Unit 7: Business Law

The report explains the various sources of law, the role of government in law making, impact of employment and contract law, legal formation of different types of organizations and more.

Unit 7: Business Law

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Part 1................................................................................................................................................3
Explaining different sources of law.............................................................................................3
Explaining the role of government in making law and application of statutory and common
laws in justice courts....................................................................................................................4
Evaluation of legal system’s effectiveness in context of recent developments & reforms.........5
Illustration of impact of employment and contract law using specific examples........................5
Analysing potential impact of differences in legislation, regulations and standards on business
.....................................................................................................................................................5
Evaluating legal system & law....................................................................................................6
Part 2................................................................................................................................................7
Evaluating different types of businesses with their legal formation and management and
funding.........................................................................................................................................7
Case 1...........................................................................................................................................8
Case 2...........................................................................................................................................9
Case 3.........................................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES................................................................................................................................1

INTRODUCTION
The term business law refers to all the laws that are related to how business will operate,
what will be their functions and why they will do certain actions which are allowed and supposed
from them to do legally. Commercial law and mercantile law are the other names used for
referring to business law. Businesses and law are put together with the purpose to ensure that
businesses are working in a safe environment, inclusive of all the individuals involved in it.
Contract, labour, employment, securities, intellectual property and tax laws are the bifurcates of
business law. The current report will explain the various sources of law, the role of government
in law making. Application of common and statutory law within the justice courts will be
explained. The essay will analyse the impact of distinction between legislation, regulations &
standards over the business. Further in the part 2 of the report the legal formation of different
types of organizations will be explored. The study will explain the management and funding of
different organizations. A comparison of varied legal advice sources for recommending
appropriate legal solutions.
MAIN BODY
Part 1
Explaining different sources of law
 Legislation: One the source of law formation that is highly reliable and powerful. The
government of UK establishes legislation through the legislative body. People elected by
the citizens of UK are the members of such body (Steinemann, 2018). Laws for the entire
nation are formed by the legislative members. These are mandatory and hence are to
compiled by everyone.
 European Union Law: It is system of rules that operates within all the member countries
of EU. As UK was a part of EU for a long time such law is also a source of law in UK.
 Case Law: These are judgements of the court over cases that happened in past. Such
judgements act as a law, in depth facts of a case are considered to reach a solution for the
present case.
 Customs: Beliefs that are followed in UK from the ancient times is also business law
source. The rule that are appropriate and applied from a long period of time are included
in customs.

 English Law: It is also known as common law. These are the set of rules that have been
developed by the courts and not created by the parliament (Hollowell and et.al., 2019). It
is legal system that is mainly consisting of civil and criminal cases of England & Wales.
Explaining the role of government in making law and application of statutory and common laws
in justice courts
There are various roles that are performed by the governing body of a country. It is the
responsibility UK’s government to run & manage the state. Parliament & government have a
vital role in forming the laws & regulations to ensure that business functions appropriately.
Further protection of individual interests is maintained by government through exercising its role
of law making. Laws are formulated for the purpose of evaluating the functions of businesses on
the basis of legal context. There is a well -structured process that is followed in UK for the law
making (Payne, 2018). Firstly, in the parliament bill is introduced that proposes a law. Then the
bill is debated in both the parliamentary houses and after the approval on it from both the houses
it is sent for receiving royal assent. And at the final stage the bill becomes a law and referred as
an act after it receives such royal assent.
A bill can be introduced by any of the member of parliament. Policies of government are
represented in some of the bills that are introduced by ministers into the parliament. The
government’s legislative programmes are held in each of the session of parliament. A legislative
programme is the one in which bills are planned that will be considered in the session to be
conducted. Private Bills in a legislative program are determined to be passed in a particular
session and other bills for instance emergency bills can be passed in any of the session. A bill in
its procedure to becoming a law undergoes certain stages namely, first reading, second reading,
committee & report stages, third reading, ping pong between two houses and receiving royal
assent from monarch.
A common law is a law in which judicial decisions are used are the law, also known as
case law. It is applied as an instruction into the justice court decisions. It is based on the
examples of judicial proceedings (Bertini, 2022). A statutory law is alternatively known as
legislation, a system of rules & principles of law that the statute puts. It is applied in justice court
as a prescription as these are based on the statutes enforced by the legislature. Common laws are
amended by the statutory law and statutory laws are amended by separate statute.

Evaluation of legal system’s effectiveness in context of recent developments & reforms
Legal system is quite effective in recent development and reforms in UK such that
different industrial performance keeps increases and that is why, it can be stated that company is
growing. Also, it can be stated that with the help of strong legal system, company can run easily
and further improve the business performance. That is why, role of legal system need to be
strong which in turn create a better outcome for the welfare of a business and this in turn assist to
sustain the brand image as well.
Illustration of impact of employment and contract law using specific examples
Employment law affect the business performance in positive manner such that each
company need to comply with different laws which in turn help in smooth running. On the other
side, if company do not comply with the same laws then it affects the business performance. For
example, if an employer does not pay them a minimum wage then it affects the employee’s
performance level and that is why, they start resisting which affect the business performance
directly (Hardman and Ramírez Santos, 2022). Moreover, impact of Health and safety of staff
employees always create a positive impact over the business.
Contract law also have a direct impact over the business performance because it mainly
regulates how legal entities execute the contracts to avail the services in order to maintain
documentation. This is mainly done by the business in order to perform the entire operations in
effective manner. That is why, it can be stated that there is a direct association between the
company’s performance and contract law. For example, a company can file a case to another
party when they find any disputes under the contract then it affects the performance of a
company into negative manner.
Company law is also plays an important role in the company that mainly allows business to
understand what employees are expecting to them and what restrains them from the business
(Osier, 2020). Thus, it can be stated that by applying the company law, company can run
effectively. For example, Tesco and Marks & Spencer are those firm who actually comply with
the rules and regulations (including company law) in order to run the business successfully.
Analysing potential impact of differences in legislation, regulations and standards on business
There are various types of obstacles that are faced by businesses in their path for growth.
Amongst all such hindrances the biggest one is that arising from uncertainties and doubts. As a

result of complex terms and different explanations for the legislation, regulations and standards
creation of confusion occurs for the businesses. The system consisting of all the statutes, rules
that are formed by the government of a state, country or city and enacted by concerned
legislative body are known as laws (Blauberger and Martinsen, 2020). The term regulation is
used for referring to in depth details outlining the ways through which the associated public
authorities or regulatory bodies will be enforcing the legislation. And standards are basically
used as guide to the daily business activities which help in making knowledgeable decisions.
Conclusively legislation is the set of laws, regulations are the rules that are made to evaluate that
adherences of businesses to the laws and standards are the ideal ways to doing functions. Impact
over business in case there is any type of confusion regarding these terms are in the form of
facing legal consequences. Confusion leads to non- adherence of laws and regulations by the
businesses impacting their progress, growth and profitability. Not following the standards results
in inability of such business to maintain its competitive edge.
Evaluating legal system & law
Legal system & law are highly crucial for effective and efficient functioning of the entire
economy of the country. Law and legal system are essential as they provide uniform and certain
base for running the overall administration and evaluation of activities by a business enterprise.
Protection of general public and also the corporations from facing any kind of biasness, arbitrary
or dishonest judgements (Muthu, 2020). The judgement for individuals becomes free from
errors. Further there is reliability in the decisions that are taken legally. Besides to the usefulness
of legal system and law there exists some limitations too. To begin with the first is that laws tend
to be rigid as the time when they were formulated and the present time have different situations
and hence to maintain the effectiveness it is essential that the amendments are brought with the
changing time. Further the approach that is followed in law is conservative and there are lot of
formalities that are involved with make the procedure of justice a lengthy process (Bradford,
2020). Lastly the nature of the modern society fails the attempts of creating simplicity in the law
and thus it becomes highly complex.

Part 2
Evaluating different types of businesses with their legal formation and management and funding
A business organization can be of a number of types depending upon the factors like
establishment, ownership, management and sources of funding. Sole trader business, partnership,
limited company and limited liability partnership are the various types of business entities.
Sole Proprietorship
One of the easiest and simplest form to business in terms of establishment and operating
is the one that is run by a sole trader. The complete authority of all the gains that generates from
sole proprietary business is of the individual person who the owner of the business. There is
benefit of being the sole owner of the entire business which brings the advantage of being
individual authority to make all the decisions related to the business (Abdel-Basset and et.al.,
2020). The initial costs involved for establishing such a business is very low. Despite of these
such an owner faces certain limitations in the form of unlimited liability and limit to the fund
raising capabilities. This business is entirely managed by the owner single handed who also have
the sole responsibility to arrange funds. Personal savings, angel investors, bank loans, etc. are
some examples of sources of funds. Such a business is legally required to be registered with
HMRC and file for self-assessment tax.
Partnership
A business in which two or more people forms an association with the aim of earning
profits is categorised as partnership form of business. Such persons are known to be self-
employed in the business. There are certain advantages like utilization of more number of
peoples’ expertise into the business, sharing of responsibility of losses that may incur in course
of operating the business. The limits to this type of business entity are creation of conflicts
because of differences in opinions and suffering of faults of one by all. Such a business is
registered with Companies House & HMRC (Andrews and et.al., 2020). Partnership acts, labour
and employment laws and laws concerning health and safety are required to be followed.
Contribution of capital is done by all the partners. Funds can also be borrowed through involving
banks or other financial institutions. Management the Business is responsibility of such partners
who also retains profits for growth perspectives.
Limited Liability Partnership

The above mention type of business is similar to limited liability partnership. The reason
for both being a different type of businesses lies in one of their features that is liability. This
feature is limited in case of limited liability partnership and unlimited in partnership type of
business. HMRC and Companies House are the bodies within which a LLP form of is required to
be registered. The minimum number of persons required to establish a LLP business are two. On
annual basis accounts are prepared and filed. The sharing of responsibilities and profits or losses
associated with businesses is done between partners. All the details of this type of partnership are
stated into the partnership agreement. Partners in a limited liability partnership are required to
file self –assessment tax return individually. Insurance payments are submitted to authority
named HMRC. Share in profits of each partner is liable to be paid for income tax obligations.
Limited company
A business whose ownership and management is handled by individual privately is
known as limited company. Corporation tax are paid by these organizations. Owners of limited
company are known as shareholders, liability of whom is up to the amount of shares prescribed
to them and are not paid by them. Owners of the company and the company itself are having
separate legal entity. Complexity in establishing such a business organization is high. Start-up
costs are high and paper work requirements further makes it a lengthy process. Legal
requirements are MOA and AOA drafting. Incorporation certificate is received by registering to
Companies House, also is needs to be registered with HMRC. Business activities are managed by
board of directors, representing shareholders (Bouveret, 2018). Capital is brought into business
by the way of issue of shares and through borrowing from external sources.
Case 1
Issue: The issue that the case study highlights is between Orange Computer Ltd Store and
their salesman. The company did not pay Gordon (salesman) what it has to pay according to the
agreement of employment.
Rules: In the case there are two laws that are applicable first is contract law and other is
employment law. The labour wages act and the employment rights act of 1896 gives
fundamental rights to employees to receive their salary or wages in accordance to what is
specified in agreement of employment. The contract law states that the parties involved in a
contract are compelled to follow T & C of the contract they have entered to.

Application: In the given case of Orange Computer Ltd. Gordon must receive an amount
for his salary and also the payment of commission against the computers that he sells. Increase in
competition faced by company reduced the turnover of the business so it asked Gordon to accept
only the amount of commission for the years 2015 – 2017. On this salesman agreed with the
management but for the 2016 the company experience good performance and earn high profits.
according to the employment law company is liable to pay Gordon for his salaries and
commission amount (Abdullaeva, 2022). According to the contract act new contract should be
made in case changes takes place in the existing contract.
Conclusion: On analysing the case and the laws applicable to it is concluded that the
computer store has breached in the T & C of the employment contract by not paying for its
obligation of making salary payment to Gordon. It is right of Gordon to receive all the amounts
due against his salary and commission account for all the years.
Case 2
Issue:
The issue that is identified in the above case is that the firm virgin media have not provided the
client with the proper facilities and made a delay of 3 weeks in installation of the internet
package inclusive of the telephone line in its accordance after not providing with the proper
services and facilities the company have charged extra for the telephone line that includes
the bill of the 3 weeks that are delayed by the company (Carlson, 2020). Even when the
invoice is generated the firm have taken the bill of the 3 weeks extra that they have delayed
in, for providing with the services.
Rules:
In the context of the above case how the company have made the delay in providing the service
the consumer right act, 2015 is applicable on the firm. This is the law helps in protecting the
customer rights of the individual when any of the purchase is made. The problems that
comes under the consumer right law, 2015 are the faulty goods, counterfeit goods, poor
services, contracts, rogue traders, etc. Under this law the individual who faced the problem
can call on the helpline numbers and get the advice related to the problems faced.
Applicability:
Under the condition of the delay in the services and not proper response from the company the
negligence of the law is being implied in the case. Customer negligence includes the gross

negligence or the intentional misconduct of the customer or the principles of the customers
related to the side of the customer's principles, directors, agents, etc. The negligence
involves section 65Bar of the consumer protection act on the exclusion of services or the
restrictions related to the negligence liability (Goulard, Aziz, and Gragtmans, 2020). The
applicability of the consumer right protection act, 2015 also includes the factors that can be
applicable on the firm's misconduct like partial rejection of the good, right to reject, and
consumer right to enforce the terms related to the goods and services.
Conclusion:
As per the above case that has been made on the consumer on the firm virgin media is that it is
sued under the protection of the consumer rights based on the misconduct done by the firm
related to the installation of the internet package and that too inclusive of the telephone line.
The firm can be sued under the negligence act and consumer right protection act, 2015. The
firm might face the different allegations from the side of the client like the right to reject,
partial rejection, etc. The client of the firm can sue the company legally in the court by
putting various allegations and can put the allegation like not satisfied with the quality of
work and the service being provided. The company may have to pay out the compensation
amount to their client for the delays they made and bad service they have given to the client
related to the problems faced.
Case 3
Issue: Blackhorse Ltd. which is a security company breached the contract it had with its
creditors by being defaulter as the company failed to pay for its obligations as a result of which
an application to terminate the contract is filed by such creditors.
Rules: The rules that are related with this case are contract law, insolvency act.
According to the contract law it is the obligation of the parties involved to compile with all the
terms and conditions of agreement covered in the contract.
Application: The case study company, Blackhorse Ltd. with the suppliers of it entered
into a contract according to which the company was receive services from such suppliers in
advance and payment of which was agreed to be received by the suppliers later on. Because of
some internal crises where the company’s major customers stopped opting for its services
reducing the burden of company’s turnover to be managed from few of its customers, the

company failed to meet its obligations against the suppliers (Adams, Freedman and Prassl,
2018). The company has been found defaulter of its payments consecutively many times
resulting one of its suppliers to apply for termination of contracts. According to the contract law
it is clearly specified that all the rules & regulations of the contract between two parties abides
them and in case of breach of such terms the contract is regarded to be terminated. The party
who is responsible for breaching the terms of the contract is liable to pay for the liability amount
as the contract mentions.
Conclusion: Blackhorse Ltd has breached the T & C of the contract that it had with its
suppliers according to the contract law. Breaching of the contract is done by the company in its
action of non- payments for three months so the appeal by the creditor of the company with the
court seeking termination of contract is correct and lawful (Arrowsmith, 2018). Further the
company is also liable to pay for the penalty (if pay).
CONCLUSION
Based on the above report it can be concluded that business law, also referred as
mercantile is a group of industry & trade related laws, regulations and acts. In the part 1 essay an
explanation of sources of law has been done. The governmental role in making a statutory and
common law and its application have been explained. An evaluation of legal system
effectiveness in the context of reforms and developments done recently have been done. With the
use of specific instances application of contract and employment law on business have been
illustrated. In the part 2 of the report legal establishment of different types of businesses have
been explored. In the study an explanation how business entities are managed and funded has
been explained. The report has analysed and applied employment laws in context of three cases
given. For each of the case legal formalities are covered and solutions have been suggested and
justified with the legal context.

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