Law and Ethics in Business

Subject: Business Ethics
Pages: 7
Words: 1999
Reading time:
7 min
Study level: College


Business law and ethics are concepts used to address legal and moral concerns related to business. Business law encompasses all rules and regulations that protect liberties and rights, resolve issues, maintain order, and establishes standards for corporate matters and their transactions with individuals and government agencies. Moreover, business ethics encompasses all moral principles that govern the conduct of business practices. Ethics and law are crucial for the success of any organization. The two govern how organizations treat both their employees and customers and play a significant role in controlling business practices. Furthermore, business law assists in trade formation and handling compensation issues that may arise in an organization and safeguards the rights of the company’s shareholders. This paper demonstrates how ethics allows businesses to make excellent decisions and uphold highly moral actions in the workforce, environmental, societal, and cultural systems of societies.

Business Formation

Business formation is an essential requirement when starting a business. It determines how payment of taxes will be made, the founders’ liability, and other crucial details. The most common corporate structures are sole proprietorship, nonprofit, corporation, partnership, and limited liability company (Piacentino, Bono, Cracolici & Giuliani, 2017). On one hand, a sole proprietorship is considered the cheapest and simplest business to form. It does not require incorporation documents or the running of notices in the media. This type of entity is owned by one person who is held personally accountable for company debts or legal issues, and they have no protection from creditor claims or lawsuits. On the other hand, partnership usually involves drawing agreements to state the business operation and the sharing of profit or losses between the involved parties. Each participant is typically responsible for business debts, lawsuits, and the actions of other partners.

Moreover, a limited liability company offers its members restricted protection from liability. To form this enterprise, one must file certificates of formation and articles of organization if the state statute permits it. The company is responsible for all individual bank accounts and debts of its members. The organization’s profits and losses also flow through it to each owner. The members are then supposed to choose how they expect to pay for their taxes, whether as an organization or partnership. Moreover, a corporation is far more expensive and official industry formation, where establishing it involves filing Articles of Incorporation with the state. The owners of this entity are then provided with limited liability protection.

Contract Law

Contract law is a collection of laws concerned with the making and implementing of agreements that are enforceable in court between parties. Contract laws oversee the generation of contracts, their execution, and establishing suitable solutions in case of a breach. For anyone to conduct business, they are required to use these regulations since they ensure smooth transactions happen and eliminate any misunderstandings. Still, they make sure both parties clearly understand the terms of the transaction. This law’s practice requires identifying the emerging issue and supporting extensions to ensure the business is conducted favorably and more conveniently.

In case of a breach or disagreement about the agreement terms, the parties involved may choose to resolve the issue in court. The common remedy for a breach of contract is compensatory damages. The party that is responsible for violating the deal is supposed to pay for the damages. Liquidated harms are sometimes provided when the parties had already decided on the consequences of breaking the agreement. Moreover, nominal damages are a small amount of compensation given to the aggrieved party if a breach occurs but does not cause any significant loss.

Contract law is practiced by lawyers, either as in private practice or in-house counsel for corporations, throughout the United States. To become contract lawyers, they require knowledge on creating and evaluating settlements that are enforceable, acceptable, and have value to the client (Flinders, 2017). They should also be aware of law choice, mandatory arbitration clauses, and jurisdiction for enforcement. In case of a dispute, the lawyers are responsible for resolving the issue and ensuring the best possible results for their clients. The solution sometimes can be achieved by both parties working together, while in other cases, the matter is resolved by the court.

Securities Law

Securities law is a collection of rules and regulations that control the issuance of security, a financial instrument that raises money for a business from its investors. The law states what is required from a corporation for it to offer its investments to the public. It exists to ensure public investments are fairly distributed to everyone interested in investing in the company. There are various security laws, including transactional security laws, regulatory security laws, litigation security laws, and administrative security laws.

Transactional lawyers are required to advise their clients on the manner of making public offerings and negotiate investments. On one hand, regulatory securities help clients adhere to federal regulations and state myriads that are used in safety offerings. The business needs to obey compulsory information disclosures and regulatory filings before and after being offered for public investment. In addition, litigation securities assist in solving disputes that may occur when buying and selling securities. On the other hand, administrative securities law includes appearing in an administrative hearing.

Intellectual property laws encompass the rules and regulations for enforcing and securing legal rights to designs, artwork, and inventions. It is designed to motivate people to be innovative and create beneficial works by ensuring they are not afraid of misappropriation and reap profits from their works. The constitution allows patents that give investors a right to make money from their products by transferring the right to someone else or using it in the marketplace. Trademarks are also used to avoid misleading advertising, confusion and assist customers in distinguishing different brands. Furthermore, copyrights protect architecture, music, writings, motion pictures, and other original artistic and intellectual expressions.

Anti-trust laws are established statutes that shield customers from illegal business practices and guarantee the competition is fair in the open market. They apply to various business activities such as price-fixing, bid-rigging, monopolies, and market allocation. They allow consumers to access diverse options and prevent them from paying higher prices for products and services in the marketplace. The major anti-trust regulations comprise Clayton Anti-trust Act, the Federal Trade Commission Act, and Sherman Anti-Trust Act.

There are other laws such as employment law, immigration law, and good consumer sales that apply to a business. Employment law incorporates all the rules and regulations that govern the relationship between employees and employers. The law states when an organization can hire an employee and when the employee can start working. It also indicates what an employee must be paid for their work and states the minimum required working conditions for the staff. The most common employment laws in the United States include overtime pay, the minimum wage laws, and family and medical leave laws.

Employers need to be more careful to avoid discriminating against employees. The constitution prohibits employers from being biased regardless of color, race, sex, religion, or national origin during the hiring process, when giving out promotions, or making dismissal decisions. However, sometimes there are allowed exceptions to the employment law. For instance, managers who direct roles that require specific types of people are permitted to choose based on their interests. Furthermore, the Age Discrimination Act of 1967 does not allow discrimination of older workers when it comes to termination, compensation, or promotion.

Corporate Law

Corporate law encompasses all matters relating to corporations, such as public listings and delisting, mergers and acquisitions, shareholder rights, and incorporation. The law regards companies as independent entities, and it applies to the organization itself instead of its workforce. The law is unique for corporations since they have a different legal personality that is not the same as those of its owners, shareholders, financiers, or directors. In business matters, a corporation claims similar rights as those of an individual.

Corporate law, despite the name, applies to businesses of all sizes, including sole traders, companies, and partnerships. Sole traders are controlled by few people who divide profits between themselves, while companies are considered independent from the financers, owners, or directors (Heaton, 2017). Private companies, on the other hand, are owned and run individually. It is not a corporation, but there is a limitation of personal liability. Also, public companies are financed by their shareholders, and the profits are divided based on the invested amount. Corporate law entails diverse matters and situations that relate to corporate interactions and operations.

Corporate solicitors have varied roles depending on the size and type of the organization. They provide legal advice for corporations, companies, and sole traders. They also handle issues relating to registration and incorporation of new companies, helping partnerships acquire finances and restructuring corporate entities to improve profitability. Furthermore, corporate solicitors offer advice to all types of businesses on various subjects, including restructuring, tax planning, risk assessment, and management.

Tax laws deal with government transactions and the taxation of businesses. It falls under public law and is mainly apprehensive with the legal features of taxation. International tax regulation applies when a corporation or individual has a tax problem in multiple countries. The law can further be divided into material tax and formal tax law. Material tax analyses the legal provisions that cause the charging of taxes, while formal tax law concerns rules stated in the law.

Business Ethics

Business ethics are the values and principles, written and unwritten, that govern the actions and decision-making within organizations. The ethics include trustworthiness, respect, fairness, and caring (Twin, 2021). They are essential for any company since they have an immense potential to impact the community. This behavior is made conducive to the organization by providing ethics training to executives and employees, providing advice on ethical situations, writing a code of conduct, and implementing systems for anonymous reporting. Business ethics is empowered by changing the structure, motivating the workers, and ensuring professionalism.

The observation of business ethics offers a variety of benefits to the organization. It ensures that the business is always conducting itself per the law by not committing any illegal actions to the customers, consumers, and employees (Connett, 2020). Conducting business ethically also guarantees the development of trust between the consumers and the organization. Trust is essential in ensuring success in a competitive market. Besides, leveraging business ethics can lead to improvement in overall brand equity. Furthermore, companies that observe a high level of conduct have a high probability of acquiring shareholders and investors. Display of good work will attract a highly skilled and talented workforce, too, since they will perceive the organization as being appreciative of employee interest.

There are varied ethical issues in an organization, and they affect all of its functional areas. The finance department is affected by security fraud, insider trading, false accounting, and inappropriate financial analysis. On the other hand, human resource management has recruitment, training, orientation, and health and safety issues. The marketing and sales department is also facing challenges regarding transparency on potential risks, product ingredients, respect for customer autonomy, and unfair pricing and distribution. Still, the production department may produce goods that can have harmful effects on consumers and the environment.

There are various ways of displaying ethical behavior in a workplace. The organization should prioritize the customer needs and hire staff that conducts themselves ethically. It should also provide clear communication and transparency in its dealings. Still, the business should respect customer information and provide sufficient resources for reporting ethical misconduct. Besides, the organization should ensure diversity in the workplace by offering equal employment opportunities.


In Summary, business laws and ethics describe a standard of conduct that is more than just doing what is legally correct but morally right. Laws enforce the rules and regulations that people are required to follow, while ethics assists in exploring options that help make ethically correct decisions. Business law and ethics play a significant role in maintaining order, establishing generally accepted standards, resolving disputes, and protecting rights related to customers, the organization, and the government.


Connett, I. (2020). Justine Vilain of Datagrail [Podcast]. Web.

Flinders, M. (2017). The politics of accountability in the modern state. London: Routledge.

Heaton, J. B. (2017). The” long term” in corporate law. The Business Lawyer, 72(2), 353-366. Web.

Piacentino, D., Bono, F., Cracolici, M. F., & Giuliani, D. (2017). A spatial analysis of new business formation: Replicative vs innovative behaviour. Spatial Statistics, 21, 390-405. Web.

Twin, A. (2021). Business ethics: Fair business policies within controversial subjects. Web.