A quantum of three friends

Running head: BUSINESS LAW
BUSINESS LAW
Name of the Student
Name of the University
Author Note

BUSINESS LAW1
Part 1
Issue
The primary issue is what may be the most adequate business methods in relation to the
clients mentioned below:-
(a) A collection of a quantum of twenty architects who all desire to form a minor business
for attracting the property developers.
(b) A quantum of three friends who all have recently qualified as and possess the skills to be
beauticians.
(c) A musician with good prospects.
Rule
Sole trader is considered to be the easiest and simplest structure of business for
registration purposes. A sole trader is self-employed and in this kind of business structure one
always works for itself. A sole trader business is registered with the HMRC, which is, ‘HM
Revenue and Customs’. The owner of the sole trader business shall have the entitlement in
relation to the profits and benefits of the business, although he must make the payment of the
taxes. He shall be accountable in relation to the liabilities regarding the business (Robertson
2016).
A partnership is considered to be a business structure where two individuals or
associations or more than two individuals or associations come together and start a business. All
the partners in a partnership share the common intention to earn profits and incomes. The
partners share the benefits, costs, risks, responsibilities and obligations in relation to the
administration and governance of an organization. A partnership in created with the help of a

BUSINESS LAW2
partnership agreement. The ration of sharing the profits and the obligations relating to the
partners shall be mentioned in the partnership agreement. A maximum quantum of twenty
partners may be present in a partnership business (Bennett et. al. 2019).
A ‘Limited Liability Partnership’ (LLP) is considered to be similar in relation to a
partnership. However, in this case the accountability of the partner is restricted to the quantum of
money that is invested by them in the business. The registration of LLP must be done with the
HMRC and at Companies House. The incorporation of an LLP can be done with two members or
more than two members. Members may be an organization or any particular individual (Rahman
and Ghadas 2018).
A company (limited company) is considered to be a business structure where the owner
of the business shall be the shareholders and the business shall be managed by the directors. As
stated in the case of Salomon v Salomon & Co Ltd (1897) (HL), the company itself shall be a
distinct legal personality. It shall have its own legal obligations and rights. The company itself
shall be held to be accountable in relation to the operations of the company. The liability
regarding the members and the shareholders shall be limited only up to the value of the shares
that are owned by them. In certain instances, the liability or the accountability of the members
are restricted by guarantee. However, the principle of distinct legal entity of the company may be
lifted by the courts in specific situations, where the directors are involved in any kind of
fraudulent and deceptive conduct that may have caused damage to the company. Such situations
have been perceived by the court in cases such as Gilford Motor Co Ltd v Horne [1933] Ch 935
and Adams v Cape Industries PLC [1990] Ch 433. A company should be incorporated and it
should be registered with the HMRC. Article and Memorandum of Association should be drafted
in order to set the objectives of the company. It may be said that in a private company there may

BUSINESS LAW3
be a minimum of 2 members and a maximum of 200 members. A private company should have
at least two directors. In a public company there should be a minimum of 7 members and the
maximum quantum in public companies is unlimited. A public company should have at least
three directors.
Application
The sole trader business method should be applied in the provided situation. Sole trader is
considered to be the easiest and simplest structure of business for registration purposes. A sole
trader is self-employed and in this kind of business structure one always works for itself. The
owner of the sole trader business shall have the entitlement in relation to the profits and benefits
of the business, although he must make the payment of the taxes. He shall be accountable in
relation to the liabilities regarding the business. Hence, it can be said that the musician with good
prospects may engage itself in this business structure, as the business shall be managed solely by
him and he shall be entitled to the profits of his own musical works.
The concept of ‘Limited Liability Partnership’ (LLP) must be applied in relation to the
provided scenario. LLP is considered to be similar in relation to a partnership. However, in this
case the accountability of the partner is restricted to the quantum of money that is invested by
them in the business. The incorporation of an LLP can be done with two members or more than
two members. Therefore, this business structure shall be suitable for the three qualified
beauticians. They shall be able to commence a partnership business having limited
accountability. They shall be able to conduct the business with the common intention of earning
profits.
The company business structure should be applied in the provided situation. A company
(limited company) is considered to be a business structure where the owner of the business shall