Business Law: Sources, Role of Government, Impact on Business, Legal Systems and Different Forms of Business Organizations

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

Unit 7: Business Law

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................4
P1. Evaluate different sources of law..........................................................................................4
P2 Explain the role of government in law making and how statutory and common law is
applied in the justice of courts....................................................................................................5
M1 Analyse the effectiveness of the legal systems in terms of recent reforms and
developments ..............................................................................................................................6
P3 Using specific examples, illustrate how company, employment and contract law has a
potential impact upon business...................................................................................................6
M2 Analyse the potential impact on business through difference between the legislation,
regulations and standards............................................................................................................7
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. ........................8
PART 2............................................................................................................................................8
P4 Explain how different kinds of business organisations are legally formed...........................8
P5 Explain how business organisation are managed and funded ...............................................9
M3 Analyse the advantages and disadvantages of the formation of different kinds of business
organisation. .............................................................................................................................10
D2 Critically analyse the formation of different kinds of business organisation .....................11
P6 Compare and contrast different sources of legal advice and legal support for the dispute
resolution to make appropriate recommendation to legal solutions. ........................................11
M4 Recommend legal solutions for resolving a range of disputes, using examples to
demonstrate how a party might obtain legal advice and support .............................................12
D3 Critically evaluate the effectiveness of legal solutions, legal advice and legal support for
the dispute resolution. ..............................................................................................................13
CONCLUSION .............................................................................................................................13

REFERENCES..............................................................................................................................14
INTRODUCTION
Business law is the area of law which deals with the protection of an individual and the
organisation. The UK legal system plays significant role in identifying the rights and interest of
the employees and employers. It provides detailed legislation that regulates, governs and
supervise the business activities that take place in order to satisfy the need of the consumers.
Business law covers range of legislation including Company Act of 2006, Employment law and
Contract law etc. The enactment of such legislation brings major reform in the UK legal system.
Employees are considered as the asset of the organisation who contribute their efforts towards
success of the organisation. It is important for the employees and employers to create peaceful
environment and maintain cordial relation between each other to prevent conflict and
misunderstanding among them (Aguilera-Barchet, 2018). The various sources of law includes
International Convention, treaties, customs etc. that helps the Parliament to enact the law for the
society which contributes in the economic growth of the country. This report will discuss the
various sources of law and its impact on the performance of a business. Further, it will cover
various major reforms that has been observed by the English legal system and use of financial
resources that is managed and utilised by the organisation effectively to meet financial
requirement of a business. Also, it will cover the role of Alternative Dispute Resolution
mechanism that provides amicable settlement of the dispute between the parties.
TASK
P1. Evaluate different sources of law.
There are various sources of law that contributes in the economic and legal development of
the nation. It provides structured mechanism which facilitates remedies for resolving
disagreements between the parties (Brown, Liñares-Zegarra and Wilson, 2018). The main
objective of these sources is to secure the fundamental and human right of the individual. The
English system is centralised with power of Parliament that allows them to frame law for
safeguarding the interest of the party. The primary source and secondary sources of law
establishes the legal principles and regulations to implement in the society.
Primary Sources of Law

The primary source of law is identified with the help of International Convention, treaties and
customs that plays crucial role in the UK legal system. It has unique and complex legal structure
that are made to cover all the rights of the individual. In simple words, law is a rules and
regulation that are made to govern the behaviour and conduct of the society so that no one can
violate their right and they can live freely without any danger and harm. It has greater impact on
the society and have legal consequences. Law binds the citizens with certain moral and legal
obligation that is exercised in favour of other individuals. The role of Judicial precedent is also
important and act as a case laws for the inferior court. Law is made with the help of legislative
body and considered as the supreme law of land and executive are responsible for enforcing such
laws in order to maintain harmony and peace in the society. Judiciary is an enforcement body
that addresses the issue of the party and give them legal solution to secure their right to access
justice. The principle of common law is based on law of equity that provides the fair, equal and
just treatment to an individual. However, legislation is further categorised into two parts
including Delegated and Primary legislation. This categorisation is done on the basis of power of
framing laws in which delegated authority is responsible to make law when Parliament is not in
session and to reduce burden of work over them.
Secondary Sources of Law
It includes documents such as Legal Encyclopedia, Journals, Article, Books etc. are the
secondary source of law that is considered as the background resources and evaluated with the
help of primary sources.
P2 Explain the role of government in law making and how statutory and common law is
applied in the justice of courts.
Government are the official authority which is responsible for imposing, regulating,
governing and monitoring the laws to maintain law and order in the society. They are responsible
for coordinating and administering the public service to promote social welfare and justice. Law
is made through extensive discussions and debates to cover all the aspects of human lives and
protection so that their right remains secured (Duval and Furceri, 2018). The Parliamentary body
consists of two Houses including House of Lords and House of Commons that gives consent to
the proposed Bill and introduce among the general public. These allegation brings transparency
in the system and effectively enforceable for the safety of the citizens.
Common law and Statutory laws in the judicial system

The distinction line draws between the Common law and statutory law are related to the
codification of law. In which, common law is not codified and belongs to unwritten statute that
are made with the help of different sources of law. It is a procedural law that defines the legal
proceeding and method to resolve the dispute between the parties. It is basically based on the
principle of equity that provides fair and just treatment to the citizens. Whereas, Statutory law is
the substantive law that provides the original rights and obligation of the individual. It is derived
with the help fo statutes and constitution. These are the set of laws that governs the member of
the society to direct them how to behave with the other individuals. These statutes are binding
upon the citizens and have legal consequences. These laws are crucial to fulfil the need of
society and safeguarding their right against the wrongdoer.
M1 Analyse the effectiveness of the legal systems in terms of recent reforms and
developments .
The English legal system has observed the major changes in UK and have greater impact on
its individual and organisation. Due to emergence of new technology and innovation, the demand
of new legislation is also increased to secure the right of the parties who are involved in various
kinds of business activities. These modernisation of technique has also increased the scope of
crime through various means which leads to violation of privacy rights, legal right and human
right of the individual. In order to avoid raising of crime rate and its impact on the society,
legislative authority take major steps to introduce various new Bills and statute to secure the
interest of the party. The UK legal system has analysed the drastic reform in the area of business
law by introducing employment rights Act, Company Act of 2006, Computer Misuse Act and
many more. The change in criminal justice system has also been taken place to reduce the
criminal activities by imposing strict penalty on them.
P3 Using specific examples, illustrate how company, employment and contract law has a
potential impact upon business.
An organisation is bound to various legal compliances that are important for effective
functioning of an organisation. The operation of a business is governed, managed and supervised
with the help of statutes that defines the roles and responsibilities of each member of the
organisation. These legislation are binding and established to protect the right of the employees
and employers. It promotes healthy and safe environment where employees can contribute their
efforts towards organisational goal (Giliker, 2018). The Company Act of 2006 was made to

provide comprehensive and detailed information about the incorporation, establishment and
operation of a business. The set of standards are applicable to operate a business to secure the
rights of the stakeholders. Consumers are the real king of the market to whom an organisation
supplied and produce the goods and services to benefit the society at large. The duties and right
of the directors are also laid down the provision of Company Act of 2006 as they are the decision
making authority of the organisation. An organisation owes several unique features which
includes that the company is separate legal entity, have common seal, can sue and can be sued,
perpetual succession and many more.
The Employment law is another source of legislation that provides the detailed legislation on the
protection of the rights of the employees and employers. Its main aim is to create cordial relation
between them and promoting healthy environment at workplace. The right of the employees are
the paramount objective of the employment law and protection is available on the basis of
holidays, dismissal, paternity and maternity leaves , wages etc. t is significant for an organisation
to encourage the employees by motivating , guiding and providing incentives them so, that they
are become satisfied at workplace. It improves the performance of the employees that are key to
success of an organisation. It also reduces the high employment turnover at workplace and
establish brand value in the market. The employment contract is made between the parties that
defines the rights and responsibilities of each party and binds them with contractual obligation.
Any of the party fails to legally comply with it, will be held liable for the breach of contract and
other party can claim compensation and damages of the violation of their right.
Contract law is a wide and complex legislation that defines the kinds of contract and various
related provision which are laid down under the said Act (Hancox, 2021). It is a legal agreement
that is made between the parties in order to create legal relationship with each other. It provides
the provision pertaining to damages and compensation for the violation of any of the terms of the
contract.
M2 Analyse the potential impact on business through difference between the legislation,
regulations and standards.
An organisation is bound with the legislation, standards and regulations according to the type
and nature of the activities carry out by the business. It is guiding and monitoring tool that is
compulsory obligation over the organisation to complied with it. It directs and influences the

business to meet the set standards to ensure the safety and security of the potential user of that
product.
Impact of Legislation, Regulations and Standards
The impact of legislation, Regulation and Standards are positive on the functioning of an
organisation. Legislation is detailed statute that defines the comprehensive procedure that
regulated and guides the business activities. Every organisation is bound to complied with it to
meet the requirement of its consumers so that their trust and faith remains secured. Standards are
the level of quality and legal principles and it may related to the hygiene and safety of the
consumers as they are the real king of the market. Each product is required to meet certain set of
standards that are made by the government for the protection of the rights of the individual.
Regulations are the official order and guidelines that are made to bring transparency in the
working system of an organisation.
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 UK legal system is unique and diversified. The unwritten constitution is the supreme
law of land and provides the rights and responsibilities of the government authority who are
responsible for enacting the law as per the provision of the said Act. The two Houses of
Parliament are the House of Lords and House of Commons who are responsible for debating and
discussion the proposed bill to enforce it as a law (James and Quaglia, 2020). The sources of law
contributes in enforcing the rights of the individual so that they their faith and trust on the
legislative authority remain secured.
PART 2
P4 Explain how different kinds of business organisations are legally formed.
The various forms of business organisation are established according to the nature, type and
size of the business. It is decided on the basis of availability of resources, finance and other
factors that are relevant for the growth of an organisation. There are few organisation which is
very easy and simple to form and does not involves in complex legal formalities. Sole trader and
Partnership form of business organisation consists of unlimited liability of the partners and
considers as the one of the biggest disadvantages.
The various forms of business organisation are discussed below:

Sole proprietorship –The sole trader forms of business organisation is easy and simple to form.
It is not necessary to register a business under any statute. Sole trader enjoys several rights and
profits individually. It involves less legal complication which ease the operation of business. The
unlimited liability of the sole trader is considered as one of the major drawbacks of this forms of
business organisation. Due to single ownership of business, the chances of expansion is
comparatively less.
Partnership – it consists of two or more persons who comes together to form a partnership firm.
The partnership agreement is made between the partners but not compulsory to made in writing.
The partnership deed defines all the related details of the partners and their share in the
partnership firm. The main disadvantage of this forms of organisation is that there is chances of
conflicts and misunderstanding due to indifference of their views and culture that may create
dispute among them. The liability of the partners is unlimited due to which they are required to
use their personal asset to pay off their debts.
Limited Liability Partnership – it is a wider concept which includes limited liability of the
partners and have unique features of company (Lienen, 2019). LLP is considered as separate
legal entity and have corporate personality that can sue or can be sued on its own name. The
right to privacy of the partners is affected due to public disclosure of financial statement and
information to the Companies House.
Limited Company – It is incorporated as per the Corporate Act of 2006. The company enjoys
several unique features of company and attracts the investors to invest their company. It requires
huge investment and involves complex legal procedure.
P5 Explain how business organisation are managed and funded
Finance is an important source of business organisation as it is required to meet the day to day
requirement of a business. It contributes in the expansion and diversification of a business. Fund
helps to meet the uncertainness and dynamic business environment. An organisation can raise
their funds through multiple source and few of them are discussed below:
Equity Fund- It is source of fund that can be raised through shareholders who invest their fund
to share ownership in an organisation. It is generally useful for the medium and large scale
enterprises.

Banking institution – it is a financial institution that provides financial assistance to an
organisation to meet their needs. The banking institution lend them money at low rate of interest
for contributing in their expansion of business.
Grants- The official authority empowers the new startups and business to help them by
providing financial assistance so, that they can meet their routine requirements
Crowdfunding- it is the source of fund that can be raised with the help of donation and
contribution managed with the help of general public who are ready to invest their funds in new
startups business.
Angle Donors- It includes family and friends who encourage the new start ups and innovative
business and includes future growth by providing them adequate funds so that they can achieve
further growth.
M3 Analyse the advantages and disadvantages of the formation of different kinds of business
organisation.
 Sole Trader
Advantages
It requires less investment and easy and simple to form. It is most suitable forms of business
organisation.
Disadvantages
The chances of expansion is comparatively less and unlimited liability of owner may affects his
personal asset to disposed off in order to pay creditors.
 Partnership
Advantages
It is easy and optional to made in writing. It involves less legal formalities and losses are shared
among the partners equally (Moore, 2018).
Disadvantages
The unlimited liability of the partners is the biggest drawbacks of Partnership forms of business
organisation. It creates conflicts and misunderstanding among the partners due to indifference in
their views and culture.
 Limited liability partnership (LLP)
Advantages

The liability of the partners is limited and not required to use personal asset to pay creditors. It
also enjoys some features of company.
Disadvantages
The privacy of right of the partners is get affected due to disclosure of financial statement to the
Companies House.
 Limited Company
Advantages
The rights of the employers and employees remain secured due to the provision of Corporate
Act, 2006 which provides detailed legislation in this regard. The limited liability of the members
reduces burden of liability over them.
Disadvantages
The complexity of legal procedure and involvement of huge funds can put heavy burden over
them.
D2 Critically analyse the formation of different kinds of business organisation
The different forms of business organisation such as sole proprietorship, Partnership, LLP and
corporate organisation possess distinct features and formed for some purposes. The primary
objective of every business organisation is profit maximisation and expansion of business in the
global market (Omolaja, 2018). The secondary objective of such kinds of business organisation
is to build brand value and goodwill in the market.
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 a new form of legal solution that reduces the
pendency of cases in the Litigation. It is quick, fastest and simple form of dispute resolution that
tries to settle the dispute amicably between the parties.
CASE 1
Issue – Whether issue of claim of the employees for wages is appropriate?
Solution – the process of mediation can help the party to amicably settle the dispute among each
other.
Pretext – The mediator is appointed who act as a third party and responsible for conducting
meeting between the parties to resolve their dispute.
CASE 2

Issue – Whether cost of instalment of telephone connection lines are appropriate?
Solution – The process of negotiation is an appropriate option to settle the dispute.
Pretext – With the help of negotiation, the negotiator can amicably settle the dispute between
the parties and considered as the quick, fastest mechanism that will give the desired result to the
party.
CASE 3
Issue – Whether demand of creditors for determination is a valid ground for appeal?
Solution – The process of Arbitration is suitable method to resolve dispute between the parties.
Pretext – the Arbitrator's decision is binding on the parties and identified as the cost effective
method that will resolve the dispute between the parties.
M4 Recommend legal solutions for resolving a range of disputes, using examples to
demonstrate how a party might obtain legal advice and support
The procedure, method or manner by which parties are able to get effective solutions through
fast and speedy trial is the procedure of Alternative Dispute Resolution. In order to get
appropriate legal advice and support, there are various mechanisms through which Alternative
Dispute Resolution can be achieved are:
 Arbitration – The method through which effective justice can be achieved is the method
of arbitration. This procedure allows speedy trials without the long proceedings of the
court. The proceedings in Arbitration can be instituted by the Claimant and the person
against whom suit is instituted is known as Respondent. The Arbitrator then
independently decides the case in order to settle the disputes and provide reasonable
justice to the aggrieved parties. Its decision are legally binding on the parties and the
parties can appeal in such cases if they are not satisfied with the decision of arbitrator.
The decisions made in the process of Arbitration are confidential and does not have
access for the public.
 Conciliation – The dispute of parties can be solved through a Conciliator who neutrally
decides the case by being a third party in order to have an effective process of decision
making (White, 2022). The conciliator is the unbiased person against who helps in
deciding cases between the parties by having a neutral effect in the process of decision
making. The decisions of conciliation are binding on the parties in the form of

agreements, settlements and others. The matters of conciliation includes disputes such as
industrial, marriage and family disputes.
 Mediation – In order to settle disputes between two or more people, the effective
solution of arbitration is used which helps having a common say among the parties by
mediating their disputes. The parties are provided effective solution through Arbitrator
who helps in having mutual agreement between the parties. There is a mutual, voluntarily
and transparent effect through the effective process of mediation and also helps in solving
real issues of workplace.
D3 Critically evaluate the effectiveness of legal solutions, legal advice and legal support for
the dispute resolution.
In order to have an effective solution, advise and support, the process of Alternative dispute
resolution is used to resolve the disputes among the parties (MacFarlane, 2021). It is the most
effective method as it helps in providing relief to the parties through fast and speedy trials in
order to prevent the delay of cases among the parties.
CONCLUSION
From the above report it is concluded that the commercial activities of business are conducted
through the legal procedure of business law. The English legal system is based on the principle
of common law which helps in securing the rights of people in the country. Law can be
understood and determined through its various sources which are primary and secondary. The
primary sources of law are legislations, case laws, customs etc. The secondary sources of law are
books, articles, journals, encyclopedias etc. There are different laws that helps in understanding
different aspects of business law which are Contract law, Company law and Employment law.
The disputes between parties can be solved through the effective solution of Alternative dispute
resolution through Arbitrator, Mediator and Conciliator. The parties are able to get fast and
speedy trial with the effective method of Alternative dispute resolution.

REFERENCES
Books and Journals
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the Future Strategic Intentions of UK SMEs (March 1, 2018).
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macroeconomic conditions and policies. IMF Economic Review, 66(1), pp.31-69.
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dream?. In Essays in Memory of Professor Jill Poole (pp. 14-32). Informa Law from
Routledge.
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James, S. and Quaglia, L., 2020. The UK and multi-level financial regulation: From post-crisis
reform to Brexit. Oxford University Press.
Lienen, C., 2019. Judicial constitutional comparativism at the UK Supreme Court. Legal
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MacFarlane, L., 2021. Contract Law and the Legislature: Autonomy, Expectations, and the
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