Business Law: Understanding Legal Systems and Solutions

This report explores the fundamental nature of the legal system, focusing on the sources of law and their impact on businesses. It examines key legislations like the Health and Safety at Work Act, Equality Act, and General Data Protection Regulations (GDPR), highlighting their implications for organizations. The report further delves into legal solutions for business problems, analyzing case scenarios involving termination of contracts and insolvency. It compares traditional litigation with alternative dispute resolution (ADR) methods, emphasizing the benefits of ADR for resolving business disputes.

Business Law
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Contents
Introduction........................................................................................................................3
Section 1– Nature of legal systems and legislations impacting businesses.....................4
LO1 Explain the basic nature of the legal system.........................................................4
P1 Explain different sources of law and laws that organizations must comply with.. 4
P2 Explain the role of government in law-making and how statutory and common
law is applied in the justice courts..............................................................................5
M1 Evaluate the effectiveness of the legal system in terms of recent reforms and
developments.............................................................................................................6
LO2 Illustrate the potential impact of the law on a business.........................................7
P3 Using specific examples illustrate how company, employment and contract law
has a potential impact upon business........................................................................7
M2 Differentiate and analyze the potential impacts of regulations, legislation and
standards....................................................................................................................8
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 judgements.
....................................................................................................................................9
Section 2 – Legal solutions to business problems..........................................................10
LO3 Suggest appropriate legal solutions to business problems.................................10
P4 Suggest appropriate legal solutions for a range of business problems e.g.
termination of contract, rescue from insolvency and liquidation..............................10
P5 Provide justifications for the use of appropriate legal solutions..........................11
M3 Assess the positive and negative impacts of legal solutions to business
problems...................................................................................................................12
LO4 Recommend appropriate legal solutions based upon alternative legal advice
provided........................................................................................................................13
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P6 Recommend legal solutions based upon a different country’s legal system
and/or a different legal framework............................................................................13
M4 Compare and contrast the effectiveness of these recommendations................14
D2 Critically review and evaluate the use of appropriate legal solutions in
comparison with alternative legal advice..................................................................15
Conclusion.......................................................................................................................16
References.......................................................................................................................17
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Introduction
Law is a set of rules which any community or country recognizes as a fundamental and
guiding principle for conduct of its members, organization and society. The non-
compliance of laws leads to penalties and other legal consequences. Business law is
that branch of law which applies to business. It recognizes the manner in which a
business shall be conducted and defines the rights and responsibilities of persons
associated with such business. In this report, sources from which these laws emerged
and are enacted have been discussed. There are mainly three sources of UK law.
These are legislature which is enacted by Parliament, common law which is passed by
judges and European law which are the rules and laws of European Union (EU) and UK
being a member state must comply with EU laws. This report has further discussed
various laws applicable on business such as laws relating to health and safety at
workplace, equal opportunity laws and laws for data protection.
The second section of the report is discussing two different case scenarios. The
scenarios relate to business laws and appropriate recommendations have been given to
business owners for their business problems. The case scenarios relate to winding up
of company when it is unable to pay off its debts and notice required to be served by
employee at the time of termination of employment contract.
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Section 1– Nature of legal systems and legislations impacting businesses
LO1 Explain the basic nature of the legal system
P1 Explain different sources of law and laws that organizations must comply with.
The meaning of “Every year the government announces its programme for
legislation by way of the Queen’s Speech at the State Opening of Parliament in
October or November” has been discussed below. An event is held in Parliament of
UK at the beginning of session commonly known as ‘State opening of Parliament’.
During this event, a speech is given by Queen known as Queen’s Speech. This event is
held in month of November every year and is held in front of both houses of Parliament
i.e. House of Lords and House of Commons. The Queen’s Speech outlines the agenda
of government and Parliament for coming session. This event attracts large crowds and
media. The Queen delivers the speech from the throne in House of Lords (Sparrow,
2015).
Source of Law
There are three major sources of UK laws. These are Legislation, Common Law and
European Union Law. These laws are followed by judges of courts in deciding any case.
These are explained as under:
 Legislation:
Legislations are laws enacted by Parliament of United Kingdom. The laws
enacted by Parliament are Act of Parliament. The laws are enacted as an Act
when the they are passed by both houses of Parliament i.e. House of Lords and
House of Commons. The laws enacted by parliament are also called statutory
laws.
 Common Laws:
Common laws are those laws which are enacted by judges of superior courts.
These are also called judicial precedents as these are the decisions of superior
courts in any previous legal case decided by them and is established as a law
which is required to be adhered to by junior courts while deciding cases of similar
nature as the case in which the law was established (Koprowski, 2017).
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 European Union (EU) Laws:
UK is a member nation of European Union and therefore is required the comply
the laws and regulations established by European Union. These laws are
precedents over UK laws. Therefore, in case of any contradiction between EU
laws and statutory laws, EU laws shall supersede.
Laws Applicable on an Organization
There are several laws which are applicable on an organization. These are as follows:
 Employment Rights Act, 1996: The rights of employer and employees in
relation to employment are established and guided by this Act. It also includes
the duties of employers and employees and terms of employment.
 Companies Act, 2006: This Act contains the provisions relating to company’s
incorporation and includes procedures to be followed by company for running its
business. All the companies in UK must comply with provisions of this Act.
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S o u rc e s o f L a w s
Legislature
Common Laws
European Union
(EU) Laws.

 Finance Act: This Act is amended every year based on the requirements. All
companies or any other establishments must follow this Act for matters relating to
finance, such as applicability of taxation procedures and exemptions that can be
claimed (Arden, 2016).
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P2 Explain the role of government in law-making and how statutory and common
law is applied in the justice courts
The government plays a significant role in law making. An Act is enacted by Parliament
after a bill is presented for approval by both houses of Parliament i.e. House of Lords
and House of Commons. Following procedure shall be followed for enactment of an Act:
 First reading: Here, the title of bill is published followed by second reading.
 Second Reading: In this stage, a debate is carried by members of parliament on
contents of Bill in House of Commons.
 Committee Stage: Here, required amendments are made in the bill after
detailed examination.
 Report Stage: In this stage, amendments made in the bill are discussed and a
debate is carried. The members, in this stage vote on the amendments.
 Third Reading: The members vote on final bill in this stage. The proceedings of
House of Commons end in this stage.
 House of Lords: After third reading, bill is sent to House of Lords for approval
and if any amendments are required to be made, then the bill is sent back to
House of Commons for approval of amendments.
 Royal Accent: The Bill when approved by both houses of Parliament is
presented for Royal Accent. When Royal Accent is received, the bill enacts as an
Act (Open Learn, 2018).
Application of statutory and common law in judicial courts
When there is no application of laws, then the significance of laws is lost. For a strong
mechanism, both statutory and common laws must be applied by courts in decision
making. The statutory laws are laws enacted by Parliament and are applied by both
superior and junior courts in decision making process. The common laws are laws
enacted by superior courts and are applied by the junior courts in deciding cases of
similar nature in which such law was enacted (Koprowski, 2017).
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M1 Evaluate the effectiveness of the legal system in terms of recent reforms and
developments
Law Commission is an independent body appointed by Parliament to keep the laws
under review and recommend reforms whenever needed. The aim of Parliament and
law commission is to ensure that the laws implemented are fair and updated. Recently,
reforms have been introduced in UK insurance laws followed by extensive consultation
carried out between Scottish Law commission and UK Law Commission. Under these
reforms, three new Act of Parliament have been adopted. These are: The Third Parties (Rights against Insurers) Act 2010. The Consumer Insurance (Disclosure and Representations) Act 2012. The Insurance Act 2015 (Hertzell, 2016).
Therefore, it can be concluded that the legal system of UK is effective as reforms are
introduced in laws continuously.
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LO2 Illustrate the potential impact of the law on a business
P3 Using specific examples illustrate how company, employment and contract
law has a potential impact upon business.
 Health and Safety Regulations
The employer must ensure that all the employees of company and others at
workplace are provided safe and healthy working environment. The law
applicable for ensure health and safety at workplace is Health and Safety at
Work Act, 1974. It defines a fundamental structure that is required to be followed
and implemented by employers at workplace to provide safety and proper health
care precautions to its employees. This Act requires the employers to perform
certain duties to protect his employees and other people at workplace premises.
The other subjects included in the Act are prevention of use of harmful chemicals
beyond specified limits, emissions of harmful gases in atmosphere and many
more similar provisions (Jamieson, 2015). In case scenario specified, JPM
Publishing must comply with the provisions of Health and Safety at Work Act to
provide safety and better working environment to its employees. Such
compliance can attract better skilled workforce and can enhance the goodwill of
company. The compliance of provisions of this Act can also help the company in
avoiding any legal consequences.
 Equal Opportunities Regulations
The laws applicable for providing equal opportunities to all employees is
Equality Act 2010. This Act protects the employees for any discrimination at
workplace and provide equal rights to all the employees. This Act outlines certain
provisions and standards based on which no discrimination shall be done among
employees at workplace or in society. Protection against any discrimination on
basis of sex, caste, religion, age, gender, disability, marital status or sex is
provided to employees under procedures of this Act (Cole, 2017). In given case
scenario, JPM Publishing must follow the procedures provided under this Act for
protection of employees from discrimination and equal rights must be provided to
them. If the managers or any other person discriminates the employees on any
basis, then such person shall be prosecuted under provisions of Equality Act,
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2010. The companies must comply the provisions of this Act and must ensure
that all its employees are treated equally, and no discrimination is done on any
basis.
 General Data Protection Regulations (GDPR)
For protection of data, EU General Data Protection Regulation (GDPR) are
applicable. These regulations have superseded UK Data Protection Act, 1998.
This Act specifies the rights of individuals to exercise control over the manner in
which their data is collected, processed and utilized. This Act requires
organizations using personal data of individuals to be more accountable for
protection of such data. The major benefits of this Act include better governance
of data, improved information security and improvement in brand image and
reputation of company. It also helps the companies in gaining competitive
advantage and build customer trust (Nadeau, 2018). JPM Publishing, in given
case scenario, must comply with the provisions of General Data Protection
Regulations (GDPR) for protection of data provided to the company by
employees or any other individuals. The company must take precautions to
ensure that the data is protected and to avoid any legal proceedings.
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M2 Differentiate and analyze the potential impacts of regulations, legislation and
standards.
Laws are the system of rules and statute enacted by government of any country or
community. Regulations are the detailed instructions about how enacted laws shall be
carried out and enforced. Standards are the specifications provided for products,
services and systems (Focus, 2018). The compliance of applicable laws, regulations
and standards affects the efficiency and goodwill of an organization. If the business of
an organization is carried on without compliance of applicable laws. then it shall result in
inefficient and unfair decisions. This will impact the growth of business. The compliance
of laws and regulations is important for gaining trust of customers and other persons
who associate with business as clients or stakeholders. The non-compliance of laws
shall lead to legal consequences and liabilities. Therefore, every organization must
follow the laws, regulations, and standards applicable.
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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
judgements.
The effective of English Legal system is a matter of concern. The citizens of UK expect
the court to implement its decisions in a fair and effective manner. When a judicial
system functions well, the rights of citizens are protected against infringement of laws
and regulations by others, including powerful government parties. However, when it
comes to impact of judicial system on security outcomes and crime control, the views
are impacted because of involvement of stakeholders such as correctional systems and
police (Arden, 2016). Therefore, it a major limitation of English judicial system. Apart
from this limitation, the English legal system protects the citizens, society and
organizations from exploitation and promotes fair dealings.
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Section 2 – Legal solutions to business problems
LO3 Suggest appropriate legal solutions to business problems.
P4 Suggest appropriate legal solutions for a range of business problems e.g.
termination of contract, rescue from insolvency and liquidation.
Case 1
Facts of the case:
Champion Ltd. is a company based in London was paid in cash by premiere league
club to move from its north site for construction of a new stadium. Due to this relocation,
company lost its customers and faced financial crisis. The company, however was
unable to pay off its debts to both banks and financial institutions. The creditors of
company are now threatening that they will apply to court for winding up.
Issue:
The company wants to know if the creditors have power and authority to apply to court
for winding up.
Applicable laws:
In the present case scenario, provisions of Insolvency, Act 1986 and Companies Act,
2006 are applicable. As per these laws, if a company owes £750 or more to its creditors
or other banks and financial institution, then such creditor can demand the payment of
debt due from the company by serving a statutory notice to the company for debt
payment within 21 days from date of such notice. If the payment is not made by
company in notice period, then the creditor has right to apply to court for winding up of
company. However, it is a mandatory requirement for creditor to serve 21 days statutory
notice for demand of debt before applying to court for winding up (Johns, 2017).
The company, on receipt of such notice can either pay off its debts in full or enter into
an agreement for payment of debts with creditors. A company can be wound up by two
procedures i.e. Voluntary winding up and Compulsory winding up. Therefore, the
company may also enter into Company Voluntary Agreement (CVA) or Creditors
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Voluntary Liquidation (CVL) Agreement with the creditors for voluntary winding up
(Morrison, and Anderson, 2015).
Recommendations to company
Champion Ltd. is recommended to pay of its debts in statutory notice period and if it is
unable to pay off its debts, then it must enter into an agreement with creditors for
payment of debts or voluntary winding up. The company must take a decision as soon
as possible after the notice is served by creditors.
Case 2
Facts of the case:
Mr. Anderson is appointed as CFO at Amber Ltd. and therefore has access to highly
confidential information of company. He gives a notice to the company for resignation of
a month. Based on terms of his employment contract, the notice period in case any
party wants to terminate the contract must be twelve months.
Issue Involved:
Amber Ltd. wants to sue Mr. Anderson for breach of contract term and serving a notice
of lesser period. The company wants to know the possibilities of getting an injunction
against Mr. Anderson.
Applicable laws:
In the present case scenario, provisions of Contracts (Applicable Law) Act, 1990 and
Employment Rights Act, 1990 shall be applicable. Based on applicable provisions of
these laws, the employer and employee both have a right of notice in case either party
wants to terminate the contract. Whenever an employee has been employed for more
than one month but less than two years, such notice of termination shall not be less
than one week. Whenever an employee has been employed for two years or more but
less than twelve years, such notice of termination shall not be less than one week notice
for each year of employment and whenever an employee has been employed for more
than twelve years, the notice of termination shall not be less than twelve weeks (Taylor,
and Emir, 2015). The applicable laws also state that wherever the contract of
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employment specifies the notice period, then it must be complied with if such time
period is more than what is required under law (Reuters, 2018).
Recommendations to company
This is a case of breach of contract by Mr. Anderson as he did not serve the notice as
required by his employment contract. Amber Ltd. is recommended to sue Mr. Anderson
for breach of contract as he has violated the term of contract and the court may grant an
injunction against him. The company is further recommended to consider alternate legal
advice and resolve the matter through Alternate Dispute Resolution (ADR) method.
Under this matter, the dispute can be resolved outside courts.
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P5 Provide justifications for the use of appropriate legal solutions.
Case 1
Champion Ltd. is recommended to pay off its debts within the statutory notice period or
enter into an agreement with the creditors for payments of debts on a later date or for
voluntary winding up of company. If the directors and members of company are of
opinion that the company cannot revive its operations, then the company must enter
into an agreement for voluntarily winding up the operations of company. This will protect
the company from court procedures and in-depth scrutiny of operation of company and
acts of directors (Johns, 2017). Through voluntary winding up, the directors of company
shall also be able to exercise some control over the operations of company and can
influence decisions of liquidators. This will also reflect efficiency in decision making on
part of directors and members.
Case 2
Amber Ltd. is recommended to move to court and file a suit against Mr. Anderson. Mr.
Anderson has breached the terms of contract and can therefore the court may grant an
injunction against him. The facts of Nationwide Airlines (Pty) Ltd v Roedinger, were
similar to the given case scenario. In this case, Mr. Roedinger was a pilot appointed by
Nationwide Airlines. His employment contract stated that the party terminating contract
of employment must serve a notice of at least three months whereas he served a lesser
period notice. The company filed a suit against him in court of law and the court decided
that the company has a right of specific performance against Mr. Roedinger (Cartwright,
2016). Based of the facts of this case, the court may grant an injunction against Mr.
Anderson. The court procedure is however time taking and expensive and therefore
Amber Ltd. is also recommended to resolve the issue outside court through ADR
methods.
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M3 Assess the positive and negative impacts of legal solutions to business
problems.
Case 1
Positive impacts:
The company by entering into an agreement for voluntary winding up shall be able to
save money and time and can avoid procedures of court. The goodwill of the company
shall also not be destroyed completely. The directors of the company shall be able to
gain better value of assets of the company and the remaining funds after payment of
debts in full and shall be able to utilize balance funds for buying assets for new business
(Morrison, and Anderson, 2015). The directors shall also be able to exercise better
control on operations of company when in liquidation process.
Negative Impacts:
When the company enters int an agreement for voluntary winding up, a liquidator shall
be appointed to carry the operations relating to liquidation process. Based on value of
assets and size if company, he may charge higher fees. The highly skilled employees of
company shall also become redundant (Johns, 2017). The liquidator shall also exercise
scrutiny of company’s operations and in case he finds any fraud or misrepresentation,
then the company may have to face legal consequences.
Case 2
Positive Impacts:
Amber Ltd. is recommended to sue Mr. Anderson for breach of terms of contract. The
company shall be able to set an example for other employees of the company and they
will take the restrictions related to notice seriously (Taylor, and Emir, 2015). The
company shall also be able to claim compensation from Mr. Anderson as he was key
managerial personnel of company and his sudden resignation may cause monetary and
non-monetary losses t the company.
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Negative Impacts:
Mr. Anderson was the CFO of Amber Ltd. and therefore he had access to highly
confidential information of company. If the company files a suit against Mr Anderson,
then he may get offended and leak the confidential data of company to court or
competitors. This may cause huge losses to the company and the goodwill of company
may also be compromised (Reuters, 2018). If any faulty information related to the
company is leaked, then it may affect the profitability of company and the company and
directors might have to face legal consequences.
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LO4 Recommend appropriate legal solutions based upon alternative legal advice
provided.
P6 Recommend legal solutions based upon a different country’s legal system
and/or a different legal framework.
Amber Ltd. wants to sue its CFO Mr. Anderson for breach of contract. It may resolve
the matter through court process. The alternate legal advice given to Amber Ltd. is
solving the dispute through Alternate Dispute Resolution (ADR) methods. Under this
method, dispute can be resolved quickly, and the matter of dispute remains confidential.
The dispute under ADR can eb resolved through four methods, namely, arbitration,
conciliation, mediation and negotiation (Block, 2016).
Arbitration is a method under which dispute is resolved by an individual appointed as an
arbitrator. Such individual shall be impartial and shall resolve the dispute outside court.
The decision of arbitrator shall be binding on both parties. However, if the parties are
not satisfied with decision of arbitrator, they may apply to the court for further hearing.
This method of solving dispute is quick and comparatively cheaper than traditional
litigation process. The second method of ADR is conciliation. Under this method, a
conciliator is appointed to resolve the dispute between parties. The main aim of
conciliator is to suggest parties to dispute with alternate solutions that are available to
parties to dispute for resolution of dispute. He shall help the parties in arriving at a
settlement. He shall actively participate in resolving the dispute between parties. This
settlement however is not binding on parties. Another method of dispute resolution is
mediation. Under mediation method, a mediator is appointed to resolve dispute between
parties. This method is appointed when the parties to dispute are not on speaking
terms. The main aim of mediator is to help the parties in effective communication. He
does not actively participate in the proceedings. He does not pass any decision and
therefore no decision or settlement is binding. The last method of resolution of dispute is
negotiation. Under this method, a negotiator is appointed who helps the parties to
dispute in resolving matter through negotiations. Here, both parties negotiate with each
other and arrive at a settlement (Gill, et.al., 2014).
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Resolving dispute through ADR is a time and cost saving method. Litigation process is
not very effective as there are many pending cases in court of law and therefore, the
decision of case takes a lot of time. The court’s efficiency is also compromised due to
work burden. Through ADR, dispute can be resolved confidentially and quickly.
Therefore, Amber Ltd. is recommended to resolve the matter with Mr. Anderson through
ADR method instead of traditional litigation process.
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M4 Compare and contrast the effectiveness of these recommendations
The two alternate advices given to Amber Ltd. are solving dispute through traditional
litigation process within the court or through Alternate Dispute Resolution (ADR)
methods outside the courts. Both of these alternatives help the parties to dispute in
resolving their issue by either passing an order which is binding on both the parties or
bringing the parties to dispute at a settlement. Under traditional litigation process,
dispute is resolved by court process where under ADR dispute is resolved through four
different methods namely arbitration, conciliation, mediation and negotiation. The
dispute under court process is resolved by judges. They pass decisions after hearing
both the parties and considering all the facts. Such decisions are binding on both
parties. Process under ADR is slightly different from court process. Under ADR, matter
is resolved with help of arbitrator, conciliator, mediator and negotiator. They are
independent persons appointing for resolving the matter. Apart from an arbitrator, no
other person passes a decision but help the parties in arriving at a settlement. The
arbitrator however passes a decision which may or may not be binding on both the
parties (Gill, et.al., 2014). The traditional court process is complex, expensive, and time
taking. On the other hand, matters are resolved quickly under ADR methods and they
are less complex and less expensive as compared to litigation process.
Therefore, Amber Ltd. may consider any of the two alternatives to resolve the issue. It
must consider the degree of seriousness of dispute, desired outcomes and the
relationship it intends to continue with Mr. Anderson.
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D2 Critically review and evaluate the use of appropriate legal solutions in
comparison with alternative legal advice.
Amber Ltd. is recommended to sue Mr. Anderson in a court of law for breach of
contract. He did not company the terms of employment contract as he gave a lesser
period notice for termination of contract. The company is given an alternate legal advice
to resolve the matter outside court through Alternate Dispute Resolution (ADR) method.
Using this method, the company shall be able to resolve the matter outside the court
through independent persons. The independent persons appointed under these
methods are arbitrators, conciliator, mediator and negotiator. The may be experts of the
industry (Block, 2016). The decision of such persons may or may not be binding on
company or Mr. Anderson. This method is less costly and time consuming and the
matter under this method can even be resolved in one sitting.
Under ADR method, dispute is resolved through arbitration, conciliation, mediation and
negotiation. This method is more convenient and less complicated when compared to
traditional litigation process.
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Conclusion
Law is a fundamental part of conduct of society or business. For understanding the
concepts of law, a foundation must be created. This foundation in this report is the
source of law form which laws have emerged. This report has provided a basic
understanding of laws relating to business and the sources from which such law has
emerged. Business law is a very wide subject and it covers several laws which have a
direct or indirect impact on business. The study of business laws helps an individual in
making better decisions when required relating to an organization or any business
problems. It can help in spotting legal issues and evaluating as when legal help must be
sought. Managers must always be aware of legal issues in business and the study of
business law ensures that they always take an informed decision. The managers must
be capable of anticipating how laws can impact their business in both negative and
positive ways. The knowledge of laws helps an organization and its managers and
employees know their rights and perform their duties better. In the scenarios discussed
in this report, rights of companies in case of winding up and the right to receive a notice
of termination of contract of employment have been discussed. Wit help of applicable
laws, companies ae suggested best legal solutions available.
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