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Bylaws: Definition, Example and Related Terms

What are Bylaws ?

Bylaws are like the rulebook for a company. They set out how the company is run, who's in charge, and what happens when people don't play by the rules. They are written by the company's founders or directors and can be changed as the company grows and changes.

They are important because they keep everyone on the same page and make sure the company is run fairly and efficiently. For example, bylaws can set out how often the company has to hold meetings, how many people need to agree before a decision is made, and what happens if a director wants to leave the company. Bylaws are not usually seen by the public, but they are very important for running the company smoothly.

Commercial contract managers should be familiar with bylaws because they can affect how contracts are made and enforced. For instance, bylaws might specify who has the authority to sign contracts on behalf of the company, or they might set out how disputes over contracts are to be resolved. Understanding bylaws can help contract managers navigate these issues and ensure that contracts are fair, legal, and in the best interests of the company.


  • Scenario Description
    A software company is setting up its bylaws. They include a clause about how decisions are made at board meetings. In this example, the bylaws might specify that a majority vote is needed to make decisions at board meetings. This means that more than half of the board members have to agree before a decision can be made. This can help ensure that decisions are fair and represent the views of the whole board, rather than just a few individuals. The bylaws might also set out how often board meetings are held and who has the right to call a meeting. These rules can help the company run smoothly and make sure everyone has a say in important decisions.
    A manufacturing company includes in its bylaws a procedure for resolving disputes over contracts. In this scenario, the bylaws might set out a process for resolving contract disputes. This could involve negotiation, mediation, or arbitration. The bylaws might specify who is responsible for handling these disputes and what steps they have to take. This can help ensure that contract disputes are handled fairly and efficiently, and can reduce the risk of costly litigation.

Related terms