Business Ethics and Common Law

The laws regulating business practices are all generally designed on either precedent or on anticipation of certain situations and actions. As an example, the Sarbanes-Oxley Act was passed as a result of the Enron scandal

One of the biggest hurdles for any sort of law aimed towards enforcing ethical procedures on the part of businesses is that there will always be cracks through which certain situations and actions fall. These gray areas often crop up simply because a law must have significant rigidity to it in order to function, as a law that is too overly open to interpretation is a weak law and ineffective at serving its purpose. Thus, a situation could arise in which one would hope that a law existed to enforce a certain action, but no such law does exist.

For example, in 1982, Tylenol was found to be contributing to a number of deaths around the City of Chicago, but the number of deaths was small enough and the incidents isolated enough, that the Food and Drug Administration did not attempt to force Johnson and Johnson, the company that owned Tylenol, to take any action in particular. Johnson and Johnson could have legally taken no action whatsoever as a result of a lack of law governing that specific situation.

It is these gray areas in which business ethics plays an incredibly important role, as the given ethical procedures of a company involved will determine its behavior in such a situation. To find out more information on business law and its gray areas, click the link.

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