These rules are recognised as legal rules (or the law) because they govern or regulate all
community behaviour and must be obeyed by everyone. The consequences for breaking them are
enforced through the judicial system.
Law as a regulatory tool
The law as a regulatory tool not only prescribes what people cannot do, it also informs people of
what they can do and what they must do.
For example, you cannot commit a crime, but you can own a property, and must pay taxes.
Law guarantees our freedoms, permitting free enterprise and providing a means to settle disputes
Could a business exist without a legal system?
Businesses could not exist without a legal system. To operate effectively and efficiently, business
needs law to
Regulate business activities
To facilitate business transactions
To settle disputes that can arise between manufacturers, wholesalers, retailers and
consumers of goods and services