Business law is also known as commercial law. It is a body of law that governs business entities and commercial transactions. Business law includes subcategories such as:
- Intellectual property;
- Environmental issues; and
As noted above, there are many categories of business law which touch upon various aspects of a business. For example, many tasks required by businesses would fall under a specific subcategory of business law known as employment law. These tasks include:
- Paying employees;
- Providing employee work benefits; and
- Arranging employee work schedules.
A large portion of business law includes contract and commercial law. Contract and commercial laws govern everything ranging from business deals to sales transactions to non-disclosure agreements for employees. Because of the numerous aspects of businesses that are regulated by contract law, this is arguably the most important subcategory of business law.
Contract law governs many business issues, including:
- One company merging with another business;
- Forming an agreement with a distributor to sell a company’s products; and
- Providing services to customers.
What are Business Transactions?
In its most basic form, a business transaction is any event involving the exchange of goods, money, or services, or a combination thereof. These transactions occur between two or more parties.
A business transaction may occur between two parties who are engaged in a business and are conducting a business transaction because it is mutually beneficial. In the alternative, a business transaction may also occur between a business entity and a customer.
A business transaction may be categorized as either an exchange transaction or a non-exchange transaction. An exchange transaction consists of physically exchanging values. A non-exchange transaction does not include physical exchanges.
In order for an act to be considered a business or commercial transaction, there must be specific payment that is provided in exchange. In other words, there must be an exchange of value. In addition, a business transaction must be supported by documentation. The most common example of documentation would be a receipt.
What Does Business Transactional Law Cover?
Another way in which to define a business transaction would be any economic event including a third party which can be recorded as an accounting item. A business transaction must be measurable in some quantifiable value, such as money.
Some common examples of business transactions which are covered by business transactional law include:
- Investing cash and/or other assets;
- Purchasing an insurance policy from an insurer;
- Buying inventory from a supplier;
- Selling goods or services to a customer on credit or for cash; and
- Paying employee wages.
What are Some Common Business Transaction Disputes?
As previously discussed, business law is a broad category of law that governs all aspects of a business. This includes how a business is:
- Acquired; and
In many cases, legal disputes occur due to a failure to adhere to business laws, whether they are local, state, or federal. A business transaction dispute is often contractual in nature.
These types of disputes are often resolved by referencing the contract that governs the transaction. A court will often refer to the contract when resolving a dispute.
For example, the members of a business may have a business dispute regarding who controls the business. In most cases, the members involved in the dispute as well as the court would refer to the partnership agreement that was entered into at the time the business was formed.
Another common type of business transaction dispute involves customers and the shipment of goods or the provision of services. There are numerous goods and services which come with an implied warranty. A business may have a dispute with a customer regarding whether the goods or services were delivered and whether they were up to the expected standard.
For example, if a customer orders a book then claims that book was damaged upon receipt. If this occurs, the customer may demand that the book be replaced or that they receive a refund.
Are There any Legal Remedies Available for a Business Transaction Dispute in Pennsylvania?
A business may be able to avoid disputes by creating sound policies, which includes dispute resolution protocols. In addition, having clear policies for hiring and firing employees is essential.
A business should also have liability waivers and clear, visible product warnings, if needed. Should a business transaction dispute arise, in some cases, it may be necessary to file an action in small claims court.
Small claims court can help a business resolve outstanding bills, debts, or employment issues. However, in order to file a claim in small claims court, the damage amount must fall within the filing limitations.
It is common for businesses to use an alternative dispute resolution (ADR) clause in their business contracts. These types of clauses require that any legal disputes that arise relating to the contract must be resolved using a binding alternative process other than a lawsuit.
Examples of alternative dispute resolution include mediation and arbitration. In general, these types of ADR processes must be exhausted prior to a lawsuit being filed.
Arbitration is a process where both parties argue their case before an arbitrator. The arbitrator reviews their arguments and evidence and makes a ruling which will hopefully assist both parties.
Mediation is conducted by a third party, known as a mediator. It differs from arbitration in that the mediator does not make a decision for the parties. Instead, the mediator’s responsibility is to assist the parties in coming to a resolution on their own terms.
If the parties are unable to resolve their dispute using one of these methods, one of the parties may be required to file a lawsuit against the other party for damages or for another type of remedy. Disputes commonly arise between the individuals who own and control a business, between different businesses, and between a business and a vendor.
In general, the remedies for a breach of contract are divided into two categories, legal remedies and equitable remedies. A legal remedy allows a non-breaching party to recover compensatory damages, or money.
An equitable remedy is an action that must be prescribed by a court. These remedies are often used when there is a substantial breach of a contract or a contract dispute in which money damages would not be a sufficient remedy or would not protect the parties from harm.
Equitable damages may include:
- Contract reformation;
- Specific performance requiring the breaching party to fully perform according to the original contract; and
- Contract rescission.
Does Pennsylvania Have any Specific Business Transactional Laws I Should Know About?
In recent years, there have been changes to Pennsylvania business laws. Title 15, or the Association Transaction Act, is designed to modernize corporation laws and make Pennsylvania competitive with other states for attracting business organizations to come to the state.
This law applies to all major types of business organizations. It is designed to improve the process of certain fundamental transactions and establish the rights of interest holders when those transactions occur.
Fundamental transactions include:
- Merging of one entity with another;
- Conversion of an entity to a different type;
- The division of an entity into two or more associations;
- Interest exchanges between two entities wherein one is controlled by the other without actually merging; and
- The domestication of an entity originally organized in another state into Pennsylvania.
This law is intended to streamline laws which were previously complex and costly. A Pennsylvania business attorney will be aware of these changes and how they affect a business.
Should I Hire a Pennsylvania Business Lawyer for Assistance with My Issue?
Yes, it is essential to have a Pennsylvania business lawyer assisting you with any business issue you may have. An attorney can even help prevent a business issue from occurring before it begins.
Your business attorney can draft and review business policies, ensure your business is in compliance with all applicable laws, and assist you should any disputes arise. A business attorney is a sound investment for your business that will pay off in the long run.