Law and the Role of Ethics in Business

FEW POINTS TO REMEMBER
•  Law is a legally enforceable set of rules established by a government to regulate the conduct of people in a society.

•  Sources of law in the United States include constitutions, statutes, case law (court decisions), and administrative regulations.

•  Case law is a modern version of the common law of England. Then, as now, court decisions became precedents. A precedent is a standard that judges use for deciding later cases. The practice of following precedents (previously decided cases) is called stare decisis.

•  Law can be classified as civil or criminal law. Civil law protects the rights and property of individuals from harm by other individuals. Criminal law protects society from the harmful acts of individuals.

•  Those who violate criminal laws are punished, whereas those who violate civil laws pay money damages or are required to perform an act (specific performance) or to refrain from certain conduct (injunction).

•  Law is constantly changing to reflect the changes in society. Technology has had a major impact on the way we conduct our personal and business affairs.

•  Ethics has assumed a greater role as businesses carry on their day-to-day operations. Business owners can no longer minimize moral dilemmas in their role as decision makers. A lack of solutions to ethical issues could be a pathway to disaster.

•  Unethical behavior may be serious enough to be considered criminal in nature and therefore subject a violator to a fine or incarceration.