ARMY INSTITUTE OF BUSINESS ADMINISTRATION

Savar Cantonment, Dhaka.

Topic: Term Paper on How Business Law affects on New Business and Importance of Obeying the Rules
of Business Law.

Course Title: Legal and Ethical environment of Business

Course Code: ALD 2407

Submitted By: Submitted To:

Abdullah Al Mehraj Hossain S.M. Khaled Hossain
ID: B4170B050 Lecturer Army Institute of Business Administration,
Batch: BBA-05(B) Savar Cantonment, Savar.

Batch: BBA-05
Semester: Fifth

Date of Submission: June 8th , 2020

Page |
1
 ACKNOWLEDGEMENT
I sincerely acknowledge my debt to my course advisor, S.M. Khaled Hossain, Lecturer, Army Institute
of Business Administration for his valuable counseling towards the improvement of the report. Without
his encouragement, this would have never been possible.
I am overwhelmed with gratitude to my course advisor as he helped me in terms of propulsion and
completing this term paper impeccably. The report is prepared only to meet academic purpose not for any
other reason.

Abdullah Al Mehraj Hossain

Id: B4170B050
Batch: BBA-05(B)

Page |
2
 LETTER OF TRANSMITTAL
June 8th , 2020
S.M. Khaled Hossain
Lecturer,
Army Institute of Business Administration,
Savar Cantonment, Dhaka

Subject: Submission of a Report on How Business Law affects on new business and importance of
obeying the rules of Business Law.

Dear sir,

Here is my report on the “How Business Law affects on new business and importance of obeying the
rules of Business Law” that you have assigned me to submit as a partial requirement for the course-
“Legal and Ethical environment of Business” and course code-“ALD 2407” . While preparing this report,
I have taken help from internet, books, class lectures and relevant sources.

Though I have tried best yet it may contain some unintentional errors. I hope, this report will come up
with your expectation.

I will be glad to answer any kind of question related to this report and I will be glad to provide further
clarification if needed.
Yours faithfully,

Abdullah AL Mehraj Hossain

ID: B4170B050
Batch: BBA-05(B)

Page |
3
 DECLARATION
I hereby declare this term paper has been written by myself and has not been previously submitted to any
other University/ Institution/ Journal/ Organization. Some data are copied from sources which are
mentioned in reference.
The work does not breach any copyright

Abdullah AL Mehraj Hossain

ID: B4170B050
Batch: BBA-05(B)

Page |
4
 Table of Contents

Acknowledgement - - - - - - - - - - - - - -- - - - - - - - - - - -- ---- -- -- -- - - - - - - - - - - - - - - - - 2

Letter of Transmittal - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - -- - - - - - - 3

Declaration - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - -------- 4
Executive Summary - - - - - -- - - -- - - - - - - - - - - - - - - - - - - - - ---- - - - - - - - - - -- --- -- 6

Chapter 1: Introduction - - - - - - - - - - - - - - - - - - - - - -- - - - - - -- - - - - - - - - - - - - - - - - --- 7

Chapter 1.1 : Objectives of the study -- - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - -- - - 7

Chapter 1.2 : Scope of the study - - - - - - -- - - - - - - - - - - - - -- - - - - - - - - - - - - - -- - - - - 7

Chapter 1.3 : Limitation of the study - - - - - - - - - -- - - - - -- - - - - - - - - - - - - - - - - - - - - - 7

Chapter 1.4 : Methodology of the study - - - - - - - - -- - - - - - - - - - -- - - - - - - - -- - -- - - -- 7

Chapter 2 : Literature Review - - - - - - - - -- - - - -- -- - - - -- - -- - -- -- - -- - - - -- - - -- - - - 8

Chapter 3 : Project Description - - -- - - - -- ----------------- -- - - -- - - - - - -- - - - - - -- - - - 9

Chapter 3.1 : sources of Business law - - - - - - - - - - - - - - - - -- - - - - - - - - - -- - - - - - - - - - - 9-10

Chapter 3.2: Business being affected by different laws ------------------------------------------------ 10-12

Chapter 3.3 : Essential Elements of a Contract--------------------------------------------------------- 12-13

Chapter 3.4: Importance of Business laws to conduct new business ------------------------------- 14

Chapter 3.5: Effects of new technologies in the landscapes of Business law ------------------ 14-15

Chapter 4 : conclusion ----------------------------------------------------------------------------------------- 16

Reference------------------------------------------------------------------------------------------------------- 17

Page |
5
 Executive Summery
The purpose of our study is to analyze how business law affects on new business. It’s impossible to know
exactly what regulations might apply to your particular business. Regulations vary by state and locality.
And they vary depending on the type of business. Some businesses, for example those that are involved in
health care or food service, face complex regulation by many federal, state, and local agencies. Other
businesses, on the other hand, may be minimally regulated. Businesses that face specific regulations
because of particular products or services they offer usually need to get permits or licenses, so we’ll
discuss the special rules they must follow in a future article. Other kinds of regulations affect—or
potentially affect—all businesses: Businesses open to the public must comply with the Americans with
Disabilities Act. Your lawyer can explain the requirements, or you may be able to get information about
them through your city or state’s economic development office. Many types of business might have to be
concerned with environmental regulations, including rules on air and water pollution, disposal of toxic
materials, use of certain products (i.e., the gas Freon, used in air conditioning systems).

Page |
6
 Chapter 1: Introduction
Business is a crucial part of life, there should be some kind of rules and regulations to control and operate
it in a disciplined way (Cheese man, 2004). In order to do so, business laws have been introduced. And in
the present world business firms must operate within the boundaries of laws and government regulation.
Laws have been developed not only to protect consumers but also to preserve competition. Government
agencies enforce these laws at different administrative levels. Business firms that do not comply with the
laws face fines, penalties and in consequences fail to run. So, knowing business laws are very important to
operate a business. To become a new successful businessman everyone should obey the business law
carefully.
1.1 Objectives of the Study
1. To analyze how business law affects on new business.
2. To identify how business law make entrepreneur successful.
3. To found business law that are important for businessman.
4. To analyze why it’s so important to know and obey the business law

1.2 Scope of Study

This study is conducted on the Business Law. From this paper we can get to learn how actually
business law effects on new business. We can also learn how the businessman become so successful
by abiding these business law. Also, we can get the idea of why business law should obey.

1.3 Limitation of the Study

During the study of the report we have faced following problems-
- Time is not enough for such an extensive study.
- Information relating to the survey is very sensitive that is why secondary data have been used in some
extent.
1.4 Methodology of the Study
The information and data used in this report have been collected from both primary and secondary sources
Primary sources- Personal observation.
Secondary sources- Books, company’s annual report, Lecture sheets, Internet

Page |
7
 CHAPTER-2: LITERATURE REVIEW

Bill Williams (February 7, 2017) conducted a study which provides potential expectations of how does the
law affects businesses. Governments impose different rules and regulations on businesses and some of these
rules and regulations apply to both small and big businesses. As a business owner, it is very important for
you to understand business law and the regulations that affect your type of business. Business laws affect
employer to employee relationships and vice-versa.
Nathalie Virem (December 14, 2018) provided a general understanding of the Business law, Why the Most
Successful Businesses Follow These 7 Natural Laws. Many entrepreneurs are continually struggling to
build their businesses with little to show for it. That could change in a flash for those who know and apply
seven natural laws that work behind the scenes to determine whether a business endeavor will succeed or
fail. Just as a sailboat must work with the winds to reach its destination, so too must business leaders work
with these natural laws to achieve their goals. For businesses that are not performing at their best, consider
which of these laws you might be missing.
Arkady Bukh (October 25, 2019) conducted a study in which we can learn couple of areas that
business owner needs to learn. If you own a business, especially a fledgling or small business, you
probably do not have a large team of attorneys on retainer to address the myriad legal issues that arise in
the course of a given day, week or quarter. Nevertheless, there are certain areas of law that you need to
familiarize yourself with to help ensure your business is prime for growth.

Jayson Demers (December 12, 2016) conducted a study in which he expressed Starting a business -- or
even getting involved as a professional when you’re young can be intimidating. You might have knowledge
about business from school, books or practical advice from sources online, but there’s a big difference
between understanding business fundamentals on paper and gaining wisdom through actual experience.

Page |
8
 CHAPTER-3: PROJECT DESCRIPTION

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. 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. 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.

3.1 sources of Business law

Common law:

In law, common law (also known as judicial precedent or judge-made law, or case law) is the body of law
derived from judicial decisions of courts and similar tribunals. The defining characteristic of “common law”
is that it arises as precedent. In cases where the parties disagree on what the law is, a common law court
looks to past precedential decisions of relevant courts, and synthesizes the principles of those past cases as
applicable to the current facts. If a similar dispute has been resolved in the past, the court is usually bound
to follow the reasoning used in the prior decision (a principle known as stare decisis). If, however, the court
finds that the current dispute is fundamentally distinct from all previous cases (called a "matter of first
impression"), and legislative statutes are either silent or ambiguous on the question, judges have the
authority and duty to resolve the issue (one party or the other has to win, and on disagreements of law,
judges make that decision). The court states an opinion that gives reasons for the decision, and those reasons
agglomerate with past decisions as precedent to bind future judges and litigants. Common law, as the body

Page |
9
of law made by judges, stands in contrast to and on equal footing with statutes which are adopted through
the legislative process, and regulations which are promulgated by the executive branch (the interactions
among these different sources of law are explained later in this article). Stare decisis, the principle that
cases should be decided according to consistent principled rules so that similar facts will yield similar
results, lies at the heart of all common law systems.

Statutory Law: Statutory law or statute law is written law passed by a body of legislature. This is as
opposed to oral or customary law; or regulatory law promulgated by the executive or common law of
the judiciary. Statutes may originate with national, state legislatures or local municipalities.

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.
Statues getting changes is sometimes due to the decision by the court.

Administrative Law: Administrative law is the body of law that governs the activities of administrative
agencies of government. Government agency action can include rule making, adjudication, or
the enforcement of a specific regulatory agenda. Administrative law is considered a branch of public law.

Administrative law deals with the decision-making of such administrative units of government
as tribunals, boards or commissions that are part of a national regulatory scheme in such areas
as police law, international trade, manufacturing, the environment, taxation, broadcasting, immigration
and transport. 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

3.2 Business being affected by different laws

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:

Page |
10
1. The law of Contract
2. The Law of Torts
3. Law of Sales
4. The Law of Agency
5. The law of Property
6. The law of Bankruptcy
7. The law of Negotiable instruments

The Law of Torts Tort is the area of law where in response to a private or civil wrong or injury the courts
provide the remedy of allowing a lawsuit for (usually monetary) damages. Thus, the goal is to restore the
victim to his or her former condition. Tort law is said to be a development of the old maxim “ubi jus ibi re
medium” (Every right needs a remedy). The term tort comes from the Latin word "tortus", meaning
"crooked" or "twisted”. Derived from French for "wrong," a civil wrong or wrongful act, whether
intentional or accidental, from which injury occurs to another. Torts include all negligence cases as well as
intentional wrongs which result in harm.
Therefore tort law is one of the major areas of law (along with contract, real property and criminal law) and
results in more civil litigation than any other category. Some intentional tort s may also be crimes, such as
assault, battery, wrongful death, fraud, conversion (a euphemism for theft) and trespass on property and
form the basis for a lawsuit for damages by the injured party. Defamation, including intentionally telling
harmful untruths about another-either by print or broadcast (libel) or orally (slander)-is a tort and used to
be a crime as well.
Definition of Tort
“A tort is a civil wrong for which the remedy is an action for un-liquidated damages and which is not
exclusively the breach of a contract, or the breach of a trust, or the breach of other merely equitable
obligation”- Salmond. Tort is anon criminal (civil) injury to other persons or their property or reputation;
results from intentional act or negligence. (Skinner and Ivan ncevich) The first reported case where the
court used the word “tort” is an old (1597) English case, Boulton v. Hardy. The term tort is the French
equivalent of the English word ‘wrong’ and of the Roman law term ‘delict’. The word tort is derived from
the Latin word ‘tortum’ which means twisted or crooked or wrong and is in contrast to the word rectum
which means straight. Everyone is expected to behave in a straightforward manner and when one deviates
from this straight path into crooked ways he has committed a tort. Hence tort is a conduct which is twisted
or crooked and not straight. As a technical term of English law, tort has acquired a special meaning as a
species of civil injury or wrong. It was introduced into the English law by the Norman jurists
Some General Conditions in Torts
❖ Act and Omission

To constitute a tort there must be a wrongful act, whether of omission or commission, but not such acts as
are beyond human control and as are entertained only in thoughts. An omission is generally not action able
but it is so exceptionally. Where there is a duty to act, an omission may create liability. A failure to rescue
a drowning child is not actionable, but it is so where the child is ones own. A person who voluntarily
commences rescue cannot leave it half the way. A person may be under duty to control natural happenings
to his own land so as to prevent them from encroaching others’ land.

❖ Voluntary and Involuntary Acts

Page |
11
A voluntary act has to be distinguished from an involuntary act because the former may involve liability
and the latter may not. A self will act like an encroachment for business, is voluntary, but an encroachment
for survival may be involuntary. The wrongfulness of the act and the liability for it depends upon legal
appreciation of the surrounding circumstances.

❖ Malice

Malice is not essential to the maintenance of an action for tort. It is of two kinds, ‘express malice’ (or malice
in fact or actual malice) and ‘malice in law’ (or implied malice). The first is what is called malice in common
acceptance and means ill will against a person, the second means a wrongful act done intentionally without
just cause or excuse. Where a man has a right to do an act, it is not possible to make his exercise of such
right actionable by alleging or proving that his motive in the exercise was spite or malice in the popular
sense.

3.3 Essential Elements of a Contract

An agreement becomes enforceable by law when it fulfills certain conditions. These conditions, which may
be called the Essential Elements of a Contract, are explained below.

Offer and Acceptance

There must be a lawful offer by one party and a lawful acceptance of the offer by the other party or parties.
b. The adjective “lawful” implies that the offer and acceptance must conform to the rules laid down in the
Contract Act regarding offer and acceptance.

Intention to Create Legal Relationship

There must be an intention (among the parties) that the agreement shall result in or create legal relations.

An agreement to dine at a friend’s house is not an agreement intended to create legal relations and is not a
contract. But an agreement to buy and sell goods or an agreement to marry, are agreements intended to
create some legal relationship and are therefore contracts, provided the other essential elements are present.

Lawful Consideration

Subject to certain exceptions, an agreement is legally enforceable only when each of the parties to it gives
something and gets something An agreement to do something for nothing is usually not enforceable by law.
The something given or obtained is called consideration. The consideration may be; in act (doing
something) or forbearance (not doing something) or a promise to do or not to do something. Consideration
may be past (something already done or not done).

It may also be present or future: But only those considerations are valid which are “lawful”.

Capacity of Parties

The parties to an agreement must be legally capable of entering into an agreement otherwise it cannot be
enforced by a court of law. Want of capacity arises from minority, lunacy, idiocy, drunkenness, and similar
other factors.

Page |
12
Free Consent

In order to be enforceable, an agreement must be based on the free consent of all the parties. There is
absence of genuine consent if the agreement is induced by coercion, undue influence, mistake,
misrepresentation, and fraud. A person guilty of coercion, undue influence etc. cannot enforce the
agreement. The other party (the aggrieved party) can enforce it, subject to rules laid down in the Act.

Legality of the Object

The object for which the agreement has been-entered into must not be illegal, or immoral or opposed to
public policy.

Certainty

The agreement must not be vague. It must be possible to ascertain the meaning of the agreement, otherwise
it cannot be enforced.

Possibility of Performance

The agreement must be capable of being performed. A promise to do an impossible thing cannot be
enforced.

Void Agreements

An agreement so made must not have been expressly declared to be void. Under Contract Act there are five
categories of agreements which are expressly declared to be void. They are:

• Agreement in restraint, to marriage

• Agreement in restraint of trade
• Agreement in restraint of proceedings
• Agreements having uncertain meaning
• Wagering agreement

❖ The elements mentioned above must all be present. If anyone of them is absent, the agreement does
not become a contract. An agreement which fulfills all the essential elements is enforceable by law
and is called a contract.
❖ Willfully interfere with or misuse any appliance, convenience or other thing provided in the
establishment for the purpose of securing the health, safety or welfare of the workers therein;
❖ Willfully and without reasonable cause do anything which is likely to endanger himself or other;
❖ Willfully neglect to make use of any appliance or other things provided in the establishment for the
purposes of securing the health or safety of the worker therein.

Page |
13
3.4 Importance of Business laws to conduct new business

If you imagine doing business without any legal means to protect your best interests, you’ll understand
why the rule of law is important to business. The rule of law gives everyone a framework for how to act
and operate. It holds people, businesses and government accountable for their actions.

Without predictable rules and patterns to follow, doing business would be chaotic. You would never
know how another party would act in any given situation and it would be all too easy to be taken
advantage of. The rule of law provides much-needed stability, consistency and certainty in a potentially
volatile landscape. With the guidelines for universal acceptable behavior clear and universal, it’s a lot
easier to ensure that organizations act predictably and responsibly.

The rule of law has no simple definition, but in its essence, it’s a concept that means no one is above
the law. The rule of law means that there are clear, understandable rules that everyone has to follow –
citizens, governments and businesses. It’s a way of keeping our justice system fair and ensuring that
everyone complies with the law.

There are rules in place to ensure that the way you do business is fair to you, your employees and your
community. Everyone has to follow these rules and – ideally – there are universal consequences if you
neglect to do so.

Workplace safety, hiring, wage issues and licensing are just a few areas where some business owners
struggle to tick all the boxes. While the rule of law means that there’s clarity and consistency in rules
and regulations, you still need to learn what the rules are.

If you own or work for a Bangladeshi business, you have to follow Bangladesh’s law. When you neglect
to do so, there are clearly outlined consequences. For example, Bangladesh has laws governing
minimum wage. When someone fails to comply with this law, there is certainty and clarity around how
the matter will be dealt with, ensuring fairness and consistency. By understanding Bangladesh laws, you
can better identify legal risks and protect your business.

So, there is a question “What are the risks of non-compliance?”

Failing to comply with state and federal guidelines can have serious consequences for your business.
That’s why it’s so important to know and understand the rules. If you don’t, you can be vulnerable to
fines, lawsuits, audits – even having your business dissolved entirely.

If you’d like to broaden your understanding of the law and how it relates to your business, consider
undertaking Southern Cross University Online’s Master of Business Law. By equipping yourself with
valuable knowledge, you can make the best and most informed decisions for your business

3.5 Effects of new technologies in the landscapes of Business law

When our world is moving towards technologies, then our business should change. All of businessman’s
mind has a common headache on “how technology is changing the landscape of Business Law?”

Page |
14
The tidal wave of automation is transforming every part of society, and the laws that govern Bangladesh
businesses are no exception. Here, we’ve outlined some of the ways that new technology is disrupting
the legal context in which businesses operate – from the boardroom to the courtroom.

New legalities around digital business practices

Digital business has exploded over the last decade, and the boom shows no sign of abating. Rapid
changes in how the global economy operates have left some jurisdictions scrambling to catch up. Some
questions are less up in the air than others.

But it’s not just online-only businesses that are affected. For instance, the Privacy Act 1988 requires
that you make customers aware of any data you’re collecting, and under the Spam Act 2003 it’s illegal
for business in Bangladesh to send unsolicited commercial electronic messages – i.e. it’s unlawful to
add people to your newsletter list without their consent.

E-commerce Law

Commercial rights and legal environments are crucial to the form of trade conducted through the Internet
over invisible national barriers. The role of government should provide legal framework for e-commerce
so that domestic and international trade is allowed to expand their horizons; and basic rights such as
privacy, intellectual property, and prevention of fraud and consumer protection should be taken care of.
There is no e-commerce law in Bangladesh yet. To make new cyber laws the following recommendation
cab be considered:
The relevant rules and regulations for customs, income tax, the penal code, telegraphy and telephony and
other relevant rules should be modified to accept e-commerce documents. A number of federal, state, and
international laws now govern e-commerce, which can involve complex contract and tax issues, security,
and privacy issues. Because technology changes quickly, the laws regulating it are new and developing.

In the United States, the proposed Uniform Computer Information Transactions Act (UCITA) intends to
bring uniformity and certainty to the laws that apply to information technology transactions, just as the
Uniform Commercial Code does for the sale of goods. UCITA would create a uniform set of rules to govern
such areas of e-commerce as software licensing, online access, and other transactions in computer
information, but it has been controversial because of its potential to weaken consumer protections, and
instead of becoming federal law, has only been adopted in two states, Virginia and Maryland.

Intellectual Property Law

Intellectual property law deals with the rules for securing and enforcing legal rights to inventions, designs,
and artistic works. Just as the law protects ownership of personal property and real estate, so too does it
protect the exclusive control of intangible assets. Intellectual Property law in Bangladesh is now an
international concern because of the effect of globalization in the commercial environment. Bangladesh
took part in the convention founding the World Intellectual Property Organization (WIPO) on May 11,
1985. Bangladesh is a member of the Paris Convention regarding the Protection of Industrial Property in
1991 and of the Berne Convention for the Protection of Literary and Artistic Works in 1999. Besides, our
country is a signatory of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement of
the World Trade Organization (WTO), which came into action on January 1, 1995. The TRIPS Agreement
sets comprehensive, compulsory and common standards for all countries following the dispute settlement

Page |
15
system of the WTO. Being a member of Least Developed Countries (LDC), Bangladesh is exercising the
extended transition period to bring herself into compliance with their regulations.
Chapter 4: Conclusion
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 Bangladesh has presented

Page |
16
References:

1. Bill Williams. How Does the Law Affect Businesses? Journal of YourStory from Mystory, 7th Feb 2017.

2. Lisa Furgison. 20 Business Laws Every Entrepreneur Should Know in 2015. Journal of bplans, 2015
3. Uzair Ahmad Khan. What Should I learn about Business Law to be Successful as an In-House Counsel?
– Journal of ipleaders, September 10, 2019

4. Arkady Bukh. 6 Areas of Law Every Business Owner Needs to Understand. Journal of Entrepreneur Asia
pacific, October 25, 2019

5. Jayson Demers. The 7 Business Lessons You Should Learn by 30. Journal of Entrepreneur Asia pacific,
December 12, 2016

Websites:
1. https://yourstory.com/mystory/6d7c3b1641-how-does-the-law-affect-businesses-
2. https://www.lawteacher.net/free-law-essays/commercial-law/the-effect-of-business-laws-law-
essays.php
3. https://online.scu.edu.au/blog/how-rule-of-law-is-important-to-business/

4. Book- “Commercial Law , including company law and industrial law” – by Sen Mitra.

Page |
17