According to Melvin (2011), the term law is defined as “a body of rules of action or conduct prescribed by controlling authority, and having legal binding force.” Many will find that laws are commonly encountered in a business or social environment and it is because laws largely impact the success or failure of a business or social operation. It society is to run smooth and efficient; laws need to be in place to regulate social behavior. Laws are also responsible for setting business and social expectations and ethical standards. Law also provide a conduct of rules, means to measure and enforce such rules, provide paths to settle differences and sanction consequences for breaking rules.
Without governing the actions of business and social laws, society and business would not function effectively, and more than likely—commerce would crumble. Social and business laws seem simple from the outside looking in. However, the legal system in the United States can be very complex but can be broken down into groups: statutes, constitutions, administrative decisions and regulations, common law, treaties, executive orders and ordinances. Of these groups, the most common terms one may hear in a business or social environment are constitutional, common, statutory and administrative law.
“Constitutions have two primary functions one to prescribe the basic structure and powers of a particular government body and to protect certain rights of individuals and businesses from government encroachment (Melvin, 2011).” It is also an overriding law because its foundations are built on the principles of a government—federal or state.
Essentially, common laws are made by courts and has not taken legislative action and been passed. This is normally in place because fundamental issues from previous—yet similar cases or prior court decisions. Common laws apply when cases are not governed by another type of law.