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Law can be defined as rules set by society to govern behavior; thus, business law refers to those rules of behavior that govern business. To govern behavior efficiently, law must be both predictable and flexible. It must be predictable so that people can plan their behavior, and it must be flexible so that it can be applied in a wide variety of different situations.

Law is directly related to ethics, especially in a business context: Much of business law amounts to the formalization of “good business practices” or ethics, and neither ethics nor law can be meaningful without each other. Ethics without the authority and enforcement of law is a mere aspiration. The reverse is also true: Mere law, if it does not mirror societal expectations ...

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