Business Law, Ethics, and Regulation

Business law is an expansive area consisting of a range of legal disciplines, many of which are explored in subsequent chapters. To ensure that business is developed and operated with the greatest chance of success, it is important to be familiar with the laws, regulations, and ethical aspects of the context in which business activities occur.

It is not possible for law to recognize and correct every wrong that occurs in society. At a minimum, laws are developed and applied to curb the most egregious kind of wrongs. There is an association between what we generally think of as ethical behavior and what laws prescribe. For example, contract law upholds the general expectation that promises should be kept. Promise-breaking is viewed by most people as unethical. The law provides remedies for broken promises (in breach of contract cases) but not for all broken promises; as there may be valid reasons underlying an unmet obligation (for example, a force majeure situation).

A common challenge for students new to law is disentangling what the law says against ethical prescriptions and practices. While laws are typically based on societal ethics, mores, and customs, ethical expectations or obligations may not align perfectly with existing laws. It is important to recognize that ethics and the law are not the same and there may be times when simply following what the law stipulates may not be the ethical and responsible course of action.

Understanding legal rights and regulations including social and environmental obligations should be a primary concern for any business initiative. Failure to understand legal rights may result in customers or competitors taking advantage of your business. Failure to understand regulatory and related obligations could expose the business to risks and other negative impacts.