Cite this article as:"Legal Regulation in Ethics," in The Business Professor, updated January 30, 2015, last accessed August 6, 2020, https://thebusinessprofessor.com/lesson/legal-regulation-ethics/.
Back to: BUSINESS ETHICS
What is the role or effect of legal regulation on ethics?
- That 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.
- Good faith requirements can be found in the UCC.
- That bad faith leads to a cause of action for tort in certain circumstances. 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
- Also duty of care for directors and officers.
- 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.