Knowledge of the law is a business asset that can assist owners and managers in reaching their goals and objectives. Business law: a set of established rules governing commercial relationships, including the enforcement of rights. It sets rules with penalties in order to encourage compliance. Breach of contract: failure to comply with a contractual promise. Contract law: rules that make agreements binding and therefore facilitate planning and the enforcement of expectations: allows business enterprises to plan for the future and to enforce their expectations. The law functions to prevent disputes and to facilitate relationships. Litigation: the process involved when one person sues another. When one party fails to keep a contractual commitment, suing that person may seem to be the best and only response but this tends to lead to ruining a good business relationship, high financial costs, and more. Liability: legal responsibility for the event or loss that has occurred.