What Is the Relationship between Business Ethics and the Law?

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  • Written By: Esther Ejim
  • Edited By: Kaci Lane Hindman
  • Last Modified Date: 15 September 2019
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Business ethics and the law are two interrelated terms that can exist independently of each other when it comes to business, yet intersect in various vital aspects. The reason for this intersection can be attributed to the fact that most times ethical considerations are also legally enforceable. This is not always the case though, because some ethical considerations in business are more like an unwritten code based on basic morality that is assumed to be universal.

One of the examples of a situation where business ethics and the law intersect is in the area of contract in business. Morality or ethics dictates that when two or more parties agree to something they should honor the agreement unless there is some form of extenuating circumstance that make sit unduly difficult, or even impossible, to fulfill the agreement. Yet, this is not always the case since some parties to an agreement often find a way of extricating themselves from the performance of an agreement. Fortunately, this type of act is not only ethically wrong, but it is also a violation of the law of contract and the injured party may seek redress from a court of competent jurisdiction.


Business ethics and the law also intersect in the area of false representation where someone falsely presents a material fact to another party with the intention of getting the person to part with something valuable. An example of this is when a car salesman presents a used car to a customer as if the car was brand new, causing the customer to pay the price of a new car for the used one. Clearly, such an action is ethically condemnable as well as legally actionable. This is just one of the varied instances where business ethics and the law have a confluence point.

In some countries there are strict laws establishing the minimum wage that an employer of labor is legally mandated to pay his or her employees. This does not, however, stop some employers from looking for ways to circumvent this law. In such an instance, an unethical employer might employ some people based on their circumstances and use this as a means for paying them less than they deserve for the service they provide. An example would be a farmer who hires some illegal immigrants to work on the farm and decides to use their illegal status as a means to pay them much less than the minimum wage. By doing so, the employer would have acted both illegally and unethically in first hiring the workers and then by underpaying them as well.


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