of contracts cover agreement terms between parties:
Liability
Any business with operations, employees, or a product or service to sell runs the risk of being found legally responsible for some wrongful action (or inaction) that causes another to suffer a loss. That risk must be managed and is often accomplished through a combination of corporate protections, insurance, and good business practices. When things do go wrong, there are a number of potential outcomes. One party may have an obligation to "indemnify" another, such as by paying money to compensate one party for harm caused to that party from the actions or omissions of another. If the costs of responding to a liability (for example, in the case of defending against a lawsuit) exceed the limits of available insurance, then the affected party may seek to hold another (e.g., the negligent party or a contractual indemnifier) responsible for the excess, or "excess judgment."
Regulatory Compliance
Business owners and managers, particularly those engaged in more specialized industries, need to have an understanding of government regulations that apply to their products, services, or environment. Almost all industries are subject, to one degree or another, to administrative regulation. In addition to the baseline (and most common) employment laws, there are various applicable environmental, health and safety, consumer protection, and industry-specific rules that businesses must comply with. Compliance obligations frequently create liability risks, so managing those risks and learning how to interact with regulatory authorities is essential to the legal health of a business.
Intellectual Property Rights
Intellectual property (IP) comprises the intangibles that exist as a result of creative thought. Ideas, inventions, processes, brands, symbols, logos, and other content, as well as the underlying technology used to "generate" IP, may be protected from unwarranted use by others through registered or unregistered copyright, patent, and/or trademark rights. At a minimum, business people need to understand the concepts of registration, protection, licensing and assignment, infringement, passing off, and non-circumvention, and how those concepts relate to their businesses.

How to Pick the Perfect Legal Environment of Business Textbook

In considering which book to use to study the legal environment of business, you should consider the following: Whether the book is written by someone with expertise in teaching legal environment of business. Professors with business backgrounds usually make the best legal environment of business authors, along with faculty who teach Business Law, because they have first-hand experience in applying the law of business, especially contracts and torts. Some of the worst legal environment of business books do not have authors who teach the course, which means they have a much harder time trying to figure out how to explain complex legal concepts that could be useful in the course. Whether the book covers the full range of topics for business law. Some books are quite skimpy in their coverage, with a couple of pages on a given topic. There are 20 different areas of business law and it is important to cover all of them, even if some are afforded less time than others. And, while not all schools use the new, ABA-required Business Law and Ethics course title, it is important to cover not only the legal concepts but also the ethical issues in business. Whether the book is accessible to undergraduates. This follows from the first point about the author, whose job it is to take complex legal theories and make them comprehensible to non-lawyers, or at least, to provide enough background material that the student can make sense of the examples used in the text. How the book approaches analyzing complex legal issues. Does the author take an issue and break down the legal concepts underlying the issues, providing the student with a roadmap to get to the conclusion? Or does he or she expect the student to either guess the legal principles being applied, or worse, receive a large amount of what they need to know from the textbook, rather than taking the time to analyze it and figure it out for themselves? There are legal environment of business books that are well-written, with great depth, and approach analysis of problems from multiple angles, while at the same time making the information highly accessible to undergraduates. Shorter books which cover less material — or are more difficult to read — may lead to students skipping sections of chapters or ditching the book entirely in favor of the ever-growing amount of free information online.

Best Legal Environment of Business Books to Read

When it comes to furthering your knowledge of the legal environment of business, there are a variety of books out there that can be helpful. Here are some of the top recommended legal environment of business books:
Legal Environment of Business
By Neal Bevans [DATE PUBLISHED: 2011]
This book provides an overview of legal concepts from contracts to labor relations. Its author, Neal Bevans, is a professor of legal studies at Limestone College who has authored over 15 textbooks.
Business Law: Text and Cases
By Kenneth W. Clarkson [DATE PUBLISHED: 2015]
This popular textbook is one of the most well-known on the subject. Its credit goes to Kenneth W. Clarkson, the C. Ellis and Helen Shaindlin Professor of Business Law, University of Florida, Gainesville.
Business Law
By Robert Neumann [DATE PUBLISHED: 2012]
Robert Neumann is an Assistant Professor of Business Law at Indiana University of Pennsylvania, where he teaches both business law and international business law. In addition to teaching , he has also authored five other business law textbooks and is currently researching and writing a book on the new Uniform Commercial Code provisions for the international sale of goods.
Introduction to Business Law
By Richard A. Mann [DATE PUBLISHED: 2009]
Richard A. Mann is a professor of the Department of Management, Business Law and International Business in the College of Business at the University of North Texas, Denton. He has authored six business law textbooks and has written or co-authored several articles and chapters in law books.
Essentials of Business Law
By Neil Schiller [DATE PUBLISHED: 2013]
Business law scholar Neil Schiller is a professor at Purdue University, where he has taught and published resources on business law for almost 30 years. He is known for his typically straightforward, accessible writing style.
Business Law: Text and Cases
By Kenneth W. Clarkson [DATE PUBLISHED: 2014]
Kenneth W. Clarkson, the same author as "Business Law: Text and Cases" from 2015 listed above, also wrote this similar volume in 2014.

Using Legal Knowledge to Shape Business Strategy

Mastering the legal environment of business is not merely about comprehending regulations and laws; it involves embedding that understanding into the very fabric of business strategy. The awareness of legal mandates and prohibitions is of little use if it does not affect how business is done or how strategic decisions are made.
Integrating legal knowledge into business plans and strategy begins with a comprehensive understanding of the legal landscape in which your company operates. This means not only knowing the laws that directly apply to your business, like employment law, consumer protection statutes, and tax codes, but also understanding the regulatory environment that surrounds your industry and geographic markets. For example, if you plan to export goods, familiarity with international trade regulations is essential.
Once you have a clear picture of legal requirements, they can be woven into the strategic framework of your business. This could mean, for instance, ensuring compliance with environmental laws by investing in "greener" technologies upfront, rather than waiting for fines or penalties down the road. Similarly, compliance with health and safety regulations may require investing in higher-quality manufacturing equipment or updating product designs before such changes become mandatory.
Legal knowledge can also guide strategic planning in terms of impact on resources. An analysis of which states or countries offer the best protections for intellectual property, or the most favorable corporate tax structures, can steer the decision over where to locate manufacturing or service facilities. Moreover, keeping an eye on changes in the legal environment can inform whether or not to expand into new markets or invest in new opportunities.
Understanding the legal environment can also help businesses assess risk versus reward when pursuing new opportunities. For example, even if an acquisition looks great on paper, assessing the target’s outstanding civil liability, tax issues, or potential environmental violations can lead to a different conclusion about whether or not to proceed.
Finally, a familiarity with legal requirements in different areas of your business may even open up new avenues for growth. For instance, if alterations to a safety or anti-discrimination law make it difficult for some competitors to stay in business or continue hiring, that could present an opportunity for your company to expand your marketing to their customer base or recruit their employees.
Bringing strategic awareness of the legal environment into your business does not need to occur at the level of the chief executive, though that is certainly a good starting place. The sooner you can make legal understanding an integral part of your company’s business philosophy, the better. By doing so, you can use the legal environment to your business’ advantage and continue operating within the bounds of the law.

The Evolution of Legal Studies in Business

As global commerce continues to evolve, so too does the field of legal studies for business. One significant trend is the rise of interdisciplinary approaches to business law—merging concepts from fields like economics, sociology, and data analytics to provide a fuller picture of legal challenges. For example, as businesses face increased scrutiny over their environmental, social, and governance (ESG) practices, legal scholars are exploring how law can better incentivize corporate responsibility beyond the traditional profit-driven model.
Moreover, with the rise of technologies like artificial intelligence and blockchain, legal scholars are also examining where the law stands—or does not stand—on the use of these tools. Should robots be granted rights? What happens when an algorithm discriminates against certain users? Should cryptocurrencies be treated differently from cash?
Further, new areas of study are emerging within the field of legal studies . For example, the notion of "corporate personhood" and the rights of corporations as they interact with citizens and government continue to be hotbed issues. Legal scholars explore whether corporations—as entities with profits and losses—should be entitled to the same legal rights as individual humans. The first step to answering these questions, however, is understanding the legal context surrounding them—and that means getting comfortable with the law.
The key takeaway is that students today—whether in a Murray State University program or another—must be prepared to be lifelong learners. In addition to the required coursework, they must stay up-to-date on current events, business regulations, and financial trends. Staying ahead of the curve in business means understanding the law as it relates to business—and the only way to do so is through education: in a traditional sense for those just starting their careers, and through continuous education for the established business leaders of tomorrow.