What is the role or effect of legal regulation on ethics?
Ethical values frequently become law and that legal regulation reflects ethical values.
- Ex. Civil Rights Act of 1964
Legal regulation is a significant source of values for business. At least five major ethical rules can be drawn from the law:
- Respect the liberty and rights of others.
- Act in good faith,
- Exercise due care,
- Honor confidentiality, and
- Avoid conflicts of interest.
Respect for the liberty and rights of others suggests formalist values.Consider due process guarantees, freedom of expression, and privacy legislation.
- Ex. Good faith requirements can be found in the UCC. That bad faith leads to a cause of action for tort in certain circumstances. This suggests formalism. Also leads to fiduciary actions in corporations.
Due care, such as required in negligence law, derives from society’s expectations about the reasonableness of actions. This suggests consequentialism (promoting the common good).
- Ex. Firestone tires, level of care required
Confidentiality often arises when the law creates or requires fiduciary obligations. Various agency relationships demonstrate this. This suggests consequentialism by its purpose of enhancing the willingness to enter relationships through the expectation of confidentiality.
Conflicts of interest can arise in the law because of “serving two masters” or through bias caused by matters (often financial) that compromise fair judgment.
- Example of Director-Shareholder relationships.