Business Law: Understanding Legal Systems and Their Impact on Businesses

This comprehensive guide explores the intricacies of the UK legal system, focusing on its impact on businesses. It delves into the sources of law, the role of government in law-making, and the application of statutory and common law in justice courts. The document examines key areas of business law, including company, employment, and contract law, using specific examples to illustrate their potential impact on businesses. It also provides a critical evaluation of the legal system and its effectiveness in light of recent reforms and developments. Furthermore, the guide explores appropriate legal solutions for business problems such as termination of contracts, rescue from insolvency, and liquidation, offering a comparative analysis of different legal frameworks and alternative dispute resolution methods.

Business Law
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Contents
Introduction................................................................................................................................3
Section1......................................................................................................................................4
LO1. Nature of legal systems and legislations impacting businesses....................................4
P1- Explain different sources of law and laws that organisations 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................................................................................................6
M1- Evaluate the effectiveness of the legal system in terms of recent reforms and
developments......................................................................................................................7
LO2.........................................................................................................................................8
P3- Using specific examples illustrate how company, employment and contract law has a
potential impact upon business...........................................................................................8
M2- Differentiate and analyse the potential impacts of regulations, legislation and
standards.............................................................................................................................9
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.....................10
Section2....................................................................................................................................11
LO3. Suggest appropriate legal solution to the business Problem.......................................11
P4. Suggest appropriate legal solution of the range of business problem e.g. termination
of contract, rescue from insolvency and liquidation.........................................................11
P5. Provide justification for the use of appropriate legal solution....................................13
M3 Assess the positive and negative impacts of legal solutions to business problems....14
LO4. Recommend appropriate legal solutions based upon alternative legal advice provided.
..............................................................................................................................................15
P6 Recommend legal solutions based upon a different country’s legal system and/or a
different legal framework.................................................................................................15
M4 Compare and contrast the effectiveness of these recommendations..........................16
D2 Critically review and evaluate the use of appropriate legal solutions in comparison
with alternative legal advice.............................................................................................17
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Conclusion................................................................................................................................18
References................................................................................................................................19
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Introduction
Understanding of the legal system of the country in which business is setup or a new business
is to be started in the new place is always required. The assignment is designed and prepared
in a manner which will help the reader to understand how the business law is applied over a
business and the impacts that are drawn by it over the business and the customers of it. The
sources and law making process has been explained for developing the understanding of the
background and legal development that takes place in the country. For giving the idea of
application of the business law on business and its impact the case studies have been taken to
explain the relevant law. The laws like health and safety, data protection and Equal
opportunities regulation etc. have been explained and the relevant legislation has been taken
to explain their impact over the business in various ways. All the activities of the business has
to be confined in the legal frameworks only.
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Section1.
LO1. Nature of legal systems and legislations impacting businesses
P1- Explain different sources of law and laws that organisations must comply with
a) Discus the meaning of this statement and the various sources of UK Laws.
The concept of ‘parliamentary sovereignty came into existence during the reign of William
and Mary who put a condition to provide parliament supremacy and special privilege to the
royals in the parliament.
The ‘Parliament is sovereign’ - by the following statement, it is meant that the parliament of
the United Kingdom is the supreme power responsible for law-making or end any irrelevant
law. Even the Supreme Court does not have the power to overrule the legislation passed by
the parliament (i.e., these cannot be challenged in the courts). Also, no parliament can make
laws that cannot be amended by the future parliament (Cotterrell, 2017). According to A. V.
Dicey, the parliamentary sovereignty involves four major aspects:-
1. Parliament is supreme authority in the UK that can form any laws depending upon the
subject matter.
2. No parliament has the power to bind the future parliament.
3. Nobody including the judicial bodies can question the validity of law.
4. All laws have equal authority and no one is above the other.
Different Sources of the UK laws
The sources of laws in UK can be categorized into two different sub-classes: Primary and
Secondary.
Primary Sources
• Legislations: The UK constitution partly written and hence, amendments are made
into it every year. The Laws passed in the parliament are termed as legislations. These laws
are applicable to the whole of the United Kingdom.
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• Precedents: In UK, precedent is that doctrine, whereby the previous decision of a
court of same importance or higher stature can be taken as reference to make decisions in a
similar current case.
• Customs Laws: These are the unofficial rules that are made by a particular society
and are practiced customarily. Those who violate these laws are subjected to the punishment
by the society.
• European Laws: These are the set of regulations and guidelines given in the treaty
signed by the members of the European Union. These laws are considered above the laws of
the member nation (Schmidt, 2013).
Secondary Sources
• Law Journals: These contain the mix of the case studies, articles, and case
summaries that can help in understanding the legal issues thoroughly.
• Legal Encyclopaedias: These contain the comprehensive statement of the legislations
of the whole of the UK and can serve as an excellent source of research.
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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.
In the democracy as big as UK, nobody is above the law. Since the constitution of UK is
partially codified or written, hundreds of laws are made every year and the parliament is the
sole body responsible for making laws. The parliament consists of two important bodies,
namely the House of Commons and the House of Lords. The former is the elected body of
the parliament and every member is chosen by people of the UK for a serving period of five
year. These members present and support a bill in the parliamentary sessions. The House of
Lords comprises the Supreme Court. After a bill is up voted in the House of Commons, the
House of Lords examine it and give the appropriate suggestions. In the United Kingdom, the
Royals are considered as the supreme power or the head of the state (Royal Assent). Once the
suggested changes of the House of Lords are made into the bill, it is sent to Monarch to get
the final approval. Once the bill gets the green signal from the Queen, it’s officially gazetted
and become an act. Later on, the legal laws are made under that particular act.
Applying the Statute and Common Laws in the Justice Court
The common laws are those laws that are formed within the court, either by the judges or
tribunals, whereas the statutory laws are the formal laws created by the parliament of the UK.
In the former case, the judges make the decisions based on some previous verdicts given in
the similar type of cases, and are also called as ‘precedents’. Many a times, it has been
noticed that the final judgment given by the court becomes a new law. The statutory law is
the fundamental structure of the English legal system. These are important for the efficient
regulation of the society and to maintain the law and order. Statutory law is superior to that of
common law and can modify or overrule the latter (Common laws are a crucial instrument to
understand and apply any statute law.
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M1- Evaluate the effectiveness of the legal system in terms of recent reforms and
developments.
The English legal system consists of variety of guidelines for institutions, principles,
processes, governance, and administration of justice. Legal system is flexible and constantly
changing. Legal reforms are necessary for improving the lives of the citizens. Changes in the
Factory Act, Employment Law and Contract Law established some new measures by which
the intervention of government in defining the welfare provision, health and safety of workers
in working premises got improved (Donaldson and Walsh, 2015). The reform in the
Education Act 1944, led to the reorganization of the whole education system of the UK.
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LO2.
P3- Using specific examples illustrate how company, employment and contract law has
a potential impact upon business.
1. Health and Safety regulations
The Health and Safety at Work Act 1974 protects the rights of the each and every person
indulged in a business activity. It puts many obligations on the employers like “Risk
assessment” of the working premises to ensure the public safety. It affects businesses by
putting an extra burden over the organisation in the era of ‘no win, no fee’! Meeting the
Health & Safety criteria is uneconomical for the businesses as they have to provide special
training sessions to their employee, get the certification of safety from the authority, etc.
(Partington, 2016). Failing in complying with the regulations defined under HSWA-1974, can
lead to serious consequences for the employer or organisation. These include fines or
imprisonment or both or cancellation of the working license of the organisation.
2. Equal Opportunities regulations
The Equality Act 2010 prohibits the discrimination by the employer or service provider on
the basis of age, disability, gender, pregnancy and maternity, race, religion or belief, sex,
sexual orientation. This act also obligates businesses to make some valid adjustments for
disabled people so that they can also compete with the non-disabled ones. It also prevents
people from any kind of harassment or victimisation by the service providers. In case of
dereliction of any of the provision given in the Act, the suit can be brought into the civil court
and the victim can seek compensation for the same. It is mandatory to bring the claims in the
civil court within six years of the date of the act to which the claim relates (Manthorpe and
Moriarty, 2014).
3. General Data Protection Regulation (GDPR)
This is the latest EU parliamentary measures that governs the guidelines of handling the
privacy and ensure the maximum level of protection on privacy of data. Since the data can
travel across the national boundaries, GDPR gives the citizens of Europe a protection towards
the data breach. Any company working in the EU is bound by its rules. GDPR protects the
data by understanding that the processes of collecting and processing the data, thereby giving
the ultimate control to the consumer. GDPR promotes pseudonymization, encryption, and
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anonymization (Mourby, et.al, 2018). There is no exemption in this act that means from
micro to MNC, every organization has to comply with GDPR.
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M2- Differentiate and analyse the potential impacts of regulations, legislation and
standards.
It is a well-known fact that there is a twisted relationship between the regulations, legislation,
standards, etc., and growth of a business. On one hand regulations remove the market
uncertainties and failure, thereby improvising the growth and on the other, they have a
negative impact on business growth by inducing the undesirable cost and distortions. In the
UK, imposing regulations in upstream market have great impact on the productivity of
downstream market. In many UK-based studies, it has been found that a healthy employer-
employee relationship was not developed, but regulations help them in cementing it.
Employment and Contract law obligates the organisation to put those guidelines in the
contract that protects the rights of both parties. Businesses mostly act reluctant to apply
standards in the work premises because standards give lower innovation efficiency, whereas
regulations usually cause the opposite effect. When there is high uncertainty in markets,
regulations lead to lower efficiency and standards become quite effective (Blind, et. al.,
2017). So, we cannot compare the two as end results depend upon the market environment.
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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 UK covers a large portion of world’s population and to govern such a large number of
people, one needs to have a strong and robust legal system. Many countries have composed
their legal systems taking the English legal system as reference. The oddest thing about the
UK is that its constitution is partly written and the legal system is adversarial unlike the USA
where it is inquisitorial (Zane, 2012). It means that the judges are neutral and do not involve
in searching evidence. In addition to this, unlike other united regions, such as UAE or USA,
the UK follows a common law system. Instead of providing consistency based on arbitrary
judgements personal views, the English legal system does that through the doctrine of
precedent. It also elucidates and implements the legislation, and provides the guidance on law
that helps to work in difficult situations.
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Section2.
LO3. Suggest appropriate legal solution to the business Problem.
P4. Suggest appropriate legal solution of the range of business problem e.g. termination
of contract, rescue from insolvency and liquidation.
1. Champion Ltd on whether the creditors have legal powers to do what they
threatening and the processes for liquidation.
Factual Background:
Champion Ltd was allocated fund to move the business of it to North London to develop the
new stadium by the premier league club. In the process of development huge financial loss
were faced by the company due to loss of the customers. In this process on several occasions
company had dishonour payment to bank and creditors as well. Due to this failure company is
facing continuous threat for winding up of the company by the creditors.
Law relating to right of creditors to make Voluntary Winding up of the company:
The case study relates to the right of the creditors to make voluntary winding up of the
company on failure to meet the debts demand of the creditors by the company. The winding
up by the company is governed by the Insolvency Act 1986 and Insolvency Rule 1986. The
creditors of the company are given the right to file the winding up petition in the court when
the company is at default in making the repayment to the creditors of their lawful claims (The
Gazette, 2018).
In the case study of Champion Ltd. on several occasion the company made default of
satisfying the rightful claims of the creditors of the company and this gave the creditors right
of applying for the voluntary winding up of the company.
Process of liquidation:
The law pertaining to winding up of the company permits the winding up of the company
wither by the members and creditors. In case of the winding up petition by the creditors of
the company extraordinary resolution is required to be passed (Gov. UK, 2018). The
insolvent directors of the company under section 86 of IA 1986 are calls meeting after seven
days prior notice to creditors for the appointment of the liquidator and up to 5 representatives
in the liquidation committee. The liquidators appointed under section 84 of the IA 1986 by
the creditors shall prevail over those chosen by the company. The liquidators of the company
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call the meeting of the creditors and members for giving the update of the status of the
winding up of the company. In the final meeting of the liquidators the final accounts of the
company are laid. As per the status of the company’s account the assets of the company are
distributed among the creditors.
Conclusion:
The creditors of the company can make the lawful claim of the winding up of the comp any
on the proof of default made by the company on several occasions under the Insolvency Act
1986.
2. Amber Ltd on the possibility of getting the injunction. Case Study2.
Background of the case:
Mr Anderson was given the role of CFO in Amber Ltd. in which he was given access to high
confidential information. As per the service contract of him with the company both the
parties to the contract had to give 12 months’ notice period for termination of the service
contract. Anderson received the offer from the another competitive company of Beta Ltd.
consequently Mr. Anderson gave notice of resignation to Amber Ltd. and suggested for
termination of contract at the end of 31 May 2016. However this resignation of him was
objected by the company on the basis of 12 months prior notice of resignation in contract.
However even than Anderson stopped working for the Amber Ltd. at the end of May 31.
Therefore the company is seeking injunction against offer acceptance by Anderson from the
competitor company on the ground of contract clause of notice.
Application of Law:
The contract law and Unfair Contract Terms Act 1977 are applicable here (Howells and
Weatherill, 2017). As per the UCTA the terms and conditions of the contract has to be
reasonable and there must not be dominance of the one party over another in setting the terms
and conditions of the contract. The notice period of termination of the contract of
employment between the employer and the employee must be reasonable and it must neither
be excessive nor it is less than minimum time period set out in the Employment Contract
Law. As per the applicable law, employee of the organisation who is hired for one month to
till 2 years he is entitled to get the notice of minimum period of one week. If the employment
is of more than 2 years then in that case employee is entitled to receive the notice of one
week and it may extend up to 12 weeks but not more than that (Long more Solicitors, 2018).
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If the employee and the employer do not follow the given time period notice requirement in
that case the opposite party will be entitled to seek remedy from the court. The remedy can be
for either injunction or for compensation in term s of the monetary value.
Remedial Suggestion:
Employer in the give case study can approach to the employment Tribunal, Country court and
High Court for the injunction order to Anderson from accepting the offer of Beta Ltd. The
remedy of the injection can be claimed by the company under the specific law remedy like
other claims of damages. Injunction is a remedy that is a matter of discretion of the court and
it is only granted in the cases where there is urgency of the matter. It falls in two categories
one is the permanent injunction and another is temporary injunction temporary injunction is
granted by the court only in those cases in which urgency of the matter is there and until the
court decides the final position of the parties a temporary relief is given with the help of it.
In the case study of Anderson he had to give the notice of 12 months before the living of the
employment with the Amber Ltd. However for getting the injunction by the company it had
to be proved that the time period of 12 months’ notice was reasonable for the nature of
service. Since the time period of 12 months’ notice was more than the limit that is given
under the Employment Law. The time period of 12 moths was excessive and it cannot be
expected in the reasonable cases that notice period will also for so long. Therefore on the
proof of reasonability of notice by the Amber Ltd. injunction can be claimed (Freedland, et.
al., 2016).
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P5. Provide justification for the use of appropriate legal solution.
Case Study1
Case study one relates with the right of the creditor to apply to the court and tribunal for the
voluntary wind up process of the company which is deficient to pay the damages. The right
of the creditors to wind up the company is given under Insolvency Act 1986 and the
connected regulation. The creditors of the company are the one who advances the loan to the
company and the company in return is bound to pay them debts as per the nature of the
creditors’ i.e. secured and unsecured creditors. Since the financial position of the company
was not good and the creditors of the company have the right under the IA 1986 to make the
application of the voluntary winding up of the company. The creditors of the company are
allowed to make the application for the windup under section 86 of the Act. Under section 84
of the act the liquidator is appointed and then the analysis of the financial position of the
company takes place under this.
Case Study 2
The case study 2 relates with the termination of the contract of employment, reasonability of
the term of the notice period and maintenance of the claim of injunction against the company.
Anderson was alleged to have broken the contract of employment by not giving the notice of
12 months. The limit of the notice in the contract of Anderson and Amber Ltd. was very long
and therefore it is a matter of proof before the court by the company that the term of the 12
months’ notice was reasonable as per circumstances of confidentiality of matter. The Unfair
Contract Terms Act 1977 and the employment contract law states for the limits of notice as
per the term of service (Whish and Bailey, 2015). To claim the injunction first reasonability of
the notice has to be proved by the Amber Limited and the court will be governed by the
common law judgment of Lumley v Wagner [1852] 1 DM & G604 it was directed by the
honourable court that injunction cannot be claimed as a matter of right for those cases in
which it will be used as an instrument of compelling another person to do for what cannot be
done by him directly.
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M3 Assess the positive and negative impacts of legal solutions to business problems.
In the case of insolvent the legal duty of company was to make the payment to creditors and
other debtors which were due and when the company failed to meet its liability the right of
creditors arose and the winding up they were claim was reasonable under the preview of the
contract law of the country only. If the creditors are allowed to windup the company the
whole business of the company will come to an end. However the innocent creditors will be
saved from losing their finances.
In the second employer has to follow the time limit prescribed in the relevant law and since
the time period set in the contract was not ordinary one it had to be proved by him before the
court that the time was reasonable for the object which he will be proving. When the
injunction is allowed than the employee will have to bear the consequences and many
innocent employees in the trading sector will be subjected to unreasonable notice period. If
injunction is not allowed in that case every employer will be aware of the reasonability of the
term of notice (IHL, 2018).
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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.
All most all countries in the world are moving towards adopting alternative dispute
resolution. Government of Australia is also taking use of ADR in finding solution of various
natures. Features of ADR are proven and therefore issue in above case study of employment
contract also instead of going to court for enforcement of contract with employee of Amber
Ltd. the other alternative like arbitration, mediation, adjudication, negotiation etc. These
modes have helped parties to settle their matter by their own with help of third independent
person who would have suggested best way to find out solution to problem that is beneficial
for both parties to contract only. Since employment contract was containing huge notice
period it will be difficult for Amber Ltd. to prove that notice period is reasonable and on
other hand it will also be difficult for Anderson to prove that his short period notice was
sufficient to terminate the service contract (Freedland, et. al., 2016).
Therefore mediation could have been adopted for finding mutually amicable solution to
business problem. Since terms between two contracting parties are already not good these
will be further strained in the court proceeding when the arguments and other proceedings
will carry own. It is also possible that employee may misuse confidential information for
getting undue advantage. Therefore in mediation parties could have solved their dispute in
friendly manner and it was also possible that their contract is revived and Amber does not go
to another company (McKendrick, 2014).
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M4 Compare and contrast the effectiveness of these recommendations.
Mediation Adjudication
 COMMERCIAL DISPUTES ARE
PREFERRED TO BE SOLVED BY
THIS MODE.
 MEDIATOR DOES NOT ENJOY
THE IMMUNITY OF AWARDING
COST.
 NO EXECUTION PROCEEDING
CAN BE MADE IN THE COURT
FOR ENFORCEMENT OF
OUTCOME OF THE MEDIATION.
 It is most suitable for the
construction disputes.
 Adjudicator has power to award cost
with the consent of the parties to the
dispute.
 Adjudication award can be enforced
by the court (Tollerst Solicitor,2-
016).
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D2 Critically review and evaluate the use of appropriate legal solutions in comparison
with alternative legal advice.
The effectiveness of the court system is fade away with the long and complicated procedure.
There is a saying that delayed justice is denied justice and therefore the overburden of the
work in the courts has led to the situation of ineffectiveness of the justice for suffers. The new
development of the Alternatives ways of finding dispute is growing instruments for the
effectiveness of the judgment. These modes allow the parties their own schedule fixing,
selecting the mediator, selecting the mode of ADR etc. All these features make the parties to
solve the dispute in very friendly manner. Therefore further efforts be made for making
changes in legal system to make it more effective (Tollerst Solicitor, 2016).
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Conclusion
Ethical activities will always pay the reward to the business not is terms of monetary value
but in terms of reputation and many other ways. Ethical practices can be adopted in the
business only when there is understanding of the legal applications over the business. The
very existence of the business is dependent on the various legal companies and if any of the
legal requirements are not fulfilled by the business the sole existence of the business comes
into danger. Therefore business laws have to be understood and their legal application over
the business and the other connected activities of the business is desired. The attentive
compliance of legal duties by the company will help in the in making the good image of the
company and run business on success path.
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References
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 Donaldson, T. and Walsh, J.P., 2015. Toward a theory of business. Research in
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Deakin, S. and Prassl, J. eds., 2016. The contract of employment. Oxford University
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 The Gazette 2018, How does the winding up petition process work? Available at:
https://www.thegazette.co.uk/all-notices/content/101087 [Accessed on 11 June 2018]
 Tollerst Solicitor 2016, Adjudication, Arbitration and Mediation - What’s the
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