Business Law and Its Application

This assignment delves into the world of business law, covering its fundamental aspects, including sources, types, and application. It discusses the significance of government in law-making and the distinction between common and statutory laws. The document also touches upon company, employment, and contract law, highlighting their impact on businesses and entities. Additionally, it explains dispute resolution methods, emphasizing arbitration as a final and binding solution. Various references from books, journals, and online sources are provided to support the content.

Business Law

Table of Contents
INTRODUCTION...........................................................................................................................1
SECTION 1......................................................................................................................................1
Task 1.....................................................................................................................................1
Task 2 ....................................................................................................................................5
SECTION 2......................................................................................................................................9
Case 1.....................................................................................................................................9
Case 2.....................................................................................................................................9
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business law comprises number of legislations and rules which are applicable on
business affairs. Management of organization should be done by complying with required laws
otherwise there may arise legal consequences. It also known as mercantile or commercial law
which is divided into two categories such as regulations of commercial entities and regulation of
commercial transactions (Clarkson, Miller and Cross, 2014). This report exhibits explanation of
parliament is sovereign, sources of UK laws, role of government in law making, implementation
and usage of common and statutory laws in justice courts. Furthermore, impact of company,
employment and contract law upon a business and different types of business followed by
difference between unincorporated and incorporated business are also included. In addition to
this, disputes resolution methods are discussed according to different cases.
SECTION 1
Task 1
a). Discuss the meaning of the statement “Parliament is sovereign” and various sources of laws
Parliament is sovereign holds a great meaning which is important in UK legal system.
This statement signifies that ultimate authority to pass or reject a law is with Parliament. The
government of UK review the legal system on a continuous basis in order to decided whether to
implement, amend or repeal any law. At the Queen's Speech, members from House of Lords and
House of Commons present bills in front of the Queen which is required to be passed by
following a set procedure. Legislations are a part of constitution which is why Parliament holds
the supreme power to enact laws (Parliament is sovereign, 2019). These can not be challenged
by any high court or other courts also, by any individual. A bill has to go through number of
stages till the Queen's assent is received. Process is as follows:
First stage- This is the beginning of the process in which a bill put before the houses in
the Parliament.
Second stage- The bill put up for voting after having a discussion. Amendments are
possible here.
Committee stage- After all the changes are incorporated, it is examined by an
independent committee.
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Report stage: Recommendation of committee is contained in a report form which is sent
to House of Lords within two weeks from last stage.
Third stage- In this stage, a bill is drafted which is to be implemented as a law.
Amendment is possible only when both the house have agreed to it.
Queen's assent- The queen's assent converts a bill into an act which is made applicable
through UK (Bill passing procedure, 2019).
Every citizen has to abide by laws and rules which are imposed by the Parliament. Apart
from this, there are sources from which knowledge of laws which are applicable can be known.
These are as follows:
 Primary sources: Legal information when kept in their original form are called primary
sources. Some of these are mentioned below:
Case law: Judgement of a case is recorded in a report which can be used in a new case.
Courts in UK follow doctrine of judicial precedents for case with similar facts and issues. There
is no creation of new law.
Legislation: Laws enacted by Parliament are compulsory for every individual to follow
them without any contravention. These cannot be challenged by any person or court. It can be
amended from time to time which should be known to every individual.
EU directives: The laws enacted by EU is required to abide by in order to have trade
without any hindrance. Till there comes a final answer for BREXIT referendum, this can be used
as a source.
 Secondary sources: Information extracted from primary sources when further
restructured in a new form or interpreted are included in this category. These are as
provided:
Legal encyclopaedias: There are many legal encyclopaedias which can be accessed for
knowing the meaning of legal terms. However, Halsbury's legal book is considered to be the best
comprehensive book which is used widely (Sources of UK law, 2019).
Parliamentary and non-parliamentary publications: These are discussion of both the
houses which are available in the form of debate and speeches and reports from government's
department which is uploaded on their sites.
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Law commission: It is the committee which provides their recommendation in the form
of a report after reviewing existing legal system. Since, it is an independent committee whose
decisions are not influenced by any factor, it can serve as a good source of law.
Textbooks: These are academics books made from different interpretations of authors. It
contains simple and intelligible language which includes examples in the form of case laws for
making the meaning more clear.
b). State the role of government in law making process and how statutory and common law are
implemented in justice courts
Government has a number of roles in law making process which is categorised into three
parts as described below:
 Executive role: In this, enforcement of laws along with rules are taken care of. The
government make sure that each area of UK has laws. The administration is done by
Queen, Prime Minister and other cabinet ministers. Furthermore, policies and plans are
also implement for the improving the conditions persisting in a society (Role of
government, 2019).
 Legislative role: In this role, many new laws or amendments in existing laws are made
which are mandatory for each individual and entity to follow. A bill is transformed into
an act in order to implement as a law. House of Lords and House of Commons have this
role to play. Furthermore, amendments are also done with the approval of Parliament in
which both the houses are present.
 Judicial role: Rest of the government has role to build courts of different jurisdiction and
in different areas after analysing requirements. These are constructed so that delays in
concluding judicial proceedings can be avoided. This is one of the most important roles
as it includes budget for constructing courts.
These roles are very well delegated to government but there are common and statutory
laws which are applicable to justice courts for giving decision in cases. These are as follows:
Common law: This is about the case judgements passed by different courts. They follow
doctrine of judicial precedents which provide that a case with similar situations and facts will be
resolved on the basis of previous case law (De Lacy, 2013). It is also known as judge made law
because it includes decisions taken by judges. If a new law is made, then it will be used as
subsequent law.
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Statutory law: In this, laws are available in written form on which the whole legal
system is built. It is the base for all other laws which is why it is recorded in written form. A case
is solved by applying different law. It is enacted by Parliament and cannot put questions on its
validity or authenticity. Every citizen and entity is bound to comply with laws in order to carry
its activities lawfully.
c). Explain impact of company, employment and contract law upon a business and difference
between legislation, regulations and standards
A business has to follow various laws without which it can not conduct its business
activities lawfully. Impact of three different laws are shown hereunder:
Company law: Organizations which are established in the form a company is required to
comply with Companies Act, 2006. This act is very wide in scope which includes legal
provisions governing different areas of a company. Every transaction, contract, appointment,
fund raising, remuneration etc. should be done according to these laws. A company is obliged to
follow such laws along with getting registration. Furthermore, there are number of privileges
which can be gained only when a company is complying with such laws (Sheikh, 2013). The
importance of laws in a company is that, candidates always search for corporates who are ethical
and abide by legal provisions without breaching any law. Apart from this, investors are attracted
towards registered companies for making investment as they believe they are secured against
frauds.
Employment law: Human resource is vital for attaining the goals and objectives of an
organization. Every entity should be aware of rights of its employees so that they can protected.
There should be a sense of security and safety at the workplace. This is the prime element for
attracting new talents to work in the organization. There are legislation such as Equality Act,
2010, Employment Act, laws related to working conditions and many more. If these laws are
applicable on a particular business, then not a single law should remain unfulfilled. There are
courts and tribunals in which personnel can seek justice. These are important to follow otherwise
the business would turn unlawful. For example, ABC Pvt. Ltd. Wish to change its policies which
is significant in nature, then it should consider laws which affect rights of workforce.
Contract law: Every business executes contracts for transactions occurring in the
business. Every contract comprises terms and conditions which are given by both the parties so
that deal can be completed accordingly (McKendrick, 2014). In UK, every contract made in
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trade and commerce are governed by Sale and Supply of Goods Act, 1954. Every deal should be
completed according to terms mentioned in the contract. This gives a sense of security because
the parties know that they ca approach courts in case of any breach. In contracts, date of entering
the transactions, date, amount, mode of payment etc. are mentioned to avoid any disputes in
future. For example, a vendor, Richard and purchaser, Garry enters into a contract for
exchanging goods of technical nature. The buyer provide detail description of goods which are to
be provided. However, the quantity as mentioned in the contract was missing. This is purely a
breach of contract against which actions can be taken by the buyer.
Difference between legislation, regulations and standards is as follows:
Legislation Regulation Standard
Laws which exist in legal
system of a country are known
as legislation. A bill is passed
through process which is
provided by Parliament in UK.
Every individual and
organizations are required to
abide laws and non-
compliance would amount to
contravention.
Regulations are the additional
instructions apart from the
main laws. There are rules
which are formed after laws
have came into force in order
to make their implementation
more effective. It is also
compulsory to abide by
(Difference between
legislation, regulations and
standards, 2019).
Government suggests
standards for every industry so
that products or services can
be produced according to
them. Outputs are measured
against standard in order to
find out differences with a
view to mitigate the gap.
Task 2
In this case, Jane, Penny and Marie are friends from many years who have established a
partnership firm right after graduation. Their accountant advised to convert into limited company
for raising funds for expansion. For this purpose, different types of business organizations have
been explained as follows:
Limited Company: Company is an artificial person having perpetual succession and
common seal. A corporate is different from its members which is known as separate legal
identity. It is required to registered under Companies Act, 2006 in order to get privileges.
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Furthermore, there are certain powers which can exercised by a company such as execution of
contracts, own properties in its name, open bank account (Limited companies, 2019). A company
can be limited by shares which means that the liability of shareholders is up to unpaid nominal
amount on the shares held by then. Apart from this, it can also be limited by guarantee which
means that a shareholder is bound to pay the amount guaranteed in MOA in the event of winding
of company.
Sole proprietorship: The business is generally small in size which is established by a
sole proprietor. There is no requirement to register it however, the owner is under compulsion to
get registered. Law does not differentiate between the entity and sole trader. If any consequences
of the firm arises, then owner is to be blamed. Profit and loss are not divided with someone else.
In other words, all profit and loss are of owner only. In extreme situations, personal properties
can be used where the entity fails to meet its financial obligations.
Limited Liability Partnership (LLP): This form of business organization is a outcome
of a partnership and a company. Structure of LLP can easily be changed as there is flexibility in
the management. Along with this, liability of partners is also limited and in no case it can extend
to their personal assets. It is a preferred choice for people such as lawyers etc. It can be converted
as per the demand of its partners.
A business could be unincorporated and incorporated which is very different from each
other. Both of these have been explained below along with their funding and management:
Basis Unincorporated Incorporated
Business
liability
It is extension of owners in which their
liabilities are personal. In other words,
if the obligations are not met the,
personal properties of owner will be
used for discharging the liabilities.
In such business, owner is not
responsible for business debts. There
is no legal implication on owner to
pay outstanding amounts of the
business.
Unlimited life The life of a business is limited till its
owner is alive. This means that, if the
owner dies, there is no existence of the
business (Liu, 2012).
This business is not affected with the
death of owner for any other reasons.
In other words, it will continue to
exist even if all the owners die.
Transferability Interest of the business is transferred There is an independence in this
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of interest with very difficult to a third party.
Business assets can be shared but
interest of business cannot be sold
because it is just an extension of the
owner.
business due to which it can be
transferred easily without causing
any problem in the business.
Taxpayer status The income of such business is taxed
for one time only.
Here, taxes are paid twice, first when
the income is earned and second
when it is received by the owners.
Legacy
considerations
There may arise situations in which
additional efforts need to be made for
transferring the business.
It is perpetual in nature which can
live long without selling the
business.
Paperwork
requirements
The level of paperwork requirements
in unincorporated business is very low.
There will be no legal consequences
even if it does not adhere to rules or
legislation.
A business is incorporated only
when it is registered. On registration,
the business is required to comply
with many legal provisions and rules
for which it is required to maintain
lots of paper. Hence, paperwork
requirement is high.
Funding Investors hesitate to invest in such
business because there is no legality in
the actions and activities. It face
problems in raising funds and limited
sources are available which are
member's contribution, bank/financial
institution loans and borrowings from
friends or relatives (Funding of
unincorporated companies, 2019).
The sources of funds that can be
opted are huge. These business often
consider proposals to raise funds for
expanding their businesses or for any
other reasons. The sources are loans
from bank, financial institutions,
borrowings, member's contribution
in the form of capital, share capital,
debenture, venture capital and many
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more.
Management There is no legal requirement for the
appointment of specified number of
employees. The whole can be managed
by single person, or there could be
more than one person for managing the
affairs. There is no such requirement of
appointment of directors, officers etc.
This is a business which exist in the
eyes of law. The management is
done with specific people who
should be appointed as per the laws.
For example, a company is managed
by directors only, similarly,
partnership firm is controlled by
partners.
Advantages and disadvantages of a partnership firm and a company are as follows:
Partnership firm: Advantages-
 It is easy to establish as the cost of formation is less.
 Legal formalities are low as compared to a company.
 Partners are the decision maker and no outsider can interfere in its matter.
 No requirement of registration.
Disadvantages-
 It can be dissolved easily if all the partner die.
 Taxation rate is high.
 A partner will be held liable for the acts of other.
 Profit and loss are shared equally if no ratio is mentioned in the deed. This creates
inequality and disputes.
Company: Advantages-
 Registration is compulsory which protects the company against any frauds.
 Investors are interested in investing their funds, therefore, it has many options available
for raising funds.
 It is perpetual and cannot be dissolved easily.
 There exist separate legal entity between members and the company.
Disadvantages-
 Expensive to set up the business due to high cost of incorporation.
 Not so easy to change the structure.
 Increased legal and financial requirements (Holloway and Parmigiani, 2016).
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 High penalties in case of default.
SECTION 2
Case 1
In this case, Champion Ltd. Is a company which was given compensation to shift its
business to a new location for development of new stadium. The company suffered from
financial problems because of significant reduction in number of customers. This made the
company fail at repaying money to banks as well as creditors. Now, it is facing a situation where
it is receiving threats for winding up petition.
There is a dispute between the company and its creditors which needs a solution.
Winding up petition is an order by the court under which an insolvent company is made bound to
go into compulsory liquidation. According to this order, court appoints an official receiver (OR)
to realise all the assets and collect the amount for paying off company's obligations. A winding
up petition can be applied by a creditor or any other member having interest in company's
business. This petition can be filed only when company fails to repay a debt of exceeding £750
for minimum 21 days.
This is case which can be resolved with negotiation. Negotiation is a process in which
parties to disputes try to have a conversation in which both of them put their arguments in front
of each other. This is done to find a conclusion which can be applied to resolve the matter. In this
case, Champion Ltd. Can set a meeting with its creditors so that negotiation can be done which
would allow it to have an extension of time for the payment.
Case 2
In this case, Mr. Anderson has breached the term of employment contract as he is
resigned from the office even when he was well aware that a 12 month notice is required to be
given before any resignation. Amber is not considering the resignation and wish to seek an
injunction against Mr. Anderson.
Injunction refers to order by court for settlements. This is given as a command. In simple
language, it is an judicial order restraining a person from starting or continuing an action or
compelling a person to carry out certain act. It involves intervention of court which can prove to
be expensive and time consuming. Therefore, out of the court methods should be used for the
settlement.
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In this case, arbitration can be used for resolving the matter. Arbitration is a way dispute
resolution which is easy to use, inexpensive, expeditious. In this method, an arbitrator is
appointed with the consent of both the parties or a third person may be appointed for the
resolving the dispute. Arbitrator listens to both parties, judges the arguments, witnesses, evidence
etc. on which a decision is taken which is final binding. This method is best way to resolve
disputes of any kind also there is different procedure for each case which provide a different
way. Orders of arbitrator can not be challenged in courts because it final.
CONCLUSION
From the above report, it has been concluded that business law is a huge body of law
comprising number of laws and rules which are compulsory to abide by for carrying business
activities lawfully. There should be knowledge about laws and rules which can be obtained from
different sources of law. Along with this, government plays important role in law making process
and parliament enact laws which are applicable throughout the country. Also, there should be
clear distinction between common and statutory law along with its applicability in justice courts.
Furthermore, how company, employment and contract law impact upon a business and different
types of entities have been explained. Advantages and disadvantages of a partnership and
company are also included. In addition to this, dispute legal solution which can be applied to
different situations have been defined.
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REFERENCES
Books & Journals:
Clarkson, K.W., Miller, R.L. and Cross, F.B., 2014. Business Law: Texts and Cases. Nelson
Education.
De Lacy, J., 2013. Reform of UK Company Law. Routledge-Cavendish.
Sheikh, S., 2013. A guide to the Companies Act 2006. Routledge-Cavendish.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).
Liu, L., 2012. Income taxation and business incorporation: evidence from the early twentieth
century.
Holloway, S.S. and Parmigiani, A., 2016. Friends and profits don’t mix: The performance
implications of repeated partnerships. Academy of Management Journal. 59(2). pp.460-
478.
Online:
Parliament is sovereign. 2019. [Online]. Available
through:<https://www.parliament.uk/about/how/role/sovereignty/>.
Bill passing procedure. 2019. [Online]. Available
through:<https://www.parliament.uk/about/how/laws/passage-bill/>.
Sources of UK law. 2019. [Online]. Available
through:<https://www.soas.ac.uk/library/subjects/law/research/file70249.pdf>.
Role of government. 2019. [Online]. Available
through:<https://www.parliament.uk/education/about-your-parliament/parliament-and-
government/>.
Difference between legislation, regulations and standards. 2019. [Online]. Available through:
<https://www.360factors.com/blog/laws-regulations-and-standards-what-is-the-
difference/#.
Limited companies. 2019. [Online]. Available through:<https://debitoor.com/dictionary/limited-
companies>.
Funding of unincorporated companies. 2019. [Online]. Available through:
<https://www.upcounsel.com/unincorporated-company>.
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