Business Law: Understanding the Legal System and its Impact on Business

This comprehensive guide explores the fundamental principles of the English legal system, examining its sources, structure, and impact on business operations. It delves into key areas of law, including company law, employment law, and contract law, providing practical examples and insights into their implications for businesses. The report also explores alternative dispute resolution (ADR) methods, such as arbitration and conciliation, offering a critical evaluation of their effectiveness in resolving business disputes.

Business Law
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Contents
Introduction........................................................................................................................3
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........................................................................................6
M1 Explain the effectiveness of legal system in terms of recent reforms and
development...................................................................................................................7
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...8
LO2 Illustrate the potential impact of the law on a business.............................................9
P3 Using specific examples illustrate how company, employment and contract law
has a potential impact upon business............................................................................9
M2 Differentiate and analyze the potential impacts of regulations, legislation and
standards......................................................................................................................10
D1. Provide a critical and coherent evaluation of the legal system in laws drawn from
range of different examples to support judgments......................................................11
LO3 Suggest appropriate legal solutions to business problems.....................................12
P4 Suggest appropriate legal solutions for a range of business problems.................12
P5 Provide justifications for the use of appropriate legal solutions.............................14
L04 Recommend appropriate legal solutions based upon alternative legal advice
provided...........................................................................................................................15
P6 Recommend solutions based on a country’s legal system and /or a different
framework.....................................................................................................................15
M4 Compare and contrast the effectiveness of these solutions..................................16
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The suggested legal solutions for resolving dispute are arbitration and conciliation.
Their effectiveness is compared as follows:................................................................16
D2 Critically review and evaluate the use of appropriate legal solutions in alternative
advice...........................................................................................................................17
Conclusion.......................................................................................................................18
References.......................................................................................................................19
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Introduction
Legality of action is need on the part of individual engaged in business and by the
organisation as a whole as well. The laws application of which will govern the legality of
business activities are explained and the impact of same is also analysed in reference
to CP Ltd. The role of courts in making the business on legal premises cannot be
denied and the same is explained with the concept of common law. The application of
the statutory and common law on the relevant business organisation is also explained.
The conflicts in the business are very common and the court is very old manner of
solving issue and sometime business have to bear adverse consequences rather than
solving of issue therefore Alternative suggestions are made.
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LO1 Explain the basic nature of the legal system.
P1 Explain different sources of law and laws that organizations must comply with.
Sources of law for organisations in UK:
European Law:
There is a union of 28 countries and UK is one which is also member to this union
and therefore being part of this union, the laws, regulation all set by the union are
applicable over the business organisation running business in UK.
All business practices are to be set in such a way that shows the enforcement of
obligation agreed under the EU laws.
Common Law:
Source of common is adjudicator of courts and tribunals. It is not individual who
has capacity to announce the common law as fitting to their individual wishes. It is
dignity and status attached to office of these adjudicating authorities that entitles
the judges to announce “ration decidendi”. Under the common law it is not the
case that that everything pronounced by the judge will be considered as law,
however the only provision that is based on principles of natural justice and other
legal basis will form the binding obligation by the business organisation in UK
(Arden, 2016).
Example: Case of Soloman v Soloman.
Legislation:
It is law-making body that is composed of members of parliament. They enjoy
supremacy over all other laws in country which means they have unrestricted
power to in traduce the new laws and change the existing one by following the
prescribed system. The legislative instrument list is very long that works as guide
for business functions. It includes Factories Act 1961, Equality Act 2010 etc.
(Davey, 2018).
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Obligation of business under UK laws:
Companies Act 2006:
It is a complete code that specifically deals with the business corporation. The Act gives
the birth to company and it contain the process of ending the life of corporation. The
rights and duties that has to be performed by directors for serving business interest are
also mentioned under it. The various kinds of organisation can be opened under the act
like private, public, limited company or unlimited etc. All corporation business is subject
to limitation and rules mentioned under this act only.
Factories Act 1961:
The goods are manufactured in the factory premises. The organisation running
production business have to follow all rules given under the Factories Act. This act
provides limitation about the age of employment, the standard and facilities to be
provided by the business its workers. The consideration of health issues and providing
treatment for it etc. obligation of business is governed by this act.
Foreign Laws:
International business standards are applicable over business in case of multinational
companies.
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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.
Issue agreed in government agenda is taken forwards for law making in two houses i.e.
House of Commons and Lords if the law-making function is decided to be carried out by
parliament itself. Law making function is sometime delegated to other government
departments and bodies as well and in that case, they are subject to approval of
parliament.
Parliament’s two houses discussed the issue of law, in systematic manner. 1st reading
helps parliamentarians about bill. Discussion of quality of bill and to check whether
desired provisions are inserted sufficiently in second bill is forwarded in second reading.
It orders to make efficient bill that is free from technical errors parliamentary member
are made member of committee and they are given task of making the efficient draft by
removing defects. Therefore, they prepare report of finding and recommend changes
and suggestion. Report of committee is checked again by parliamentarians to over the
chances of minute defects. Then bill is finalised and passed to Monarch assent (Law
Teacher, 2018).
Application of court laws and laws of parliament is not option and it is legal mandate for
business organisation to follow applicable laws and common law principles. Law of
Limitation is applicable over business which is statutory law and case of Solomon v
Solomon is common law that is followed in each and every business premise.
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M1 Explain the effectiveness of legal system in terms of recent reforms and
development.
The balance has to be maintained by parliament and court that they make the desired
laws at right time when there is dire need. Effectiveness of legal system can only be
attained in this manner only. Reforms of Companies law, constitution of county etc. are
examples of reforms that contributed in rendering legal system efficient (Law Teacher,
2018).
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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.
From study of sources of law and legal system of court in UK, the law-making process it
is evaluated that development are one of major cause that UK is able to maintain good
state of living for people and also rendering supportive business environment. Courts
are also ensuring that only legal business are prompted, and illegal activities are
removed from roots by laws and judicial pronouncement. Authority of judgment of court,
the rule of contempt of court etc. are the forcing reason of legal practices by business
(Reuters, 2018).
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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.
The table shows application of various statutory laws on business in UK.
Employment Law Consumer Law Contract Law
As per judgment of UBER
Taxi CP will also have to
bear the consequences of
employee’s act.
Employees are
independently liable in
case they are self-
employed.
However, CP will bear
consequences of work
done in employment
course.
It must make its
employees safe from
work hazards (Banker, et.
al., 2013).
Consumer Protection
Act 2015 is protective in
nature to interest of rights
of buyers and consumer
of services and goods.
Seller of goods bears
responsibility of:
Offering right quality and
quantity asked by buyer.
Fit to use for purpose, for
which goods are
commonly used.
To compensate buyer in
case of injuries to buyer
due to his negligence in
rendering goods and
services.
Contracts to be legally
binding, have to includes:
Offer- Asking other to a
favour on set terms.
Acceptance- Agreeing on
terms to do favour for
former.
Capacity- Majority of age,
free from lunacy, not to be
an idiot etc. by contracting
person.
Consideration-
Exchange of monetary or
non-monitory thing
(Reuters, 2018).
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M2 Differentiate and analyse the potential impacts of regulations, legislation and
standards.
Regulation laid in advance ensures transparency for business and help in
understanding the liabilities in advance so that mechanism to avoid the liabilities can be
created. Business activities will be learned to be carried out only in legal manner only.
Illegality will be removed, and employees of the organization will be provided a platform
that is safe and secure wherein all rights of them are protected and saved from
violation. The mechanism will also be developed by following regulation in house only to
address the issues of violation. Thus, regulations and standards will benefit the
business (Khan, 2015).
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D1. Provide a critical and coherent evaluation of the legal system in laws drawn
from range of different examples to support judgments.
The issue before CP was developing of understanding of employment law and contract
law. Under this legal system works on constant basis to regulate the business activities
in legal manner only. The business is also made obelised to respect the various rights
to employees and help them in their business activities. However, in developing
understanding it has been analysed that the laws are biased towards the employees
and there are certain occasions when business is made strictly liable even in case of
lack of proof of evidence. These discrepancies show the negative side of legal system
(Reuters, 2018).
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LO3 Suggest appropriate legal solutions to business problems.
P4 Suggest appropriate legal solutions for a range of business problems
Introduction
Country Pine is currently operating as sole traders and wants to convert itself into a
limited company. The company has sufficient profits and therefore is suggested to
convert itself in a public limited company. Companies Act, 2006 shall eb applicable if it
converts itself in a limited company. This report is highlighting the nature of company,
duties and roles of directors in such conversion along with suggesting them the ways in
which they may raise their capital.
Nature of Company
The companies can be incorporated under Companies Act, 2006 in following types:
 Public Limited Company: These are the companies which can issue shares to
the public. It must have at least two shareholders, two directors and a company
secretary. The initial capital of £50,000 must be invested to incorporate a public
limited company.
 Private limited Company: These are the companies which cannot issue its
shares to the public. The shares are issued to the directors of the company and
their relatives and the liability of members remain limited to the shares
contributed by them.
 Limited Liability Partnership: These types of partnership fall under Companies
Act and are combination of both partnership and company. The liability of
members remains limited to their contributed shares, but they are not liable for
each other’s acts (Machiavelli, 2016).
Based on the nature of above discussed types of companies, CP is recommended to
incorporate as public limited company.
Role and duties of Directors
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The roles and duties of directors of Public limited company are as follows:
 The directors must use their expertise, experience and skills with due care while
performing their duties and taking decisions.
 They must act within their powers and must perform their duties in line with
memorandum and articles of company.
 The directors must not participate in matters in which they are interested.
Capital Financing
Country Pine may raise capital from following sources for converting into a public limited
company:
 Banks and Financial Institutions: The company may raise required capital from
banks and financial institutions in form of long-term loans. Such loans shall be a
liability for the company.
 Public Issue of shares: A public limited company can raise capital from public
and therefore Country Pine may raise funds from public for financing its capital.
Such funds can be raised by issue of shares to public. The company shall pay
dividend to shareholders on such capital raised (KlačmerČalopa, et.al., 2014).
Conclusion
From above report, it can be concluded that Country Pine can be incorporated as public
limited company and can raise capital from public. The directors of the company must
perform their duties at the time of conversion with reasonable care.
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P5 Provide justifications for the use of appropriate legal solutions.
Country Pine is suggested to convert itself in a public limited company as the company
is looking forward for expanding its operations. The conversion as a public limited
company shall help CP in expanding its operations as it can deploy its previous years
profits and capital raised through public issue of shares in such expansion (Mucciarelli,
2016). The company shall also provide growth opportunities to CP as through such
conversion and expansion, the customer base of the company shall also be increased.
The company’s operations shall be highly transparent, and the company can use its
funds for capital expenditures which would help the company in increasing its
productivity. The goodwill of the company shall also be improved, and the company
shall be able to build customer trust. Another advantage of a public limited company is
that its shares are easily transferrable. Therefor, Country pine must convert itself in a
public limited company.
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L04 Recommend appropriate legal solutions based upon alternative legal advice
provided.
P6 Recommend solutions based on a country’s legal system and /or a different
framework
Introduction
Country pine imports timber from Poland and is of view that on a later date, there can
be disputes. In this part of report, appropriate legal advices are given to CP for
resolution of dispute.
The dispute can be resolved by Country Pine through ADR methods. Under this
method, there are four methods through which dispute can be resolved. These are
arbitration, mediation, conciliation and negotiation (Perrin, 2014). The matter is
resolved outside courts under these methods. Under Arbitration process, an arbitrator is
appointed to resolve the issue. After due consideration of facts and opinions of parties,
he shall pass a decision which shall be binding on both parties. The second method
under ADR is mediation. Under this method, the dispute is resolved by a mediator. He
shall be appointed for effective communication between the parties. This method is
used when the parties to dispute are not on speaking terms. He does not actively
participate in dispute resolution process. The third method of dispute resolution is
conciliation. In this method, a conciliator is appointed whose main aim shall be to
suggest alternate solutions to parties for resolving dispute and arrive at a settlement. He
shall not actively participate in proceeding of dispute resolution (Block, 2016). The last
method under ADR is negotiation. In this method, a negotiator is appointed who shall
help the parties in negotiating with each other and arrive at a settlement.
Therefore, the most appropriate method for resolving dispute for Country Pine is
arbitration as the decision of arbitrator is binding on bot parties. However, CP may also
consider resolving dispute through conciliation.
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M4 Compare and contrast the effectiveness of these solutions.
The suggested legal solutions for resolving dispute are arbitration and conciliation. Their
effectiveness is compared as follows:
Arbitration Conciliation
Here, an arbitrator is appointed to resolve
the dispute.
The main aim of arbitrator is to decide the
matter after considering the facts and
circumstances.
The decision of an arbitrator may or may
not be binding on parties (Block, 2016).
Here, a conciliator is appointed to resolve
the dispute.
The main aim of conciliator is to suggest
appropriate alternate solutions for
resolving the disputes.
A conciliator does not pass any decision.
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D2 Critically review and evaluate the use of appropriate legal solutions in
alternative advice.
Traditionally, the disputes were resolved through litigation process in courts of law. This
procedure is time taking and expensive. However, the decisions of courts are binding on
both the parties. The alternate advice given to Country Pine is to resolve the issue
through ADR methods. Under these methods, Country Pine may resolve issue outside
the court. Resolving dispute through ADR shall be less expensive and quick when
compared to traditional litigation process. The parties to dispute may also arrive at a
settlement and the decision of dispute resolving authorities is also not always binding
(Perrin, 2014).
Conclusion
In this report, appropriate legal advice is given to Country Pine in case any dispute
arises in future. CP is recommended to resolve the issue through ADR methods.
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Conclusion
English legal system sets foundation for all companies, organizations, society or
community for their conduct. It establishes the rights and duties of people and
organizations in UK. For the best understanding of these laws, sources from which
these laws have emerged must be studied. This report has discussed these sources
and emphasis has been made on laws applicable on business. From the study of this
report, it can be concluded that the companies must comply with the laws applicable on
them in order to avoid any legal consequences. They must carry on their operations
based on the laws applicable. Here, Country Pine are operating as sole traders and
they have been recommended to be converted in a public limited company. The
consequences and benefits of such conversion are discussed and evaluated. The
company is also recommended to resolve its disputes through ADR methods.
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References
 Block, M.J., 2016. The Benefits of Alternate Dispute Resolution for International
Commercial and Intellectual Property Disputes. Rutgers L. Rev., 44, p.1.
 Perrin, H., 2014. Alternative Dispute Resolution (ADR): An Overview of Some
Common Mechanisms, and their Strengths and Weaknesses in Context. The
Plymouth Law & Criminal Justice Review. Vol. 4. Pp. 70-79.
 Sherbet, E., 2014. The Top Five Business Benefits of Compliance. [Online].
Pharma Compliance Monitor. Available at:
http://www.pharmacompliancemonitor.com/top-five-business-benefits-
compliance/7233/ [Accessed on 26 June 2018].
 KlačmerČalopa, M., Horvat, J. and Lalić, M., 2014. Analysis of financing sources
for start-up companies. Management: journal of contemporary management
issues, 19(2), pp.19-44.
 Mucciarelli, F., Gerner-Beuerle, C., Mathias, S. and Edmund-Philipp, S., 2016.
Study on the law applicable to companies. European commission.
 Tiwari, K., 2017. Article: Importance of Law in Society. [Online]. Legal Desire.
Available at: http://legaldesire.com/article-importance-of-law-in-society/
[Accessed on 26 June 2018].
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