Business Law: Understanding Legal Frameworks and Solutions

This comprehensive guide explores the fundamental principles of business law in the UK, examining various legal sources, the role of government in lawmaking, and the impact of key legislation on business operations. Through real-world case studies, it delves into company, employment, and contract law, providing practical legal solutions for common business problems such as contract termination, insolvency, and liquidation. The paper also explores alternative dispute resolution methods, comparing their effectiveness to traditional litigation.

Business Law

Table of Contents
Introduction......................................................................................................................................3
LO1..................................................................................................................................................4
P1. Explain different sources of laws and the laws that organisation must comply with............4
P2. Explain the Role of Government in Lawmaking and how statutory and common law is
applied in the justice courts..........................................................................................................6
M1. Evaluate the Effectiveness of the legal system in terms of recent reforms and
developments...............................................................................................................................8
LO2..................................................................................................................................................9
P3. Using specific examples illustrate how the company, Employment, and Contract law has a
potential impact on a business.....................................................................................................9
M2. Differentiate and analyse the potential impacts of regulations, legislation, and standards.
....................................................................................................................................................12
L03.................................................................................................................................................13
P4. Suggest appropriate legal solutions for a range of business problems e.g. termination of the
contract, rescue from insolvency and liquidation......................................................................13
P5. Provide justification for the use of appropriate legal solutions...........................................15
LO4................................................................................................................................................16
P6. Recommend alternative legal solutions to the following business problem. You can
consider another country’s legal system or a different legal framework...................................16
M3. Assess the positive and negative impacts of legal solutions to the business problems......18
M4. Compare and contrast the effectiveness of two different recommendations......................19
Conclusion.....................................................................................................................................20
Reference.......................................................................................................................................21

Introduction
It is necessary for controlling and regulating the activities which have a detrimental influence on
the economy as well as the community of the nation. All these activities are overseen by the legal
system of the respective nation. This assignment explains the significance of legal system of the
U.K and sources which are considered while developing the law. In this assignment, various
issues i.e. case studies are given, the solution of which is provided based on the applicable laws
or norms of the English Legal system. There are various laws and the legal formalities which are
to be performed by the each and every business organisation which is mentioned in the given
three cases. There are different options which are available with the organisation for the
resolving the issues. These are known as Alternative Dispute Resolution which is mentioned in
the assignment along with the benefits of opting these methods for resolving the issues.

LO1.
P1. Explain different sources of laws and the laws that organisation must comply with.
For developing an effective legal system, it is essential that the laws must be covering each and
every aspect which may affect its effectiveness. Therefore, for making sure that the law covers
every aspect, various sources are considered by the authorities for making the law. These sources
are categorised into two parts which are as follows:
Primary Sources: These sources are considered most significant in regards to the lawmaking.
These are the states which is provided or stated by the law itself i.e. by the Parliament or the
Government. This form of sources includes the decision made by the court i.e. Jurisprudence,
laws developed and enacted by the Parliament. At the same time, the laws of the English Legal
System are consistent with the European Law.
Jurisprudence: These are the cases and its decisions which are made in the courts. Cases and
the decisions of previous times are the referred by the court for dealing with the problems or
disputes of the current times. The legal system of the United Kingdom works on the principle of
Stare Decisis which means that the subordinate courts are obliged to follow the decisions made
by the Superior Courts (Koskenniemi, 2017). It is the court which deals which the dispute
between two or parties which may also include the illicit activities and provides justice to the
community. Therefore, while formulating law, the decisions made by the courts are also
considered.
Legislations: These are the laws or norms which are formulated by the chief authority i.e. the
Parliament with the help of the Government. Under this, the discussion is made between both the
Houses of the Parliament. All the acts are enacted by the Parliament after the Bill of such act and
after all the discussions are made in both the Houses.
Common Law: The legal system of the United Kingdom and the law operating under it are
based on the common law i.e. the laws which are in general practice for a long period of time. It
is necessary that the laws made are constant with common law. These can also be defined as the
customary laws which are being followed from a long period of times.

European Law: These are the laws which are adopted by the English legal system under certain
treaties by which it is stated that these laws have dominance over the legal system of the United
Kingdom.
Secondary Sources: These are the comments which are made by the experts and person having
excess knowledge of the law. These comments are made on the laws or the acts passed by the
authorities. These sources are also to be considered while formulating the law (Besson and
d'Aspremont, 2017). These sources include legal encyclopedias, legal journals or articles based
on the law, parliamentary and non-parliamentary documents, and various textbooks which are
based on law. These sources are considered after the primary sources are considered or when
there is no primary source related to the area on which the law is being made.
There are various laws or the acts which are to be considered and complied by the organisation
which is as follows:
Corporation Act: From the time of establishment of the corporate bodies until its dissolution,
all the provisions of this law are to be complied with. This also includes the way of appointment
of the directors i.e. the personnel responsible for running the organisation and the also includes
the provisions of the removing them. In all, the management of the organisation must be follow
the provisions mentioned in the act.
Employment Rights Act: This is the act which provides the provisions which the principal and
the workforce of the organisation are liable to follow. This also includes the contract of
employment which is entered into the workers with the principal and includes the terms and
conditions of working in that organisation.
As per the nature of the business of the organisation, there are different laws which are
applicable to the organisation such as Equality Act, Consumer Rights Act, Contract law, etc.

P2. Explain the Role of Government in Lawmaking and how statutory and common law is
applied in the justice courts.
There are various authorities which plays an essential role in lawmaking process in the legal
system of the United Kingdom. However, the area where regulation or the control of law is
needed is identified by the Government. After that, the bill i.e. the draft of the act is prepared by
the Government or by the committee authorised by the Government in this regards (Birkland,
2015). After the bill is prepared, it is presented before the legislature of i.e. the Parliament for
discussions to be made on its effectiveness and the highlighting the drawbacks in the draft so that
modifications could be made.
The Parliament of the United Kingdom consists of two Houses. These Houses are House of
Lords and House of Common which are the main organs of the process of the making the law.
Different debates are organised in these Houses so that the view or the opinions of the members
of these houses can be received so that further alteration can be made. Both the Houses have are
similar in terms of their powers and there is no superior-subordinate concept between the
Houses. Once the bill is drafted, it is presented in these Houses at first instance.
There are various stages which are involved in the process of the lawmaking i.e. for formulating
the new law or for making alterations or modification in existing laws. These staffs are as
follows:
Stage 1: In this stage, a general reading of the draft is done.
Stage 2: Stage of Reading: The bill is presented before the House of Commons by the
Government in which the members of the House give their views on the bill and then the bill
moves to the Committee made in this regards (Zander, 2015).
Committee Stage: This committee is constituted for reviewing the effectiveness of the bill
consisting of a number of members having expert knowledge related to the laws and its need in
the community of the nation. In case, there is deadlock while making the decision for approving
or rejecting the bill, in that case, only the chairman can exercise the veto right. Different
committees are constituted for different bills.

Reporting Stage: Such committee presents its comments on the bill within a specified period of
time so making further discussions that whether such changes as per the comments of the
committee.
Third Reading: In this stage, the final reading of the bill is done. After this stage, it is decided
that whether such bill must be approved or rejected.
Royal Assent: After the approval of the Houses, the bill is subject to the approval of the
Monarch and then notification is to be made in the Official Gazette.
Statutory and Common Law
Statutory laws are the laws which are made and developed by the Parliament and it is applicable
to the each and every citizen of the nation including the organisations operating in the legal
system of the nation. There are various laws which are applicable to the organisation and it must
be made sure that the all these laws are complied with properly (Kershaw, 2012). Moreover,
these laws are made taking into consideration the common law which is being followed by past
times.

M1. Evaluate the Effectiveness of the legal system in terms of recent reforms and
developments.
In the past few decades, various reforms are made in the legal system of the United Kingdom as
it is essential to implement changes in the practices which are being followed from old times.
This improves the way of working and makes it easier to operate or perform the duties which are
to be performed by the court and the personnel related to it.
The reforms which have transformed the operations and the functions of the legal system of the
United Kingdom and have improved its working are the establishment of the bodies which
provides the services of Alternative Dispute Resolution. Some changes are also made in the legal
charges or the fees of the court and the legal practitioners as due to low fees, various parties were
taking advantage of this by wrongly filing the cases (Williams, 2012). Different schemes for the
persons who are unable to hire the lawyers for the proceedings were introduced in this legal
system. In the era of digitalisation, virtual courts are set up in which the proceedings are the done
online. The implementation of the digital platform in which the files related to the cases can be
uploaded and can be accessed for presenting it before the juries and the judges of the court. This
has reduced the burden of carrying the documents by the advocates.

LO2
P3. Using specific examples illustrate how the company, Employment, and Contract law
has a potential impact on a business
Employment Law
Case Study 1
The case is related with the employment contract between Mathew who had the job of Salesman
in the store and the Orange Computer Ltd. It was decided that the annual package of Mathew
will be £ 10,000 and commission which will be payable at 9%. Taking into consideration, the
record of the last 3 years, the total commission to be payable to Mathew was £ 11,000 p.a. As the
competition in the market was rising, it was informed by the employer, Fred that the outgoing of
the finance from the store is to be reduced and in relation to this, Mathew was asked to only
accept the commission and to let go of the salary for helping out the organisation for the period
of 2015-17. This variation in the contract of the employment was accepted by Mathew.
However, in 2016, the organisation came back on track and started earning good revenues and
the financial position of the organisation was improved (Taylor and Emir, 2015). The question
was whether Mathew will get the salary of three years.
Application of Law: In the given case, contract and employment law both are applicable. As
there is a change in the terms of the employment which is different from the original
employment contract in regards to Mathew’s salary. Whereas the regulation relates to the
employment and the wages is done in under the provisions of the Employment Rights Act. In
accordance with the provisions of the act, the wages of the workers or the employees are
protected in this act and as per section 13 of the act, no deduction could be made in the salary of
the workers unless he/she approves.
Contract law
Case Study 2

Sarah needed internet so BT was called for purchasing and installing the same at her place
costing £ 35 monthly. On the given date, the worker of the BT arrived at 9 a.m. and while
installing, the worker was unable to find the internet line on the switchboard and told Sarah that
he will go and get the line, after which he didn’t return. Various calls were made by Sarah to
install the same and after that she received an invoice, charging her for the internet services for
three weeks.
Contract Law and Consumer Protection Law: As per the given case, breach of the contract
was on the part of BT cables as the internet was not installed at the given time. Moreover, not
repairing the same for three weeks and the new worker was sent for installation after several calls
were made by Sarah which is the act of negligence of BT. At the same time, the company
charged her for the using the services of the internet of the period of three weeks during which
even the installation of the cables was not made which is unfair to the consumer i.e. Sarah. Under
this, Consumer Protection Right provides safeguard against such unfair practices. In this case,
Sarah has the right to claim compensation as BT cables were the party at default.
Company Law
Case Study 3
Blackhorse Ltd. is an organisation which provides the services of security. The organisation lost
four top customers leaving the debts of the £1, 00,000 which stretched the due date for making
payment to the creditors of the organisation (Sterling Ford, 2018). Due to which one of the
creditors of the organisation filed with the court for winding up of the company.
The provisions of the winding up of the company are mentioned in the Corporation Law. There
are various ways by which the winding up of the company of compulsory nature can be avoided
which includes making timely payment of the debts of the company. This also includes the
settlement of the dispute with the creditor and making claim for the extending the time so that
arrangement of funds can be made for making payment. Moreover, the company also have the
option to voluntary liquidate itself and can avoid the winding up of the company of compulsory
nature.

In the given three cases, different laws are applicable which includes the contract law,
corporation law, employment law, consumer protection, etc. Different laws cover a different
aspect of the organisation and the applicability of all the provisions of these laws must be obliged
by the management of the company. In case, the company failed to obliged, then the company
has to face legal consequences. It can also be said that for operating the business under the legal
system of the United Kingdom, companies must comply with the provisions of applicable laws.

M2. Differentiate and analyse the potential impacts of regulations, legislation, and
standards.
The main purpose of the legal system and the laws made in it is overseeing the activities which
have a detrimental effect on the community of the nation. For operating the business activities in
an ethical way, there are various laws such as contract law, consumer law, employment law, the
law of limitation, etc which regulate these activities. Along with accomplishing the goals of the
organisation, it is required that applicable laws are complied with (Business Rescue Expert,
2018). Not following the laws attracts legal penalties which creates hurdles for the
accomplishing the organisational goals as the focus of the management will be diverted to
settling down the penalties related to law. This also includes the following the law related to the
employment as the employees will be more focused on achieving the organisational goals if they
are satisfied that all the laws are complied with.

L03
P4. Suggest appropriate legal solutions for a range of business problems e.g. termination of
the contract, rescue from insolvency and liquidation.
As mentioned above, regulating the activities which have a detrimental influence on the
community or the society of the nation as well as economy of the nation is controlled by the law
and the legal system. Different laws such as contract law, company law, employment law, etc.
are included in the common law i.e. the law on which the legal system of the United Kingdom is
based. While running a business, different types of issues are faced by the organisations which
are resolved based on the laws applicable. Following are the examples of these issues:
Termination of the Contract: It can be understood with the name itself i.e. putting an end to the
contract. In this, the contract is terminated by the employer. There are different situations in
which the contract of employment is terminated by the employer such as when the workers are
unable to meet the expectations of the employers or fail to meet the standard performance in the
organisation. In such case, it is essential that the employer must follow the provisions of the
Employment Rights Act, 1996 as the grounds on which the workers can be removed are also
mentioned in the above-mentioned act (Vettori, 2016). As per these grounds, the workers can be
removed if his performance causes loss to the employer, due to the restructuring of the
organisation, etc. It is recommended that in the first case of Mathew, the provisions of the
employment law must be followed.
Rescue from Insolvency: This is the functions which are to be performed by the management of
the company that all the business activities must be organised and managed in such a way that
the organisation is able to earn revenues. Otherwise, the organisation may suffer from insolvency
(Hannigan, 2015). In this regards, the proper budget must be made and the funds must be
allocated adequately for the business activities so that optimum utilisation of financial resources
are made. All the expenses of the organisation must be reduced by which the income will be
increased. Same must be done in the second case.
Liquidation: It is the duty of the directors of the company that timely payment of the debts is
made. If the company fails to make timely payment, then the creditor of the company has the

option to file against the company for making a payment which is owed to creditors by the
company (McLaughlin, 2015). Such case is filed with the view of recovering the funds back. If
the company believes that it will be unable to make payment, then it can opt to undergo
voluntary liquidation.

P5. Provide justification for the use of appropriate legal solutions.
Employment Law
Case 1
In accordance with the given case, it is related to the variation in the terms of the employment
contract. In the context of the provisions of the Employment Rights Act, 1996, the amount which
was deducted cannot be claimed by Mathew as it was done with the consent of the Mathew
himself i.e. the conditions of the accepting the commissions and surrendering the remuneration
for three years as the company was going through financial crisis (Painter and Holmes, 2015).
Furthermore, if Mathew wants to claim the remuneration of three years, it must be done way
adopting the alternative dispute resolution. As with these methods, the issues will be solved
quickly and with the appointment of the arbitrator or mediator, the issues of remuneration will be
resolved.
Case 2
In accordance with the given case, the party at default was the organisation i.e. BT Cables as it
cannot charge Sarah for using the services of internet whereas it was not installed at that time
and the worker of the organisation failed to provide proper services of the installing the internet
(Kraakman and Hansmann, 2017). A case can be filed in the consumer court by Sarah and
compensation can be claimed. At the same time, such issue can be solved by mediation.
Case 3
In this case, Blackhorse Ltd. has the option to demand an extension of the time for paying the
debts as the four of the major client left with the bad debts of £ 100,000 and the financial
position of the organisation was not good enough to make payment (McKendrick, 2014).
Moreover, the surety can be given to the creditor that full payment will be made.

LO4
P6. Recommend alternative legal solutions to the following business problem. You can
consider another country’s legal system or a different legal framework.
The case discussed above, i.e. the case of Mathew, Sarah and Blackhorse Ltd, can be solved by
using the method of the alternative dispute resolution. It is the system in which disputes are
resolved other methods instead of reaching to the court (Neamtu, 2016). In this, it is made sure
that proper solution to the problem is provided quickly and at low charges or fees. It includes
different methods such as Arbitration, Negotiation, Mediation, and Conciliation; Arbitration
being the most commonly used method.
Arbitration: In this method, a party is appointed by the parties between whom there is a dispute
with the view that such issue will be resolved. However, for solving the dispute by arbitration,
the parties must put an arbitration clause in the contract to which they are legally bound (Ahmed,
2016). It is suggested that Blackhorse Ltd. must solve their disputes by this method as the
decision of arbitration is legally binding on both the parties.
Mediation: In this method, for reaching to a mutually agreed settlement, party (s) is appointed.
Such party acts as the mediator. There are no specific guidelines which are to be followed by the
mediator in order to resolve the problem and whole focus remains on providing the best solution
(Gill, et. al., 2014). The case of Sarah and BT Cables and the Mathew and the Orange Computers
Store must be solved by this method.
Negotiation: In this method, variation in the terms and conditions of the contract can be made.
Negotiating the terms and conditions is done either by the parties itself or through their advocate.
This method is mostly adopted in the financial dispute (Cortés, ed., 2016). In the case of
Mathew, this method is most suitable as an issue, in this case, is about the remuneration of the
Mathew which is to be received.
Conciliation: In this method, the party appointed work as the conciliator who listens to the story
of each side and after that, both the parties come round the table and solve the disputes with the
help of the conciliator (McGregor, 2015).

In most of the nations, different bodies are established which provides the services of Alternative
Dispute Resolution (Mak, 2017). In Hong-Kong, this services is given by the Institute of Dispute
Resolution Schemes, etc and Hong-Kong’s legal society.

M3. Assess the positive and negative impacts of legal solutions to the business problems.
There are always two sides to the legal decisions which are as follows:
Positive Impact:
The parties get to know about the available rights under the laws in the legal system of the
United Kingdom which protects their interest (Lee, et. al., 2016).
As non-compliance attracts the legal penalties, the party at default will learn about the
importance of law.
Negative Impact:
As there are various laws which are to be complied with, so due to complying with the applicable
laws, the performance of the organisation is hampered.
This result in a financial burden on the organisation as it attracts huge penalties in some case.

M4. Compare and contrast the effectiveness of two different recommendations.
In the discussion made above taking into consideration the applicable laws which vary from case
to case, it is recommended that the disputes can be resolved by reaching to the litigations system
as well as the alternative dispute resolution. Comparison between the two is made which are as
follows:
 Resolving the problems through the litigation system takes time whereas ADRs solves
the problems quickly (Blake, et. al., 2016).
 The focus of litigation system is on complying with the laws and norms and the ADRs
aims at resolving the issues with the best solution.
 ADRs are those methods which are flexible as per the needs of the parties whereas
litigation system is a rigid system.

Conclusion
In accordance with the analysis of the legal system of the United Kingdom, it is concluded that
an essential and significant role is played by the legal system in controlling and regulating the
unlawful activities which affect the economy of the nation. Different sources are considered
while making the law so that all the aspects are covered. In this, the bill is drafted by the
Government and is approved by the Parliament. In the given scenarios of Mathew, Sarah and
Blackhorse Ltd. different laws are applicable such as Corporation law, Employment law and
Contract law and the solutions to which are provided accordingly. In case of disputes, the parties
have the option to solve the dispute by way of Alternative Dispute Resolution.

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