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How business laws effect business operations

Info: 3151 words (13 pages) Law Essay
Published: 3rd Jul 2019

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Jurisdiction(s): UK Law

In the current world business are playing an important role in every aspect of life. One’s standard of living, life style, education and even cultural standards are determined by business (Cheesemen, 2004:56). Studying business and understanding business will lead to a better life. If we understand business, both expected and unexpected events can be easier to cope with, less stressful and more efficient. The studying of business will give us a better understanding that in today’s world, national economies are not an independent entity anymore, but rather dependent and taking an uneven global shape. Financial depression in the U.S.A. has an influence on the whole world and all the businesses. China is becoming an influence in the world economy because of their outstanding business skills and the system known as “Free Enterprise”.

Business is a crucial part of life, there should be some kind of law (rules and regulations) for it to function it in a disciplined way (Cheesemen, 2004:59). Business law was introduced in order to fulfil this purpose. In today’s world, businesses must function within the restrictions of laws and government regulation. Business laws was not only developed to protect consumers but also to preserve competition. These laws are enforced by government agencies at different administrative levels. Any business firm that do not keep to these laws will face fines, penalties and in consequences fail to run. It is very important to know the business laws to operate a business successfully.

The purpose of this dissertation is to investigate how business laws can improve or effect our daily business operations. Mentioning a literature review, sources of business law, different laws affecting businesses, laws regarding commerce and industry in South Africa. My findings will be put together in a conclusion.


The objective of this TIS is to investigate how business laws improve or effect our daily business operations. The topic I have chosen is about how business laws plays an important role in every aspect of life. Rules and regulations have been implemented to control how businesses operate. These laws protect consumers and also preserve competition between businesses. Businesses that do not obey with any of the business laws will face fines or penalties.

Dr. Henry R. Cheeseman, past researcher, is a lawyer and economist (Cheesemen, 2004:59). His speciality is interrelationships of law with economics and finance. His expertise lies in savings, loans, banking, anti-trust law, economics and regularity law. In his fifth book he adds coverage and importance on the internet as a vital aspect for business laws. He also wrote several other publications including “Contemporary Business & E-Commerce Law” and “The Legal and Regulatory Environment”.

Stephen Judge studied LL.B (Hons) at the University of Jean Moulin. Currently he is teaching Commercial Law as his main subject. He taught Company Law and Corporate Insolvency previously. He is interested in the following research: The European Charter on Regional or Minority Languages and Comparative Company Law (Judge, 1999:62).

This TIS mainly focuses on sources of business law, how businesses are being affected by different laws, laws regarding commerce and industry in South Africa. This TIS shows how important business laws are in today’s world, what business laws means for the consumers and businesses. Without business laws the current businesses will not be able to function or survive.


Common Law:

Is known when a law is created through the court decisions by judges. It’s mostly based on tradition, usage and court rulings of early England (Bushman, 2007:119).

Statutory Law:

A law created by parliament, constitution, law commission or agreement is called statue. Most laws created today are statues. A statutory law is made up by various legislative endorsed bodies. For a law to be constitutional it must be drawn up in a specific way. However, courts often must interpret a law’s meaning (Miller, 2000:63). Statues getting changes is sometimes due to the decision by the court.

Administrative Law:

Laws troubled with the rules and tasks of the executive branch of the government, its organizations, their interrelations with each other, citizens and the non-governmental entities. The intention of administrative law is to provide a legal framework for regulating the powers, procedures and acts of public administration (Cheesemen, 2001:96).


Business Law is the body of law that governs business and commercial transactions (Bushman, 2007:24). In today’s complicated business world in order to operate and control a Business Laws are a must. So, this part of law deals with businesses to keep businesses running in a disciplined way as all the parties related to businesses get protection as well as feel responsible in their respective positions, is known as business law.


Several and different laws control the actions of all the businesses and each person involved in the business, from the manager the employee and even the owner.

Some major business law categories are as follows:

5.1 The Law of Torts:

While criminal law deals with crimes against society and people, tort law is worried with rewarding the victims of noncriminal wrongs. Tort is a noncriminal injury to any other person, their reputation or their property (Judge, 1999:62). There are two types of torts:

Intentional Torts:

Any deliberate act by a business firm or person is known as an Intentional tort.

Negligence Torts:

When one party causes injury to another party and fails to use reasonable care, this is known as a negligence tort. Negligence torts arise from carelessness rather than intentional behaviour. Product accountability is a vital part of the tort law. Business firm’s responsibility is to involve the product liability for negligence in their manufacture, design, sale, and operation of their products. The business action examines some product liability cases in the tobacco industry. In many ways product liability laws have been extended to their ends in which the producer or marketer of the product is not able to prove negligence (Judge, 1999:206). Under strict product liability, the manufacturer is responsible if the injured party can show that the product was effective, that the defect caused the injury and the product to be dangerous.

5.2 The law of Contract:

A contract is a legally binded agreement between two or more parties. A contract is like a private statue, in which the parties explain the agreement they owe each other. Most business transactions contain some kind of contract (Cheesemen, 2001:23). They can be either express or implied. A contract in which the words are actually put forth, either orally or in writing is known as an express contract. Generally, oral contracts are just as legally enforceable as written contracts.

Essential Elements or Feature of Contract:

Plurality of member

Offer and acceptance

Intention to establish legal relationship

Legal consideration

Legal objective

Capacity to contract

Free consent


Possibility of performance

Types of Contract:

Valid contract

Void contract

Voidable contract

Implied contract

Independent contract

Expressed contract

Bilateral contract

Executed contract

Un-enforceable contract

5.3 Law of Sales:

Products sold for money or credit is known as sales law. This law grew out of the contract law. Even if all the requirements are not met for a contract, the uniform commercial code provides that some sales contracts are still binding (Judge, 1999:24). For instance, a sales agreement is legally binding even if the selling price is left out of the agreement; the buyer must then still pay a reasonable value of what the goods are worth.

5.4 The Law of Agency:

An agency is a business relationship in which a principal appoints an agent to act on his or her behalf. The actions of the representative, authorized by the principal, are legally recognized as though they were performed by the principal. For example, a talent agent can enter into a contract for a client as though the client signed the contract him or herself. Agents are used in many diverse industries, including insurance, sports, entertainment, and real estate. Generally, agents are paid a fee or commission or their services.

Because the principal is bound by the actions of the agent, it is important to put the agency agreement in writing (Judge, 1999:69). Generally, a legal document called a power of attorney is granted to authorize the agent to act on behalf of the principal.

5.5 The law of Property:

Property is considered by anything that can be owned. Property is something for which a person or business entity has unrestricted of possession or use (Bushman, 2007:102). Property is divided into several categories. Real estate, land, and anything permanently attached to it, such as buildings, parking lots and houses is known as real property. Physical items such as a store’s inventory of goods, automobiles, and equipment is known as tangible personal property. Intangible personal property is that shown by documents or other written instruments, such as money orders, cheques, stocks, bonds and receipts.

Individuals or business firms gets legal protection from any of the three forms of intangible personal property. A name or symbol registered with the trademark and patent office is known as a trademark. This will guarantee the owner exclusive rights for a certain amount of years (differs from country to country) and the owner can renew it as many times as he wishes. Patents granted by the patent and trademark office give inventors the exclusive right to make, use, or sell their product for certain years (varies country to country). A copyright filled with the copyright office, gives the creator or owner exclusive right to publish and sell original written work (Bushman, 2007:236).

5.6 The law of Bankruptcy:

Individuals and business firms that cannot pay their debts will be declared as bankruptcy. By declaring bankruptcy, the individual or firm asks the court to declare them as unable to satisfy creditors and to be released from financial responsibilities. The debtor’s assets are usually sold to pay off as much of the debt as possible.

5.7 The law of Negotiable instruments:

A negotiable instrument is a substitute for money (Cooke, 2002:451). It is a written promise to pay a specified sum of money, if it can be transferred from one person or business firm to another. There are three types of negotiable instrument:

Promissory note

Bill of exchange


The following requirements must be met for a negotiable instrument:

They must be payable at a specific date or on demand.

They must contain an unconditional promise to pay a certain sum of money.

They must be written and signed by the maker or drawer (Bushman, 2007:12).

They must be payable to a specific person or business firm or the holder.

The recipient must endorse a negotiable instrument before it is transferred. A person’s signature on the back of a negotiable instrument is called an endorsement. When the recipient signs the back of the instrument, a bland endorsement is accomplished. A restrictive confirmation is known when using the words for deposit only along with the signature, it is much safer as a blank endorsement and states what the instrument is for. When including the firm’s or person’s name on the back of the instrument, also including the signature, this is known as a special endorsement (Cooke, 2002:31). Should the special and restrictive endorsements be lost or stolen, the negotiable instrument protects it. Finally, a qualified endorsement usually uses the words without recourse, this means the person who originally signed the instrument, not the endorser, is responsible for the payment. If the instrument is not backed by sufficient funds, the endorser does not guarantee any payment.

Followings are the laws enacted in South-Africa and regulating business activities of the country. Most of the laws have their roots in the British colonial period.


Business is nothing new in human society. Ancient Business is a part of our social life in different forms (Judge, 1999:14). Presence of business proves that we are dependent on each other and with the passes of time this dependency is increasing. At the early stage people engaged in exchange of goods without using money which was called trade. Over the years many things have changed, money has been introduced as medium of exchange and through lots of forms businesses are now in the present forms. Today business means exchange of goods, services or money for mutual benefit or profit.


The Sale of Goods Act-1930

The Partnership Act-1932

The Contract Act-1872

The Negotiable Instrument Act-1881

The Company Act-1994

The Carriage of Goods Act

The Common Carriage Act-1865

The Railway Carriage Act-1890

The Carriage by Air Act-1934

The Carriage of Goods by Sea Act-1925

The Insurance Act-1938

The Insolvency Act-1997


Laws Based on Types of Work:

The Factories Act-1965

The Mines Act-1932

The Mines Labour Act-1934

Laws Regarding Wages:

The Minimum Wages Ordinance- 1936

The Payment of Wages Act-1936

The Provident Fund Act-1925

Laws Regarding Industrial Relation:

The Industrial Relations (Amendment) Ordinance-1989

The Industrial Relations Ordinance-1969

Laws Regarding Social Protections:

The Workmen’s Compensation Act-1923

The Employers Liabilities Act-1938

The Workmen’s security Act-1934

Laws Regarding Employment Condition:

The Employment of Labour (Standing Order) Act-1963

The Shops and Establishment Act-1965

Laws Regarding Child Labour:

The Child Labour Appointment Act-1938

The Child Labour Prohibition Act-1930


Law is a structure of rules, typically prescribed through a set of institutions. Politics, Economics and Society are shaped by it in numerous ways and aids as a primary social mediator of relations among people. In other words law can be defined as “A standard or rule established by the society to oversee the behaviour of its members” (Cooke, 2002:100).


Favourable business and legal environment: South Africa has a world class, progressive legal framework. Legislation relating to commerce and labour issues is particularly well developed, while laws relating to competition policy, copyright, patents, trademarks and arguments adapt to international standards and agreements. Purity of contract is protected under common law, and independent courts ensure respect for commercial rights and obligations. The independence of the judges is guaranteed by the Constitution. The financial systems of South Africa are sophisticated, healthy and well regulated. The banking regulations of South Africa rank with the best in the world and also while the sector has long been rated among the top ten globally. Electronic banking facilities are widespread, with internet banking as a growth feature of the sector and foreign banks are well represented (Judge, 1999:145).

Strategic alliances and trade reform: South Africa has become a player in the global trading system, and a series of trade restructurings, including a tariff reduction and reasoning programme have been implemented, since they have signed the Global Agreement on Trade and Tariffs in 1994. Market access has been enhanced through free trade agreements with the European Union and the Southern African Development Community and the implementation of the Africa Growth and Opportunity Act by the United States. In recent years strong relations with markets in the rest of Asia, Africa and Latin America has been developed by South Africa (Cooke, 2002:489).

Cost of doing business in SA: South Africa is one the least expensive countries to do business and for foreigners to live in due to the exchange rate, and with a first-world infrastructure and high living standards this will ensure good value for money. The energy costs of South Africa is still among the lowest in the world, and the country even compares well with petrol prices, while nearly all imported petrol are refined and marketed by the private sector and multinational oil companies. Even telecommunications costs are getting cheaper. Neotel, the recently licensed, fixed line operator, has begun to give Telkom, state owned company, competition. The government is refining laws and is taking steps to ensure that bandwidth capacity is cheaper and more widely available (Judge, 1999:483).

Competition: The Competition Act of 1998 fundamentally reformed the country’s competition legislation, strengthening the powers of the competition experts along the lines of the European Union, US and Canadian models. The law places various preventions on anti-competitive behaviour, restrictive practices (such as price fixing, greedy pricing) and “abuses” by “leading” firms (firms with a market share of 35% or more). The competition authorities monitor implementation and loyalty to the law, while state supervisors oversee natural monopolies and promote worldwide access to government utilities (Cooke, 2002:421).


Therefore we see that laws are affecting business in numerous ways. Laws protect the business men as well as the customers which is essential to have a good relation between these two parties otherwise business firms will not run. Laws are necessary to incorporate a business firm, to run a business firm and to dissolve it. It should be mentioned that in this assignment, only the major laws from international perspective that are affecting business have been discussed shortly and only a list of the laws that are applicable in field of business in South-Africa has presented.

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