Impact of Business Law on Companies

This article discusses the importance of business law in governing the conduct of companies. It covers the different sources of law, the role of government in law making, and the application of statutory and common law in justice courts. It also explores the potential impact of company, employment, and contract law on businesses.

Business Law

INTRODUCTION
Business law can be referred to as that body of law which is engaged in governance of
business as well as commerce. It is very often regarded as a branch of the civil law. Business law
is acknowledged to be dealing with the issues of public as well as private law. In other words, it
can be viewed as a wide concept which encompasses the significance of commercial law in
relation to regulation of corporate contract, hiring procedures, manufacturing and sale of
consumer goods and many more. In this relation, it is quite important that when an organisation
carries out its day to day operations, they are aligned with the requirements of the statute.
Business law has extensive importance within the corporate world as it lays down the laws and
legislation that need to be taken into account by companies while functioning in market place.
Each and every decision of the entity is to be made in accordance with the business law.
The present report seeks to cover a wide range of topics ranging from importance of
legislation and their consideration for long term sustainability of the corporation. Further, the
impact of different laws will be covered. Apart from this, some cases are addressed in the report
for deeper understanding of the business law and its application in the corporate context.
TASK 1
Explain the different sources of law.
The English legal system is made and enforced in a way that makes sure that the
activities and practices of each and every organisation are aligned with it. Thus, it has been
determined that the English law has been derived from a number of sources which are discussed
in a detailed manner as follows:-
Act of Parliament: One of the most powerful legal bodies within the confines of United
Kingdom is acknowledged to be parliament that holds the right of passing laws for the country as
a whole. Whenever a new law or legislation is passed, it is essential to take into consideration
that no current law is violated. The primary advantage linked to this source is that it allows
prohibition of illegal conduct that may otherwise hold negative consequences for the country.
However, it is known that the procedure followed in Parliament for the formation of law is quite
complex owing to the guidelines that need to be duly taken into consideration.
Case Laws: This is considered as yet another powerful source which gives rise to the
consideration of law by corporate within United Kingdom. Hereby, the case is discussed in the
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initial stage and in accordance with the circumstance, judgments are passed. The judgement held
gives rise to the creation of a new law which becomes enforceable for the public at large within
the boundaries of UK (Sources of law, 2018). In case some situations do not take into
consideration such laws, the legal remedies are present within English legal system.
European Union law: This is also considered as one of the most prominent sources of
law since last some years. This has given rise to the formation of several legislations within the
confines of United Kingdom which seek to promote maintenance of silence as well as peace
within the nation. This source has given rise to a number of laws for various domains which
implies its significance within the nation.
Journals: There are various laws which can be created in accordance with the journals.
Some significant articles can provide information related to the requirement of more number of
legislation and law within the UK. The final authority associated with the formation of law vests
with the House of Parliament.
Explain the role of government in law making and how statutory and common law is applied in
the justice courts
Within the confines of any country, the ruling party has the most important role to play in
context of the manner in which work is to be done. Within the confines of UK, government holds
the responsibility of taking each and every crucial decision in relation to formation of law. In this
relation, the steps which are executed by the government of this country for forming laws within
UK are discussed beneath:-
First reading: It is the initial stage whereby effective course of action as well as decision
are undertaken by the government of UK in accordance with the bill presented before them. The
primary portion of decision is taken in accordance with the introduction of name of the bill
which is presented.
Second Reading: Within this stage, it becomes necessary for the members of second
reading to have the capability of making judgement on the concerned bill. The main intention
hereby is associated with the significance of bill and the related consequences or results of the
same. As per this, the members are needed to give declaration of their judgement over the bill
required to be taken for further discussion in future or not.
Committee Stage: With the grant of permission by the personnel of last stage to do
further discussion over the bill, it becomes necessary to check each and every aspect of the
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concerned bill. The major purpose behind checking these points belonging to the bill is to
enhance or improvise the bill.
Report Stage: Hereby, the members come up with amendments that can be introduced to
the bill for its enhancement. This will facilitate improvement in the results derived from it.
Further, there is high chance of declining the negative consequences in the long run.
Third Reading: When a bill tends to reach at this stage, it becomes important for all the
members of House of Common to indulge in the process of voting in favour or opposition. If the
majority is in favour of passing of the bill, it is further transmitted to the House of Lords.
House of Lords: This stage is considered crucial as all the previous phases taken into
account by the House of Common are again taken into due account. This procedure is essential
to be executed by the peer members for the purpose of bringing any further amendments or
improvement.
Royal Assent: This being the last phase of the process marks the last acceptance to be
received by the Queen.
How statutory and common law is applied in the justice courts.
Statutory law holds immense significance within the confines of justice courts as with its
application, the process of decision making gets easier. The justice court needs to give suitable
decisions in accordance with the case presented before it. The statutory law consists of certain
guidelines which provide aid to the justice court in giving the correct decision and providing
remedies to the party.
Whereby common law is discussed, the judges hold the authority to take the final
decision. Judges within the justice court hold the responsibility of taking a look at the previously
discussed cases to determine solutions for similar cases. In an instance whereby no such similar
case is detected then the judges need to pass new laws in accordance with which the decision is
then taken.
Evaluate the effectiveness of the legal system of UK
There are several benefits owing to the legal system prevailing within the confines of
United Kingdom. In this relation, the effectiveness of legal system within UK is discussed
beneath:-
 Long Term Decision: The government within the confines of United Kingdom has been
stable since long time. This enables long term decision making by the public at large
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within this country. In this relation, it has been analysed that there are still several
countries which are deficient of concerned departments as a result of which the nation has
to struggle in many cases.
 Process of Formation of law: It is essential for every country to make usage of suitable
way for commencement of law within its boundaries, allowing them to maintain the
stability of the situation. With reference to United Kingdom, it has been noted that
parliament has allotted the authority to House of Common as well as House of Lords and
House of Commons related to preparation and checking for the creation of a new law.
TASK 2
Illustrate, using specific examples, how company, employment and contract law has a potential
impact upon business.
Company law: A company law can be defined as that body of law that tends to govern
the conduct, relation, rights of individuals and companies. It is quite essential that laws as well as
legislation are taken into consideration by each and every company. This is a law which allows
corporations to undergo decision making process in order to accomplish the goals and objectives
in due course of time. This law holds positive as well as negative impact, all dependent upon the
decisions taken by the entity. While talking about company law, it gives the idea about decision
requires to be taken by the organisation and this has the positive impact. For ex: Barclays Plc is
required to take the decision regarding the frequency of AGM to be held by them. In this
relation, organisation can access The Companies Act 2006 as it allows the entity to ascertain the
requirements regarding frequency of AGMs.
Contract law: This can be defined as the law which governs the provisions of each and
every contract entered between two or more parties for a specific process. A number of
guidelines are laid down within this law that need to be adhered to by the companies or it would
account to breach of the law. The basic premise of this law is that as and when an entity enters
into a contract, it cannot at any time breach any of the conditions of the contract. This law holds
positive as well as negative impact for a company. Its positive side is that it freezes the terms and
conditions along with the price once agreed upon between the parties, and thus the work needs to
be carried out upon those grounds only. For ex: Barclays Plc enters into a contract with a bank
account holder wherein the bank will provide loan to the holder @6.2% interest. The amount is
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payable until the next year. If by any chance, the holder fails to repay the principal and / or
interest amount, they are posed to legal action which can be taken by Barclays.
Employment law: This can be defined as the law that puts forth the terms and conditions
agreed upon between employee as well as employer at the time of providing employment. The
major benefit linked to this law is that it protects the rights of workers of any company. This law
holds several sub branches which possess immense importance for businesses. In relation to the
impact place by this law, it can be said that employment law does not allow any corporation to
take a decision upon their own discretion for the workers functioning within their premises. This
at times accounts as adverse impacts for the corporation. For ex: One of the provisions of this
law state that in case an individual gets injured within the premise of the corporation, all the
expenditure needs to be borne by the company. This inflates the overall cost for the corporation
along with decline in organisational productivity owing to the time that needs to be given to that
employee as rest period.
Differentiate between legislation, regulations and standards to analyse potential impacts upon
business.
Legislation, standard and regulation are considered as three distinct aspects of law. The
intent to perform better of a company requires it to take into consideration all the 3 aspects of
law as they hold the capability to affect the working scenario of the corporation. In this relation,
all 3 of them are discussed as follows:-
Legislation: These are the regulations formulated by legislature or any other government
body. The process to make laws under legislation needs to be executed by the House of
Parliament. This aspect of law tends to hold a significant impact over entities as they have led to
the development of several laws like environment law, health and safety law, employment law
and so on. The compliance with all such laws is essential for an organisation to get saved from
being posed to fines or penalties.
Regulations: This can be defined as that part of the act which encompasses the
guidelines governing a particular area along with the significance of such law. It is quite
important for each and every corporation to take into consideration the regulations laid down by
statute along with the rules made by itself provided the condition that the rules of company at no
point of time can override the statute. This tends to place crucial impact over a company as the
regulations laid down by statute keep on altering with the passage of time.
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Standard: This can be defined as something developed by custom, legislation or
authority in order to point out the exact way of carrying out a practice. The standards put forth by
the statute need to be taken into due consideration by each and every company as the failure to
do the same would lead to legal action being taken against the firm. This will directly influence
the brand value and goodwill of corporation.
Provide a coherent and critical evaluation of the legal system and law
The legal system and law tend to possess extensive importance for corporations as it
provides support in promotion of the company in a direct or indirect manner. In last some time,
alterations have been done in laws which have led to provision of benefits like subsidy to the
companies, allowing them to undertake suitable decisions for welfare and timely
accomplishment of goals. This account as the positive side of the law however there are negative
sides too. The alterations in statute tend to create challenge for the organisation while making
decisions in the long run, leading to the occurrence of additional expenditure.
TASK 3
Explore how different types of business organisations can be legally formed
There are mainly two forms of business organisation in which one form provide assistance
to small scale industry while other form of business is for large scale organisation that further
require number of legal requirements. Two types of business organisation are incorporated and
unincorporated organisation.
Unincorporated Business Organisation: This scale of business is having very limited form of
legal requirements. It further provides different type of offers to investors that allow them to earn
large page of profitability. As per according to the law the scale of organisation are required to
follow very limited regulations and laws. This segment includes number of businesses that are:
Sole Proprietorship:
Small scale proprietorship is owned, managed and control by sole individual and is
termed as an easy form of organisation in which there is very limited legislations or obligations
that are required to be abide by owner. Further it has been evaluated that sole proprietor is
entitled to all the profit or losses. In order to form business in sole proprietorship scale it is
essential to register business with HMRC along with having National Insurance number.
Partnership:
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Partnership mainly includes more than two individuals who are willingly entered into a
partnership contact in order to run business operations. This type of business organisation mainly
include different type of activities and functions that are accomplished by proper team in which
allocation of work to individuals is done in order to accomplish partnership objectives. In this
scale it is essential to have partnership deed which is a significant aspect that are required to have
by partners in order to decide shares, profit and loss ratio of each and every partner. In addition
to this it is essential for organisation registered under HMRC in order to effectively operate their
business operations.
Incorporate Business Organisation:
This form of business organisation is developed in order to accomplish any business
activity. Organisation those who operate in this segment are entitled with many benefits that
include additional tax deductions and liability protection. In addition to this business in this
segment are also allowed to raise capital via sale of share of company. Further this has been
determined that incorporate business organisation are mostly registered according to The
Companies Act 2006 guidelines. Mentioned below there are number of incorporated business
organisations elaborated:
 Joint Venture: Joint venture is mainly define as an business agreement within which two
or more than parties combine their resources for accomplishment of particular task
project or business activity. In order to initiate business operations in a joint venture it is
essential for involved parties to have proper understanding of Companies Act, 2006 and
get registered in same. As in this there are some certain registration criteria that are
required to be followed by them in order to initiate business operations as per according
to law.
 Corporation: This is a form of business organisation that declares business as a separate
legal entity which is guided by group of individuals those who are known as board of
director. This structure offer many advantages to initiate business organisation in this
scale, as corporation exists as a separate legal entity. It is essential for organisations that
are forming their business in this segment to understand importance of all regulations and
laws in order to fulfil their business objective, as this sector offer wide range of benefits
such as entities in this are easy to enter as well as exit. It has been evaluated that in order
to register it is essential to have title and address of entity. Furthermore, directors are
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responsible to appoint MOA and AOA in order to conduct business operation as a
corporation.
Explain how business organisations are managed and funded
It is essential for all organisations operate their function in any scale to be effectively
managed and funded in order to conduct business activities in a well defined manner. This has
been evaluated that the entire business organisation has distinct nature and process to manage
activities of business. Mentioned below description related to different business forms along with
the manager to manage activities or defined:
Sole Proprietorship:
This business sector is having comfortable operations as in this owner is only person who
are entitles with the profit and losses of business and have sole authority of decision making.
Along with this in order to initiate business operation as a sole proprietor investor are required to
only make small investment. Along with this in order to manage the fund in this organisation
credit card and small investment of owner can play effective role.
Partnership:
In order to operate business function in a partnership it is essential for involved parties or
partners to form partnership deed in order to define roles and responsibilities to each and every
partner as per according to company law. Along with this, it is essential for owners to
systematically manage all the activities with periodical funding that can further be managed by
them from bank loan, loan from financial institutions, investment form partners, credit card and
more.
Joint Venture:
This is one of the most popular business organisations that are commonly used by many
organisations. This is mainly done in order to accomplish a project or business activity. In order
to manage funds in this segment there are multiple options available. Due to the involvement of
more than two organisations in this loan from financial institutions, investment from partners and
bank loan are some of the common measures through which the funds can be allocated. Along
with this, if joint venture is formed between public limited company then they can raise fund by
issuing shares. However in order to manage funds it is essential to have mutual decisions of
involved parties as per according to company law.
Corporation:
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In order to operate business functions and conduct activities in a best effective manner it is
essential for entity to undertake decision-making in an effective manner as to accomplish
organisational goals in best effective manner. Along with this that there is different type of
sources through which funds can be raised that are debenture, shares, loan from government
financial institution, peer to peer lending and more. While in order to manage work it is essential
to have key executives, key managerial personnel, managers, board of directors and more.
Assess the advantages and disadvantages of the formation of different types of business
organisations.
In order to initiate or register business organisation in any segment there are some certain
advantages or disadvantages that will create obstacles. Thus, it is essential for investors to have
proper understanding of advantages and disadvantages as to initiate business in incorporated and
unincorporated segment.
Unincorporated Business Organisation
There are different type of benefits that are entitles within uniform business organisation.
It has been identified that organisations within this are subjected towards very limited legal
formalities. Along with this in terms of investments it is required to made small amount in order
to influence investors. However unincorporated business organisations are subjected towards
many negative effects as in this they entities are not entitled to have power to sue on the name of
organisation that can further create problem for investors. In addition to this companies in this
segment are also not entitles with limited liability company option.
Incorporated Business Organisation
There are different types of benefits in this segment as to conduct operations in
incorporated business sector entities have the power to sue and be sued. By being a separate legal
entity it is easy for them to enter or exit without affecting business or partner. While in terms of
negative effects organisations within this are required to invest high investment and decision
making process take more time. As in this each and every person are entitled to give their
consent. In addition with this there are many legal laws, obligations and guidelines that are
required to be obliged by entities within this as to take advantage of legal remedies.
Critically review and evaluate the formation of different types of business organisations
It has been evaluated that there are number of business organisations those who perform
their operations in different segment along with this they have different working pattern as well
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as style. Main aim to these business organisations is to fulfil goals and objectives in time
effective manner. It has been evaluated that by undertaking some changes in the formation
process. For instance if unincorporated business organisation have access to more rights of
formation process then they can effectively able to attract more number of investors. In addition
to this there are many activities and obligations that are required to be undertaken by
incorporated organisation that take much time during formation time periodthat can be changed
for making working condition more favourable.
TASK 4
Recommend appropriate legal solutions
Case 1
This is a case which reflects an employee not carrying out their work responsibilities in a
manner expected by the company. This is acknowledged to be one of the primary reasons
because of which the entity faces several challenges. Taking a deeper look into the case, it can be
said that several laws as well as legislation can be enforced upon the concerned company in
relation to the given case. The main issue that have arisen in the given case is on the part of
Sarah who is working as a secretary for the past 7 yrs. The in depth analysis of the respective
case reaches to the conclusion, that there are several legal advices which can be applied to deal
with the case. These are discussed in detailed manner as beneath:-
Compromise and severance agreements: This can be said to be a legally binding
agreement entered into by the employee as well as the corporation. This is created for the
purpose of terminating an employee who is unable to execute performance as per the
expectations as well as requirements of the company. This agreement is made in order to make
sure that employees cannot sue the company in such case for claiming damages. However the
agreement is not limited up to here as the employer needs to add compensation amount that can
allow an employee to get settled in the long run. A renowned and recent case law named Walsh v
Belfast Metropolitan College [2020] put forth the premise that there was no compromise
agreement which gave Walsh the permission to file a legal case against the entity (Walsh v
Belfast Metropolitan College, 2020). This case law can be looked upon by the Human Resource
department for the resolution of current case as the company intends to remove Sarah after
elapse of a certain time owing to her misconduct.
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Breach of Contract: This is regarded as one of the most prominent areas playing
significant role in the resolution of any case. The case reveals Sarah to be guilty of breaching the
contract by not treating the juniors suitably, thereby getting engaged in the practice of workplace
discrimination.
In such case, a number of charges can be imposed by the Human Resource department
over Sarah. Also, such laws and regulations will enable the corporation to deal with the issues
that are leading to creation of legal constraints for other individuals functioning within the
confines of the entity.
Case 2
This case deals with the dispute taken place between an importer of United Kingdom and
Peter Romanov. The rationale behind the dispute is the fluctuation found in exchange rate. This
case can be resolved without even carrying out the court proceedings. Another way of resolving
the case is via Alternative Dispute Resolution.
Alternative Dispute Resolution: It is considered as one of the most prescribed ways of
resolving any dispute arising between the parties. The effectiveness of this process owes to its
nature which is the resolution of issue in short run. The ways of resolving the case is simple as
several sources are present within it which are discussed as follows:-
 Conciliation: This process of solving an issue is acknowledged to be simple as it directly
provides an idea regarding resolution of the issues raised. The role of supporter is played
by the conciliator who provides guidance to the disputed party regarding the manner in
which they can find the solution to the issue.
 Mediation: This is a similar procedure of dispute resolution as this process is also
formed with the intent of provision of suggestions. The mediator who has been appointed
needs to work upon the points which have led to creation of dispute so as to ensure
delivery of the suggestions.
 Arbitration: This is important as hereby orders are given jury members. The decision is
final and needs to be respected by the parties to the dispute. The agreement for adoption
of this process by the parties is essential prior to the actual execution of arbitration.
The detailed analysis of the dispute between Peter Romanov and UK importer reaches to
the conclusion that they must take efforts to find ways through which dispute can be
resolved. With respect to this, it is suggested that they should make use of arbitration
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process for resolution of dispute. Thus, the jury will take the decision regarding how both
the parties can deal with an issue so that further dealings are executed effectively.
CONCLUSION
On the basis of above discussion, it can be easily stated that business law is an essential
law that constitutes the provisions and other essential aspects which need to be taken into
account by each and every company functioning within an economy and carrying out its day to
day operations. The rules and legislation that are laid down within the confines of business law
provide assistance to an entity in carrying out business activity in a manner that is approved by
the statute. There are a number of laws which constitute the business law and all these need to be
taken into due consideration by a firm. This is important as the non consideration of such laws
will account as having negative consequences for the company and its long term functioning
within the market place. The commencement of a business takes place in accordance with the
size as well as scope of such business. In this regard, it is important to take into account the
procedure for formation of company. Apart from this, there are several instances which give rise
to the emergence of disputes within the confines of the organisation. In such situations, it
becomes crucial for the corporation to understand the premise that it has a number of options
available for the effective as well as timely resolution of the issues through the application of
alternate sources.
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<https://file.globalacademicresearch.com/projectfiles/internal_cust_document/
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