Business Law: Understanding Legal Systems and Solutions

This report explores the fundamental nature of the English legal system, examining its sources of law and the laws that organizations must comply with. It delves into the role of government in law-making and the application of statutory and common law in justice courts. The report further analyzes the potential impact of company, employment, and contract law on businesses, providing specific examples to illustrate their influence. It then explores legal solutions to business problems, such as termination of contracts, rescue from insolvency, and liquidation, offering justifications and assessing their positive and negative impacts. The report concludes by recommending appropriate legal solutions based on alternative legal advice, comparing and contrasting their effectiveness.

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
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
Laws are important for any society, community or organization as it sets fundamentals
for their conduct. It also provides proper order and guidelines upon behaviour expected
from citizens and to sustain equity. It keeps the society running. In this report, the
sources from where such laws are emerged have been discussed. The English Legal
System is a centralized structure which is applicable on whole country. This report is
highlighting the laws applicable on businesses under English Legal System. The
application of laws on business is important as it can shape their conduct positively and
makes them aware of their duties and responsibilities. Various laws applicable on
organizations such as Companies Act, Health and safety Act, Insolvency Act, Contract
Act have been discussed.
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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
“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.
Therefore, it is commonly said that ‘Parliament is sovereign’.”
This statement is relevant in light of facts that every year an event is held in month of
November in front of both houses of Parliament. The Parliament has two houses
namely House of Lords and House of Commons. During this event, the Queen
delivers a speech on agenda of government for the coming session known as Queen’s
Speech. This event is called State Opening of Parliament. This speech is delivered by
Queen from the throne in House of Lords (Sparrow, 2015).
Sources of Law
The English Legal System is based on laws from mainly three sources. These are as
follows:
 Legislation: These are the laws which are enacted by Parliament as an Act.
This is the main source of law. Parliament is the supreme law-making authority in
UK. A set of procedures is followed in both Houses of Parliament for enactment
of laws. The procedure starts with Bills and ends as an Act (Morgan, 2018).
 Common Law: These are the laws created in courts by judges. Courts can use
their expertise and knowledge for interpretation of statutes. Such interpretation
becomes law when the statute requires clarifications in various circumstances
known as common law.
 European Union (EU) Laws: UK is a member of European Union. The members
of European Union are required to follow the laws of European Union. Therefore,
UK is required to comply with laws of European Union. EU laws are precedents
over UK laws.
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Laws Applicable on an Organization
 Companies Act, 2006: Companies in UK must comply with the provisions of
Companies Act, 2006. This Act defines the procedures of incorporation, duties
and responsibilities required to be fulfilled by directors and managers and all
other provisions relating to companies.
 Finance Act: This Act outlines the provisions relating to Finance. This Act is
applicable on all organizations irrespective of their sector, field of operations or
nature. This Act includes provisions relating to taxation, exemptions available
and many more related matters (Siems, and Deakin, 2014).
 Health and Safety at Work etc. Act, 1974: This Act contains provisions and
procedures that an employer is required to follow for ensuring safety and good
health of its employees and other persons at workplace.
 Contracts (Applicable Law) Act, 1990: This Act is applicable on contracts and
agreements. It provides for the rights available to the parties and protects their
rights in case any party commits breach of contract.
Fig. 1: Sources of Law
Source: (University of Portsmouth, 2012)
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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 of UK plays a significant role in enactment of laws. The procedure to
be followed by both houses of Parliament for law making is as follows:
First Reading: This is the first stage where the title of bill is introduced.
Second Reading: In this stage, the members of House of Commons conduct a debate
on contents of bill.
Committee Stage: This is the third stage of law making and a detailed examination of
bill is done.
Report Stage: Amendments of the bill are matter of debate in this stage, required
amendments are made in bill and member of house vote on proposed amendments.
Third Reading: Here, the final bill is presented for approval from members of House of
Commons. They vote on the bill and send it to House of Lords for approval.
House of Lords: In this stage, bill is presented to House of Lords for approval and in
case any amendments are required to be made, then the bill is sent again to House of
Commons for implementing such amendments.
Royal Accent: When both houses approve all the contents of Bill, it is presented for
Royal Accent. The bill is enacted as an Act as soon as Royal Accent is received
(Sparrow, 2015).
Application of statutory and common law in judicial courts
Statutory laws are laws enacted by legislature. These laws are used to interpret the
statute. At the time of interpretation, courts presume that the legislature intends to
provide meaning of every single word mentioned. They follow the intent of legislature for
its interpretation and deciding the cases in court of law (Morgan, 2018).
Common Laws are the laws enacted by judiciary. These laws are applied and used by
all the courts in deciding cases of nature similar to the case in which such law was
enacted and interpreted.
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M1 Evaluate the effectiveness of the legal system in terms of recent reforms and
developments.
Professor Hart recognises the tool of rule of recognition rule of adjudication and rule of
change as necessary components of legal system. Under rule of recognition new laws
are introduced by parliament at present and adjudication process is carried out by
courts. Rule of change has been suggested by him as tool of transformation and
reforms. Under the rule of change various reforms like Constitutional changes,
amendment under company law and procedural changes had been brought in patter of
working by introducing ADR and legal aid systems. These changes are used as a tools
of reforming legal practices of nation. Contemporary legal framework is only a strong
tool to deal with contemporary issues. Parliamentary body of country is performing this
function very effectively.
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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.
1. Health and Safety regulations
There are two main acts which prescribes safety and health matters, Health and Safety
1974 and Factories Act 1961. Former act guides employer in employee safety at
executive office of company and Factories act governs regulatory practices at
manufacturing plant. Employer has to follow safety standards to avoid institutional
hazards with employees. Preventive and protective both measures are commonly
adopted for meeting legal requirement under the above mentioned acts.
In Donoghue v Stevenson [1932] AC 562, HL case consumer drunk content of bottle
which contained snail and caused illness to him. Therefore it was stated that
manufacturer bears duty to safety and health for consumers also. Thus manner of
business and from final product both there must not be any harm to user and
manufacturer respectively. To avoid these cases employer needs to work for safety and
security measures.
The manners in which data are to be handled in the business are also covered under
safety laws in country. Remedial rights are given to aggrieved sufferer as no law is
complete if same does not provide effective remedy to restore in proviso position either
in sense of money or other (Work Smart, 2018).
2. Equal Opportunities Regulations
Opportunities must be given to each and every one who is eligible in terms of quality of
work and experience if same is relevant. If the criteria of qualification and experience
are not satisfied then in that case opportunities can be denied in legal manner. Illegality
of denial of equal opportunities arises if it is denied on ground of colour, caste, religion,
sex etc. (Gov. UK, 2018).
Law of Equality 2010 and Disability Act are governing laws for equal chances to be
provided at work. The practices of sexual harassment and ill treatment on the basis of
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sex and age are also common in corporate sector and the legislature has attempted to
eliminate these practices of illegal nature by following legal standard and regulations.
Under these acts the one who is competent is protected from discrimination and
biasness practices. Fair and transparent opportunities are tried to be given through
these two acts. These two acts ensure growth and development of fair completion
between employees of the company and better opportunities are grabbed in more
efficiently contribution on part of employees.
3. General Data Protection Regulation (GDPR)
The General Data Protection Regulation 2018 is there which allows the use of
personal data in the restricted limit of data principles only. It guides employer and its
employees at work to use information and data for:
 Fair, lawful and transparent use only.
 Only for explicit and specified use.
 In a manner and for relevant purpose only.
 Use for limited duration for what it is required.
 Handling in a manner that does not impact security.
The above given acts allows individual to know what information about him is stored by
government and the reason of storing that information. The manner in which data will be
used and manner of using the data (Gov. UK, 2018).
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M2 Differentiate and analyse the potential impacts of regulations, legislation and
standards
Regulations are the product of judicial and non-judicial bodies however legislation are
exclusively instrument of parliament only and standard can be set by executive does or
they can be departmental creation as well. The object of setting these is apparent to
have a uniform Patten of business activities by all stakeholders involved in business.
Presence of enforceable business regulation and standards vitiate the illegal practices
by business. Business practices are designed to meet the legal compliance requirement
in attainment of profit making objectives and growth of business. Failure to follow these
attraction legal enforcement consequences.
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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 consultation for legal evaluation has been drawn from the theoretical literature
available reading the business laws discussed in first part and their practical
understanding over the case. The coordination of legislature in making and bringing
timely laws and their strong enforcement by the judges in the court makes the UK legal
system efficient. It cannot be said that entire legal system is free from defects and
uncertainties however it has been analysed there strong process has been developed to
deal with uncertainties and constant efforts have been noticed on part of parliament to
sharpen the legal system (Work Smart, 2018).
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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
In given case scenario, Champion Ltd. is a company based in London which is paid to
shift from its location. Later, the company faces financial crisis due to decrease in
customers as a result of change of location. Now, the company is unable to pay off its
debts. The creditors of the company are threatening to take the company to court for
winding up. The company wants to know the rights of creditors for making a petition for
winding up.
Based on provisions of Companies Act, 2006 and Insolvency Act, 1986, if a company
owes £750 or more to banks or other creditors, then the creditors may apply to court for
winding up of company after serving a twenty-one days statutory notice to the company
for payment of debts. If the company, in give period of twenty-one days, does not pay
off the debts or enters into an agreement with the company for payment of debts, then
the creditors may apply to the court for winding up. When the notice is served to
company, then it may enter into an agreement with creditors for payment of debts or for
voluntary winding up (Bernstein, 2013). For voluntary winding up, the company may
also enter into Company Voluntary Agreement (CVA) or Creditors Voluntary
Liquidation (CVL) Agreement with creditors.
Suggestions to company
The company may consider following suggestions to protect itself from the petition for
winding up in court:
 It may deny and prove in court of law that no such debt is due from creditors to
company.
 The company may enter into an agreement with creditors for payment of debts
on a later date.
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 It may also enter into an agreement with creditors for voluntary winding up.
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Case 2
In given case scenario, Mr. Anderson is appointed as CFO at Amber Ltd. He served a
notice to the company for resignation. The notice served by him is of lesser period than
required by contract of employment of Mr. Anderson. The company wants to know if
there are possibilities that the court will grant an injunction against him.
Based on provisions of Contracts (Applicable Law) Act, 1990 and Employment
Rights Act, 1990, Mr. Anderson has breached the terms of contract of employment.
The laws provide a right to both the parties a notice of period determined by law or as
specified in contract of employment. When an employee has been employed for more
than one month but less than two years, notice shall not be less than one week. When
an employee has been employed for two years or more but less than twelve years,
notice shall not be less than one week notice for each year of employment and when an
employee has been employed for more than twelve years, notice shall not be less than
twelve weeks (Taylor, and Emir, 2015). Apart from these provisions, the law states that
when the contract of employment requires a notice of period more than what is required
by law, the terms of contract shall supersede. The contract of employment of Mr.
Anderson requires a notice of twelve months at the time of termination of contract.
However, he served only a month notice. Therefore, he committed breach of contract.
Suggestions to company
The company has following remedies available against Mr. Anderson:
 It may sue Mr. Anderson in court of law for breach of contract.
 The company may also resolve the matter through Alternate Dispute Resolution
(ADR) method (Gill, et.al., 2014).
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P5 Provide justifications for the use of appropriate legal solutions
Case 1
In case of Champion Ltd., the company is recommended to either pay off its debts or
enter into an agreement with creditors for voluntary winding up. A company can be
wound up under two procedures i.e. voluntary winding up and compulsory winding
up. In voluntary winding up, the directors, members and creditors of company
voluntarily decides to shut the operations of company and appoint a liquidator to carry
on the procedures of winding up of company. In compulsory winding up, the operations
of company are wound up by order of court. If the company decides to shut the
operations of company voluntarily, then, it shall be saved from cumbersome court
procedures. The directors of the company can also be protected from detailed scrutiny
and the directors shall also be able to exercise control over operations and sale of
assets of company.
Case 2
In case of Amber Ltd., the company is recommended to proceed with litigation against
Mr. Anderson for breach of contract in a court of law. The company can also resolve the
dispute through Alternate Dispute Resolution Method (ADR) (Gill, et. al., 2014). In a
decided case of Nationwide Airlines (Pty) Ltd v Roedinger, Mr. Roedinger was
appointed a pilot by Nationwide Airlines who gave a notice of resignation to company for
a period lesser than what is required by contract of employment. Due to this sudden
resignation, the company faced huge losses and filed a suit against him in court of law.
The court decided that the company has a right of specific performance against Mr.
Roedinger. Therefore, based on facts of this case, it can be concluded that the
company may file a suit against Mr. Anderson.
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M3 Assess the positive and negative impacts of legal solutions to business
problems
Positive impacts
Case 1: The company may enter into an agreement with creditors for voluntary winding
up. The company is currently facing insolvency and compulsory winding up can add up
the stress. The company by entering in voluntary winding up can manger this stress and
can be protected from highlighting any wrongdoings. The company shall be able to
appoint a liquidator as per their choice. This can protect the company and directors from
any allegations of wrongful trading, and also from any personal liabilities (Bernstein,
2013).
Case 2: Amber Ltd. is recommended to sue Mr. Anderson. With the help of this
litigation, the company shall be able to claim compensation for the losses incurred due
to sudden resignation and breach of contract by Mr. Anderson (Reuters, 2018). The
company shall also be able to set an example for employees for consequences of
lesser period notice.
Negative Impacts
Case 1: When the proceeding of winding up procedure begins; the operations of
company shall come to an end. The employees of the company will become redundant.
All the assets of company shall also be sold to pay off the debts of company. The
liquidator may also charge extra fees based on value of assets and size of company.
The conduct of directors shall also be investigated and if any wrongful trading is found,
the directors may be prosecuted.
Case 2: Mr. Anderson had access to highly confidential information of the company. If a
suit is filed against him, the he may use this information to take revenge from the
company due to which the company might have to face legal consequences and losses.
The proceedings shall also waste lot of time, energy and money.
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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.
Mr. Anderson has breached the contract of employment and Amber Ltd. wants to sue
him so that an injunction can be granted against him. The company can sue him
through traditional litigation process but is recommended to resolve the dispute through
Alternate Dispute Resolution (ADR) method. Under this method, arbitration,
mediation, conciliation and negotiation are four methods available to resolve the matter
(Gill, et. al., 2014).
These found methods are discussed here:
Arbitration is a method under which dispute is resolved by an independent person
appointed with approval of both parties know as an arbitrator. He decides the matter
based on facts of the case and circumstances of case. The decision of an arbitrator may
or may not be binding on both parties.
Mediation is second method of dispute resolution through ADR. Here, a mediator is
appointed to resolve the matter. The mediator is appointed for effective communication
between parties to dispute (Perrin, 2014).
Conciliation is a method of ADR where a conciliator is appointed to resolve the
dispute. The conciliator aims to bring parties to dispute at a settlement by suggesting
those alternate remedies available for resolving the dispute.
Negotiation is the last method of dispute resolution through ADR methods. In this
method, the parties are brought to a negotiated settlement with the help of a negotiator.
This settlement is not binding on parties.
All the methods of dispute resolution through ADR discussed above are used to resolve
the matter outside court at a lower cost and in less time.
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M4 Compare and contrast the effectiveness of these recommendations
Amber Ltd. can resolve the matter through traditional litigation process or ADR
methods. The effectiveness of both these methods is compared below:
Under Court process, matter is decided by judges in court of law. Under ADR, matter
is resolved by individual persons appointed namely arbitrator, mediator, conciliator and
negotiator (Perrin, 2014).
The decision under court process is always binding on both parties whereas; the
decisions or settlements under ADR are not always binding.
Court process in time taking and expensive. However, ADR method of dispute
resolution is quick and cheap.
Therefore, it can be concluded that the effectiveness of Court process may be
sometimes compromised because of overburden and pendency of cases whereas the
resolution of dispute through ADR is effective.
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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 resolve the dispute between the company and Mr.
Anderson for not giving appropriate notice through ADR method. Under this method, the
dispute is resolved through four methods. They are conciliation, mediation, arbitration
and negotiation. The dispute under these methods is resolved by independent persons
appointed known as conciliators, mediators, arbitrators and negotiators respectively.
The dispute can be resolved quickly through ADR methods and at a lesser cost as
compared to court process (Gill, et.al., 2014). The individuals appointed for dispute
resolution are sometimes experts of industry and therefore, expert advices can also be
sought. The process under ADR methods remains confidential. Therefore, the parties to
dispute are not required to worry about privacy or goodwill.
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Conclusion
Law is a system of guidelines and rules which are enforced through coordination of
government, courts and social institutions. It helps in governing behaviour, shapes
economics, politics and society in numerous ways. Business Laws protects the society
and customers from exploitation from companies and big organizations. These laws are
important as they provide a foundation for employers and employees for their behaviour
and conduct, helps them in fulfilling their duties and responsibilities and in achieving the
goals of business in more organized way. Non-compliance of laws may lead to
penalties. Therefore, laws applicable must always be complied with.
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References
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2018]
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 Taylor, S. and Emir, A., 2015. Employment law: an introduction. Oxford
University Press, USA.
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 University of Portsmouth, 2012. Types of Law, Types of Legal System and
Types of Justice. Compass Port. Available at:
http://compass.port.ac.uk/UoP/file/c7ffec37-0632-475f-84ba-ae018a2f0f38/1/
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