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Legal Aspects Of Business | Case Study

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Added on  2019-12-28

Legal Aspects Of Business | Case Study

   Added on 2019-12-28

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LEGAL ASPECTS OFBUSINESS
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Table of ContentsINTRODUCTION....................................................................................................................................................3TASK 1.....................................................................................................................................................................3Sole Trader..........................................................................................................................................................3Unlimited Partnerships.......................................................................................................................................4Limited Liability Partnership..............................................................................................................................5TASK 2 ..................................................................................................................................................................6Duty to act within powers...................................................................................................................................6Duty to perform the success of the company......................................................................................................7Duty to exercise independent judgement............................................................................................................8The duty to avoid conflicts of interest................................................................................................................9CONCLUSION .......................................................................................................................................................9REFERENCES.......................................................................................................................................................10
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INTRODUCTIONEvery business is governed with some sort of laws and ethics which are need to befollowed by a organization. These are not the rules which a company make these are externallaws made by the government of the country to regulate a firm and asks them to follow thoselaws. Normally these rules define shareholders, employees, creditors, consumers, taxation,partnerships, company structure and etc. and how they will be governed and what measuresand criteria will be followed (Pathak, 2013). Any frauds or cheating will be considered asviolation of laws and certain action to the company, its owners, board of directors will betaken. So while initiating with a new company or business the owner should go through thelegal aspects which could impact the firm in the future. Such kind of laws specify aorganization that how they will work with their partners and contractors (Padhi, 2012).Comparison of the companies on the basis of legal business forms are included in these.Director is a person who guides and govern a company or a field of a company. Directorsduties are the laws which gives power to the board of directors to anonymously takesdecision in the company. TASK 1Sole TraderBusinesses organizations are distinguished in many ways depending upon the criteriaused. On way of classify companies are based on their ownership. Sole traders are one of thetypes of businesses. It is one of the most simple form of business organization and is definedas a business owned and run by a single person and are also called as sole proprietorship.There is no legal difference between the owner and the business. Owner is responsible for thesupply of the required funds to run the business (Horrigan, 2010). Any financial activitywhich is commenced by a sole trader will trade under the name selected by the himself and oron his own name. assets are considered as the personal of the owner. For starting a businesshe needs a licence and registration process of this is not that complicated and is not thatexpensive. Once the name of sole trader business is registered it will prevent other peoplefrom using it. Person interested in starting a business can be form sole trader business as itdoes not need legal formalities. Profits generated will be going all to the owner because he isresponsible for all the business losses and liabilities. Size of these can be small or big
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depending upon the number of employees or the area in which they are operating. Smallretailers or grocers can be example of sole trade.Legally sole trader is given a identity of a single individual, so every liability or theassets are considered as the personal of the owner (Sinclair and Lipkin, 2016). For starting abusiness he needs a licence and registration process of this is not that complicated and is notthat expensive. Once the name of sole trader business is registered it will prevent other peoplefrom using it. When it comes to the tax norms they does not have to pay taxes separately butowner have to pay.Case Study of Sole Trader:- On evening, a person named John Mark is a member of alaw firm which is responsible of taking care of accounts of a sole trader business of afurniture named Argon Furnitures. John receives a phone call from his subordinate that theowner of the company, 76 year old Victoria Wurtz, had a heart attack at his residence andnow admitted to hospital. But there are two transactions which require Victoria's approval.This problem arise because in sole trader the decision making power is with only one singleperson. John was concerned about the health of Victoria but he has to also deal with the legalaspect coming in-between the company.Unlimited PartnershipsUnlimited Partnership also refereed to as unlimited liability, it is basically a businesswhich include joint owners that are in charge of liabilities and debts resulted throughbusiness. This kind of liability is not crowned and can be paid off by the personal assets ofowner. Unlimited partnership exists in sole traders, if the company is not able to pay the debtsowner's of the company will be responsible for this (Craig and Campbell, 2012). Thegovernment can grab or snatch the personal property or assets of the owner if the debts arenot paid. In order to avoid this situation or to get away from this people establish limitedpartnership so that they could save their personal assets. For example, three people came witha business and invest $38000 in that business which they own with collaboration. After aperiod of the time company arise with $330000 in liabilities and if they cannot repay it andthe bank announce company as defaulters than all the three partners will be equallyresponsible for the repayment of the debts. This would result that all of them have to comepay $110000 each in addition to the initial investment they made. Unlimited Partnershipcompanies have a complicated legal laws controlling or governing them. The registration of
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