Business Law: A Handbook for New Start-Up Companies
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AI Summary
This handbook provides essential guidance for new start-up companies on navigating the complexities of business law in the UK. It covers key areas such as different sources of law, the role of government in law-making, the impact of company, employment, and contract law on business operations, and effective legal solutions for resolving disputes. The handbook aims to equip new businesses with the knowledge and tools necessary to operate legally and ethically, fostering a strong foundation for success.
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BUSINESS LAW
1
1
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Contents
INTRODUCTION........................................................................................................................ 3
LO 1.......................................................................................................................................... 4
P1 DIFFERENT SOURCES OF LAW.......................................................................................... 4
P2 ROLE OF GOVERNMENT IN MAKING THE LAW AND HOW STATUTORY AND COMMON
LAW ARE APPLIED IN THE JUSTICE COURTS..........................................................................6
M1 EVALUATE THE EFFECTIVENESS OF THE LEGAL SYSTEM IN TERMS OF RECENT
REFORMS AND DEVELOPMENTS.......................................................................................... 7
LO 2.......................................................................................................................................... 8
P3 ILLUSTRATE HOW COMPANY, EMPLOYMENT AND CONTRACT LAW HAS A POTENTIAL
IMPACT UPON BUSINESS USING EXAMPLES......................................................................... 8
M2 DIFFERENTIATE BETWEEN LEGISLATION, REGULATIONS AND STANDARDS TO ANALYSE
POTENTIAL IMPACTS UPON BUSINESS............................................................................... 10
LO3......................................................................................................................................... 12
P4 HOW DIFFERENT TYPES OF BUSINESS ORGANIZATIONS ARE FORMED LEGALLY...........12
P5 HOW BUSINESS ORGANIZATIONS ARE MANAGED AND FUNDED..................................14
M3 MERITS AND DEMERITS OF FORMATION OF VARIOUS TYPES OF BUSINESS
ORGANIZATIONS................................................................................................................ 15
LO4......................................................................................................................................... 17
P6 RECOMMEND LEGAL SOLUTIONS FOR RESOLVING A VARIETY OF DISPUTES
DEMONSTRATING HOW A PARTY MIGHT OBTAIN LEGAL SUPPORT AND ADVICE.............17
M4 COMPARE AND CONTRAST VARIOUS SOURCES OF LEGAL SUPPORT AND ADVICE FOR
RESOLUTION OF DISPUTES.................................................................................................19
CONCLUSION.......................................................................................................................... 21
2
INTRODUCTION........................................................................................................................ 3
LO 1.......................................................................................................................................... 4
P1 DIFFERENT SOURCES OF LAW.......................................................................................... 4
P2 ROLE OF GOVERNMENT IN MAKING THE LAW AND HOW STATUTORY AND COMMON
LAW ARE APPLIED IN THE JUSTICE COURTS..........................................................................6
M1 EVALUATE THE EFFECTIVENESS OF THE LEGAL SYSTEM IN TERMS OF RECENT
REFORMS AND DEVELOPMENTS.......................................................................................... 7
LO 2.......................................................................................................................................... 8
P3 ILLUSTRATE HOW COMPANY, EMPLOYMENT AND CONTRACT LAW HAS A POTENTIAL
IMPACT UPON BUSINESS USING EXAMPLES......................................................................... 8
M2 DIFFERENTIATE BETWEEN LEGISLATION, REGULATIONS AND STANDARDS TO ANALYSE
POTENTIAL IMPACTS UPON BUSINESS............................................................................... 10
LO3......................................................................................................................................... 12
P4 HOW DIFFERENT TYPES OF BUSINESS ORGANIZATIONS ARE FORMED LEGALLY...........12
P5 HOW BUSINESS ORGANIZATIONS ARE MANAGED AND FUNDED..................................14
M3 MERITS AND DEMERITS OF FORMATION OF VARIOUS TYPES OF BUSINESS
ORGANIZATIONS................................................................................................................ 15
LO4......................................................................................................................................... 17
P6 RECOMMEND LEGAL SOLUTIONS FOR RESOLVING A VARIETY OF DISPUTES
DEMONSTRATING HOW A PARTY MIGHT OBTAIN LEGAL SUPPORT AND ADVICE.............17
M4 COMPARE AND CONTRAST VARIOUS SOURCES OF LEGAL SUPPORT AND ADVICE FOR
RESOLUTION OF DISPUTES.................................................................................................19
CONCLUSION.......................................................................................................................... 21
2
INTRODUCTION
Being the senior employment and dispute law advisor of Global Solicitors, this assignment
will be conducted for producing a handbook to provide advice to the new start-up
companies in resolving the disputes of employees and guiding them about the employment
law. The handbook will describe the different sources of law, the role of government in
making laws, evaluating the effectiveness of the legal system and thus, describing the nature
of the legal system in detail. The handbook will include the positive and negative impact of
laws on the business with the help of examples and also focus on the legal formation of
various kinds of business organization. The last part of the handbook will lay its emphasis on
providing suggestions for solving disputes within an organization.
3
Being the senior employment and dispute law advisor of Global Solicitors, this assignment
will be conducted for producing a handbook to provide advice to the new start-up
companies in resolving the disputes of employees and guiding them about the employment
law. The handbook will describe the different sources of law, the role of government in
making laws, evaluating the effectiveness of the legal system and thus, describing the nature
of the legal system in detail. The handbook will include the positive and negative impact of
laws on the business with the help of examples and also focus on the legal formation of
various kinds of business organization. The last part of the handbook will lay its emphasis on
providing suggestions for solving disputes within an organization.
3
LO 1
P1 DIFFERENT SOURCES OF LAW
The law system in the UK is originated from four different sources which can be described
as:
Legislation: The legislations are created by the UK parliament that contains the House of
Lords has 800 members and House of Common comprising of 650 members of parliament.
The UK parliament passes the laws and legislation that are to be followed by four countries
namely England, Scotland, Ireland and Wales (Reimann and Zimmermann, 2019).
The Act of Parliament is the primary law passed by the UK parliament in the form of Public
General Acts and Local and Personal Acts and the secondary legislation includes statutory
instruments, by-laws and orders in council that are published up to 3500 on an annual basis
and arranged in sequence every year (Edge, 2017).
Common law: This is a significant source of providing legal guidance in order to protect the
rights of an individual. It is a collection of rules and principles that are obtained from the
judgement in the high courts (Reimann and Zimmermann, 2019). The common law is also
referred as the Case law which was incorporated in 1865 under which all the cases are
reported systematically by the Incorporated Council of Law Reporting which publishes the
law reports in an organized form. The case laws are developed by the judge in the court
instead of the parliament and this judge has to follow the rules stated by the parliament
while passing any decision. But in cases where no legislations are present due to change in
the situation, the judge solves the disputes and take decision with their own understanding
of what is right and what is wrong (Edge, 2017).
European Union Law: The rules under this law are divided into primary and secondary
legislation. The European Union can take actions based on the laws framed by the treaties in
the primary legislation or with the help of regulations in secondary legislation (Reimann and
Zimmermann, 2019).
The treaties in the primary legislation comprise of The Treaty of European Union, The Treaty
of Nice 2001, The Treaty of Libson 2009, The Treaty of Amsterdam, etc.
4
P1 DIFFERENT SOURCES OF LAW
The law system in the UK is originated from four different sources which can be described
as:
Legislation: The legislations are created by the UK parliament that contains the House of
Lords has 800 members and House of Common comprising of 650 members of parliament.
The UK parliament passes the laws and legislation that are to be followed by four countries
namely England, Scotland, Ireland and Wales (Reimann and Zimmermann, 2019).
The Act of Parliament is the primary law passed by the UK parliament in the form of Public
General Acts and Local and Personal Acts and the secondary legislation includes statutory
instruments, by-laws and orders in council that are published up to 3500 on an annual basis
and arranged in sequence every year (Edge, 2017).
Common law: This is a significant source of providing legal guidance in order to protect the
rights of an individual. It is a collection of rules and principles that are obtained from the
judgement in the high courts (Reimann and Zimmermann, 2019). The common law is also
referred as the Case law which was incorporated in 1865 under which all the cases are
reported systematically by the Incorporated Council of Law Reporting which publishes the
law reports in an organized form. The case laws are developed by the judge in the court
instead of the parliament and this judge has to follow the rules stated by the parliament
while passing any decision. But in cases where no legislations are present due to change in
the situation, the judge solves the disputes and take decision with their own understanding
of what is right and what is wrong (Edge, 2017).
European Union Law: The rules under this law are divided into primary and secondary
legislation. The European Union can take actions based on the laws framed by the treaties in
the primary legislation or with the help of regulations in secondary legislation (Reimann and
Zimmermann, 2019).
The treaties in the primary legislation comprise of The Treaty of European Union, The Treaty
of Nice 2001, The Treaty of Libson 2009, The Treaty of Amsterdam, etc.
4
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The secondary sources include the regulations, directives, decisions obtained by the court
and recommendations and opinions received (Edge, 2017).
European Convention on Human Rights (ECHR): the Human Rights Act that was
incorporated in October 2000 signifies that all the decisions of the courts in the UK have to
concentrate on protecting the rights of the people and the fundamental freedom that is
established in ECHR. The decisions taken by the court in regards to the payment of
compensation to the damage borne by an individual are monitored by the Committee of
Ministers of the European Council (Edge, 2017).
5
and recommendations and opinions received (Edge, 2017).
European Convention on Human Rights (ECHR): the Human Rights Act that was
incorporated in October 2000 signifies that all the decisions of the courts in the UK have to
concentrate on protecting the rights of the people and the fundamental freedom that is
established in ECHR. The decisions taken by the court in regards to the payment of
compensation to the damage borne by an individual are monitored by the Committee of
Ministers of the European Council (Edge, 2017).
5
P2 ROLE OF GOVERNMENT IN MAKING THE LAW AND HOW STATUTORY
AND COMMON LAW ARE APPLIED IN THE JUSTICE COURTS
At the time of the election, the political party that gains the most number of the votes/
seats becomes the government of the country for the next five years (Zander, 2015). The
leaders of the party that win are appointed as the Prime minister and have the right to elect
other members of the team that become the cabinet minister and junior ministers.
ROLE OF GOVERNMENT IN LAW-MAKING:
The government of the UK is responsible and accountable to the UK parliament that
introduces laws in the UK termed as the legislature. The government plays an important role
in making the law which includes:
The government of the country participate in meetings and discussions in order to make
policies, vision, set objectives and directions regarding specific issues being discussed
(Zander, 2015).
The government is responsible for the development of new laws and policies which needs
the approval of the parliament.
The ministries of government have to draft green paper, white paper and other documents
that are used in the discussion and debate process (Zander, 2015).
Application of statutory law in the justice court:
The judge in the courts of the UK follows the legislation implemented under the statutory
law and also overlook the drafts and debates conducted while incorporating the law. There
are cases when the court does not follow the legislation and considers the statutory law
invalidated and unconstitutional (Ahmed and Perry, 2017).
Application of common law in the justice court:
The judge in the justice court creates the common law by using common sense and taking
decisions according to by applying the facts in the aroused situation and give conclusions.
The common law is developed by the judges on an everyday basis in the form of written
judgement of cases they hear (Ahmed and Perry, 2017).
6
AND COMMON LAW ARE APPLIED IN THE JUSTICE COURTS
At the time of the election, the political party that gains the most number of the votes/
seats becomes the government of the country for the next five years (Zander, 2015). The
leaders of the party that win are appointed as the Prime minister and have the right to elect
other members of the team that become the cabinet minister and junior ministers.
ROLE OF GOVERNMENT IN LAW-MAKING:
The government of the UK is responsible and accountable to the UK parliament that
introduces laws in the UK termed as the legislature. The government plays an important role
in making the law which includes:
The government of the country participate in meetings and discussions in order to make
policies, vision, set objectives and directions regarding specific issues being discussed
(Zander, 2015).
The government is responsible for the development of new laws and policies which needs
the approval of the parliament.
The ministries of government have to draft green paper, white paper and other documents
that are used in the discussion and debate process (Zander, 2015).
Application of statutory law in the justice court:
The judge in the courts of the UK follows the legislation implemented under the statutory
law and also overlook the drafts and debates conducted while incorporating the law. There
are cases when the court does not follow the legislation and considers the statutory law
invalidated and unconstitutional (Ahmed and Perry, 2017).
Application of common law in the justice court:
The judge in the justice court creates the common law by using common sense and taking
decisions according to by applying the facts in the aroused situation and give conclusions.
The common law is developed by the judges on an everyday basis in the form of written
judgement of cases they hear (Ahmed and Perry, 2017).
6
M1 EVALUATE THE EFFECTIVENESS OF THE LEGAL SYSTEM IN TERMS OF
RECENT REFORMS AND DEVELOPMENTS
The UK has a well-structured legal system that works with the rules and laws of the
legislature and needs to be followed by every individual in the business. There are many
benefits of the legal system in the development of the country (Wilson et al. 2018).
The legal system enables a high volume of specialization by providing rules and procedures
and handling disputes arising between two parties thus, providing fair judgements. The laws
incorporated by the legislature focus on considering the rights and interest of all the
stakeholders of the business which includes consumers, employees, shareholders,
community, etc. these laws result in consumers and employee satisfaction, increasing job
opportunities, protecting the environment and raising the standards of living of the people
of the UK which leads to gaining competitive advantage and development of the country
(Wilson et al. 2018).
The legal system is monitored by the parliament and government of the country and
changes are made whenever needed by conducting proper team meetings and discussions
and reaching on effective conclusions. The reformation of the law is necessary at times in
order to enhance the efficiency of the existing legal system by examining, advocating and
implementing the required changes in the existing system (Wilson et al. 2018).
Thus, the legal system of the UK is very effective as it helps in handling various kinds of
disputes quickly with impartial conclusions that consider the interest of both the parties and
are fair to implement. The legal system in the UK, therefore, enables reform and
development (Wilson et al. 2018).
7
RECENT REFORMS AND DEVELOPMENTS
The UK has a well-structured legal system that works with the rules and laws of the
legislature and needs to be followed by every individual in the business. There are many
benefits of the legal system in the development of the country (Wilson et al. 2018).
The legal system enables a high volume of specialization by providing rules and procedures
and handling disputes arising between two parties thus, providing fair judgements. The laws
incorporated by the legislature focus on considering the rights and interest of all the
stakeholders of the business which includes consumers, employees, shareholders,
community, etc. these laws result in consumers and employee satisfaction, increasing job
opportunities, protecting the environment and raising the standards of living of the people
of the UK which leads to gaining competitive advantage and development of the country
(Wilson et al. 2018).
The legal system is monitored by the parliament and government of the country and
changes are made whenever needed by conducting proper team meetings and discussions
and reaching on effective conclusions. The reformation of the law is necessary at times in
order to enhance the efficiency of the existing legal system by examining, advocating and
implementing the required changes in the existing system (Wilson et al. 2018).
Thus, the legal system of the UK is very effective as it helps in handling various kinds of
disputes quickly with impartial conclusions that consider the interest of both the parties and
are fair to implement. The legal system in the UK, therefore, enables reform and
development (Wilson et al. 2018).
7
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LO 2
P3 ILLUSTRATE HOW COMPANY, EMPLOYMENT AND CONTRACT LAW HAS
A POTENTIAL IMPACT UPON BUSINESS USING EXAMPLES
The laws, rules and regulations formed within the company, by the government or the
legislature have to be followed strictly by the companies to avoid mismanagement in
business, the dissatisfaction of stakeholders and penalties from the government. Therefore,
the company, employment and contract law affect the decision making of the business to
fulfil the objectives and attain success and growth (Taylor and Emir, 2015).
Corporate law: The corporate law provides rules and regulations regarding the start-up of a
business, formation of business, taxation policies, documentation needed such as
Memorandum of Association, Article of Association, and etc. before operating the business
in order to consider the interest of the stakeholders of the business (McLaughlin, 2018). The
corporate laws need to be strictly followed by the business to avoid government
intervention. For example: A business does not pay regular taxes and violates the taxation
policy of the government, the government will charge penalty to the business and business
may have to pay higher taxes along with interest which would affect the goodwill of the
company and lead to difficulty in finance allocation of the business (McLaughlin, 2018).
Employment law: this law regulates the employer-employee relations and focuses on
protecting the right and interest of the employees to achieve employee satisfaction. This
employment law comprises of areas such as data protection, minimum wages Act, fair
remuneration, discrimination at the workplace, friendly work environment, gender equality,
fair recruitment and selection, working hours, etc.(Taylor and Emir, 2015). Thus, these laws
affect the functioning and decision making of the managers in the business, for example,
discrimination among the employees on the basis of caste, gender, religion at workplace will
create dissatisfaction and the employee would not perform well which would result in poor
business performance, increased absenteeism, etc. that would affect the business and its
success (Taylor and Emir, 2015).
Contract law: This law binds two parties in an agreement in terms of sales of goods,
exchanging the interest of ownerships or service provisions, etc. The contract laws include
Sale and Supply of Goods Act that helps in protecting the seller and the purchaser of the
8
P3 ILLUSTRATE HOW COMPANY, EMPLOYMENT AND CONTRACT LAW HAS
A POTENTIAL IMPACT UPON BUSINESS USING EXAMPLES
The laws, rules and regulations formed within the company, by the government or the
legislature have to be followed strictly by the companies to avoid mismanagement in
business, the dissatisfaction of stakeholders and penalties from the government. Therefore,
the company, employment and contract law affect the decision making of the business to
fulfil the objectives and attain success and growth (Taylor and Emir, 2015).
Corporate law: The corporate law provides rules and regulations regarding the start-up of a
business, formation of business, taxation policies, documentation needed such as
Memorandum of Association, Article of Association, and etc. before operating the business
in order to consider the interest of the stakeholders of the business (McLaughlin, 2018). The
corporate laws need to be strictly followed by the business to avoid government
intervention. For example: A business does not pay regular taxes and violates the taxation
policy of the government, the government will charge penalty to the business and business
may have to pay higher taxes along with interest which would affect the goodwill of the
company and lead to difficulty in finance allocation of the business (McLaughlin, 2018).
Employment law: this law regulates the employer-employee relations and focuses on
protecting the right and interest of the employees to achieve employee satisfaction. This
employment law comprises of areas such as data protection, minimum wages Act, fair
remuneration, discrimination at the workplace, friendly work environment, gender equality,
fair recruitment and selection, working hours, etc.(Taylor and Emir, 2015). Thus, these laws
affect the functioning and decision making of the managers in the business, for example,
discrimination among the employees on the basis of caste, gender, religion at workplace will
create dissatisfaction and the employee would not perform well which would result in poor
business performance, increased absenteeism, etc. that would affect the business and its
success (Taylor and Emir, 2015).
Contract law: This law binds two parties in an agreement in terms of sales of goods,
exchanging the interest of ownerships or service provisions, etc. The contract laws include
Sale and Supply of Goods Act that helps in protecting the seller and the purchaser of the
8
goods (McLaughlin, 2018). For example: if one party does not follow the law, suppose the
seller did not provide right quantity and quality of goods to the buyer, then the buyer can
file a complaint against the seller in the court which would lead to decrease in reputation of
the business and affect the success of the company (McLaughlin, 2018).
9
seller did not provide right quantity and quality of goods to the buyer, then the buyer can
file a complaint against the seller in the court which would lead to decrease in reputation of
the business and affect the success of the company (McLaughlin, 2018).
9
M2 DIFFERENTIATE BETWEEN LEGISLATION, REGULATIONS AND
STANDARDS TO ANALYSE POTENTIAL IMPACTS UPON BUSINESS
Standards: the form of a written document that can be used as a reference in business to
ensure quality and safety of products and services. The standards are written in a technical
language that is applied in a particular industry and updated frequently to cope up with the
changing technologies and trends of the industry (Bond, 2015). Thus, the application of
international standards in business helps in increasing the goodwill of the company and
helps in gaining competitive advantage to the business.
Regulations: The regulation helps people in understanding what if something is legal or not
and whether a certain action is acceptable to be conducted in the business or not. The rules
and regulations framed by the government of the country comprise of taxation policy,
licensing, privacy policies, rules regarding advertising, labour laws, environmental security,
etc. that needs to be followed by the companies to attain effectiveness in business
operations (Cracknell, 2017).
Legislation: The legislations are formulated in specific areas such as protection and safety of
consumers, employment laws, environment protection health and safety, etc. in order to
satisfy the interest of the community as a whole (Cracknell, 2017).
DIFFERENCE BETWEEN STANDARDS, REGULATION AND LEGISLATION
BASIS STANDARDS REGULATION LEGISLATION
Meaning The standard refers
to as the guideline or
specification that
helps in ensuring the
safety, quality and
efficiency of the
products or services
and systems of any
company (Bond,
2015).
The regulations are
referred to as the
rules formed by the
administrative
agencies that enable
the enforcement of
the law and helps in
performing activities
that are legal.
The legislation refers
to the laws that are
incorporated by the
government or the
parliament of the
United Kingdom and
strictly followed by
all the business
organization listed in
the UK (Cracknell,
2017).
Set by Administrative
agencies
The government of
the country.
The parliament of
the UK.
Examples International
Organization for
Standardization
Taxation policy,
licensing policy,
labour laws, etc.
Consumer Protection
Act, Employment
Act, Health and
10
STANDARDS TO ANALYSE POTENTIAL IMPACTS UPON BUSINESS
Standards: the form of a written document that can be used as a reference in business to
ensure quality and safety of products and services. The standards are written in a technical
language that is applied in a particular industry and updated frequently to cope up with the
changing technologies and trends of the industry (Bond, 2015). Thus, the application of
international standards in business helps in increasing the goodwill of the company and
helps in gaining competitive advantage to the business.
Regulations: The regulation helps people in understanding what if something is legal or not
and whether a certain action is acceptable to be conducted in the business or not. The rules
and regulations framed by the government of the country comprise of taxation policy,
licensing, privacy policies, rules regarding advertising, labour laws, environmental security,
etc. that needs to be followed by the companies to attain effectiveness in business
operations (Cracknell, 2017).
Legislation: The legislations are formulated in specific areas such as protection and safety of
consumers, employment laws, environment protection health and safety, etc. in order to
satisfy the interest of the community as a whole (Cracknell, 2017).
DIFFERENCE BETWEEN STANDARDS, REGULATION AND LEGISLATION
BASIS STANDARDS REGULATION LEGISLATION
Meaning The standard refers
to as the guideline or
specification that
helps in ensuring the
safety, quality and
efficiency of the
products or services
and systems of any
company (Bond,
2015).
The regulations are
referred to as the
rules formed by the
administrative
agencies that enable
the enforcement of
the law and helps in
performing activities
that are legal.
The legislation refers
to the laws that are
incorporated by the
government or the
parliament of the
United Kingdom and
strictly followed by
all the business
organization listed in
the UK (Cracknell,
2017).
Set by Administrative
agencies
The government of
the country.
The parliament of
the UK.
Examples International
Organization for
Standardization
Taxation policy,
licensing policy,
labour laws, etc.
Consumer Protection
Act, Employment
Act, Health and
10
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(ISO), Accounting
standards, etc.
Safety Act, etc.
Impact of Standards, legislation and regulation on the business organization:
All the types of business organizations have to maintain the international standards
developed by the agencies in order to achieve efficiency in the operations of the business to
ensure good quality of production as it leads to increasing the brand image of the company
which results in increased sales of the company (Bond, 2015). If the business does not
follow the regulations of the government and laws of the country, it would lead to
mismanagement in the business operations and result in confusion and conflicts which will
lead to ineffectiveness in achieving the objectives of the organization (Cracknell, 2017).
11
standards, etc.
Safety Act, etc.
Impact of Standards, legislation and regulation on the business organization:
All the types of business organizations have to maintain the international standards
developed by the agencies in order to achieve efficiency in the operations of the business to
ensure good quality of production as it leads to increasing the brand image of the company
which results in increased sales of the company (Bond, 2015). If the business does not
follow the regulations of the government and laws of the country, it would lead to
mismanagement in the business operations and result in confusion and conflicts which will
lead to ineffectiveness in achieving the objectives of the organization (Cracknell, 2017).
11
LO3
P4 HOW DIFFERENT TYPES OF BUSINESS ORGANIZATIONS ARE FORMED
LEGALLY
There are various types of business organizations formed in the UK that are owned and
operated by an individual, partners or groups. These types of organizations are Public
limited company, private limited company, Community Interest Company, unlimited
company, limited liability partnership, non-profit organizations, etc. (Hannigan, 2018).
The legal formation of various types of organization can be described as follows:
PUBLIC LIMITED COMPANY (PLC)
PLC must have a minimum of two shareholders and must issue shares to the public with a
minimum value of £50,000 before it starts trading (Ramanadham, 2019).
The company has to register itself under Companies House that is the agency of business,
innovation and skills department. The registration can be done with a minimum of two
directors, each having a minimum age of 16 years and a maximum of 70 years.
The public limited companies may or may not be listed on stock exchanges, but they must
have PLC as a suffix in the company’s name to register the legal name of the company
(Ramanadham, 2019).
At the time of registration of the company, registration fee and certain documents such as
Memorandum of Association, Article of Association, form 1, form 12, etc. are sent to the
registrar of companies.
The Memorandum of Association of the company must include the names of all the
subscribers who have purchased the shares of the company and also the number of shares
they have subscribed (Ramanadham, 2019).
PRIVATE LIMITED COMPANY (LLC)
The Private limited companies are created and governed under the Companies Act 2006.
12
P4 HOW DIFFERENT TYPES OF BUSINESS ORGANIZATIONS ARE FORMED
LEGALLY
There are various types of business organizations formed in the UK that are owned and
operated by an individual, partners or groups. These types of organizations are Public
limited company, private limited company, Community Interest Company, unlimited
company, limited liability partnership, non-profit organizations, etc. (Hannigan, 2018).
The legal formation of various types of organization can be described as follows:
PUBLIC LIMITED COMPANY (PLC)
PLC must have a minimum of two shareholders and must issue shares to the public with a
minimum value of £50,000 before it starts trading (Ramanadham, 2019).
The company has to register itself under Companies House that is the agency of business,
innovation and skills department. The registration can be done with a minimum of two
directors, each having a minimum age of 16 years and a maximum of 70 years.
The public limited companies may or may not be listed on stock exchanges, but they must
have PLC as a suffix in the company’s name to register the legal name of the company
(Ramanadham, 2019).
At the time of registration of the company, registration fee and certain documents such as
Memorandum of Association, Article of Association, form 1, form 12, etc. are sent to the
registrar of companies.
The Memorandum of Association of the company must include the names of all the
subscribers who have purchased the shares of the company and also the number of shares
they have subscribed (Ramanadham, 2019).
PRIVATE LIMITED COMPANY (LLC)
The Private limited companies are created and governed under the Companies Act 2006.
12
An application consisting of the unique name of the company, its address, name of
directors, details of company's shares, name of shareholders, etc. is sent to the Companies
House of the Government of the UK for registration of the company (Hannigan, 2018).
The creation of Memorandum and Article of Association is mandatory by the shareholders
of the company.
After the registration of the company, a “Certificate of Incorporation” that includes the date
of formation and the number of the company is issued by the government to verify the legal
existence of the company (Hannigan, 2018).
COMMUNITY INTEREST COMPANY (CIC):
The new company can register itself by creating MOA and AOA having signed by all the
directors and filing Form 1 and sending it to the registrar of the companies along with the
payment of £35 as registration fees (Sands, 2017).
These papers would be sent to the regulator of CIC by the registrar and a test is conducted
in order to check whether the company satisfies the interest of the community (Sands,
2017).
13
directors, details of company's shares, name of shareholders, etc. is sent to the Companies
House of the Government of the UK for registration of the company (Hannigan, 2018).
The creation of Memorandum and Article of Association is mandatory by the shareholders
of the company.
After the registration of the company, a “Certificate of Incorporation” that includes the date
of formation and the number of the company is issued by the government to verify the legal
existence of the company (Hannigan, 2018).
COMMUNITY INTEREST COMPANY (CIC):
The new company can register itself by creating MOA and AOA having signed by all the
directors and filing Form 1 and sending it to the registrar of the companies along with the
payment of £35 as registration fees (Sands, 2017).
These papers would be sent to the regulator of CIC by the registrar and a test is conducted
in order to check whether the company satisfies the interest of the community (Sands,
2017).
13
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P5 HOW BUSINESS ORGANIZATIONS ARE MANAGED AND FUNDED
The various types of business organizations are managed in different ways and finance is
acquired through different sources depending on the nature and dynamics of the business
organization (Chandler, 2017). The management and funding of activities in the different
types of business organizations can be explained as:
PUBLIC LIMITED COMPANY: A public limited company is owned and operated by various
stakeholders which comprise of managers, employees, officers, shareholders, directors, etc.
that are engaged in achieving the objectives of the organization directly or indirectly
(Chandler, 2017). The managers of the company are focused towards the optimum
utilization of all the resources of the company which includes human resource, finance, raw
materials, fixed assets, technological resources, etc. in order to increase the profitability and
growth of the company. The public limited company can acquire funds through various
sources that include issuing of shares to the public through initial public offerings, subsidies
provided by the government, grants and loans from the banks, retaining the income of the
company, etc. The appropriate allocation of funds in the business helps in the effective
management of operations of the organization (Chandler, 2017).
PRIVATE LIMITED COMPANY: The management of private companies is focused on
achieving the desired goals of the organization by performing certain functions which
include the planning of strategies and procedures, organizing of the activities by assigning
roles and duties to the employees of the organization, guiding the employees to perform in
the right direction with the best of their capabilities, recruiting and selecting talented
candidates for the organization to fulfil the vacancies and controlling the activities of the
business in order to improve the performance of the employees as well as the business and
achieve efficiencies and effectiveness (Chandler, 2017). The private organizations acquire
funds through various sources which include private placement of securities, issuing of
equity and preference shares, issuing of debentures, taking secured loans from the banks,
acquiring unsecured loans from friends and relatives, commercial paper, right issue, etc.
which helps in accomplishing the activities of the business and focusing on growth and
expansion (Chandler, 2017).
14
The various types of business organizations are managed in different ways and finance is
acquired through different sources depending on the nature and dynamics of the business
organization (Chandler, 2017). The management and funding of activities in the different
types of business organizations can be explained as:
PUBLIC LIMITED COMPANY: A public limited company is owned and operated by various
stakeholders which comprise of managers, employees, officers, shareholders, directors, etc.
that are engaged in achieving the objectives of the organization directly or indirectly
(Chandler, 2017). The managers of the company are focused towards the optimum
utilization of all the resources of the company which includes human resource, finance, raw
materials, fixed assets, technological resources, etc. in order to increase the profitability and
growth of the company. The public limited company can acquire funds through various
sources that include issuing of shares to the public through initial public offerings, subsidies
provided by the government, grants and loans from the banks, retaining the income of the
company, etc. The appropriate allocation of funds in the business helps in the effective
management of operations of the organization (Chandler, 2017).
PRIVATE LIMITED COMPANY: The management of private companies is focused on
achieving the desired goals of the organization by performing certain functions which
include the planning of strategies and procedures, organizing of the activities by assigning
roles and duties to the employees of the organization, guiding the employees to perform in
the right direction with the best of their capabilities, recruiting and selecting talented
candidates for the organization to fulfil the vacancies and controlling the activities of the
business in order to improve the performance of the employees as well as the business and
achieve efficiencies and effectiveness (Chandler, 2017). The private organizations acquire
funds through various sources which include private placement of securities, issuing of
equity and preference shares, issuing of debentures, taking secured loans from the banks,
acquiring unsecured loans from friends and relatives, commercial paper, right issue, etc.
which helps in accomplishing the activities of the business and focusing on growth and
expansion (Chandler, 2017).
14
M3 MERITS AND DEMERITS OF FORMATION OF VARIOUS TYPES OF
BUSINESS ORGANIZATIONS
The formation of different types of organization in the UK has its own advantages and
disadvantages that can be explained as:
PUBLIC LIMITED COMPANY
Advantages:
A PLC is able to raise capital by issuing a large number of shares to the general
public.
The risk of the company is spread among the shareholders that purchase the shares
of the company (Prowle, 2016).
The company can expand its business by raising huge funds from the public which
leads to growth.
The shares of the company are easily transferable as they can be purchased and sold
on the listed stock exchange (Prowle, 2016).
Disadvantages:
A PLC requires more legal and regulatory documents for protecting the interest of
the shareholders.
The companies have to maintain a high level of transparency.
With the purchase of the shares, the shareholders become the owners or directors
of the company which leads to many control issues (Prowle, 2016).
PRIVATE LIMITED COMPANY
Advantages:
An LLC has an easy and simple registration process.
The company has a limited liability depending on the value of the total number of
shares of the company (Blair and Hitchens, 2018).
There is no fixed amount of minimum share capital to be raised by the company.
The company exist even after the death of the owner.
15
BUSINESS ORGANIZATIONS
The formation of different types of organization in the UK has its own advantages and
disadvantages that can be explained as:
PUBLIC LIMITED COMPANY
Advantages:
A PLC is able to raise capital by issuing a large number of shares to the general
public.
The risk of the company is spread among the shareholders that purchase the shares
of the company (Prowle, 2016).
The company can expand its business by raising huge funds from the public which
leads to growth.
The shares of the company are easily transferable as they can be purchased and sold
on the listed stock exchange (Prowle, 2016).
Disadvantages:
A PLC requires more legal and regulatory documents for protecting the interest of
the shareholders.
The companies have to maintain a high level of transparency.
With the purchase of the shares, the shareholders become the owners or directors
of the company which leads to many control issues (Prowle, 2016).
PRIVATE LIMITED COMPANY
Advantages:
An LLC has an easy and simple registration process.
The company has a limited liability depending on the value of the total number of
shares of the company (Blair and Hitchens, 2018).
There is no fixed amount of minimum share capital to be raised by the company.
The company exist even after the death of the owner.
15
Disadvantages:
It requires a huge amount of paperwork and strict restrictions need to be followed
while selecting the company’s name (Blair and Hitchens, 2018).
LLC must maintain a regular record of accounting and bookkeeping.
COMMUNITY INTEREST COMPANY
Advantages:
These companies are committed towards the social cause for which they are formed.
A CIC can raise funds with the help of charity and donation once proven trustworthy.
It is easy to set up and requires less governance (Sands, 2017).
Disadvantages:
CIC companies have limited access over the funding schemes.
They have to follow certain formalities of registration under Companies House
(Sands, 2017).
16
It requires a huge amount of paperwork and strict restrictions need to be followed
while selecting the company’s name (Blair and Hitchens, 2018).
LLC must maintain a regular record of accounting and bookkeeping.
COMMUNITY INTEREST COMPANY
Advantages:
These companies are committed towards the social cause for which they are formed.
A CIC can raise funds with the help of charity and donation once proven trustworthy.
It is easy to set up and requires less governance (Sands, 2017).
Disadvantages:
CIC companies have limited access over the funding schemes.
They have to follow certain formalities of registration under Companies House
(Sands, 2017).
16
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LO4
P6 RECOMMEND LEGAL SOLUTIONS FOR RESOLVING A VARIETY OF
DISPUTES DEMONSTRATING HOW A PARTY MIGHT OBTAIN LEGAL
SUPPORT AND ADVICE
The businesses may face many disputes within the organization such as conflicts between
two parties, late payments from clients, etc. which can create inefficiencies in the business.
Therefore, all kinds of disputes arising in business must try to be resolved quickly with the
help of legal solutions within the business rather than going to the courts and paying high
fees (Blake et al. 2016). The legal solutions that enable support and advice to the parties can
be explained as:
ALTERNATIVE DISPUTE RESOLUTION (ADR): ADR comprises of various techniques that are
useful for resolving disputes under the guidance of the third party that is not biased to any
of the conflicting parties. It is an effective and cost saving process that is far better than
going to the court for justice (Blake et al. 2016). The procedures used under ADR are as
follows:
Arbitration: an arbitrator is a person or a group of people named as arbitrators that helps in
resolving the disputes by taking decisions that are legal on behalf of the two parties in order
to solve the conflicts. This technique is commonly used for solving commercial disputes,
conflicts between consumers and employees, etc. (Moses, 2017).
Mediation: Mediation is a well-structured procedure where interaction between the third
party and the conflicting parties is done with the aim of resolving the disputes using
effective communication and negotiation so as to conclude with unbiased solutions (Stitt,
2016). The third party encourages the other two parties to be a part of the discussion and
share their views so that fair decisions can be taken considering the rights and interest of
both the parties involved (Stitt, 2016).
Conciliation: the third party referred to as a conciliator meet both the conflicting parties
together and separately in order to understand the issue clearly, reducing their stress,
assisting and supporting them to find a solution that is acceptable by both the parties with a
mutual agreement (Kumar, 2017).
17
P6 RECOMMEND LEGAL SOLUTIONS FOR RESOLVING A VARIETY OF
DISPUTES DEMONSTRATING HOW A PARTY MIGHT OBTAIN LEGAL
SUPPORT AND ADVICE
The businesses may face many disputes within the organization such as conflicts between
two parties, late payments from clients, etc. which can create inefficiencies in the business.
Therefore, all kinds of disputes arising in business must try to be resolved quickly with the
help of legal solutions within the business rather than going to the courts and paying high
fees (Blake et al. 2016). The legal solutions that enable support and advice to the parties can
be explained as:
ALTERNATIVE DISPUTE RESOLUTION (ADR): ADR comprises of various techniques that are
useful for resolving disputes under the guidance of the third party that is not biased to any
of the conflicting parties. It is an effective and cost saving process that is far better than
going to the court for justice (Blake et al. 2016). The procedures used under ADR are as
follows:
Arbitration: an arbitrator is a person or a group of people named as arbitrators that helps in
resolving the disputes by taking decisions that are legal on behalf of the two parties in order
to solve the conflicts. This technique is commonly used for solving commercial disputes,
conflicts between consumers and employees, etc. (Moses, 2017).
Mediation: Mediation is a well-structured procedure where interaction between the third
party and the conflicting parties is done with the aim of resolving the disputes using
effective communication and negotiation so as to conclude with unbiased solutions (Stitt,
2016). The third party encourages the other two parties to be a part of the discussion and
share their views so that fair decisions can be taken considering the rights and interest of
both the parties involved (Stitt, 2016).
Conciliation: the third party referred to as a conciliator meet both the conflicting parties
together and separately in order to understand the issue clearly, reducing their stress,
assisting and supporting them to find a solution that is acceptable by both the parties with a
mutual agreement (Kumar, 2017).
17
Negotiation: It is a process that enables unanimous decisions by developing a joint
agreement between both the parties involved. Negotiation technique is applied in all the
types of organizations and focuses on resolving the difference between the parties and
turning it into an agreement that considers the interest of both the parties involved ending
in a win-win situation (Kumar, 2017).
For example: in a contract or an agreement, detailed policies, terms and conditions must be
provided which includes provisions regarding the negotiation, mediation, arbitration, etc. to
provide effective guidance and support to the party for resolving the disputes that may arise
in the future (Kumar, 2017).
18
agreement between both the parties involved. Negotiation technique is applied in all the
types of organizations and focuses on resolving the difference between the parties and
turning it into an agreement that considers the interest of both the parties involved ending
in a win-win situation (Kumar, 2017).
For example: in a contract or an agreement, detailed policies, terms and conditions must be
provided which includes provisions regarding the negotiation, mediation, arbitration, etc. to
provide effective guidance and support to the party for resolving the disputes that may arise
in the future (Kumar, 2017).
18
M4 COMPARE AND CONTRAST VARIOUS SOURCES OF LEGAL SUPPORT AND
ADVICE FOR RESOLUTION OF DISPUTES
There are various forms of legal solutions that help in providing support to the parties and
resolving their conflicts without going to the justice court. These sources of legal support
and advice come under Alternative Dispute Resolution that comprises of conciliation,
mediation, negotiation, expert determination, mini-trial, arbitration, etc. each method have
their own importance and can be used by the parties depending on the conflict and their
interest. Some of these methods can be compared on the following basis:
BASIS ARBITRATION MEDIATION NEGOTIATION CONCILIATION
Meaning Arbitration is a
technique for
resolving
commercial
disputes and
providing an
unbiased solution
to the parties
(Moses, 2017).
It is a party-
centred process
where
interaction
between the
mediator and
conflicting
parties occur to
facilitate
effective
communication
for resolving the
dispute (Stitt,
2016).
Negotiation
helps in
resolving the
dispute by
satisfying the
interest of both
the parties
involved and
making
concessions in
order to agree
on mutual terms
(Kumar, 2017).
The third party
solves the
disputes by
hearing the
case from both
the parties and
encouraging
them to find a
mutually
acceptable
solution
(Kumar, 2017).
Third party “Arbitrators” or
“arbitral tribunal”
mediator May or may not
involve the third
party
conciliator
Strengths Faster
than the
lawsuit in
the court.
Arbitral
proceeding
are
confidenti
al and
non-
public.
The parties
can choose
their own
tribunal
(Moses,
It is a
less time
consumi
ng and
less
costly
method.
The
mediatio
n
remains
highly
confiden
tial.
It is a
quick
and less
costly
process.
The
relations
hip
between
the
parties
can be
preserve
d
through
negotiati
It is an
informal
and
coopera
tive
process.
It
improve
s the
relations
hip
between
the
conflicti
ng
parties.
19
ADVICE FOR RESOLUTION OF DISPUTES
There are various forms of legal solutions that help in providing support to the parties and
resolving their conflicts without going to the justice court. These sources of legal support
and advice come under Alternative Dispute Resolution that comprises of conciliation,
mediation, negotiation, expert determination, mini-trial, arbitration, etc. each method have
their own importance and can be used by the parties depending on the conflict and their
interest. Some of these methods can be compared on the following basis:
BASIS ARBITRATION MEDIATION NEGOTIATION CONCILIATION
Meaning Arbitration is a
technique for
resolving
commercial
disputes and
providing an
unbiased solution
to the parties
(Moses, 2017).
It is a party-
centred process
where
interaction
between the
mediator and
conflicting
parties occur to
facilitate
effective
communication
for resolving the
dispute (Stitt,
2016).
Negotiation
helps in
resolving the
dispute by
satisfying the
interest of both
the parties
involved and
making
concessions in
order to agree
on mutual terms
(Kumar, 2017).
The third party
solves the
disputes by
hearing the
case from both
the parties and
encouraging
them to find a
mutually
acceptable
solution
(Kumar, 2017).
Third party “Arbitrators” or
“arbitral tribunal”
mediator May or may not
involve the third
party
conciliator
Strengths Faster
than the
lawsuit in
the court.
Arbitral
proceeding
are
confidenti
al and
non-
public.
The parties
can choose
their own
tribunal
(Moses,
It is a
less time
consumi
ng and
less
costly
method.
The
mediatio
n
remains
highly
confiden
tial.
It is a
quick
and less
costly
process.
The
relations
hip
between
the
parties
can be
preserve
d
through
negotiati
It is an
informal
and
coopera
tive
process.
It
improve
s the
relations
hip
between
the
conflicti
ng
parties.
19
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2017). on.
Weaknesses There is
limited or
no pre-
trial
procedure
in
arbitration
.
There can
be delays
in the
process
due to the
existence
of multiple
arbitrators
in the
panel
(Moses,
2017).
A bias
mediato
r may
give
partial
solutions
.
Lack of
legal
protecti
on in
terms of
certainty
(Stitt,
2016).
There is
an
imbalanc
e of
power
among
the
parties.
There is
no
guarante
e of a
binding
decision
in
negotiati
on
(Kumar,
2017).
The
third
party
cannot
impose
its
decision
on the
conflicti
ng
parties.
The
conciliat
or relies
on the
reputati
on of
both or
either of
the
parties.
Thus, it can be concluded that there are many methods such as negotiation, arbitration,
conciliation, mediation, etc. that can be used by the conflicting parties to resolve the conflict
with the help of advice and support from the third party. These methods have one major
similarity that all the methods are focused on the resolution of the conflict. But they have
their own procedure for the same which make them different from each other (Stitt, 2016).
20
Weaknesses There is
limited or
no pre-
trial
procedure
in
arbitration
.
There can
be delays
in the
process
due to the
existence
of multiple
arbitrators
in the
panel
(Moses,
2017).
A bias
mediato
r may
give
partial
solutions
.
Lack of
legal
protecti
on in
terms of
certainty
(Stitt,
2016).
There is
an
imbalanc
e of
power
among
the
parties.
There is
no
guarante
e of a
binding
decision
in
negotiati
on
(Kumar,
2017).
The
third
party
cannot
impose
its
decision
on the
conflicti
ng
parties.
The
conciliat
or relies
on the
reputati
on of
both or
either of
the
parties.
Thus, it can be concluded that there are many methods such as negotiation, arbitration,
conciliation, mediation, etc. that can be used by the conflicting parties to resolve the conflict
with the help of advice and support from the third party. These methods have one major
similarity that all the methods are focused on the resolution of the conflict. But they have
their own procedure for the same which make them different from each other (Stitt, 2016).
20
CONCLUSION
Thus it can be connoted that there are four sources of laws prevailing in the UK and
government of the UK plays an important role in making the laws of the country. The
formation of legal systems in the country is proved to be very effective for the development
of the country. The report also describes how the business is affected by the company and
employment laws and the regulations and legislation incorporated in the country. The
second part of the report concentrates on the legal formation of various types of
organization and their management and funding. Lastly, the report lays its emphasis on
resolving the disputes arising in various situations with the help of legal support and advice.
21
Thus it can be connoted that there are four sources of laws prevailing in the UK and
government of the UK plays an important role in making the laws of the country. The
formation of legal systems in the country is proved to be very effective for the development
of the country. The report also describes how the business is affected by the company and
employment laws and the regulations and legislation incorporated in the country. The
second part of the report concentrates on the legal formation of various types of
organization and their management and funding. Lastly, the report lays its emphasis on
resolving the disputes arising in various situations with the help of legal support and advice.
21
REFERENCES
Ahmed, F. and Perry, A., 2017. Constitutional Statutes. Oxford Journal of Legal Studies,
37(2), pp.461-481.
Blair, D.M. and Hitchens, D.M., 2018. Campus companies: UK and Ireland. Routledge.
Blake, S.H., Browne, J. and Sime, S., 2016. A practical approach to alternative dispute
resolution. Oxford University Press.
Bond, T., 2015. Standards and ethics for counselling in action. Sage.
Chandler, J., 2017. Questioning the new public management. Routledge.
Cracknell, A.P., 2017. UAVs: regulations and law enforcement. International Journal of
Remote Sensing, 38(8-10), pp.3054-3067.
Edge, P.W., 2017. Religion and law: An introduction. Routledge.
Hannigan, B., 2018. Company law. Oxford University Press, USA.
Kumar, D., 2017, March. E-Negotiation: Emerging Trends in ADR. In International
Conference on Information and Communication Technology for Intelligent Systems (pp. 92-
98). Springer, Cham.
McLaughlin, S., 2018. Unlocking company law. Routledge.
Moses, M.L., 2017. The principles and practice of international commercial arbitration.
Cambridge University Press.
Prowle, M., 2016. The changing public sector: A practical management guide. Gower.
Ramanadham, V.V., 2019. The economics of public enterprise. Routledge.
Reimann, M. and Zimmermann, R. eds., 2019. The Oxford handbook of comparative law.
Oxford University Press.
Sands, P., 2017. European Community environmental law: legislation, the European Court of
Justice and common-interest groups. In European Environmental Law (pp. 103-116).
Routledge.
22
Ahmed, F. and Perry, A., 2017. Constitutional Statutes. Oxford Journal of Legal Studies,
37(2), pp.461-481.
Blair, D.M. and Hitchens, D.M., 2018. Campus companies: UK and Ireland. Routledge.
Blake, S.H., Browne, J. and Sime, S., 2016. A practical approach to alternative dispute
resolution. Oxford University Press.
Bond, T., 2015. Standards and ethics for counselling in action. Sage.
Chandler, J., 2017. Questioning the new public management. Routledge.
Cracknell, A.P., 2017. UAVs: regulations and law enforcement. International Journal of
Remote Sensing, 38(8-10), pp.3054-3067.
Edge, P.W., 2017. Religion and law: An introduction. Routledge.
Hannigan, B., 2018. Company law. Oxford University Press, USA.
Kumar, D., 2017, March. E-Negotiation: Emerging Trends in ADR. In International
Conference on Information and Communication Technology for Intelligent Systems (pp. 92-
98). Springer, Cham.
McLaughlin, S., 2018. Unlocking company law. Routledge.
Moses, M.L., 2017. The principles and practice of international commercial arbitration.
Cambridge University Press.
Prowle, M., 2016. The changing public sector: A practical management guide. Gower.
Ramanadham, V.V., 2019. The economics of public enterprise. Routledge.
Reimann, M. and Zimmermann, R. eds., 2019. The Oxford handbook of comparative law.
Oxford University Press.
Sands, P., 2017. European Community environmental law: legislation, the European Court of
Justice and common-interest groups. In European Environmental Law (pp. 103-116).
Routledge.
22
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Stitt, A., 2016. Mediation: a practical guide. Routledge-Cavendish.
Taylor, S. and Emir, A., 2015. Employment law: an introduction. Oxford University Press,
USA.
Wilson, S., Rutherford, H., Storey, T. and Wortley, N., 2018. English Legal System. Oxford
University Press.
Zander, M., 2015. The law-making process. Bloomsbury Publishing.
23
Taylor, S. and Emir, A., 2015. Employment law: an introduction. Oxford University Press,
USA.
Wilson, S., Rutherford, H., Storey, T. and Wortley, N., 2018. English Legal System. Oxford
University Press.
Zander, M., 2015. The law-making process. Bloomsbury Publishing.
23
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