Business Law: Sources, Role of Government, and Impact on Business

This report provides an overview of business law, including the sources of law, the role of government in law making, and the potential impact of contract, employment, and company law on businesses. It discusses how different types of business organizations are legally formed and how they are managed and funded. The report also includes specific examples to illustrate the potential impact of business law on businesses.

Unit 7: Business Law

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Explain different sources of law............................................................................................3
P2 Explain the role of government in law making and how statutory and common law is
applied in the justice courts.........................................................................................................4
TASK 2............................................................................................................................................6
P3 Using specific examples, illustrate how company, employment and contract law has a
potential impact upon the business.............................................................................................6
TASK 3............................................................................................................................................7
P4 Explore how different types of business organisations are legally formed...........................7
P5 Explain how business organisations are managed and funded..............................................8
TASK 4............................................................................................................................................9
P6 Recommend legal solutions for resolving a range of disputes using examples to
demonstrate.................................................................................................................................9
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business law, also known as commercial law refers to a body of law which regulate the
commerce and business. It is a branch of civil law which deals with the issue of both public and
private law. Commercial law applies to the relations, rights and conduct of the persons and the
businesses which are engaged in the trade, commerce, merchandising and sales. It is vast field
which covers various laws that includes contract law, employment law, company law and many
more. Contract law governs the rights, liabilities, conduct and relation of parties who enter into a
contract for a business transaction. On the other side, employment law regulated the rights of
employee and protect them from exploitation. Company law regulates the formation, dissolution,
rights and obligations of the stakeholders connected with the company (Dewi, 2020). This report
shall deal with the business law which shall cover the sources of laws, role of government in law
making and the impact of contract, employment and company law. Further it will deal with
different types of business organisations followed by recommendations for legal solutions in
solving the disputes using various examples.
TASK 1
P1 Explain different sources of law.
The English legal system is centralised to the legislature who have the sole authority of
enacting the law. Apart from legislation, the laws are also enacted by precedents through the case
laws. There is no written Constitution of the UK therefore, the laws govern the rights and duties
of the people. It is constitutional monarchy where head is the monarch.
Laws are made with a purpose of maintaining orders, protecting liberties, establishing
standards and resolving the disputes. The English legal system has evolved over a large period of
time which has been subject to great changes. The amazing fac is that the ancient laws still
prevails in UK and are valid.
The different sources of law in English legal system is divided into primary and
secondary which are discussed below-
Primary sources are the one which are formed by the official bodies which are as follows- Legislations- The UK legal system does not consist of written Constitution to which most
of its parts are written in the laws passed by the Parliament (Wood, 2020). These are the
legislations that applies to whole of UK which cannot be questioned in any English court.

These are primary source which are solely enacted by the Parliament which consists of
House of Lords and House of Commons. Case laws- These are the decisions and judgements passed by the judges in the courts
which are published in law reports. It includes the facts, issues and the decisions together
with legal principles through which the judgement is passed. These are valid and are
recorded for future decisions.
 Treaties- These are often considered as international source of law which regulate the
international relations and are often considered as laws. These are signed by the different
states in order to regulate their relations.
Secondary sources are the one which have a background resource containing the citations of
primary sources. These include the following- Law journals- These are considered as a combination of case commentaries and studies
which help in clarifying the complex legal issues. Some have general information while
others deals with particular area of law. Text books- For beginning a law research, these are the best source which are written by
academicians or experts in order to clear the concepts of legal issues.
 Directives- These are the objectives and rules which are to be achieved by the member
states. The legislations are to be applied in compliance with directives. These have a
binding effect on member states (Zimmermann, 2019).
P2 Explain the role of government in law making and how statutory and common law is applied
in the justice courts.
Role of government in law making
The Parliament consists of two houses, which includes House of Commons, where people
are elected through general election and the other is House of Lords, where people are appointed
according to their experience and achievement (Varney, 2019). The Parliament is entrusted with
a duty to make laws which includes the following procedure-
 First reading- Initially a bill is proposed by ether House of Parliament and the title is
read out which is regarded as first stage.
 Second reading- During this stage, the bill is now explained and debate is started as to
the need of bill. There is a voting system at this stage which decides whether the bill will
go on to next stage.

 Committee stage- Here the detailed scrutiny is done of the bill and changes are
suggested which are called amendments. Votes are taken at this stage also for reporting
the changes.
 Report stage- A report is made by the committee which explains the amendments which
are suggested for the bill. Further amendments can be suggested in this stage.
 Third reading- At this stage, the loopholes in the bills are closed and votes are taken to
accept the bill with the amendments to make it a law. Now the bill moves to other House
and same procedure is adopted. If the Lords have made any change, it must be accepted
by the Commons and vice versa.
 Royal assent- After the bill is passed by both the Houses, it moves to the Monarch who
gives assent to enforce the bill which is now called the law (de Flamingh and Bell,
2020) .
Organisation of Judiciary
The judiciary is also entrusted with the power to enact law through its precedents. The
judicial system of UK comprises of superior and subordinate courts. The superior courts
comprises of Supreme Court which is last court of appeal in both criminal and civil cases, High
Court which comprises of Queen's Bench, Family division and Chancery Division and the Court
of Appeals which is appellant court for civil and criminal matters.
The subordinate court includes Magistrate's Court which hear summary offence and
includes Crown Court, Youth Courts and family Court, County Courts which hear civil cases,
Crown Courts which hear appeals from Magistrate courts and original cases of criminal matters.
How statutory and common laws are applied
The statutory laws are Legislature made laws which are enacted by the sole official
authority, Parliament. There are enforced and are valid in whole UK and cannot be questioned in
courts. These include contract, employment, consumer, data protection, etc. laws. These govern
the rights, relation, conduct of the people (Goldberg and Wilkinson, 2020). The common laws
are the Judge made laws which are made through the precedents from case laws. These are also
valid and act as primary source of law. These are flexible which include the interpretation of
existing rules for clarity or new rules are formed through case laws as they are made with the
changing needs of the society.

TASK 2
P3 Using specific examples, illustrate how company, employment and contract law has a
potential impact upon the business.
The contract, employment and the company law forms the part of business law which
regulate the conduct, relation and rights of the people who are engaged in the trade and
commerce of the business. The following laws have the potential impact on the business which
are discussed below-
Contract Law- It is also called the commercial law which deals in transaction of sale,
purchase, repurchase and rendering of services. The contract law governs the rights, obligation,
relation and conduct of the parties involved in the transaction for which a contract is formed
between the business and the client. For a valid contract, following essentials are necessary
which include offer by one party, acceptance by other, consideration and the intention to create a
legal relation. The contract law protects the rights of individuals and provide adequate remedy
for the loss suffered from the breach of contract.
Employment Law- This law was enacted to protect the rights of the employees from
being exploited. It regulate the relationship between the employer and employee so that healthy
working environment is created. It consists of Equal Pay Act, which bound the employer to pay
equal to people who does similar work. Another legislation which includes Health and safety
Act, which imposes the duty on employer to take all safety measures in order to assure safety in
the workforce. The Employment Act states obligations on the employer to take necessary steps to
protect the rights of the employees and also bounds the employer to make an employment
contract between the employee and business where terms and conditions relating to work shall be
specifically expressed (Mahadevan and Leith, 2020). The Equality Act of 2010 prohibits
discrimination on any ground like colour, sex, race, etc.
Company Law- This law regulates the formation of companies till its dissolution. It
regulates the rights of stakeholders involved with the company in order to protect them from
exploitation. As company is regarded as the separate legal entity, it has its own liabilities and
assets. It influences the wealth creation of company and organise it according the capital
requirement. This law helps in guiding the stakeholders in case of any difficulty and provides
mechanism to redress them. It provides detailed and complex procedure for its incorporation and
dissolution which involves large expenses.

TASK 3
P4 Explore how different types of business organisations are legally formed.
There are usually two types of legal structures in the business which includes
incorporated which involves companies who have the separate legal entity distinct from its
owners and the unincorporated structure which includes sole proprietorship and partnerships
where owners have liberty to conduct their business activities according to their wish.
The following are the different business organisations which are discussed thereunder-
Sole Proprietorship
This type of business organisation involves single owner who is responsible for the day
to day operations of the enterprise. The assets and liabilities of the business belong to the owner
and personal liability may arise of the owner in case of any debt or liability. The key
responsibility of sole proprietor is to record the sales and expenses of the business, pay annual
tax on profits and Class 2 and 4 National insurance (Mutia and Muindi, 2019).
In this form of business organisation, words like 'limited', 'Ltd', 'PLC' or 'LLP' is not used
nor the word which is offensive or have existing trade mark can be used by the sole proprietor.
Only a registration with HM Revenue and Customs is required to open a sole proprietorship.
Partnership
This form of business organisation involves two or more people who are called the
partners who carry on the business activities mutually. It is governed by the Partnership Act of
1890 . It is not regarded as the separate legal entity and partners have the personal liability for
the debts of the firm. The partners share the ownership, profit, loss, decision making and many
other things in order to run the firm smoothly.
For setting up a partnership firm, the partners are required to register the firm with HM
Revenue and Customs after choosing the appropriate name and partners.
Company
The companies are the separate legal entity distinct from its owners. It has its perpetual
succession where the owners may come and go but company shall remain forever. The procedure
for incorporating the company is complex and lengthy which involves choosing the type of
company initially, next is to choose the name and directors of the company. Then prepare all the
requisite documents for registering the company and finally register the company at the
Companies House.

There are generally two types of companies which are public and private. The former is
involves trading of shares of the public on stock exchange where the shareholders are the owners
of the company and its equity capital is raised easily. The liability of shareholders are limited to
the extent of their shares in the company (Ford, Gillan and Thein, 2020). The later involves no
shares and its capital is raised by its owners or investors. The directors of the company may have
personal liability for the debts and liabilities in which the company is involved.
P5 Explain how business organisations are managed and funded.
Every business organisation is managed and funded according to its form. The
management of the business is usually entrusted into the hands of its owners or to the delegated
personnel to whom such power is entrusted by the owner. The management and funding of
different forms of business organisation are-
Sole proprietorship- This business organisation is managed by its owner who is
entrusted with a duty to manage the day to day activities of the business. The funds for running
the sole proprietorship is either given by the owner from its savings or by opting for loans from
the financial institution or banks.
Partnership- This business organisation is managed by the partners according to their
terms in partnership agreement or according to their share in the firm. The partners are the
mutual owners who contribute capital and generally their share of profit and loss is decided
according to their capital contribution. These are funded by the partners through their savings or
by loans from banks or financial institution.
Company- The management and funding of the companies are decided according to their
type. For public companies, these are managed by the board of directors appointed by the
shareholders who are responsible for the operations of the company. It is funded by the public
who purchase their shares from the stock market and become the shareholders of the company
and its funds are also raised by investors and creditors (Harduth and Webster, 2020). For private
companies, it is managed by the directors of the company and is funded either by the directors
itself or through the investor.

TASK 4
P6 Recommend legal solutions for resolving a range of disputes using examples to demonstrate.
Alternate dispute resolutions (ADR) are the legal solutions where speedy disposal is
found by the parties. These are cost effective and less time consuming as compared to litigation.
The Civil Procedure Rules, 1998 has illustrated the ADR which includes arbitration, conciliation,
mediation, negotiation and many more (Wong and et. al., 2017).
Overview of business laws-
Contract law states the rights, obligations, conduct and relation of parties who have
entered into commercial agreement for the business transaction. It provides remedies for breach
of contract to the party who have suffered loss.
Employment law deals with the rights of the employees and protect them from
exploitation. These include several laws like National Minimum Wage Act which provides
minimum wages to all, Equality Act which prohibits discrimination.
Company law states the rules for running the business which includes rules from
incorporation of company to its dissolution. It also states the rights of stakeholders. The
companies are bound to govern their operations from this law in order to prevent legal
obligations (Nawafleh, 2017).
Legal points of each case
Case study 1
Under this case scenario, the legal point involved is the National Minimum Wages Act
from employment law where Gordon is subject to minimum wages. There has been an
employment agreement between the parties so employment Act shall apply. In case of variation
in the contract of employment, the contract law shall be considered in order to see whether the
variation has infringed the rights of Gordon.
Case study 2
Under this case, the legal point which exist is that the company did not provide adequate
service to Janet by not installing the telephone. The contract shall be applicable as there has been
breach of contract between the parties where consideration is taken full but services are not
provided adequately.
Case study 3

For this case study, company law shall be applicable for winding up the company as the
company failed to make the payment to its creditors on time as its debtors were converted into
bad debts.
Legal solutions
Case study 1
For this case, Gordon may opt Negotiation under alternate dispute resolution for
resolving this issue. Negotiation refers to the process of bargaining where both the parties try to
reach an amicable solution. After brief discussion and bargaining, the parties reach at win win
situation where both get what they want. At the end, an agreement is signed which have a
binding effect (Wilson, Harten and Morgan, 2020).
Case study 2
Under this case, Janet may opt for Mediation which refers to the process of appointing an
independent mediator who provides suggestion to both the parties to reach a compromise. It is
not binding .
Case study 3
For this case, Black Horse may opt for Arbitration which refers to the process of
appointing an independent arbitration who after considering the facts and evidence on record
pass an award which is binding on both the parties. It is the most effective form of ADR
(Williams and et. al., 2020).
Justification
Case study 1
The contract of employment can now again be varied when the company has being out of
losses and earning profits in 2017. As the contract has been subject to variation due to financial
trouble, Gordon can now claim the wages for 2017 as the company has got financial stability.
Case study 2
As Virgin Media failed to provide adequate service to Janet so Janet shall only be entitled
to make payments for the services which were enjoyed by her and not for the time period when
she didn't get service of telephone. Through mediation, Janet can solve her dispute for breach of
contract by company of not providing full service and also for charging for the services which
were not given.
Case study 3

The Black Horse company has been in loss due to large amount of its converted into bad
debts. This loss was sudden for the company as large customers have left without clearing the
payments. As company was not prepared for the loss so Black Horse may opt for arbitration to
protect the company from being wound up.
Effectiveness of solution
Case study 1
Negotiation is the best solution for this problem because the claim can be made by
Gordon in order to get speedy disposal. As the employment agreement has been varied in 2015,
it can again be varied in 2017 and Gordon can claim his wages. In negotiation, there is a win win
situation and through discussion Fred and Gordon can come to an amicable solution.
Case study 2
As Virgin Media has breached the contract of service and is charging excessive amount,
Mediation is best solution for Janet to claim her remedy and the reputation will also be protection
of the company. Mediation can help in bringing the amicable solution.
Case study 3
Arbitration is suggested in this case as the company is not at fault because its large
amount has been converted into bad debt all of a sudden. Through this mechanism, the creditors
will be able to scrutinise the evidences and may give time to company for repayment. This is
less time consuming and reliable resolution mechanism.
Use of legal solution in comparison with alternate resolution
The legal solutions available are apart from litigation are arbitration, mediation,
conciliation and negotiation. In order to take legal solution, the parties shall seek legal advice
from the lawyers who are under professional obligation to provide such advice. Litigation has
been a lengthy, expensive and time consuming process whereas the alternation resolutions offers
speedy disposal and cost effective resolution mechanism (Creutzfeldt, 2016).

CONCLUSION
From the above report, it is summarised that business law is an essential law that
regulates the operations of the business. Every form of business organisation shall be regulated
by the law in order to ensure its smooth running. There are 2 sources of law which includes
primary and secondary where legislations and case law constitute primary source and law
journals, textbooks, directives are secondary sources. The different forms of business
organisation includes sole proprietorship, partnership and companies. Further it is concluded that
alternate resolutions are recommended in different case studies with their justification in order to
show the benefits of alternate resolution.

REFERENCES
Books and Journals
Creutzfeldt, N., 2016. An Introduction to Alternative Dispute Resolution (ADR) for Consumers
in Europe. Intersentia.
de Flamingh, J. and Bell, C., 2020. Employment law: Employment relationships-when two's
company and three's a crowd. LSJ: Law Society of NSW Journal. (70). p.82.
Dewi, G., 2020. THE APPLICATION OF ISLAMIC BUSINESS CONTRACT IN THE
NATIONAL LAW REGULATIONS (THE COMPARISON BETWEEN COUNTRIES
WITH CIVIL LAW SYSTEMS AND COMMON LAW SYSTEMS). Journal of
Islamic Law Studies, Sharia Journal. 3(1).
Ford, M., Gillan, M. and Thein, H.H., 2020. Supranational grievance mechanisms and firm‐level
employment relations. Industrial Relations Journal. 51(4). pp.262-282.
Goldberg, J. and Wilkinson, G., 2020. Recent relevant labour case law: employment
law. Without Prejudice. 20(3). pp.12-13.
Harduth, N. and Webster, R., 2020. The ranking of creditors’ claims–now settled law: company
law. Without Prejudice. 20(4). pp.37-39.
Mahadevan, V. and Leith, J., 2020. The Transition from Law School to Law Employment.
In Careers in Law: A Guide for Students, Graduates and Professionals (pp. 63-91).
Springer, Singapore.
Mutia, A. and Muindi, C., 2019. Impact of Employment Law on Employment
Relationships. East African Journal of Law and Ethics. 1(1). pp.39-52.
Nawafleh, A., 2017. Electronic contracts and torts in the UK and the UAE private international
law. International Journal of Private Law. 8(3-4). pp.299-309.
Varney, E., 2019. Agency Contracts and the Scope of the Incapacity Defence in English Contract
Law: A Topic too Hot to Handle?. Journal of Business Law.
Williams and et. al., 2020. Participation as a Framework for Analysing Consumers’ Experiences
of Alternative Dispute Resolution (ADR). Journal of Law and Society.
Wilson, K., Harten, N. and Morgan, C., 2020. Business rescue practitioners held to a high
standard: company law. Without Prejudice. 20(2). pp.32-34.
Wong and et. al., 2017. Company law: An interactive approach.
Wood, P.R., 2020. Ten Points for Choosing the Governing Law of an International Business
Contract. Business Law International. 21(1). pp.5-22.
Zimmermann, R., 2019. The textual layers of European contract law: contract law. Acta
Juridica, 2019(1), pp.165-199.