1. Describe legal issues affecting businesses
3.06 Acquire foundational knowledge of business laws & regulations to understand their nature & scope
Describe legal issues affecting businesses

2. Business Law
Everything that relates to our society is governed by laws and business is no exception.
Business law or commercial law is simply a body of law that governs every aspect with regards to conducting a business.
Before you start your own business, you should always familiarize yourself with the different laws to avoid legal liabilities and to protect yourself from fraudulent attacks.

3. Business Laws
Business law is applicable to both small and big businesses
Because of its broad coverage, several branches of it are categorized to avoid confusion
Contract law
Sales law
Property law
Intellectual property & computer law
Bankruptcy law
Tax law

4. Contract Law
Designed to provide stability, predictability, as well as certainty, for buyers and sellers in the marketplace.
Necessary to ensure compliance with a promise or to entitle the innocent party to some form of relief.

5. Contract Law
A contract is a legal agreement negotiated between two persons that creates an obligation to perform (or not perform) a particular duty
A “person” may be either a human being or an entity, such as a corporation, created by law.
A legally enforceable contract requires:
An Offer (I’ll mow your lawn this weekend, if you pay me $35)
An Acceptance (You’ve got a deal)
Consideration (The value received and given – the money and the lawn mowed)

6. Contract Law What law governs contracts?
Common Law of Contracts – Service Contracts.
Mainly deals with real estate, service, insurance, intangible assets and employment contracts.
Uniform Commercial Code (UCC) - Sale and lease contracts
Mainly concerned with sale of goods and securities.

7. Sales Law
The sale of a good, or item of value, is a transaction designed to benefit both buyer and seller.
Sales laws relate to the transfer of ownership of property from one person to another for value

8. Sales Law What law governs sales? The Uniform Commercial Code (UCC)
All 50 states and territories have enacted some version of UCC.
Once a state's legislature adopts and enacts UCC, it becomes a state law and is codified in the state's statutes.

9. Commercial Property Law
Governs the lease, sale and use of land as well as buildings that are mainly used for business purposes.
Includes shopping malls, office buildings, warehouses and grocery stores.
Looks after people who own and use commercial property.
Commercial property laws vary from jurisdiction to jurisdiction.

10. Intellectual Property & Computer Law
What is intellectual Property?
A product resulting from human creativity, an original work fixed in a tangible medium of expression.
Intellectual property laws protect the value of the investment in their creation and their economic potential into the future.

11. Intellectual Property & Computer Law
Types of Intellectual Property:
Patents - Inventions
Copyrights - Movies, Songs, Plays, Literary
Works, Choreography, Paintings, drawings, Photographs
Trademarks - Products and Services
Trade Secrets - Formulas, Practice, Process, Patterns
Designs - Machines, Building, Products

12. Copyrights
Copyright law protects the expression of an idea but not the underlying idea itself, i.e. composers, artists, photographers.
Minimum term of life of author plus 70 years
95 years in case of anonymous or pseudonymous works
Published and unpublished works

13. Patents
Exclusive federal grant from U.S. Patent and Trademark Office to make, use and sell an invention for 20 years.
Cannot be renewed.
Protection much stronger than copyright.
Holder has exclusive rights to produce
Must be an original idea.
Patents for Software are now available.

14. Trademarks
Trademark is a distinctive mark, symbol, or slogan or any combination of these used by a business to identify goods and to distinguish them from products sold by others.
Trademarks apply to products.
Trade name applies to companies and are protected by federal law as well.
Example: IBM, Coca-Cola, NBC.

15. Trademarks Register with U.S. Patent Trademark Office
Registration allows use of “®” symbol.
Continuous use good forever.
Renew every 10 years.
General trademarks can be lost (Corn flakes and aspirin)

16. Trade Secrets
Includes business processes or information that cannot be patented, copyrighted or trademarked.
Includes: customer lists, plans, research, formulas, pricing information, marketing techniques.
Gives businesses protection from competitors.
Protection for trade secrets does not expire
Governed by the Uniform Trade Secrets Act.

17. Bankruptcy Law
Business owners who can't afford to pay back their creditors may file for bankruptcy.
Way to settle their debt & avoid costly legal action
Creditors may be prevented from collecting on debts until the bankruptcy process is completed.
Generally Two Forms of Bankruptcy Relief
Liquidation
Reorganization
Forms are divided into Chapters:
Chapter 7 – Liquidation (Personal or Business)
Chapter 11 – Reorganization (Personal or Business)
Chapter 12 – Reorganization (Family farmers or fishermen)
Chapter 13 - Reorganization (Personal)

18. Bankruptcy Law Chapter 7 – Liquidation. Chapter 11 – Reorganization
Primarily for individuals but affect businesses operating as sole proprietorship
Trustee will sell assets (business & personal) to satisfy outstanding debts
Chapter 11 – Reorganization
Applies to both individuals & small businesses
Small businesses operate under increased scrutiny but may keep operating under a reorganization plan
Chapter 12 – Reorganization
Family farmers & fishermen
Chapter 13 – Reorganization
Personal only.
Trustee sets up a 3-5 year repayment plan. Debtor keeps more assets under this plan.

19. Tax Law Businesses must consider: N.C. businesses will need to obtain:
Federal Tax Laws
State Tax Laws
Sometimes Local Tax Laws
N.C. businesses will need to obtain:
Federal Employer Identification number (EIN) from the IRS
State Employer Identification number from the N.C. Department of Revenue

20. Federal Tax Laws Income taxes:
Tax on profits of the business
Determined based on the type of business ownership
Payroll taxes – tax on salaries and wages paid to employees
Social Security – paid by business & employee
Medicare – paid by business & employee
Federal income tax withholding – paid by employee only
Federal Unemployment tax – paid by business only
Excise taxes – broad category of taxes covering certain types of businesses
Environmental taxes.
Communications and air transportation taxes.
Fuel taxes.
Tax on the first retail sale of heavy trucks, trailers, and tractors.
Manufacturers taxes on the sale or use of a variety of different articles

21. State Tax Laws Income taxes:
Tax on profits of the business
Determined based on the type of business ownership
Payroll taxes – tax on salaries and wages paid to employees
State income tax withholding – paid by employee only
State Unemployment tax – paid by business only
Worker’s Compensation Insurance – paid by business only
Sales & Use Taxes – collected from customers & remitted to N.C. Dept. of Revenue
Property taxes – tax on the assets of the business
Real estate
Personal property – trucks, equipment, etc.

22. Local Tax Laws
May vary County by County or Municipality to Municipality
Privilege License – license to operate a business in locality
Ensures a business is located in an area that is properly zoned
Permits, Zoning requests
Property Taxes

23. Picture Sources
Uniform Commercial Code Picture -
U.S. Patent Office Logo -
Coco Cola Trademark -
Top Secret Folder -
Bankruptcy Petition - bankruptcylawnetwork.com
Taxes with Hand - business.com
Federal Tax Forms - myaccountantaz.com
N.C. Dept. Of Revenue Logo - checktaxrefund.com
N.C. County Map - geocaching.com