In operating a business it is necessary to be clear in all legalities concerning your business. Governments make laws, and different countries have different structures as well as laws varying from state to state or city to city. Some have only one level of government (a national government); others have two levels (eg. a national and either local or state) and yet others may have more levels.

In some situations, groups of national governments may combine and reassign (ie. give away) certain of their powers to an international authority (The European Union).

If you are involved in any business, you need to know what authorities are responsible and relevant for making and enforcing laws within your sphere of operation. The law which applies in any business situation will depend upon what governing body has authority, both with respect to:

  •  The location of the business (the country or state where business is being carried out)
  •  The area of activity (In some places, international agreements may come into force with respect to quarantine law, but might not be relevant with respect to storage of products for sale).


In running a business it is also important to understand the role of courts in your area. It is essential that you are aware of the guidelines and protocols when starting your new business. Wherever you are located, courts are responsible for a range of things, such as:

  • Arbitrating the Constitution
  • Interpreting Legislation
  • Arbitrating Disputes.
  • Protecting Civil Rights.

1. To Arbitrate the Constitution

In Australia, for example: there are two distinct levels of government ‑State and Federal.

Under the constitutions of the Federal government and the various state governments, each government has designated distinct spheres of influence which it can act within. It is illegal for a government to act outside of it's designated sphere of activity.

If someone is unhappy with the way a government department is putting into practice sections of a state or federal constitution, they may complain to the department which administers that section of the law. If the government employee changes his/her decision, the matter will end there. If the dispute is not settled though, a complaint can then be made to either an administrative board or to the courts.

If the dispute is serious and still not resolved to the satisfaction of both parties after the appeal, the option then exists for a further appeal to be made to a higher court (eg: A supreme court), whose ruling will then be final.

2. To Interpret Legislation

Legislation is a term used to refer to Acts of Parliament or Congress (ie: formal decisions made by parliament). Most words written down in legislation do not have precise meanings. This fact leaves legislation open to be interpreted in differing ways, depending on who is reading it and how literal or liberal a view they take.

New legislation almost always has the possibility of affecting the way existing legislation would be interpreted. Frequently there are conflicts created between two different pieces of legislation if interpretation is made in a liberal way. In extreme cases of conflict between two pieces of legislation, a government may repeal one in order to prevent undesirable interpretations being made by the courts.

Courts have a role to decide what is the proper interpretation of the legislation.

3. To Arbitrate in Disputes.

Though there is legislation which affects disputes between people or organizations, there are many areas where there is no legislation exists. In these areas, the courts have developed opinions and made rulings which form precedents. In such disputes, the courts will make a judgment, and that judgment is binding.

4. To Protect Civil Liberties

Civil Liberties are things such as freedom of religion, freedom of speech, and freedom in politics. Some countries have a bill of rights incorporated into their constitution, or legislation. Australia does not. There are laws in some states which guarantee certain civil liberties (eg: equal rights legislation –where it is illegal to advertise a job for one sex or group and exclude other groups). There are also some laws which interfere with what some people would call civil liberties (eg: restricting drinking alcohol etc).


In creating a business and deciding what type of business to open – sole proprietor, partnership, or corporation legal issues need to be addressed. The decision on which type of business to open will be you decision, therefore it is important that you look at all the types along with their benefits and liabilities to make a sound decision. Different types of businesses will have different legal obligations with respect to such things as the following:

  •  Business Name Registration

You may operate under your own personal name without registering a business name; but if you operate under any other name (eg: Lilydale Lawn Mowing), you need to register that name with a corporate affairs office in your capital city. You will not be able to open a bank account or cash cheques using the name of a business without registering that name and being able to show an official business registration certificate.

  •  Trading Hours

Legislation may or may not restrict hours of trading in some businesses.

  •  Staff Employment ((wages and conditions)

Wages and Conditions may be established under union award systems, or some other legal mechanism.

These may be legally binding conditions.

  •  Consumer protection
  •  Legislation re: sale of goods
  •  Health laws
  •  Town Planning requirements
  •  Weights and measures laws
  •  Uncollected goods laws
  •  Sales tax
  •  Laws relating to shoplifting
  •  Restrictive trade practice laws
  •  Prices justification legislation

Be sure you know the implications of such laws on your proposed business before commencing or committing yourself.