The heart of Capitalism comprises two basic principles: Supply
and Demand and Contractual Agreement. A business transaction occurs
when Contractual Agreement is successfully employed to address a
Supply and Demand issue; legal tender is a mechanism
utilized to expedite a business transaction.
An implicit business contract may be as simple as money and goods changing
hands, such as a purchase performed at a local shop or department store.
An explicit business contract may be as simple as a handshake agreement
for one individual to perform a service in exchange for compensation by
another.
Ah, but were the world always so simple! Business Law has evolved
because:
things are not always simple;
a transaction is not always successful, i.e., disagreements
arise;
not everyone is honest;
circumstances external to a business transaction may create no
fault scenarios that demand resolution;
expectations often do not match reality or final product, resulting
in a “That’s not what I said I wanted,”
scenario;
changing situations may require reinterpretation and
renegotiation;
the terms fair practice and fair value have
different meanings to different people, making it necessary to
formulate rules of conduct;
transactions must be recorded in a universal format for future
reference.
The Law is a set of rules and codes of conduct governing societal
behavior; Business Law is the subset of these rules and codes
that apply to business transactions.
Authored by Kenneth L. Anderson.
Original article published 9 January 2004, updated 4 July
2005.
Our Business Law section identifies areas of business requiring legal
expertise and provides resources you can use both to become better informed
and to accomplish those legal transactions necessary for the operational
success of your business. Business Law listings in other sections
of the Business Center such as Starting a Business and
Business Maintenance reference the Business Law section.
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