Understanding Business Law: Sources, Government Role, and Impact on Companies

Carter LLP

INTRODUCTION
There are various laws made by the government to regulate the management and functioning
of the business and its activities which are commonly referred to as business law. These laws
helps in regulating, how to launch, buy products, run, end, or sell goods or services, etc. are all
included in this category. The law of the companies, lay out the several groundwork related to
the company’s activities which they are to obey. A knowledgeable owner of the business may be
well acquainted with the laws relating to the business and will recognize whether it is necessary
to obtain advice of an expert legally. State and federal rules, as well as regulatory legislation,
make up business law (Montenegro, 2017). There are several aspects in which a company can be
managed and therefore such management needs regulations. It is important therefore for the
owner of the business to have knowledge about the laws that are related to the business and its
activities. The aim of this report is to provide a better understanding of the UK legal system and
the related laws that apply to companies.
MAIN BODY
Different sources of law
The majority of court decisions are focused on two primary legal documents. Although
there are two types of sources in English legal system, namely:
o Primary, and
o Secondary.
Primary sources of law includes:
 Legislation (enacted by Parliament): The sovereign body commonly known as
Parliament, creates legislation in England and Wales. A statute or the laws made by
parliament is a legally binding act of Parliament and cannot be overturned in an English
court. The authority of the Parliament to establish the laws binds the judiciary, which
must make decisions based on the current law. The English legal system, on the other
hand, provides for a great deal of discretion in decision-making.
 Legal/judicial precedent or case law: The theory of judicial precedent is also another
major source of law, and it is founded on the Latin doctrine of stare decisis, which means
"to stay on judgments." This ensures that judges must obey prior superior court rulings
and they are binding. The ratio decidendi, or justification for the verdict, is the

component of a prior ruling that is legally binding, and furthermore, it must be extended
to subsequent cases.
All of these sources must be considered by business experts in order for judges to take them
into consideration before making a verdict (Lupo and Thiers, 2020).
Secondary sources of law includes:
 Legal commentary and all the textbooks that related to law.
 Views expressed by the Judicial Expert, and
 Foreign Judicial decisions.
These are called "persuasive" which can be used by a judicial in making a decision, and
they're not necessary.
Role of government in law making
Legislations are those laws or rules that has to be followed by anyone in the world. No one
is above the rules in a democracy such as the United Kingdom. Per year, over a hundred new
laws are enacted. The proposed law is commonly known as the bill. Bills proposed should be
referred to by both Houses in the parliament and later it receives Royal Assent and then became
the Act of Parliament, which helps in the running of the country. The process of it is stated
below:
 First Reading: In this situation, the title of the said bill to be proposed and descriptions
are read aloud in the House of Commons. At this point, nothing is being done.
 Second Reading: At this point, the Bill's details are being discussed and revised. MPs
then vote on whether or not to go forward with the Bill. At this point, the whip scheme is
primarily used to persuade voters to follow their political party, which will often result in
the new government winning a majority.
 Committee Stage: This is the stage at which the Bill is forwarded to a House of
Commons committee for further consideration. If necessary, further changes to the bill
can be made during that time.
 Report Stage: The committee reports back to the House on the discussions and
subsequent amendments. The House will then discuss and vote on the bill.
 Third Reading: The bill is reintroduced in the House. A brief debate can be held,
followed by a vote about whether the proposal should really be approved or refused.