Business Law and Legal System - Assignment

BUSINESS LAW

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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Different sources of law...................................................................................................3
P2. Role of government in law-making and application of statutory and common law in
justice courts...........................................................................................................................5
M1 Effectiveness of the legal system in terms of recent reforms and developments............6
D1 Critical evaluation of the legal system and law................................................................6
TASK 2............................................................................................................................................7
P3. Potential impact of company, employment and contract law upon a business................7
M2 Differentiation in legislation, regulations and standards to evaluate potential impact upon
business...................................................................................................................................8
TASK 3............................................................................................................................................9
P4. Different types of business organizations that are legally formed...................................9
P5. Management and funding of various types of business organizations...........................10
M3. Assess the advantages and disadvantages of formation of different types of business
organizations.........................................................................................................................11
D2 Evaluation of different types of business organisations.................................................12
TASK 4..........................................................................................................................................12
P6. Legal solution for resolving disputes along with a recommendation.............................12
M4. Compare different legal solution for dispute resolution...............................................13
D3 Effectiveness of legal solutions, legal advice and support for dispute resolution..........14
CONCLUSION..............................................................................................................................15

INTRODUCTION
Business law regulates the affairs of the company from its incorporation to its winding
up. This includes laws about organization such as companies, partnership, agency, bankruptcy
and contract. It is also known as commercial law or mercantile law. These provide legality to the
business so that legal actions can be taken in case of any breach or contravention of the
provisions of applicable law. The report covers nature of UK legal system including different
sources of law, role of government in law making and application of statutory and common law
in justice courts. Further, explanation of various laws that have potential impact upon a business,
different types business organizations and their management and funding. Furthermore, various
types of legal solution along with a recommendation of suitable method for resolving disputes.
TASK 1
P1. Different sources of law
UK legal system has a constitution that is partially written on which acts have been
passed that govern rights of citizens living in the country. There is a specific structure that is
followed for passing the bill and enact it as an Act. Further, the judiciary system is divided into
two types viz. Civil and criminal courts. In order to gain better knowledge about laws, various
sources can be accessed. These are as follows:

Primary sources: These are the fresh information that are restored in original form
without any modification. The language used in such documents can not be understand by every
one, hence requires interpretation. These are as follows:
 Case law: These are the judicial decisions passed by courts. The law reports contain
facts, issues and their judgement together with legal principles upon which decision is
made. These are considered as base on which future case laws are concluded. Further,
these are of binding nature.
 Legislation: UK does not have a complete written constitution. There are various laws
that have been passed and enacted as Acts which are applicable to whole UK. In order to
impose legislation, the bill has to passed through a fixed procedure to convert it into an
Act. Their validity can not be questioned in the courts.
Secondary sources: These are the decoded information into a simple language which is
fathomable by layman. These are as follows:
 Legal encyclopaedias: Halsbury's laws of England and Wales is the authentic source of
legal provisions that is arranged in an alphabetical manner which is easy to access. It is
contains law derived from every sources and is written in consultation with experts.
 Parliamentary publications: These provide background detail about the enactment of a
a legislation so that one can understand a particular area of law. These can be found in
command papers which is further divided into green papers and white papers. Along with
this, debates and speeches of House of Commons and House of Lords.
 Non-parliamentary publications: These are the reports and publications papers from
government departments and agencies which are available offline as well as online on the
official site of each department or agency.
 Law commission: It is an independent body set constituted in 1965 for monitoring law of
England and Wales in order to make recommendation in the areas where reforms are
needed. The committee consult such recommendation with wider public and interested
parties and experts.
 Law journals: These are extensive in nature which contain general as well as specific
area of law. These may have combination of articles and case commentary which can
help in understanding the legal issues in detail.

 Textbooks: These are the best source to conduct a research on a legal topic. They may
include textbooks written by academics for students etc. Further, summaries of cases on a
specific subject matter are also given.
P2. Role of government in law-making and application of statutory and common law in justice
courts
The UK government has a significant role in law making. They have the duty to make
plans in order to implement to whole UK. Hence, they have vast roles and responsibilities which
is divided into three separate types such as:
1. Executive role: This branch of government has a role to assess the laws that are needed
for implementing together with their administering the laws so enacted. Further, they
have been empowered to make rules that will be followed for better implementation. For
maintaining law and order, executive branch has the power to pass orders. Queen, Prime
Ministers and various other cabinet ministers are its members. Further, they conduct daily
routine activities.
2. Legislative role: The legislative bodies viz. House of Commons and House of Lords
make laws that are necessary for the country. A bill goes through various stages in order
to become an Act which will be binding on each individual. Further, they have a huge
role in overriding veto of President after receiving majority of votes from both the
houses.
3. Judiciary role: Legal system needs regular evaluation in order to assess the level of
compliance and non-compliance. Government form various commission to monitor
existing laws and make recommendation in order to increase its effectiveness. Further,
there are various courts that have been established in order to punish the culprits. The
judgement, after hearing and examination of evidence produced, so passed is considered
as the basis for future deciding the cases in the future.
These three roles have their individual importance and a proper co-ordination should be
formed so that legal provisions can be enacted effectively. Along with this, there are two laws
viz. Common and statutory which have major significant in UK legal system. There application
in justice courts have been discussed below:
Common law have its roots from judgements passed in courts including appellate
tribunals or courts. These are also known as case law or judge made law. The basic and core

elements according to common law is that same facts should be treated in a different way in
different circumstances. It follows the “doctrine of judicial precedents”, which means that judges
refer to the cases that have already been decided in the past to make a decision. In other words, a
case with similar facts and issues have been decided earlier, then such judgement will be used for
deciding the future case law.
Statutory law are the written form of principles and rules of law that have been passed
by legislative body in order to govern citizens of UK. A bill after going through all the necessary
stages and royal assent becomes an Act which is called a statue. These are the fundamental
framework of a legal system which consists all the available statues. Such law is compulsory for
everyone to follow along with this, these may have restriction or prohibitions on certain acts.
M1 Effectiveness of the legal system in terms of recent reforms and developments
Effectiveness in legal system in context with recent developments and reforms not only
bring political and economical stability at great extent but also aid country social life by
embedding various statutes and codes of laws. Reforms in legal system effectively ensure
organisation to lay their cases before courts. In addition with this legal system make compulsory
for each and every organisation to follow statues along with this there are certain prohibitions
and restrictions which bids companies to perform their activities as per according to laid
standards. Legal system effectively makes sure universal access and provides various set to
procedures in order to settle down various kinds of disputes. In UK legal system civil disputes
can be resolved in courts and VCAT in which cases can be resolved in quick manner without any
kind of exorbitant cost. In United Kingdom there are mainly three form of legal system for
England and Wales, Northern Ireland and Scotland. Legal system operates in effective way in
order to resolve disputes. In UK legal system, cases of organisations resolved in a way of fair
and unbiased manner within timely resolution of disputes. This benefits remarkable reforms and
developments.
D1 Critical evaluation of the legal system and law
Strong legal system of a country ensures qualitative and effective functionality of business
organisations. UK government adopt and frame own legal system, civil law and common law
and key administrative Jurisprudences. This provides national and international business
organisations to perform their activities within legal system and resolve any kind of issue or
query in timely effective manner. UK government implemented few provisions in their law

system in order to govern formative relationship in between contacted and deceased parties. For
example, Government of United Kingdom, follow Civil Law System which is mainly a code
system and a written constitution that include specific codes related to, constitutional law, tax
law, civil code law that mainly covers corporate law. In this for example, if a company is
important for a company operating its business activities in UK to follow tax laws and other
corporate laws in possible manner in order to ensure its long term sustainability and ask for their
right to file a complaint and resolve a issue in UK courts. All these underlying regulations is
required to abided by all organisations in order to perform their business functions in organized
way while taking advantages form these laws and regulations laid in legal system.
TASK 2
P3. Potential impact of company, employment and contract law upon a business
Legislations are enacted to govern people as well as organizations in a country. These
provide a legal backup and have significant impact on an entity. The laws that may potentially
influence a business are have been mentioned below:
Company law: A company is an artificial judicial person having perpetual succession
and a common seal. Further, it has identity separate from its members and can sue or be sued and
own properties in its own name. Further, it can be a company limited by shares or guarantee.
Along with this, an unlimited company can also be incorporated. All the corporations in UK
have to follow Companies Act, 2006 which provides provisions regarding formation,
appointments and removal of directors including resignation, duties and responsibilities of
directors, rights of shareholders, remuneration, policies of company, winding up and many more.
For example, a remuneration to director has not been provided according to provision so
provided in the Act, then he can seek legal actions.
Employment law: Employees are on of main resources of a business organization. The
goals and objectives are achieved through them, therefore, it is necessary to provide them
suitable working conditions. Employment Act, 2002, contains laws governing the rights of each
individual working in the organization. It provides legislation for minimum wages or salary,
leaves including paid leaves, bonus, incentives, dismissal and many more. In case of any default
on the part of employer, personnel can apply for a suit in employment tribunal. For instance, an

employee has been denied parental leave, so he proceed for a legal solution which can be
litigation in extreme situations.
Contract law: A contract is an offer made by one party to another for a valuable
consideration and with a legal intention to enforce as contract. A contract must have legal
enforceability to be able to provide legal remedies. A business enter into contract with its
suppliers, customers, shareholders, retailers, government, employees and many other parties.
Further, there are fixed terms and conditions, according to which deal has to be done. The
contracts are regulated by Sale and Supply of Goods Act, 1994 which manage the formation and
execution of each and every contract. Further, one may seek legal actions for breach or
contravention of clauses mentioned in the contract. For example, buyer has failed to provide the
payment in the time period so mentioned in the contract, in such case mandatory notices can be
provided to make him pay the amount along with interest. In case he fail to pay, then lawsuit can
be filed for legal action.
M2 Differentiation in legislation, regulations and standards to evaluate potential impact upon
business
Legislation Regulations Standards
 It is a statutory law
which is mainly
enacted by legislature.
 It is passes by a
legislative body of a
particular country.
Along with this
legislation include,
establishment of
framework as per
according to which
government is required
to act.
 It is regular process in
which proper
monitoring and
enforcing of law is
done.
 Regulations are mainly
raised from
government or self
regulations.
 In this there is a proper
specification,
guidelines and
requirements are given
for product, system
and services in order to
ensure appropriate
quality and safety.
 Standard is mainly a
principle or a
document which is
approved by
recognized body and
ensure quality and

safety for users.
TASK 3
P4. Different types of business organizations that are legally formed
There are many different types of business structures that are available and one of them
can be chosen for the commencement and conduct of business. Further, each business type must
be analysed to check the suitability so that maximum benefits can be taken. These are as follows:
 Company: It is a legal entity separate from its members which has perpetual succession
and common seal. It has the right and capable of buying properties in its own name and
can sue or be sued. Further, the liabilities of members can be limited by shares or
guarantee or in some cases the liability can be unlimited. Shareholders are the owners of
the company and directors manage the affairs of it. Further, it can be formed only when
its name is recorded in the documents of Companies House. Similarly, it can be wound
up and dissolved only by law. The liability of shareholder is limited up to the unpaid
nominal amount. A company should be registered under the Companies Act, 2006 in
order to carry business in UK.
 Partnership: It is an association of two or more persons formed for mutual interests in
order to make profits. The business so carried has to be lawful in nature. A partnership
deed is executed between partners which consist various terms and conditions along with
the ratio in which profits and losses are to be divided. In case, the ratio is not mentioned,
then profits and losses are to be divided equally. Along with this, partners may be held
liable jointly and severally for the acts of other partners. The liabilities of partners can
extend to personal assets, however, creditors can not force the partners to pay off their
unpaid money. The registration is voluntary.
 Sole proprietorship: It is a business types owned and managed by a single person at
small scale. There is no need for registration along with this, no separate legal distinction
between the owner and business entity. The individual is also called sole trader, or
proprietor. Further, there is no limit on the liabilities of the owner and profits/losses are
earned/borne all by himself. Further, the debts of the business is considered as the debts
of the sole trader. It is the simplest form which can easily be established and wound up.

 Limited liability partnership (LLP): It is a partnership and also have elements of a
company. Thus, it is a hybrid structure of both partnership and a company. In a LLP, an
individual partner can not be held for the misconduct or negligence of another partner.
The liabilities of partners is limited just like shareholder's in a company.
P5. Management and funding of various types of business organizations
Every business type should be organized, managed and funded in order to run the
business smoothly. The management and funding of different types of businesses are as follows:
 Company: A company is an artificial person with no brain, hence, can not be proceeded
with its own work. For managing the affairs by executing contracts with related parties
are done by directors who are collectively called board of directors. The decision making
power is with the board and requires majority of votes to pass a resolution. Further, there
are two types of directors viz. Executive who are responsible for managing day to day
activities and non-executive are responsible for providing independent judgement and
often formed as a committee. A company is a registered entity which have many options
to raise funds. The most common sources are share capital and debentures. Further, the
other options are bank loan, borrowings, retained earnings, personal savings etc.
 Partnership: A partnership firm has partners who are responsible for the management of
the business activities. The decisions are made by getting consent from all the partners
and a partner can be held liable for the acts of other partners. A contract can be entered
only when it has been approved by each and every partner. Further, a partner is held
liable jointly and severally. A firm has lesser sources available as compared to company
for raising funds. The major way through which funds are generated is partner's capital,
retained earnings, bank loans etc.
 Sole proprietorship: It is owned and managed by an individual, who is known as sole
trader or proprietor. The ultimate decision to run the entity is with the owner himself.
Further, the liabilities may extend to personal assets if not paid within the time period.
Further, owner may appoint one or more people to assist him in his business. There is no
legal identity of the organization, hence, it does not have much options to raise funds for
the business. The only two options available are personal savings and bank loan.
 Limited Liability Partnership: This type of business entity consists features of both
partnership and company. The partners have direct control over the affairs of the LLP and

the liability of each partner is limited up to ratio so specified. Further, just like
partnership firm, all the partners should give their consent. It has more options available
as compared to partnership or sole proprietorship. The sources through which it can raise
finance are personal savings, retained earnings, venture capital etc.
M3. Assess the advantages and disadvantages of formation of different types of business
organizations
Basis Company Partnership Sole Proprietorship Limited Liability
Partnership
Advantage
s
The shareholders
have limited
liability. Shares can
be transferred
easily. More
options for raising
capital.
This form of
organisation is easy
to form and there is
a rise in ability to
acquire funds when
there is more than
one owner.
In sole proprietorship
form of organisation,
there is sole owner
who enjoy all profits
along with low
investment cost to
establish a business.
In the form of
limited liability
partnership, it is
easier to attract
attention of
investors as in
this limited
partners holds
limited liability in
business debts.
Disadvant
ages
High formation
costs. More
reporting
requirements which
are complex in
nature. The profit
received by
shareholders is
taxable.
In this form of
organisation each
and every partner is
liable in an
individual way for
the obligations and
debts. Moreover
partners are not
able to transfer any
kind of interest in
business without
Owner is
individually liable to
bear liabilities and
losses incurred and
this form of business
may come to end at
death of owner
unless it is not
transferred to heirs.
In this it is
important for
limited partner to
fill certificate of
limited
partnership which
require state
filling fees.

taking prior
consent from other
partners.
D2 Evaluation of different types of business organisations
There are mainly four types of business organisations sole proprietorship, partnership,
company and limited liability partnership. In these, sole proprietorship form of business
organisation is mainly owned and controlled by a sole individual who is only responsible to bear
losses and enjoy earned profits. Whereas, partnership consists of more than one business owner
who share amount of liability and profit as per according to share divided among them. In
addition to this, a company is separate legal entities who are mainly owned by shareholders.
Along with this, in a limited liability partnership partners are only authorized to limited liability
are not liable for any other partner negligence or misconduct.
TASK 4
P6. Legal solution for resolving disputes along with a recommendation
Dispute resolution methods that can be used to resolve a conflict and dispute. There are
number of solutions available that can be used according to the circumstances so demand. These
are as follows:
 Negotiation: It is the most simple and basic method for resolving conflicts. In this
method, two way communications is held between the parties with an aim of finding a
solution. The parties to the disputes can resolve the matter by themselves or they may
hire a third person mutually. There is no specific procedures, and one may establish and
apply own ways to find a conclusion. If a dispute arises in the company, then it can be
solved in board room with all the board members. For example, Company X wish to
purchase raw material from Company Z on certain payment terms which should be
decided through negotiation.
 Mediation: It is a voluntary process in which a third party is appointed who help with the
communication and help in settling the differences. An agreement is decided by both the
parties, however, it is used only when conflicts can not be resolved through negotiation.

The mediator manages the whole process. No decision is made or enforced by mediator
and parties directly participate for settling the conflicts. In the beginning of the process,
certain grounds are decided on which decisions are made. For example, there has been a
problem in winding up of a trust. In such case, mediation can be applied.
 Arbitration: It is a simple, inexpensive and out of the court settlement of disputes. In
this, an independent person is appointed who control the process. Under the process, the
arbitrator hears both the parties, examine the evidence and make a decision. It is the most
preferred solution for conflict resolution because of its features. Further, witnesses can
also be presented for their testimonies. The decision so made is final and binding on both
the parties. For example, two employees got into a fight in the premises of the company,
them this can be solved with arbitration.
 Litigation: It is used as a last resort when all above mentioned methods fail or can not be
applied in the given situations. In this method, conflicts are resolved through civil courts.
This can be used to refrain the other party from participating in the whole matter. It starts
from trial, in which facts are produced, which is then followed by production of evidence.
After examining all the evidence and testimonies by the judge, a judgement is passed
which is binding. However, a party aggrieved with the decree so passed may apply to
appellate tribunal in order to review or repeal the previous judgement. For example, an
employer has dismissed his sub-ordinate without providing proper notice or justification.
Hence, the person so suffered can file a litigation in the court for legal action.
The most appropriate method for resolving a conflict or dispute arising in the company is
arbitration. It is inexpensive to use and provide a solution that can be relied upon. Further, the
process is speedy together with this the arbitration award is final and binding.
M4. Compare different legal solution for dispute resolution
Negotiation Mediation Arbitration Litigation
It is the most simplest
and easy to use
method. It involves
minimal cost and time
to get a decision.
This method is better
than negotiation as a
third person is
engaged for
facilitating
It is the most useful
and effective method
for fast resolution of
conflicts. It does not
involve much cost,
This is the most
expensive and time
consuming method for
resolving the disputes.
It should be used only

Further, there is no
procedure, hence, the
decision so obtained
can vary case to case
which lacks in
consistency and
reliability.
communication so that
disputes can be
resolved as
expeditiously as
possible. However, the
third party so hired
may or may not be
independent and it is
easy to influence his
thoughts.
also, the matters are
resolved out of the
court. Further, the
arbitrator so appointed
is independent and can
not be influenced.
Moreover, decision is
final and binding.
when there are no
other options
available. Hence, this
method should not be
used unless and until
extreme situation arise.
D3 Effectiveness of legal solutions, legal advice and support for dispute resolution
Legal solutions and advices are developed to help organisations to solve their legal
problems. In this legal counsels provide legal solutions and advices to companies in order to
resolve their disputed. For this, organisations are required to understand leverage of their basic
legal rights in order to effectively ensure best possible outcomes. Companies by seeking
professional expertise solutions and come through any toughest legal circumstances while
ensuring more favourable possible results. Organisations can take advantages of different types
of dispute resolution such as, negotiation, mediation, arbitration and litigation in order to resolve
any kind of related conflict and dispute.

CONCLUSION
As per the above mentioned report, it has been concluded that, business law is a body of law
which effectively govern business operations from its establishment to its end. It this there are
numerous laws laid down which ensure the manner in which a business organisation is required
to run their operations. This report includes different types of law sources such as, case laws,
textbooks, parliamentary publications, legislations and more. Along with this, effectiveness of
legal system and different types of business organisations are covered in this report. Present
project include, manner in which these business organisations get fund and some legal solutions
in order to resolve any kind of related disputed and issues as to work in smooth and effective
manner.