The business Environment in the UK
9 Pages3443 Words82 Views
Added on 2021-06-17
The business Environment in the UK
Added on 2021-06-17
ShareRelated Documents
qwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmLegal Aspects of Business
LEGAL ASPECTS1TASK 1The business environment in the United Kingdom is considerably friendly for organisationswhich are operated in the country. Primarily, there are three types of business structures inthe UK: sole trader, partnership and limited company (Simple Formations, 2018). Thesebusiness structures have both merits and limitation which are required to analyse by partiesbefore selecting them. In the UK, partnership and private limited company are two mostpopular business structures which parties choose for operating their business. The aim of thisessay is to evaluate advantage and disadvantages of an unlimited partnership and privatelimited company by analysing relevant case laws and legislation. The Partnership Act 1890 isthe key document which provides provisions regarding partnerships operating in the UK(Legislation.gov.uk, 2018a). The definition of partnership is given under section 1 of the Actwhich provides it as a relation that exists between two or more parties with a purpose ofcarrying on a business in common with a view of profit. In the UK, partnerships arecategorised into three types: limited partnership, unlimited partnership and limited liabilitypartnership. There are both advantages and disadvantages of an unlimited partnership. Theadvantages include easier formation by either written, oral or implied by conduct, fewer legalformalities, and private of documents. The disadvantages include dissolution in case any disagreement arises between partners, nolimited liability, and no separate legal entity. There are four key elements of a partnershipwhich includes the relationship between parties, carry out a business, in common and view ofprofit. In Stekel v Ellice (1973) 1 WLR 191 case the plaintiff was a salaried employee, and healso agreed with the defendant to enter into a partnership (Prassl, 2014). However, theagreement wasn’t constructed, and the plaintiff leaves with his clients. The question ariseswhether arrangements between parties constitute a partnership. Megarry J held that theplaintiff and the defendant have entered into a partnership even when the plaintiff receives asalary from the defendant rather than the portion in profits and his name did not appear as thepartner. It is important to analyse the substance of the relationship between parties in order todetermine a partnership which assists in classifying between a mere employee and a partner.Next essential element is ‘to carry out a business’ which means partners must together carryout a business. In Smith v Anderson (1880) 15 Ch D 247 case, the court held that a partydoing any isolated act is not considered as “carrying on” a business that is an association
LEGAL ASPECTS2formed for performing an act which will not be repeated in the future is not considered as apartnership (Salim, 2009). In Checker Taxicab v Stone (1930) NZLR 169 case, a driver hid a cab from its owner whichwas not considered as a partnership because it was not a business that is being carried out byparties in common (Hawes, 2011). Another element of partnership is “in common” whichmeans that partnership business must be operated in a common way by all the partners in afirm. A good example was given in Keith Spicer Ltd v Mansell (1970) 1 All ER 462 case. Inthis case, X and Y decided to form a company and X purchased furniture from the third partyand delivered it to Y. The party sued Y for the unpaid amount; the court held that apartnership hadn’t been constructed because they are not carrying on a business in common(Deards, 2013). The final element of the partnership is “with a view of profit” which meanspartners must earn and share profit of the business they run in common. In Britton v TheCommissioners of Customs & Excise (1986) VATIR 204 case, the court held that agreementbetween a married couple for sharing of profits could not be constituted as a partnershipbecause only sharing of profits is not enough and other elements are required to fulfil as well(Morse, 2010).The provisions regarding a private limited company are given in the Companies Act 2006.The definition of a private limited company or ‘Ltd’ is given under section 4 which providesthat it is the company which is not a public limited company or PLC (Legislation.gov.uk,2018b). The differences between PLC and Ltd assist in understanding the definition of aprivate limited company. A PLC can issue its shares and list them on a stock exchange forfree trade which can be bought by anyone. In case of private limited, the shares are not freelytraded, and they are issued to friend and family of the members. The section 9-11 of the CA2006 provided significant provisions which are required to comply by a corporation.According to section 9, a company is required to maintain its registration documents whichinclude the memorandum of association and the article of association. The article ofassociation is a significant document which provides bylaws basic structure andadministrative structure of a corporation which governs the actions of its members. Undersection 10 the provisions regarding the statement of capital and initial shareholdings aregiven which are delivered by a Ltd in case it has share capital. As per section 11, 12 and 13, different statements are required to be made by a corporationwhich includes a statement of guarantee, proposed officers and compliance respectively.
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Assignment : Legal Aspects of Businesslg...
|10
|3364
|168
Legal Aspects of Business in the UKlg...
|9
|3342
|356
Corporations and Business Structure PDFlg...
|10
|3423
|70
Choosing the Right Business Structure in Australialg...
|11
|3157
|282
Corporation and Business Structure: Partnership and Companylg...
|13
|3656
|107
Application of Contract Law Principles in Three Scenarioslg...
|8
|2206
|500