Different Sources of Business Law pdf

Business law

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P1 Different sources of law.........................................................................................................1
P2 Role of government in law making and there application in justice courts...........................2
LO 2.................................................................................................................................................4
P3 Company, employment and contract law impact on business...............................................4
LO 3.................................................................................................................................................6
P4 Types of business organisations which are legally formed...................................................6
P5 Difference between unincorporated and incorporated business and how they are managed
and funded...................................................................................................................................8
LO 4..............................................................................................................................................11
P6 Recommendations of legal solutions which resolves various conflicts...............................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business law helps in governing the business and is branch of civil law which take care
of all issues related to private law and public law. Starting, closing and running of a business all
depends on business laws. It also regulate hiring practices, manufacturing and sales of corporates
so that they work ethically. The report will include different sources of laws that are civil law,
criminal law, customs and common laws. Further roles and responsibility of government to make
these laws have been explained. Report explains statutory and common law applied in justice
courts. Report also explain how company, employment and contract law impact on business.
Different types of organisation are formed on basis of some legal condition and how business
are managed and funded is explained in this report. At the end there are some legal solutions for
resolving disputes with help of legal support and advices which is explained in the report(de
Silva, 2017).
LO 1
P1 Different sources of law
Parliament is sovereign means parliament of UK is given legal authority to create or end
a law which courts and people of UK have to follow. In the year 1689 parliament of England was
declared as supreme and have power in hand to give direction to English government. Parliament
is a sovereign body which has legal authority to make laws and amend them(Pillay, 2017).
Sources of law are as follows:-
 Civil law:- It is set of rules and principles which are easily acceptable by citizens and
also jurists. In this rights and duties of citizens are clearly expressed so that all citizens
are able to protect there private rights and it covers laws related to contracts, property and
family law. If any individual violet these laws and have done crime which have impacted
other individuals rights then government of UK can prosecutes them by asking
compensation for the damage, fine or may results in imprisonment of 1 year(Beatty,
Samuelson and Abril, 2018).
 Criminal law:- Crime is basically any act that violet the laws and harm an individual or
group. Criminal law basically relates to crime that is harmful and can become threat for a
person because it may be endanger to the property, safety or health of an individual or
group of people. Main reason for the implementation of this law is to detect who has
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committed the crime and protect the victim and surrounding people from further crimes.
The crime may be related to murder, dealing drugs, manslaughter, robbery etc. The
remedies such as jail, life imprisonment and heavy fines are the results of such
actions(Allen and Kraakman,2016).
 Customs:- Customs are basically common beliefs and habits which comes with
behaviour of people and have given legal recognition. As UK's legal system is very old
so does the customs it have. So it become for the government to set laws according to
common believes of the people over the years(Orlov, 2016).
 Common law:- These laws are based on judges decisions and on customs. It is not a
written form of law. It become easy to analyse the situation and make decisions
according to common laws set up by the government. These are legal rules made by
legislature for example judges made a rule that people have duty to read contract(Cox,
2015).
P2 Role of government in law making and there application in justice courts
Role of government in law making:-
Government of UK plays an important part in making different laws. When a new law is
proposed it is in form of a bill which need to passed by house of parliament and is necessary to
receive Royal assent from the queen as they both play an important part in this decision making
to convert this bill into an act of parliament. First of all the bill is presented in house of lords or
house of commons. Presenting the bill in any one house is necessary. After this bill is introduced
in parliament through first reading that is in form of a notice which tells about the bill which is
going to be proposed and what this bill is all about. After this second reading is there in which
principles of the bill are considered and members of the house vote, whether bill have to
proceeded further or not(Donaldson and Walsh, 2015). If maximum votes are in favour of the
bill then it is moved further where a detailed examination of this place take place by house
committee and this stage is known as Committee stage. Now comes the report stage in which
amendments are taken back to the house and again debate is going on and voting is done. After
all these stages comes third stage where short debates and voting is going on that concludes
whether bill will be passed or not. This bill then passed to another parliament house where all the
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process gets repeat and they get approval from the house. Bill is then processed further and is
proceeded to Monarch so that queen can approve the bill as it is necessary to get the approval
from both house of parliament and queen. At last it become an act of parliament(Mayss and
Reed, 2018).
Application of Common law:- These laws are made through previous ruling that is judges are
referring the earlier rule applied during similar case on current decision and is made for both
civil as well as criminal cases. Judges can deny the ruling only when any misinterpretation
regarding evidence take place(de Silva, 2017).
Application of Statutory law:- Here judges find the relevance law and apply that over the
matter and then pass the decision. It is also applicable for both civil and criminal cases. Statutory
law is applicable to whole nation with same conditions applied and no one can raise question
regarding the same(Pillay, 2017).
Application of law in justice court:- High court:- Role of high court is to hear at first instance the serious matters coming to
the court which may be related to family cases or any other complex issues. There are
basically three divisions which includes Queen's Bench, Family division and Chancery.
Queen's Bench is the biggest out of the three divisions. They are included with number of
specialist courts:- The Admiralty, Technology and construction, Commercial, administrative and
Mercantile court.
The Chancery division basically deals with partnership claims, land law, taxation case, company
law etc. These divisions has three specialist courts:- The Companies court, Bankruptcy court and
The Patents court.
Family division deals with cases related to divorce, custody of children, domestic violence
etc(Khamis and Yahya, 2015).
 County courts:- The main role of County court is to hear problems of the people
according to different geographical areas and there are 160 county courts in UK which
hear people's cases related to civil cases. They basically hear about money claims with
value up GBP100,000 or any personal injury. They also deal with matters related to
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mortgage, repayment of loan or breach of contract. In these courts cases are heard by
judges then jury(Blair and Marcum, 2015).
 Family court:- In the year 2014 family court was established which has national
jurisdiction and handle all level of cases related to family(White, 2017).
 Crown court:- This court is in centre around England and Wales and deals with cases
that are transferred from Magistrate's courts that may include serious cases related to
crime like murder, rape, robbery etc. The case is heard by jury but decision is passed by
judge(Bartlett, Rhode and Grossman, 2016).
 Magistrates' court:- All the criminal cases are first heard in Magistrate's court. They
usually hear less serious cases or civil cases. They deal with three kinds of offence:-
Summary that is less serious case, either-way that is the cases that are heard before judge
and jury in Crown court and indictable only that is serious cases. These cases are either
heard by district judges or by penal of 3 judges(Boda and Zsolnai, 2016).
 Tribunal services:- They deal with cases related to employment, child support, pension,
tax, social security etc(Molina-Azorín and Cameron, 2015).
LO 2
P3 Company, employment and contract law impact on business
Impact of Company law on business:-
Company Act 2006 is having different laws which helps in monitoring different
operations of the business and have 1300 sections that states different rules related to
commencement and liquidation procedure of a company. This law creates an legal entity for
regulating the business so that wealth can be created and there should be a pricing mechanism so
that investors are benefited. According to company law company can own assets and can raise
money independently through there debt and equity. According to company law 2006 they are
required to prepare financial reports and also require to get their accounts audited with
professional auditors. This impact potential and operation cost of the business(Mäkinen and
Kasanen, 2016).
Impact of Employment law on business:-
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There are various laws which protect employees rights like National minimum wages act
2010, Equality act 2010, pension act 2006, Employment right act 2006 etc. Employees are very
important sources to run a business so employment law is directly impacting business operations
of a firm. During hiring of an employee company need to formulate a contract in which whole
things related to employees duties and advantages they will get during job has to be mentioned
clearly. Employees are getting certain protections during termination, lay-offs according to
employment law. In case of retirement of an employee organisation should fulfil each legal
requirement that is mentioned in pension act 2006. This will increase operational cost of the
business(Naqvi and Fatima, 2017).
Impact of Contract law:-
There are different rules and regulations regarding transfer of goods and services to
customers and generating revenue from it. According to consumer contracts regulation 2013
there are different rules to buy and sell goods and services and for the same company have to
prepare a contract with the party from whom it is exchanging goods and services and need to
fulfill all legal requirements related to contract law. This law helps the organisation to work
ethically so that no financials loss take place in the company. Contract law helps in building trust
between two parties and reduce the risk of uncertainty(de Silva, 2017).
Difference between legislations, regulations and standard to analyse impacts upon business
Legislation:- Legislation is basically laws that legislature enact for different legal requirements
and also in punishing who are not following the laws. It is a legal system which give information
regarding different laws which are applicable to each and every individual. It is giving different
guidelines for every activity related to business not following which may result in
punishment(Pillay, 2017).
Regulation:- Regulations are instructions in a detailed form that how these laws can be carry
forward to implement them in work culture of an organisation. After these laws are implemented
it is necessary to regulate them that is to monitor whether people are following the laws and
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working on its basis or not. It takes care about the practices an individual perform in an business
to control operations of the business in ethical manner. Regulations describe the reason of the
implementation and how it will be beneficial for the company and people working in the
organisation. Basically government formulate regulations so that people can understand different
laws and there importance(Beatty, Samuelson and Abril, 2018).
Standard:- Standards provide guidelines for products and services that what requirement is there
with respect to offerings. Safety, quality and efficiency must be there to maintain standard of
product and services. It may be in form of reference document which will provide whole detail
about the involved process to keep the standard(Allen and Kraakman,2016).
Now a days basic problems which arise during business growth are uncertainty and doubt among
the individual working internally as well as externally. Standards helps in making clarity that the
products and services offered by the company is within the set standard so that all competitors do
there business fairly
LO 3
P4 Types of business organisations which are legally formed
For setting up a business entity, there are 4 ways such as sole-proprietorship, partnership,
corporation and limited liability company. It depends on the nature of the business and choice of
owner. Proprietors start business for long term thus they have to adopt legal systems that protects
the rights and duties of people associated in the business, control, life span, personal liability and
financial structure. So JPM publishing need to evaluate types of business organisations(Orlov,
2016).
Sole-proprietorship:
It is the simple form of business entity where business have only one owner. Owners
have rights to choose the way they want to conduct their business. To form sole-proprietorship
requirement is a social security number and important licenses and permits. It is beneficial for
company has a person need to pay tac only once and not twice(Cox, 2015).
Advantages
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 It is one of the easiest and less expensive ownership.
 Owner have complete control over the business and make decision according to their
suitability. Revenue flows directly to owner's individual tax return.
Disadvantages
 This kind of business has unlimited liability and are lawfully responsible to pay all the
debts.
 Owner's have high risk, their assets and property are in risk(Mayss and Reed, 2018).
 They have limitations in raising funds, so they mostly use their personal savings.
Partnership:
In this type of business organisation there are 2 or more than 2 people who start business
together and share ownership according to their capital invested. Law does not differentiate
between owner and business. Participants involved in the partnership need to have a legal
agreement between them. Partners share profits equally or according to the money invested.
Agreement of partnership involve profit sharing ratio, process of dissolution, conflict resolution
etc. it is beneficial for JPM to set up a partnership business(Donaldson and Walsh, 2015).
Advantages
 It is a simple and easy to set up. Business benefits from the partners as they have various
skills.
 Liability is reduced as it is shared between the partners. Profits are taxed only once
Disadvantages
 Profits of the business need to be share among the partners.
 Conflicts may arise while decision making process.
 High risk of fraud if agreement is not signed by all the partners(Khamis and Yahya,
2015).
Limited liability company:
It is similar to corporation. This business organisation is owned by different entities,
individuals and corporations. It follows hybrid business constitution which provides owner's
limited liability and flexibility. It is complex in nature. It is a separate legal entity which bear a
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limited amount of debt and actions. This type of business organisation is beneficial for JPM
publishing in following ways(White, 2017).
Advantages
 It is beneficial for small business and is taxes as a sole proprietor.
 Company may have unlimited owners. It is a separate legal organisation and has a limited liability.
Disadvantages
 It is a costly process, it incurs yearly administration cost.
 Personal liability of tax.
 Accounting and legal help is required(Blair and Marcum, 2015).
JPN publishing need to establish limited liability company. As there are 3 people Jane,
Penny and Marie they can form a company. A private company requires minimum 2 members to
form a company. It will be beneficial for all 3 friends to establish a company and share profits
and loss according to their capital invested or equally. It is beneficial for them as it has limited
liability and is beneficial for small business. Though it is a costly process but tax is paid as a sole
proprietor. Company will have a support of legal bodies in case of conflicts and any obligation
upon them. It is termed as separate entity(Bartlett, Rhode and Grossman, 2016).
P5 Difference between unincorporated and incorporated business and how they are managed and
funded
Basis Incorporated Unincorporated
Definition Incorporated business is
registered under the laws. This
type of business includes
partnerships and limited liability
companies(Mäkinen and
Kasanen, 2016). These business
are legally operated and formed.
When a business is incorporated
then it is free from personal
Unincorporated business are
such business which are not
registered under the companies
act. It may be partnership firms,
family trusts or other people
associated with business which
is not legally registered. It may
consist of 2 or more persons. It
does not have seperate entity
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liability. Deductions for some
expenses are reduced from the
taxable income of a company. It
has a legal advantage as
company is termed as separate
entity in all matters. These are
held responsible for their
financial statement and reports
and creditors cannot claim the
personal resources to settle
amount(Molina-Azorín and
Cameron, 2015). Most of the
financial institution prefer to lend
money to incorporated business
rather than unincorporated. It is
easy for incorporated company to
raise funds(Khamis and Yahya,
2015).
unlike incorporated company. If
the business is engaged in any
legal or lawsuits than it is
personally accountable, legal
authorities does not have any
rights to involve in the matter
because entity is not legally
registered(Naqvi and Fatima,
2017). The owner is fully liable
for wrong and right decisions
made for business. Financial
institutions hesitate to give
funds to these type of business.
It need not require to meet legal
obligations. It incurs less cost in
management and financing as
compared to incorporated
business. Profits are taxed as
personal income of proprietor.
All the liabilities and assets of
the business belongs to
proprietor(Boda and Zsolnai,
2016).
Managed It is managed by board of
directors and managers of the
company who approves and
make strategic decisions. It is the
duty of BOD to take care of the
corporation and be loyal toward
it(White, 2017). They need to
It is managed by owner's itself.
They manage their financial
reports and audit their accounts
to find out the position of the
company. They make their own
policies so they are responsible
for any wrong decisions.
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have good faith and interest in
the business. There are also
employees, internal auditors and
company secretory who manage
and look at the legal matters of
the company(Mayss and Reed,
2018). Auditor of the business
makes financial policies and
regular annual report in order to
check the position and stability
of the company. This further
helps in controlling and taking
various measures to protect the
company(Donaldson and Walsh,
2015).
Funded These business are funded
through initial public offerings,
bank loans, borrowing money or
by adding partners in the
company(Bartlett, Rhode and
Grossman, 2016). IPO is the
main source from where
company raise funds for itself.
Firm issues equity shares,
preference share and debentures
to sell a ownership stake in the
business. Organisation raise
equity shares and pay dividends,
these shares are not redeemable
whereas preference shares are
redeemable(Naqvi and Fatima,
These business raise funds
through their personal savings
which is often called retained
earnings. Generally they face
difficulty in raising funds
through financial institutions
because they are not legally
registered under law(Blair and
Marcum, 2015). If an entity is
unable to repay the fund back
then financial institution cannot
legally sue it. They may also
add partners in order to raise
funds as new participant will
bring capital. Owner may also
apply for personal credit from
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2017). Further company raise
funds by adding partners in the
entity so that they bring capital
and firm use this funds in
investing. Financial institutions
also provides loans at an certain
rate of interest which company
need to repay the money back
with interest(Molina-Azorín and
Cameron, 2015).
the loan which need to be repaid
after a certain limit(Mäkinen
and Kasanen, 2016).
LO 4
P6 Recommendations of legal solutions which resolves various conflicts
CASE 1
Issue: The issue in this case is that champion Ltd. is unable to repay money to its
creditors because company was asked to move away from North London for developing new
stadium. After moving, company faced decline in their customer base. Also company was not
able to pay bank on numerous occasion. Creditors of the company were threatening to file
petition against them. The main issue here is whether creditors are right or wrong(Cox, 2015).
Legal solutions: Insolvency act, 1986 is the perfect solution for the company. In this act
if a company is unable to pay money to its creditors than creditors have full rights to file a
petition in the court. Court can give chance to the company to rescue itself from the debt and
losses. If a company is unable to this then court has to compulsory dissolve the company or wind
up and sale all the assets and property to repay a small amount to creditors(Orlov, 2016).
Under this act Champion Ltd. Can go insolvent to rescue itself from the losses. In this
act, company get a chance to repay the debt. The court appoints an administrator who tries to
make business profitable in 2-3 years which is agreed between creditors and company. During
this time creditors cannot file a case against the firm until the time period of administrator is not
fulfilled. If administrator is unable to make profits for business than creditors have full right to
file case against the company. For e.g. Realbuzz company was going under administration in
11

2017, many stores were closed of the company. Creditors of the company cannot file a case
against the firm as it is going through administration process.
CASE 2
Issues: The main issue faced by Mr. Anderson was working with Amber Ltd and its
competitor offer more attractive role like CEO(Allen and Kraakman,2016). Mr. Anderson left
the job and started working for Beta Ltd without fulfilling the employment contract. Amber Ltd
is ceasing Beta Ltd for providing employment and stop company Anderson to work for it.
Legal solutions: Here are some law which need to be followed. Employment contract: Under this law, at the time of hiring a candidate company need to
make an employment contract which consist that the particular candidate will work in the
organisation for specific time. This agreement contain various rules and regulations
which employee need to follow while performing in the business. This includes various
elements like working hours, rules, salary structure, policies for leaving the job
etc(Beatty, Samuelson and Abril, 2018). Employment law: This act sates that labour law, 2006, ethical code of conduct etc. these
provides provision relating employment. It need to be followed by both employer and
employees. Breaching of contract: It states that if any party i.e. employee or employer does a fraud or
does not fulfil the contract is called breaching. Another party has rights to sue the
defaulting party.
 Claim of breach of contract: Under this provision the defending party has all the rights to
file a case against the defaulting party(Pillay, 2017).
Under this laws, Amber Ltd can sue Mr. Anderson for not fulfilling the employment
contract. In the case Anderson was not able to leave the company without giving 12 month
notice. Anderson breached the contract, Amber Ltd can sue him for breaching. By implementing
all the above laws employer and employees are chained to maintain trust between them. In the
above issue Anderson has accepted and started job with Beta Ltd. For e.g. A case of Lambeth v/s
Agoreyo, a teacher was involved in the activity which was not in the agreement of the firm.
Teacher proceed towards court to file a case against the company for breach of contract. The
court sated that company has not done breach of contract instead teacher has done breaching and
12

does not fulfil the employment contract. Teacher was terminated from the job as she has not
maintain the trust between organisation and itself(de Silva, 2017).
CONCLUSION
From the above study it can be concluded that legal authorities are responsible for
making laws and policies under which company perform their activities. In the report it has been
determined that parliament in sovereign is that parliament has unlimited rights to make laws.
Sources of law are civil, criminal and common law. Government makes all the laws which
include 3 steps i.e. a bill is given to the house of parliament then the reason for making the law is
identified and lastly voting is done in order to finalise the law. Further it can be also concluded
that there are various business organisations which person can form according to the nature of
their business like partnership, sole-proprietorship and limited companies. Report also concludes
that there are various laws through which defending party can sue the defaulting party in order of
breach of contract, breaking employment contract etc.
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REFERENCES
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ONLINE
London Borough of Lambeth v Simone Agoreyo – school legally entitled to suspend teacher
accused of misconduct. 2018. [ONLINE]. Available. Through
<https://www.redmans.co.uk/london-borough-of-lambeth-v-simone-agoreyo-school-legally-
entitled-to-suspend-teacher-accused-of-misconduct/>
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