Nature of the Legal System and Sources of Law

This project explores the nature of the legal system, different sources of law, the role of government in lawmaking, and how statutory and common law is applied in justice courts. It also examines the potential impact of the law on a business, the formation of different types of business organizations, and recommends legal solutions to resolve areas of dispute.

BUSINESS
LAW

Table of Contents
INTRODUCTION...........................................................................................................................4
LO1: Explain the nature of the legal system...................................................................................4
P1. Explain different sources of law............................................................................................4
P2. Explain the role of government in lawmaking and how statutory and common law is
applied in the justice courts.........................................................................................................5
M1. Evaluate the effectiveness of the legal system in terms of recent reforms and
developments...............................................................................................................................7
LO2. Illustrate the potential impact of the law on a business..........................................................7
P3. Using specific examples illustrate how company, employment and contract law has a
potential impact upon business....................................................................................................7
M2. Differentiate between legislation, regulations and standards to analyze potential impacts
upon business...............................................................................................................................8
LO3. Examine the formation of different types of business organizations.....................................9
P4. Explore how different types of business organizations are legally formed...........................9
P5. Explain how business organizations are managed and funded...........................................10
M3. Assess the advantages and disadvantages of the formation of different types of business
organizations..............................................................................................................................11
LO4. Recommend appropriate legal solutions to resolve areas of dispute....................................12
P6. Recommend legal solutions for resolving a range of disputes using examples..................12
M4. Compare and contrast different sources of legal advice and support for dispute resolution
...................................................................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
The aim of this project is to identify how company’s law can be applied to the operations and
decision of a firm. This assignment will also discuss about legal solutions applied by owners and
promoters of a company. Basic business law concept will be evaluated based on nature of legal
system, potential impact of law on business and formation of different types of business
organizations. In modern times, there is no other option than the rule of law to protect democratic
beliefs, citizens' rights and freedoms. The rule of law is based on the belief that all are equal
before the law. This recognition prevents political power from becoming autocratic and also
helps to maintain order in society. The rule of law is the basis of good governance. This regime
increases public welfare by stopping the arbitrariness of the government. It can also be based on
governance traditions and constitutional provisions.
LO1: Explain the nature of the legal system
P1. Explain different sources of law
Business law: This law basically related with business activities and companies; it can be divided
into two categories; business and law. Where, business is the activity of availing services through
mediating seller with buyer by adding some small margin to the products. On the other hand; the
term law associated with rules and regulations made by government and other regulated
authorities (Miller, 2016). Hence business law together means all rules and regulations which are
enforced on business to do all activities or operations without abandon the terms and conditions
sign by the company. Some of the sources of law have been discussed below:
1. Constitution: UK is the basis of the constitutional system - the principle of division of powers.
The legislature, executive and judicial powers are different and are held by three independent
organs of government. This distinction of the Constitution is clearly reflected in its three first
sections. According to Section 1, all the legislative powers conferred under this section will be
vested in Congress. Section 2 provides that executive powers shall vest in the President.
According to Section 2, executive powers will vest in the President. Section 3 says that the

judicial powers will be vested in the Supreme Court and other lower courts, which the Congress
may appoint and establish from time to time.
2. Legislative law makers: The legislative privilege was first exercised in England, where
Parliament exercised these rights to protect itself from the king's encroachment. The Parliament
of England had made provisions for many rights and privileges, including the freedom of
Members of Parliament to speak and vote freely in Parliament. The privilege should be exercised
only when it causes genuine hindrance in the functions of the legislature, not against general
commentary and criticism. In view of the increasing number of these cases, it is necessary for the
Parliament and the legislatures to enact laws for the codification of privileges.
3. Executives: Parliament provides funds for most of the sovereign's government spending
through parliamentary grants and public funds, known as the "civil list". And an annual grant is
also allocated for maintenance of royal residences and official visits to the queen. Funds for most
expenses, including staff costs, state visits, formal commitments, and official entertainment, are
met by the civic list itself (Beatty, Samuelson and Abril, 2018).
4. Judicial decision: As per Section 95 of the CGST / SGST Act and Section 12 of the UTGST
Act, an advance judicial decision means a decision rendered by the Authority or the Appellate
Authority to the applicant in those matters or on the questions as in Section 97 of the CGST /
SGST Act. 2) Or mentioned in 100 (1) in relation to the supply of goods and / or services being
made or proposed by the applicant.
5. Commercial treaty and agreement: Free trade treaty is made to make trade between the two
nations of the world more liberal. Under this, customs duties, subsidies, regulatory laws, duties,
quotas and taxes on goods exported from each other are simplified. This treaty makes the cost of
production in two countries much cheaper than the rest of the countries.
P2. Explain the role of government in lawmaking and how statutory and
common law is applied in the justice courts
Union of Parliament is able to legislate on matters mentioned in the list. State legislatures are
able to legislate on subjects mentioned in the state list. Only Parliament has the right to legislate
on matters which are not included in the state or concurrent list.

The subjects mentioned in the concurrent list can be legislated by the Parliament or the
Legislative Assembly, but in case of dispute only the law made by the Parliament will be valid
and the law made by a state will be invalid as long as that law is approved by the President. That
law has been kept safe and their approval has not been taken and in case of getting approval, that
law will be effective in that state (Jan and Harm, 2019).
The Parliament is primarily a law making organization. The proposed law is also substituted as a
bill in Parliament. It becomes law after passage in Parliament and approval of the President. Now
we will study how Parliament makes laws. There are two types of legislation that come before
the Parliament.
Application of statutory and common law in justice courts
Common law (also known as judicial precedent or judge-made law, or case law) is that the body
of law is derived from judicial decisions of courts and similar tribunals. The defining feature of
"common law" is that it emerges as an example. In cases where the parties disagree on the law, a
common law court looks past the previous decisions of the relevant courts, and synthesizes the
principles of those cases that apply to the present facts. If a similar dispute has been resolved in
the past, the court is generally bound to follow the reasoning used in the first decision.
If, however, the court finds that the present dispute is fundamentally different from all previous
cases (referred to as the "first impression case"), and the legislative laws are either silent or
ambiguous on the question, Judges have the right and duty to resolve the issue (one party or the
other has to win, and on the disagreement of the law the judges decide). The court sets forth an
opinion that gives reasons for the decision, and those reasons coincide with past decisions as an
example of tying up future judges and litigants (Basedow, 2017). Common law, as a body of law
created by judges, contrasts equal footing with rules adopted through the legislative process and
rules promulgated by the executive branch (later interpretations are explained in this article). The
court sets forth an opinion that gives reasons for the decision, and those reasons coincide with
past decisions as an example of tying up future judges and litigants. Common law, as a body of
law created by judges, contrasts equal footing with rules adopted through the legislative process
and rules promulgated by the executive branch. Determinism has the principle that cases must be

consistently decided according to principled rules so as to yield similar results to the same facts,
lies at the heart of all common law systems are explained in this article).
M1. Evaluate the effectiveness of the legal system in terms of recent reforms
and developments
The political structure of Britain is based on the principles of a unitary state and a constitutional
monarchy. In the British democratic system, the king is designated as the head of the nation,
while the democratically elected prime minister is the head of the state. This political and
governmental system of government prevalent in Britain is Britain's own system, which has
developed progressively in Britain itself, over a period of thousands of years. This is known as
the Westminster system. The British constitution has not been formulated according to any plan
nor has it ever been written. The British constitution is the result of a long historical
development. The British Constitution is actually a developing constitution (Ibp, 2017).
In England, all laws must be granted despite the fact that the old rule, which× hasᾳnot¥been®
repealed, is an unexpected time for the current rule of law to determine in relation to long-
pending proposals on a certain subject. It is the obligation of the Parliamentary Counselor's
modest and deeply functioning office to embrace a combination of proposals, that is, the ground
work for the institution by the Parliament of the same new measure is managed by the occasional
old rules, at the same time quite far away, communicated and communicated intelligently in the
language of the present day. This communication was carried out as a change of substance of the
law (codification, union and resolution changes) necessitated new reforms.
LO2. Illustrate the potential impact of the law on a business
P3. Using specific examples illustrate how company, employment and contract
law has a potential impact upon business
Company, employment and contract law plays an important role in any organization. Ethics of
business includes major part of these three components. Some of the potential impact of
company, employment and contract law on business has been discussed below:

Company law: The Companies law or Act is the most important legislation that empowers the
Central Government to regulate the formation and functions of a company. It is amended from
time to time. This Act determines the registration of the formation of companies and the
responsibility of their directors and secretaries. The Companies Act is administered by the
Federal Government of Britain through the Ministry of Corporate Affairs, Office of the Registrar
of Companies, Official Liquidators, Public Trustees, Company Law Board, etc. Every business is
obliged to follow this law for smoothly running its operations (Dimatteo, 2016).
Employment law: Labor Acts or labor laws are those laws made by a state that define the
relationships between workers (workers), employment providers, trade unions and the
government. Labor are distinct groups of society. The spread of industrialization, increase in the
permanent category of wage earners, increasing importance of workers in the economic and
social life of different countries and improving their status, development of labor unions,
awareness of their rights among workers, education among unions workers The prevalence of
labor legislation has increased due to proliferation, deterioration of the prerogatives of managers
and employers and many other reasons.
Contract law: A contract is a promise or set of promises that is legally enforceable and, if
breached, allows the injured party to access legal remedies. Contract law recognizes and controls
the rights and duties arising from contracts. Each party should have the ability to enter into a
contract. Although most oral contracts are binding, some types of contracts may require
formalities such as a signed, dated written agreement for a party to be bound by their own terms.
M2. Differentiate between legislation, regulations and standards to analyze
potential impacts upon business
Main difference: Legislation is actually rules and guidelines established by social institutions to
govern behavior. These laws are made by government officials. Everyone, including private
citizens, groups and companies, as well as public celebrities, organizations and institutions,
should follow the law.
On the other hand; regulations are guidelines that are provided for the smooth functioning of an
organization and maintaining peace and harmony among its people. In terms of definition, rules
are largely similar to laws. However, they differ from laws because they are not rigid as a law.

Standards work by giving details (rules or requirements) for items, administration, and
structures. When used reliably, they guarantee quality, well-being, and productivity. They can
appear as a reference document that gives insight into the subject matter in question (Roach,
2016).
In order to establish a business, it must follow a set of regulations, legislation and standards that
help it run smoothly. Regulations, legislation and standards have been put in place to ensure that
all are treated equally. All three ensure that every company must follow a set of guidelines and if
it is breaking those rules, firm should accept the consequences of any social situation or
condition.
LO3. Examine the formation of different types of business organizations
P4. Explore how different types of business organizations are legally formed
There are several types of business organizations which are made based on legal formalities, size
of the business and number of members. These types are discussed below:
There are different types of business organization based on ownership and management. These
include Sole Proprietorship, Partnership, Cooperative Society and Joint Capital Company.
1. Sole Proprietorship: It is a form of business organization in which a single person is to handle
the business and bear the profit and loss. This business organization has its strengths, it can be
easily set up and closed, take quick decisions and act quickly on it, direct motivation and
flexibility in operations.
2. Partnership: A partnership is a form of business organization in which two or more competent
individuals agree to run a law-friendly business and agree to share the profits from it. A
partnership firm is easy to build and has flexibility in its operations. Under the partnership, the
resources of all the partners are unified and they are best utilized with the help of appropriate
decision. Under this, the interests of all the partners are protected by taking advantage of the
personal specific knowledge of the partners. Because all the partners are profit and loss partners
of the business, they take full interest in the business (Mayss and Reed, 2018). Their major

limitations are: unlimited liability, impermanence, limited capital, non-transferable share and
lack of mutual understanding among partners.
3. Co-operative society: It is a voluntary organization of individuals who work together to
promote their economic interests. It works on the principle of self-help and mutual aid.
Membership of cooperatives is voluntary and open to all. It has its own independent statutory
existence and is managed democratically.
4. Joint stock Company: A joint stock company is a business entity in which shares of the
company's stock can be bought and sold by shareholders. Each shareholder owns a share of the
company in proportion, which is evidenced by their shares (certificates of ownership).
Shareholders are able to transfer their shares to others without any effect of the continued
existence of the company.
P5. Explain how business organizations are managed and funded
Different business organizations have different scale of business according to its requirements
and process. Managing and fund requirements are based on size of operations and number of
staff working under owner:
Sole Proprietorship – This is suitable for simple business with low capital and low risk.
Businesses that require manpower, such as handloom, art and craft, Jewelers work, etc. are
generally established as sole proprietorship businesses.
Partnership – It is suitable in organization, providing legal services, medical services etc.
Businesses that require medium level capital are suitable there. Wholesale trade, professional
services, trading houses and small production units can operate as partnerships (Kelly, Hammer
and Hendy, 2014).
Co-operative society – It is established to solve common economic problems or to meet the
needs of the weaker sections. They are established to get consumer goods at cheap prices, home
construction, sale of products in the market, loans to members and are suitable for granting
advance etc.

Joint stock Company: This type of organizations are managed by multiple members and legally
bounded by joint obligations and regulations. It is funded either through taking loan or raising
fund from other Non banking financing companies (NBFC).
M3. Assess the advantages and disadvantages of the formation of different
types of business organizations
Advantages and disadvantages of different types of organizations:
Sole Proprietorship:
Advantages Disadvantages
Low start-up and operational costs. It has unlimited liability: personal property of
sole proprietor is subject to pay back dues.
Sharing all profits alone. Business has limited life span; it ends with
owner’s life.
Having fewer standards and regulations. It faces challenges while raising capital for
running the business.
Partnership:
Advantages Disadvantages
Flow through taxation Partners have unlimited liability in relation to
trade liabilities and debts.
Relatively easy to install One partner can cause business and personal
property damage to all partners.
The talent and strength of each partner can be
best utilized
Without advance planning, the company
terminated upon the death of a partner.
Minimum paperwork and legal restrictions The decision of one partner with or without
prior approval from other partners may disrupt
the business.
Co-operative society:
Advantages Disadvantages
This product sells cheap because there is no
cost to advertise it.
Since its members are mostly of low income
group, capital can be raised in limited quantity.
The expenses for the maintenance of accounts
etc. and management is minimal as members
work on their own unpaid.
Due to limited financial resources, it is not
possible to hire highly qualified people.
It provides good salary and position to its It requires rigorous and good care.

employees.
Joint stock company:
Advantages Disadvantages
The liability of shareholders is limited to the
direct price.
Efficiency is low and losses may occur due to
low interest of salaried managers.
More people are motivated to invest money;
hence more capital can be raised to run modern
industries.
The directors of such organizations and other
members of the management have more
opportunities for personal gain, as they are
aware of the financial condition of the
company and can buy and sell shares
accordingly.
It comes under legal restrictions, so the public
has full confidence.
Many types of details have to be prepared to
form a company. It also costs expensive and
time is also wasted in it.
LO4. Recommend appropriate legal solutions to resolve areas of dispute
P6. Recommend legal solutions for resolving a range of disputes using
examples
Case1: Gordon is eligible to obtain wages not only for 2017; but 2015 and 2016 as well. It is
already mentioned under contract act that; he should be paid base salary of £10,000 and 9%
commission. There has no modification in contract after that; also there is only verbal agreement
between Gordon and Fred about forgo of salary. But there is no mention under contract law and
employment law that; Gordon is agreed to leave his salary. Law also enforces company to pay
base salary to the employees for their work and contribution. Gordon is also subject to get
compensation on outstanding salary with company in the form of interest.
Case2: As per contract law between consumer and service provider; amount should only be
charged after complete installation and starting of service. Contract includes both installation and
of internet package and phone lines. Hence, Janet cannot be charged only on the basis of
installation of internet package. Additional to this both internet package and phone lines are

complementary product; which means without phone lines internet will not work. Therefore,
Janet is not liable to pay charges for non used internet up to 3 weeks.
Case3: Winding up petition can be used by those creditors having debts more than £750 with the
company and the firm has not responded after continuously intimation by creditors. To avoid
winding up; Black horse has multiple options discussed below:
1. Pay off creditor: In this option by simply paying off creditor, who has filed petition can
avoid this situation.
2. Negotiate company voluntary arrangement (CVA): Blackhorse can also go for
negotiation with its creditor’s partial payment and rest of payment on later fixed date or it
can sign an agreement to pay remaining amount on agreed date.
3. Dispute the debt: It can only use when Blackhorse has enough evidence that petition
charged by creditor is not correct.
4. Taking debt: Blackhorse can also go for taking loan to pay off creditor money.
M4. Compare and contrast different sources of legal advice and support for
dispute resolution
Some of the sources of legal advice are discussed below:
Solicitor Referral Service: Law society of NSW operates this service; it searches for companies
that meet individual needs and provides services accordingly. It only provide advices to labor,
employees and employers related to wage act and employment contract act.
Community legal Centres (CLCs): It provides advices on legal matters, related to employment
contract act, consumer contracts act and companies act. It resolves all issues related with contract
terms and conditions.
Legal Aid NSW: It provides a range of legal services to people or employees or consumers who
seek legal advice and assistance and adjourning to the court. It doesn’t provide any legal advices
to companies and employers (Mann and Roberts, 2011).

CONCLUSION
Hence, after analyses of whole report; it can be concluded that law makes all individual equal
and restrict unethical company to harm public or customers just of profits. It also restricts
production firms to pollute environment and harm employees and public safety rights. Contract
act make it transparent and key to avoid dispute between two separate parties. There are different
types of cooperatives made according to the needs of the people. Some of them are important
societies - consumer cooperatives, production cooperatives, marketing cooperatives, residential
cooperatives, agricultural cooperatives and credit cooperatives.

REFERENCES
Books and Journals
Basedow, J., 2017. BREXIT and business law. China-EU Law Journal, 5(3-4), pp.101-118.
Beatty, J.F., Samuelson, S.S. and Abril, P., 2018. Essentials of Business Law. Cengage Learning.
Dimatteo, L., 2016. International business law and the legal environment: a transactional
approach. Taylor & Francis.
Ibp, I., 2017. Romania Business Law Handbook Volume 1 Strategic Information and Basic Laws.
Int'l Business Publications.
Jan, K. and Harm, W., 2019. A Basic Guide to International Business Law. Routledge.
Kelly, D., Hammer, R. and Hendy, J., 2014. Business law. Routledge.
Mann, R.A. and Roberts, B.S., 2011. Smith and Roberson’s business law. Cengage Learning.
Mayss, A. and Reed, A., 2018. European Business Litigation. Routledge.
Miller, R.L., 2016. Business Law Today, Comprehensive. Cengage learning.
Roach, L., 2016. Card and James' Business Law. Oxford University Press.