Different Types of Businesses and Their Legal Formation

This document discusses the different types of businesses (incorporated and unincorporated) and their legal way of formation. It covers the management and funding of different forms of business and the impact of company, employment, and contract law upon a business. It also includes a task on the effectiveness of legal advice and solutions.

Law (7RQF)

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Covered in Booklet.....................................................................................................................1
TASK 2............................................................................................................................................1
Investigate the different types of businesses (incorporated and unincorporated) with their legal
way of formation.........................................................................................................................1
Management and Funding of different forms of business..........................................................2
Mention advantage and disadvantage.........................................................................................3
Differences among legislation, standards and regulations analysing their impact on business..4
Impact of company, employment and contract law upon a business..........................................4
TASK 3............................................................................................................................................5
Effectiveness of legal advise and legal solutions........................................................................6
CONCLUSION ..............................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Law is one of the important sector which provides a system of rules implicated on a
particular country so that a set of actions can be determined in order to perform various activities
in lawful manner. Legal system in the country defines a correct and ethical manner in order to
perform various operations. UK possess oldest legal system in the world and various other
countries adopt their legal system and established their own legal system (Drummonds, 2016).
In this project formation of different types of businesses with their management and funding is
mentioned. Together with this legal solutions are provided to different business issues.
TASK 1
Covered in Booklet
TASK 2
Investigate the different types of businesses (incorporated and unincorporated) with their legal
way of formation
Formation of a business organisation is done in order to perform business activity so that
profits can be generated. Establishing a business is available with number of options that differs
in formation, capital requirement, funding and management and each needs to be accessed and
selected on the basis of suitable requirements. Some of the options available with James and
Jordan are defined as follows-
Unincorporated businesses
Business organisations that are not legally registered as per law and do not possess any
legal implications. This form of business do not possess separate legal entity and application of
rules and regulations as per law is minimum (Jadhav, 2012). Such type of organization deals
with only those business under which legality is there by only to an extent. Some businesses that
are unincorporated are discussed as:
Sole Trader: It is considered as simplest form in which business can be established as
only a single person is required to establish such businesses. Formulation of sole trader business
requires minimum legal requirements and considered as one of the most preferred business form
to established. Sole trader business provides unlimited liability with undiluted ownership.
National insurance number required to be obtained and registration with HRMC is done for sole
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trader business. Also these kind of businesses are very easy to form and no complex
documentation is required to from such businesses these are very much easy to be formed .
Partnership: In this form of business two or more individuals and organisations join
their hands to perform common business activity with profit earning motive. Business is
managed by partners and arrangement of funds will be done in the ration of capital contribution.
Partnership business is governed on the basis of partnership deed and registration with HMRC is
important so that self assessment can be done for business profits. Such type of business firm ahs
been formed through more than one party and are very easy for setting up of new business and
can provide help in doing so.
Incorporated Businesses
Business organisations that are formed and registered as per legal set guidelines is termed
as incorporated businesses. These form of businesses are registered under law and possess
separate legal entity. Incorporated businesses possess set business structure in which they are
formed and operated (Mukhopadhyay, 2016). These businesses are very protected aginst any
legal issues and gives an important base to set-up an organization. They are formally recognised
and possess separate legal entity distinct form its owner.
Registered Company: It is one of the most popular legally registered form of business
organisation. In UK a business entity needs to obtained a unique number through registering with
companies house. A well established legal structure, separate legal entity made this form of
business establishment more attractive. Company can be registered as public or private and
limited or unlimited. These companies can be easily recognized under law.
Limited Liability Partnership: This is hybrid of partnership and company and available
with a mix features of both these forms of business. As a company LLP have a limited liability
feature and as a partnership it can be established with two or more owners. Formation of LLP is
simpler the formation of a company as quantity of legal requirement is minimised in comparison
to company business. In this partners are not liable for liability or negligence done by another
partner.
Management and Funding of different forms of business
Sole Partnership: As this form of business is incorporated by an individual who is the
owner of the business is also termed as the manager of all the activities for business operation.
Skills and ability of the owner is used to manage business operations and all the decision making
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power lies in the hand of an individual (Orlov, 2016). Funds in sole trader business is invested or
contributed by owner only through capital contribution or through borrowing of funds form
financial or non-financial institutions. This form of business possess low access to finances and
reliance on such business is less due to ratio of high amount of shut down of these businesses.
Partnership: Management of business activities in partnership is performed through all
the active partners. All the partners on the basis of their skills and quality by their mutual consent
decide all the responsibilities performed by them. Management of business operations in
partnership is smooth as all the partners operates as per their skills and qualifications. Funds of
partnership business are arranged by the partners in the pre determined ratio. Partnership
business have more access to funds as assets as resources of all the partners are utilised to
manage finances for partnership business.
Company: In a company which is registered as public limited organisation then it leads
to generation of management of businesses operations through its managers. As company
appoints directors who are termed as the managers of the businesses and all the decisions are
made by the directors for the day to day operations (Peterson and et. al., 2016). Management of
company is quite effective as it lies in the hand of qualified professionals appointed in the
business. This form of business have the highest access to funds because general public is called
to make capital contribution in the business.
LLP: This form of business is managed through partners in the business and funds are
arranged as partners capital. Together with this public sharing, loans and other resources.
Mention advantage and disadvantage
Organisation Advantage Disadvantage
Sole Proprietorship  Easy formation
 Undiluted ownership
 Financial crises
 No legal entity
Partnership  Management become
effective
 More access to funds
 Difference of opinion
among partners leads
business to come to an
end.
Company  Possess separate legal  More amount of legal
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entity
 Availability of fund is
high
compliances for
formation
LLP  Easy to form and
possess quality of
company
 Establishment can be
done by two or more
persons
 Income is taxed as
personal income
 Public disclosure is
necessary
Differences among legislation, standards and regulations analysing their impact on
business
Legislation Standards Regulations
Legislations are the directives
proposed by the governing
body in the country. Scope of
legislations are border and
provided in general manner. It
provides set of rules that is
specifically applicable on the
state or a country. Legislation
is important to provide an
concrete structure of rules.
They are provided with some
specifications in relation to
products, services and systems.
Standards are set so that
quality, safety and efficiency
of operations can be
maintained as per the pre
determined standards. These
are being set keeping in mind
the legislation.
These are termed as specific
requirements in legislation.
They are specific and available
in detailed manner to enforce.
Detailed instructions are
provided through legislations
regarding how different laws
are implicated. These are
formed to meet legality of laws
formed for an organization set-
up.
Impact of company, employment and contract law upon a business
Company law: It can be defined as a legislation in which all the businesses are required
to formulated, registered and incorporated according to predetermined rules and regulations. It is
very important for all the organisations to follow as it may leave negative impact upon
functionality of operations. Ignorance of it may result in legal actions against business. For
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example, if an entity do not comply with its principles then it may harm its market reputation and
also a fine could be implied on that enterprise .
Employment law: According to this law all the organisations should provide legal rights
to the staff members and also make sure that they are getting minimum wage for their work
(Weak employment practices of Forever 21, 2020). If it is not complied by businesses then it will
affect the functionality of business by increasing interferences of legal authorities in business
practices. For example, Forever 21 is one of the largest retail organisations but the employee
rating of the company is very low because the employment laws are not followed by it
appropriately. Due to this, various strict actions were taken against the company. These laws
helps in maintaining of relationship between employer and employee.
Contract law: This law is required to be followed by all the businesses which are
working on the basis of contracts as it can help both the parties to be aware of threats which may
take place in future. According to it, all the clauses and details which are mentioned in the
contract should be discussed by both the parties. If one of them is not aware of any of the term or
condition then it may result in breach of contract (Picciotto and Mayne, 2016). Business get
impacted due to this because ignorance of it can create situation of legal actions of any of the
party involved in contract. Contract formed under this are legal in nature and also has validity in
front of court.
TASK 3
In this task three different cases are provided and all three available with different issues
related to contract law, employment law and some other laws. All these cases needs to be
accessed and with the help of various laws applicable on each case a suitable solution needs to be
provided. These cases are as-
CASE 1
In this case Maxwell an art dealer has agreed to sell a rare painting to Angelica for £500.
Initial payment for 10% was made and delivery was promised with complete payment after the
exhibition in Birmingham. Angelica discovers that Maxwell has negotiated to sell the painting to
another client for £900.
This case involves a issues generated in businesses by making a contract for future acts.
In this case Angelica and Maxwell both entered into a contract and accomplished all the
requirements of a valid contract. As a valid offer is made by Maxwell to sell the painting and
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acceptance is provided with payment of 10% as a consideration (Pierce and Fox, 2012). The
transaction was available with sufficient consideration so, it can be said that existence of a valid
contract was their.
As per contract both the parties are bound to perform the contract unless they both
dissolve the contract with mutual consent. Angelica can take a legal action against Maxwell for
breach of the contract. This dispute can also be resolved through Alternative Dispute
Resolution. Mediation will be one of the suitable option for both the parties to generate a
solution best suitable for them. A mediator is going to be hired who is going to mmake both the
parties talk with each other for solving of dispute.
CASE 2
In this case Nicholas Jakob an electrician has lived and worked all his life in Newcastle.
He has worked for three years in Regents Vision but due to restructuring of and closure of brand
at Newcastle branch he was offered a job in London. Nicholas has refused to move London and
this results as loss of his job.
This case involves issues related to employee law. When employees are hired then a
contract of employment is entered by them. As per employment law no organisation is allowed
to terminate their employees without valid reason and notice period. In this case Nicholas Jakob
is transferred to other unit of the organisation due to restructuring. Here, company is no liable to
pay any compensation. It is Nicholas Jakob call to take provided offer or not. Action of company
is legal and valid as per employment law (Powell, Parker and Kilcoyne, 2017). In this case no
ADR mechanism is going to be used as no dispute has arisen and Jakob i not willing to work as
per his personal will.
CASE 3
In this case John is working in a construction company form last 6 months. He fell form
3rd floor stairs and causes some injuries. This made him out of the job for 4 weeks. A notice on
the board for be aware was their in the ground floor. Whether John is liable to make claim for
compensation or not.
In this case company can not be made fully liable to make compensation for the losses of
John. As a caution for be aware was made their on the ground floor and this made Johnson
personally liable the injuries. When the case is filled in the court it will take more time duration
and generating results through Alternative Dispute Resolution is recommended. Both the parties
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can appoint an arbitrator in order to resolve the case with arbitration method. This will provide
best suitable solution on the basis of facts of the case. Also tort of negligence is going to be
applied as it is duty of the company to take care and get the stairs repaired.
Effectiveness of legal advise and legal solutions
Disputes generated in business differs and each issues is provided a clear solution based
on the appropriate law. Legal system of UK is effective and available with best solutions that are
available to business organisations for disputes (Tucker, 2016). Legal advise and legal solutions
to business is suitable as through this disputes are provided solutions which make both the party
satisfied with the solutions. Issues that made the business activity suffer are resolved and chances
of occurrence of these issues in future is minimised with effective legal solution.
Similarities and differences using different sources of legal advice and support for dispute
resolution available to all the parties.
In any of the situation, solving the dispute is not an easy work but still there are number
of work which is to be done by the organisation or any of the person to sort out the case in best
possible manner. There are number of similarities and differences while delivering any of the
legal advices to sort out the dispute. The first similarities in any of the dispute resolution is that it
tries to solve out the matter which is creating the issues. Talking about, arbitration, conciliation
and mediation, all of this process are very less time consuming which is result oriented. On the
other side, all of this dispute resolution process might not give the accurate answer to solve the
problem as some of the team only work as supportive role to clear out the matter (Pierce and
Fox, 2012). Not, only this because of some of the legal advices are to be followed whereas some
of them do not requires to be followed.
CONCLUSION
From the above project report it has been concluded that formulation of various laws and
regulations are important in order to ensure that law and order can be maintained in business
environment of UK. Business law defined the process in which various forms of business entities
can be established in legal manner. Government of UK plays important role in order to formulate
legal system in the country by considering various sources of law. Each business have different
legal regulations and their management and funding depends on the set of legal guidelines
provided to each business form in the legal system. Disputes that arises in business are resolved
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by considering various other laws and for the best suitable solution Alternative Dispute
Resolution can be considered.
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REFERENCES
Books and Journals
Drummonds, H., 2016. Business Law Fall Forum Introduction: Workplace Secrets, Loyalty, and
Theft. Lewis & Clark L. Rev..20. p.399.
Jadhav, P., 2012. Determinants of foreign direct investment in BRICS economies: Analysis of
economic, institutional and political factor. Procedia-Social and Behavioral
Sciences. 37. pp.5-14.
Mukhopadhyay, M., 2016. Mainstreaming gender or “streaming” gender away: feminists
marooned in the development business. In The Palgrave Handbook of Gender and
Development (pp. 77-91). Palgrave Macmillan, London.
Orlov, V., 2016. Introduction to business law in Russia. Routledge.
Peterson, E. A. and et. al., 2016. Law School-Business School Collaboration: An Examination of
Interdisciplinary Course in JD/MBA Programs. Atl. LJ. 18. p.21.
Picciotto, S. and Mayne, R. eds., 2016. Regulating international business: beyond liberalization.
Springer.
Pierce, R. and Fox, J., 2012. Vodcasts and active-learning exercises in a “flipped classroom”
model of a renal pharmacotherapy module. American journal of pharmaceutical
education. 76(10). p.196.
Powell, J., Parker, C. and Kilcoyne, M., 2017. Cyber Business Law and Project-Based Learning.
International Journal of Innovation Education and Research, 5(11), pp.62-73.
Tucker, J., 2016. Draft legislation to enhance flexibility for small business to restructure. Bulletin
(Law Society of South Australia). 38(1). p.28.
Online
Weak employment practices of Forever 21. 2020. [Online]. Available through:
<https://www.huffpost.com/entry/worst-companies-to-work-
for_n_575b26b0e4b0e39a28ada793?
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