Sources of Law and Business Disputes

The provided report outlines various sources of law, including statutes, case laws, and arbitration. It also discusses the role of government in forming law and its impact on business firms. The report further explains different types of business organisations, sources of funds used by organisations, and methods of resolving disputes within a business.

BUSINESS LAW

Table of Contents
INTRODUCTION............................................................................................................................3
LO 1.................................................................................................................................................3
P1 Different sources of law.........................................................................................................3
P2 Role of government in formation of law................................................................................3
LO 2.................................................................................................................................................5
P3 Impact of different law on business.......................................................................................5
LO 3.................................................................................................................................................7
Formation of different type of business organisations................................................................7
Management & Funding of business organisations.....................................................................8
LO 4.................................................................................................................................................9
Recommendation for resolving various disputes........................................................................9
CONCLUSION................................................................................................................................9
REFERENCES...............................................................................................................................10

INTRODUCTION
Business Law provides various provisions, rules and legal guidelines for regulating &
conducting operation of a business. This report includes various types of sources of law. Further,
this report elaborate role of government of UK in formation of law and application of common &
statutory law. Furthermore, this report explains impact of Company act, contract law and
employment law on business. Moreover, this report includes different types of business
organisations & their formation. Further, this report elaborate sources of funds used by
organisations. At last, this report explain various methods of resolving disputes with in a
business firm.
LO 1
P1 Different sources of law
Law of United Kingdom is formed and regulated by government of UK. This law is
applicable to 4 countries such as England, Scotland, Wales and northern Ireland. Law of country
is introduced from different sources which are discussed below-
Legislation- Legislation is a supreme source which formulate various acts of parliaments
and it also make amendments & changes in laws according to requirements. Purpose behind
formulation of Legislation is to authorize, to restrict and to protect rights of citizens of United
Kingdom. Parliament of UK, which is located in London is authorised to form legislation. There
are two house in UK parliament such as House of common & House of Lords and all the power
regrading formulation of law is with this two house. This source also gives orders to councils,
Bye-laws and other statutory instruments(Cherry, 2017).
Common Law- Common law is formulated and regulated by judges of courts. Origin of
laws, rules and regulations in Europe & Wales is from Common Law. Provisions of this laws can
be amended frequently in comparison to acts of parliament. According to this source lawyer
gives their judgement on case laws in a written document.
European Union Law- Provisions provided by this source is applicable to members of
European Union. This source consists of rules & regulations related to political, economical and
social policies of European Union (EU). United State is also a member state of EU thus, this
provisions are also applicable on UK and any other state who wants to join EU has to follow
rules & guidelines given by this EU Law.

European Convention on Human Rights- As UK is member of European union it has
to follow all the guidelines described in “The Human Rights Act, 1998”. This act is formed for
protecting rights of citizens of United Kingdom and it is mandatory for all courts to follow.
P2 Role of government in formation of law
Role of Government in Formation of Law
Government is a body who runs a country. It is the responsibility of government to make
rules and policies which helps them in providing better facilities and services to its citizens.
Government of United Kingdom also responsible for functioning of its parliament. Government
play a role in making legal rules by appointing members of parliament.
Government of UK provides guidelines and policies to parliament through which helps
them in making necessary decisions. Government conducts legislative programmes for making
decisions related to formation of policies and rules. Government gives order to legislatures to
make changes in existing act time to time so it can benefits individuals of United Kingdom. Law
is formed with the help of public bills and whole process of passing a bill is conducted by
government & parliament. This process is described below-
First Reading- This a formal stage where role of government is to read the pubic bill
and than member of parliament also go through details of Bill(Poole, 2016).
Second Reading- In this stage member of Government of United Kingdom plays a role
as Bill is presented to House of Common by minister of government. After presentation of Bill in
parliament other members of opposite political party go through it and they give their views on
that. By considering views of opposition party Bill is further processed to Committee Stage.
Committee Stage- At this stage Bill is transferred to Standing Committee and this
committee is consists of 16-20 members of parliaments. This panel also includes some
government members. If the bills are related to finance and armed forces than government direct
them to pass them on standing committee. On the other hand bills which are important for
constitution and bills which are not controversial are transferred to committee of whole house.
Report Stage- Bill is that is evaluated and passed from Committee stage is than passed to
report stage in which bill is reported to whole house of common within a period of 2 weeks. This

stage gives an opportunity to members of parliament & government to make changes and to
make addition in any clause. Thus, government also plays a role in this stage.
Third Reading – All the amendments suggested in report stage is applied and a final
draft is to be prepared at this stage. No changes can be made at this stage by house of common
but there is an opportunity for house of lord for making amendment if necessary. After making
changes members of house of lord read the final draft and further processed(Countouris, 2016).
The Royal Assent- After receiving approval from both houses of parliament and
government Public Bill is presented to Queen. In this stage Queen's assent is to be taken.
Parliament of United Kingdom also gives power to government ministers for providing
secondary legislation. After is receiving royal assent bill is approved and than law is made. Bill is
1st formed by government thus, it plays a vital role in formulation of law. Government provide
various services such as financial, educational, health & care and safety and for effective
implementation of these services laws are formed.
Statutory Act- It is a law formed by government which is mandatory to follow by all citizens of
United Kingdom. On the other hand Common Law is applicable is formed by lawyers of court.
Effectiveness of Legal System
Legal System of United Kingdom is very effective as it is parliament makes changes in
laws according to changes in various situations such as economic conditions, political power and
social factors. Government is focusing on making laws regarding health & safety is beneficial for
development of economy. Acts of United Kingdom is formulated with the helps of various
sources thus, it helps in making flexible and effective rules. It includes both statutory laws which
is applicable on all individual of UK. Government also plays a vital role in making of laws thus,
it suggest parliament for development & amendments in any of its act.
LO 2
P3 Impact of different law on business
Difference Between Legislation, Regulations & Standards
Legislation- Legislation is legal rules, guidelines and provisions made by government of
any country and state. Government of United Kingdom also provides some rules & guidelines
and that is applicable to citizens and all organisations. Legislation has an impact on all the

business operated with in country and if companies does not follow any guidelines than they are
unable to operate their business(Taylor and Emir, 2015).
Regulations- Regulations are given by minister of government and it is a guide which
gives a detailed information as how acts are to be followed. Further, with the helps of regulations
business operators get to know as what act is applicable on their business. Regulation gives
detailed of rules & regulation with helps of this a person who is thinking to start a new business
can easily find out as which act it has to follow(Teague and Donaghey, 2018).
Standards- Standards is one which gives specific guidelines and it helps in providing
quality, safety and efficiency in work. Standards has an impact in business as it gives specific
information related to products, services and system.
Impact of Different Laws
Government of United Kingdom provides various acts & guidelines which affects
operations of business. These acts also affects employees, shareholders and managers working in
company. Impact of various acts of United Kingdom on business are discussed below-
Companies Act, 2006- This act is applicable on all companies operating with in United
Kingdom. According to this act a company is a entity which operate a business. This act helps
individuals of UK guidelines to form a company and it does not require much efforts to open a
company in UK. Provision of this act affect business For Example if a for incorporation of a
company shareholder must have decide whether the company is limited or unlimited according to
this act. Further, it divides it in company limited by guarantee or limited by shares.
According to this act a company is a legal entity thus, it has its own legal rights & duties.
This act also provides rights for employees, shareholder, investors and duties of directors. Thus,
for operating a business companies have to keep in mind interest of their investors & employees
such as health & safety, profits and better working condition. Because, if they are not satisfied
than it cannot earn profit. Further, if board of directors are not following their duties in
accordance with provisions set by this act than government can cancel their license and which
have an adverse impact on its operations(Barnard and Peers, 2017).
Contract Law- Contract is an agreement which is enforceable by law according to which
two parties meet with each other and make a contract. Contract Law formed by government of

United Kingdom defines rights, duties and obligations of parties entering in to contract. This act
also helps in determining validity of contract and relationship among agreed parties.
Provisions of this act affects business as there is various type of contract made like
contract made between supplier of raw material and contract with customers for sale. So,
company has to follow all guidelines of this act while making contract with its supplier or
customer. If business makes a contract which is not accordance with policies of this act than it
becomes void. For Example if a contract made with supplier of raw material becomes void than
this affects production process of company which in turn reduces profits and market share of
business.
Employment Law- This law is formed by government of United Kingdom with the
purpose of establishing relationship among employees, employers & trade unions and it is also
formulated with an objective of protecting rights of employers. This act consider health & safety
of employees, provides regulation related to wages, elimination of child labour and other
employee benefits such as pension & insurance. Provision of this act applies to all companies &
business which gives employment. Thus, it has an impact on business.
For Example- If a business is employing children's at the work place and it is not
providing a healthy work environment to its employees than it cannot earn high profits as
companies production is declined. Thus, business needs to follow all guidelines of this act. This
act helps companies in providing satisfactory life to its employees which in turn enhances their
interest & productivity and quality(Kraakman and Hansmann, 2017).
LO 3
P4 Formation of different type of business organisations
Sole Proprietorship- Sole Proprietorship is a type of business owned & operated by an
individual. Person who incorporate this type of business is known as sole trader. Business & sole
trader are same person and all the profits & losses in this business are belonged to owner.
According to provisions made by government of United Kingdom legal formation of sole
proprietorship firm is done by completing registration process with HM Revenue & Custom.
This is done for accomplishment of tax & for national pension.
Advantage of this business is sole trader has all the powers such as making decisions
related to operations and investment. Formation of this type of business is very easy and it does

not require much legal formalities. It is also beneficial as they are not liable to anybody because
capital invested in this business is owned by sole trader and all responsibility of losses is also of
owner. Whereas disadvantage of this business as there is no differentiation between personal
business income thus, it makes difficult for owner to calculate actual profit. Business of sole
proprietor is run by single person so there is less chance of expansion(Hannigan, 2018).
Partnership Firm- Partnership is a business which incorporated by two or more
individuals. All the members in of partnership firms shares their profits in decided ratio and they
all are liable for losses of business.
Legal formation of partnership firm is made by preparing a partnership deed. Partnership
Deed is a document prepared by all partners which includes details related to operations of
business and it also includes all terms & conditions of partnership agreement. This deed is signed
by all partners of firm.
Advantage of partnership business is liability & losses is to be shared among all partners
and its incorporation is not a lengthy process. On the other hand, drawback of this business profit
gets divided and
Limited Liability Company- Company is a legal person and having its own separate
legal identity. Company Law, 2006 formed by government of UK which gives all provisions and
rules related to formation of company which is mandatory to comply for its legal formation.
Legal Formation of Company is made with preparation of Memorandum of Association &
Article of Association. This two documents contains over all framework of business. A company
cannot operate its business out of its MOA & AOA.
Capital of company is raised by its shareholder and no person becomes liable in case of
any losses. Further, members of company need not to contribute to from their personal assets
which is its advantage. This type of business is also beneficial as shareholder of company has
limited liability. But a drawback of this business is it requires vary legal formalities for its
incorporation and its is very time consuming process(Vagts, Dodge and Buxbaum, 2015).
P5 Management & Funding of business organisations
For operating a business funds are most important element without it a company can not
expand & develop its business. Money is also required in research & development. Further,

management of capital is necessary for smooth functioning of business. If funds of an
organisation are managed than it can easily survive in adverse economic situations. For
managing liability of business it raise funds from different sources. Business can raise their
funding from different sources which are discussed below-
Issue of Share & Debenture- It is the most important source of funding for Companies.
Company issue its shares & debentures to general public and they purchase share of company.
This helps it in raising its capital and it also enhances brand image of company. It is long term
source of fund and it is helpful as many individuals are interested in making investment in capital
market. Thus, companies which are listed raise funds by issuing shares & debentures in market.
Bank Loans- Limited company, Partnership firms and sole traders all take loans for
expansion and diversification of their business. It is the most widely used source and it can be
taken at any time. Business has to apply to banks for loans and after checking credit score of
company bank give loan at a interest rate.
Own Funds- When owners of business invest their own personal capital for expansion of
business. This increases liability of owner thus, owner invest very less amount in its business.
Retained Earning- Retained earnings are profits earned by business after paying
dividend to its shareholder. Business firms invest retained earning so that productivity of firm
can be maximised. This source also helps business firms in achieving higher profits and market
share(Orlov, 2016).
LO 4
P6 Recommendation for resolving various disputes
Business firms faces vary legal disputes while offering their products & services and it is
necessary for companies to resolve this problem. Thus, its is recommended to business ventures
to use following methods, discussed below-
Negotiation- Negotiation is an approach through which disputes between two parties can
be solved. According to this method parties in which disputes are arising interact with discuss
the problem with each other and give their opinions. After that they both come to a conclusion
and give their mutual consent. During this process they also include a judge as to ensure legality.

For Example- A customer wants to purchase goods in bulk for which he want from seller
to reduce price but seller does not agree on it. This dispute can be solved trough negotiation
method as both parties set a price which is convenient for both of them.
Mediation- It is an approach in which a third party is appointed for resolving dispute this
third person is known as mediator. Mediator is not related to any of the party and it does not
support any of the party. Mediator does not take decision but it helps both parties by facilitating
communication which is fair, legal and its is not partial. Mediator helps parties in making
understand each others point of view and this method is also a cost effective. Mediator also form
a Memorandum of Association which includes terms & condition of contract as no party can
make default(Allen and Kraakman, 2016).
Arbitration- Arbitration is a method in which a third party is appointed and final
decision is taken by third party itself. It is a expensive method as fee of third party (Arbitrageur)
is high. Third Party contact with both parties and hear problems of both and examines all issues.
It also helps parties in understanding as to what type of issues need to be solved. Than, make a
final decision on that basis.
For Example- A contract is formed between supplier of raw material and company on a
specific date & at specific price than on the date execution supplier denied to deliver goods on
that price and demanded higher price. Than, this problem can be resolved legally by appointing a
third party and it decide price of supplied goods by hearing issues of both parties(Beatty,
Samuelson and Abril, 2018.).
CONCLUSION
This report outlined different types of sources of law. Further, this report summarises role
of government in formation of law. Furthermore, this report concludes impact of contract law.
Company law and employment act on business firms. Moreover, this report outlined various
types of business organisations. Further, this report summarises different sources of funds used
by organisations. Furthermore, this report concludes methods of resolving disputes with in a
business.

REFERENCES
Books and Journal
Beatty, J.F., Samuelson, S.S. and Abril, P.S., 2018. Business law and the legal environment.
Cengage Learning.
Allen, W.T. and Kraakman, R., 2016. Commentaries and cases on the law of business
organization. Wolters Kluwer law & business.
Orlov, V., 2016. Introduction to business law in Russia. Routledge.
Vagts, D.F., Koh, H., Dodge, W.S. and Buxbaum, H.L., 2015. Transnational business problems.
West Academic.
Hannigan, B., 2018. Company law. Oxford University Press, USA.
Kraakman, R. and Hansmann, H., 2017. The end of history for corporate law. In Corporate
Governance (pp. 49-78). Gower.
Barnard, C. and Peers, S. eds., 2017. European union law. Oxford University Press.
Teague, P. and Donaghey, J., 2018. Brexit: EU social policy and the UK employment
model. Industrial Relations Journal, 49(5-6), pp.512-533.
Taylor, S. and Emir, A., 2015. Employment law: an introduction. Oxford University Press, USA.
Countouris, N., 2016. The changing law of the employment relationship: comparative analyses
in the European context. Routledge.
Poole, J., 2016. Textbook on contract law. Oxford University Press.
Cherry, M.A., 2017. The Sharing Economy and the Edges of Contract Law: Comparing US and
UK Approaches. Geo. Wash. L. Rev., 85, p.1804.