The Importance of Legal System and Laws in Business

This assignment provides an overview of the importance of legal system and laws in business management. It discusses the role of government in law making, the impact of legislations such as company, employment, and contract laws on businesses, and different forms of business that can be opted. The document also highlights the need for effective conflict resolution mechanisms, including arbitration, and the significance of financial resources in business management.

A81096
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Submission dat e : 03- Apr- 2019 08 : 24 PM (UT C+0500)
Submission ID: 1105191892
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B US/NESS LAW

Table of Contents
INRODUCTION ,.. , ,.. , ,.. , ,
3
TASK 1 , 3
PI. Various sources of UK law ,.. , , 3
P2 Role of government in commencing law , .4
TASK 2 5
P3. Using specific example, illustrate how company, employment and contract law has a
potential impact upon business , .5
TASK 3 , , 7
P4. Different forms of business organizations that can be legally formed , 7
P5. Explain how business organizations are managed and funded , , 8
TASK4 9
P6. Types of legal solutions for resolving a rage of disputes using examples along with
recommendation 9
CONCLUSION 11
REFERENCES ,.. , 12
....................................................................................................................................................... 12

INRODUCTION
Business law is generally explained as the major system of law which is enforceable to
manage all the commercial work which is being managed regularly. It is one of that law which is
helps in different sectors that how business can be mange on daily basis. The different laws
which come under the branch of branch of mercantile law are: intellectual property, contract,
company, taxation law etc. It is necessary for all organization to work according to the
requirement of commercial law to make themselves safe penalty. The crucial aspect of business
is that it helps to solve all those legal problem which are inter-related with business sector
through the process of Alternate Dispute Resolution (Baker, 2019).
In this project the discussion will be of different sources of UK law and how government
shows their importance at the time of commencing law. There will be major discussion about
employment law, contract law and contract law. Even their will be detail information about
several types of organization. In the last stage the topic that need to explain will requires the help
of case study.
TASK!
Pi. Various sources of UK law
It is necessary to understand the term and language of law and role of government that
how they allows different bodies to commence law in UK. The main sources of UK law which is
required to be followed by four different nations and they are England, Wales, Scotland and
Northern Ireland.
Legislation: It is the main body which is working for preparing laws in UK. House of
Parliament need to approve at the last stage to make any legal law in UK. It is necessary to
obtain the approval of monarch to make any law as it is written in Royal Ascent Act. The main
role of legislation is to maintain peace and silence in the country. It is beneficial for both country
and general public (Basedow, 2017).
Common law: The law where freedom is given to court to commence law is known as
common law .it is one of that law where main responsibility is given to the different level of
court mainly to high court and Supreme Court. Judges are given the power to commence law as
per the requirement of situation to commence any kind of common law judges have been given

power to make their work easier and faster. These types of law might be changed as per the
demand of public at any period of time with prior approval of House f Commons and House of
Lords. Common laws are legal binding in nature even no one can challenge it. If it is found that
anyone is not following this law, then strict actions can be taken by court.
European Convention on Human Rights (ECHR): It is one of those law which are
implemented to protect the rights of general public of UK. This Law is prepared according to the
condition of different nation of UK. This law has been much beneficial as it provides the right to
every individual to put their point when something wrong is happening with them. Amendments
can be done on those Law which are propose by ECHR but cannot be overrules by House of
Parliament.
European Union Law (EU): This is one of the law which have commenced around 50%
law in premises of UK (Cooter and Uien, 2016). The laws which are enforced by EU cannot be
overruled by Parliament and even cannot be amended without prior approval. This laws are
being followed by UK because they are also one of those member of EU in which they take
active participation. This law is mainly concerned with social, political and economic poLicies.
This law helps general people to vote for the process of election through which MPs are selected
for the Parliament season.
P2 Role of government in commencing law
The main role in UK is being played by government as they know each and every area
law that whether it is weak or strong. They try to build those forms of law which are crucial for
both public and nation. There is length process which is being followed by every ruling
government in UK. There are seven different stage which are being followed by government to
commence any new law within the boundary of four different nation
The process start with first reading where focus of government is on bill is prepared by
Member of Parliament. If they are satisfied then they forward it for second reading where general
discussion round takes place. It is necessary that second stage is being focused in systematic
manner as it is main stage of commencing law. If member presented in second reading thinks
that bill should be entertained then they send it for committee stage where they try to find the
importance of bill (Cox, 1. ed., 2015). If changes are required in the bill then they send it to
report stage else it is forwarded to third reading. The major focus of report stage is just to

conduct the work related to amendment. Then after bill need to be send in third reading where
voting is done for the purpose of knowing that who are satisfied with the bill and who are against
it. [f ratio of agreed is more than 50% then it send to House of lords. The six stage is known as
House of Lords where 800 peer mem bers need to show their presence by discussing on the points
which are described in bill. If members of House of Lords are not satisfied with bill then they try
to send back to House of Common for doing certain changes. But, if they think bill should be
commenced as a law then in that condition they send it for obtaining Royal Assent.
UK legal system consist of common and statutory law which extends to whole country.
The application of common and statutory law is different which should be known to each
individual and organization. These law have been described below:
Common law: These are unwritten legislations that have been formed by following
doctrine of judicial precedents. These are judge made laws (Davidson, Forsythe and Knowles,
2015). Judgement of previous cases are considered foundation on whihc future case laws are
determined provided that circumstances of case are same. It is also know as judge made law or
case law. The new law will be treated as supplemental to existing law. Modifications are done
only through statutory law. It is a procedural law that has principles on which judgements are
made in lawuits.
Statutory law: It refers to laws established by legislative body and available in written
form. This is basic foundation of legal system on which UK legal system is based. A bill is
presented by member of Parliament who is passed through various stages which is enacted as
law after receiving consent from Queen. In order to amend to existing laws, a separate statue
must be established. It is substantive in nature which comprise rights and duties that will govern
UK citizens. There are offences and their respective fines, penalties and punishments which are
given to wrong dowers (Frank and Bix, 2017).

TASK 2
P3. Using specific example. illustrate how com pan" . emplo"menl and contract law has a
potential impact upon business
Law provide a system for the smooth conducting of business activities. These are
important which provide guideline which should be followed during the life of entity. There are
various legislation that can have potential impact upon a business such as:
Company: There is a specific law that needs to be followed by companies in UK.
Companies Act, 2006 provides laws regarding formation, appointment of minimum director,
shareholders, their rights, capital raising, remuneration, conversion, winding up and so on
(Kraakman and Hansmann, 2017). A corporate should be registered under this Act to avail the
status of a company. In case of non-compliant with these provisions, there will be legal
consequences which may create situations of financial distress, loss of reputation, goodwill and
many more and in extreme situation, a company can be wound up. For example, a company must
have minimum number of director in order to proceed with commencement. It is a pre-requisite
which should be met at the time of filing documents for registration. In case, corporate fails to
fulfil the requirement, it will not receive certificate of incorporation, which is mandatory.
Employment: There are laws in UK legal system that are applied to employers and
employees. Employment Act, 2002 protects workforce form exploitation by giving provisions
regarding minimum wage, working hours, leaves including paid leaves, discrimination,
dismissal, equal opportunities and pay etc. Further, there are rules which should also be complied
with. Every employee should be treated fairly and incentives must be provided without being
prejudice. Moreover, employment tribunals have been established where cases can be filed by a
worker or employee against his employer in case of contravention of Employment Act, 2002. For
example, a company has failed to provide the salary so mentioned in the contract of employment
to an employee and even after informing about unpaid salary, no actions were taken. In such
case, a case can be filed by referred employee (Kraakman. 2017).
Contract: It is an agreement between parties to the transaction or deal, who have legal
intention to create an obligation. Contract includes terms and conditions which should be abide
by as long as it is valid and alive. There is no particular legislation governing contracts in UK,
hence, it is regulated through Sale and Supply of Goods Act. 1994. Buyers and sellers execute
contract between them by inserting clauses regarding payment and delivery of goods or services.

A party trust another party only when a contract has been formed between them. Contract laws
are very important for a business which impact commercial activities as purchase, sell. resale,
etc. of a product or service is done after executing a valid contract. These are essence of any
business and its functions. There should be contract for each transaction. For example, a contract
has been executed between company and its creditors. which contains time within which
creditors will be paid. The entity, failed to make the payment to its creditors according to terms
and condition of contract. In such as case, it will be treated as a breach. Creditors can apply by
filing winding up petition in the court.
TASK 3
P4. Different forms of business organizations that can be legally formed
The success of a business greatly depends on the form of organization that has been
chosen among all available types (Leyland. 2016). Each form has its own advantages and
disadvantages which should be assessed and compared with other types. Different types of
entities have been mentioned below:
Sole proprietorship: The business is owned and managed by a single person known as
sole trader or proprietor. It is generally formed form business operating at small scale. The owner
is responsible for debts and obligations. There is no law that will be applicable on this form,
furthermore, there is no distinction between owner and business. It is a poplar business form
because of features like easy to set up and dissolve, low investment etc. On the contrary, sole
proprietor is solely liable for debts in case of financial distressing situations. If the assets of
entity are insufficient for paying off debts, then owner's personal properties and other assets will
be utilised.
Partnership: It is an arrangement to carry lawful business activities with an objective to
make profits. It is formed and carried by partners who execute a deed which comprises terms and
conditions. Partners have mutual interests and is suitable for individuals with common goals. It is
of two types general partnership and limited partnership. Business activities are managed by
partners (Miller and Jentz, 2017). Profits and losses are divided in the ratio so mentioned in the
deed, however, if ratio has not been mentioned, then it is shared equally among all members. All
partners are jointly and severally liable for the acts of other partners. It is easy to form as
registration is voluntary. Further, legal requirements and expenses are low as compared to any

other form. There is flexibility in operations whereby terms of deed, policies etc. can be modified
with mutual consent. Losses are shared among all partners. hence. burden does not fall on a
single person. However, there is unlimited liabilities of partners, not much options are available
to raise funds etc.
Company: A legal entity having an identity separate from its members established with
objectives to be achieved. Further, it has perpetual succession and a common seal which used to
authentic contracts and important documents. It can own properties, open account and sue or be
sued in its own name (Raz, 2017). It can be of three different types viz. Limited by shares or
guarantee and unlimited. Every company is required to be registered under Companies Act, 2006
to operate in UK. It can be formed for carrying out business at small, medium or large scale and
most preferred form or organization. It exercises its rights of paying taxes, borrow money, hire
employees etc. It can be a public, private or non profit organization. Shareholders have liabilities
up to the nominal amount unpaid on shares held by them. Taxation rates are favourable and
many options are available to raise capital. On the other hand, formation can be expensive,
complex legal requirements in huge numbers and profits distributed by company are taxable in
the hands of shareholders.
Limited Liability Partnership (LLP): It is a hybrid form of a partnership and company.
The liabilities of partners are limited just which means that no personal properties or assets of
partners will be realised in order to complete obligations. Unlike partnership, a partner is can not
be held liable for the acts of another partner, hence, everyone is in charge and liable for their own
acts. Further, there is existence of separate legal between owners and LLP. In other words, it can
execute contracts, own properties etc. in its own name. It has perpetual succession, management
of commercial activities are done by all partners, ownership can be transferred easily etc.
Whereas, it lacks in credibility, more conflicts between partners, and low recognition (Rohlin
and Ross, 2016).
P5. Explain how business organizations are managed and funded
Management and financial resources are two major requirements of a business entity
without which it can not operate. People are hired to manage and sources are accessed to gather
funds. These have been discussed below:
Sole proprietorship: It is a business at small scale which is managed by owner himself.
All roles and responsibilities are fulfilled by him. Decisions such as making contracts. expansion

of business, hiring employees for help, etc. are made by sole trader only. Profits and losses are
not shared with any other person. In nutshell, administration is in the hands of sole proprietor and
can not be assigned to a different person. Finances can be raised through one or two sources
because it is not a registered entity, thus, gets difficult for raising funds. Hence, personal savings
along with bank loans are the only sources which can provide funds so required.
Partnership: A partnership firm is formed with partners who carry and manage its
business activities. Decisions making power is with every partner, however, consent of all is
required. In case, any of the partner oppose the proposal or decision, then it can not be
considered final (Singer, 2018). Moreover, all the members may choose one of them who will act
in their behalf. Furthermore, there could be active or sleeping partners who will act in different
ways. They will receive profits or share their losses in the ratio so mentioned in the deed.
Partners use their skills and capabilities to manage it. Majority of activities are financed through
capitals brought by partners. Moreover, it can access more options for raising funds which can be
business loan, crowdfunding, business grants etc.
Company: It is an artificial person who can not manage business activities on its own.
Therefore, it appoints directors who manage and act on behalf of the company. The board has
rights, duties and responsibilities which are defined in Companies Act, 2006. there must be
required number of directors for carrying the business. They make decisions, formulate policies,
plans and procedures which are applicable on whole organization. Furthermore, they act as
trustees and agent for its monies and properties. There are huge sources available for raising
funds, however, the most common are through issuance of shares and debentures. Apart from
these, bank loans, venture capital, capitals brought by members, deposits etc.
LLP: Its partners have direct control over the affairs of LLP. They are treated in the
same way as shareholders in the company. They have roles and responsibilities of forming
contracts, making decisions, admission or removal of a partners etc. However, no partner is held
liable for the acts of others. It is 011 higher side when its comes to raise funds, as various sources
are available to it as compared to sole proprietorship and partnership. Capitals of partners, bank
loans, retainer earnings, crowdfunding etc (Vago. 2015).

TASK 4
P6. Tvpes of legal solutions for resolving a rage of disputes using examples along with
recommendation
Disputes and conflicts are likely to happen in an organization which should be resolved
with an appropriate legal solution. There are different methods that can be used legally for
concluding disputes. These are as follows:
Negotiation: It is the simplest and preferred method for dispute resolution. In tills, a two
way communication is held between parties to disputes which an aim to find a solution. The
parties can negotiate directly or appoint a third person who will help with communication and try
to settle differences. It does not follow a set procedure which be modified depending on the
situations (Wilson and Wortley, 2018). However, the decision must be accepted and mutually
agreed on by both parties. For example, directors and managers can resolve their conflicts in the
board room by negotiating terms and conditions.
Mediation: It is a voluntary process which is adopted when negotiation failed to resolve
the conflict. A third party is appointed who is called mediator who helps with the whole process
for reaching a mutuaJly acceptable agreement. Mediator handle the process and facilitates
negotiation between parties to disputes. However, no decision is made or implemented. Parties
have direct control for settling the matter. Certain grounds on which whole process will be
carried are established. Mediator helps each side in understanding perception and opinions of
other party. These take place in the office of mediator or a location agreed mutually. Mediation
agreement can be converted into a contract which can be enforced by law. For example, a
company has tax disputes with the prescribed authority, tills can be resolved through mediation.
Arbitration: It is an out of court settlement in which an independent person is appointed
with the approval of both parties. In this, evidence and facts are produced to arbitrator for
examination. He listens to both parties, inspect evidence, apply his knowledge and take decision.
The judgement so awarded is final and binding. It is simple, fast and inexpensive mode for
settling differences. Arbitrator creates his own procedure, manages the whole process. There can
be either one arbitrator or a panel. These usually held in offices or meeting rooms. For example,
there is a dispute between an employer and employee due to safety at workplace which can be
solved with arbitration.

Litigation: It is the method which is used when above methods have failed to resolve
disputes. The disputes are taken to courts which are resolved by a judge. It starts with trial stage.
in which facts and evidence along with witnesses are produced. The aim is to compel opposing
party to participate in the solution. It is an expensive. time consuming method. For example. a
female employee has been raped in the organization. It is a heinous crime which can be resolved
in courts only.
The above methods can be used in different situations in order to fmd a solution.
However, arbitration is the best solution which can provide prompt actions for conflict resolution
in almost every situation.
CONCLUSION
From the above report, it has been concluded that every business is managed through
laws which govern commercial transactions throughout life span of the entity. In order to
understand legal system and laws, various sources should be accessed. Further, government has
an important role in law making which can not ignored. Rights of citizens are governed through
statues in UK. Legislations like company, employment and contract are applicable and have
potential impact upon businesses. Further, there are different forms of business which can be
opted. There management is vital together with financial resources. Along with this, conflicts can
be resolved with various legal solution.

REFERENCES
Books and journals:
Baker, J., 2019. Introduction to English Legal History. Oxford University Press.
Basedow, J., 2017. BREXIT and business law. China-Ell Law Journal. 5(3-4). pp.lOI-118.
Cooter, R. and Ulen, T., 2016. Law and economics. Addison-Wesley.
Cox, J. ed., 2015. Business Law. Oxford University Press, USA.
Davidson, D.V., Forsythe, L.M. and Knowles, B.E .. 2015. Business law: Principles and cases in
the legal environment. Wolters Kluwer Law & Business.
Frank, J. and Bix, B.H., 2017. Law and the modern mind. Routledge.
Kraakman, R. and Hansmann, H., 2017. The end of history for corporate law. In Corporate
Governance (pp. 49-78). Gower.
Kraakman, R., 2017. The anatomy of corporate law: A comparative and functional approach.
Oxford University Press.
Leyland, P., 2016. The constitution of the United Kingdom: A contextual analysis. Bloomsbury
Publishing.
Miller, R.L. and Jentz, G.A., 2017. Business law today: The essentials. Cengage learning.
Raz, J., 2017. The rule of law and its virtue. In The Rule of Law and the Separation of
Powers (pp. 77-94). Routledge.
Rohlin, S.M. and Ross, A., 2016. Does bankruptcy law affect business turnover? Evidence from
new and existing business. Economic Inquiry. 54(1). pp.361-374.
Singer, L., 2018. Settling disputes: Conflict resolution in business, families, and the legal system.
Routledge.
Va go, S., 2015. Law and society. Routledge.
Wilson, S. and Wortley, N., 2018. English Legal System. Oxford University Press.