Importance of Legal Provisions in Business

This report emphasizes the importance of following legal provisions in every individual's and organization's daily life. It highlights various laws such as company, employment, and contract law that significantly impact businesses. Additionally, it discusses different types of business entities, methods for resolving disputes, and efficient management of funds and resources to achieve desired results.

Business Law

INTRODUCTION
Business law comprises legal provisions that are applicable on transactions of
commercial nature occurred in an organization. The other names are commercial law or
mercantile law. In UK, every entity is required to abide by laws that are applicable on them
(Ayios, 2018.). This law has two distinct parts viz. Law governing company, partnership,
agency etc. and law regulating contracts. This report exhibits sources of law, role of government
in law-making, importance and applicability of statutory and common law in justice courts.
Further, impact of various law upon a business, different form of business organizations and their
funding and management. Lastly, legal solutions for resolving number of disputes followed by
recommendation.
TASK 1
P1. Explain different sources of law
Legal system is a structured mechanism which provides remedies to resolve
disagreements. It have three functions viz. Adjudication, legislation and execution. The judicial
function involves hearings and issuing decisions for settlement of disagreement. Legislative
function is about determining rules and legislation that will govern process of adjudication.
Execution function has the purpose to ensure that cases are resolved by complying with
prescribed laws. English legal system is a centralised legal system in which Parliament has been
empowered to make laws that will be applicable throughout UK. The constitution is partially
written for which Acts have been made. The legal system in UK works on doctrine of judicial
precedents. Further, it consists of civil and criminal, public and private, and statutory and
common law. Effective application of law requires adequate knowledge which can be gained
from various sources available. These are divided into two categories viz. Primary and
secondary. A detail of sources have been mentioned below:
Primary sources: These include documents, evidence, images etc. which contain
information contained in original form (Besley, 2015). To have knowledge about legal
provisions, the below-mentioned sources can be used:
 Case law: The decisions passed by courts are presented in the form of reports which are
considered prime sources of UK law. Facts, issues, evidence, legal principles and
decisions are included in these reports. Every case is decided on the basis of judgement

passed in earlier case. In other words, doctrine of judicial precedents is followed in
English legal system. The decisions of higher courts can not be challenged by lower
courts. These are reliable information on which future cases are determined.
 Legislation: The constitution of UK is partially written which is called as partly written
and wholly un-codified. Acts have been passed for written portion which extend to whole
UK. The laws are called legislation which are enacted by UK Parliament as it has
supreme authority. Further, these are above all other sources and no questions can be
raised for its applicability (Bishara and Westermann‐Behaylo, 2012.).
Secondary sources: The information that has been interpreted and decoded by
researchers, scholars and authors are included in these sources. These are as follows:
 Legal encyclopaedias: Halsbury's laws of England and Wales is the popular and majorly
used as secondary sources. It has been written by or in consultation with experts in the
field of law.
 Parliamentary publications: These are considered to know the history and background
of a particular law that has been enacted. It comprises of command papers, debates of
parliament published in Hansard, papers prepared by both the houses of Parliament.
 Non-parliamentary publications: The reports and papers prepared by various
departments of government and agencies. These are available on official website of each
such department and agency.
 Law commission: It is an independent commission which has been established with a
view to oversee laws and make suggestions in the areas of improvement. These are
presented in report which is disclosed to public at large and expertise for their opinions.
 Law journals: These are academic publication which comprise extensive information
which may be specific or general. The language used to write legal provisions is very
simple and intelligible (Buckley, P.J., Burton, F. and Mirza, H. eds., 2016).
 Textbooks: The interpretation of bare Acts and other original information by authors and
scholars are included in this source. These are used by students or a person researching a
particular legal topic.

P2. Explain the role of government in law-making and how statutory and common law is applied
in justice courts
Government make plans, policies, rules and procedures for the benefit of wider public by
taking their interest into account. Further, it has a responsibility to administer the whole country
and make decisions which are of vital nature. Separation of roles make effective management
and implications of law together with adequate monitoring. The role of government in UK law
making has been discussed below:
 Executive role: This branch comprises of Crow and Prime minister and other cabinet
ministers, who are responsible to make and formulates policies that will extend to all the
people in UK (Cq PressPollitt and Bouckaert, 2017). This role is about assessing areas
where laws are required to be enacted. Further, Parliament has authority to make changes
in existing legal provisions that are applicable.
 Legislative role: The House of Lords and House of Commons are legislative body who
have responsibility to pass a bill which is to be passed and made an Act. Further, there is
a fixed procedure under which a bill is presented in the Parliament for the approval of
both the houses followed by Queen's assent. However, advice of Prime Minister is taken
into account. The Parliament has the highest authority to enact, amend or repeal a law.
 Judicial role: The judicial role of government bound it to establish higher and lower
courts for speedy resolution of disputes. The legal system should improved by appointing
judges in courts who have the skills and knowledge about legal matter and can pass right
decisions. However, queen has the authority to appoint senior judges.
There is a set procedure through which a bill is passed which become an Act, this
initiates from presenting a bill, which goes through first reading, second reading, committee
stage, report stage and finally, third reading, if required and after receiving royal assent.

Chart 1. Law-making Procedure in UK
UK legal system has common and statutory laws that are applicable in their respective
ways. Both of them have their individual value and applicability which is described below:
Common law is also known as judge made law because of the fact that UK legal system
is based on doctrine of judicial precedents. Under this law, decisions of previous case laws are
treated as principles on which future case with similar situations are concluded. The decisions so
passed by judges is of binding nature (Fitzmaurice, 2017). However, the decision should be
made applicable to particular case only. These are formed on recorded judicial precedent in
which fresh evidences and facts are considered but previous judgement is also taken into
account.

Statutory law: These are legislation along with rules that have been recorded in written
form which are applicable throughout UK. These are made by legislative body for governing
rights of people living in the country. A bill is presented by a member of both the houses for
enacting it as a law. Further, when a law is passed after receiving royal assent it becomes an Act
or legislation. This forms fundamental structure of whole legal system which comprises various
statutes. Legislation defines rights along with prohibitions or restrictions which should be
followed in order to live in the society peacefully.
TASK 2
P3. Illustration of potential impact of company, employment and contract law upon a business
A business involves various activities which are conducted as long as it is operating.
Legislation are meant for human as well as entities that are also an important part of the society.
Laws can impact a business significantly, which can be understood as follows:
Company law: Companies Act, 2006 contains provisions which are applicable on
corporations. The act govern a company from its inception to winding up (Frank and Bix, 2017).
According to the legislation, it has separate identity from its members and can have obligations
in its own name. Further, it has authority to raise capital. There are rules which are supplemented
with it to be followed while conducting affairs of a company. The act comprises rights of
stakeholders, directors, documents and registers to be prepared and kept, remuneration of key
people, formation of contracts, repayment to creditors etc. For example, a shareholder will be
more interested in buying shares of a registered company as compared to any other form of
organizations. Further, every company is required to get registration under the act in order to
commence its business.
Employment law: An entity utilised human resources to get the work done. People
working in the organization are appointed to achieve goals and objectives set by corporation.
Employment Act, 2002 has been enacted by UK government to govern relationship of employer
and employees (Greenwood, J. ed., 2016). Further, this act protects rights of employees as it has
provisions regulating appointments, removal, working hours, wages/salary, resignation, disputes
resolution, incentives, bonuses, dismissal and many more. Every business organization should
follow these provisions in the letter and spirit. Further, UK government has established
employment tribunals and courts, where employees can go and file case against their employer in

case of breach of legal provisions. Further, it is the duty of an employer to provide healthy and
safe working environment to all its employees. Moreover, all personnel should be treated equally
and there should not be any discrimination on the basis sex, race, gender, nationality etc. Further,
no employee should be dismissed without offering justification. For example, an employee prefer
a company that giver importance and respect to its workforce by complying with laws and rules
regarding employees.
Contract law: These are the agreements which are enforceable by law and has legal
binding on the parties to contract. Contracts are part of business which are executed between a
vendor and purchaser. Terms and conditions are mentioned according to which whole work
should be done during tenure of the contract. Any breach would be enough to revoke it. UK does
not have separate act governing them, hence, they are regulated through Sale and Supply of
Goods Act, 1994. An entity has to execute employment contract its employees, sales contract
with purchaser, contract with suppliers, government etc. A party relies wholly on terms included
in the contract. For example, a party who has acted in contravention to one or more clauses
mentioned in the contract will give power other party to rescind it (Hayden, and Bodie, 2012).
TASK 3
P4. Different types of business organizations that are legally formed
Business organization can be defined as an entity formed with an objective to carry
activities which will involve exchange of products or services in order to fulfil demands of end
consumers. There are different types of business organization which are as follows:
Company: A body corporate which is an artificial persona having a separate legal
identity, perpetual succession and common seal is called a company. There are other features as
well such as it can have accounts in its own name, properties distinct from its members. Further,
the authority to sue and be sued. It can be limited by shares or guarantee and also unlimited
companies can be formed (Nica, 2013). Companies Act, 2006 govern all the corporations in UK,
which provides requirements in the form of legal provision which should be abide by. Further,
every body corporate should be registered under this act in order to get the status of a company.
Minimum number of directors in case of public and private company, minimum number of
shareholders, capital etc. should be complied with. A company has more options to raise capital

to be infused in its activities. The taxation rates are favourable as compare to any other types. On
the other hand, it is expensive to set up and income of a company is taxed double.
Partnership: It is an association of two or more people with mutual interest and intention
to form a partnership in order to carry business for profit. The business must be lawful and a
partnership deed must be executed before the commencement of the firm. Deed consists terms
regarding capital of members, ratio in which profits and losses will be divided, situations in
which firm will liable to be dissolved etc. Every partner is expected to follow terms and
conditions and make decision within the authority and for the benefit of whole firm. There is no
requirement of registration, i.e. it is voluntary to get registration (Johnson, 2012). It is easy to
form which does not require high amount. Partners are jointly and severally responsible for the
unpaid debts of the firm. There are less formalities and no complex system. However, it has
limited options to raise funds. This types is suitable for professionals like advocates, company
secretaries, chartered accountants etc.
Sole proprietorship: The business is owned and managed by a single person know as
sole trader or proprietor. It is the simplest form of business which is easy to form as there is no
requirement of registration. There is no legal compliances. Owner has absolute right on profits
and losses. Investors do not get attracted to invest in this types because its does not have
registration. There is no distinction between owner and his business, and in the eyes of law, it is
treated as one. So any case filed on sole proprietorship would drag the owner. Obligations of
business will extend to personal assets of sole trader in case of non-payment. It dissolve with the
death of owner. It is easy to form and dissolve. Tax rates applicable on income of an individual is
applied to profits of the entity.
Limited liability partnership: When features of a company and partnership firm are
mixed it become a limited liability partnership (LLP). The partners have the same authority as
shareholders have in a corporation. This means that, partners have limited liability. The partners
can exercise direct control on its affairs. Different level of tax liability occurs from LLP. This is
suitable where all members or partners wish to get equal rights and power. There is existence of
separate legal entity. Flexibility in terms of agreement. Partners have limited liability and are not
held liable severally and jointly for the act of other partner (Jones and Lainez, 2013). There could
be situations in which one or more partners may more rights as compared to others.

P5. Explain management and funding of various types of businesses
Funds are vital resources which are required to carry activities without any hindrance.
Also, management is also important in order to get the work done within time allotted. A balance
between these two will help in getting desired results. Management and funding of different
types of entities are as follows:
Company: It can not conduct activities on its own, therefore, it appoints directors who
manages its affairs. Directors are collectively known as Board. They have the power to call and
hold meetings in which decisions are take. Further, policies and procedures are formulated by
them which are applicable to whole company. There are in a fiduciary relationship, trustee of
properties of corporate, and its agents, who signs contracts on its behalf. It has number of sources
available through which funds are raised. The most common ways are by issuing shares and
debentures which are called share capital and debentures, respectively. Apart from these, it can
take loans from banks, creditors, utilise its retained earnings, etc.
Partnership: The commercial transactions are managed by partners of the firm. Each
partner has responsibilities towards the entity (Kraakman and Hansmann, 2017). A partner can
be held liable jointly and severally for the negligence of other partners. Further, their obligations
and liabilities can extend to personal assets, however, creditors do not have the right to make
partners pay their money from their own properties. The decision making power is each of them
followed by approval of all. The major source of funding is the capital of partners. The other
sources can be retained earnings, crowd funding, bank loans etc.
Sole proprietorship: The owner is responsible for managing the affairs of entity. The
decision making power is with him, all contracts are formed by the sole trader. Expansion,
wining up etc. should be determined by owner himself. Moreover, losses are borne by him, there
is no division of profits as well. However, sole trader may appoint others to help him in
conducting business activities smoothly. It is not a registered entity, hence, investors are not
much keen to invest due to which the only source is owner's personal income. Bank also do not
usually approve of loans (Leiden University PressMishan, 2015).
Limited Liability Partnership: The partners have direct control over the affairs of LLP.
They have the authority to make decisions which should be approved by other partners. The
sources available to it are bank loans, partner's capital, retained earnings etc.

TASK 4
P6. Types of legal solution for disputes resolution along with recommendation
It is very common to have disputes or conflicts at workplace which need quick resolution.
There are many legal solutions available that can be used to resolve problems. These are as
follows:
Negotiation: It is the most simplest form of dispute resolution which involve
communication and compromise between parties to disputes. The parties may hire a third person
who will facilitate with effective communication. It is successful only when both the parties have
agreed to accept terms that have been negotiated. For example, employees have been facing
problems with salaries that are being offered to them, for which they have decided to strike. Such
situation can be managed through negotiation (Lang, M., Pistone, P., Schuch, J. and Staringer, C.
eds., 2018).
Mediation: In this method, an outside person is appointed who is called mediator. This
person is responsible to create an environment in order to reach a solution that can be adopted by
both the parties. Further, forum can be created for better communication for speedy conclusion.
Arbitration: In this, an arbitrator is appointed who handle the whole matter. Parties to
disputes have to submit evidence which are examined. The arbitrator make decisions by applying
best of his knowledge. The decision awarded is final and binding on both the parties. For
example, there is a dispute going between en employer and employee, this can be resolved by
producing evidence that will be used.
Litigation: This is the last option and is used when a case has crossed all the limits and
can only be resolved though the intervention of courts. This is a time consuming and expensive
process. For example, an employer has threaten one of his sub-ordinate to leave the job which
has gotten ever worse. In such a case, only litigation can help.
CONCLUSION
From the above report, it has been concluded that legal provisions are important which
should be followed by every individual and organizations. There are various laws such as
company, employment and contract law which impact business in a significant way. Further,
different types of business entities should be assessed and evaluated before choosing them to
commence business. Along with this, there are methods for resolving disputes. Each of legal

solution should be analysed in order to resolve such disputes in a speedy way. Further, the funds
and other resources should be managed in an efficient way so as to get desired results.

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