Business laws among other regulatory measures help to protect economic growth and to shield consumers from exploitation and other illegal factors. Before establishing or when in the process of running a business, it is important to understand the legal factors affecting your business. In this article we’ll look at some of the ways various laws influence a business and the general business environment.

Legal factors are simply the factors that affect a business and its dealings in relation to governmental/state laws. These laws play a huge role in determining the success of a business as they regulate the relationship between employers and employees, profit margins, taxes and many more.


The government has passed laws to protect the interest of employees. These laws protect them against discrimination on the basis of their race, religion, sex, age, or colour. Our labour laws can be found in the Employment Act.

These laws play a key role in protecting employees from unfair termination and exploitation. For instance, it is illegal for a business to dismiss employees for joining trade unions or for expecting a baby. Ignoring these legal factors will result in serious repercussions for your business. In this case, before the dismissal of any worker, there must to be prior notice with proper reasons outlined otherwise, the case may be treated as an unfair dismissal.


The government has put in place various contracting rules, regulations and procedures that dictates the manner in which they conduct their dealings with businesses. The government encourages small businesses to participate in expressing interest when it purchases products and services. It also goes to great lengths to invest in outreach programs to find reliable, qualified small businesses to be its suppliers.


In a perfect world, all businesses would act in the best interest of their customers. Unfortunately, this is not the case. For this reason, the government has put in place various laws to protect consumers. The Sale of Goods Act is a perfect example of this. This Act focuses on the rights and responsibilities of merchants and customers when exchanging legal tenders and goods. It is essential for retailers, whole sellers and businesses involved in the exchange of goods be familiar with its terms.


Any business that is organized as a legal entity is subject to the state law that governs its operation and conduct. In a previous post we discussed the various forms of business entities.  For example, corporations, limited partnerships, partnerships and limited liability partnerships all of which have different legal status and liabilities. It is important to understand your business association in order to know what laws apply to you. This helps prevent various illegalities and protects your business as a whole.


Contract law is the law that governs the relationship between two or more individuals who enter in to an agreement (contract) which creates mutual obligations that are enforceable by the law. With this law, business can contract with individuals and both party’s rights are protected without one taking advantage of the other. Contract law also spells out the components of a contract and what would be either legal or illegal and the elements that would void a contract. Fraud, illegality and misrepresentation are all elements that would make a contract void and therefore not enforceable.

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