Economics
In your economics class, you may have discussed the government's role in the market through its taxing and spending powers, referred to as fiscal policy. The government may use these powers to affect market outcomes, particularly when the market does not self-adjust (via the "invisible hand") as desired. For example, the government could decrease taxes in the hope of stimulating investment and consumer spending. However, the government also plays a much more basic and essential role in the market: It lays the legal foundation on which market transactions may occur. This particular function of the government in the economy is intimately related with the subject matter of this textbook—the intersection of law and business.

Fundamentally, the government creates laws (e.g., states' adopting of the UCC) that protect parties on both sides of business transactions. For instance, as discussed in this chapter, the government creates laws that protect buyers and sellers in contractual relationships. If a seller fails to deliver a good for which a buyer has already tendered payment, the buyer can seek a remedy, either by suing for compensation or by obtaining specific performance for delivery of the goods. Had the government not created laws to enforce contractual agreements, buyers would be less willing to make payments prior to receiving goods and sellers would be less willing to deliver goods prior to receiving payments. Hence, the absence of business law would create strong disincentives to buy and sell. Therefore, the government plays a critical role in establishing the legal foundation on which buyers and sellers can form contractual agreements, and where one party fails to meet his or her obligations, the other party can seek redress for any damages.