All cows are mammals, but not all mammals are cows. It’s the same with business law and corporate law: All corporate law is business law, but not all business law is corporate law.1
When people ask about the difference between corporate and business law, it’s often because they have questions about their own situations. Whether you’re launching a new business or leading an existing corporation, there are corporate and business laws you’ll need to comply with.
Understanding the differences between these laws is a must for running a successful business. Moreover, knowing what makes each type of law different is essential for distinguishing between corporate and business lawyers—and knowing which one to consult.
What is business law?
Business law is the broad legal framework that governs commercial activity. It covers the rules that guide how businesses are formed, how they operate and how they handle common legal issues.
All business entities must comply with federal, state and local business laws, from your neighborhood coffee shops to nationwide service providers. This area of law addresses everything from contracts and employment disputes to intellectual property protection and tax obligations.
Business law helps ensure fair practices and supports clear communication. It encompasses other areas of law, including corporate law, and protects both the business and its customers. A business law attorney or a corporate lawyer fall under this scope.
Together, business and corporate law form the basis of all legal guidance that shapes organizations big and small.
What does business law cover?
Understanding business law is easier when you see it in real life. These examples show how legal principles relate to everyday business situations.
1. Contractual agreements
The law directly provides clear guidelines for business contracts, because they’re integral to commercial transactions.
Let’s say Ivy and Jasmine are sisters who run a café called The Blooming Brew. They sign a contract with a local bakery that agrees to deliver fresh pastries every morning between 5:00 and 7:00 a.m. for $600 a month.
To be legally binding, a contract must satisfy four criteria:
- Agreement: The signatories must agree to the terms of the contract.
- Consideration: There contract must clearly outline a promise each party will uphold.
- Capacity: The signatories must have the legal ability to enter into a contract.
- Lawful intent: The parties must agree to operate within the confines of the law.2
Both parties – the café and the bakery – willingly agree to the terms. The pastries and the payment are the consideration; each side will provide something of value. Everyone involved has the capacity to understand the deal, and nothing about selling pastries is illegal.
In other words, the contract Ivy and Jasmine signed is legally-binding and enforceable.
So, if the bakery starts delivering at 10:00 a.m., instead of the agreed time, Ivy and Jasmine could pursue legal action. Likewise, if the sisters stop paying the full $600 without renegotiating, the bakery could seek legal recourse. A contract carries legal implications.
For more on that, check out What is Contract Law, and Why Does it Matter in Business?
2. Employment disputes and employee rights
Workers’ rights are another important issue that underscores the connection between law and business. Employment law is an area of business law that focuses on creating fairly-managed workplaces.
Consider Marcus and Mitchell, who run a landscaping business. One of their employees, Lena, tells them she’s pregnant and will need time off for medical appointments. A couple of weeks later, Marcus and Mitchell tell Lena they’re cutting her hours. No longer a full-time employee, Lena will lose access to her health benefits.
Lena believes she’s facing discrimination and contacts a business attorney who specializes in employment law. With legal support, she files a complaint with the Equal Opportunity Commission (EOC).
After investigating Lena’s employer, the EEOC finds that Marcus and Mitchell violated federal and state laws, including Title VII of the Civil Rights Act, which protects against pregnancy-based discrimination.
With the law on her side, Lena can file a suit against Marcus and Mitchell’s company.
3. Intellectual property protection
In the business world, protecting intellectual property (IP) is important for maintaining a competitive advantage.
Take Luna, the owner of a popular vegan bakery called “Mother Moon Sweets.” She designed her own logo—a smiling crescent moon above a croissant—and even tested it with friends and family before trademarking it.
In preparation for her grand opening, Luna printed her logo on boxes, signs and merchandise. Business boomed—until a new bakery called “Mama Moon Treats” opened one block away.
Mama Moon Treats has a nearly identical logo: a moon over a croissant. The colors are different, but the similarities are striking.
Luna hires a lawyer who sends Mama Moon Treats a cease-and-desist letter. Under intellectual property protection laws, Luna’s registered trademark allows her to take legal action against others who copy her logo and business name.
What is corporate law?
Business law deals with all legal aspects of business operations. On the other hand, corporate law issues are specific to corporate entities, businesses that meet the standards to be considered a "corporation."
What does corporate law cover?
Corporate law focuses on corporate operations. From forming a company to managing major financial decisions, this area of law guides how corporations operate and grow.
Corporate law concerns are myriad--and they include compliance with tax law and international laws, which might apply if the scope of the corporation crosses national borders.
Below are a few examples that illustrate the relationship between the law and corporate entities.
Forming a corporate entity
Corporate laws include federal, state and local laws that regulate different corporate structures.
For instance, say five friends—Alyssa, Ben, Claire, Danny, and Enira—decide to launch a business focused on pet wellness. They plan to bring in investors to grow the company, so they form a corporation.
They check their state’s business name database, file articles of incorporation, appoint themselves to the board, and draft company bylaws. As founders, they each receive shares, which they note in a shareholder ledger.
These steps are all examples of corporate governance in action, and corporate law directly influences corporate governance.
Going public and selling shares and securities
Corporate law regulates publicly traded companies. It provides guidelines for taking private companies public (and vice versa).
Let’s say a company named "LiveSpark Technologies" is a clean energy company that starts as a private corporation. After eight years, the board votes to go public so the organization can raise capital through an initial public offering (IPO).
In accordance with corporate law—and, more specifically, securities law—LiveSpark will amend its bylaws and authorize more shares. It will also file a registration statement with the Securities and Exchange Commission (SEC).
This filing must disclose LiveSpark’s financial risks and details about its corporate leadership. State and federal regulations require public companies to make this information readily available for investors.
Corporate attorneys help guide companies like LiveSpark through complex filings to ensure compliance and transparency.
Corporate leadership’s fiduciary duties
Directors and officers of a corporation have a legal obligation to act in the best interest of the company and its shareholders. This obligation is known as leadership’s “fiduciary responsibility,” or “fiduciary duty.”
Take Sarah and Stephanie, who both sit on a company’s board of directors.
Sarah does her homework—reviewing reports, asking questions, attending meetings—before voting on a big investment. Stephanie skips meetings and votes based on what others are doing. If the deal fails, Sarah’s preparation may protect her from blame under her duty of care. But Stephanie’s lack of due diligence? That could be a problem. She had a legal responsibility to act in the best interest of the company with all corporate assets.
There are other management duties, too. For instance, the duty of loyalty prevents officers from making decisions purely to benefit themselves. And under the duty of obedience, corporate leaders must follow the law as well as the company’s own rules.
These fiduciary responsibilities help preserve shareholder trust.
Corporate lawyers work closely with organizational leadership to comply with these regulations and uphold ethical standards.
What are the key differences between corporate and business law?
While they’re closely related, corporate and business law differ in scope and application.
Business law covers a wide range of legal issues. It applies to every business structure, including sole proprietorships, partnerships, LLCs and corporations. Business lawyers focus on a broad scope of legal services, as they handle everything from employment law to contractual agreements and IP protection.
Corporate law, on the other hand, exists within the realm of business law. It focuses on corporate entities and how they’re formed, governed and structured. Corporate law also deals with topics like corporate governance, shareholder agreements and the fiduciary responsibilities of officers and directors.
Corporate lawyers advise their corporations on matters like going public, issuing stock or navigating regulatory compliance. Business and corporate lawyers may also work together to provide legal advice to incorporated businesses.
What’s the difference between corporate lawyers and business lawyers?
Corporate and business lawyers are two different types of legal professionals that help ensure companies follow the law, limit their liability and operate sustainably.
Though business and corporate lawyers often work side by side, their areas of focus aren’t identical.
A business lawyer handles general issues that arise in everyday business operations. For example, they may draft contracts or advise clients on employment concerns.
Alternatively, a corporate lawyer assists corporations with issues like creating company bylaws, navigating board decisions and preparing legal documents for mergers and acquisitions.
It’s important to understand this distinction, especially when legal disputes arise.
Law and business go hand-in-hand
Corporate and business law play essential roles in today’s economy. Whether you're starting a small shop or scaling a public company, understanding the distinction between the two can help you navigate the business – and legal – landscape effectively.
I teach online courses in the Business Management degree program at Rasmussen, and we include a foundational knowledge of business and corporate law. We focus on real-life scenarios because it makes this curriculum far more interesting!
You’ll explore common legal issues that plague business entities as you discuss the relationship between the law and business transactions.
The intersection between studying legal matters and studying business is fascinating. If you like it, you might gravitate toward a career in business management or legal compliance within an organization (thankfully, these roles don't require law school!).3 Check out What Can You Do with a Business Management Degree? Understanding Your Options to get a bigger picture.
1The material contained in this blog is for informational purposes only and is not to be interpreted as advice or guidance.
2Nolo website, Who Lacks the Capacity to Contract, viewed 7/13/25
3It is important to check with employers what the educational requirements are to be employed in legal compliance.
