Legal Regulation in Ethics

Cite this article as:"Legal Regulation in Ethics," in The Business Professor, updated January 30, 2015, last accessed October 29, 2020,


  • 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.

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