Law in Albion
The Law in Albion is controlled by the Albion Guard when they are present. The guard patrols many of the major city-states and towns in the game, however there are many smaller villages that are considered lawless, and the villagers will take matters into their own hands.
Areas in between towns and city-states are also considered lawless.
In Fable and Fable: The Lost Chapters, while visiting Bowerstone South and Bowerstone North, Hero won't be able to use his weapons, likely because of the presence of children in the areas. In the other towns, Oakvale, Knothole Glade and Hook Coast, Hero will be able to use weapons, but being seen having the weapon out will result in a 40 gold coin fine.