A functioning legal system is one of the basic requirements for economic coexistence to function at all. This is why New York State driving school has to adhere to the law in business before offering their services.
The main tasks of law in this context are:
- Legal certainty: There must be transparency about what is right and what is wrong. Only when economic agents can adjust to when and how they are allowed to set up companies will they really invest capital for this.
- Legal continuity: It is also important that the laws do not change too often and arbitrarily. If not, the different types of companies and businesses can hardly plan for the future, which is basically essential for efficient management.
- Incentives: In addition, the law must create incentive mechanisms that induce all economic agents to actually behave “righteously”. For this purpose, fines or imprisonment can be used so economic agents can justly abide by the law.
- Enforcement: The law is only binding and efficient if it is actually enforced. There must be no corruption, and the executive should be powerful enough to hold tax evaders accountable, for example.
- Protection: In a certain way, the law in business also has a protective function in certain contractual relationships in which the positions of power are not evenly distributed. This is the case in labor law, for example, where the employee has special rights such as protection against dismissal and health protection. Private consumers are also protected by numerous regulations because their knowledge is less than that of the selling companies.
In the economy of certain countries, there is basically what is known as private autonomy. This means that economic subjects can conclude contracts independently. On the other hand, this is a principle that the legislature has refrained from in some cases that have been presented under the item “Protection”.
Therefore, law is understood to mean all the rules applicable in a country. The legal system is to be divided into public and private law in particular. And it must be understood that without an accepted legal system there could be no economic coexistence.
