Business Law Report: UK Legal System, Business Types, and Contract Law

This report provides a comprehensive overview of UK business law, beginning with an introduction to the legal framework and various sources of law, including statutory, common, and EU law. It delves into the role of the government in the law-making process, highlighting the application of statutory and common law in justice courts. The report examines the impact of company, employment, and contract law on business operations, providing practical examples. Furthermore, it describes different types of businesses, their management, and funding models. The report concludes by offering legal solutions for conflict resolution in business scenarios, demonstrating the practical application of legal principles in real-world situations. This report provides a detailed understanding of business law principles and their practical implications.

Business Law

Table of Contents
INTRODUCTION...........................................................................................................................1
SECTION 1......................................................................................................................................1
TASK 1............................................................................................................................................1
a) Meaning of the statement and describe different sources of UK laws...............................1
B) Role of government in law making process and application of statutory and common law
in justice courts.......................................................................................................................2
C) Describing how company, employment and contract law has a potential impact upon
business...................................................................................................................................4
TASK 2............................................................................................................................................5
Describing nature and formation of different types of business.............................................5
How the business are managed and funded............................................................................7
SECTION 2......................................................................................................................................8
Providing legal solution for both cases..................................................................................8
CONCLUSION................................................................................................................................9
References......................................................................................................................................11

INTRODUCTION
Business law comprehend all the laws which direct how to form and run a business and it
also includes all the laws which govern how to start, purchase, manage and close or sell a firm.
Apart from this, it also establishes the rules which every organization must follow. In the same
way, present report also based upon the laws which a business entity must follow and it shows
the importance of all the business law in an entity that helps to govern those in systematic
manner.
The present study describe how the business law are applied to run a business smoothly
and it is split into two sections such as in Section A, study will describe the meaning of Queen's
speech and describe various origin of UK laws. Further, it also explains the function of
government in law- making process and describes how case law and statutory law are practical in
courts. In addition to this, report show company, employment and contract law are created
potential impact upon business by using examples. Then it describes different types of business
and how they are managed and funded. In section 2, report shows legal solutions in order to
resolve the conflict using laws.
SECTION 1
TASK 1
a) Meaning of the statement and describe different sources of UK laws
The statement states that at state opening of parliament during October or November the
government used to announce its legislation by means of Queen speech every year. However, it
can be seen that the constitution of United kingdom is unique as the constitution is not present or
limited to a single document. The parliament continuously make changes in its legislation in
order to meet the needs of the society. Therefore, it can be said that the parliament of UK is an
supreme ruler (The UK Legal System, 2019).
Administrative law : The administrative law comprises of some other law such as common law
statutory law and office of information and regulatory affairs this altogether can jointly be
defined as administrative law(Reiss, 2017).
Common law : The procedural rule and substantive law which has been created by the judges
after listening the cases in a court and decision making. There are basically two types of common
law :
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Procedural law : The set of rules or procedures are said as procedural law. In order to assure
that the laws used and applied fairly, some rules and procedures have been made which should
be enforced when any case is heard in a court whether the case is criminal or civil.
Substantive law : The law safeguards people right and responsibilities. The law dictates that
what kind of punishment should be given to person after hearing the whole case and coming to
conclusion.
Statutory law : This law is written law which is passed by body of legislature. The law is
different from that of oral and customary law which is announced or promoted by executive or
common law of judiciary law.
Legislation law : This law was created by a legislature. UK parliament is the principles
legislature which is situated in London. UK parliament is the only body which holds the
authority to pass the law which is governs all the four countries. Within UK parliament there is
two house i.e., house of lords and house of commons. In house of lords there are 800 peers out of
which 600 are appointed by Queen on the recommendation by prime minister.
European union law : This law operates within the member of states of European union.
This is a new legal order as per stated by the court of justice. Any state can join EU if they agree
to follow rules of an organisation. The citizen has right to vote directly in the election of
parliament(Leckey, 2017). The national government operates on behalf of European council and
council of European union. Here court of justice deals with the rule of law and rights of people.
While the member of state government represents council of European union.
Constitutional law : The law has undergone various changes in the last 20 years. The
main changes and steps taken under this period is European convention on human right by the
human right act 1998, The Brexit referendum, introduction of supreme court in year 2009 etc.,
are some of the major developments(Barnett, 2017).
B) Role of government in law making process and application of statutory and common law in
justice courts.
Law Making Process and role of government in it :-
 Identification of Need :- After analysing the legal system, the ministry body of
government of UK identifies those areas or activities which are required to be monitored
or are in need of regulation. The ministry correctly analyses the present conditions in the
country regarding all the scenarios like studying crime rates etc. and the data thus
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collected acts as a basis in law formation (Bolton and Foxon, 2015). The ministerial body
also evaluates the present law and identifies whether changes can be made in the present
law or an entirely new law needs to be formed.
 Bill Formation :- After the identification of need for law, the next stage is the formation
of a bill that is to be passed for making a new law. Right from the beginning of this law
making process to the final stage; the ministerial body plays a very important part. At this
stage, the ministry of government forms a draft which acts as a rough outline of what the
new law intends to propose.
 First Reading :- At this stage, the rough draft of bill is presented before the MP's in the
House of Commons. This gives them an idea regarding the purpose of bill i.e. what its
about so that they can prepare for it and discuss it.
 Second Reading :- After a short duration of First Reading comes the next stage of
second reading (Ballot and et.al., 2015). Here, the key principles of the bill proposed are
discussed and it is then sent to a smaller group of MP's who carefully examine every
detail of the bill.
 Committee Stage :- At this stage, the Bill is referred to a special committee formed by
House of Commons which discusses very single aspect of the bill.
 Report Stage :- After every aspect of the bill has been discussed and debated, the
representatives vote for the clearing of the bill to be further passed in the House of Lords.
 Proceeding in the House Of Lords :- The bill gets cleared from the House of Commons
stage and is further discussed in the House of Lords. The bill is modified in this house
including any amendments if any to be made in the bill.
 Consent From the Queen :- This is the final stage where bill has been completely
approved by both the houses with majority is presented before the Queen of England i.e.
the Monarch. The Monarch has the final power to accept the bill and their assent is
compulsory to convert the bill into an Act (Li, Gagliardi and Miles, 2019).
Statutory law can be defined as that law which has been passed by a legislative body and is
written in nature. Since it is passed by a statute constituting national, state legislative body or
local governments it is called Statutory Law. Common Law can be defined as those laws which
are derived from the different decisions of justice courts and tribunals. Common law is also
referred as judge made law or case law.
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C) Describing how company, employment and contract law has a potential impact upon business
All the laws defined by the government creates potential impact upon business, only if
the entities are run by complying with the defined laws. In the same way, company, employment
and contract law has a potential impact upon business which are as mentioned below:
Company law: It is the assemblage of rules that govern a business with rights and
relation, so that business run smoothly. Therefore, the impact of company law is divided into two
parts such as regulation on economic condition of a business as well as pricing performance for
the investor. It has been analysed that a firm creates an isolated legal entity and the business now
has its own assets and also raise the money through debt, further, it also response on obligation.
Therefore, the entire rules organize the company's creation of wealth by corporate governance
(Wild and Weinstein, 2019). For example, Mr. X is the shareholder of a company and now he
wants to compare the shares with another company and also emphasis the purely legal matter and
at that time, using company law, individual can easily bargain with directors and solve an issue.
Employment Law: It mainly involves in a hiring process during an interview such that
in a workplace, managers and employees should not discriminate workers and the law plays a
crucial role in loose a job. Further, through employment law, company protect the employer and
employee as well as maintain economic stability in workplace. On the other side, it also creates
positive impact and provide certain protection during lay-offs, terminations and other issue that
affect the entire business (Employment law in UK, 2018). Employment law also determine the
rights of wages and benefits. For example, top brand follow employment law in which they paid
at least minimum wages to their employees and if an employee feel that they are discriminated
on any basis, then they can go directly to court in order to compensation for the damages and
losses.
Contract Law: The law binds the parties into legally relation, protect both parties and
also locking the financial agreement. The contract also creates potential impact upon the business
performance and maintain future relationship as well. Further, the contract also will also make
sure that the minimum requirement of governing contract which may avoid the challenges to
their validity (Knapp, Crystal and Prince, 2019). Further, if the firm have valid contract law then
business owner can also use them for the future deals and this reduces the cost of new contract
and fulfilling the requirement of law. For example, when X business deal to purchase 100 soap
products from Y in every year and to save a business from every year contract, it deals with
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contract law in which both firms bind with a contract of 5 years, and they are agreed with terms
and condition.
Legislation: This also affect the business such that change in law means change in
manner to operate a business. Such that every firm should maintain the legislation on data
protection and confidentiality so that the personal information will not be used by anyone.
Regulation: It deals with government rule and regulations. For example, sudden change
in taxation policy by government affect the business directly, it is so because the money earned
by firm. Therefore, it increases the price of products and service offered (Graziano, 2019).
Standards: It is the agreed way for doing a business and through standard, company
maintain its product quality, process and deliver the service with a huge range of activities.
Therefore, these standards help a business to run smoothly and maintain relationship with the
customers as well.
TASK 2
Describing nature and formation of different types of business
As per the case scenario, there are three main types of business which are as mention
below:
Sole trader: Sole trader is the simplest form of a business and it is easier and cost
affective business. In sole trader business, the company owner is legally responsible for taking
all the important decision. It is also known as Sole proprietorship. In this type of business, there
is no specific process for registering as a sole trader, and they are also liable for paying different
taxes such as Income Tax and National Insurance (Bakar and et.al., 2016). The formation of sole
trader is described as, firstly an individual have to decide the name of a business which is not
used by any other company previously, and then they have to register the firm with local, state
government. Lastly, the person have to obtain all the necessary business permit as well as licence
from the government and business is also liable for having safety standards and tax (Formation
of Sole trader Company, 2018).
Limited company: This type of company are mostly found in the country and in Limited
company, the liability of members is limited with regard to what they invested and this can be
divided into public as well as private company. Such that private Limited company are not offer
their shares to public and if the members are in private limited then they are restricted by laws
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and rules. While on the other side, public limited company can raise the capital and also offer the
shares to public as well, but it can issue the shares up to £50000 (Apergis and Georgellis, 2018).
The limited company also requires proper registration which includes name and address of a firm
and details of each shareholder with capital invested, name and address of each director. The
limited company should also pay tax such as Corporation Tax, VAT, Capital Gain tax and
PAYE. Limited company have their own separate finance system from their owners, shareholder
in which they are not liable for any losses and debts.
Partnership: It is the agreement where both parties are agreed to corporate with their
mutual interest and a partnership may also result in issuing and only governed by a contract.
Generally partnership is done to increase the sales and profit and to achieve the vision as well. In
partnership, generally partners are liable for any business decision which includes debts as well
as liabilities (Ramanadham, 2019). For the partnership agreement, person must have the
registered the business name and also obtain the employer identification number and open a bank
account in the name of partnership and finally file the annual information return as well.
Difference between the unincorporated and incorporates
The unincorporated group is the collection of individuals and it did not have any legal
identity outside. Therefore, the person are legally liable for an entire group action. On the other
side, incorporated group has their own legal entity and members of incorporated groups are not
personally liable for any action within a group (Blair and Hitchens, 2018). In addition to this, in
unincorporated members have to meet the debts and legal action which is quite risk and in the
case of incorporated group, the liability of individual is limited and the risk is quite low as
compared to unincorporated.
Apart from this, the unincorporated group cannot be entered into the contracts, on the
other side, incorporate group have their own property, and they also enter into contract. The
unincorporated group are not regulated by any legal body but it can be regulated by registered
charity (Chalaby, 2018). On the other side, in the case of incorporated group, which is regulated
by the least one or two bodies, but it can increase the administrative burden as well and also
require large number of committee members.
Advantages and disadvantages of partnership:
Advantages: Partnership requires legal formalities as compared to other type of business
and the more capital is also available for the partnership. Further partners are also pooled from
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different specialised area and it leads to provide collective expertise advantage for a firm so that
they all take better decision for the business (Marquis and et.al., 2019). In addition to this,
partnership business is quite flexible as compared to others types and tax rates are also lower
than compared to proprietorship and all the risk are also bearded by the partners equally, which
leads to diffusion of risk. On the other, business who operate in partnership they did not have to
pay income tax and every partner can share the profit and loss by their own.
Disadvantages: The liability of the partners are limited and even the personal assets are
also in risk when the business is not liable to pay debts. Further, it also lacks of continuity which
means that death and withdrawal of one partner also leads to end of partnership. If one partner
take wrong decision then it is to be borne by other partner as well (McCarthy, 2016). Partnership
also leads to create conflict between the partners and even the disagreement also leads to destroy
many partnerships.
How the business are managed and funded
The sole trader has multiple option for getting the fund such that the sole trader can invest
their own saving for the expansion of a business, further, when a sole trader has a short of
personal capital they may sell some assets which is registered in the name of a business. Next is,
sole trader can get the fund from the loans and credit lines or mortgage, and they may also use
Trade credit which is mostly secured option for the sole trader (Petri and Plummer, 2016).
On the other side, private limited company also managed or funded from their friend and
from their personal saving so that it will help to raise their fund. Apart from this, the company
also collect the fund from the bank in which they have to pay a low amount of interest for repay.
In addition to this, bank loan also require owners to describe their revenue source and profit
levels with detail plan and then bank accept the loans (Khmel and Zhao, 2016). They also collect
the money from angel investor in which a person provides financial backing for small start ups
and entrepreneurs. The fund which a private company get may be one time investment and also
help a firm get off the ground. But in this case, the angel investor wants to get some shares of the
business to so that it will help to get up from the early stages.
In addition to this, the company also get fund from crowdsourcing which is a website in
which fund is provided to private venture. This key is applicable to communicate the business
idea so that it will help to keep in engage and a business will able to successfully depend upon
the ability to appeal through social networking as well as mass audience as well (Delmon, 2017).
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SECTION 2
Providing legal solution for both cases
Case 1: As per the case study, it is to be recommended to Champion Ltd to use
Insolvency Act, 1986. the law is also regulates the company in UK to repay their debts. In the
case of Champion Ltd who is not able to provide cash to its creditor after facing financial
problems and declining its customers base as well. Therefore, it is recommended to the firm to
use Insolvency Act of UK in which the law Is attempted to rescue the company in its difficult
phase in which all the employees and creditors are fail to pay (Rochelle, 2017). In Insolvency
Act which provides a legal platform for all the matter even with relate to personal and corporate
insolvency in UK. As per the case study, Champion Ltd was actually given the cash payment in
order to develop new stadium by premier league club. But during the move, the company was
experienced financial development due to lower down its customers. Therefore, it takes loan
from Bank in order to repay the cash for creditors. But now, the creditor are threatening to apply
the case in courts for winding up petition. Therefore, it is recommended to use Insolvency act so
that it will help to resolve the conflict.
Apart from this, the creditor may file Company Voluntary agreement in which creditors
are threatened to apply in courts for wind up and as Champion Ltd also enter into a Company
Voluntary arrangement in which the insolvency procedure allows the firm in its debt problem
with its creditors regarding the repayment. This agreement is mainly made by the agreement of
all the directors as well as legal administrator as well. In this situation, CVA is only implemented
by the insolvency practitioner who draft the proposal for the creditors and even around 75% of
the creditors are agreed then the CVA is accepted (Kane, 2018). But in this situation, creditors
are also not able to take further action, and they are not even adhered such as winding up order
case. Therefore, in this situation, payment are also made in single amount and the fees charged
by the insolvency practitioner will also deduct from this payment as well. Therefore, it is
recommended to Champion Ltd to use CVA in order to overcome form this situation and get
their money back as well (Block-Lieb, 2016).
Case 2: As per the case study, Mr. Anderson resign from his post of CFO by stating that
he had come to nothing therefore he take a decision to leave. But on the other side, he had a
contract of 12 months with Amber Ltd and therefore, in this situation, the firm is to take
Injunction as a legal solution so that it will help to come Mr. Anderson from the situation.
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Injunction are the court orders which states to a person that they are not allowed to do any act.
Mainly it is applied in Domestic purpose and to breach faith in company as well. In the same
way, Amber Ltd is also looking to an injunction in order to prevent Mr. Anderson for providing
services to its competitor and also from breaching the duty of good faith, trust as well as
confidence for a period of 12 months (Lawrance and Brooks, 2017). Therefore, the act prevent a
person to publish something about which they did not like and there maybe chances that they
leave the country and also getting rid of their assets as well.
In addition to this, the court also grant the injunction which is the final remedy in which
the applicant demonstrate that the legal right are about to periphery and even the money is also
damaged in inadequate compensation (Carr, Slothower and Parkinson, 2017). On the other side,
it is also evaluated that Injunction is prohibit future violation of the law such as real property,
infringement of the patent and violation of constitutional right. For example, Carter Ruck
solicitor raise the super- injunction on behalf of oil trader, who prohibit the Internal report of
Ivory Coast Toxic waste dump scandal. It has been analysed that the case is revealed only when
it is referred to parliament. Therefore, it has been analysed that using injunction, Amber Ltd can
easily resolve the disputes and even it can charge a case on Mr. Anderson who breach the faith
and did not maintain confidential (Daly, 2017)
.
CONCLUSION
By summing up above report it has been concluded that laws plays a crucial role in the
smoothening of business and in the same way, report also concluded that there are main three
sources of UK laws such as EU law, Common law and statutory law that critically evaluate the
effectiveness of legal system. Further, study also concluded that government plays another
important law in the law making process such that in the entire process of converting bill into
law in which government plays crucial role. In addition to this, study further concluded that
company law also affect the business in positive manner and apart from this, employment and
contract law also assist a firm to run smoothly and achieve the defined goals as well. Further,
legislation, regulation and standards also affect the business in positive side which helps it for
attaining goals in defined time.
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