Law 421 - Role and Functions of Law

Role and Functions of Law

LAW/421 Contemporary Business Law

March 11, 2013

Doug Dribben

Role and Functions of Law

Introduction

The legal system of the United States dates back to England's common law system; "The ancient law of England based upon societal customs and recognized and enforced by the judgments and decrees of the courts" (Common Law, n.d.). The legal system interprets and enforces the laws that govern the United States. Law is defined as "a body of rules of action or conduct prescribed by controlling authority, and having legal binding force" (Melvin, 2011, p. 4). The roles and functions of laws have developed to include the rights and responsibilities of individuals and businesses; "the common characteristics of the current state of the law are that it creates duties, obligations, and rights that reflect accepted views of a given society" (Melvin, 2011, p. 4).

Role and Functions of Law

The role of law is to govern the rules of conduct and ethical standards for businesses and societies. The types of laws are categorized "based on classifications related to a particular legal function or a right afforded by law" (Melvin, 2011, p. 18) and include civil, criminal, substantive, procedural, public, and private. Laws enable businesses to operate successfully and societies to run efficiently by regulating conduct, disputes, and criminal activity.

The purpose of law has progressed from England's common law system to include a combination of constitutional law, statutory law, common law, and administrative (regulatory) law, which are recognized and enforced at the federal, state, and local levels. However, the federal government's power to regulate individuals and businesses is limited and granted by the United States Constitution. The Constitution contains 27 amendments that protect the rights of individuals and businesses. The First Amendment has been broadened to extend businesses protection free speech; "...the Supreme Court has gradually increased the constitutional protections related to advertising" (Melvin, 2011, p. 39). The Fifth Amendment affords individual corporate officers and employees protection under the Fifth Amendment when facing a criminal investigation. The Fourteenth Amendment provides individuals and businesses protections regarding the Due Process Clause.

An example of individuals protected rights are the rules and regulations of estate planning. An estate "is all that a person owns, both real and personal property, and is essentially a person's net worth" (Azria, 2008, p. 2). Estate planning allows an individual to determine who receives his or her property upon his or her death through the use of wills and trusts. Estate planning also helps individuals control the amount tax payable on their estate.

An example of a business protected rights are the rules and regulations of business estate planning. Businesses "require estate planning to control the direction and future of the firm at the time of an owner's death or retirement" (Flynn, 2008, p. 1). Business estate planning allows owner's to determine who will inherit their company, protect their family interests, treat all heirs fairly, and minimize transfer estate and gift taxes among other issues. Business estate planning is controlled and regulated through laws, such as the IRS Revenue Ruling 59-60, the Economic Growth and Tax Relief Reconciliation Act