Role of Law and Courts in Today`s Business Environment

Roleof Law and Courts in Today’s Business Environment


Roleof Law and Courts in Today’s Business Environment

Thejudicial system every country is one of the basic foundation, thatentails the mechanisms that are meant to uphold the rule of law.Within the judicial system, there is the court which forms theplatform for resolving disputes as well as enforcing the law. The lawis devised to govern the relationship between people and the state,business-business relations among other aspects. In the businessworld, the court has become an indispensable tool in settlingdisputes as well as ensuring that, business respects the rule of law.

Businessescontinuously interact with other businesses, public, the government,and other business as they carry out their daily operations. Duringsuch interactions, various issues arise necessitating the need for aneutral body to solve them. The law and the courts serve as theneutral body and govern business practices in today’s businessenvironment (Keenan &amp Riches, 2007). Every aspect of businessactivities should be in line with the federal, state, andinternational laws. Therefore, it is imperative that today’sbusinesses understand and follow the laws that govern them to avoidpenalization. This paper discusses the role played by the law andcourts in today’s business environment and differentiates thefederal and state court structure. It also explains the concept ofjudicial review and the alternative dispute resolution methods in thebusiness world.

Roleof Law and Courts in Business Environment

Theprincipal roles of the law and courts in the business environment areestablishing standards, resolving disputes, and protecting theliberties and rights of businesses (Newton, 2005). The law and courtsset the expected standards to be met by a business and providespenalties for those who do not adhere to them. The standards set aremainly aimed at protecting the public from exploitation (Keenan &ampRiches, 2007). Laws also outline the procedure to create a newbusiness as well as the requirements to operate it. Therefore,businesses know what is expected of them in their operations. The lawalso ensures peaceful settling of disputes that arise betweendifferent players in the business field. In addition, it protects therights and liberties of the business by retaining the government andother parties from infringing on the businesses’ property rights.

TheJudicial Review Concept

Theaspect of judicial review entails the powers being held by theSupreme Court in the US, which mandates it to perform a review theactions executed by the executive and the legislative governmentbranches, and in turn decide whether their actions are within thelegal constitution (Keenan &amp Riches, 2007). The Supreme Court hasthe ultimate judicial authority to conduct such reviews, however,some federal and state courts also have such powers as well. Thejudicial review concept takes into the concept that, there should beno government branch that possesses ultimate powers thus promoting abalance of powers in all the branches (Newton, 2005). Judicialreview, therefore, ensures that all the branches of the governmentfollow the constitution. The judicial review demonstrates theseparation of powers in the modern business environment with commonlaw judges been granted the powers to create new legal rulesaffecting businesses or disband invalid ones.

Federaland State Court Structures

Thefederal court system is founded on Article III of the USconstitution. The Article creates the Supreme Court and grants thecongressional powers to create lower federal courts. The federalcourt system, District Courts, Court of Claims, the court ofinternational trade to govern businesses, international tradeactivities and Bankruptcy courts to handle business liquidationissues. The federal courts of appeal are mandated to listen toappeals in case a party is dissatisfied with the ruling from eitherof the mentioned courts.

ThePennsylvania State constitution was passed in 1874 and it establishesits court structure. Minor courts form the first level of thePennsylvania’s judiciary. They are followed by courts of commonpleas in 60 judicial districts. The superior courts and thecommonwealth courts are the intermediate appellate courts on top ofthe courts of common pleas. The Supreme Court of Pennsylvaniaconstitutes the highest in the state. Its administrative and judicialpowers are from the seven-member court and the Judicial Code(, 2015).

LawsAffecting the Restaurant Business

Variouslaws affect the restaurant business. To start with, zoning lawsaffect the location of restaurants to prevent health hazards. Therenewing of licenses and permits is another legal obligation for therestaurant to continue operating. Permit and license fees aresupposed to be paid before being given. Alcohol permits must beobtained from restaurants selling alcohol and alcohol laws such as noselling of alcohol to minor apply (Beesley, 2015). Other laws includea routine medical examination of the food handling personnel and thelegal structure of the restaurants in terms of liability. Limitedliability restaurants protect the owner from the liabilities ofhis/her business while the unlimited liabilities ones do not.

AlternativeDispute Resolution Methods

Businessdisputes can be resolved without involving the courts. These methodslimit the court bureaucracies and are, therefore, preferred by modernbusinesses because they reduce the litigation costs. These methodsinclude negotiation, mediation, and arbitration (Legal InformationInstitute, 2015). Negotiation is usually the first and involves bothparties coming together and trying to reach a consensus on their own.Mediation follows where both parties come together in the presence athird party who tries to bring the opposing parties to an agreement.This method of dispute resolution is common for resolving disputesbetween investors and stockbrokers. Finally, arbitration follows andis a simplified version of the trial. Arbitration is headed by anarbitral panel and has established rules. Each party presentsevidence which is weighed by the panel and issues a written decisionin favor of either party. This method is mainly used securitiesregulation, labor, and other business disputes.

Inconclusion, laws and courts affect businesses in many ways. Lawsgovern business practices to ensure they meet the required standards.Businesses must adhere to the ethics and standards set by the law orrisk being punished. Laws also help in the solving of disputes andprotect the rights of businesses. The judicial review ensures theevaluation of laws set to promote fairness and ensure a balance ofpower between all the branches of government. However, to reduce thecosts of litigation and save on time, businesses can choose to usethe alternative dispute resolution methods.


Beesley,C. (2015). Openingand Running a Restaurant “A Legal and Regulatory Checklist | theU.S. Small Business Administration | 27 October 2015, from

Keenan,D., &amp Riches, S. (2007). Businesslaw.Harlow: Pearson Longman.

LegalInformation Institute,. (2015). AlternativeDispute Resolution.Retrieved 27 October 2015, from

Newton,L. (2005). Businessethics and the natural environment.Malden, MA: Blackwell.,.(2015). Learn| Unified Judicial System of Pennsylvania.Retrieved 27 October 2015, from