Business Law: Sources, Role of Government, Impact on Business, Legal Formation of Organizations

This report explains the different sources of law, the role of government in law making, and how statutory and common law is applied in the justice of courts. It also illustrates how company, employment, and contract law have a potential impact upon business. The report analyzes the effectiveness of the legal systems in terms of recent reforms and developments, and the potential impact on business through the difference between legislation, regulations, and standards. Additionally, it explains how different kinds of business organizations are legally formed.

Unit 7: Business Law

Table of Contents
INTRODUCTION ..........................................................................................................................4
TASK ..............................................................................................................................................5
P1. Explain different sources of law...........................................................................................5
P2 Explain the role of government in law making and how statutory and common law is
applied in the justice of courts....................................................................................................6
M1 Analyse the effectiveness of the legal systems in terms of recent reforms and
developments ..............................................................................................................................7
P3 Using specific examples, illustrate how company, employment and contract law has a
potential impact upon business ..................................................................................................7
M2 Analyse the potential impact on business through difference between the legislation,
regulations and standards............................................................................................................8
D1 Provide a coherent and critical evaluation of the legal system and law, with evidence
drawn from a range of different relevant examples to support the judgements. ........................9
PART 2............................................................................................................................................9
P4 Explain how different kinds of business organisations are legally formed...........................9
P5 Explain how business organisation are managed and funded .............................................10
M3 Analyse the advantages and disadvantages of the formation of different kinds of business
organisation. .............................................................................................................................11
D2 Critically analyse the formation of different kinds of business organisation .....................13
P6 Compare and contrast different sources of legal advice and legal support for the dispute
resolution to make appropriate recommendation to legal solutions. ........................................13
M4 Recommend legal solutions for resolving a range of disputes, using examples to
demonstrate how a party might obtain legal advice and support..............................................14
D3 Critically evaluate the effectiveness of legal solutions, legal advice and legal support for
the dispute resolution. ..............................................................................................................14
CONCLUSION .............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
The UK legal system consists of various legal principles, rules and statutes that are
important to safeguards the rights of the individual. The common law system has unwritten
constitution and uncodified legislation diversified the scope of English Legal system. It aim is to
maintain peace and security in the country and establish peaceful environment in the society. It
has complex and detailed legal system that regulates and governs the business activities for its
effective functioning. Law is defined as the rules and regulation that monitors and supervise the
conduct of the individual and provide security to its citizens (Ba Duong, 2021). The UK business
law provides mechanism through which legal relation between the parties can be formed. The
law of employment provides the statutory framework to protect the employees from all kinds of
discrimination that may affect their morale and confidence at workplace. This report will cover
classification of law and its impact on the performance of an organisation. Further, it will
identify the need of finance and its relevancy in the business organisation. Also, it will examine
the process of Alternate Dispute Resolution mechanism and its role in providing legal solution to
the clients.
TASK
P1. Explain different sources of law.
The UK legal system is complex and diversified. The various sources of law such as
International Convention, treaties, customs etc. emerged the unique legal system in a country.
The three pillars of democracy such as Legislative , executive and judiciary plays signifiant role
in the growth of the country and ensure safety of its individual and organisation. Legislative
body which is formed through Members of Parliament are responsible for making law whereas,
executive body enforces the law to harmonise the positive relation among the individual and
judiciary is an enforcement body that exercise their responsibility to provide justice and equity to
the victim.
Primary Sources of Law
The sources of law is divided into two parts which is primary and secondary sources. The
unwritten constitution is supreme law of land which defines the various rights and duties of the
individual including their right to life, right to privacy, human right etc. The case law is judge
made law that is given by the judicial body in a case to decide the matter (Charlson, 2020). It is

act as a judicial precedent for the inferior court to ease the right of the victim to claim justice
from the enforcement agency. The case laws has positive impact on the UK legal system as it
helpful source for the legislative body in order to frame laws. Legislation is divided into two
parts such as Delegated Legislation and Primary Legislation. However, Delegated
Legislation empowers the certain authority to the members to frame enabled Act in order to
suggest the Parliament about the contemporary issue of the society to reduce burden over them.
It helps the Parliament to cover all the aspect of provision that are important for regulating
human malicious conduct in the society. Primary legislation refers to original power of
legislative body to make laws for the society. They develops the idea and aims to enhance the
scope of legal system by regulating new norms, standards and legal principle to safeguard the
individual's right.
P2 Explain the role of government in law making and how statutory and common law is
applied in the justice of courts.
The English legal system is also referred to as a “ common law” system that plays significant
role in the development of England and Wales. The primary legal principles have been taken
from the courts in the form of precedent that have been heard by the judges. The customs and
tradition has great impact on the growth of UK legal system as it influences the enforcement
agency to act in such manner. Judicial decision plays active role in filling the gap where there is
no statute and not having interpreted law to deliver to fair regulatory mechanisms. The common
law is a combination of substantive and procedural law that are helpful for the judges to make
judgements (de Abreu and Ceglia, 2018). The common law and statutory law are followed by
the UK to serve social and justice and public welfare.
Common law and Statutory laws in the judicial system
The major line draw between the common law and statutory law highlights the uncodified and
codified statues. The common law is developed through judicial precedents and termed as judge
made law. It is procedural law that defines the method and ways to conduct legal proceedings. It
is instructive in nature and originated through judgement and judicial precedents.
Statutory law are the written and codified legislation that is established in the form of statutes. It
is substantive law that identifies various legal issues, concepts and its definition is given under
any statute. It is prescriptive in nature that is formed by the Government authority. New laws are

made to address the requirement fo the citizens, to resolve their issues and established the
effective laws to regulate their activities.
Role of Government in law making process
Government are the sovereign authority which are responsible for creating law. It plays crucial
role in transforming the society to address the problem of the citizens. The statutory rules and
regulation s are established by the government to maintain law and order in the country. Law is
made through analysing the evaluating the society's needs and protection and provide them
effective legal system where there right of the individual remains protected. The law making
policy involves complex procedure that are adopted to secure their interest and inherent rights
given by legislation to them. But, it should not be arbitrary and must be legal. The rules and
legislation are binding on its citizens and have to bear its legal consequences in case of
infringement of any of its provisions.
M1 Analyse the effectiveness of the legal systems in terms of recent reforms and
developments
The effectiveness of legal system is measured with the help of major reforms and development
that are made by the government through enforcing several laws. These reforms are observed in
the area of business law, criminal justice system and cyber criminal activities. The UK
government has made various new legislation to address the emerging issues that are taken place
in the modern society (Dickinson, 2020). The industrialization and modernisation in an
economy, analysed the needs of establishment of new laws to provide protection to the right of
employees and employers. The increase in crimes rates and use of modern technique to harm the
society are increasing due to which the legislation identified the importance of establishment of
new statutory obligation for securing their rights such as Criminal Law Act of 167, The Equality
Act of 2010, Company Act, 2006 and many more.
P3 Using specific examples, illustrate how company, employment and contract law has a
potential impact upon business
The statutory framework of business law helps to supervise and monitor the activities and
functioning of an organisation. It is legal compliances that are binding on the business
organisation and regulates operational activities taken place during production, sale and
marketing of goods in the market. The success of an organisation depends on its satisfied
employees and customers where employers contribute their efforts by producing goods for the

consumers to satisfy their need and demand. Business is legally complied to follow certain
standards and norms that are mandatory to safeguard the right of its consumers in relation to
their health and safety. However, it is important to have its legal existence which is possible
through their registration under companies Act of 2006, which defines the rights and
responsibilities of its shareholders, employees and directors to exercise their power as per the
said provisions. It provides the comprehensive legislation framework that are important to give
legal identity to a company through which it can enjoy several unique features of the company. It
has separate legal existence which means company is always distinct from its members and have
common seal. A company is formed to attract the investors and raising a capital for its expansion
and growth.
The employment law is another important legislation that has greater impact on the business as it
regulate the activities between the employees and employers. It bring coordination and integrate
their business activities in order to meet the competitive advantage in the market. It mainly focus
on cordial relation between the employees and employers because it is important to satisfy the
need and interest of them (Farah, 2020). It aims to create positive environment for the members
so that their efforts can meet the goal of the organisation. Employment law protects the
employees from all kinds of discrimination and treat them equally. The employment contract is
made between the employees and employers that are binding and enforceable against each other.
The main objective of employment law is to bring sense of belongingness and harmony among
the people. The employment law boost the morale and confidence of the employees and direct
them toward the organisational goal.
The Contract law cover all the rights of parties that are laid down under the terms of the contract.
The legal agreement is signed between the parties that binds them with rights and obligation that
are exercise against each other. If any of the party fails to exercise their rights will be held liable
for the breach of the contract and can claim compensation and damages for the loss they have
suffered.
M2 Analyse the potential impact on business through difference between the legislation,
regulations and standards.
The Legislation, Standard and Regulation are those principles that are applicable on the
business to monitor and supervise the activities of an organisation. It is important to influence
the conduct of the employees and maintain all the specified norms within an organisation. The

Standards are the regulation and level of quality that are important for an organisation to meet
while conducting any business activities. It directs the way of doing something in a legal manner.
Whereas, Regulation refers to direction and order that are imposed by the government authority
to influence the economic behaviour and functioning of an organisation. Legislation refers to
laws and legal principles that are made to supervise the human activities and operational
activities of an organisation.
Impact of Legislation, Regulations and Standards
The Regulation, Standards and legislation have positive impact on the business as gives legal
identity to the work of the organisation and these standards are important for them to legally
complied with it. The safety and Health standards has been made to secure the rights of
consumers as they are the king of the market and it is important to satisfy their needs and
demand by providing them effective product services (French and Antill, 2018). These
Regulations helps the to impose legal compliances on the organisation to create safe and peaceful
environment at workplace.
D1 Provide a coherent and critical evaluation of the legal system and law, with evidence
drawn from a range of different relevant examples to support the judgements.
The English legal system of UK is based on the constitutional monarchy and unwritten
constitution of UK is the supreme law of land. The two Houses of Parliament consists of House
of Lords and House of Commons that are responsible for taking part in the discussion and
debating process to convert the Bill into the law. The proposed Bill is presented before the
House of Parliament and assented by the President to convert that Bill into the legal statute.
PART 2
P4 Explain how different kinds of business organisations are legally formed.
There are range of business organisation according to the nature, type and size of the
business. An organisation is involved in various activities in order to earn profit and growth in
the market. The members of the organisation are taking active part to perform various
operational activities to increase efficiency and transparency in their working system. The
different form of business organisation involves complexity of formation and involves liability
on its members. There are few organisation which has huge chances of investment whereas other
have less growth and expansion opportunity.

The range of business organisation are discussed below:
Sole proprietorship – it is singly owned organisation that are operate by the sole trader. The
management and functioning of the business are handles by the single person who have full
responsibility over it management (Chen, 2022). He enjoys all the profits and revenue of the
business and not required to share those profits with other members of the business. It involves
less legal formalities and very simple to form. The biggest disadvantages of Sole proprietorship
is that the liability of its member is unlimited due to which he has to use their personal asset to
pay off their debts. Also, there is less chances of expansion and investment.
Partnership – it is formed by two or more person to carry out the business activities in a
partnership firm. The partners are signed partnership deed through written agreement that
detailed out all the information of the partners. The main drawback of Partnership is that the
liability of the partners is unlimited and there is chances of conflicts and misunderstanding
among them.
Limited Liability Partnership – It is an extensive form of General Partnership where liability
of the partners is limited and not required to use their personal asset to pay the creditors. The
liability of the members is limited due to which partners are protected from paying off debts
from their personal assets. The main disadvantages of Limited Liability Partnership is that there
is violation of privacy rights due to public disclosure of financial account.
Limited Company – It is legally complied with the provision of Companies Act of 2006 that
defines the procedure for incorporation and establishment of a company. It has several unique
features such as perpetual succession, having common seal, separate legal existence as per the
law. It lays down various rights and responsibilities of the employees, stakeholders and directors
and framing of important documents such as AOA and MOA which is compulsory for defining
core information and internal functioning of the company.
P5 Explain how business organisation are managed and funded
Finance is most important part of every organisation as it plays crucial role in the effective
functioning of an organisation. It is important for the finance manager to effectively manage and
utilise them more appropriately. It should not be waste and requires effective plans to avoid its
expenditure. Funds are used to meet day to day requirements and contributes in ascertaining
growth and expansion of a business (Smolina, 2019). There are various sources of finance
through which an organisation can raised their funds. It can be raised through equity and debt.

The financial institution also provides the funds to fulfil their financial needs at low rate of
interest. There are some sources of funds that can use by the company to raise and manage their
funds are discussed below:
 Equity Fund- it is a source of funds that are raised with the help of shareholders who
invest their funds in different companies to contribute their shares in the capital of a
company.
 Banking institution – This source of fund help the company to manage their funds
through financial institution who charge low rate of interest from them. With the help of
loan, the small scale and medium scale enterprises raises their funds. It assist the
organisation during uncertain and dynamic business environment by fulfilling their
financial needs.
 Angel Donors – These are the people who can be their family members and friends, and
ready to invest their funds to promote start up and new business for further growth in the
market.
 Grants – It is a certain amount of funds that are given to an organisation to encourage
new idea and innovation in the business (Hunter-Henin, 2020). These grants promote new
business and fulfil their business needs and helps to manage their funds.
 Crowdfunding – It is the most useful method in which public are ready to contribute in
the investment of an organisation in the form of donation. It is must suitable form of
investment especially for small scale and medium scale enterprises.
M3 Analyse the advantages and disadvantages of the formation of different kinds of
business organisation.
There are various forms of business organisation that varied due to its nature, size and resources.
Each organisation possess some benefits and drawbacks, differ in their legal formalities and
complexity in its formation.
 Sole Trader
Advantages
It is simpler forms of business organisation that are very easy and simple to form. It involves
less complex procedure and ownership lies on single individual. The sole proprietorship enjoys
all the rights and responsibilities on his business. Sole trader are independent to form their own

decision for the growth of business. Sole trader entitle for all the profits and revenue earned by
them from their business.
Disadvantages
The liability of sole trader is Unlimited and it is one of the main disadvantages of this form of
organisation. There is less scope of expansion and attracting investors to invest in their business
organisation.
 Partnership
Advantages
The partnership firm is a combination of two or more person who are empowered with certain
rights and responsibilities as per the partnership deed which is made between the partners. It
involves less legal formalities and bear the losses equally.
Disadvantages
The biggest drawbacks of Partnership firm is unlimited liability of its partners as they are
required to use their personal asset to pay off their debts (Land and Lewis, 2018).
 Limited liability partnership (LLP)
Advantages
it is extensive form of general partnership firm of business organisation but the liability of its
partner is limited due to which they are protected from using their personal asset for paying
debts.
Disadvantages
There is a violation of privacy rights of the partners due to public disclosure of financial accounts
and information.
 Limited Company
Advantages
It is formed with the help of Corporate Act of 2006 which defines the detailed procedure for its
establishment and incorporation. The company is entitled from several unique features such as
separate legal existence, common seal, perpetual success and many more.
Disadvantages
It involves complex legal formalities and huge investment to establish and expand the business in
the competitive market.

D2 Critically analyse the formation of different kinds of business organisation
There are different forms of business organisation that varied according to the nature and type
of its business. It includes sole proprietorship , Partnership, Limited liability Partnership and
Limited Company.
P6 Compare and contrast different sources of legal advice and legal support for the dispute
resolution to make appropriate recommendation to legal solutions.
The Alternative Dispute Resolution mechanism is the new form of legal solution that are
established to provide quick and fast legal solution to the parties. It help to amicably resolve the
dispute between the parties by involving informally them into the process of ADR. It is less
complex than Litigation (Pauker, 2020). Unlike Litigation, it does not involve any trial
proceedings and documentation work.
CASE 1
Issue – Whether claim of wages made by the employees are valid.
Solution – This issue can be resolved with the help of negotiation procedure as it help the party
to amicably settle the dispute and avoid miscommunication among them.
Pretext – The process of negotiation may help the party to reach the desired outcomes of the
issue to amicable settle the dispute among them.
CASE 2
Issue – Whether the installation fee is justifiable for connecting the telephone line which is
demand from Janet?
Solution- The party must go for mediation procedure to settle their dispute.
Pretext – The process of meditation is suitable to settle the dispute between the parties as it will
give them fats and quick legal remedy.
CASE 3
Issue – Whether appeal made by the creditors for its determination is valid?
Solution – The procedure fo Arbitration is appropriate legal solution that will help the party to
settle their dispute.
Pretext – the process of Arbitration is quick and fastest legal solution that helps the party to
amicably settle their dispute.

M4 Recommend legal solutions for resolving a range of disputes, using examples to
demonstrate how a party might obtain legal advice and support.
There are range of legal solution has ben made for the party to provide them quick and fast
legal remedy. The process of ADR is new concept that are recognised to reduce the burden over
the court. It is generally used in commercial matters.
The different ways through which party can settle their dispute are discussed below:
Arbitration: The process of Arbitration is conducted with the help of arbitrator who is appointed
by the parties to amicably settle their dispute (Griglio, 2020). It provides quick and fastest legal
solution top the parties. The decision made by the arbitrator is not binding upon the parties.
Conciliation: The conciliator is the third party who is appointed to provide effective legal
solution to the parties. It is informal process that engaged the party to analyse their issue in order
to reach at right conclusion.
Mediation: The mediator is appointed to provide quick legal solution to the parties and helps to
frame effective decision to facilitate effective decision in the favour of the parties.
D3 Critically evaluate the effectiveness of legal solutions, legal advice and legal support for
the dispute resolution.
The Alternative Dispute Resolution is considered as the most effective method for settling the
dispute between the parties as it helps them to amicably settle their dispute without going into
complex legal procedure of litigation. It is not only save their time and money but also facilitate
quick decision and legal solution to the party. Therefore, it is most useful in commercial matters
where the interest of both parties are involved.
CONCLUSION
From this above report, it has been concluded that the sources of law play signifiant role in the
growth of economy. The range of legislation not only secure the right of the individual but also
safeguard their general interest and protect them from all kinds of harm and discrimination.
Legislation has positive impact on the growth of an organisation as it provide effective statue to
govern, monitor and regulate their activities. Finance also plays crucial role in the expansion of
business as it help them to deal with the uncertain business environment. The ADR process is
also very useful in commercial issue to secure the interest of the parties. The different
mechanism of ADR helps the party to amicably settle their dispute.

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