Functions and Role of Law in Business and Society


Law is a binding practice that is adhered to by a community. It is a rule of conduct that has been formally put in place by a higher authority and is binding. The role and function of law is to make sure that there is peace, personal freedom and social justice. Law in most cases is set to maintain a social control and public order and resolve the disputes in a very peaceful manner. Moreover, law facilitates change that makes individuals accept the process of change and institute the change.

The law plays a very significant role in business as well as in society in general. It regulates behavior in the society and ensures that it is run smoothly. Additionally, law supplies ethical standards and expectations, through which the rules of conduct emerge as well as measures which put these rules in place. Apart from the functions mentioned above, law has other functions such as peace keeping, promoting personal freedom and social justice, upholding of free competition and protecting the environment. All in all, law is a set of rules that ensures that common sense is followed to the latter (McCloud, 2010).

Classifications of Law

Law plays various roles in business and society. The three classifications of law present its roles more apparently.

  • Criminal and civil law, whereby criminal law is the law through which public individuals who commit crimes are prosecuted by governing bodies. Civil law, on the other hand, is law whereby private parties sue each other for crimes committed against one another.
  • Substantive law presents social rights and duties of people, while procedural law is a guideline through which government bodies deal with people who break substantive laws.
  • Public law defines relationship between government and individuals while private law defines a relationship between two individuals.

Through the above classifications, lawmakers are able to treat law as a flexible tool, through which they can accomplish the chosen purposes. Thus, law plays a vital role in businesses and societies.

Function and Role of Law in Business and Society

First of all, law promotes personal freedom. It means that an individual can be herself or himself without being judged by others in society or in business. Through this, confidence and self-assurance is elevated in a person.

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Secondly, law promotes free competition. When law is put in place, the business environment gains free competition as there is no discriminating; this in turn leads to the economic growth.

Moreover, law facilitates planning and realization of reasonable expectations. When law is put in place, especially in a business setting, it helps the members of that business to achieve their expectations, with which they may have a successful and fruitful venture.  Without law, people may not respect the set expectations and may fail to work towards achieving these expectations.

Finally, law promotes social justice. It plays a major role in society as it guarantees the rights of those who are weak both physically and socially in any given social structure. Law avoids discrimination, torture and ridicule. It protects the rights of life and substance from those in a society who tend to use their prestige or wealth to manipulate the weaker individuals in the society.


Law decides what is right and what is wrong in the view of the public. Without law that governs the actions of businesses and societies, the society will fail to function effectively and there will be a lot of social injustice. The business environment will also be on a downward movement and the economy will in turn collapse. Law exists to keep the business environment and society from tearing themselves apart through corruption, cheating immorality, and inhumane acts. Law plays a significant role in business and society, but like any other man device or idea, it does have potential for abuse and can be ignored in most cases.

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