Business Law: Sources, Impact, and Formation of Business Organizations

This report provides an overview of business laws, including the sources of laws, their impact on organizations, and the legal formation of different business entities. It also discusses the management and funding aspects of business enterprises. The report covers topics such as employment law, contract law, company law, and different types of business organizations.

Business Law

Contents
INTRODUCTION.......................................................................................................................................3
PART 1.......................................................................................................................................................3
P1 Sources of laws...................................................................................................................................3
P2 Process of law making and how common and statutory law is applied in justice courts.....................4
M1 Effectiveness of legal system in terms of reforms and developments in recent times.......................6
P3 The potential impact of laws on business organizations.....................................................................6
M2 Difference between legislation, standards and regulations to analyze the impact on business law....7
P4 How business organizations are legally formed?................................................................................7
P5 The funding and management of the business enterprises..................................................................8
M3 Pros and cons of business organizations............................................................................................9
PART 2......................................................................................................................................................10
P6 Legal solutions to resolve range of disputes.....................................................................................10
M4 Contrast and compare the different sources of legal advice and support for the dispute resolution. 12
CONCLUSION.........................................................................................................................................13
REFERENCES..........................................................................................................................................14

INTRODUCTION
The legislations are the important aspect of the nation as it comprises of rules and
regulations that governs the citizen’s behavior. Similarly, business laws are also being framed in
order to regulate the working of enterprises as it is a branch of civil law. Business legislations is
a broad field that consist of many areas for which legislations are being enacted so that its
functioning can be regulated in an effective manner. It includes company law, intellectual
property rights, data protection, employment legislations and many others. Every organization
requires the workforce which is the valuable asset of the company so it is important to protect
their rights so that no exploitation is done. The employment law is specifically being made in
order to protect the rights of employees (Kooshshkar and Ghasemi Ahde, 2019). This report shall
cover the English legal system, the impact of legislation on business enterprises, various kinds of
organizations and management and funding. Lastly it will include the legal solutions for the
range of disputes.
PART 1
P1 Sources of laws.
The English legislation covers those laws that are followed in the civil and criminal
matters and it is administered by the justice court. It comprises of both statutory and common
law. Various sources of legislations are discussed thereunder-
Primary
This source is considered as the original source of law which is authoritative as it was
enacted by the authority that has power for making laws. Different primary law sources are
narrated thereunder-
 Case laws- These are the primary and fundamental source of the law that consists of
judgment made by the judges in various cases. They are published in law reports where
facts, decision, issue, reason, legal principle and other aspects of the judgment is
provided which are required to pass the decision. The judgments made by the Superior

Courts are binding on Subordinate Court for their future decisions. These are also known
as common law.
 Legislation- These are made by the authoritative and authentic authority of law that is the
parliament. These are also known as statutory laws. The English law does not have a
written Constitution so the principles of it are enumerated in statutory laws made by
parliament (Wijesinghe, 2018).
Secondary
These are the best way for initiating the law research as it comprises of commentaries. Some
of them are narrated below-
 Textbooks- These are written by the academicians so that support is provided to students
for researching on legal topics and made clarity in their concept.
 Law journals- It consists of specific and general areas of legislation and comprises of
case commentaries and articles so that the legal issues are being made clear.
 Legal encyclopaedia- It comprises of the cases, key points on the issues so that the
research on the law can be made appropriately.
 Parliamentary and non-parliamentary publications- It comprises of various papers of
debates, command papers and documents of Parliament whereas non-parliamentary
publications consist of reports prepared by the government agencies and the departments
(Parr, 2018).
P2 Process of law making and how common and statutory law is applied in justice courts.
As Parliament is the supreme authority for making the laws so the process of law making is
initiated in the Parliament where the members meet and make a decision from making the
legislation. At an initial stage, a bill is prepared and proposed in either house which undergoes
various stages by discussions and debates and after examination of the bill, amendments are
suggested. The detailed process of making the law is discussed thereunder-
 First reading- Here the bill is introduced in the parliament and a formality is made by
reading its name.
 Second reading- In this stage, debates and discussions are initiated on the key objectives
and areas of bill. Generally, there are no votes taken as only discussion is being made.

 Committee stage- Here a detailed scrutiny and analysis is being made of the bill where it
is examined line after line and amendments are suggested. The votes are taken by the
members so that the changes can be made in it.
 Report stage- This stage involves another chance for implementing the change and votes
are taken for implementing it.
 Third reading- The aim of this stage is to close the loopholes so a final chance is
provided to the members so that change can be made in the bill.
 Considering amendments- This stage involves a part where the amendments that are
suggested by one house are sent to other house for its acceptance or rejection. Generally
where any changes are made by the Lords, it is sending common and they may accept or
reject it.
 Royal assent- The bill when passed by both the houses is sent to the Head of state for its
royal assent in order to bring the enforceability of the bill (Lee, 2019).
Application of law in Court
The legal system in UK consists of hierarchy of courts that is categorized into
subordinate and superior courts. The former comprises of various judicature which includes
firstly the Magistrate Court wherein minor criminal offences are being dealt. Next is the Crown
Court wherein the major criminal cases are dealt together with the appeals that are brought from
the cases of Magistrate court. Then is Youth court where the offences committed by the young
people who are of the age group between 10-17 years are dealt. Then is County court that deals
with the civil matters and is regarded as the court of first instance for civil cases. Last is the
Family proceeding court that is involved with disputes which relates to matrimonial and family
matters.
The Superior Court includes firstly the Supreme Court of UK which is regarded as the
highest court where the appeals are heard both from criminal and civil matters but only on point
of law. Then is the Court of Appeal which comprises of two divisions, civil and criminal and
both of them deals with the appeal from their respective disputes. Then is High Court of justice
which is divided into three divisions which are Queen’s bench, Chancery and Family Division.
The legislations derived from the judgment of court are the common law which are made
by the superior courts and are binding on the subordinate courts. The statutory and common law

both have equal relevancy and the judges are required to make use of their knowledge, skill and
expertise in order to bring a decision in the dispute and interpret the statutory law in an efficient
manner. There are various laws which are derived from common law such as murder which is
not enumerated in statutes but is an offence similarly there are many legislations which were
initially the common law but with the changing requirements of society, they are written in the
statutory legislations of UK. Example of such legislation is Theft Act (Hohmann, 2017).
M1 Effectiveness of legal system in terms of reforms and developments in recent times.
The English legal system is effectiveness enough there are changes being made to it as
per the needs and requirements of the society. The reforms are made in the justice courts such as
replacing the House of Lords with Supreme Court in the year 2009 in order to bring such court
which can render justice. Then creating County Courts in 2013 which can specifically deal with
civil disputes and Family court in 2014 so that it can deal specifically with family disputes in
order to save time of court (Singham, Tylecote and Hewson, 2018).
P3 The potential impact of laws on business organizations.
The laws are the regulations and rules that are made by the Parliament in order to ensure
its smooth running in the nation. The main objective of enacting the business law is to regulate
its working and in case they are not being complied by any of the organizations, they may be
subject to various legal actions, penalties and restrictions. The impact of the business legislations
on the enterprises are illustrated there below-
 Employment law- These are mainly aimed to protect the rights of the workforce from any
type of exploitations and entitle them to various rights like equal pay, holidays, protection
from unfair or the wrongful dismissal and many other aspects. This law is the vast area
which comprises of much legislation in order to protect the rights provided to employees.
For instance, have the Equality Act, 2010 is mainly framed to promote fairness and
equality into the company so that equal and fair opportunities are provided to the workers
which can result in healthy and positive environment. Another example can be the
National Minimum Wages Act which obliges the organizations to provide minimum
wages to employees irrespective of any protective characteristics like gender, race, age
etc. The business enterprises are bound to make their organizational strategies and
policies in such a way that there is compliance with it.

 Contract law- It is designed specifically to regulate the terms and conditions of contract
or agreements. As in today's time, every organization is involved in transactions which
are required to be regulated by the contract so this legislation provides protection to the
parties from any breach of the term or the whole contract. It mainly regulates the
obligations, rights and liabilities of parties so that legal enforcement is being made. It also
provides many remedies to the aggrieved party so that they can claim it in case of breach
and the party is put in the similar position as if the contract was fulfilled. The rules
enumerated in this law mainly govern the enforceability and legality of the contract and
ensures protection to the parties from any type of loss (Borselli and Miguel, 2020).
 Company law- It mainly comprises of various rules which regulates the working of
companies and consist of other rules that relates to incorporating and winding up the
company. The main aim of this legislation is to ensure that the functioning of
organizations is regulated together with the conduct of it so that there is transparency
being maintained. Every stakeholder that is associated with business is subject to many
duties and rights so that there is effective and fair running of the organization. The
transparency is also provided to the stakeholders and investors so that there is less
consequences of loss and fraud.
M2 Difference between legislation, standards and regulations to analyze the impact on business
law.
The legislations is the process or act of enacting the laws which is applicable on whole
nation while the regulations involves maintaining the legislations or rules which can govern the
people. It is mainly governmental driven that has an order or instruction to have enforcement of
law. On the hand, standards are the one which are established for the technical details as it
provides specifications or guidelines for system (Lobban, 2019).
P4 How business organizations are legally formed?
There are many types of organizations which are being formed and carry their business
structure which consists of legal configuration that defines liabilities and rights of stakeholders
associated with business. Each business organization has different financial structure, ownership,
life span, control and liabilities. The various types of business organizations and its legal
formation are illustrated below-

 Sole proprietorship- This type of organization is mainly suitable for the small scale
business wherein a single owner is involved which has the control and management of
enterprise. The owner has the personal and unlimited liability towards the debt of firm
but is independent enough to work without the interference of other party. The legal
formation of the sole proprietorship requires the registration at HMRC and there is no
procedure which is complex in order to form it.
 Partnership- This type of business organization requires two or more people as its owner
that mutually decides to initiate this firm. The partners are mainly entitled to share the
profit, losses, control, power for decision making and responsibilities. The contribution
made by the partners for initiating the capital mainly decides the ratio of profit or loss of
the partners or it may be fixed by an agreement or in a verbal manner. There are two
types of partnership wherein the first is General that requires registration at the HMRC
and unlimited liability of partners is there whereas the next is Limited Liability
Partnership wherein registration is required at HMRC and Companies House. The
partners have limited liability in this type of partnership which is based on the capital
contribution (Rocha, 2018).
 Companies- The formation of this business enterprise requires the lengthy and complex
procedure as it has many formalities. The company is the separate legal entity wherein
the owners are distinct from the organization. It has its common seal as the company is
artificial personality that can sue and be sued. The control of this business is in the hands
of director and they have the limited liability but they cannot be held personally liable for
the debt of enterprise. The corporation tax is paid by these businesses as each profit
belongs to company and not to directors.
P5 The funding and management of the business enterprises.
Every business has a distinct way to manage its operations and working. Moreover they
have a distinct way to raise their funds due to their different business structure and ownership.
The funding and management of various business enterprises are narrated thereunder-
 Sole proprietorship- The management of this enterprise is in the hands of owner as it has
the sole responsibility, power and liability of the business. The owner manages the daily
operations of the enterprise and is subject to the power for making any decision. As it is

suitable for the small scale business, so it requires fewer finance that may be arranged
either from the bank loan or through the personal savings.
 Partnership- The owner of this firm is two or more person so its management is also in
the hands of the partners who mutually agree either verbally or through a contract.
Generally the management rest in the hands of the partners on the basis of their
contribution in capital or the share in profit or loss. The funds are raised either through a
bank loan or a personal savings of partners. For example, Red Bull and GoPro, etc.
 Company They are generally operational at large scale and require complex procedure
for incorporation. There are two kinds of companies which involves public where the
funds can be raised by inviting the application from general public to subscribe the shares
so that share capital is raised whereas the private company can raise its finance by debt or
equity. The public company is managed by the elected board of directors who represents
the interest of shareholders while private company is managed by the directors who are
the owners. For example, Tesco Plc, Sainsbury, etc. (Lewandowski, 2020)
M3 Pros and cons of business organizations
Every business organization is distinct in their own way due to their structure and
ownership. The main advantages and disadvantages of various enterprises are-
 Sole proprietorship- The main benefit of this is that there is no interference of other
person as owner has whole control and management to manage business and take its
decision while the drawback of this is that the owner has unlimited and personal
liabilities of the firm.
 Partnership- The main advantage of this firm is that the partners mutually share their
power to manage the firm as per their skills and expertise and the capital is also raised by
mutual contribution while the main disadvantage of this is that in case on partner leaves
the firm, there may be dissolution of whole firm in case of two partners only.
 Company- The benefit of establishing company is that it is the separate legal enterprise
which is different from owner so owners do not have unlimited liabilities while its major
drawback is that there is complex process to incorporate and wind up the firm. Moreover,
there is whole procedure to manage it as it requires timely disclosure of documents and
reports of company (Finn, 2021).

PART 2
P6 Legal solutions to resolve range of disputes.
There are many legal solutions for the business for resolving their dispute which involve
Litigation but it is considered as the time consuming and costly procedure. Apart from this, there
are many alternate resolutions for solving the disputes which are enumerated in the Civil
Procedure Rules, 1986 that provides those solutions that has a purpose to bring speedy disposal
of cases. They are cost effective and less time consuming. Various legal solutions for different
case scenarios are discussed below-
Case scenario 1
Under this scenario, the legal issue involves whether Gordon shall be entitled for annual
wages of the year 2015 to 2017 under the contract and employment law. It can be pointed out
from the scenario that there was a valid employment contract between Gordon and employer and
the variation clause was being accepted freely by it so any alteration made to it are valid.
Legal solution
Negotiation can be used by Gordon as its legal solution because there is appointment of
the independent 3rd party who is known as negotiator which engages in negotiating between
parties. The main aim of this resolution is to bring amicable solution for both parties so that they
can be put at win-win situation and no party will suffer any loss. The decision of the negotiator
can be binding only when the negotiation agreement is signed by the parties (Diakoloukas,
2019).
Justification
The main rational for recommending this solution is that Gordon have made the
acceptance to the variation clause freely as there was instability in business and when the
business is now being flourished, the terms of the contract can be further negotiated so that
Gordon can claim the wages of past years. This solution can help in bringing amicable solution
between parties by making an alteration in the contract of employment again.
Case scenario 2

The main legal issue under this scenario is whether Janet can be liable to make the
payment for the telephone bill which is not being used by her for entire month due to delayed
installment. The second issue in this scenario is what is the legal position of Virgin Media and
Janet. The issues relates to the contract law in this scenario where the company and Janet has the
consumer contract between them where Virgin Media is entitled to provide the services to the
consumer. The service contract provides that payment can be collected by the customer only for
that time when there was usage of services by the consumer.
Legal solution
Mediation is suggested in this scenario wherein the independent neutral person is
appointed as a mediator whose aim is to mediate among parties and give them suggestions. The
binding decision cannot be brought from the mediation so the parties have the choice to either
accept or reject the suggestions (Roszczynski, 2020).
Justifications
The main reason for suggesting this resolution is to help parties come into amicable
solution wherein the goodwill of the organization can be protected due to resolving the matter in
the confidential manner.
Case scenario 3
In this case, the legal issue is that whether creditors are subject to entitlement for filing
the petition of winding up against the company due to failure in repaying their amount. The
company law is applicable in this scenario as the organization has failed to make the payment to
the creditors because of their huge amount being converted into bad debts.
Legal solution
For this scenario, arbitration is being suggested wherein the independent arbitrator is
being appointed by parties who examines the evidence and hears the facts of case in order to pass
an award which has the binding effect on parties. It is regarded as the flexible method of
resolving the dispute as the parties have right to choose the time, place of arbitration and the
arbitrator itself (Karkhaneh and et. al., 2020).

Justification
This resolution is being recommended as severe issues are being faced by parties in
relation to the money so this resolution can help in bringing speedy disposal of matter. The
binding effect of the decision can help in resolving the dispute outside the court where the
company will be given opportunity to communicate its problem to the creditors so that an
extended period of time is provided to them.
M4 Contrast and compare the different sources of legal advice and support for the dispute
resolution.
There are many legal solutions available for businesses which includes the foremost one
that is litigation. It involves more time and cost while there are many alternative dispute
resolutions such as arbitration, negotiation, mediation, etc. which provides speedy disposal to
cases and are cost effective. They are flexible in nature as parties can choose their judge and
time, place for resolving dispute. The legal advice is mainly sorted by the lawyers who are under
professional obligation to provide advice to parties either free of cost or charge their fees. These
help in opting the best solution for the dispute.

CONCLUSION
From this report, it is concluded that the legislations that regulates the business are
mainly aimed to govern the working of businesses. There are many sources of laws which
include secondary and primary. The English legal system consists of statutory and common law
wherein the former is made by the Parliament and the latter is brought by the courts. The
business law affects the working of businesses as they regulate their functioning and provides
rights and obligations to the people associated with it. Further it is added that there are many
kinds of business entities which are formed and managed as per their structure and legality. In
case any organization is engaged in any dispute alternate resolutions can be opted by them so
that speedy disposal is brought.

REFERENCES
Books and Journals
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Mediation Found in Article 182 of Law 4512/2018. ENTHA. 11. p.19.
Finn, M., 2021. Remaining the dispute resolution epicentre: is Med-Arb in Europe's
future?. Construction Law International. 16(1).
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and German law. Anchor Academic Publishing.
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Kooshshkar, R. and Ghasemi Ahde, V., 2019. methods in Iran and UK legal system have been
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Rocha, H.O., 2018, July. Capitalism, Collaboration and the Purpose of Business Organizations.
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Roszczynski, L.W., 2020. Alternative Dispute Resolution Techniques to Address Workplace
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Wijesinghe, P., 2018. Criminal and Civil Offences of Insider Dealing: UK Perspective. Available
at SSRN 3167197.