Legal System and Business Organizations

This assignment delves into the significance of the legal system for citizens and businesses. It discusses various business structures, including their advantages and disadvantages, and the importance of adhering to applicable laws for a company's functions to be valid. Additionally, it explores different methods for resolving employment disputes, with arbitration being highlighted as a cost-effective and time-efficient approach. The assignment concludes by emphasizing the need for businesses to abide by laws and rules to protect against frauds or breaches in contracts.

Business Law

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Different sources of law...................................................................................................1
P2. Role of government in law-making and use of common and statutory law in justice courts
................................................................................................................................................3
TASK 2............................................................................................................................................5
P3. Illustration of potential impact of company, employment and contract law upon a business
................................................................................................................................................5
TASK 3............................................................................................................................................6
P4. Different types of business organizations that are legally formed...................................6
P5. Management and funding of above-mentioned business organization............................9
TASK 4..........................................................................................................................................10
P6. Various legal solutions to resolve number of disputes along with recommendation of
appropriate method...............................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business law contains various provisions which govern dealings in trade. It is also known
as mercantile law or commercial law. Laws are meant to provide a uniformity and protect any
unfair commercial transactions. (Vagts, and et. al, 2015) Further, different types organizational
structure such as company, partnership, agency etc. are governed by their respective laws and
contracts that are formed are regulated by the laws applicable on contracts. These are enacted in
the form of ACTs and entities falling within the scope of various laws should abide by them in
order to run business without any legal consequences. This report covers, nature of UK legal
system along with various sources of law and role of government in law-making, illustration of
impact of employment, contract and company law upon a business, different types of business
and their management and funding and lastly, legal solutions for resolving employment conflicts
along with recommendation.
TASK 1
P1. Different sources of law
The origin of English legal system is based on three important elements viz. Legislation
(Statue Law), Common Law (Judge-made Law) and European Community law. Further, it has
evolved from customs. UK has a partially written constitution on which Acts have been enacted.
The supreme authority is Parliament of Westminster which confers power on various local
authorities to make laws. Further, it follow Doctrine of Supremacy of Parliament, which means
that courts are bound to accept legislation enacted by Parliament, also, they are of nature that
supersede the judge-made laws. Furthermore, Queen is unelected who has the role of monarch on
ceremonial occasion. Government have been empowered by the Crown to exercise powers on
behalf of Queen. (Schwartz and et. al., 2013) However, she makes decisions in the matters of
national security, defence of realm and deployment of armed forces. The legal system is for
protecting the citizens of UK by implementing Acts. These Acts do not only contain the
requirements that has to be followed, but also punishments for offences and breaches made by a
person, be it natural or artificial. In order to know the applicability and solve legal cases, one
should have knowledge about laws. These can be determined through various sources, which are
as follows:
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1. Primary sources: These are immediate, first-hand information which is directly linked to
the matter. Original documents are included in this. In the context of law, it refer to case
laws, legislation enacted by Parliament and EU law.
 Case Law: The conclusion determined by judges forms fundamental sources of UK law.
These contain reliable information which is divided into facts, issues and decision and
principles on which case was concluded. (Hanrahan, Ramsay and Stapledon, 2013) It is
based on judicial precedents, which are used for subsequent reference for determining
future case law. These are published in Law Reports.
 Legislation: UK has legislations for written potion of constitution. These are passed by
Westminster Parliament. Further, these are applicable to whole UK and every citizen is
required to abide by laws. Parliament is considered supreme and can enact laws. Further,
these are superior to all other sources and cannot be challenged in courts for any reason.
 European Laws and Regulations: The laws along with the regulations are formed by
European Union which are applicable on the member countries of European Union.
These are issued in the form of derivatives.
2. Secondary Sources: These are about information that has been used or interpreted
earlier. These are used for research. It includes, legal encyclopaedias, parliamentary and
non-parliamentary publications, law commission, law journals and textbooks.
 Legal Encyclopedia: UK has authentic Encyclopedia named as “Halsbury's Laws of
England and Wales”. It contain narrative explanation of various laws and is written in
alphabetically manner.
 Parliamentary and Non-Parliamentary Publications: In order to to know history and
reason as to why a legislation cane into effect, it's important to go through various
publications which includes command papers, debates of parliament, house of common
and house of lords papers (De Jonge, 2011). And non-parliamentary publications is about
reports and papers from government agencies.
 Law commission: UK government has set up an independent body to monitor and
overlook the areas where law requires amendments and reform in order to remove
loopholes of existing laws. Suggestions of public at large are taken before
implementation of a law.
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 Law Journals: These are a combination of various academic arguments, newsletter etc.
to help a person understand every detail in a legal issue.
 Textbooks: These are very easy to understand and considered as one of the best sources
for research work. Also, authors have presented their expert views in critical matters.
P2. Role of government in law-making and use of common and statutory law in justice
courts
The responsibility and authority to manage an economy is in the hands of government. It
formulates plans according for achieving long-term and short-term goals which will benefit its
citizens. Laws are made for protecting people and punish the wrong doers. Government has huge
role and responsibility in law making. (Posner, 2014) It monitors the outcomes of plans it has
implemented, assess need for reform and make laws that will increase transparency in the
country.
Before an Act is passed, it is presented by government in the form of Bill before both the
houses of parliament. It is given in draft form and passes through various stages before receiving
royal assent. These stages are given beneath:
First Reading : This is being considering as initial reading, where bill's title along with
its inclusion consist paper is being read out by House of Commons.
Second Reading : At this stage, it can be said that details on a specific bill is basically
being debated and amended. Along with this, MPs at this phase vote on the bill that if, bill
should proceed or not.
Committee Stage : Under this stage, bill is specifically being referred to House of
Commons committee where proper examination takes place of the bill.
Report Stage : At this phase, committee reports the debates and amendments made back
to the House. The Bill is further debated and voted upon by the House.
Third Reading : This is being considered as a bill which is basically re-presented to the
House and here short debate is done and then voting takes place whether the bill should be
accepted or rejected.
House of Lords : Under this stage, bill is specifically sent to House of Lords and this
again includes 5 initial stages. On the other hand, amendments over here are made so that it can
be sent back to House of Commons to consider the amendments.
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Royal Ascent : Final stage where process where the monarch has to formally approve the
Bill and then becomes an Act of Parliament.
However, parliament has authority to reject the bill if it find inappropriate. It can be said,
most of laws passed by Parliament are based on opinions and ideas of government. Furthermore,
it is also responsible that people living in UK are following laws and conducting their activities
as demanded by Act. Furthermore, it constitute committees who oversee effects of laws on the
lives of people, analyse benefits and loopholes, suggest ways in which it can be reduced or
removed and prepare a report containing conclusions. Government also refers the areas of laws
which can be improved through amendments without changing whole law. Each year, it
introduces new legislation by putting a bill in front of Parliament provided it must be approved.
Apart from this, rules and standards along with codes are also made applicable for better conduct
of activities and to ensure democracy in the country.
UK Legal system has consisted of a whole body of law that regulates the activities of
society. It can be categorised or classified in numerous ways. However, main classification that
is important, useful and relevant to Legal matters are as follows:
1. Common Law: Each case is different and unique in its own way whose decision forms a
base which can be applicable to conclude future cases. These are usually un-codified. It
operates by relying on doctrine of judicial precedents. (Colpan and Hikino, 2010) Each
case is determined on by applying conclusion that has been given by judges in the past.
These are instructive in nature and include procedural law. These can be modified
through existing statutory law. A case is decided on the basis of evidences and facts, and
a principle on which similar case has been concluded in the past. Single precedent can be
used to take legal decisions in more than one lawsuit.
2. Statutory law: These are the laws passed by Parliament in the form of Act. It is also
known as legislation. Every state law has to go through a set procedure which is
presenting a bill in Parliament and obtaining royal assent. These are in written form and
every citizen is bound to comply with provisions of these laws. (Lefort, 2010) Further,
such laws are treated as foundation on which UK legal system is based. It regulates
behaviour of people and members of Parliament. These are formed for governing the
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society. It is made and enacted by legislative body. It is of substantive in nature which
contain rights and duties of UK people.
Hence, it can be said statutory law have wider scope and is more powerful as compared
to common law. Also, former has power to overrule the latter and in case of any disputes
regarding applicability, statutory law shall prevail. Along with this, divisions of the court system
at United Kingdom is mentioned beneath:
 Court of Appeal.
 High Court.
 Crown Court.
 County Court.
 Family Court.
 Magistrates' and youth Courts.
 Coroners' Courts.
 Ecclesiastical Courts.
TASK 2
P3. Illustration of potential impact of company, employment and contract law upon a
business
Laws are formed to provide a norm of conduct for citizens. These serve as guidelines and
order on which people as well as different types of organization have to complied with. UK has
many types of business structure operating in its economy. For their smooth functioning,
applicable laws have to be abided by. Some of the major laws that impact business are as
follows:
1. Company Law: Companies Act, 2006 is the legislation that governs activities carrying
on by a corporation or company. It is an artificial person in the eyes of laws and has
citizenship. So it is treated as any other citizen of UK, hence, it is required to comply
with provisions of this ACT. The ACT provides rights of shareholders, duties and
responsibilities of directors, preparation and maintenance of various documents, filing of
audit report, appointment of required number of directors, company secretary, etc. The
inception of company can happen only when it is registered with Companies House.
(Scholes, 2015) It is mandatory for every corporation to abide by the provisions of this
ACT for carrying its business without any legal hindrance. For instance, if a company
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fails to conduct first any general meeting within specified time together with extension,
then it has to face consequences. Companies House may also remove the name of
company after giving proper notice.
2. Employment Law: The organizations operating in UK has to comply with Employment
Act, 2002 along with Equality Act, 2010. These laws are formed to protect rights of
employees working in an organization. Equality Act, 2010 provides for discrimination on
the basis of gender, colour, religion, etc. Further, these legislations are in favour of
working personnel and unfair dismissal is treated as an offence. (Gevurtz, 2010) Whoever
face acts of bullying, assault, unfair dismissal, discrimination, denied of leaves, etc. may
seek relief from Employment Tribunal. Every organization is bound to follow the above-
mentioned legislation so that employees feel happy to work in the entity. Employees hold
great power, and an organization can be face events in which it can be wound up. For
example, a pregnant lady has been denied maternity leave, in this case, she can file
lawsuit against his employer.
3. Contract Law: Contract is formed not only in business dealings but for everything for a
legal backup. An offer made by a person in the form of agreement made to another
person and when it is accepted, it forms a contract. Further, there must be a legal
intention to create a contract along with, some consideration. UK does not have separate
legislation for contract instead it is governed through Sale and Supply of Goods Act,
1994. When vendor and purchaser enter into a contract, they become legally bound to
comply with terms and conditions. The provisions deals with commercial transactions
which are formed in the ordinary course of business. (Hopkins, 2011) In the case, is a
party has beached a clause can seek specific action against opposing party. For
examples, an employer enters into employment contract with its employee in which there
was a clause about minimum number of leaves. The employer denied allotted leaves,
thus, a term of contract has been breached. Hence, personnel can file a case against him.
TASK 3
P4. Different types of business organizations that are legally formed
A person is free to choose business structure to attain objective and earn profits. Every
type has its own advantages and disadvantages. Hence, the owner must choose an appropriate
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form of business by considering financial, legal, taxation, human resources etc. aspects. Some of
the most preferred organization forms are as follows:
Sole proprietorship: It is suitable for business operating at small scale. It has no legal
identity, also there is no law which is specifically formed to regulate this type of business. A sole
proprietor is the owner who takes all the decisions regarding the management. Formulation of
sole trader business includes several steps which are described as below:
 Decide specific name of business that has not been used by someone else
 Registration of chosen business name with several legal entities such as state, local and
federal government.
 Take essential business approval like licenses from authorised governmental authority
(Svantesson, 2016).
Further, profits and losses are borne by him only. He invest his capital to start a business. Also,
he has absolute authority to hire employees for good conduct of business activities. There is no
need to prepare any documents and file with any authority.
Advantages:
 The owner is not required to pay corporate tax on payments.
 Legal costs are minimum due to simple procedure of formation.
Disadvantages:
 Losses are borne by proprietor only.
 Investors are not at all interested in for investing in this type of business structure.
Company: It is an association of person, which is called as body corporate. A company
is an artificial person with separate legal identity and having a common seal and perpetual
succession. Moreover, there is a distinction between properties owned by corporate and its
members. Further, it is divided into three categories viz. Limited by shares, guarantee or
unlimited company. Some examples of this for are companies with profit making objective, non-
profit organization, banks and financial institutions.(.Svantesson, 2016) In the eyes of law, it a
person who has individual identity. A company in UK should compulsorily file required
documents with Companies House. At the time of filing, an organisation needs to submit
documents to company house like IN01, and other essential details in order to fulfil all the
requirements. It can carry its activities when it has been registered.
Advantages:
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 A company can raise finance from various sources because it is a registered entity.
 Easy transferability of shares from one person to another.
Disadvantages:
 Reporting of various reports and financial statements which makes the system complex.
 Chances of legal consequences are high if company fails to repay number of creditors.
Partnership: It is being referred to general partnership. It is the relationship among two
or more people who are carrying out business together for mutual profit. Partnership is governed
in United Kingdom with Partnership Act 1890. it is a form of business whereby two or more
person execute an agreement known as “partnership deed” for carrying activities to earn profits.
The income and losses are shared in ration as mentioned in the deed or equally in absence of
ratio. This means that risks and liabilities are shared by all the partners. The interest of all
partners are same. Registration is not compulsory but if firm may register the same for available
legal benefits.
Advantages:
 Partnership firm is easy to set and requires low set up cost.
 The decisions making process is faster.
Disadvantages:
 A firm would be dissolved on the death or insolvency of a partner.
 Leadership is often missing which leads to directionless operations.
Limited Liability Company: It is a new form of business which has characteristics of
both a company and partnership firm. (Allen, 2017) The liabilities of members are limited and
cannot held personally liable for company's debts or liabilities. Along with this, it is totally up to
owners to choose the rule they want to follow such as corporate taxation rules or partnership.
Advantages:
 Increased tax flexibility.
 Involves less paperwork.
Disadvantages:
 The life of LLC is limited and ceases to exist, if a member departs.
 Lack of assigned roles.
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P5. Management and funding of above-mentioned business organization
A business operates for earning profits for which it set some objectives. These goals can
be achieved through effective management through forming co-ordination among all the
activities. An entity without proper management and resources will not be successful, hence,
sufficient funds along with proper management is required. (Lefort, 2010) The mechanism of
funding and managing have been described below:
Sole Proprietorship: It is formed by one person, who is called “sole proprietor”. He has
absolute authority to take decisions from formation to dissolution. Also, structure of business is
decided by him only. Also, a contract will be executed by putting signature of business owner.
However, he can hire his family members or outsiders to help in conducting his business. It is
usually funded from owner's capital as it is difficult to raise funds from other sources because
investors are not interested. However, it can obtain loans from bank and utilize it for business.
Company: It is treated as an artificial person in the eyes of law, who has a life and is
distinct from its members. A company has no eyes, brains or hands, hence, cannot manage its
activities on its own. Therefore, to manage its affairs, number of directors as prescribed by
Companies Act, 2006 is appointed. Directors are responsible to make decisions within the limits
and for the benefits of its business. They execute contracts on behalf of company and buy and
register properties in the name of company. There are various sources of funding are available to
company. The major ways to raise funds are through issuing shares and debentures to its
members in case of private company and to public in case of public company. Also, it can
borrow money from creditors or obtain from banks and financial institutions.
Partnership firm: The partners who share mutual interest have the authority to manage
its activities. Decisions are taken by all or any one of them acting for all. All partners have equal
responsibilities towards management. Further, decision regarding admitting a partner or to sign a
contract or not shall be made with consent of each partner.(.Swanson and Frederick, Budhwarand
Varma, 2010.) Partnership firm have limited options to raise funds, as compared to company.
The major ways through which it fulfil requirements of resources are capital brought by partners
and loans from banks and FI.
Limited Liability Company: The owners are its members who manage LLC. It may
have a single owner or multiple. They are ultimate decision makers regarding the organization.
However, it may hire managers to manage its affairs in an effective manner. Furthermore, each
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member has individual authority to take decisions for the interest of company. But if it wants to
enter into contracts or loan agreements, then such can be executed only when it has been
approved by majority of members. Further, they are also known as its agents. There are many
sources available to fund LLC, but majorly preferred is contribution by members. It also uses
other sources to raise resources such as admitting new members, short-term financing, loans
from institutional lenders etc.
TASK 4
P6. Various legal solutions to resolve number of disputes along with recommendation of
appropriate method
Disputes and conflicts cannot be avoided at workplace or in our daily lives. Employees
working in an organization may have different opinions which causes disputes. A leader and
manager should be capable enough to resolve them before they turn ugly. Various methods have
been provided which are useful for resolving such conflicts. However, each situation different
can need different solution to solve it.(DeMatteo, 2010) Furthermore, employer should assess the
situation first, and then decide which legal solution should be used. Some of the most used legal
solutions for resolving employment disputes are as follows:
1. Negotiation: It is most simple and effective way of resolving disputes. Under this, parties
to conflict may themselves negotiate with each other or they may hire a third person to
settling things. It involves two-way communication in order to reach to a conclusion.
There is no specific procedure for this, and one may have their own way to solve
problems. For example: An employee has been humiliated at workplace by his employer,
so negotiation would be first step to have a conclusion.
2. Mediation: It is of voluntary nature in which a third person called mediator helps in
communication with parties to disputes and creates ways for reconciliation between them.
This allows fast action of reaching to a solution which would end any kind of disputes.
However, mediator does not make any decision or agreement which can be enforced. For
example: An employee has faced sexual harassment and he has accused his colleague for
this. Since, this may reduce the reputation of company, such problem can be solved with
mediation before any other way.
3. Arbitration: Under this method, a third person is appointed mutually by both the parties.
This person is an independent person who will make decision that will be final and of
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binding nature. Arbitrator hear both the parties and make conclusion on the basis of it.
Further, parties have to submit evidence along with witnesses who may be their
testimony. (De George, 2011) For example: an employee has been terminated without
being offered any explanation or notice. This can be solved with arbitration.
4. Litigation: Under this solution, a person who have made allegation goes to court to file
litigation or lawsuit against another person with a view to refrain him for participating in
the solution. It begins with trial which is then followed by production of evidence and
witnesses in front of judge. For example: Employer has removed one of his employees
also did not provide salary for last 4 months, then the victim can go court and file a case
against his employer.
From the above solutions, the best solution to solve employment disputes would be
Arbitration as it is amicable settlement of disputes which is cost-effective and less time
consuming.
CONCLUSION
From the above report, it has been concluded that legal system is very important for every
citizen as it provides a base on which each individual is treated equal. Business organizations are
also required to abide laws and rules that are applicable on them. This protects against frauds or
any of breach in the contract. Along with this, there are different types of business structure
which has it advantages and disadvantages. All the factors should be considered before selecting
a type. Further, a company should follow applicable laws in for carrying its functions on with
legal validity. Furthermore, there are various methods by using which disputes can be resolved
promptly.
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REFERENCES
Books & Journals:
Vagts, D. F. and et. al, 2015. Transnational business problems. West Academic.
Schwartz, R. L. and et. al., 2013.Health law: cases, materials and problems. West Academic
Publishing.
Hanrahan, P. F., Ramsay, I. and Stapledon, G. P., 2013. Commercial applications of company
law.
De Jonge, A., 2011.Transnational corporations and international law: accountability in the
global business environment. Edward Elgar Publishing.
Posner, R. A., 2014.Economic analysis of law. Wolters Kluwer Law & Business.
Colpan, A. M. and Hikino, T., 2010. Foundations of business groups: towards an integrated
framework. In The Oxford handbook of business groups.
Lefort, F., 2010. Business groups in Chile. In The Oxford handbook of business groups.
Scholes, M. S., 2015. Taxes and business strategy. Prentice Hall.
Gevurtz, F. A., 2010. Corporation law. West.
Hopkins, B. R., 2011.The law of tax-exempt organizations (Vol. 5). John Wiley & Sons.
Svantesson, D. J. B., 2016.Private international law and the internet. Wolters Kluwer Law &
Business.
Allen, W. T., 2017. Our schizophrenic conception of the business corporation. In Corporate
Governance (pp. 79-99). Gower.
De George, R. T., 2011.Business ethics. Pearson Education India.
DiMatteo, L. A., 2010. Strategic contracting: contract law as a source of competitive
advantage.American Business Law Journal. 47(4). pp.727-794.
Law, D. W., 2010. A measure of burnout for business students. Journal of Education for
Business. (4). pp.195-202.
Swanson, D. L. and Frederick, W. C., 2016. Denial and leadership in business ethics education.
Business ethics: New challenges for business schools and corporate leaders. pp.222-
240.
Budhwar, P. S. and Varma, A. eds., 2010.Doing business in India. Routledge.
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