Legal Applications to Businesses

Legal Applications to Businesses


Regulatory and legal environment plays important roles in the process of determining the success of any type of a business. There are government regulations as well as various regulatory measures spelled out in law aimed at promoting economic growth of any particular geographic region (Kubasek, Browne, Herron & Dhooge, 2016). In addition, the laws protect consumers from fraudulent and exploitive activities by the business environment. There are various legal sources, which normally create such regulatory measures, and include constitutional law, administrative law, tort law as well as criminal law (Cahoy, Reed & Pagnattaro, 2015). It is imperative for the business environment to understand the functions and impacts of each legal source to businesses, for the purposes of avoiding any form of conflict and in the process of promoting their businesses. The paper will investigate specific functions of each regulatory body and its impact in business environment as far as decision-making processes are concerned.

Constitutional laws

A business law is considered constitutional only if it is recognized and acceptable under a defined constitution (Cahoy et al., 2015). Typically, the constitution is as the elemental basis of law to any country or region. Countries with federal system of government such as the United States are governed by federal constitution that must be adhered to by every state. This means that every business entity is expected to observe and follow constitutional laws when conducting business activities. Any business activity that goes against constitutional laws is naturally impermissible (Kubasek et al., 2016).

Constitutional law encompasses various legal regulations such as the trade policies that directly impact business environment. In this case, there are a number of variables each with its own function and impact to businesses such as monetary policies, tax policies, fiscal policies, regulatory policy, government policy as well as property rights policy (Cahoy et al, 2015).

It is critical for business managers to understand that each of the regulations have either positive or negative impact to business. This means that constitutional laws can allow or inhibit business growth. For instance, trade policies are used to allow or prevent free trade in specified areas and therefore establishing businesses in such areas can result to losses (Morehead, Pagnattaro & Shedd, 2012). Business managers are expected to be keen in constitutional laws before conducting business operations.

In addition, every country has a specified tax system spelled out in constitutional laws. Tax laws are the strongest forms of regulatory and legal factors that normally affect business activities. There are some countries that have favorable tax codes more than others and therefore are capable of supporting business operations. There are tax codes that are capable of restricting business operations (Kubasek et al., 2016). Therefore, business managers are expected to ensure that the existing tax codes do not impact the productivity of businesses negatively (Cahoy et al., 2015). Ideally, government bodies can decide either to reduce or increase tax laws depending on the existing economic conditions. Besides, tax laws are able to increase or reduce consumer spending that ultimately affect business operations.

Tort laws

Tort laws normally fall under the categories of civil laws of a given region or country and are useful in the process of regulating parts of civil systems (Cross & Miller, 2008). It is worth noting that the laws are under constitutional framework and must therefore observe and follow the laws depending on the country or region of reference. Most businesses are typically guided by business contracts under which they freely run their business operations. According to the civil law jurisdictions, business contracts are normally enforced by administrative courts unless such contracts are specified (Kubasek et al., 2016). The business contracts have specific features that both contracting parties have to guide throughout the period when such contracts are valid. Different countries and regions have different legal provisions enforced in the business environment (Kubasek et al., 2016). For instance, there are countries that allow modifications to specific aspects of business contracts when the state considers public interests (Morehead et al., 2012). However, important bodies such as the contracting bodies do not have the right to make any form of modifications to specific features of the contracts such as the financial provisions.

Nevertheless, the contracting body is empowered to change some specifications such as the services spelled out in the contract. This means that business managers are expected to understand the type of tort laws that govern their area of reference as they have direct impact towards their business operations (Morehead et al., 2012). This is because in some countries, the government have powers to prohibit business suppliers from supplying specified services or products in a specific contract. They may also decide to demand the specifications in business contracts to be disclosed for specified reasons such as the freedom of information act (Kubasek et al., 2016). Moreover, it is important for business managers to note that some governing authorities have legal requirements on parties involved in business contracts where one party is provided higher bargaining powers relative to the other.

Administrative Laws

Administrative law is a legal body of regulations and rules normally created by the regulatory bodies as well as the executive agencies (Cross & Miller, 2008). They are powerful legal bodies because they are critical towards the process of enabling various statutes passed by the legislature of a particular country or region. There are business contracts that normally have the background of principles of administrative law and normally have specific details regarding how both parties implement such business contracts (Kubasek et al., 2016). However, it is worth noting that it is difficult to override or change any features detailed in administrative laws as such normally requires a rigorous and complex legal process (Cross & Miller, 2008). For instance, business people or parties are prohibited from changing the specified service standards of a business contract in some countries. Therefore, it is paramount for business managers to understand the nature of existing administrative laws since they have direct impact towards business operations.

Criminal Laws

Criminal laws involve all business activities regarded in a given country or region as wrong and illegal to the state (Cahoy et al., 2015). In this respect, the illicit or wrong business activities are deemed punishable as per the kind of offence committed. In business there are various acts considered criminal activities and therefore are spelled out in given criminal laws such as selling or trading in illegal goods and services, damage or theft of business properties as well as failure to abide by signed business contracts (Kubasek et al., 2016). When individuals commit the criminal activities, they are found guilty thereby triggering punishment against them. Criminal law identifies various forms of punishments to the perpetrators of law such as fines, imprisonment as well as community sentences (Morehead et al., 2012). Therefore, business managers are expected to evaluate their corporate undertakings in regards to existing criminal laws and ensure that they only deal with activities that do not criminalize their businesses.


Cahoy D., Reed L. O., Pagnattaro M. (2015). The Legal and Regulatory Environment of Business. New York. Wiley Publishing.

Cross F. & Miller R. (2008). The Legal Environment of Business: Texts and Cases. New York. McGraw Hill Publishing.

Kubasek, N.K., Browne, N. M., Herron, D. J., & Dhooge, L.J. (2016) Dynamic Business Law: The Essentials (3rd ed.) New York: McGraw-Hill Education. ISBN-13: 978-0-07-802364-2.

Morehead J., Pagnattaro M., Shedd P. (2012). The Legal and Regulatory Environment of Business. New York. McGraw Hill Publishing.

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