Principles of Business Law

The purpose of this paper is to discuss business law principles. The focus is on several distinct areas of law that are pertinent to conducting business, such as contracts, agency relationships, partnerships, corporations, property, sales, negotiable instruments, and secured transactions. This paper does not claim to address the wide-ranging body of knowledge that encompasses business law but, instead, defines the terms, summarizes the rules and, where appropriate, notes the remedies.

Contracts are legally binding agreements that are formed when an offer is made, followed by an acceptance, and supported by consideration.1 The offer is an expressed willingness to make a binding agreement on certain terms. The acceptance is an unqualified and unconditional assent to the offer. The consideration means that each of the contracting parties must exchange something of value with the other.2 In addition, a contractual agreement must be between competent parties and made for a lawful objective.

Contracts may be valid or voidable, express or implied, oral or written.3 Valid contracts are binding and enforceable, while voidable contracts may be rejected at the option of one of the parties. An express contract is one in which all the details are spelled out, whether oral or written. The details of an express contract include identification of the item to be purchased or sold, the date of purchase or sell, and the price and terms of the offer. Implied contracts are u

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eparate, independent existence, and with its own rights and liabilities. However, directors and executive officers who are the primary decision makers are liable for the acts of their corporations.19 A corporation may take various forms. For instance, the income of a corporation is often taxed twice, once under the federal income tax laws and a second time by way of distribution of dividends to shareholders. However, double taxation can be alleviated through establishing Subchapter S corporations in which a corporation pays no income tax but, instead, each shareholder's portion is taxed as personal income.20 A corporation may expand its operations. Where parent corporations form or acquire subsidiary corporations, the parent and subsidiary are considered separate entities even if the parent owns most of the subsidiary's stock and if the directors and officers are the same.21 A corporation may be dissolved or terminated by agreement, reorganization proceedings, or forfeiture of its charter. Two or more corporations may be combined to form a new enterprise. This may be a consolidation with a new corporation established, or a merger where one corporation absorbs the other.22 Property includes the rights of any person to

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