Although most of the contracts in businesses are based on the sole purpose of earning the profit, still ethics plays an important role in imposing the moral obligations together with legal obligations to fulfill the commitment of the promises under the contract and to follow the general code of ethics like moral principles, values, and so on., while performing such contracts. Ethics generally involves the rules of ethics and standards of professional conduct for completing the contracts. The ethical considerations in the business environment may relate to the cultural and moral obligations and duties. Ethics is an important part of law and also applied in the field of contract law to ensure the justice, fairness and equity between the parties to the contract through the applications of different principles of natural justice and morality.
Application of Ethics in Contracts
Most of the parties to the contracts try to reach an agreement that is both stable and durable, i.e., the parties may fulfill their parts of promises without abandonment according to the term of the contract while adhering to the standards of professional conduct and without approaching the courts. Notwithstanding such adherence and completion of the contract, the numbers of contracts that are breached depending on a different class, culture, type of transaction, moral values, wealth, and so on., in the business environment are difficult to ascertain. There are different pioneers who relate ethical obligations from either cultural backgrounds or moral principles. Cultural relativism applicable to different societies and groups depends on different ethical standards, values, and beliefs, whether religious, aesthetic, political, or ethical. These standards may be moral where their ethics depends upon their social groups, situational where right and wrong depends upon the circumstances or analytical, which depends upon oneâ€™s perception. The contracts between parties from different cultures often resulted in the dealing of breaches of contracts by the courts of the society of economically strong party while applying their cultural and legal rules. Such cultural and legal rules varied from one jurisdiction to another and were often categorized under the frustration of contracts. Also, a lack of information on the part of either of the parties relevant to the contract may also give rise to ethical issues in some cases. The act of binding someone to the contract that has no awareness or understanding of the contract which they are signing and committing to or the act of lawyer encouraging the client to sign the document without understanding its contents may be considered unethical. Some people also use financial resources to control the breach or the outcome of situations relating to contracts which may be regarded as against the basic moral principles in terms of moral relativism. Few people also take advantage of trust and confidence, which the other party envisaged on the basis of their relationship. However, in most of the cases, the law may not accede with such moral or cultural relativism and the award may not be made while keeping in the general view of â€˜rightâ€™ or â€˜wrongâ€™.
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