Impact of Company, Employment, and Contract Law on Business

This document discusses the potential impact of company, employment, and contract law on business organizations. It explains the importance of these laws and how they can have both positive and negative effects on businesses. The document also highlights the differences between these three categories of laws and their impact on business.

Business Law

Table of Contents
INTRODUCTION...........................................................................................................................1
SECTION 1: Nature of legal systems and legislations impacting businesses.................................1
TASK 1............................................................................................................................................1
Explain the meaning of statement 'Parliament is Sovereign'..................................................1
Discuss the different sources of UK laws...............................................................................2
Role of government in law making process and how statutory and common law are applied in
justice court............................................................................................................................2
Illustrate how company, employment and contract law has a potential impact upon business.. 4
TASK 2 ...........................................................................................................................................5
Nature and formation of different types of business,.............................................................5
Evaluate the differences between unincorporated and incorporated business that how they are
managed and funded...............................................................................................................6
Advantage and disadvantage of a partnership and that of a company...................................7
SECTION 2: Legal solutions to business problems........................................................................8
CASE 1............................................................................................................................................8
Case Scenario.........................................................................................................................8
CASE 2............................................................................................................................................9
Case Scenario.........................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
The law which has the responsibility to manage every single work related business
organisation is known as business law. There is a huge importance of business law as it is the
main source of taking any of the business decision. In any of the business organisation, business
law helps to generate the better revenue for the company. Broad area has been covered in it due
to which it can be said that it is one of the lengthiest law. The main purpose of preparing this
report is just enhancing the knowledge about business law and to give relevant suggestion that
how any of the case studies can be solved by taking the best alternative decisions. The file will
cover some of the important topic such as sources of law, role of governing bodies, legal
procedure to form a business organisation and recommendation will also be their according to
case studies which will help to understand this law in detail.
SECTION 1: Nature of legal systems and legislations impacting businesses
TASK 1
Explain the meaning of statement 'Parliament is Sovereign'.
Parliament is defined as legislative body of the country which does have the power to
commence any of the laws within the country. In case of UK parliament, it is generally discussed
that they are among one of the most powerful body which is working for the welfare of general
public so it must be understood clearly that no one will have the option to take any of the
decision without obtaining their permission. Their decisions are not premiss-able to be
questioned at any level and must be considered. They even have the power to end any of the
enforced law with immediate effect (Allen and Kraakman, 2016).
The speech of Queen is being delivered every year to address the parliament House
(What happens during the State Opening, 2019). This speech is necessary to be delivered each
year because after delivering the speech the session of parliament get started. The main benefit of
this speech is that it helps to prepare the agenda for every political parties in this particular
speech every things are mention in detail that what are the topics that should be focused more
through out the year.
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Discuss the different sources of UK laws
In present scenario, UK cover the large geographical area due to which it can be said that
it is not easy for single government to commence any of the law which can cover the problem of
each and every area. Just to make everything much easier they have delegated the power and
roles to different agencies so that any of the area will not be weak. The sources of UK who have
the power to commence any of the law in the area of UK are:
Statutory law: The focus of this source is to commence only those law which can benefit
the public for taking any sort of decision in daily basis life. This is the source which takes the
responsibility that unethical and illegal work will not take place within the premisses of UK.
Here, statutory laws are being commenced which has the crucial role for any of the organisation
for taking any of the decision.
Common Law: The laws and regulation which are based on past cases and judgement
by different court is known as common law. This types of laws can be easily modified at any
period of time if House of Parliament think so. This is one of the source which is effective and
result generating. The legal precedent is mainly established here which is beneficial for any of
the authorised body to declare their decision at any period of time.
European Union Law: Whenever there will be the discussion about commencing
maximum number of law in UK there will be only one name i.e., European Union Law because
they are the who have enforced half of Act which is being followed in UK premisses. They
mainly forms those policies and laws which are connected with social and economic policies.
They even covers the rules and regulation related to international laws.
European Convention on Human Right: It is also the important sources which helps
UK in several ways. This is the source which tells that how security should be provided. This is
source what clearly writes that what an individual can do and what are the things which is
prohibited for them.
These are the sources in UK who have the power to commence to commence any of the
law so that peace and silence can be maintained in best possible manner. For managing business,
it is necessary that company must comply with European Union law and Statutory law as they
prepare the guidelines for business organisation through which business activities are being
managed.
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Role of government in law making process and how statutory and common law are applied in
justice court.
The role of government is huge as they are the one who decides that which laws and
policies should be enforced and which should not be enforced. But, if they decide to commence
any of the law they need to make sure that there is no default and for that procedure has been
formed which is needed to be formed. The executive branch of government is responsible for
developing new bills which is needed to be entertained further. The branch of government is
responsible for adopting policies and passing new laws to give the proposals legal effect. The
detail procedure of commencing the law is explained below where every steps have regulation
which is needed to be considered.
First Reading: The stage where name of the proposed bill is to given is known as first
reading. In this stage, members give the title as per the terms and condition written in it.
Second Reading: Even this stage is not much and more different then first reading but
still it is necessary that proper bill must be read by the member that what are the points which are
written in it and how favourable is it. This stage gives the guidelines to committee stage that
what are the points which might create trouble.
Committee stage: This is the stage where it is needed to be checked that whether all of
the points are suitable or not and if not then what are those points which is needed to be changed.
They are required to do voting to check that is is really important to change the points which are
mentioned in the bill. Then they pass the bill to next stage.
Report Stage: This is the stage which is needed to work as per the guidelines provided
by the committee stage because they are needed to just change all of those points which might
create issues in future (Ambler, Witzel and Xi, 2016). The main thing which is found in this
stage is that member do get time for changing so that similar form of issues cannot be found in
future. Even it is the backbone of this complete process.
Third Reading: This is the reading where member are needed to cast the vote to find that
whether bill is really helpful or not and if not they send it back for couple of changes. In short,
one final chance is being given to the member for checking the billing as it is needed to be send
in House of Lords after that (Allen, Kraakman and Subramanian, 2016).
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House of Lords: Same procedure is needed to be followed in House of Lords as they are
needed to check every points in detail as they are the one who needed to take final decision on
any of the points. Peers member have the responsibility to check each and every points.
Royal Assent: When approval is obtained from each and every steps, it is necessary that
Queens approval should be taken so that bill can be converted to Act. This is one of the step
which need to be followed as per the guidelines of Royal Assent Act, 1961.
This is the detail process which is needed to be followed by the government of UK if they
want to pass any of the new bill. Each and every steps are needed to be considered and single
mistakes in any of the step might create further issues to commence new law.
How statutory and common law are applied in justice court.
Statutory law: This is the segment of laws and policies which do passes almost all of the
rules and regulations. It is necessary that all of those laws and regulation must be followed and
whenever they fail to do then legal action is being taken by the justice court. Here, if case is filed
within the justice court, the judges have to find the situation that whether any of the laws and
remedies has been explained or not. If it found that laws and regulations has been explained, then
judges do declare their decisions on that basis and if not they take the help of common law. In
addition, justice court has to find the actual default performed and according to that they are
needed to find laws and penalties from statutory law to declare decision. This is how statutory
laws are applied within justice court.
Common law: This is the department of commencing law which does play the important
role in any of the justice court. There are number of situation where judges are unable to find any
of the laws and regulations related to any of the particular topic and in that situation judges have
to refer the case laws. Here, judges of justice court do get the power to declare any of the legal
decisions of their own choice. This is how both common law and statutory law is being applied
within justice court.
M1 Evaluate the effectiveness of the legal system in terms of recent reforms and
development.
The Legal system of UK has been trying to commence suitable laws and regulations so
that better results can be obtained. Law which are being commenced have some purpose but still
it is necessary to amend some of the laws and acts because they are too and everyday new
methods are being formed due to which it becomes important to amend. There are even some of
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the laws and regulations which are well defined which makes legal system more reliable and
helpful for business organisation.
Illustrate how company, employment and contract law has a potential impact upon business.
Laws can be of different types but the main thing which is needed to be consider is that
what are effecting in any of the field. It is said in any of the business company, contract and
employment has the highest effect on any of the business organisation as it sometimes has the
positive and sometimes it does have the negative impact. The detail information about all of this
laws and regulation has been mention below with its major impact on business organisation.
Contract law: This is one of the law which has a huge importance in any of the business
organisation because it tells that how company need to enter into any of the contract and what
can be the major benefits. Also, it tells that with whom company is not allowed to enter into the
contract. The positive impact of contract law is that forces the organisation to accomplished
every single things as per the deed which has been drafted at the time of starting the work.
Whenever organisation enters into the contract they must need to fulfil all of the terms and
condition which might impose number of penalties on defaulter company which means contract
law does have the positive impact. For example: If TESLA enters into the contract with BMW
that they will not sell their any of the vehicle in the premises but still they does exactly against
the law term and condition of agreements which means company is breaching the contact and
they can be penalised in this situation.
Company law: The most important law for any of the business organisation is company
law because it is the one which tells how business is needed to be operated. The positive side of
company law is that business decision can be easily taken with its help. Whereas, it do have the
negative side under its sections such as conducting number of meeting in a year, appointment
and removal of directors, forming the legal paper i.e., Memorandum of Association which
clearly says that company is not allow take any of the shortcuts to save money which means the
proceeding of company is costly and prolonged. For example: After the commencement of
business organisation, it is necessary for the director of TESLA to conduct meetings every year
for discussion that how company is needed to work and what are those work which can help
TESLA and whole of this procedure is lengthy and costly too.
Employment law: The law which has the crucial role in any of the organisation is
employment law because it has been commence for the welfare of employer and employee's
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both. It is mandatory to be followed by every association. There are number of positive impact of
employment law in any of the organisation. The main positive of employment law is that it have
given the guidelines to every organisation that what type of safety and security equipment should
be given to any of the employees which helps develop positive mind-set among the employee's.
Some of the laws which do comes under employment law and must be must be followed by the
company is Employment Wages Act 1998, Equality Act, 2010 and many more. For example:
TESLE is needed to make sure that they are given equal opportunity of every employee who are
working within the company and if in any of the situation they fail to do so then they can be
penalised. This procedure is expensive too which reduces profitability.
M-2. Difference between three categories mention below of their impact on business.
Legislation: It is a strength of a organisation as it gives legal support to that how they
need to work. It makes clear that what an organisation need to do and what is ethical and what is
not. It will tell that what are the rights and responsibilities which has been delegated to
organisation.
Regulation: It is the rules and regulations of a company which they are need to follow
and it is mandatory to be followed by everyone in an organisation. It is helpful for both workers
and firm.
Standard: It is basically understood as maintaining the laws and regulations. Standards
simply says that organisation are not allowed to work unethical or against the law. In short,
standards to take suitable decision for business organisation and creates opportunity to perform
better within the market.
TASK 2
Nature and formation of different types of business,
As Jane, Penny and Marie wants to expand its business activities, it is necessary for them
to deal with various issues and problem because it is never an easy task to commence any of the
type of business organisation. First of all, it is important that they must understand that how man
types of organisation are there any how they need to form the company.
Sole Proprietorship: The business organisation which is being managed by single
person is known as sole proprietorship. The work load on this form of organisation is almost nil
because there is no requirement any legal terms and condition which do requires in other form of
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business organisation. This types of organisation are always helpful for individual because they
get the chance to take their decisions of own. To setup the sole proprietorship firm, it is
necessary that agreements should be prepared and that must be submitted to Companies
Registration office.
Partnership: Whenever two or more than two number of people thinks that they should
come together as they have the common objective then they have the option to commence
partnership firm. This is one of the most successful form of business at current scenario if
various people are their with common objectives. The legal requirement in partnership is that
limit should not exceed of the total number of partners. The legal procedure of commencing any
of the partnership firm is that deed is needed to be formed and then it is necessary that partners
should should decide that who will take the responsibility of a company and after that all of the
documents should be submitted to Companies House (Bayern, 2016).
Joint Venture: This type of companies is generally of combination of number of
organisation where they set the common objective that how they achieve the targets in short
period of time. This is one of those organisation which are formed for shorter period as well as
longer period of time too. The process to form joint venture is explained below:
 Name should be decided with address.
 Authorised person should be appointed who will take the responsibility to handle all of
the work of a company.
 Deed is also required to prepare that who is investing what amount of capital in the
company.
 Detail information should be mentioned that what are those work which company will
conduct.
 All of this legal documents is required to be submitted in Companies House.
Corporation: This is the business organisation which has the maximum number of
responsibility that they must do. This form of business has to work at greater platform. Here,
number of work and formalities are needed to be done so that all of the work can be managed in
a systematic manner. The proper team is required to be formed who can take the responsibility
that when to take any of the decisions so that profit can be earned. The problem which is being
faced in this types of organisation is that authorised persons has to follow a long process for
taking any of the decisions. The detail procedure of forming any of the corporation is:
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 Here, it is required to select the name of a company.
 Requirement of first director and first shareholder is also their who can take the business
decision.
 SIC number is also required.
 Memorandum of Association and Article of Association is must.
Once all of this criteria are completed, it is necessary that documents should be handed to
Companies House.
Private Company limited by share: This is one of the company which plays crucial role in
present situation as number of people can come together to perform the business activity. This
types of company are not allowed add on the additional number of shareholder once it is
incorporated. The detail process to commence this types of business organisation is:
 There is the requirement of name and address of a company.
 List of shareholder is mandatory.
 Memorandum and Article of Association is also required in it.
 All of this documents are needed to be submitted within the Companies House.
As there are number of option available to commence the company but will be important for
all the three partners to commence the private limited company as they will get the opportunity
to perform at greater platform and even they will get more opportunity to raise additional fund
for the company.
Evaluate the differences between unincorporated and incorporated business that how they are
managed and funded.
Basis Unincorporated Incorporated
Definition The business organisation which has
to perform any of the business
activity at a smaller ground is known
as unincorporated business
organisation.
This types of company is one of the most
popular form of business organisation
where it is necessary to understand that
company must be registered under
Companies Act, 2006.
Managed The work load is very important in
any of the company for that is
The work load in incorporated
organisation is more compared to other
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necessary to understand that who
will manage its all of the activities.
In case of unincorporated
organisation the person who invest
their money in it have to manage all
of the task.
form of company. So team is needed in it
and for that Key Managerial Personnel
plays the crucial role. Even board of
director have to also manage every single
work (James, 2017).
Funded They have very limited resources
available with them when it comes
collect the fund. Some of the
available source are:
 Credit Card
 Bank Loans
 Personal Assets etc.
There are number of sources available
when incorporated organisation have to
manage the fund and they are:
 Issuing share with in the security
market.
 Loan from private and
government banks.
 Peer to peer lending is also
possible etc.
Advantage and disadvantage of a partnership and that of a company.
There are number of advantages and disadvantages of company over partnership firm and
they are discussed below:
Advantages
 The liability of the member of company is always secured and limited but it is necessary
for the partnership firm that their member must clear all of the debt which they have
incurred (Lee, 2017). If changes are needed to be done in plans and policies then there is no requirement to
prepare new deed in company but in case of partnership it is necessary.
Disadvantage
 Legal formalities are found excessive in companies as compared to partnership firm.
 Company have to conduct number of meetings but partnership firm doesn't requires it.
M3 Advantage & disadvantage of forming different business organisation
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Sole Proprietorship: There is a option to take any of the decision in shorter period of
time. Here, firm does not get the opportunity to perform business at large scale just because of
legality.
Partnership: Roles and responsibilities are always easy to delegate in partnership firm.
But this types of company doesn't get the right to sue and be sued on the name of organisation.
Joint Venture: Goals and target can be easily accomplished in it but setting up of joint
venture is an lengthy process.
Corporation: Performing business at greater scale is easy in corporation but decision
making process are lengthy and expensive too.
SECTION 2: Legal solutions to business problems
CASE 1
Case Scenario
There was the case which took place between Champion Ltd and its creditors. It was
found that company was unable pay its debt amount due to some of the unwanted reasons. Now,
their credits threatening to to them that if they will not wind up the company then they will file
the winding up petition within the court.
Winding Up: It is defined as the stage where it can be understood that company is
struggling from number of problem due to which it is not easy for them to perform any of the
business activities in smoother way. It is almost that stage from which it never becomes easy to
recover and perform well within the market. There are different ways of winding up of company
which is explained below: Compulsory Winding Up: Here, creditors are required to file the petition in the court that
company is not paying the amount of loan which they have then from them. They have to
make sure that debt amount is not less then £750 (What is Compulsory Liquidation,
2018). Then, it is the responsibility of member of a company that must give the
justification that why court should not pass the order of winding up and if they fails to do
so then decision is declared against the organisation. Here, most crucial role is played by
appointed liquidator who have to prepare the detail of available assets and after that he
has to sell then in appropriate amount. Once it is sold it is necessary that payment should
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be done of creditors and if amount remains then it is needed to b distributed among
shareholders. Voluntary Winding Up: This is the process of winding up in which it is necessary to be
understood that company should liquidate their company of own. The most important
thing in this is that directors have to take the decision and conduct the meeting to inform
all of the member that company is not able to perform well and because of that they must
wind it up to clear the debt amount (Beatty, Samuelson and Abril, 2018). Here, resolution
need to be passed by the member of company which should not be less then 3/4th of total
member in the organisation. (Cameron, 2017). Once, it is obtained it is necessary that
liquidator must be appointed and after that news must be published in newspaper and
companies official website where they update each and every informations.
Negotiation: This is one of the process through which disputes can be easily solved in
future period of time. The most important thing which necessary to understand here is that
disputed party themselves have to sort it out. This is one of the effective way for solving any of
the disputes.
Recommendation: It is recommanded that Champion Ltd can take the help of
negotiation method to solve the dispute because negotiation process will also provide
opportunity to company that they might perform again in the market. Here, company will get the
chance to revive and to perform once again in decent manner. Secondly, this matter can be
closed without involving court procedure which is one of the great sign for both creditors and
Champion Ltd because that takes unnecessary time. As company have performed default similar
default for number of times, so if they are unable to clear their problem without applying
winding up process then they should wind up their company through voluntary winding up
process. A that will be easy and fast as compared to compulsory winding up.
CASE 2
Case Scenario
In the following case, Mr Anderson is facing critical situation with leaving the current
employment as he is provided with good package than that of compared with working with the
existing company. Mr Anderson has made his contract of employment with the existing
organisation of not leaving the organisation before the period of 12 months. But as Mr Anderson
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is also having another option of good package which Beta Company is providing to him. So the
situation is one side the contract of employment says not to leave the organisation before the
period of 12 months but on the other side, an individual works at the place where he gets more
pay and good working conditions.
Injunction: It is the situation where court do suggest that person should not do any of
those task which might create unnecessary problem for any of the person or organisation because
there are some of the important information that should not be shared with anyone. In the above
given case, Mr. Anderson is trying to breach the injunction.
Similar Case
Case: Sunrise Broker LLP v Rodgers
Judgement: The high court of UK declared that Rodgers will be counted as a employee of
Sunrise Broker LLP till the date of contract. It is his decision whether he is willing to come or
not with in the premisses of company but he will not be allowed to join any other company till
that period of time as another company is rivalry (Sunrise Brokers LLP v Rodgers – High Court
enforces restrictive covenants against broker, 2014)
This is the case which can be solved with the help of Alternative Dispute Resolution. It
is defined as the process which is beneficial for solving any of the legal problem. Number of
methods have been given here which do help any of the disputed party in any of the situation.
Various methods are:
 Mediation: This is most preferable method whenever issues are simple in nature and can
be easily solved without going to the court. The thing which is important to consider over
here is that parties have to explain in detail about the problem which they are facing, then
they give proper suggestions.
 Conciliation: It is the process of solving the problem which does arises between the
parties. This is helpful for solving the problem whenever there is miscommunication
between the parties. The target in it to achieve is that how maximum number of terms can
be met of contract paper.
 Arbitration: The process where permission is given by the authorised department of
government that person whenever takes the help of this method they are not allowed to
take the help of other method if they are not satisfied with the decision. Dispute parties
must be agreed before going under arbitration process.
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Recommendation: To clear out the problem between both the parties it will be necessary
for them to take the advices of arbitration method which do declare its decision without being
biased at any period of time. It is suggested to Mr. Anderson & Amber Ltd because this
procedure will save their time and secondly matter will be sorted out in quick succession as court
procedure are never an easy thing for any one. Another, decision will also be legal binding which
means both the parties must have to agree on terms and condition of decision.
M-4. Compare different support of resolving disputes.
Arbitration: The decisions which are being given by appointed person is always neutral
and they are not just for the purpose of suggestion because they need to be followed.
Conciliation: Appointed person in has to listen the problem of both parties and what they
need in this situation and according to that they are needed to help their client.
Mediation: In this particular stage, suggestions are being given that how problems are
needed to be solved so that both parties can get benefited.
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CONCLUSION
From the above assignment prepared it has been concluded that there are different sources of
acquisition of the laws followed by the citizens of UK. In addition to this, it is also concluded
that organisations, employment and contract impacts upon the business depending upon the
nature of business, job and contract of employment of the organisation. Further the conclusion
has been drawn about the different types of businesses which are important and their formation
also depends upon the nature of business which is carried over by the individuals. Lastly, the
conclusion has been drawn about the relation in between the employer and employee which
should be based on the principle of utmost good faith and organisations should also follow the
proper procedures of their liquidation so that the interest of no party could remain in bad.
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REFERENCES
Online
What happens during the State Opening. 2019. [Online]. Available Through:
<https://www.royal.uk/state-opening-parliament/>
What is Compulsory Liquidation. 2018. [Online]. Available Through:
<https://www.companydebt.com/liquidation/compulsory-liquidation/>
Sunrise Brokers LLP v Rodgers – High Court enforces restrictive covenants against broker.
2014. [Online] Available Through: <https://www.redmans.co.uk/sunrise-brokers-llp-v-
rodgers-high-court-enforces-restrictive-covenants-against-broker/>
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