Business Law: Legal Systems and Impact on Business Operations

This report covers the legal system of UK in relation to different sources of law with the role of government in the process of law making. It also covers formation of different kinds of business organisation with resolving of disputes through the procedure of Alternative Dispute Resolution. Learn about the potential impact of company, employment, and contract law on business operations. Evaluate the effectiveness of legal systems and law with evidence from different examples.

Unit 7 Business Law
Legal Systems and the potential impact of law on
business operations and decision making

Table of Contents
INTRODUCTION ..........................................................................................................................4
TASK ..............................................................................................................................................4
PART 1............................................................................................................................................4
P1. Identify different sources of law...........................................................................................4
P2 Examine the role of government in law making and how statutory and common law is
applied in the justice of courts....................................................................................................5
M1 Evaluate the effectiveness of the legal systems in terms of recent reforms and
developments..............................................................................................................................6
P3 Using specific examples, illustrate how company, employment and contract law has a
potential impact upon business .................................................................................................6
M2 Analyse the potential impact on business through difference between the legislation,
regulations and standards............................................................................................................8
D1 Provide a coherent and critical evaluation of the legal system and law, with evidence
drawn from a range of different relevant examples to support the judgements. ........................8
PART 2............................................................................................................................................8
P4 Explore how different kinds of business organisations are legally formed ..........................8
P5 Explain how business organisation are managed and funded ...............................................9
M3 Analyse the advantages and disadvantages of the formation of different kinds of business
organisation. .............................................................................................................................10
D2 Critically analyse the formation of different kinds of business organisation......................11
P6 Compare and contrast different sources of legal advice and legal support for the dispute
resolution to make appropriate recommendation to legal solutions. ........................................11
M4 Recommend legal solutions for resolving a range of disputes, using examples to
demonstrate how a party might obtain legal advice and support .............................................12
D3 Critically evaluate the effectiveness of legal solutions, legal advice and legal support for
the dispute resolution. ..............................................................................................................13
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................15
INTRODUCTION

The legal system of UK is divided into three separate legal systems which are England
and Wales, Scotland and Northern Ireland. The country of United Kingdom has a common law
legal system in order to impose legal obligations on the people of the country. There are four
main sources of law which are case laws, common laws, human rights and EU law. The
operational functioning of an organisation is conducted under the Companies Act, 2006. The
companies have to follow certain financial regulations which includes accounting, payroll, tax,
anti-money laundering regulations, Companies house and HMRC. The business of any
organisation is regulated through various laws such as contract law, employment law and others.
The employment law plays a major role in order to protect the rights and duties of workers
working in an organisation (Akhtar, 2020). This report will cover the legal system of UK in
relation to different sources of law with the role of government in the process of law making. It
will also cover formation of different kinds of business organisation with resolving of disputes
through the procedure of Alternative Dispute Resolution.
TASK
PART 1
P1. Identify different sources of law
A source can be defined as something from which certain thing originates and sources of
law means origin of law. This origin of law can be determined from historical conducts from
documents that helps in analysing the rules, regulations and customs that have existed since
previous or early times.
The different sources of law which are considered as common or general sources of law are
mentioned below:
 Legislation – A declaration of legal rule that have been incorporated by the people of
society with the base of national conscience through a competitive authority, practices
and customs in order to regulate the obligations of law. It is basically a legal rule that is
decided and regulated by a competent authority in order to develop a structural
framework for law (Baillie, 2019). They have generally evolved from customs which
has helped in determining the obligation of law as they are the obligatory legal sources

which helps in having a deep understanding of law. There are two main sources of law
which are Primary and Secondary legislations.
 Judicial precedents – The cases which can be considered as previously decided cases by
the higher authorities are known as Judicial precedents. They are previously decided
cases which have been decided by the superior courts. It is a very important source of law
that helps in interpreting the legal matter with consideration of judicial precedents. It
helps in analysing the matters that require legal interpretation of law with the aid of
previously decided cases. They are the valid sources of law that helps in having a
practical application of law. It is generally based on two factors where firstly it is decided
by the higher authority of judges in order to provide an appropriate interpretation of law
and secondly the evolution of case laws is through a principle which are taken into
consideration for interpretation of law.
 Customs – The customs were considered as the only source of law in the ancient times
and in present times it is these customs through which law is enforced on the people of
the country. The existence of customs have helped in analysing the different perceptions
of law through its ancient approach. They can be considered as an important source of
law as it is made and enacted through the will of people which is greater than the will of
sovereign.
P2 Examine the role of government in law making and how statutory and common law is
applied in the justice of courts
The process of law making is determined through the role of government which helps in
having a deep understanding of the process of law making (Creutzfeldt, 2018). The enactment
and enforcement of law is done through the competitive authority of the parliament. The
formation and creation of law is done through the system of common law that is prevailed in the
country. The legal system of UK is based on the common principle of law. The three main pillars
of the legal system of UK are Executive, Judiciary and the Legislative. The implementation of
authoritative power is determined through these pillars of the parliament.
Statutory law and Common law

The rights and duties of the citizens is determined through the common legal system which is
generally based on the principle of equity. There are various sources of law that help in
determining the legal obligation of law through case laws, legislation and customs. Case laws are
termed as judicial precedents which are cases that have been previously decided by the superior
judges of the court. These case laws are used by the judges in order to have a better
understanding of law. Legislations are the legal rules that have been provided for the people of
the country in order to follow the legal obligations of law. Customs are the practices, traditions
that have been followed by the people in earlier times which further helps in implementing the
practices of law (Deb, 2022). The substantive law which is a codified law with written
implementation is Statutory law. The legislative authority of the parliament enforces such
statutory laws through its authoritative power.
The government plays a very important role in the process of law making which is made with the
authoritative power of the parliament. The enactment and enforcement of rules, regulations and
standards are done through the parliament. The procedure of introduction of bill in both the
houses of parliament which are House of lords and House of Commons. The passing of bill in
both the houses of parliament enables the enforcement of law in the form of act with the assent
of president.
M1 Evaluate the effectiveness of the legal systems in terms of recent reforms and
developments
The country of United Kingdom has a very diverse and vivid culture which has an impact
on the English legal system. The changing time has various changes and developments in the
regulations and norms of the country. The wave of pandemic has also changes the functioning of
legal system through conduct of online proceedings (Giliker, 2021). There has been a positive
impact on the economic growth of country with the withdrawal of UK from EU due to Brexit
period.
P3 Using specific examples, illustrate how company, employment and contract law has a
potential impact upon business
The successful growth of a business is analysed through the conduct of commercial
activities that is running in an organisation. There are various legislations that help in analysing

the potential of business in the industry. There is a huge impact on the functioning of business
through these legislations which are mentioned below:
Impact on Company law
Under Company law, 2006 there are various amendments that have laid a huge impact on
business with time. These amendments have helped in enhancing the internal management
system which has in turn led to development of the company with rise in its economic growth.
The operational activity of the organisation such as management, administration, structure and
conduct of affairs of the companies are regulated through the enforcement of company law. The
enforcement of company law helps in managing the activities of business through conduct of
daily activities without any help from the legal department. The activities of business such as
policies of employees, legal decisions, financial decisions can be regulated through
implementation of company law.
Impact on Employment law
The widen running of business in UK protects a large number of employees through the
enforcement of employment law. An additional cost is imposed on the business of an
organisation with the enforcement of employment law. The companies have to spend a huge
amount on the training, recruitment and payment of employees (Hardman, 2022). The safety and
security of employees are regulated through various legislations in employment law such as
Health and Safety Act, 1974. The health of the workers is secured and protected with availability
of clean and sanitised wash rooms. A neat and clean environment in the organisation also helps
in safeguarding the workers or employees within an organisation.
Impact on Contract law
Contract law plays a major role in functioning of business as the requirement of contract is
needed in every aspect of business. The business of an organisation is affected through various
activities such as selling, buying and reselling of products and services which requires the
effective rendering of services. Therefore, contract is required in each and every transactional
activity of business.

M2 Analyse the potential impact on business through difference between the legislation,
regulations and standards.
The conduct and behaviour of employees is regulated through the enforcement of
regulations in an organisation. The performance of employees is regulated through the
implementation and enactment of regulations. Legislations prevents the illegal activity conducted
in an organisation and helps in maintaining a cordial environment among the employees or
workers of the organisation. Standards impacts the governing of an organisation which further
helps in development and growth of the organisation.
D1 Provide a coherent and critical evaluation of the legal system and law, with evidence
drawn from a range of different relevant examples to support the judgements.
A bill is introduced in both the houses of parliament which are House of lords and House
of Commons. After the passing of bill in both the houses of parliament, it is analysed, evaluated
and examined through the members of parliament (Lemassel, 2020). Once the bill is passed by
the members of parliament, it takes the form of act with the authorised assent of President.
PART 2
P4 Explore how different kinds of business organisations are legally formed
A business is regulated through the conduct of commercial activity which can be done
through different kinds of business organisations. The different kinds of business organisations
help in running a business on small and large scale in order to smoothly run a business. The
different kinds of business organisation are:
 Sole Trader – The management of a business is regulated through a single person, who
takes the whole responsibility of business is a sole trader. A sole trader is also known as
sole proprietor who does the registration of business through HMRC under HMRC
account. The main advantage of sole trader is that he in not under the authority of any
person or owner of the business as he is the owner of his business. The main
disadvantage of sole trader is that if there is any disability in business then it is to be
beard by the sole trader only.

 Partnership – The business of an organisation is conducted through two or more
partners which is known as partnership. The business of partnership is conducted through
partners with registration of business through HMRC account. There is an equal share of
responsibilities among the partners where profit, loss and liabilities are shared among
partners. The partners can terminate or revoke a partnership after informing the partners
about their termination. There can be development in business with the enactment of
partnership through partners.
 Limited liability partnership – The partnership where liability of partners is limited in
the operational activity of business. It is an extensive form of general partnership which
is considered as an advantageous partnership (Medway, Roper, and Gillooly, 2018).
The execution of partnership of limited liability partnership exudes the imposition of
limited liability on partners. The partners are only liable up to a particular point where
they are liable up to the investment in the company. It is considered one of the best kind
of partnership due to the limited liability of partners.
 Limited company – Under the Company Act 2006, the system of limited company is
very complex and complicated. There are greater chances of growth of company due to
its unique features such as perpetual succession, separate legal entity and common seal.
The registration of limited company is done under HMRC account. The investors invests
more in limited company due to economic growth of the company.
P5 Explain how business organisation are managed and funded
The financial stability of an organisation is determined through the economic growth in
the business of company. The overall functioning of an organisation is done through the
availability of finance. The funding and management of business organisations is done through
various sources which in stabilising the financial status of an organisation. The different sources
through which funds can be generated are:
 General financial channels (banks) – The most common and important source of
funding is banks. It is the financial institution that are great source of funds and it has the
capacity to give huge amount of money in the form of loans (Moloney, 2021). An
interest is generated on every repayment of loan through which banks provide a great
financial assistance to multi national companies.

 Angel donors – The person who are friends, family or relatives who help by providing
funds for starting of business are angel donors. They are type of investors who are
considered angel in the time of need who have donated a particular amount for growth of
business.
 Equity fund – The shareholders of the company invest a particular amount in the equity
of company who is termed as equity fund. At the time of distribution of profit, the
members of equity fund are considered last even after having higher authority in the
company. The revenue of the company is generated through the funding of equity fund
in order to increase the growth of company.
 Crowdfunding – This is a type of funding which is done through the public in order to
get huge amount of income for growth in business. The company or business can get the
assistance of crowdfunding with the help and aid of investment of public. Crowdfunding
is also known as Peer-to-Peer method which is one of the effective method of funding.
 Grants – They are the official authorised financial assistance which is given by the
government for investment in business in order to enhance the development of the
country. Grants are generated with the organisation of programmes in order to generate
funds through the British government (Omolaja, 2018). These grants are generally given
to start up a business for the evolution of start ups.
M3 Analyse the advantages and disadvantages of the formation of different kinds of business
organisation.
The advantages and disadvantages of different kinds of business organisations are :
 Sole Trader
Advantages
The profit accumulated from the business of sole proprietorship is enjoyed wholly by the sole
trader.
Disadvantages
The losses incurred in the business is to be beard by sole trader and is wholly responsible for the
liability of business.
 Partnership
Advantages

There is less pressure in the business of partnership due to sharing of responsibilities among
partners.
Disadvantages
There are higher chances of disputes between partners in the business of partnership.
 Limited Liability Partnership
Advantages
There is a very limited liability of partners in limited liability partnership and is also one of the
best form of partnership.
Disadvantages
The financial status of the company can be disclosed in limited liability partnership.
 Limited Company
Advantages
There is equal share of profit among the shareholders of company which further helps in
economic growth of the business of limited company.
Disadvantages
In the business of limited company, there is huge incorporation of cost and is expensive in
comparison to other business organisations.
D2 Critically analyse the formation of different kinds of business organisation
Sole proprietorship, Partnership, Limited liability partnership and Limited Company are
the different kinds of business organisation in order to operate the commercial activities of
business in an organisation.
P6 Compare and contrast different sources of legal advice and legal support for the dispute
resolution to make appropriate recommendation to legal solutions.
The procedure of legal dispute is very complex and tedious process which takes a long
time (Tan, 2020). In order to have fast and speedy trial with fast solutions, the procedure of
Alternative Dispute Resolution is the an effective method for resolution of disputes in an
effective manner. The parties can take the assistance of Alternative dispute resolution in order to
have speedy and fast trials.

CASE 1
Issue – Is the claim of employee towards employer justifiable in the matter of wages?
Resolution – The most effective solution for this case will be the procedure of negotiation.
Pretext – The Negotiator will help in solving the issue through negotiating among the parties
which in turn will help them to negotiate the terms between the parties.
CASE 2
Issue – In case of telephone lines, whether the matter of Janet justified?
Resolution – The procedure of mediation is the most appropriate solution for solving of this
issue.
Pretext – The dispute between the parties can be solved through the aid of Mediator who helps
in settling the disputes with mutual consent of parties.
CASE 3
Issue – Is there a reasonable appeal raised against the creditors?
Resolution – In case of Black Horse Organisation, the most effective method is the procedure of
arbitration.
Pretext – The disputes among the parties will be solved through Arbitrator in order to provide
fast and speedy trial and is a very cost friendly and effective method.
M4 Recommend legal solutions for resolving a range of disputes, using examples to
demonstrate how a party might obtain legal advice and support
Alternative Dispute Resolution is the procedure of settling disputes in an effective way
with fast and speedy trial (Viana, Moreira, and Alves, 2022). The mechanisms through which
Alternative dispute resolution can be understood are:
 Arbitration – It is the method of settling disputes in order to have an effective solution
without going to the court. The party who institute the suit is the claimant and the party
against whom suit is instituted is called the respondent. The case is then instituted in front
of the Arbitrator to solve the issue and he independently decides the case of the affected
parties. The decisions made in arbitration are legally binding on all the parties and can
even be appealed but the only requirement is that it should be appealed on limited

grounds. The reason for appeal must be justified and appropriate and all the decisions
made in the process of arbitration are confidential and not much available to the public.
 Conciliation – The process of alternative dispute resolution is decided through a
Conciliator who is a third party in order to have neutral effect on the process of decision
making. The dispute of parties will be solved through a neutral and unbiased person who
will help in negotiating the terms among the parties (Waters, 2018). The agreements,
decisions and settlements among the parties are binding on the parties. A conciliator
officer will settle disputes which includes marriage disputes, industrial disputes and
family disputes. Mediation – The process of mediation is very confidential and flexible in order to settle
the disputes among two or more people. A mediator is appointed who helps in resolving
the dispute through negotiation and mutual agreement. The real issues of workplace are
solved through the process of mediation. The decision made through arbitration is
transparent, voluntarily and mutual.
D3 Critically evaluate the effectiveness of legal solutions, legal advice and legal support for
the dispute resolution.
Alternative Dispute Resolution is the most effective method of legal solution for
resolution of dispute among the parties. The main purpose of this method is to have effective and
justified justice with fast and speedy trial (Whiteside, 2021). The is the most effective method
to prevent the delay of disputes between the parties.
CONCLUSION
From the above report it is concluded that the legal system of UK is based on the
principle of common law. There are variety of protections that are made for securing the rights of

people of the country. There are different sources of law through which law can be analysed in
order have deep understanding of law. The main sources of law are legislation which are
generally of two types which are Primary and Secondary legislation. The other important sources
of law are case laws and customs. The business of any any organisation is majorly influenced
due to the enforcement of Company law, Contract law and Employment law. The employees of
the organisation are asset of the company that help in growth and development of the company.
There are different kinds of business organisations such as Sole trader, Partnership, Limited
Liability partnership and Limited company. The business organisation of Limited liability
partnership is one of the best kind of business organisation for doing business as there is very
limited liability of the partners. The parties can get effective and speedy remedy with the
enforcement of Alternative dispute resolution due to its effect of fast and speedy trial.

REFERENCES
Books and Journals
Akhtar, Z., 2020. Low Skilled Jobs, Free Movement Migration and Employment in the
UK. Labor Law Journal, 71(3), pp.144-153.
Baillie, K., 2019. Regulation of Crowdfunding in the UK: Past, Present and Future. Bus. L.
Int'l, 20, p.147.
Creutzfeldt, N., 2018. Ombudsmen and ADR: a comparative study of informal justice in Europe.
Geneva: Palgrave Macmillan.
Deb, E., 2022. International Business Law-Critical Review on Corporate Governance in
UK. Available at SSRN 4074105.
Giliker, P., 2021. Legislating on Contracts for the Supply of Digital Content and Services: An
EU/UK/Irish Divide?. Journal of Business Law, 2021(2), pp.143-162.
Hardman, J., 2022. The Plight of the UK Private Company Minority Shareholder. European
Business Law Review, 33(1).
Lemassel, M.M., 2020. Regulations of financial institutions in the US/UK.
Medway, D., Roper, S. and Gillooly, L., 2018. Contract cheating in UK higher education: A
covert investigation of essay mills. British Educational Research Journal, 44(3),
pp.393-418.
Moloney, N., 2021. Financial services under the Trade and Cooperation Agreement: reflections
on unfinished business for the EU and UK.
Omolaja, O., 2018. Comparative Analysis of the Laws of Delaware and UK Company Law on
Enforcement of Pre-Incorporation Contracts. Available at SSRN 3117638.
Tan, Z.X., 2020. The Proportionality Puzzle in Contract Law: A Challenge for Private Law
Theory?. Canadian Journal of Law & Jurisprudence, 33(1), pp.215-244.
Viana, L.C., Moreira, J.A.C. and Alves, P., 2022. Disclosure of Information and Transparency in
Public-private Partnerships: a Comparative Study Between Portugal and the
UK. Accounting in Europe, pp.1-27.
Waters, B., 2018. Brown & Marriott's ADR: principles & practice. Sweet & Maxwell.
Whiteside, N., 2021. Before the Gig Economy: UK Employment Policy and the Casual Labour
Question. Industrial Law Journal, 50(4), pp.610-635.