Key Sources of Laws for Business Organisations in the UK

This report describes the key sources of laws as the legal context for business organisations in the UK. It covers various forms of business, their legal implications, and recommendations for IOM Solutions.

Business Management
BMP4002 Business Law
Assessment 2
Report describing the key sources of
laws as the legal context for business
organisations in the UK
:
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Contents
Table of Contents
Introduction ...............................................................................................................................2
Businesses & Organisations in the UK........................................................................................3
The legal business structure of UK companies..........................................................................3
Sole Trader.............................................................................................................................4
General Partnership...............................................................................................................4
Partnership............................................................................................................................5
Limited Liability......................................................................................................................5
Recommendations for IOM Solutions........................................................................................6
Conclusion..................................................................................................................................6
REFERENCES ..............................................................................................................................6
Introduction
Business law is a branch of civil law which specifically deals with the activities and affairs of
the business such as the hiring of employees, sale and manufacturing of goods and services.
Moreover, the said laws also specifies certain rights, liabilities and the way of conduct in
which the business activities needs to be carried out. Also depending on the size and
functioning of every enterprise, it can vary in different forms such as sole trader, partnership,
limited liability and public and private limited companies. Therefore, in order to have a
effective and smooth working of the business, it is required for it to comply with the existing
legislations. This report is going to cover the various forms of the business which one can opt
for along with its legal; implications and other aspects. It also summarizes the suitable
recommendation which Sam is looking for as per ones requirement(Aikens, 2020).
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.
Businesses & Organisations in the UK
One of the original source which regulates the affairs of the business in the country is the
Companies Act of 2006. But as one knows that the affairs includes every sort of activities
including the engagement of employees and being party to different agreements therefore,
other than the companies law, they also need to comply with the contract and employment
laws of the country. The business can only be grown when its employees or the internal
management is doing well as this ultimately leads to the success of the company. Every
company in accordance with the said legislations, depending on their forms enjoys different
status and rights such a the title of separate legal entity and perpetual succession. Other then
this there also prevails certain concept in the UK such as letter of intent, non- disclosure
agreements, etc. The affairs related to employment are governed by the various employment
laws which bounds both the employer and its employees to adhere to certain obligations
towards the company as well as to the others. Other than its members, the companies can
also be made liable for his acts of non compliance and non adherence to the existing laws and
regulations(Aizenberg and Hanegraaff, 2020). The directors of the company, are considered
as the one who holds all the responsibilities related to its working and decision making.
Therefore, the ultravires acts and conduct of the directors can made them jointly or personally
liable against the interests of the company. Other than companies act, the legislation which
specifically govern the conduct of of partnership firms is the Partnership Act of 1890.
Further, the two major documents which are article of association and memorandum of
association, that are said to be the constitution of any company, is a source which results in
the guidance of legislations which states the way in which the company needs to be carried
out. Also the said documents need to be mandatory signed by its members at the time of the
formation of the company. These two drafts include all the possible information and details
regarding the company including, it form, the type of product in which the company will deal,
it registered office, required capital, etc(Wachowiak and Zuleeg, 2021).
The legal business structure of UK companies
Every business forms irrespective of the fact that in what goods and services it has been used,
possess various advantages and disadvantages. Thus in order to ascertain the one option, it is
required to have a keen knowledge about all the prevailing forms along with their legal
implications as this is one of the crucial factor which aids in the functioning of the company.
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Further, with respect to the case of Sam who is operating in a business of electrical parts from
last eight years, now wish to expand his approach. So the recommendations of the same are
as follows-
Sole Trader
The form of sole trader is also addressed as sole proprietorship where whole of the business is
managed and controlled by the single person who is the owner of such arrangement. This is
meant as one of the simplest form out of all the available options reason being its process of
incorporation and dissolution(Balloch and Taylor, 2001). The need of such forms are on rise
in the country as also all the made profits retains by the side of trader themselves. Also, the
acquiring of capital for initiation of this type does not requires much efforts and process to
follow as the same can be arranged from personal borrowings and savings of the owner
themselves. Some of the major perks of being a sole trader are, the sole control lies in the
hands of the owner. The other can of the benefit of maximum privacy as being the single
owner all the information and details limits to the proprietor only. Also the process of setting
up of the business that is its incorporation, has no mandate of its registration for its legal
existence. Further, some of its drawbacks are the trader alone has to bear all the said
liabilities which arise out of the business and also all the concerned financial and banking
charges or the costs related to the assets and machinery lies on the head of trader only.
Moreover, with respect to the legal implication, the filing of taxes are required to be made out
of the total generated revenues from the business by the one themselves. The failure on the
part of the trader for complying such norms can result in the facing the liabilities and charges
by the sole proprietor. One also need to adhere to the regulations of general data protection
and to obviate any legal consequences on timely basis.
General Partnership
This form is an arrangement where two or more people agrees to act in the capacity of
partners or co-owners in order to set up and run a business altogether with an aim of earning
some revenues out of it. In the types of general partnership and partnership, there stands no
such major difference. But in former one, it is more of an informal or a verbal agreement
which takes place between the concerned partners and the decision regarding the conduct lies
totally on the discretion of the partners(Bull, 2018). Here the liability of its members is of
unlimited nature which on later stage can also be adjusted from the personal belongings or
assets of them. Moreover, this form also requires the minimum requisites with respect to its
formation and applicable monetary charges. Also all the partners are equally need to be get
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occupied with the duties and responsibilities of the business. Other than this members also
have a privilege to import assets, labor and capital to the arrangement(Tkachuk, 2019). The
advantages of this form are sharing of liabilities in equal proportion while having the profits.
The firms which are formed under the cap of general partnership does not enjoy the status of
separate legal entity and hence its partners can also be bound to pay the liabilities out of their
personal assets. More, with respect to the legal implications, its members are bound to pay the
tax assessments on their part of revenues only which they has acquired as a part of total
profits(Lukey, 2019).
Partnership
As similar to that of the general partnership, this form is an agreement between two or more
people who comes together to share the acquired profits and losses. There lies various
essential aspects which are required for the formation of the this types such as mandatory
existence of the partnership deed. The deed is the document which states all the possible
attributes of the said arrangement including the ratios in which the share of the profits and
liabilities are to be distributed, the share in which the capital has been invested , the rights
and obligations on the part of each partners, etc. Also there stands no such compulsion that all
the partners in a joint manner need to carry the affairs of the business rather it can also be
conducted by any one partner on the behalf of all. Moreover, the availability of number of
members all together on one platform is an added advantage of this form as it forms the
cluster of different skills, experiences and talents which in the end results in the growth of
the business. Further, with respect to the legal implications, the members of the firm are not
needed to pay the tax assessments on the total income of the business rather they subjected to
the limit to which the one has acquired his part of share. Therefore, accordingly the profits
and losses which arises out of the partnership arrangement are brought back into the
individual partner tax returns(Olalere, 2018).
Limited Liability
This form as suggested by its name, the liability of the members of the company are subjected
to the limit the amount of share one has invested in the company. Moreover, it is a form
which combines aspects of both the partnership firm and corporations. The method of
procurement of required capital of business is through the issuance of shares in the market.
The limited liability companies enjoys the benefit of being the separate legal entity and hence
both the company and its members are addressed in the capacity of individual legal entity.
The amount of required capital in the limited liability company lies totally on the discretion of
the parties as there lies no minimum cap for the same. One of the drawback is of the number
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of directors which is generally fifty in most of the cases and also the issuance of prospectus of
the company to the general public. The company being enjoying the status of separate legal
entity provides a individual status to its employees of being sued and to sue the others. And
also because of the same reason its members are not held accountable for the losses which
have occurred on the part of the company. But if there stands a case where any of the partner
is guilty of the acts such as negligence, fraud or criminal offenses then in such cases the said
member is the sole and personally responsible for their own acts(Pearson, 2019).
Recommendations for IOM Solutions
Out of all the available options the most appropriate form for Sam for his business of IOM
solutions is of the Limited Liability Partnership. The major attributes which one is looking for
such as the maximum security with respect to the unnecessary liability and also of the control
over the business are the two major benefits of this particular form. The aim of looking for
new business options is because of the lack of adequate management which lies reason being
Sam is the only one to look after the every possible things. So if one one opts to go with this
option then can have the engagement of more number of members each having certain skills
who can handle the affairs of the business, while having certain liabilities to the extent of
their share in the capital(Sazonov, 2012).
Conclusion
It can be concluded from the following project that Business law is very essential in
protecting the rights of those involved in business. It helps in resolving conflicts that occur in
business and establishes standards for the performance in the business. It also creates legal
obligations on the members and owners of the business. Governance of the business
environment helps in its effective functioning. Business structure is of various types ranging
from a small level to a large scale business. Those starting or expanding a business can
choose from these for earning higher profits. For Sam, choosing a right business structure is a
key step in expanding his business and protecting himself from various liabilities. Thus he is
recommended to choose Limited Liability Partnership for his business expansion because it
offers various benefits relating to sharing of financial risks and responsibilities. It also helps
in capital formulation due to increased investments. So it will be the best option for his
business.
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REFERENCES
Aikens, R.H.S.R., 2020. UK–England and Wales. In Courts in Evolving Societies (pp. 59-
70). Brill Nijhoff.
Aizenberg, E. and Hanegraaff, M., 2020. Time is of the essence: A longitudinal study on
business presence in political news in the United Kingdom and the Netherlands. The
International Journal of Press/Politics. 25(2). pp.281-300.
Balloch, S. and Taylor, M. eds., 2001. Partnership working: policy and practice. Policy
Press.
Bull, M., 2018. Reconceptualising social enterprise in the UK through an appreciation of
legal identities. International Journal of Entrepreneurial Behavior & Research.
Lukey, P.T., 2019. Independent consultancy in drug discovery and development: a personal
perspective. Future Drug Discovery. 1(1). p.FDD4.
Olalere, Y., 2018. Companies Act 2006: A Panacea to Stakeholders’ Struggles and Socially
Responsible Firms, or a Mechanism to Enrich Already Rich?. Available at SSRN
3457940.
Pearson, R., 2019. A feminist analysis of neoliberalism and austerity policies in the
UK. Soundings. 71(71). pp.28-39.
Sazonov, V.E., 2012. Advantages, disadvantages and risks of public-private
partnership. RUDN Journal of Law. (3). pp.99-108.
Tkachuk, N.V., 2019. Historical cost and fair value: advantages, disadvantages,
application. Journal of History Culture and Art Research. 8(1). pp.173-182.
Wachowiak, J. and Zuleeg, F., 2021. The EU–UK Partnership and Implications for
Differentiation Within the EU and Between the EU and Third Countries. EU IDEA
Research Papers. (10).
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