Business Law Essay

This essay provides a comprehensive overview of business law in the UK, covering topics such as sources of law, legal system, impact on business, business organization types, and dispute resolution methods. It analyzes the role of government in lawmaking and the effectiveness of recent legal reforms.

BUSINESS LAW

Table of Contents
P1 Different sources of law...................................................................................................3
M1 Evaluation of effectiveness of recent reforms and development in legal system...........4
D1 Evaluation of legal system and the law...........................................................................5
P2 Role of government in law making and how laws are framed.........................................6
P3 How companies, employment and contract law has potential impact upon business......7
P4 Different types of business organisation and how they are formed.................................9
P5 How business organisation are managed and funded.....................................................10
P6 Recommendation of legal solution for resolving a range of disputes............................11
Conclusion................................................................................................................................14
REFERENCES.........................................................................................................................15

INTRODUCTION
Business law is considered as the body of law which helps in governing business
and commerce in a country. It is considered the branch of civil law and also deals
with issue procedures for both private and public law. Commercial law is formed to
regulate corporate contracts, hiring practices that are used by employers and the
how the manufacture and sale of goods take place (Rutledge, 2014). These
business laws helps in solving the problems that can impact business or causes
legal disputes. The current assignment is based on the nature of legal system and
different sources of law and the impact of law on business. Furthermore this
assignment will show how different types of business are formed and the legal
solution for resolving disputes.
P1 Different sources of law
‘’Parliament is sovereign” because it is the supreme legal authority and it can
create or it can end any law at any time. No other courts can overrule or modify any
law. The role of government is to make the laws to enable citizens to follow the
guidelines in ethical manner. Every year government announces programmes that
changes or updates laws. If established rules and procedures that are passed by
government are not followed then it may cause the defaulter to be penalised or be
given punishment or warnings according to the level of the violation of law (Mann
and Roberts, 2011). There are different types of English law system which includes
three major types: Statutory law, common law and equity law. These laws are
described as below:
Statutory law: this is considered as the act of law the declares, prescribes
and commands something. This is the law which is specific and is expressed in
writing. This is the statue which is a written law passed by legislature on federal
level. These laws set the general propositions of laws which is applied by courts in
specific situation. These laws are enacted by legislative body and vary from
regulatory or administrative laws which is passed by executive agencies and the
common laws (Fitzmaurice, 2017). This follows the legislation process to become a law.
In this a bill is proposed in legislature and is voted upon. If this get approved then
passes to the executive branch and if it signed by executive then it is said to be
passed.

Common law: This is the law which is derived from the judicial decision of
courts or any other similar tribunals. These laws are considered to be arising in the
precedents. This is the law that arises with the reference to the cases. Here if the
court finds that there is a requirement of law and the current dispute is distinct from
all the previous cases held and also the all the legislations are silent and ambiguous
about the dispute then judges have the authority to resolve the duty (Pallemaerts,
2016). This law is formed as and when required by society and differs from case to
case basis. If there is no legislation regarding the dispute then judges makes the
laws which helps the society in implementing it.
Equity law: This is the body of law that was developed in the English court of
chancery. This is derived from old English common law where the court uses their
discretion to apply justice in accordance with the natural law. Equity law is
considered as supreme law when there is any conflict between the common law and
statute law. This law was established in response of rigid procedure of England's
legal system (Mishan, 2015). This law helps in the situation where the monetary reward
is not a remedy to the issue. This law was framed as a result of solution to frustrated
plaintiffs. Here the chancery was framed who is headed by the chancellor and who
has the power to settle disputes in order to relief according to the conscience. The
decisions that are made by chancellor became the basis for the law of equity.
Parliamentary sovereignty is considered as a principle of UK constitution.
Through this parliament is considered as the supreme legal authority in UK which
can make any law or bring it to end. Also it is given a authority that court cannot
overrule the legislation and any parliament in UK cannot make any law that future
parliament cannot change.
M1 Evaluation of effectiveness of recent reforms and development in legal system
There are various legal system which are changed and helps in improving access to
justice for society. Law reforms means a number of things. These helps in making
the law that governs the society up to date and provide a better solution to citizens,
for example the Education Act 1944 helped in reorganising state education system to
provide a better education in the country. As this reforms are effective from point of

view of society as a whole this would increase the functionality of people towards
country.
There are various advantages and disadvantages which are associated with the
English legal system which includes the following:
Specify: The common law is used to clarify, expand and implement the
legislation. As it is seen that act of parliament wordings are often seen as generic
and broad term which only provides the general information (Van De Meene and Van
Rooij, 2016). With the help of common law the generality of the law becomes
specificity.
Consistency: The English legal system works well with the doctrine of
precedent which helps them in most part. This helps the parties to understand the
decisions. Also the senior judges in the higher courts are the one which helps them
to develop precedents and gives them experience.
Speed and Efficiency: The English legal system is flexible, faster and
responsive. As these laws which are made in English legal system responds rapidly
to the community expectation and there changing social values (Pollitt and Bouckaert,
2017). As the courts in the English law are not bounded by the procedures and
political constraints of any legislative process hence they help in achieve the law
reforms faster.
Finally, as it is important to have a number of constitutional reforms that helps in
modernising the constitution e.g. Succession to the Crown Act allowing female rather
than male succession to the Crown, but that would give a very difference in day-to-
day running of the country.
D1 Evaluation of legal system and the law
Posner (2014), point of view of main function of legal system in the society is to
maintain behaviour and compliance among the people. Whilst the adversarial system
of rules is a cardinal point of the English legal system, it raises difficulty of its own
accord due to its very nature and function. Some advantages of English legal system
are certainty while passing decision, consistency and fairness among people and in
all the laws, precision, time saving as there is no loss of time while passing a
judgement, flexibility with regard to time and decisions that are taken. And of course

some disadvantages will be illogical distinctions and slowness of growth as this is
very rigid and complex procedure.
P2 Role of government in law making and how laws are framed
Law making process of government is done by the parliament. The functions
that are performed by the parliament includes to represent citizens interest, to pass
laws and to monitor actions of government (Frank and Bix, 2017). There are different
stages that are required for law making process. It begins with general election
which defines the details of government agenda. After this the political parties, socio
economic situations opens some issues in the agenda. This includes the negotiation
for the joint operations in government agenda. After this Government identifies the
issues that are related to the society. Consultation of people including the ministers,
political parties and boards is taken on the drafted resolution. Then the stage comes
where proposal is created which focuses on people and the social structure of the
country is not harmed. After this proposal is created and it focuses on people and the
social structure. Then proposal is transformed to Bill through the parliamentary
council. The Bill is introduced in the parliamentary session and it is moved to
different committee and report stages after this to Bill considering chambers. Then
Bill moves to the House of Commons and the House of Lords which accepts Bill and
make them as a law (Kerwin and Furlong, 2018). At last if Bill is consented by the royal
and becomes an act.
The Procedure of bill making as discussed above is elaborated below:
First reading: This is the step where the procedure for bill reading starts. Here
the bill arrives in the parliament for discussion.
Second reading: Here the second reading of bill is done in house of
parliament. The bill is presented by government minister and the views of opposition
are taken into consideration.
Committee stage: it is the stage that comes after second stage in which when
the bill passes the second reading in the house of commons these are referred to the
standing committee for examination. The standing committee is chaired by member
of chairmen panel. As there is a procedure of second reading, they are usually
referred to the committee of the whole house.

Report stage: After the committee stage the decision on the bill must be
examined to the house of commons within two week so that all the members gets
the opportunity to amend or to add some clauses.
Third reading: At this stage the final draft of the bill is reviewed by parliament.
Her the bill cannot be amended. But if there is any bill in the house of lords which
can still be amended at this stage. This is the final stage where the bill can be
amended.
The Royal assent: this is the last stage of legislation which provides the
consent for bill to become an act. This is given by the queen to the bill that has
completed all the parliamentary stages. This is the formality that has to be done by
before the bill is amended as an act.
Common laws application in courts is one of law that has a continuous reforming
structure and has the full effect under the judge in court. In the case the judgement is
done by legal cases that are decided by courts earlier (Scholes, 2015). It is seen that
the case laws has the common structure all over jurisdiction. In criminal cases the
House of Lords and criminal division courts has to check the intensity of the crime. In
some of the cases other EU laws help to resolve the situations.
Statutory laws application in court are in the form of written format and they are
under certain bodies. The structure of laws are different from the administrative and
common laws. Various public and private acts form the part of UK legislations and
are included in law framework. Law passes through the parliament and get
approved. UK state codes and the local government sections includes the additional
rules and regulations as approved. It is important for law makers to make law in a
written form. Unlike common law, which is subject to reading in its petition by the
court, statutory laws are generally purely construed by courts (Meidinger, E., 2017).
Strict structure means that courts are specifically not able to feature between the
liens of a legislative act in order to change its application. Rather, they will be bound
by its explicit terms.
P3 How companies, employment and contract law has potential impact upon
business
Companies’ law, employment law and contract laws are a part of laws that governs
the working of company in various ways. If laws which are prescribed are not

followed then it may result in penalties to companies. Various environmental
legislations impacts business operations, business organisation should find the
various ways that helps them in achieving the environment friendly products that
they manufacture. Companies’ laws helps business organisation to understand what
is expected from them and in their personal capacities and they should also
understand rules that are required by directors of company to be followed (Besley,
2015). In addition Companies’ laws helps to restrain government and the other rivals
from infringing on the property rights or rights which are available to them so as to
operate business. As company laws has provisions of mergers and take overs, this
helps companies to acquire any other company and to purchase or issue share to
the outsiders to raise funds. Various employment laws are prescribed in the
legislation that makes the firms to follow these rules and to provide good
employment practices. The employment act is designed to protect rights of
employees and covers almost all the aspects of employer and employee
relationships. This has become essential for employers to comply with various rules
and guidelines. If they avoid these rules then it may impact them a costly tribunal
claims (Hayden and Bodie, 2012). Employment laws includes treatment of
employees, employee pay and working hours; absence due to sickness and the
duration of the work. Employment laws affects business in more specific ways which
includes the discipline and grievances, bullying and harassment, equal pay and other
related acts. Contract law has an inherent impact on business. It is the main law that
makes different contracts among business and the stakeholders that are affected
through it. All business contracts are governed by terms and condition of contract
law. In practice when contracts are made between the seller and the buyer then
terms of contracts are being used with characteristics of that are made formally,
hence contract has to be put in writing. Contract law has a vital impact on business
of company. This helps company to increase the level of certainty in business and
makes a good relation among the parties which build a level of confidence among
them. While on the other hand if a company does not follow contracts then it will
result in devastating financial effects and would cause extreme uncertainty which
would impact the working of company.

P4 Different types of business organisation and how they are formed
Companies Act 2006, it is the main legislation which governs law regarding
companies in UK where thirteen hundred sections have been defined with sixteen
schedules. It came into force on 01st October 2009, which simplifies incorporation
process, director's duties and also no requirement of Company Secretary for limited
companies.
In the case, Jane, Penny and Marie have been friends from university where they
establish JPM Publishing as a partnership venture after graduation in which they
have successfully traded for many years and now they are seeking for extra funding
for expansion (Bebchuk and Jackson 2012). There are different nature for formation
of organisation on its owner’s choice which will affect companies and owners legal
liability with different tax treatments, rules and regulation according to its
incorporation.
Sole Proprietorship when the business does not require any legal documents to
determine how profit sharing from business will be allocated. All losses, profit, assets
and liabilities are direct and only owner is responsible and will pay self-employment
tax on his direct income. It is not ideal for high risk business because they put their
personal assets at risk. For example sole proprietor includes Mortimer & company
chartered accountants which is operating its business in UK. Partnerships or
unincorporated businesses is when partners can be individuals, corporations, trusts
etc. (etcetera), where business agreements are sets forth how decision will be made,
profits will be shared, disputes will be solved (Gostin and Wiley, 2016). The general
partners are personally liable for its obligations and debts as they are direct owners
of business. In partnership firm it must decide up front for contribution in capital by
each partner. For example The Berkeley Partnership LLP which is one of the biggest
partnership firm operating UK. Meanwhile the Corporations or incorporated
businesses distinguishes business entity from its owner and can reduce the liability.
A corporation can be taxed, can sue and also be sued. In corporation, shareholders
are said to be owners where shareholder elect the board of director to look after the
major policies and decisions (Berger-Walliser, Bird and Haapio, 2011). Corporation
have its own life where it does not dissolve when ownership changes. It can raise
additional fund through sale of stock. It is more expensive and time consuming

process. Examples of corporate business includes the ALDI, TESCO and many
other companies which are one of the biggest firms in UK.
P5 How business organisation are managed and funded
As accountant of JPM publishing partnership have suggested them to register
business as a limited company to raise extra funding because in limited company
raising funds is easy as compared to partnership firm. In limited company there are
different sources of raising funds. These could be issuing fresh issue of shares in
market which can raise fund easily. It is risk free as company is not liable for any
losses. Issuing debenture, a certificate issued by company to raise additional fund by
providing certain percentage of interest which increase the borrowing power of
company. Venture debt, it is a product of loan for early-stage and fast growing
companies which are willing to increase the asset of company by raising fund. It
carries high rate of interest as level of risk is high for investors (Greenwood, 2016).
Invoice discounting and factoring is a form of short term borrowing which is used
for improving working capital and cash flow position of a company. Invoice
discounting allows to draw money against its sales invoice. Peer to Peer lending is
an online process which matches investors with saving or capital with borrowers
looking for a loan. Start-up loans when government provides different loan schemes
with low cost loan which can be excellent way to raise found for company. It a start-
up loan which is personally owed by the entrepreneur who takes it out, not company.
For incorporating a company JPM must follow different steps. A suitable company
name should be selected which should be unique (Bendell, 2017). Then an address of
company should be mentioned properly where official communications will be sent.
At least one director should be appointed at the time of incorporation who will be
responsible for maintaining accounts and reports and other wok in company. At least
one shareholder is required at the time of incorporation even who he can be Director
of a company. If company wants to shut down, shareholders must pay full amount of
their shares.
While incorporating a company you must prepare legal document called
“Memorandum of Association” with complete information about company which must
be signed by all the shareholders. “Articles of Association” should be written while
incorporating company where every sets of rules are written and duly signed by all

the shareholder and while writing ‘’Article of Association’’ we must make sure that we
are not overwriting laws. People with Significant Control (PSC) form should be
submitted while incorporating company (if any).
An incorporated business is a type of company which offers different types of benefit
over being partnership or sole proprietor with inclusion of liability protection and
additional tax deductions whereas unincorporated companies are those organisation
which do not have separate legal identity from its owner where owner bears full
liability for any action taken in organisation (Allen, 2017). An unincorporated
enterprises includes sole proprietorships, partnerships and family trusts. These
business are managed by individuals or a group of person as a whole. These
business types are not liable towards its shareholders and are individually managed
by the persons holding them. On the other hand incorporated business includes the
companies, limited liability companies, joint stock companies and various other
types. They are managed by shareholders, or directors of company which are
appointed by the shareholders. The main source for raising fund for incorporated
company are shares, debentures, bonds, loans from financial institution,
government, different commercial banks, venture funding, retained earnings etc.,
whereas for unincorporated enterprise the main source for funding is mainly for
banks or bring in the personal capital to start business.
There are some advantages and disadvantages of incorporated business and
unincorporated business. These are Liability of Business whereby the incorporated
business are independent legal entities while on the other hand unincorporated
business are only the extension of its owners (Buckley, Burton and Mirza, 2016). On the
other hand, owners in unincorporated business are themselves liable where as in
incorporated business owners are not themselves liable to pay the debts. The
Taxpayer status is seen that unincorporated business are not independent so the
owners has to report their share of business loss or income on their personal returns.
While on the other hand as incorporated business are not the burden on owners as
their tax liability is different as compared to the owners of the business and are not
set off in their personal liabilities.
P6 Recommendation of legal solution for resolving a range of disputes.
Case 1

Liquidation of a company is a primary procedure also known as winding up of a
company. As the company is incorporated through court it can only be wound
through courts. There are various steps that includes liquidation of company. One is
Compulsory Liquidation which is the process of company that has been decided
by courts on the ground that company is not able to pay off its debts or it is just
equitable to do liquidation (Nica, 2013). For company to be liquidated compulsory,
the petition can be made by company to court by its directors or any creditors to
whom company has to pay off its debts or obligations. Another step is Voluntary
liquidation which is a process of making company liquidated on the voluntary basis.
This is decided by company on the resolution that has been passed by the
shareholders in case company is solvent. Director of company has to make a
statutory declaration that they are winding up company. If no such declaration is
made by Director then it would become creditors’ voluntary liquidation in which
creditors will confirm the appointment and control the choice of the liquidator.
Unsecured creditors can generally use this as the last resort when they owes a large
amount of money from company. For liquidation of company to take effect, court
would follow some procedures. Court receives the petition from creditors which is
demanding the winding up of company. The petition of winding up is advertised in
the gazette of London. Then the bank accounts of company gets frozen due to notice
of courts. After a process of seven day court can issue the order for winding up of
company in order to meet creditor’s demands.
In given case a company named Champion Ltd. is based in London has been given
a cash payment to move its site from North London to make way for the
development of a new stadium by the premier club (Johnson, L., 2012). Hence
company has moved from its location. After some time the company started facing
some financial issues which includes the decline of customers that resulted in
declining sales figure and increase in losses. As company was not having resources
to pay its debt they have failed numerous time to honour the payment to bank
against the loans taken. Due to this creditors of company are threatening the
company to put the winding up petition in courts.
As company is not able to pay the debts of bank as well as creditors, creditors of
company are in position to file a petition for winding up of company. This can be

done through the petition that all creditors send to court. The company is given an
opportunities to pay of its debts through selling its assets. But if company is not able
to pay creditors then court will order for liquidation of company which will be binding
on company.
For example in the case of “Scrap Metal Company – Creditors Voluntary Liquidation (CVL)”
it was decided that,
Issue: The director of a scrap metal company approached Bailey Ahmad when he decided to
close his business and retire. He sought our help to extract the value of his shares in the company
(over £1.3 million) in the most tax efficient manner possible.
Decision: in this it was decided that the creditors of the company can go for voluntary
liquidation for recovering the amount due from the company. It was held that the liquidation can be
accepted by the court.
Case 2
A contract of employment is an agreement that has been entered between employer
and employee at the time of recruitment. It is legal binding agreement between
employee and employer of company. Terms of contract can be decided mutually by
employer and employee accordingly (Bishara and Westermann‐Behaylo, 2012). If
terms of resignation and the termination of contracts is decided by employer and
employee mutually then they are bound by them. If any of employer or employee
defaults in following terms of contract and that amounts to loss to either parties then
the other party that is claimant can go to court to ask for legal remedies.
Resignation is a unilateral act that is performed by employee of company which
brings employment relationship to an end. The elements of the resignation involves
the unilateral act of resignation and requirement to give notice.
If employee or employer does not gives notice of resignation and does not fulfil the
time of resignation then it may result in breach of contract and claimant can ask for
different remedies.
As in given case it is seen that Mr Anderson was CFO with Amber Ltd. And has a
highly confidential information. Contract of employment stated that a 12 months’
notice has to be given by the either side before termination of contract. Mr Anderson
got the job form the competitor named Beta Ltd and he gave notice of resignation on

April, 2016. After this he had left organisation on 31st may 2016. Company wanted
to demand the injunction order in case of breach of contract and wanted to prevent
Mr Anderson from commencing employment with Beta.
Liquidation is a process of bringing the business organisation to end through
the process of courts. This helps in bringing the business to end legally. This is the
event that occurs when the company is considered as insolvent and is not able to
pay of its debts. When the company goes into liquidation the assets of the company
are sold in the open market so as to finance the debts obligation of the company.
Also the term injunction means the order of court to bind any person,
corporation or government body to no do something or prevent them from doing
something. There are different types of injunction that are provided by court which
includes that mandatory injunction and compelling injunction.
For example in the case of Anderson v Thiess Pty Ltd [2014] FWC 6568 it was decided
that Anderson was old and has sent an email which was deemed to be seriously
offensive for the people of Islamic faith. The commission make company liable to pay
compensation of around $28,000 which make them liable for the same. This is the
case that is important foe following the strict termination policy of the company. This
includes giving adequate written and verbal warning to the employees before giving
them direct termination letter.
It is concluded from the above case that Amber Ltd and Mr Anderson is
already having a contract in which they have decided that either party would serve a
notice before termination of contract of around 12 months (Rutledge, T. E., 2014). Mr
Anderson is having confidential information which can harm business of company
and he has not fulfilled contract and has not given company sufficient notice of
resignation. Therefore the company can ask court to give the injunction order so that
they can stop Mr Anderson to commence employment in Beta Ltd, without fulfilling
terms and conditions.
There are various methods of solving the dispute which includes the following:
Mediation: In this step alternate dispute resolution elect a third person i.e.
mediator who help the parties to take mutual decisions. Mediator cannot force them
to agree on each others views and also not allow to finalise the outcome of conflict. If
mediator fails to convince the parties then they can move to next solutions.

Conciliation: Under this process the representatives of both the parties are
asked to come together before the third party i.e. conciliator . In this also conciliator
cannot pressurise the parties to agree on the decisions but can helps them in
searching solution for dispute.
Arbitration: It's an effective process as it analyse the situation and
listens to both parties after that only suggest some solutions which provides the
satisfaction to parties. It is mainly suggested by majority in order to bring an effective
solution.
It is seen that the conciliation process would be considered as the best solution to
solve the dispute that has arose between Mr. X and STR Ltd. As this is the process which is
considered as cheaper and is faster then any other form of judiciary system that is present in
the English legal system. Also here the conciliator would help to meet out the solutions
which gives them complete solution of the list of agreement.
Conclusion
From the above assignment it is concluded that there are different sources of law
which enables organisation and people in the country to behave properly and in
ethical and legal manner. Various employment and contract law has been discussed
that makes the potential impact on functioning of business so that a company should
follow all rules and regulations that would help them in achieving its objectives.
There are different forms of organisation and various structures through which it can
be formulated.

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