Key Sources of Laws for Business Organizations in the UK

This report describes the legal context for business organizations in the UK, including the key sources of laws. It covers the legal structure of UK companies, including sole trader, partnership, and limited liability. The report also provides recommendations for IOM Solutions.

BSc (Hons) Business Management
BMP4002 Business Law
Assessment 2
Report describing the key sources of
laws as the legal context for business
organisations in the UK
Submitted by:
Name:
ID:
d_2063531361

Contents
Table of Contents
Introduction ...............................................................................................................................3
Businesses & Organizations in the UK........................................................................................3
The legal business structure of UK companies..........................................................................5
Sole Trader........................................................................................................................6
Partnership........................................................................................................................6
General Partnership..........................................................................................................7
Limited Liability.................................................................................................................7
Recommendations for IOM Solutions........................................................................................8
Conclusion..................................................................................................................................8
REFERENCES......................................................................................................................9
d_2063531362

Introduction
Business laws are those rules and regulation which is used within the
formation of business organization. These laws are used for developing proper
structure for conducting business. Further, business organisation uses business laws
for conducting business operations on large scale as per laws set within country.
Business laws are based over laws like contract, company and employment making
business organization set up within particular country. Business laws helps in making
various business perspectives fulfilled through its legal integrity. Thus, business laws
holds wider scope in terms of enhancing functions makes business conducted in
direct manner. The report related with business organisation established and its
various aspects in United Kingdom. Legal structure of various business organizations
has been explained. In this, explanation in relation to sole trader and partner is
covered with various forms of partnership. In the end of report legal solution in terms
of business growth and expansion of IOM solutions.
Businesses & Organizations in the UK
Business and business organizations are those perspectives which is covered
in order to conduct business operations regarding selling, manufacturing and
production of product or services provided by an organization (Courcelles, 2019).
These aspects lead towards increasing capability of business for attaining
sustainability within market. These organisations are established with motive to earn
profit and revenue from business conducted within country. These organizations are
divided into two parts which is private and public sector. In order to make develop
business organizations three main laws are applied which are company, contract and
employment law. In UK, Companies Act 2006 is used within which formation of
memorandum of association and article of association is must for setting up an
organization. The act also deals with duties of directors within an organization.
Contract laws are used which is based over developing agreements that becomes
contracts. These laws are based over elements like offer, acceptance, consideration,
legality and validity which leads over forming of business agreements. Then, comes
employment laws that deals with various situations faced by employees within an
organization. In this various legislation are present that are Equality act 2010,
d_2063531363

Employment act 1996 and Minimum Wages act 1986. These laws have defined
various duties of directors which are given as follows:
 Duty to act within their powers: Directors of an organization have job within
an organization (Dickinson, 2017). They are given certain power which is
required to be followed by them in order make organization success and
growth achieved.
 Duty to exercise independent judgement: Directors within an organization
holds duty to take action in case where an employee has performed act of
misconduct.
 Duty of promoting organizational success: The directors of organization is
based upon making promotion done of its product and services that leads
upon increasing profit margins.
 Duty for dealing with conflicts of interest: This duty is based upon solving
conflict which makes employees difficulties while working within an
organization. Duty of taking reasonable care of employees: Directors of an organization
is required to take reasonable care of employee in relation to their basic
needs.
Liabilities of directors as per company law of UK
 Criminal liability: These liability is based upon any kind of misconduct that
has caused breach of contract or any professional misconduct.
 Financial liability: This is formation of budget and maintaining of financial
data.
 Health and security liability: Under such liability major concerns is paid over
health perspectives and security aspects which is important for an employee.
Further, vicarious liability is used by organization to understand about
principle ''Master is held liable for misconduct performed by employee''. This makes
directors of an organization develop proper framework within an organization.
Partners is an important aspect and can be terminated on death of partner or conflict
of interest. Also, business organization in UK must prepare Memorandum of
Association which is a legal document that is prepared at the time of registration of
an organization specifying about objectives which is withhold within an organization.
d_2063531364

The legal business structure of UK companies
The legal structure existing within business organizations of United Kingdom
is based upon various kinds of aspects which is used for developing legal structure
in terms of making business organizations operate within the country. These
organizations are covered within two heads that are incorporated and unincorporated
organizations. Under unincorporated organization there are various business which
operates at low level. The organizations include within this business structure is sole
trade and partnership. Then, comes incorporated organizations that has been
formed with complex and lengthy process. Under it organizations that is included are
private and public organizations. Both organizations hold important which makes
business developed in effective manner leads upon developing business with
various aspects. These organizations are formed easily and legal identity is
developed within an organization. The comes incorporated organizations which are
divided into two parts public and private organization. Under private organizations all
operations are conducted by the directors since they act as representatives of
particular business. These organizations make business conducted on large scale
with global level. These organization has together formed legal structure of business
organizations in United Kingdom. Two main organizations related to the report has
been discussed as follows:
Sole Trader
These business organizations are covered within unincorporated business
organizations within which formation process is not compelled. Sole trader
organizations are most commonly applied in order to introduce business within
particular country like United Kingdom (Kubacki, Szablewska and Kennedy, 2019).
Such organizations possess single ownership which means it has only one owner.
The owner of sole trader possess power to operate business activities. Also, they
hold responsibility in terms of bearing loss occurred due to business. Profit
generated from these business is posed by owner only. In order to form these
organizations, INGRC number is generated and name of organization is only used to
proceed within business. In case with IOM Solutions, operations as sole trader
includes management practices performed by owners themselves and funds are
generated with the help of personal contacts like family members and friends. These
d_2063531365

organizations have certain advantages and disadvantages which has been
discussed as follows:
Advantages of sole trade organizations are
 All profit generated through business activities is kept by owner themselves. The formation process does not hold any complexity and business are run
without any legal obligations.
Disadvantages of sole trade organizations are
 Funds arrangements is very difficult as sources of capital is limited which can
collapse working of business entity.
 The organization face heavy loss and makes all activities handled with great
difficulty.
Partnership
These are those organizations which has been formed by two or more than
two persons. The persons forming such organizations with sole motive to earn profit.
Partnership organizations are free from any kind of legal obligations within its
formations process. In order to develop a partnership organization, it is not
necessary to collect documents and submit it to any appropriate authority. It is
required to prepare a partnership agreement only when any legal process is involved
within business. If IOM Solutions works as partnership, the organization is required
to attain permission form its partners before taking any decisions regarding business
operations. Management of these organizations are done by partners and funds are
arranged by partners. There are two major types of partnership which has been
discussed as follows:
General Partnership
These are the organization which has been made with the help two persons
with common motive to earns some profit from business. The organization are
formed with the help of risks, costs, blessings and obligation which makes
organization function more effectively (Phillip and Moutinho, 2018). In this
organization, formation process only includes INHRC number. This is basic form of
partnership which is associated with organization only. In these organizations
agreements are created with proof of an existing estoppel. General partnership is
basic form of partnership that is related to monitoring of activities related to business.
In order to manage these organizations partners are used for performing all kinds of
business activities. Funds of these organizations are generated by the partners
d_2063531366

themselves. Funds are arranged through personal loans, assets and liability of
owner. In case, if IOM Solutions operates as general partnership, it is free from legal
obligations which makes its operations to be conducted without following lengthy
process. Also these organizations are bound to follow framework formed by
partnership. There are various other advantages and disadvantages of general
partnership which has been discussed as follows:
Advantages of general partnership
 General partnership is very easy to be formed and is created in general
manner with less cost involved within it. Under general partnership simplification of taxes exists which makes these
organizations free from tax liabilities.
Disadvantages of general partnership
 The liability of partners in relation to debts of business is unlimited which can
lead towards insolvency of business.
 The degree of risk is more which may result in rise of conflict of interest.
Limited Liability
This is another form of partnership firm which is based upon developing a
business organization as per the investment made by partners within it (Shanahan
and Hopkins, 2019). These partners are run by partners as per investment made by
partners within particular country. When IOM Solutions opts Limited Liability, its
management and funding can be dependent over the limited interest poses by
partners within partnership firm. There are certain advantages and disadvantages
which has been explained as follows:
Advantages of limited liability partnership
 No requirements of minimum contribution this is biggest advantage as no
minimum capital required within LLP organizations. No limit on owners of the business in this organization only two partners are
there which is not limited with maximum number of partners making
operations conducted easily.
Disadvantages of limited liability partnership
 Penalty for Non-Compliance even if an LLP does not have any activity, it is
required to file an income tax return and MCA annual return each year.
d_2063531367

 Inability to Have Equity Investment an LLP does not have the concept of
equity or shareholding like a company.
Recommendations for IOM Solutions
As per the scenario, it can be observed that Sam has been running IOM
solution from eight years as sole trade. IOM solutions with the help of partnership is
able to conduct business without any legal obligation. Thus partnership is important
for making business expansion done by IOM solutions.
Conclusion
From the above discussion it can be concluded that business laws are those
laws which has been used in order to conduct business activities and makes
establishment of business organization possible. The business organizations of
United Kingdom have been operating over legal operations on large scale. In this
report various kinds of business organizations and business organization of UK is
discussed. Then sole trader and partnership is covered with its advantages and
disadvantages. In the end solution is provided to IOM solutions regarding expansion
of business.
d_2063531368

REFERENCES
Books and Journals
Buchheit, L. C., 2019. Ethical considerations in the representation of sovereign
clients. In Research Handbook on Law and Ethics in Banking and Finance.
Edward Elgar Publishing.
Burri, T., 2021. The New Regulation of the European Union on Artificial Intelligence:
Fuzzy Ethics Diffuse into Domestic Law and Sideline International Law.
Available at SSRN 3865149.
Conrad, C.A., 2018. Ethics in Business Education. In Business Ethics-A
Philosophical and Behavioral Approach (pp. 327-337). Springer, Cham.
Courcelles, D., 2019. The Ethics of the Merchant in the Islamic Faith: From Ibn
Khaldoun to Islamic Finance.
Dickinson, A.L., 2017. Recent Ethics Opinions of Significance. J. Legal Prof., 42,
p.291.
Fairchild, and et. al., 2018. 14. Health Justice. In Public Health Law and Ethics (pp.
587-612). University of California Press.
Kubacki, K., Szablewska, N. and Kennedy, A.M., 2019. Guest editorial: Social good
and ethics in social marketing for wicked problems. Journal of Social
Marketing, 9(4), pp.485-489.
Phillips, P. and Moutinho, L., 2018. Business ethics. In Contemporary Issues in
Strategic Management (pp. 178-194). Routledge
Shanahan, K.J. and Hopkins, C.D., 2019. Level of agreement between sales
managers and salespeople on the need for internal virtue ethics and a direct
path from satisfaction with manager to turnover intent. Journal of Business
Ethics, 159(3), pp.837-848.
Surdam, D. G., 2020. Examples of Mid-Nineteenth-Century Business Ethics in
America. In Business Ethics from the 19th Century to Today (pp. 71-99).
Palgrave Macmillan, Cham
d_2063531369