Key Sources of Laws for Business Organizations in the UK

This report describes the legal context for business organizations in the UK, covering different types of business organizations and their advantages and disadvantages. It also discusses the key sources of laws that regulate commercial enterprises, such as employment law, partnership, and bankruptcy, and contract law. The report provides recommendations for IOM Solutions and includes information on the duties and liabilities of directors, vicarious liability, and business liability in negligence. The subject is Business Management, and the course code is BMP4002 Business Law.

Business Management
BMP4002 Business Law
Assessment 2
Report describing the key sources of
laws as the legal context for business
organisations in the UK
Submitted by:
Name:
ID:

INTRODUCTION
Commercial Code, also known as Commercial Code or Commercial Code. The body of the rule,
whether customary law, agreement law, national or international law, which governs transactions
between individuals in commercial law issues. The Business Law can understand by two types :
common law and civil law. In united kingdom there are several laws which are enforceable on
the business sector like the employment Law, Partnership , and Bankruptcy which regulate the
commercial enterprises, and Contract Law and related fields for the regulation of commercial
transactions. In a country of civil law, corporate law consists of statutory law. In the country of
jurisprudence, it is partly combined of the usual rules of common law and justice, and partly by
law. Underlying that the legal personality and limited liability two are basic theory for every
business law(Bryson, Wood, and Keeble, 1993 ).Almost all legal regulations help protect
creditors or investors. There are many forms of statutory entrepreneurship, unlike the sole owner
who bears the risks and responsibilities of running a business and making a profit, but by itself
does not form a legitimate company and is therefore special. This report will cover different
types of business organizations and recommendation to the IOM Solutions.
Businesses & Organisation in the UK
The plan of action and functional decision of company are taken by the administrative unit as
they are responsible for manage and run the business properly. Every company, itself acts like a
board of director and as if a shareholder. It duty that they ensure about fulfilment of legal
obligations. Being the board of director it is responsibility to fulfil and make decision for manage
the company's obligations. they are representatives of business who choose d by shareholders to
complete day-to-day obligations. This is basic rule that they work collectively as a board of
director. Board have power to delegate powers individually between directors or committee.
Duties and liabilities of directors
 Act in agreement with the company's Articles of Incorporation and the delegation of
powers is only reason for exercise its authority.
 They work to promote and the success of company and their members. they are also
accountable for company and employee's interests.

 It is duty of director's to maintain business organization relationships with it's suppliers
and customers. And see the Impact of the company's business on social group and the
surroundings.
 They should maintain desire of high standard business and reputation of company.
 It is duty to deal reasonably among the members of society. Possibility of long-term
consequences of the decision.
vicarious liability
 Substitution liability is a legal term used to describe a party's liability for the act that
causes the damage, even if it is not the party that directly caused the damage.
 Affiliate liability, sometimes referred to as attribution, states that if the act harms another
party, each party having a legal relationship with the other party will be liable.
business liability in negligence
 The definition of expert negligence is when a professional accountant is unable to
perform his duties according to the required standards or to fulfil his duty of care.
 Any awful behaviour leads to economic loss, physical injury, or hurt to clients and
customers.
 An expert's negligence claim may be filed against someone who is believed to have
expertise in the services he provides.
 Technical or management consultants, appraisers, etc. For the claim to be successful, it is
necessary to prove that the services provided are below the standards of their profession,
which leads to negative consequences.
Memorandum of association(MOA)
The Association's Memorandum of Understanding (MOA) is a legal document created during the
process of establishing and registering a limited liability company to define relationships with
shareholders. The MOA is publicly available and describes the company name, registration.
office address, shareholder name, and share distribution. The MOA and the Articles of
Incorporation serve as our Articles of Incorporation.
Article of Association(AOA)

Articles of Incorporation are written document that establish its rules of procedure for a company
and define company's purpose. This document guide to perform duties with an organization, such
as the processing of financial records and the appointment of directors .
The legal business structure of UK Companies
Sole Trader business
 This is easiest way for starting and run a new business. It 's in the hands of one person to
manage Business and protect ownership. Becoming a retailer is inherently dangerous.
The person can not be separated from the company & has only personal liability, its debts
and written agreement obligations, and claims against them. It is an own asset of the
company, dispose them freely, hire staff, Trading with name of trade. However, it is
supposed that the sole proprietorship position is appropriate. they required a small
amount of outside investment – unorganized limits borrowing and restrict companies
from increasing shares Issuance of shares. The restrictions on sole proprietorships are
minimal. No formal constitution is required.
 No need to register or submit an account and declaration for the company and to the
company House. only proprietors are treated as self-employed by HMRC and have to
registered and finished Yearly self-assessment – profits earns from the company are
treated as respective Income are taxable to income and social security contributions.
 Association without its own legal personality An unincorporated club is a group that
agrees or "contracts" to meet. Specific purpose.
General Partnership
general partnership if not defined under the Partnership Act of 1890 as more than two people
who "trade together for net profit." A partnership business provides a comparatively easy way to
start and operate a business together, each with capital, skills, and time. This is the same as one
individual can run a business as a sole proprietor. Every partner, whether doing different jobs or
focusing on different parts of the business, participates to some level in the every day pursuit of
the work objectives in which the partnership has been estalished.(Averchenkova, Fankhauser,
and Finnegan,, 2021)

Advantages partnership
 A partnership has no legal entity other than its shareholders. Unlike limited liability
companies and limited partnerships, it do not need to register or submit regularly to
Companies House. This makes the task easier.
 The company shared the profit among the partners, every partner is taxed individually on
the percentage of profits, there is no separate tax obligations.
 Similar to sole proprietorship model, partnership members are personally responsible
for the business debt, its liabilities. Creditors have right to claim a partner's personal
assets to pay off their debt, so if the venture fails, the partner will not be protected. In
partnerships, each partner is jointly and individually liable for debt.
Disadvantage Of General Partnership
 Therefore, if another person in the partnership takes on the debt or one partner drops out,
each partner will be responsible for all the debt. This is most dangerous if the simple
partnership is in debt and they are dealing with someone who has little or less personal
wealth. This is the personal responsibility for scare away prospect and this is the one of
reasons why many people believe incorporating their business under the limited liability
company, in some special cases, registered as a partnership or limited partnership.
Partnership
 Partnerships business are easy way for two or more legal persons to establish and operate
a legal entity. This Business is for the purpose of profit gain. this can develop without any
procedure. There should be a written agreement before people do business together, but
usually there is an agreement Act in partnership.
 Partners typically set up legally binding partnerships Agreement stating the percentage
of capital contributed by each partner, decide how they share the company's profits (and
losses). Partnerships do not have their own legal individuality.
 they share the risks, costs and the responsibility business being its members. Because
partners usually wear them As a result of each others decisions, partners usually run a
business They have right to hire employees, but themselves. Partners usually raise money
for them A company that uses its own assets and / or loans but as a partnership

Limited Liability
Liability is to reduce your personal financial risk. If a business fails (or is sued), the
structure of the business limits the amount person are liable for. This "safety net" comes in many
forms. This is how each type works. (Adamou, Kyriakidou, and Connolly, 2021).The most best-
selling form of limited liability-actually the most favourite corporate model in the UK-is the
limited liability companies. On the day it established, the company becomes a separate legal
entity have a different finance than individual. This defines that the case of a liquidation or
proceeding, they may only be personally liable for the minimum value of the company's shares.
Further liability have to be paid from the company's assets. The private assets of company are
(usually) safe. All limited liability companies must be registered with Companies House
ADVANTAGES OF LIMITED LIABILITY
 limited liability is to reduce your personal financial risk. If a business fails (or is sued),
the structure of the business limits the amount person are liable for. This "safety net"
comes in many forms.
 This is how each type works. (Adamou, Kyriakidou, and Connolly, 2021).The most
favorite form of limited liability is actually the most best-selling corporate composition in
the UK. A limited liability company. When once established, the business becomes a
individual legal entity with a different finance than individual.
 In the event of a liquidation or proceeding, they may only be personally liable for the
nominal worth of the company's shares. Further liability is to be paid from the company's
assets. The private assets of company are (usually) safe. All limited liability companies
must be registered with Companies House
DISADVANTAGES OF LIMITED LIABILITY
 Personal property is protected Companies pay corporate tax at 19% which is less than
normal tax.
 The company can start with only one member. Companies have rights such as, opening
their own bank account, buying real assets and estate, and investing and purchasing
insurance on their behalf. (Hunt., Sarkar, and Warhurst, 2022)
 The possible disadvantages of the limited liability company form are: Loss of control-
Other partners may challenge their decision Companies cannot trade shares publicly

More complex accounts that are likely to require an accountant Company account will be
published they need to understand how to make money from their business.
Recommendations for IOM Solutions
Sam should choose limited partnership here are benefits of formation according to IOM solutions
 A partnership has no legal entity other than its shareholders. Unlike limited liability
companies and limited partnerships, they do not need to register or submit regularly to
Companies House. This makes the task easier.
 The company's profits are divided among the shareholders, each is liable for pay tax
individually on their shared profits, but the partnership has no separate tax obligations.
However, this simplicity comes at a price. Simple partnerships do not have legal
personality. Similar to the sole proprietorship model, partnership individuals are
personally responsible for the business debt and its liabilities. Creditors have right to
claim on partner's personal assets to pay off their debt, so if the venture fails, the partner
will not be protected.
 In partnerships, each partner is jointly and individually liable for debt. Therefore, if
another person in the partnership takes on the debt or one partner drops out, each partner
will be responsible for all the debt. This is most dangerous if the partnership is in debt
and are dealing with someone who has little or no personal wealth. (Hunt., Sarkar, and
Warhurst, 2022)
 This personal responsibility is a discouraging prospect and also one of the reasons to
know why many group consider incorporating their business as a limited liability
company , in some special cases, as a partnership or limited partnership.
 The main reasons for choosing an LLP structure are: Protected to some extent from
mistakes made by other partners LLPs can sign contracts under their own name (instead
of being signed by each partner). The structure of an LLP can be more flexible than the
structure of a limited liability company You can protect the name of the partnership.

CONCLUSION
Thus it concluded that is united kingdom there are various type of business available and for
controlling and giving guidance sever l law available like employment law, consumer goods
sales , antitrust,etc. On establishing and registering a company. Individual need to choose their
business structure and decide how and where they want to run business. Your lawyer will help
ensure that your business is protected from the beginning.

REFERENCES
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