Legal Structures and Company Formation

This study material focuses on types of Business Organization - incorporated and unincorporated business and explains how different types of business organizations are legally formed. Access the advantages and disadvantages of the formation of different types of business organizations. Discuss Effectiveness of Legal Solution and Legal Advice and Support.

“Section A: Types of business organizations”
I- Introduction of incorporated and unincorporated business
“In this part of the presentation, I will focus analysis on two types of businesses organization: incorporated
and unincorporated business. In detail, for the type of unincorporated business, there will be 2 main types:
sole trader and partnership, in which partnership has 3 types of partnerships: general partnership, limited
partnership, liability limited partnership. And the second type is incorporated business, there will be 2 main
types: private and public company. And the following is detailed information about the definition,
characteristics, formation, management, source of finance, advantages and disadvantages of the above types
of businesses.”
II- Unincorporated business
1. Sole trader
1.1. Definition
“A sole trader, also known as a sole proprietorship, is a simple business structure in which one individual run
and owns the entire business. A sole trader is entitled to keep all profits after taxes have been deducted but
is also liable for all losses the business incurs.”(Enotes, 2021)
1.2. Characteristics
“Sole trader has the following 7 basic characteristics. The first characteristic is Sole ownership. In detail, the
ownership and the responsibility of the entire firm falls under one person - the owner of the firm. On the
closure of business, the owner is liable for all the profits and losses legally. The second characteristic is
Unlimited liability. This means the liability of the owner is unlimited. In a situation like bankruptcy or any
loss in the business, the loss can be recovered by selling both the business and the private asset (i.e. house,
land, etc.) of the proprietor. The third characteristic is Limited work area. The progress and work area of a
sole proprietor firm is limited. This is because the capital acquiring capability, organizational skills and the
available resources of an individual are limited. The fourth characteristic is Sole right on capital. The

a) Set up
“According to GOV.UK (2021), Operating as a sole proprietorship is the simplest and cheapest business
structure that can be established by qualified and behaviorally qualified individuals. And to set up a sole
trader, there are 4 basic steps as follows.”
- Check if the self-employment is right for you: “Business owners should check to see what type of
business should be established in accordance with its capabilities, capital and benefits.”
- Choose a name for the company: “Sole trader do not need to register a business name. But if you
want to expand your company's image and brand, you should register your business name with the
business registration agency so that you can easily transact with other related parties.”
- Check the records to keep: “Business owners must keep records of their business income and
expenses for tax return if self-employed as a sole trader. Besides, business owners should also choose
an accounting method to record the expenses and income of the business.”
- Tax registration: “To be a sole trader, that individual needs to let HMRC (Her Majesty's Revenue
and Customs) know that you pay taxes through a Self Assessment. Sole proprietorship owners will
need to file an annual tax return.”
b) Business name
“A business owner can conduct transactions in his or her name, or a business owner names his or her
business and conducts transactions with related parties using the business name. For the type of sole
trader there is no requirement to register the business name.”(GOV.UK, 2021)
“In case the business owner has registered the business name, when making transactions, paying bills,
sending letters to related parties, it is necessary to have the name of the business owner and the name of
the previously registered business. And when registering a business name, business owners should note
the following things. The unique business name at registration cannot contain the following words:
'limited', 'LTD', 'limited liability partnership', 'LLP', 'public limited liability company ' or 'plc'. The
business name must not resemble previously registered trademarks and the business name must not be

Besides, business owners will need to apply for a National Insurance number if moving to the UK to set
up a business.” (GOV.UK, 2021)
“For VAT, a business owner must register for VAT if his/her annual turnover is over £85,000. Business
owners can also register voluntarily if it feels right for their business.In case, the business owner
establishes a a construction industry sole proprietorship, he/she must register with HMRC for the
Construction Industry Program (CIS) as a subcontractor or contractor.”(GOV.UK, 2021)
1.4. Management
“For a sole trader, the business owner has full authority to manage and control the business activities of the
enterprise. And the management task of the business owner starts from the time the business comes into
operation until the company closes. In the following, I will clarify the POCCC management model in sole
trader.”
“Planning: The business owner is the person who manages and makes business development plans that are
most suitable to the current conditions of the business, such as plans to recruit employees, purchase
production equipment, lease factories.”
“Organizing: The business owner is not required to consult any shareholders before making a decision.
Business owners must organize necessary activities such as organizing job interviews, hiring employees,
training and managing. Besides, business owners also need to determine the work that needs to be done to
run the business, and divide the work appropriately for each group of employees. In addition, business
owners can entrust employees with certain, clear tasks and powers”
“Coordinating: The business owner is the one who coordinates all employees work by choosing methods to
support work and assigning employees to work in the right roles. And business owners need to guide
employees to work in a good way because many positions have complex work nature. And the business
owner is also the one who analyzes, guides and answers the questions of employees when they have
difficulties.”
“Commanding: The business owner directs and guides the employees to work according to his/her plan to

a business. However, finding the money to buy equipment and manage day-to-day operations in a sole trader
is not quick and easy. And there are two sources of finance: equity capital and debt capital. Here are some
financial resources that a sole proprietorship business can use to run and grow the company stronger:
“For equity capital, there are three main sources of cash flow from the business owner, profit from the
business's operations, and cash from the sale of inventory and assets. Cash flow of business owners is the
source of capital for businesses that can maintain operations in the early days of establishment and have not
yet earned business profits. Besides, the owner's cash flow is also a source of money to help businesses
secure bank loans. In general, this is a cheap and beneficial source of finance for business owners because
they can use it however, they like to manage the company. And businesses exist to make profits and business
owners can withdraw profits so that they can be reinvested to expand their business or undertake other
development projects. Business often runs out of stock, and businesses will tend to sell their inventory at a
discounted price - a great way to raise the money a business owner needs. In case the business has excess
machinery, the business owner can sell it and use the money to serve other business activities.”(Thompson,
2022)
“There are three sources of debt capital in sole trader as follows. The first is a loan from a bank. A bank is
a place where business owners can borrow money and borrow large amounts to serve the company's business
activities. However, the bank will use the business owner's personal assets as a basis for approving loans,
ensuring that the owner can repay the loan. The second is the source of money that business owners borrow
from family members and friends. This is a source of money borrowed with low interest rates and
preferential repayment terms. In particular, loans are quicker and easier to arrange than bank loans. And
finally, the source of money from credit support. A credit card is essentially a revolving lending vehicle
that allows you to borrow up to a pre-agreed limit, then pay the balance over time. It is a useful way to cover
a temporary cash flow shortfall. Credit cards are compounded, which means that a monthly interest fee is
transferred to the account balance each month and the borrower pays "interest".”(Thompson, 2022)
1.6. Advantages and Disadvantages
“The following are the benefits that business owners get when setting up a sole proprietorship. The first is

“On the other hand, when setting up a sole trader, there are also some disadvantages as follows. The first
disadvantage is that a sole proprietorship is highly risky because the business owner has unlimited liability
to the business. Proprietary ownership gives business owners the freedom to act as they see reasonable —
subject only to licensing authorizations without registration or shareholders — this freedom comes with
responsibility. As sole proprietors, they are personally responsible for paying contractors, debts, paying
necessary taxes and insurance for their employees, and any legal action. In case of debt default, they will
have to be responsible for that debt with all their assets such as houses, cars, bank accounts,... And the
remaining disadvantage is that sole trader will have difficulty in raising capital. Because a sole proprietor's
personal liability presents a risk, and for this reason, banks may be hesitant to lend money or extend credit
under this business structure. As a sole proprietor, it is also more difficult to attract investors because the
company is not officially recognized and is not designated to have shareholders.”(Bishop, 2021)
Assessment: “From the advantages and disadvantages of a sole trader, I judge that this type of business is
suitable for individuals who want to do business alone and do not hesitate to take unlimited liability for the
business with all your assets because a sole trader is very easy to set up, low cost and with this type you will
not be able to do business with other people. And to set up a sole trader, you must have a certain amount of
capital, enough to maintain the business activities of the business because owner's capital is the main source
of capital of a sole trader.”
2. Partnership
2.1. Definition
“The term partnership, is used to mean a business structure wherein two or more individuals, come together
for undertaking a lawful business and have agreed to share the profits and losses arising from it.”(Jargons,
2021)
2.2. Characteristics
According to Jargons (2021), a partnership company has the following characteristics.
- Membership: “At least two people are required to start a partnership while the maximum number of

ratio previously agreed between the general partners and the limited partners. In case there is no
agreement between the limited partners, the profit or loss of the enterprise is divided equally among all
partners.”
- Mutual agency: “The partnership business is carried out by all the general partners, so the general
partners are all representatives of the business and the actions of the partners are binding on each other
as well as the company.”
- “The registration to become a general partner is not mandatory, but it is recommended as it provides
certain benefits, for example, in case of any conflict between the partners, any of the partners can sue
the other partner.”
- “In case the company goes bankrupt or any partner retires or becomes legally incompetent then it will
lead to a lack of continuity in the partnership and it may cause the partnership to come to an end. If the
remaining partners still want to operate, they can sign a new partnership agreement.”
- “The partnership relationship that exists between the members is due to the conclusion of a contract,
which can be oral, written or implied.”
- “The consent of all partners is required to transfer the rights and interests in the company to any outside
individuals. Decision making in a partnership is made based on the consent of all partners. They share
decision making and control of the regular business.”
2.3. Types of partnerships
Before establishing a partnership, the business owner should determine what type of partnership is most
suitable for their and the most profitable. In general, a partnership has three basic types: general partnership,
limited partnership, and limited liability partnership.
- General partnership: “is a business arrangement by which two or more individuals agree to share in all
assets, profits, and financial and legal liabilities of a jointly-owned business. In a general partnership,
partners agree to unlimited liability, meaning liabilities are not capped and can be paid through the
seizure of an owner's assets. Furthermore, any partner may be sued for the business's debts.”

capital contribution and do not participate in the management of the company.” (Murray, 2021)
2.4. Formation
a) Set up
“A partnership, the business owner and the limited partners all share responsibilities with the
partnership. They are liable for any loss caused by the business; responsible for the invoice for any
equipment and supplies related to the business. And when the company is profitable, the members
have to share the profits together, each member has to pay taxes based on their income.”
“And when forming a partnership, the business owner needs to name the business, choose a designee
partner (who is responsible for managing the partner's tax returns and keeping business records) and
must Register your business with HMRC (Her Majesty's Revenue and Customs).”(GOV.UK, 2021)
b) Business name
“Business name is the name under which general partners may transact under their own name or general
partners may choose another name for their business. General partners do not need to register their
names. For a partnership company, when establishing a business, the company must register the
company name with the business registration office and the business name must ensure the following
elements: including 'limit', 'Ltd’, 'limited liability partnership,'LLP', 'public limited liability
company' or 'plc'; no offense implied; unlike an existing brand name. Also, the partnership name
must not contain 'sensitive' words or expressions or suggest a connection to the government or local
authorities, unless authorized.”(GOV.UK, 2021)
c) Responsibilities
“Once a partnership has been established, business owner and each general partner has shared
responsibility for the partnership. Partners must share profits equally (unless otherwise agreed) and
work equally.”
“For a general partnership, the general partners are the executive, have unlimited liability and are

“The business owner must register a partnership for Self Assessment with HM Revenue and Customs
(HMRC) if he/she is a 'designated partner'. This means that they are responsible for submitting a
partnership tax return. All partners must also file their tax returns as individuals, and general partners
must register by October 5 of their second tax year, otherwise they may be fined by the tax authorities.
And like sole traders, partnerships must also register for VAT if the company's VAT able turnover in
a year is more than £85,000.”(GOV.UK, 2021)
2.5. Management
“Partnerships are divided into 3 main types, so general partners are also divided into 2 types: general partners
and limited partners. A general partner is usually a person who participates in operating and managing the
company as an owner. On the other hand, limited partners only contribute capital and earn profits from the
company's business activities, but do not participate in operating and managing the business.”
Planning: “General partners will usually participate in the management and operation of the business. They
are the ones who come up with ideas, implement business development plans and ask employees to complete
them. However, before making any decisions related to the business, the general partners must obtain the
consent of all partners in the company.”
Organizing: “General partners will often organize the necessary activities to determine the structure and
mechanism of the system, determine the jobs suitable for each group and each department.”
Coordinating: “General partners will often plan, organize, operate, arrange so that the work can go smoothly
and easily. In case of necessity, limited partners can use their knowledge to help the business implement
better development projects.”
Commanding: “The general partners are often the key part of the partnership; they are the ones who guide
and direct the employees to work according to their wishes so that the work can be completed in the best
way.”
Controlling: “The general partners will often participate in supervising and administering the work in the
company to ensure that the results of completing the work are the most effective.”

to invest in the business. And capital from effective business is also a source of capital to help businesses
avoid borrowing from banks and usury.”(Chron, 2021)
“For loans capital, loans from friends and family are the most beneficial sources of loans because the partners'
parents and brothers can put some money into their relative's business without without receiving any profit.
In addition, partnerships can mobilize capital from bank loans to pay for their business activities. And to get
a bank loan, it is also a difficult point for businesses because they have to prove the information and business
experience of their partners that they can repay the debt within the allowed time. Alternatively, the
partnership can raise capital from the public. It is a way to call for investment by using the Internet to have
the opportunity to raise capital from the community, small investments for businesses.”(Chron, 2021)
2.7. Advantages and Disadvantages
“When setting up a partnership, there are some advantages to choosing this business structure as follows.
Firstly, a partnership is a combination of the personal prestige of many people and the unlimited liability
regime of the general partners and limited liability to the capital contributors, the partnership easily create
trust with customers and business partners. From there the partnership can easily form a partnership easier
and less expensive. Secondly, the management of the company is not too complicated due to the small
number of members and the combination of resources and expertise of a few people. Thirdly, the partnership
is easy to manage because the profits or losses are shared with the partners according to the previously
signed agreement. Finally, when a partnership borrows from a bank, it is easier to borrow and delay debt
due to the unlimited liability regime of the general partners.”(Chron, 2021)
“However, with what is beneficial, there are also some disadvantages that follow and so is the formation of a
partnership. The first disadvantage is that the level of risk for general partners is very high because all
partners are personally liable for business debts. Each partner is individually liable for the debts of them.
The second disadvantage is that the partnership cannot issue any securities, so the company's capital
mobilization is also limited. This causes members to add their own assets or accept new members. The third
disadvantage, a general partner who withdraws from the company is still liable for the debts of the
partnership arising from the company's commitments before that member withdraws from the company.

company, they will become general partners. As for individuals with stable capital sources, only contributing
capital to the enterprise and earning profits from business activities, but not participating in the management
of the company, they will become limited partners in the company. Therefore, individuals should pay
attention when participating in the establishment of any business.”
III- Incorporated business
“Table 1: Compare the private and public limited company”

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No Criteria Private limited company Public limited company
1 Definition “Private limited companies are legally distinct
entities with their own assets, profits and liabilities.
The personal finances of any shareholders (i.e.
company owners) are protected by limited liability
(i.e. their liabilities are limited to the value of their
shares). Shares in private companies cannot be
offered to the general public.” (Rocketlawyer,
2021)
“Public limited companies (PLCs) are similar to private limited companies,
in the sense that they are legally distinct entities with their own assets, profits
and liabilities. However, shares in a public company can be freely sold and
traded to the general public and their shares can be listed on a stock
exchange. PLCs are the only type of company allowed to raise capital from
this type of public investment.” (Rocketlawyer, 2021)
2 Characteristics - Limited Liability: “The liability of each member or shareholders is limited. If a company faces loss under any circumstances,
then its shareholders are liable to sell their own assets for payment. The personal, individual assets of the shareholders are not
at risk.”(LegalRaasta, 2021)
- Perpetual succession: “The company operates with continuous inheritance and the life of the company does not depend on the
life cycle of individuals or organizations contributing capital to the business.”(LegalRaasta, 2021)
- Incorporated association: “Enterprises must register business activities and have legal person.”(LegalRaasta, 2021)
- Separate legal entity: “An incorporated company is a separate legal entity, separate from all members of the company.”
(LegalRaasta, 2021)
- Common seal: “Metal stamp used to seal documents with the company name to show that they have been officially approved.”
- Transferability of shares: “Shares in an incorporated company can be transferred from one shareholder to another or
transferred to someone outside the company and these shares are not necessarily listed on the stock exchange.”(LegalRaasta,
2021)

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- Separate property: “the assets of the company are separate from the assets of individuals who contribute capital or purchase
shares of the company because the company is a legal person.” (LegalRaasta, 2021)
- Capacity to sue and be sued: “the incorporated company is a legal person so it has the ability to sue other companies and can
be sued by shareholders in the company or other companies.” (LegalRaasta, 2021)
- Artificial person: “The company is formed on the basis of legal regulations and is called a legal person.” (LegalRaasta, 2021)
- Separation of ownership from management: “The management department and the company owner are separate.
Shareholders participate in the board of directors meeting and elect the company management system. Company directors can
hire and do not have to contribute capital to the company.” (LegalRaasta, 2021)
3 Management “The incorporated company is a legal person, so the management department and the owner are separate. The company
management department will be selected by the board of directors from employees in the company or recruited other individuals
from outside as directors. Company management is shown through the following POCCC elements.”
“Planning: The director is the person who manages the business and based on the current situation of the company to set up
appropriate plans and activities to develop and expand the business.”
“Organizing: The director is a person chosen by the board of directors, who has a lot of experience and knowledge to be able to
determine the activities necessary to achieve the overall goals of the organization. At the same time, organize the work of building
the business such as arranging and organizing the departments to work properly with their functions, assigning responsibilities
and powers to each department as well as each individual.”
“Cooperating: The director adjusts and allocates work reasonably to employees in order to develop the business, comply with the
provisions of the law, and ensure the interests of employees.”
“Commanding: The directors rely on their own experience and knowledge to guide employees to work in accordance with the
wishes and requirements of the project to achieve the best performance.”
“Controlling: The director is the person who controls, determines the actual achievements and compares with the standard to

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detect deviations and its causes, on that basis, takes measures to correct the deviations to ensure that the organization achieves its
development goals.”
“A private company limited by shares is owned by
one or more 'shareholders', and managed by one
or more 'directors'. This means he/she can set up a
company limited by shares on his/her own.
Companies limited by shares are required to issue
portions of the business as ‘shares’.” (QCF, 2021)
- “A public limited company is a business that is managed by directors and
owned by shareholders.”
- There are 2 ways of managing a public limited company:
+ “either the traditional management system with a board of directors;”
+ “or the dual management system consisting in:”
- “a management board in charge of the management of the company;”
- “and a supervisory board in charge of permanently monitoring the
management board's work.”
- “The management of a public limited company is two-tiered, i.e. having
either a board of directors and an executive board or a supervisory board
and an executive board. The major difference is that the board of directors’
forms part of the management, thus having an independent managerial
responsibility, whereas a supervisory board does not form part of the
management, but merely supervises the company’s executive board.”
(Hjulmand, 2021)
4 Formation According to GOV.UK (2021), To set up a limited liability company includes the following steps:
“Step 1: Check if setting up a limited company is right for you”
“Step 2: Choose a name for the company”

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“Step 3: Choose Directors and a Company Secretary”
“Step 4: Decide who the shareholders or guarantors are”
“Step 5: Identify People with Significant Control (PSC) Over Your Company”
“Step 6: Prepare Documents Agreeing How to Run Your Company”
“Step 7: Check What Records You’ll Need to Keep”
“Step 8: Register Your Company”
Business Name
+ “The company name must not be the same as the name of another registered company.”
+ “If your company name is too similar to another company's name or trade mark, you must change the name to avoid complaints.”
- “A private limited company name should
usually end with 'Limited' or 'Ltd' or
'Cyfyngedig' and 'Cyf' if you are registering a
company in Wales.” (GOV.UK, 2021)
- “All public limited company names must end with “plc” or “public
limited company”.”(GOV.UK, 2021)
“Director’s Responsibilities: The director of a limited company has the following responsibilities: to follow the rules of the
company, which are expressed in its terms of association, to keep company records and to report changes, to file accounts and
File your Corporate Taxes, tell other shareholders if he/she could personally benefit from a transaction the company makes, pay
corporate taxes. The director may be fined, prosecuted or disqualified as a company director if he/she fail to meet his/her
responsibilities.” (GOV.UK, 2021)
Company changes you must report:
- “You must tell Companies House if you want to change your company’s registered office address. If the change is approved,
they will tell HM Revenue and Customs (HMRC).”
- “You must tell Companies House within 14 days if you make changes in your company.”

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- “You must tell Companies House within a month if you issue more shares in your company.”
- “You may need to get shareholders to vote on the decision if you want to make a change in your company.”
- “You must keep records about the company itself AND financial and accounting records. You can hire a professional to help
with your tax. And HM Revenue and Customs (HMRC) may check your records to make sure you’re paying the right amount
of tax.” (GOV.UK, 2021)
“Accounting records: You must keep accounting records and any other financial records, information and calculations you need
to prepare and file your annual accounts and Company Tax Return.” (GOV.UK, 2021)
“Records about the company: You must keep detailed information about the company's directors, shareholders, secretary, loans,
transactions, results of operations, etc.” (GOV.UK, 2021)
“Register of ‘people with significant control’: You must keep a register of ‘people with significant control’ (PSC). You still need
to keep a record if there are no people with significant control.” (GOV.UK, 2021)
“Confirmation statement: You need to check that the information Companies House has about your company is correct every
year. This is called a confirmation statement (previously an annual return). You need check your company’s details, Send your
confirmation statement.” (GOV.UK, 2021)
“Signs, stationery and promotional material Signs: You must display a sign showing your company name at your registered
company address and wherever your business operates.” (GOV.UK, 2021)
5 “Source of
finance”
- Debt capital:
+ “Bank loans: Companies must present sufficient information about revenue sources, profit levels and business plans at banks
to be considered and approved for loans.” (Sarash, 2021)
+ “Borrowing from relatives: Borrowing is extremely beneficial for shareholders because it will not have to pay any additional

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interest. However, it can affect the relationship between the borrower and the lender if the borrower does not intend to pay the
loan amount.” (Sarash, 2021)
+ “Credit Loans: There are more than 500 active credit unions in the UK and many of them offer low interest business loans.”
+ “Crowdfunding has become more popular and widespread and is a way of funding that allows others people to invest a small
amount of money in a business.” (Sarash, 2021)
- Equity capital:
“Sell shares: Private limited company can only sell
its shares to friends, family members and staff.”
(Sarash, 2021)
- Equity capital:
+ “Selling shares: PLC can sell and transfer its shares to anyone inside and
outside the company after being agreed by shareholders.”
+ “Stock market: PLC can list on the stock exchange and conduct a public
offering of shares to raise capital.”(Sarash, 2021)
- Equity capital:
+ “Venture capital: a limited company can invest large amounts of money in newly established businesses to profit from that
company's business activities.” (Sarash, 2021)
+ “Reward-based crowdfunding: The company gives contributors rewards, (such as goods or services or discounts), in return
for their payout.” (Sarash, 2021)
6 Advantages - Limited liability: “The finances of company are separate from personal assets. This is because a corporation acts as a separate
legal person from its directors and shareholders (company executives/shareholders who own the company). This means that
the assets, profits and liabilities belong to the company. If the company encounters difficulties, the company directors and
shareholders are only responsible for the amount of capital they have invested.” (Korchak, 2021)
- Tax efficiency: “LTD only pays corporate tax on taxable profits at a fixed rate (19%), so it will be more efficient than paying
tax based on personal income.” (Korchak, 2021)

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- Separate entity: “A business is a separate legal person, and therefore the business owner or management is not personally
liable for debts as a sole proprietor.” (Korchak, 2021)
- Professional status: “Operating as a limited liability company can often improve a company's reputation and create a more
professional impression, which can lead to more business and higher profits in the long run.” (Korchak, 2021)
- Company pension: “Contributions to a pension can offer significant tax advantages. Pension contributions can be considered
an allowable business expense and offset against the company's corporate tax bill.” (Korchak, 2021)
“No minimum capital is required to set up a Private
Limited Company. A Private Limited Company
can be registered with as little as £10,000 as total
allowed share capital.” (Korchak, 2021)
- Growth and expansion opportunities: “By having more financing, PLCs
can pursue new projects, new products or new markets and spend capital
to support and enhance business operations.”
- “PLC has the ability to raise additional financial resources through equity
capital. This means that a Public Limited Company can raise money
through a stock exchange through an initial public offering by issuing
additional equity shares.” (Korchak, 2021)
7 Disadvantages - Complicated to set up: “When forming a limited liability company there is more paperwork and limited time involved in
running a business than when operating as a sole trader, which can difficult for some people.” (Korchak, 2021)
- Complex accounts: “In a limited company, the accounting and bookkeeping requirements are also more complex. Hiring an
accountant and ensuring the financial management of the company is also concerned by the management department. Neither
the owners nor the shareholders can move money out of the business at will, they need to adhere to strict payment practices
for themselves and for other employees.” (Korchak, 2021)
- Ownership: “It is much more difficult to control who are the shareholders of the company and for whom the directors are

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ultimately responsible. As a result, there is a chance that the original owners or directors could lose control of the direction of
the company, face disputes, or just spend more time managing shareholder expectations.” (Korchak, 2021)
- Accountancy cost: “A limited liability company has a lot of expenses and needs an accountant to calculate and record all the
information to avoid errors such as company tax return, company tax payment, revenue and expenditure recording in the
company. This means that the limited company will need to pay accounting fees, which can be quite high, to find a really
reputable accountant.” (Korchak, 2021)
- Public record: “Limited companies, whether public or private, have more of their details in the public domain, available via
Companies House, than other business types.” (Korchak, 2021)
- “In a private limited company, the number of
members in any case cannot exceed 200.”
- “Another disadvantage of private limited
company is that it cannot issue prospectus to
public.”
- “In stock exchange shares cannot be valued”
- “Restricts the transfer ability of shares by its
articles.”
- “Minimum financial commitment for PLC is higher than for private
limited company. To trade, the PLC must start with at least £50,000 of
nominal share capital, at least 25% of which is paid in installments.”
- “With a PLC, there are large startup costs and the participation of many
shareholders, so accounting and reporting requirements are more
complicated.”
- “If a company's shares are listed on an exchange, the company will
typically pay legal and investment professionals to advise and manage
the listing process.”
- “PLC lacks control when it comes to shareholders, which can lead to
potential problems. There is more risk of a hostile takeover by a rival
company because the company cannot control who buys its shares.”
8 Assessment “A limited liability company is suitable for individuals who want to set up a business, where they have limited liability with the

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amount of capital contributed and share in profits from business activities of the business. And it is suitable for businesses that
want to develop a wide image and brand. At the same time, a limited liability company is the type of business that individuals
choose if they want to attract a lot of potential capital and investment sources. In addition, it is also a type of business suitable for
individuals who want to pay taxes based on a certain tax rate.”
“LTD is a type of business with limited number of
members and suitable for individuals who do not
want to list shares on the exchange. Especially,
LTD has no requirement for minimum capital to set
up a company.”
“PLC is a type of enterprise with no limit on the number of members. And
PLCs are required to have a minimum capital of £50,000 if they want to set
up. Especially, it is suitable for businesses that want to attract a lot of capital,
potential investors and access capital from crowdfunding because with PLC,
the company's shares are listed on the stock exchange if they want to.”

D2: “Critically review and evaluate types of business organizations.”
“If you want to take full personal responsibility for the business, have tax advantages and especially you want
to own and control all the activities of the business, please note the analysis below to make the best choice
for you when you want to set up a company.”
“The first factor is personal liability. When you set up a sole trader, you are legally responsible for your
business. If your business incurs debts that the business cannot pay from profits, then you are personally
responsible and responsible for paying those debts with your own personal property such as your house, car,
etc. Creditors can sue you to satisfy your debts. And conversely, if you have unpaid personal debts, creditors
may rely on your business profits or assets to demand repayment. Along with liability for debts, as a sole
proprietorship you are also personally liable for any negligence or injury resulting from any act or omission
caused by your business. However, you can purchase liability insurance for your business to help ease the
burden of liability on your business.”
“The second factor is tax efficiency. With a sole trader, you will not have to separate taxes for your business,
you only need to report all the income and losses of the business on the individual income tax return. The
business owner of a sole traders will need to make quarterly tax payments based on estimates for the year. In
case you overpay tax, you will be refunded that amount. And vice versa, you will be charged and asked to
pay more tax in case you underpaid. You will need to pay self-employment tax. The employees get this
deduction from their paycheck, but as a sole proprietorship, you must make these contributions while paying
your income taxes.”
“The third factor is Ownership and control. As a sole business owner, you have complete control over your
business. You make all the important decisions and are overall responsible for all the day-to-day operations
of the business. In return for taking on all these responsibilities, you are also the individual who manages all
the sources of profits and expenses of the business. And business profits earned will be taxed as your personal
income, so you don't have to pay any corporate income tax.”
“In summary, with what you want when you set up a business and the information I have analyzed above, it
can be seen that Sole trader is the most suitable type of business for you. So, when you want to establish this

to rent the original price from October to December. The problem here is whether Arthur can claim £450
from Brian and his wife or not.”
2. Regulations
“The matter between Arthur and Brian is related to the Promissory Estoppel principle and the following is a
similar case and precedent that forms the Promissory Estoppel principle, Central London Property Trust v
High Trees House [1947].”
“Fact: In this case High Trees House Ltd leased a block of flats in Clapham, London from Central London
Property Trust Ltd. The agreement was made in 1937 and specified an annual ground rent of £2,500. The
outbreak of World War II in September 1939 led to a downturn in the rental market. High Trees quarreled
to find tenants for the property and approached Central London Property Trust in January 1940 to request
that the rent be lowered. A reduction to £1,250 per year was agreed in writing, though the duration was not
specified and no consideration was provided. By 1945, the building was returning to full occupancy. On 21
September 1945, Central London Property wrote to High Trees to request a return to the full rent of £2,500
and claimed arrears of £7,916 for the period since 1940. They then brought a test action to recover part of
the debt for the two quarters which had elapsed since June 1945.” (Elawsources, 2021)
“Held: High court judge, Denning J said that all rent must be paid from the time the apartments were filled
in mid-1945. And Central London Property would not be able to claim the full rent between 1940 and 1945.
Because the rent reduction was applied throughout the years until the end of 1944, but by the beginning of
1945 it was clear that the apartments were filled. And the promise of reduced rents was completely exhausted
in the first months of 1945. From here, the rent cost had to be paid in full for the quarters ending September
29 and December 25, 1945. The court therefore gave a judgment to the plaintiff's company for the amount
claimed. And from that, the Promissory Estoppel principle was also formed that when two parties have made
an offer to each other and both parties have agreed, the offeror cannot go against the offer.” (Elawsources,
2021)
3. Analysis

parties agree, the person making the offer must not go against what was said. In this case, Arthur only
promises to reduce Brian's rent until his financial situation is stable. Based on the above case law, it can be
seen that Arthur will not be able to claim the rent from May to December, but instead Arthur will claim the
rent from October, the month in which Cathy receives the inheritance until December. Although the
inheritance is her own and not shared with Brian, she also has to pay Arthur's rent because she has been
using the house so she is responsible for paying the rent. At the same time, when Brian's wife received the
inheritance, Arthur's promise was no longer valid. Because now Brian's financial situation is stable compared
to May. From here, I have two cases as follows.”
- The first case: “Cathy, Brian's wife agrees to pay the rent for Arthur, then the amount she needs to pay
is the rent equal to the original price for Brian from October to December. If she paid £250/month from
October to December, now she has to pay Arthur a total of £450.”
- The second case: “Cathy does not agree to pay the rent for Arthur, it means that Brian's family is not
following the Promissory Estoppel principle. And Arthur can file a lawsuit against Brian to get back the
rent cost that Brian's family is missing from October to December.”
“Besides the Promissory estoppel principle, which Arthur would certainly use to get back the rent from Brian.
However, in the case of Arthur and Brian, there is still a situation as follows. Under British and American
Law, a contract formed without consideration is not considered a contract. In detail, Since Arthur saw Brian
in financial difficulty, he offered to reduce Brian's rent from £400 to £250 without Brian needing to do
anything for Arthur so in this case it can be said that one sided promise without consideration from Brian.
So, it cannot be considered a consideration as it is only a one-way promise from Arthur so Contract Law
will not recognize this as a consideration. And if you go into the investigation, Arthur can claim the rent at
the original price from May to December.”
4. Conclusion
“In summary, with the above analysis information, I find that Arthur is able to claim the original rent from
Brian and Cathy.”

study with a similarity to the case of Trumpet Workshop v Arthur as Re McArdle [1951].”
“Fact: William McArdle died, leaving a home for his five children with equal amounts, subject to a life
interest for his wife. The wife of one of these sons, Marjorie McArdle, renovated the house at a cost of £488
and she paid for the repairs. After the repairs were completed, she asked all five of McArdle's children to
sign a document in which they promised to return Ms McArdle £488 from the property when they were split
asset. After the death of William McArdle's wife, Mrs. McArdle demanded payment for the repair. However,
four other sons refused to pay her. And she wrote a lawsuit against the remaining 4 sons.” (Caselaw, 2021)
“Held: The Court of Appeal held that the transaction between McArdle and William McArdle's four sons was
incomplete and imperfect. So, it was only a promise to pay after Mrs. McArdle had done the house repair so
her consideration for the other was in the past and past consideration is not good review. Therefore, the
agreement is not enforceable.” (Caselaw, 2021)
3. Analysis
“First, Arthur made a deal with Trumpet Workshop to pay £500 for car repairs. However, Trumpet's staff
actively changed Arthur's tires with new ones without an agreement between the two parties. However, after
changing the tires, Arthur promised to pay an extra £300 for the Trumpet but did not pay.”
“Based on the above case law, it can be seen that Arthur's promise to the staff at Trumpet is just a
consideration in the past. And according to the principle of past consideration, it cannot be considered an
exchange when it happened in the past. Therefore, the consideration is null and cannot be used to sue over
a contract. If one party voluntarily acts as a Trumpet employee and the other, Arthur later promises to pay
more, the consideration is said to be in the past. So, in this case Arthur's promise is null and Trumpet
Workshop can't be used to sue because the act of changing the tire is without an agreement between the two
parties, but actively done by Trumpet staff. And Arthur's promise when the car repair is completed. This is
similar to the case law above and past consideration made by Arthur, so the agreement between Arthur and
Trumpet Workshop is not enforceable.”
4. Conclusion

contract terms between Boffin and Sweeties Ltd are legal or not and how to make it a lawful?”
2. Regulation
“The incident between Boffin and Sweeties Ltd was related to a matter of trade restrictions. And here is the
case law, which created the concept of trade restriction in 1890 in England, which was the case between
Thorsten Nordenfelt and the Maxim company.”
“Fact: A gun manufacturer, Thorsten Nordenfelt had sold his business, and the two parties had agreed that
the seller ‘would not make guns or ammunition anywhere in the world, and would not compete with Maxim
in any way for a period of 25 years.” (Murray, 2021)
“Held: The case was heard by the House of Lords as follow:”
- “The provision prohibiting Nordenfelt from making guns or ammunition was reasonable.”
- “The provision banning competition “in any way” was an unreasonable restraint of trade and therefore
invalid.”
3. Analysis
a) “Restraint of trade establishes as a general rule that restraint-of-trade-clauses are void at common law,
except when they protect a legitimate interest and are reasonable in scope.”
b) “Legal basic for restraint of trade”
“The Sherman Antitrust Act of 1890 includes a section on restraint of trade:”
- “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or
commerce among the several States, or with foreign nations, is declared to be illegal”
- “An individual or business that feels his right to trade has been violated may take his case to court.
Restraint of trade may also be in violation of government regulations.”
c) “Non-Compete Agreements”

business.”
And in order consider whether a contract represents restraint of trade, a court will look at three
factors:
- “Length of time.”
- “Geographical area.”
- “Scope of work”
d) Boffin case
“In this case Sweeties Ltd stipulates in their contract with Boffin that if he leaves Sweeties, he may not
engage in the production of toffee or any other confectionery in the UK or USA for one year. This is seen
as the Sweeties company is restricting trade to Boffin.”
“And to determine if the non-compete agreement that Sweeties Ltd has asked Boffin to sign is a trade
restriction is based on three elements of the provision as follows:”
- Length of time: “In the above case, the time that Thorsten Nordenfelt cannot compete with Maxim is 25
years and it is considered an unreasonable time to ban Thorsten Nordenfelt's business. And applying to
Boffin's case, the business ban period is 1 year and it is considered a reasonable time because 1 year is
not too short or too long. And the reasonable time limit for the two parties to agree not to compete is
usually no more than 1 year.”
- Geographical area: “In the above case, Maxim asked Thorsten Nordenfelt not to manufacture guns and
ammunition anywhere in the world. This is unreasonable because a non-compete agreement is only valid
when confining the other party to a certain geographical area, such as a certain province or city. And
applying to Boffin's case, he is being restricted by Sweeties Ltd from doing business in both the UK and
the US. So this must be determined based on how the reputation of the Sweeties company grows. And
here are 3 cases to determine if this geographical claim of Sweeties is reasonable or not.”
+ “The company is small and has no reputation, it is unreasonable to ban Boffin from doing business

+ “The company is large and has a good reputation in both the UK and the US, so Sweeties' non-
compete request is completely reasonable because they are trying to protect their rights and business
formula to avoid affecting the development of the business when Boffin quit and joined a rival
company.”
- Scope of work: “With the above case, Maxim banned Thorsten Nordenfelt from producing both guns
and ammunition while Maxim company only bought Thorsten Nordenfelt's gun manufacturing business.
Therefore, Maxim's claim is unreasonable and it is considered to be a trade restriction for Thorsten
Nordenfelt.”
“Looking at the case of Boffin and Sweeties Ltd, it can be seen that the company made a request to ban
Boffin from operating in the business of producing toffee and any other confectionery. This is similar to
the above case and it is considered unreasonable because the Sweeties company only taught Boffin the
toffee recipe, it cannot prohibit Boffin from producing other types of confectionery because those are the
recipe that he learned before working at Sweeties Ltd. It is legitimate interest for Sweeties to protect the
interests of toffee recipes, but banning Boffin from producing other types of confectionery is
unreasonable.”
➔ How to make it lawful?
“In order for this non-compete agreement to be valid, Sweeties must revise its geographic and scope of
work terms. First, Sweeties should rely on the scope of the company's operations and reputation to provide
a non-compete clause in a reasonable geographical area. Second, Sweeties should amend the terms and
only ban Boffin from producing toffee, not including other confectionery.”
4. Conclusion
“With the information analyzed above, I have the following conclusions. In the case that Boffin continues
to work at Sweeties, the company should revise the provisions of the non-competitive contract to make
sure it is reasonable and if he violates the terms, then Sweeties can sue him. And if Boffin chooses to
leave and not work for the Sweeties, the terms of that contract are unenforceable in court.”

27
IV- “Compare and contrast different sources of legal advice and support for dispute resolution” (M4)
“Table 2: Compare and contrast different sources of legal advice and support for dispute resolution”
Examples Advice given to
person Source of legal advice Similarities Differences Evaluation of the effectiveness
for legal advice
Case 1:
Arthur v
Brian
“Arthur is the one
who needs legal
advice because he
is having trouble
getting the
original rent from
October to
December from
Brian and his
wife.”
“And Arthur
should use the
following sources
of legal advice:
Solicitors, Citizen
Advice,
University Law
Clinics”
- Solicitors: “is a qualified legal
practitioner responsible for preparing
legal documentation, representing
and/or defending a client’s legal
interests. And you can find the
databases of legal advisors provided by
the Law Society of England and Wales,
Scotland and Northern Ireland in
GOV.UK. If you hire a solicitor, you
will have to pay for them.”
“And the solicitors will work directly
with the customers such as Attending
meetings with clients; Drafting and
negotiating legal documents and
contracts; Providing specialist legal and
commercial advice on a variety of areas
of law; Researching and interpreting
complex points of law with the requisite
+ “All three of these
sources are sources
of information and
legal advice for
clients who need
advice on different
areas of law.”
+ “Citizen Advice
and University Law
Clinics are two
sources of free legal
advice and
information”
+ “Clients can work
directly with all
three sources of
legal advice.”
+ “All three sources
are confidential
+ “Customers can
work with Citizen
Advice by phone
and online.”
+ “Customers will
have to pay fees for
solicitors”
+ “Local libraries
will often have
hardcopy
directories of
advisors and clients
can rely on that
information to
choose the best
attorney.”
- Solicitors: “The benefits of
using a solicitor to advice you
in legal matters are as follows.
It will speed up the problem-
solving process and help you
understand your obligations in
the matter to be resolved.
Secondly, they are people with
in-depth experience, so they
will provide you with legal
information in the most clear
and understandable way. And a
solicitor will be there any time
you need advice.”
- Citizen Advice: “When you
use this source of legal advice,
it will help you save money
while still understanding the

28
rights of audience, appear and speak on
behalf of clients in court.”
- Citizen Advice: “Citizens Advice
provides free, independent and
confidential advice about a range of
legal issues. Advice can be sought
online, by phone and at 3,000 locations
across England, Wales, Scotland and
Northern Ireland.”
- University Law Clinics: “The clinics
invite legal enquiries from members of
the public and students are assigned
cases to research and advise the client
upon. All work is conducted under the
supervision of a qualified supervising
solicitor. And the University law clinics
provide free legal advice.”
information of
customers.”
+ “Customers can
search for
information and
exchange online
with Solicitors and
Citizen Advice.”
best legal information.”
- University Law Clinics: “This
source of legal information is
made by students through the
guidance of professors, so
sometimes legal information,
terms may not be explained
clearly.”
“In Arthur's case, I advise him to
choose Citizen Advice because
Arthur and Brian are friends, so
they can easily negotiate with each
other, so using this advice will help
Arthur can save the cost of hiring a
solicitor to consult and know more
information than the consulting
source University Law Clinic.”
Case 2:
Trumpet
Workshop
v Arthur
“The person in
need of legal
advice in this
case is Trumpet
Workshop
because Trumpet
- Solicitors: (analysis as above)
- Citizen Advice: (analysis as above)
- Legal help at a police station:
“Individuals have the right for free
independent legal advice, regardless of
+ “You can get free
advice from two
sources: legal help
at a police station
and citizen advice.”
+ “You can
+ “You will have to
pay a fee if you get
advice from
consulting lawyers”
+ “You can search
for information
- Legal help at a police station:
“The police have a
responsibility to assist citizens
in matters related to the law.
However, the police
headquarter regularly deals

29
staff had
arbitrarily
repaired Arthur's
car and was
promised an
additional £300
by Arthur but did
not pay.”
“And Trumpet
Workshop should
use the following
sources of legal
advice: Citizen
Advice, Solicitors
and Legal help at
a police station”
financial circumstances, when
questioned at a police station.”
exchange
information
directly with these 3
legal sources.”
+ “These three
sources are all
sources of legal
information that are
clear and easy to
understand.”
+ “Your
information is kept
confidential by
these legal support
sources”
from consulting
attorneys at your
local library”
with administrative and
criminal cases.”
“In this case I advise Trumpet to use
advice from Citizen Advice as it
would not be beneficial for
Trumpet to sue in this case as the
promise between Arthur and
Trumpet is past consideration so it
will not be considered by the court
in litigation. So, to avoid attorney
fees and quickly understand the
problem of the case, Trumpet
should use Citizen Advice.”
Case 3:
Boffin v
Sweeties
Ltd
“In this case,
Boffin needs
more legal advice
than Sweeties Ltd
because if he does
not fully
understand the
- Law center: “offer free and
independent legal advice within their
local communities. Law Centres tend to
specialise in social welfare law but may
also cover other areas of work.”
- Pro bono legal help: “Pro bono
assistance is legal advice and
+ “All three of these
sources provide you
with free legal
advice”
+ “You will receive
legal advice
directly from the
law center and pro
+ “You can get
online advice from
Advice now”
+ “The law center
source mainly
provides advice on
labor issues and
employees'
- Law center: “It will help you
better understand labor-related
issues and employee benefits”
- Advice Now: “It is only a
source to guide you by online
exchange and advice on simple
questions, so sometimes it is

30
requirements
related to
restriction of
competition, it is
likely that his
rights will be
restricted.
business
activities.”
“And Boffin should
use the following
sources of legal
advice: Law
center, Pro bono
legal help and
Advice now.”
representation provided voluntarily,
generally for those unable to pay and
who are eligible for legal aid”
- Advice now: “provides free online
guides on a wide range of legal issues, as
well as links to other useful information.
There is a section on everyday legal
problems: Know-How: Boost your legal
knowledge, confidence and skills”
bono legal help.” welfare”
+ “Pro bono legal
help provides legal
information to
those who cannot
afford the costs of
litigation”
difficult for you to understand
the terms related to the law.”
“In this case, I advise Boffin to
choose the first Law Center advice
legal source out of these three
sources. Because this issue is quite
large, if not clarified, it will affect
Boffin's interests. And the law
center is the main source of
information on labor issues and
protection of workers' rights, so
you will easily understand the
issues and terms related to the law
in the clearest way.”
V- “Evaluate the effectiveness of legal solutions, legal advice and support for dispute resolution.”(D3)
Table 3: “Evaluate the effectiveness of legal solutions, legal advice and support for dispute resolution”
Examples
Advice
given to
person
Alternative Dispute Resolution
(Description)
Advantages Disadvantages
Evaluation of the
effectiveness for legal
solution

31
Case 1:
Arthur v
Brian
Arthur - Litigation: “is the process of
taking a dispute to a court of law.
If parties cannot agree between
themselves about the fair and
proper outcome of a dispute, they
will present their respective cases
to a court for its judgment. It is a
broad term that describes a long
and sometimes complex process.
And the court's decision is binding
on the parties involved.”
(Burlingtons, 2021)
- Arbitration: “is a private dispute
resolution process that parties may
choose as an alternative to going
to court. The arbitration process is
consensual in that the parties must
agree to refer their dispute to
arbitration. The arbitration
agreement (typically referred to as
an ‘arbitration clause’) is usually
contained in the main contract
between the parties. However,
➢ Litigation
- “Parties are compelled to comply
with judgments”
- “You can appeal freely if you still
have the evidence and legal basis”
- “A lawyer is a person who provides
evidence related to a case in court.”
- “The litigation process will allow
you to obtain information from the
other side in the form of documents
and verbal responses through
processes called document
discovery and examinations for
discovery”
➢ Arbitration
- “Arbitrators can use multiple
languages depending on your
choice”
- “The arbitration process is faster
than solving the problem in court”
- “The arbitration process takes
➢ Litigation
- “Litigation process is
time consuming because
it is a rigid adjudication
process and requires full
procedure to proceed to
trial.”
- “The litigation process
can undoubtedly
become quite costly
with legal fees and other
costs associated with
going to trial”
- “It is almost always
damaging to the
relationship between the
two parties.”
- “Litigation is open to the
public”
➢ Arbitration
- “The cost of arbitration
is very high”
“With the above
analysis, I realize that
Arthur has the ability
to win this case, but
Arthur should not waste
money because the cost
of litigation and hiring
an arbitrator is high. So
Arthur should first use
negotiation with Brian.
In case Brian does not
agree to negotiate, both
parties should use
mediation by inviting a
third person, who has
legal knowledge to
mediate this issue. And
if the mediation is not
successful, then Arthur
should use litigation
and should not use
arbitration because the
cost of arbitration is
very high compared to

32
parties may separately agree to
arbitration after a dispute has
arisen.”
“In arbitration proceedings the
dispute is decided either by a
single arbitrator or a panel of
arbitrators (usually three in
number). An arbitrator performs a
similar role to that of a judge in
that they are responsible for
managing the proceedings to
ensure the parties to the dispute
have a reasonable opportunity of
presenting their case. At the
conclusion of the arbitration, the
arbitrator will deliver an award
which is final and binding on the
parties.” (ADGM, 2021)
- Mediation: “is a process wherein
the parties meet with a mutually
selected impartial and neutral
person who assists them in the
negotiation of their differences.”
place secretly and protects the
information of both parties
involved, not public”
- “Arbitrators have a deep
understanding of the legal areas
depending on your choice”
- “The arbitral award is binding and
cannot be appealed by either party”
➢ Mediation
- “Mediation can be carried out
relatively quickly compared to
litigation, taking on average
between 1 to 2 days”
- “If both parties agree to mediation
this clearly demonstrates a
willingness to achieve a negotiated
solution”
- “The appointed mediator will be
independent; they will not advise
or provide judgement”
- “It is the parties involved in the
mediation process that arrive at a
- “It requires good faith
and agreement between
the parties”
- “Procedures before
arbitration are often not
as clear and direct as
those in court”
- “There is limited scope
to object to the
arbitrator's decision”
➢ Mediation
- “Concerns exist around
the enforceability of a
mediation agreement”
- “Mediation may not be
appropriate if one of the
parties required public
disclosure”
- “All parties must agree
to a resolution as the
result is not guaranteed”
the compensation that
Arthur requires.”
Case 2:
Trumpet
Workshop
v Arthur
Trumpet
Workshop
“Looking at the above
analysis, Trumpet Shop
cannot win the case, so
I advise Trumpet Shop
to use negotiation and
conciliation with
Arthur because when
using litigation and
arbitration, it is very
time consuming and
money. Sometimes this
case will not be
considered by the court
because past
consideration is not
considered. Therefore,
Trumpet Workshop
should choose non-
jurisdictional measures
on this issue.”
Case 3: Boffin “In my opinion, Boffin

33
Boffin v
Sweeties
Ltd
“The mediator acts as a catalyst
between opposing interests
attempting to bring them together
by defining issues and eliminating
obstacles to communication, while
moderating and guiding the
process to avoid confrontation and
ill will. And the decision of the
mediator is not binding because
the two parties agree to each
other.” (Jamsadr, 2021)
- Negotiation: “is a strategic
discussion that resolves an issue in
a way that both parties find
acceptable. In a negotiation, each
party tries to persuade the other to
agree with his or her point of view.
By negotiating, all involved
parties try to avoid arguing but
agree to reach some form of
compromise.” (Jamsadr, 2021)
final solution and not the mediator”
- “The mediator is there to facilitate
and guide the discussions between
the parties, with the primary
objective of resolving the dispute”
➢ Negotiation
- “Flexibility: since negotiation is an
informal process, it is relatively
flexible.”
- “Quick resolutions as compared to
litigation.”
- “It facilitates in maintaining a
healthy relationship between the
disputing parties.”
- “Takes place in a private
environment”
- “If the dispute cannot be
resolved in mediation
the cost of mediation
will have been wasted”
- “An unwillingness of
one or both of the parties
to cooperate can make
the whole process a
waste of time, effort and
money”
➢ Negotiation
- “The parties to the
dispute may not come to
a settlement.”
- “Lack of legal
protection of the parties
to the conflict.”
- “Imbalance of power
between the parties is
possible in negotiation.”
can win in this case
because Sweeties Ltd's
non-compete condition
is difficult to enforce.
So first, Boffin should
use mediation and
negotiation because the
agreement to avoid
costs a lot and this case
involves the interests of
both parties. However,
if using those two
measures still does not
solve the problem,
Boffin should take the
case to court.”

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