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

This report delves into the intricacies of the English legal system, exploring its fundamental nature, sources of law, and the role of government in law-making. It examines the impact of company, employment, and contract law on businesses, using real-world examples like the Uber driver case. The report also provides practical legal solutions for business problems, including recommendations for dispute resolution through arbitration. By analyzing the positive and negative impacts of legal solutions, the report aims to equip businesses with the knowledge and tools to navigate the legal landscape effectively.

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..................5
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 diversity of its laws. Discuss the
problems with different sources of law.......................................................................................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..................................................................................................10
M2 Differentiate and analyze the potential impacts of regulations, legislation and standards. 13
LO3 Suggest appropriate legal solutions to business problems....................................................14
P4 Suggest appropriate legal solutions for a range of business problems.................................15
P5 Provide justifications for the use of appropriate legal solutions..........................................16
M3 Assess the positive and negative impacts of legal solutions to business problems............17
LO4 Recommend appropriate legal solutions based upon alternative legal advice provided.......18
P6 Recommend legal solutions based upon a different country’s legal system and/or a
different legal framework..........................................................................................................19
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M4 Compare and contrast the effectiveness of these recommendations...................................20
D2 Critically review and evaluate the use of appropriate legal solutions in comparison with
alternative legal advice..............................................................................................................21
Conclusion.....................................................................................................................................22
References......................................................................................................................................23
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Introduction
This report is discussing laws related to business and its applications. In this report, legal system
of UK has been discussed. Various sources of law and role of government in law making has
also been highlighted. This report is further discussing the laws applicable on business such as
contract law, consumer law, employment law and its impact on businesses. These have been
described taking in reference certain scenario. Recommendations have also been provided for
settlement of disputes.
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LO1 Explain the basic nature of the legal system.
Introduction
In this report, English legal system has been discussed. Through this report, an overview has
been provided to Business Futures Ltd. (BF) about English legal system, its structure and sources
from which law has been derived. This report is also discussing the role of government in law
making.
Basic nature of Legal system
English legal system is majorly based on common law. There is dominance of decisions given by
senior courts. However, now the scenario is changing. More statutory laws are being made by
parliament to dominate legal system statutorily.
Basic divisions of Law
 Civil Law: It deals with cases which involve injury to any individual or an organization
and not public as a whole. Example- Breach of contract, negligence.
 Criminal Law: It deals with cases which are deemed to be an offence committed against
society, public or state. Example- Murder, Theft (Duignan, 2018).
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P1 Explain different sources of law and laws that organizations must comply with.
There are three main sources of English Law. These are as follows:
 Legislation: It is law which is created by legislature and also called statutory laws. These
are the Act enacted by Parliament. Parliament consists of House of commons and House
of Lords. Parliament is that body which has sole power to pass laws.
 Common Law: This is a source of law under which the law enacted is the decisions of
superior courts. The decisions passed by judges or judicial authorities become law and
are used by junior courts in giving judgements. The Parliament has power to modify or
abolish this law as and when it deems fit.
 European Union (EU) Law: UK is a member of European Union and therefore, laws of
EU are applicable on UK and these laws acts as precedents over UK laws. EU laws are
further divider into primary and secondary laws.
Laws applicable on Organizations:
 Companies Act, 2006: An organization can be established as a company by complying
provisions of Companies Act, 2006. All companies registered under this Act must
comply with its provisions.
 Health and safety at work Act, 1974: All organizations must ensure good health and
safety of its employees at workplace and therefore must comply with provisions of
Health and safety Act.
 Equality Act, 2010: The organizations must comply with provisions of Equality Act to
ensure that no employee suffers from any discrimination on basis of caste, creed, sex or
religion at workplace.
 Finance Act, 2018: This Act provides for applicable tax rates and exemption provisions.
1)
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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.
A bill to become an Act must be approved by both houses of Parliament i.e. House of commons
and House of Lords. For this purpose, following procedure shall be followed:
1. First Reading- Here, title of Bill is published.
2. Second Reading- A debate is carried in House of Commons on contents of Bill.
3. Committee Stage- Bill is examined and required amendments are made.
4. Report Stage- Here, members of Parliament vote on amendments and debate is conducted on
amendments.
5. Third Reading- Here, MP’s vote on bill.
6. Proceeding in House of Lords- Here, Bill is considered by House of Lords and amendments if
required, are proposed.
7. Royal Accent- When a bill receives Royal Accent, it becomes an Act of Parliament.
Application of Common and statutory law:
Both common and statutory laws are applicable to justice courts. Common laws are derived from
case laws and therefore, judges must apply such laws in decision making of cases of similar
nature. Statutory laws ae codified and judges must use them for interpretation and decision
making of cases.
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M1 Evaluate the effectiveness of the legal system in terms of diversity of its laws. Discuss
the problems with different sources of law.
Diversifying legal system is a concept through which legal authorities are able to reach
maximum people and provide them with best legal solutions. The Ministry of Justice has an
appointed Judicial Diversity taskforce which aims to monitor and develop judicial progression. It
supports judicial offices in data management through developing an e-HR system.
Different sources of law pose problems for judges and advocates as they are not able to find all
judicial rulings at one place. The public is also unable to find the legal solutions available to
them at one place.
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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 English legal system is a widely spread system which aims to protect the society and
organizations from any wrongdoing. The laws must be developed overtime. The law is
continually being developed through precedents. The idea of common law ensures fairness and
certainty in judgements. However, there is need of timely decisions as there are many cases that
remain pending in courts for long time and the implementation of laws must be improved. There
are companies who break laws every other day. Therefore, procedure of implementation must be
stricter.
Conclusion
With reference to described report, it can be inferred that English Legal System is based on laws
formed by Parliament and Precedents. It helps in settlement of disputes in an effective and
efficient manner. It has also helped in understanding role of government in law making.
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LO2 Illustrate the potential impact of the law on a business.
Introduction
This report is discussing the laws applicable on businesses. All the business must comply to
employment and consumer laws irrespective of their nature. Under this report, case of Uber
drivers relating to employment status has been discussed and further a test has been conducted
for assessing status of employment and rights of employees have also been described.
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P3 Using specific examples illustrate how company, employment and contract law has a
potential impact upon business.
Company Law
Act regulating incorporation, registration and regulation of companies in UK is Companies Act,
2006. All companies in UK must be registered under this Act to carry on its operations. A
company under this Act shall have a separate identity from its owners as decided in Salomon v A
Salomon & Co Ltd [1896] (Law teacher, 2013).
Consumer Act
Act applicable for protection of Consumers under UK law is Consumer Rights Act, 2015. Under
this Act, certain rights have been provided to consumers in relation to goods purchased, services
received, and digital content availed. The Act covers following provisions:
 Goods purchased by consumers must be fit for the consumer’s described purpose and
must of acceptable quality. If not, the customer may claim refund or return the product
within 30 days.
 The services received by customer must be provided with due care and reasonable skills
and it must be completed in reasonable time. If not, the receiver may require service
provider to refund the money charged or reduce the price paid for services.
 When digital content is purchased by consumer, the seller must ensure that the content is
not faulty. If not, the buyer shall have the option to claim refund or reduction in price
paid (Laver, 2015)
Employment Law
The contracts relating to employment law in UK are guided by common law, statute and
European law. Under statute, there are many laws applicable on employment such as Health and
safety at workplace Act, 1974, Employment Act, 2002 and many more. The UK employment
laws recognize four categories of workforce. They are Independent contractors, Agency workers,
Employees, and workers.
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The test for category to which a worker belongs can be done on following criteria:
 Control over Work: When an employer exercises full control over task to be
performed and the manner in which such task is to be performed, it is deemed that the
worker is an employee of employer.
 Mutuality of obligation: Mutuality of obligations means that the employer undertakes
to duty to assign the work to worker and the worker undertakes the responsibility to
perform the work assigned. Where such a relationship exists, the employment is said to
be existing.
 Remuneration: Where fixed amount of remuneration is paid by employer to his worker
at a fixed time-interval which can be daily, weekly or monthly, then it shall be deemed
that there is an existing relation between employer and employee.
In a recent case of O'CONNOR v. Uber Technologies Inc, four drivers of Uber claimed that
they are employees of the company and Uber must pass the benefits of employees to those
drivers. However, Uber claimed that it is a technology company and not a transportation
company and it is only providing the App to drivers. Therefore, drivers are not employees of
company.
In this case, court decided that drivers are employees of Uber and they are not self-employed.
The drivers must be given employment rights by Uber.
Therefore, based on facts of decided case law and the conducted test, workers appointed by
Country Pine are employees of the company and must be given employee benefits.
Rights of employees
The rights available to employees are as follows:
 Remuneration
 Sick leaves
 Maternity leaves
 Flexible working hours
 Privacy at workplace
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 Not more than 3 month opt-out notice
Conclusion
Through this report, the reader can get an overview of various laws applicable on an organization
and the right available to employees.

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M2 Differentiate and analyze the potential impacts of regulations, legislation and standards
Country Pine must comply with all the legislations, regulations and standards applicable. These
help an organization in running its business in an efficient and effective manner. Proper
compliance helps the company in gaining competitive advantage, improving management,
improving productivity, increasing goodwill and building customer trust. When organizations
fail to comply applicable regulations, non-compliance consequences have to be faced. These
consequences may be in form of penalties, loss of goodwill and mismanagement of operations.
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LO3 Suggest appropriate legal solutions to business problems.
Introduction
The report here is discussing various provisions relating to Companies Act, 2006. It is
highlighting nature of company, roles of directors and sources through which company can raise
capital.
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P4 Suggest appropriate legal solutions for a range of business problems.
Law applicable on companies in UK is Companies Act, 2006. Under this Act, companies can be
divided into following types based on nature:
 Public Limited Company- These companies are owned by shareholders as the shares of
these companies can be sold to public. It must have a minimum of 2 directors, 2
shareholders and a Company Secretary.
 Private Limited Company- These companies cannot sell its shares to public but are held
by members of company. These companies must have at least one director and one
shareholder.
 Limited Liability Partnership: Unlike partnership, the partners here are not held
responsible for each other’s doings. Their liability remains limited to the amounts
contributed.
Therefore, based on the nature described above, CP must concert itself in Public Limited
Company.
Roles of Directors
 The directors must ensure that company does not fail in meeting its statutory obligations.
 The directors must take decisions which are strategic and operational and benefits the
company in long-run.
 The directors must take care of interests of stakeholders and shareholders.
Financing capital
Country Pine may finance its capital through both debt and equity. It may borrow money from
banks and financial institutions. For equity, it may issue its shares to the public. This way risks
and profits shall also be shared.
Conclusion
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It can be concluded that Country Pine can expand its business operations by converting itself in
public limited company.
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P5 Provide justifications for the use of appropriate legal solutions.
Country Pine is recommended to convert itself in public limited company. Through such
conversion, it will have better access to capital and shares of the company shall be more liquid.
The company shall have a prestigious profile while will result in increased goodwill and
customer trust. It would be easy for the company to acquire other organizations and expand its
business.
Further, it must borrow capital from both equity and debt sources as it will provide better finance
negotiation opportunities and help in risk management.
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M3 Assess the positive and negative impacts of legal solutions to business problems.
The negative and positive impacts of converting in public limited company are as follows:
Positive: The ability of company to raise capital will increase and it will have better finance
opportunities. The shareholder base of the company shall also be increased. The company shall
be able to transfer its shares freely and have better growth opportunities.
Negative: Regulatory requirements for company shall increase and it will have to be very
transparent. The ownership and control of the company does not remain in hands of existing
owners. The company shall be more vulnerable to takeovers (Korchak, 2016)
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LO4 Recommend appropriate legal solutions based upon alternative legal advice provided.
Introduction
Under this report, alternative legal solutions are explained and recommended to Country Pine in
case of disputes. The Alternative Dispute Resolution has been critically evaluated.
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P6 Recommend legal solutions based upon a different country’s legal system and/or a
different legal framework.
Facts of case
CP imported timber from Poland which came flat and defective. CP is aware that in case of
increased supply, more flat and defective timber can be received which may lead to dispute
between parties. It intends to resolve such disputes through a process which is quick and cheap.
Therefore, some methods of dispute resolution are suggested to CP.
Legal Alternatives for dispute Resolution
Under Alternative Dispute Resolution (ADR), there are three methods available for resolution of
disputes. Most common amongst which is Arbitration. Under Arbitration process, disputes are
settled outside courts with help of arbitrators. These arbitrators are impartial, and decision of
arbitrators is binding on parties to dispute. The major benefits of resolving disputes through
arbitration are that it consumes lesser time as compared to litigation. These are less costly, and
confidentiality remains on matter of dispute. The other two methods are mediation and
conciliation. Under mediation, both parties attempt to arrive at a settlement with help of third
party and under conciliation, matter of dispute is brought to a negotiated settlement by an
independent person (Perrin, 2014). Another way of solving disputes is through traditional
litigation which is expensive and time-consuming process.
Recommendation
Based on above evaluation, Country Pine is recommended to adopt arbitration method to resolve
its disputes.
Alternative sources of legal advice
The alternative sources for legal advice can be solicitors, citizens advice, law centers, trade
unions and many more (Dent, 2017).
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M4 Compare and contrast the effectiveness of these recommendations.
Arbitration Mediation Conciliation
 Here an impartial
party called arbitrators
are appointed to
resolve the dispute.
 The decision of
arbitrators is binding
on both parties.
 Here the dispute is
resolved with help of
third party.
 The decision is not
compulsorily binding
on parties to dispute.
 Here dispute is
resolved by an
appointed individual
by bringing parties to
a negotiated
settlement.
 The parties are not
compulsorily bound
by settlement terms.
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D2 Critically review and evaluate the use of appropriate legal solutions in comparison with
alternative legal advice.
The recommended legal solution to Country Pine is arbitration where issue is resolved by
arbitrators and the alternative legal advice could be process of resolving dispute through
traditional litigation where issue is resolved by judges in courts.
Both alternatives of legal advice are used to resolve the dispute between parties but in arbitration
process, dispute is resolved quickly and is comparatively cheaper process. Whereas, under
litigation, the process of courts consumes lot of time to resolve disputes and are very costly.
Matter of dispute in arbitration process remains confidential whereas it is not the same in
litigation process (Lakhanpal, 2017).
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Conclusion
Through this report various provisions of Companies Act, 2006 have been discussed and made
applicable to case scenarios. This has given reader an understanding of business law and the
formation of law. The law-making is in itself a complex process as it is derived from various
sources. The compliance of law is relevant for functioning of operations of any country or
organization. Therefore, it can be concluded that companies must follow the provisions of
Companies Act and all businesses must abide by all other rules and regulations applicable
otherwise they may have to face consequences.
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References
 Braun, E., 2016. Collective alternative dispute resolution (ADR) for the private
enforcement of EU competition law (Doctoral dissertation).
 Council, F.R., 2012. The UK corporate governance code. London, September.
 Davidov, G., 2016. The status of Uber drivers: A purposive approach. Labour law
research.
 Dent, J., 2017. Legal help: where to go and how to pay. House of Commons Library. Pp.
4-6.
 Duignan, B., 2018. What Is the Difference Between Criminal Law and Civil Law?
[Online]. Britannica. Available at: https://www.britannica.com/story/what-is-the-
difference-between-criminal-law-and-civil-law [Accessed on 12 June, 2018]
 Korchak, J., 2016. Advantages and disadvantages of a public limited company. [Online].
Inform Direct. Available at https://www.informdirect.co.uk/company-formation/public-
limited-company-advantages-disadvantages/ [Accessed on 12 June 2018].
 Lakhanpal, A., 2017. ADR: Alternative Dispute Resolution v. Litigation. [Online].
Lawnn. Available at: https://lawnn.com/adr-alternative-dispute-resolution/ [Accessed on
12 June 2018].
 Laver, N., 2015. Consumer Rights Act 2015—remedies and enforcement of rights.
[Online]. Lexis Nexis. Available at: https://blogs.lexisnexis.co.uk/fs/consumer-rights-act-
2015-remedies-and-enforcement-of-rights/ [Accessed on 12 June 2018].
 LawTeacher. November 2013. Salomon v Salomon - Case Summary. [online]. Available
from: https://www.lawteacher.net/cases/salomon-v-salomon.php?vref=1 [Accessed 12
June 2018].
 Lowe, S., 2017. Corporate Governance Review. Grant Thornton.
 Martin, L., 2018. Corporate Governance Guidelines. Lockheed Martin.
 Perrin, H., 2014. Alternative Dispute Resolution (ADR): An Overview of Some Common
Mechanisms, and their Strengths and Weaknesses in Context.
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