Business Law: Sources, Impact, Formation, and Dispute Resolution

This report covers the information relating to English legal system and impact of law on the business. Further it includes formation of the business organizations and various legal solutions for different disputes. Learn about the sources of business law in the English legal system, its impact on businesses, legal formation of business organizations, and various dispute resolution solutions.

Unit 7: Business Law

Table of Contents
INTRODUCTION ..........................................................................................................................3
PART 1............................................................................................................................................3
Sources of laws in English legal system.................................................................................3
Role of the government in making of law and application of them in justice courts.............4
How different laws has an impact on the business. Illustrate by examples...........................5
How business organizations are formed legally.....................................................................7
How businesses are funded and managed..............................................................................8
PART 2............................................................................................................................................8
Recommend various solutions for different disputes.............................................................8
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Commercial law is a set of legislations which governs the commercial or business
matters. As law evolves over the centuries, it has to adapt to the changes which made in society
and technology so that it can be complied in an effective manner. This a broad field which covers
many legislation under its ambit that includes employment law, contract, data protection,
immigration, company law and many others. It plays an important role in regulating the practices
of business so that there is confusion of chaos in organisation (Schulze and Zoll, 2021). This
report will cover the information relating to English legal system and impact of law on the
business. Further it will include formation of the business organizations and various legal
solutions for different disputes.
PART 1
Sources of laws in English legal system.
There is no written Constitution in UK so its principles and rights are enumerated in
various statutes and common law that are framed by legislative body and judiciary. The laws are
the set of rules of governs the working of the state and its citizens and comprises of various
penalties and restrictions in order to ensure its smooth running. There are many sources of UK
law which includes the following-
Primary
These are the original source of law as they are made by the bodies which have power to
enact the law. The primary source of law includes the following- Legislations: The UK has Parliamentary system of the governance wherein Parliament is
the superior law making authority. These are such law which cannot be challenged in any
court and takes precedence over common law due to the principle of supremacy. These
are called as statutory laws.
 Case laws: These are made by the judiciary from the judgement passed by them. These
have same relevancy as that of the statutory law as they have been evolved from the
changes in society. These are known as common law. Th judicial precedents are mainly
based on doctrine of stare decisis wherein the subordinate courts are bound to follow the
judgement of superior court (Chiappinelli, 2018).
Secondary

These are the commentaries on a law which are mainly prepared in order to bring clarity
in legal concepts and the rationale behind its formation. Some of the secondary sources are- Law journals: It comprises of specific area and general area of the law so that an update
in legislation is done. It is the combination of articles and case commentaries so that
understanding is brought on legal issues. Legal encyclopedia: It is the excellent way to initiate the law research as I comprises of
key issues, cases and laws. These are mainly made by lawyers or after consulting with
them. Text books: These are mainly written down by the academicians in order to start the
research on legal topic. It is aimed to bring clarity in legal issues and laws.
 Publication of Parliamentary and Non Parliamentary documents: It is aimed to bring
understanding on creation of law, its background and the discussion on the particular area
of law. It mainly consist of debates initiated in parliament while any law is being enacted,
command papers, etc. (Hee, 2019)
Role of the government in making of law and application of them in justice courts.
The Parliament in UK has mainly three core functions which includes, to represent the
interest of citizens, to monitor government's action and pass the laws. Their function is also
legislative in nature as it involves introducing the law on their own, reject or approve the draft
legislations and power to make amendments in it. As UK has parliamentary form of system, the
executive branch prepares the draft of laws and Parliament review, pass and amend it. The
process of law making is illustrated below- First reading: It involves reading the title of bill and also identifying date and members
to be present in second reading for the opportunity for debating on bill. Second reading: Now the bill is fully presented in Parliament and specific points are
outlined so that opinions are collected on bill. At the end, the votes are taken from House
as to whether the opinions are to be accepted or not. Committee stage: Now the bill is scrutinized and amendments are initiated. Every clause
is examined of bill by the committee of members and amendments are suggested. Votes
are taken to accept these amendments and it is re-drafted and then printed for further step
(Khan and Khan, 2020.

 Report stage: The members are given the opportunities to consider changes which have
been undertaken by committee stage. Further amendments are suggested and votes are
taken to accept or reject it. Third reading: Here loopholes in bill is closed and a final chance for the changes are
given. The votes are again taken in order to accept the amendments. Consideration of the changes: The changes suggested by one house is sent to other. For
instance, amendments made by Lords are sent to Commons and they may reject or accept
it. There are many rounds of it which is called Ping pong.
 Royal assent: When the draft bill is agreed by both the house, it is sent to Monarch for its
assent so that it can be made a law and enforced in whole nation (Arnott and Kelly,
2018).
Application of common and statutory law in court
There is a hierarchy of court system in UK which is divided into subordinate and superior
court. The subordinate court includes County Court which deals with civil disputes and is court
of first instance. Then is Magistrate Court wherein less severe offences are dealt of criminal
nature while other Crown Court which deals with serious offences and appeals from Magistrate
court. Lastly the Youth Court wherein the people aged between 10-17 years are prosecuted for
criminal offences. Then is superior court which includes firstly the High court that has three
divisions, namely, Chancery, Queen's bench and family division. Then is Court of Appeal which
comprises of two divisions, Criminal and Civil. Criminal division deals with Crown court
appeals and Civil division deals with High court and county Court's appeal. Last is Supreme
court which is the final court for appeal in UK which hears only cases on point of law. The
statutory and common law is applied in these courts so that the justice is rendered and decision is
brought in fair and equitable manner. Every court is bound to follow the laws enumerated in
statutes and farmed by judiciary through precedents as it has obligatory for the subordinate
courts to be bound by decisions of superior courts (PATEL and Christian, 2021).
How different laws has an impact on the business. Illustrate by examples.
The business laws can be referred to as the section of codes which is engaged in
protecting the rights and liberties, resolving disputes, maintaining orders and establishing the
standards for the concern of business and its dealing with the individuals and government

agencies. The business is a broad field which covers many legislations under its ambit, the
impact of various laws on businesses are illustrated below- Company law: This legislation is framed by the UK government and consist of 1300
sections which covers the whole working of companies right from its incorporation to its
winding up. It not just protect the key personnels of company but also everyone that's
why it has the provision of rights of employees. It mainly governs how the corporations
are being formed and also operated. Every company which is being registered in
Companies House is entitled to follow the provisions of this legislation so that no legal
consequences are faced by it. For example, this statute provides the duties of directors
under section 171-177 to which they are obliged to when working such as duty to act in
good faith, duty to disclose third party transactions, etc. Employment law: Within the broad areas of this legislation, there are many statutes
which are included in this ambit that covers specific areas or issues like bullying,
harassment, discipline, grievance, equal pay, discrimination, maternity or paternity rights
and many others. It is mainly aimed to protect the rights of the employees from any kind
of exploitation. It regulates their relationship and governs what an employer expects from
workforce. For instance, it is the duty of employer to take necessary measures to
eliminate or mitigate the threats so that safe working environment is provided to the
employees. Employment Tribunal is being established under law in order to deal with
cases relating employment disputes like discrimination, inequality, etc. (Uhr and Wanna,
2020)
 Contract law: This legislation is designed to regulate the relationship of parties who have
entered into the valid contract. Every business is engaged in the transactions which may
relate to trade or commerce so this law regulates their rights and liabilities under the
contract. It mainly regulates the rights, duties, liabilities and relation of parties. The
impact of this law is considerable as it increases the certainty level in the business
relations and provides confidence to the other party to deal with transactions. For
instance, when a consumer purchases any product from an organization, there is a
consumer contract which obliges the the firm to provide better quality product and after
sale services.

How business organizations are formed legally.
There are different types of businesses which are formed in UK and they vary on the
basis of their ownership, structure and liability. The sole motive of the businesses is just to earn
profit and maximise its revenue generation so that it can grow and survive in the competitive
market. These are varied from each other and their formation under law also differs. Various
business organisations are illustrated below- Sole proprietorship: It is the most common form of organization which is formed as it is
suitable for the small scale operations. It involves a single person who is the owner of the
firm and manages the working of business on its own. The power to take decisions,
controlling and management of firm rest in the hands of owner only. It is legally formed
by making the registration at HMRC and it involves just selecting the suitable name for
firm. Its registration process is simple and not complex. Partnership: When two or people decide to open a firm by mutual understanding, it is a
partnership as there are partners who are responsible for their working. The partners
mutually contribute the capital in the firm and the responsibilities of the business is
decide mutually by partners. The ratio of profit and loss, responsibilities, decision making
power and contribution of capital is decided in partnership agreement by the partners.
There are two types of this, general whose involves registration at HMRC and the
partnership agreement which is optional and there is unlimited liability of the partners
while the other is limited liability partnership whose legal formation involves registration
at Companies House and HMRC and there is limited liability of the partners only to the
extent of their share in business (Stopford and Wells, 2017).
 Company: It is an artificial personality which has its common seal as it has power to sue
anyone be sued by anyone. It is a separate legal entity which is different from owners
which means that the owners of the company cannot be held personally liable for the debt
or liability of the firm. The formation of companies involves a lengthy and complex
process wherein the registration at Companies House is required and several documents
are required to be submitted such as article of association, memorandum of associa5tion,
etc.

How businesses are funded and managed.
Every business organisation has a different structure and ownership and they differ on the
basis of these only aspects only. The management and funding of these enterprises are discussed
thereunder- Sole proprietorship: As this business involves a single owner, the power to manage its
operations is in the hands of owner only. It has the sole authority to manage its affairs and
take decisions. As it is suitable for the small scale businesses, the fund requirement is
also limited which can be raised by bank loans or through savings of the owner. Partnership: This business entity involves two or more partners who have the authority
to manage the working of the firm. The partners decide the power of managing the
business on the basis of their share in the firm and their capital is raised by each of the
partners. They may opt either for bank loans or use their personal savings for raising the
finance.
 Company: There are mainly two kinds of companies which are established in UK which
includes firstly public company wherein share capital is raised by the company by
inviting application from the general public in order to make purchase of the shares and
its management rest in the hands of shareholders who elect the board of directors in order
to represent their interest. Second is private company which raises its funds either
through equity or debt and its power to manage the working of firm is in the hands of
owners who are called as directors (Johannessen, 2020).
PART 2
Recommend various solutions for different disputes.
Whenever a dispute arises between the parties, litigation is considered as the foremost
option to resolve it as it involves binding decision on parties. Due to overload of cases with the
judges and courts, the UK government came up with range of alternative dispute resolutions
which can help the parties to resolve their conflict or dispute in speedy manner and in less cost as
litigation takes years to bring decision while involves high cost. The Civil Procedure Rules, 1986
provides for various solutions which can be opted in different disputes that are discussed below-
Case scenario 1
Legal point

Whether is entitled for the wages of the year 2015, 2016 and 2017? This case relates to
employment and contract law due to variation in the contract of employment done due to
substantial loss to the business.
Legal solution
Negotiation is suggested as it involves appointing the third party which is neutral and
independent. It will help parties to bring amicable solution so that both rest on win-win situation
and no party loses anything. In order to binding effect to the decision of negotiation, the parties
have to sign the negotiation agreement (Mamo, 2020).
Justification
Negotiation is recommended to Gordon as it will help it to claim its wages of the year
2015 and 2016 and entitle it to take wages of 2017 due to the business being flourished now.
This solution will help in negotiating between the parties regarding variation in the employment
contract clause and if a variation is brought for one time, it can again be done in order to make it
entitled for the wages of past years.
Case scenario 2
Legal point
Whether Janet is liable to pay Virgin Media the rental of phone line for the time period
when it was not installed (past 3 weeks)? This scenario relates to the contract law as there is an
implied contract between the consumer and service provider.
Legal solution
Mediation is suggested to parties as it engages the appointment of independent third party
who is called the mediator. It provides suggestions to the parties rather than providing the
decision for the case after hearing the facts and evidence of the case. The suggestions of
mediator is not binding rather parties have choice to either accept it or reject it (Rabinovich-Einy
and Katsh, 2021).
Justification
This solution is being recommended to Janet and Virgin media as it will help both the
parties to reconcile with the help of a mediator. This will bring amicable solution between them
and the matter can be resolved in a confidential manner and no harm will be caused to the
goodwill of the company. The contract between Janet and Virgin Media was a valid one as there

was offer from Janet, acceptance by Virgin media, consideration and also intention to create
legal relations so Janet must bring the solution through mediation.
Case scenario 3
Legal point
Whether winding up order must be passed by court in order to recover the debts of
creditors? This case relates to the law of company.
Legal solution
Arbitration is recommended in this case as it involves appointment of independent
arbitrator by the parties. There can be any number of arbitrators but it must be in odd number.
The parties even have flexibility to choose the time and place of the arbitration. The arbitrator
hears the facts and the evidence and provide the award which is binding on both the parties
(Menkel-Meadow and et. al., 2018).
Justification
This solution is recommended to the parties as it will help in bring binding decision for
the parties. Moreover, there is formal proceedings being held in this as compared to other
methods of alternative solution. This will help in reconciling the parties so that Blackhorse can
get time to repay the creditors. This solution involves less formal proceedings as compared to
litigation so it will help in brining speedy disposal of cases.

CONCLUSION
It is summarized from this report that business law is a branch of civil legislation which
mainly regulates the business and its working. The English legal system does not have its written
Constitution rather the rights of citizens and obligation of state is enumerated in the statutes
framed by the Parliament. There are two sources of the laws, primary and secondary. The
Parliament is the supreme authority which enacts the law which is called statutory and judiciary
is entrusted with making common law. There are various types of business organisations which
are established in UK which includes partnership, sole proprietorship and company. Further it is
added that there are various legal solutions which can be opted by parties apart from litigation so
that there is less time and cost effective resolution of dispute. These include mediation,
arbitration, negotiation, etc.

REFERENCES
Books and Journals
Arnott, M. and Kelly, R., 2018. Small parties and law-making. In Exploring Parliament (pp.
131-143). Oxford University Press.
Chiappinelli, E.A., 2018. Cases and materials on business entities. Wolters Kluwer Law &
Business.
Hee, L.T., 2019. Laws governing business. In Doing Business in Korea (pp. 57-79). Routledge.
Johannessen, J.A., 2020. Intelligent Robots and Business Organization at the Start of the
Innovation Economy (The Fourth Industrial Revolution). In Knowledge Management
for Leadership and Communication. Emerald Publishing Limited.
Khan, A.S. and Khan, S., 2020. Supremacy of Fundamental Rights Over Directive Principles:
The Reality of Personal Laws and the Uniform Civil Code. Available at SSRN 3662297.
Mamo, A., 2020. Against Resolution: Dialogue, Demonstration, and Dispute Resolution. Ohio
State Journal on Dispute Resolution, Forthcoming.
Menkel-Meadow, C.J., and et. al., 2018. Dispute resolution: Beyond the adversarial model.
Aspen Publishers.
PATEL, K.K. and Christian, S.A.L.M., 2021. The European Parliament During the 1970s and
1980s: An Institution on the Rise?–Introduction. JEIH Journal of European Integration
History. 27(1). pp.5-20.
Rabinovich-Einy, O. and Katsh, E., 2021. Artificial Intelligence and the Future of Dispute
Resolution: The Age of AI-DR. Orna Rabinovich-Einy and Ethan Katsh,“Artificial
Intelligence and the Future of Dispute Resolution: The Age of AI-DR” in Online
Dispute Resolution: Theory and Practice (Mohamed Abdel Wahab, Daniel Rainey &
Ethan Katsh, eds.) Eleven International Publishing,(forthcoming, 2021).
Schulze, R. and Zoll, F., 2021. European contract law. Nomos Verlagsgesellschaft mbH & Co.
KG.
Stopford, J.M. and Wells, L.T., 2017. Developing an Organization for Multinational Business.
In International Business (pp. 181-203). Routledge.
Uhr, J. and Wanna, J., 2020. The future roles of parliament. In Institutions on the Edge? (pp. 10-
44). Routledge.