Business Law: Legal System, Laws, and Business Organizations

This study material provides an in-depth understanding of the legal system, laws, and different types of business organizations. It covers topics such as the explanation of the legal system, the strength and weakness of the legal system, laws applied in establishing new businesses, different types of laws applied in business, and the potential impact of laws on smooth business operations. The document also discusses various types of business organizations, including sole proprietorship, partnership, and limited liability company, and examines the funding and managing criteria for each type of organization.

UNIT -7
BUSINESS LAW

Table of Contents
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................3
1) Explanation of legal system...............................................................................................3
2)Critically reflecting the strength and weakness of legal system.........................................5
3) Laws, rules and standards applied in respect of establishing new business.......................5
4) Different types of laws which are applied in business and analysing its potential impact in
respect of smooth running .....................................................................................................5
5) Different types of business organisation............................................................................6
6) Examining the funding and managing criteria of different business organisation.............7
PART 2............................................................................................................................................8
CASE 1...................................................................................................................................8
CASE 2...................................................................................................................................8
CASE 3...................................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business law refers to the body of law which is covered by the business in respect
dealing in any activities which resulting in gaining profits to them. Business law mainly covered
two major laws such as civil law and criminal laws and also it impose on person or employees or
any other parties which are not carrying the business activities in accurate manner (Business Law
and Regulation, 2019). Thus, the activities which is relating to dealing in any contract such as
importing and exporting any goods or selling any goods to other parties or hiring any person to
perform the contract on that behalf. In such perspective the business law is examined by working
under the norms which is imposed by government so that they can protect the right of the parties
by providing fair decision.
Report will includes the nature of the legal system and also different sources of law. It
also includes the potential impact which is engaged upon business in respect of pertaining to law.
It further includes the different types of business organisation which is reflected to prefer the
accurate business to carry the business activities. Lastly the report ends up with the appropriate
legal solution which is recommended to resolve the area where the dispute arises.
PART 1
1) Explanation of legal system
Legal system refers to the procedure which is enacted through law and also it protected
the right of the citizen. So that they can carry the business activities in accurate way. Thus, in
such procedure the law is imposed by the government and it is the duty of every company to
follow it in right manner. There are majorly 4 major sources of law which stated that: Customs: This law is designed for the ancient times. As this law is mainly initiated in
respect of protecting the right of the person (Ahammad and et.al., 2015). Thus, through
this perspective they mainly custom the law by viewing the condition of the society and
than accordingly the law is designed or amended to bring changes in recent times. European law: This law is mainly designed for the European people to protect their
rights and interest in the country. European community takes this initiative to protect the
rights and also provides justice in case of any infringement of right. The matter related to
political, economic and social factors bring major changes in country working (Allen and
Kraakman, 2016). This law is beneficial in getting fair judgement to parties who faces
conflict in any of the issue faced through other person.

 Common law: This laws mainly based on case law as judges refers to the judgement by
viewing the previous case and than they raise justice. As through this aspects they
provides justice to previous parties through which the same judgement is refers to the
similar case.
 Statutory law: This law is mainly based on written judgement in which the parliament
had right to bring new laws in country and also impose laws which can protect the rights
and interest of parties. Such laws are mainly imposed on states and protect the right of
the citizen of country (Bayern and et.al., 2017).
Role of government in law making:
As it is the duty of the parliament to imposed laws in country but the procedure is started
from the legislation which is imposed through the public authorities. The parries decided the
matter which results in bringing major amendment regarding the laws which are working from
the ancient times. Once the parties decided the matter they impose a draft to the cabinet ministers
regarding the changes which they occurs in the country. Without the approval of cabinet
ministers, the draft not proceed to further reading (Miller, 2016). After getting the consent of the
cabinet minister, the bill further presented to either the houses. In this the bill is presented for
first reading where the bill is speak loudly and after getting approval it reached to second
reading. The authenticity of the bill is approved through majority where all the parties vote to
decide the integrity of the bill. With the approval, the bill is presented to the committee where
the detailed discussion is carried regarding the useful of implementing the law to country. After
the bills is approved by both the houses, it results in sending the report to monarch, where the
final approval is required on bill. The law is enacted after signing the bill from queen (Merry,
Davis and Kingsbury, 2015).
Application of Statutory and Common law in business:
In respect of common law, the law which is applied in business is refers to referring the
judgement or cases from previous case and than only the judgement is passed. Through this
aspects, they provide fair judgement to parties (Mann and Roberts, 2015). In respect of statutory
law, the judgement is mainly based on the written laws which is imposed by parliament. As it
carries various amendment and thus parties gets fair judgement by imposing the current laws
which is designed by parliament in respect of getting justice.

2)Critically reflecting the strength and weakness of legal system
The major strength which is examined in respect of preferring the legal system is that law
are enacted quickly and also amendment are made on frequent bases. The weakness which is
supported with the strength is that courts are bound on the principles of precedent. They had to
follow the guidelines which is issue by the parliament and also they can provide justice to such
parties which can reach to court (Twomey, Jennings and Greene, 2016).
The another strength of the legal system is that court are not bound on such decision
which is supported by political parties if there is any illegal issue arises. The weakness in such
perspective raises in respect of facing boundation in respect of such areas which results in
occurring high illegal issues.
3) Laws, rules and standards applied in respect of establishing new business.
Legislation refers to the new laws which is imposed by parliament on company for
smooth running of the business. In respect of establishing new business, following laws are to be
imposed in respect of carrying the data protection act or working under the Companies
Law,2006. In respect of establishing new business, they had to applied to the companies house
regarding formation of the company and also had to follow the terms and condition which is
mentioned under the companies law (Yeoh, 2016). In such law, they guided the company to
prepare their memorandum and article of association under the companies law and than follow
all such procedure to run the company in effective way. The standards are set regarding carrying
the particular task and also various penalties are to be imposed in respect of infringing any of the
rights.
4) Different types of laws which are applied in business and analysing its potential impact in
respect of smooth running
Their are various laws which are applied in business in respect of smooth running of
business and such laws are related to firstly the Contract law. As per the contract law, 1919 it
mainly results in maintaining the close relationship between the parties by entering into any
agreement. The parties many enter into the contract in context of dealing in any delivering of
goods or services or transferring any money to any person (Willett and Koutsias, 2016). The
agreement is carried with certain terms and condition and parties are bound to follow it without
any negligences. Thus, in such perspective, contract law is important as parties are bound to
carry various liabilities regarding following their contract in accurate manner. Secondly the law

of torts is related to compensating any parties in respect of facing any harm or issue in
performing their rights in right way. They mainly impose on matter related to any negligences in
health and safety care or not protecting environment in better perspective or affecting the
reputation of any company. Thus, law of torts mainly carries four major aspects as duty of care,
breach in any duty, causation to any losses or injury occurred during working hours. Thus, in
such manner laws of torts is necessary in respect of smooth running of business.
The another law is imposed in respect of copyright and Patent law, 1988 as they mainly
protect the right of the creators, artist or any person who invented new things in their life and
also bring new and innovative ideas in business. Thus, in such manner, copyright law is imposed
in respect of protecting the rights of the individuals and also securing the rights of business in
respect of any innovation (Rodger, 2017). The last law which is majorly important in respect of
carrying the business in right manner is related to Employment and Labour law, 2016. This law
is mainly imposed to protect the right of employees working under the premises. As it is the duty
of the company that they treat every employees equally and also carry their health and safety
issue in serious way. They protect the employees through providing proper equipment at the time
of working in dangerous places.
Thus through this aspects by imposing laws at working places and also its potential
impact are arises which protect the right of citizen and employees for longer time period.
5) Different types of business organisation
There are various option which is given to organisation regarding preferring their own
business such as:
Sole Proprietorship: It is also known as sole trader business in which the individual is liable to
carry their own work and also they are engaged with certain business activities which they had to
deal with individual. Owners are responsible for their activities and also they had to enhance
working through dealing in all matters personally. The main advantages of choosing the sole
proprietorship business is that there is less risk associated in business. The business is set very
easily and also the tax paying procedure is simpler (Picciotto and Mayne, 2016). The
disadvantage of choosing the sole proprietorship business is that the losses is to be incurred by
the owner itself and also they didn't get any helps from banks regarding managing their overall
activity.

Partnership: The partnership business is formed when two or more person entering into the
agreement to form the partnership deed. In this partner are liable to bring their own shares in
respects of investing money in company and also they share losses equally. The advantages of
preferring the partnership business is that partner didn't have to pay the income tax and also the
business is equally set up by raising funds from partner (Beatty, Samuelson and Abril, 2018).
The disadvantage of the partnership business is that in case of death of any partner results in
termination of partnership deed. It also examined that hard work of one partner resulting in
enjoying the benefits with all the partner.
Limited Liability company: In this company, they carry the separate legal entity and owner are
not liable for any debts or issue which is occurred in any of the case. The advantages of
preferring the LLC is that their is less paper work in the company and also in case of death of
any partner, the company is still continuing their business (Kraakman, 2017). The disadvantage
of preferring this business is that this business is more expensive and also they carry various
policies for the employees in respect of retaining the employee interest at work place.
6) Examining the funding and managing criteria of different business organisation.
In case of Sole Proprietorship business, they are managed in respect of finding their own
business name and than accordingly the place is decided as the funds is managed by the owner
itself. They also take helps from their family members by investing in loans in their company.
For e.g. IKEA is considered to be one of the sole proprietorship business once they started the
business through dealing in furniture items.
In respect of Partnerships business, they are managed with the involvement of every
partner in the business and the funds can be managed through sharing all the amount equally. As
they can take helps from banks regarding investing in their business (Bouch and et.al., 2018). For
e.g. in respect of Louis Vuitton and BMW they started their partnership business in respect of
creating the travel companion to gain more profits.
In case of Limited liability company, the owners of the company manages the company
internal matter but the owners are not liable for any losses to be pay. They can manage the funds
by raising shares to people regarding investing the money in the company (Coulter and Hancké,
2016). They can also manage the funds through taking loan from banks as banks easily approved
the loan in respect of carrying the renowned brand name in market. For e.g. in case of BBC they
are public company and also engaged with large number of employees carrying their business.

PART 2
CASE 1
Issue: In the case study of Gordon V Orange Computers Ltd. The contract is made regarding
variation in the terms and the issue arises in respect of not getting the payment for the year 2015,
2016, 2017.As Fred who is the manager in the company inform Gordon that company is
suffering huge losses and also they cannot pay the salary to their employees. Thus, the
adjustment is made regarding paying the commission amount.
Rules: In respect of Contract law, 1919 their must be agreement between the parties regarding
entering into the particular contract. The parties must be competent to handle the contract and
also in case of breach of any condition, the plaintiff party had right to file suit against the
defendant. In case of employment and Labour law, 2016 it is the right of the employees to get
wages as per their work committed, if they are the employee of the company. In case of Pimlico
Plumber V Smith Case, it is the duty of the company to provide accurate facilities to the
employees of the company if they are carrying their business (Pimlico Plumbers Ltd & Mullins v
Smith [2018] UKSC 29, 2019).
Application: Thus, in respect of above case study related to Pimlico Plumber V Smith Case, the
decision are raised in respect of not performing the duty which is to be performed by company in
respect of facing any issue relating to health. In respect of Gordon V Orange Computers Ltd,
Gordon enters into the contract relating to variation in terms. Thus, they can demand the wages
in particular year when they didn't get salary. They can also claim damages under the
employment act as he worked for the company in that the particular year as it is mentioned in the
agreement regarding variation in terms.
Conclusion: From the above case study, it is examined that Contract law and employment law
mainly protect the right of the parties and also Gordon can claim for their damages which they
face by not getting the salary in particular year.
CASE 2
Issue: In this case study, the issue reflect the wrong invoice bill which is delivered by Virgin
Media regarding making payment for the internet and online phone services which they installed
in partial ways. After making lot of calls regarding not getting proper connectivity of the phone
calls the bill is generated for the whole month payment.

Rules: Under the contract law, 2006 both the parties entered into the agreement regarding
fulfilling the following terms and conditions which is mentioned in contract. Usually the contract
is made in exchanges of some consideration or any monetary terms. The parties make payment
once the contract is completed otherwise it is termed to be breach of contract. In case of RE
McArdle V Four siblings, the contract is made in respect of making payment once the bungalow
is ready after construction (RE McArdle (1951), 2019). But the sale amount is not received.
Application: Similar to this case study, as in respect of entering into any contract the parties are
bound to follow all such terms and condition which they made before entering into any contract.
Thus, the legal position of the Virgin media in this perspective is to charge payment as per the
service provides. As the consumer carry the right in respect of nit paying full payment as Virgin
media not fulfilled their duty within the said stipulated time.
Conclusion: From the above study, it is examined that virgin media not fulfilled the services
within the said time and also charge full payment regarding the services provided. This resulting
in breach in condition and also Janet carry the liability to file suit against Virgin media for not
fulfilling their condition in right manner.
CASE 3
Issue: The issue is examined in respect of not paying the money in respect of facing losses in
company. Black horse limited carry the four main customer and also the bad debts incurred three
weeks ago. One of its creditors demanded for compulsory winding up of company.
Rules: Under the companies Act, 2006 if any company not carries any of the business in right
manner, the customer can demand for winding up of company. In respect of appointing
Arbitrator, they are the person who can resolve the issue by not reaching to court. They can settle
the matter outside from the court. In case of Salomon V A Solomon & Co. Ltd, the case is
related to wining upon of the company in respect of not paying creditor money within the right
time (Salomon v A Salomon & Co Ltd [1897] AC 22, 2019).
Application: In case of Salomon V A Solomon & Co. Ltd, the only option availed is winding up
by the order of creditors but in case of Black horse limited they can choose the arbitration
method to resolve the matters. By appointing the arbitrator, they can resolve the matter through
agreeing on single point and thus, the decision given by arbitrators is bound on both the parties.
By preferring the mediator thy can resolve the issue by appointing the third person which can
hear both the parties issue and than give judgement.

Conclusion: From the above discussion, the issue can be resolved through appointing the
arbitrator which can resolve the matter easily. As both the parties demand court to appoint the
arbitrator but the decision imposed by arbitrator is bounded on both the parties.
CONCLUSION
From the above study, the report concludes that business law is imposed in respect of
managing the overall activity of the company and also guides companies to work under the set
norms. In respect of identifying the English legal system regarding examining the various
sources which helps country to protect the right of the citizen. Through determining the
procedure of making laws helps in getting various benefits and strategies regarding
implementing the accurate laws or emending the previous one. In context of business law for
smooth working of business various laws are imposed which helps companies and employees to
secure their interest. In respect of determining the various alternatives helps companies to resolve
their issue in better way.

REFERENCES
Books and Journals
Ahammad, M. F. and et.al., 2015, September. Factors influenceing the share of ownership
sought in cross-border acquisitions-UK perspectives. EuroMed Research Business
Institute.
Allen, W.T. and Kraakman, R., 2016. Commentaries and cases on the law of business
organization. Wolters Kluwer law & business.
Bayern, S. and et.al., 2017. Company law and autonomous systems: a blueprint for lawyers,
entrepreneurs, and regulators. Hastings Sci. & Tech. LJ. 9. p.135.
Beatty, J.F., Samuelson, S.S. and Abril, P.S., 2018. Business law and the legal environment.
Cengage Learning.
Bouch, C.J. and et.al., 2018. Developing alternative business models for smart infrastructure: a
UK case study. Proceedings of the Institution of Civil Engineers-Smart Infrastructure and
Construction. 171(2). pp.77-87.
Coulter, S. and Hancké, B., 2016. A bonfire of the regulations, or business as usual? The UK
labour market and the political economy of Brexit. The Political Quarterly. 87(2). pp.148-
156.
Kraakman, R., 2017. The anatomy of corporate law: A comparative and functional approach.
Oxford University Press.
Mann, R.A. and Roberts, B.S., 2015. Business law and the regulation of business. Nelson
Education.
Merry, S.E., Davis, K.E. and Kingsbury, B. eds., 2015. The quiet power of indicators: measuring
governance, corruption, and rule of law. Cambridge University Press.
Miller, R.L., 2016. Business Law Today, Comprehensive. Cengage learning.
Picciotto, S. and Mayne, R. eds., 2016. Regulating international business: beyond liberalization.
Springer.
Rodger, B., 2017. Competition law private enforcement in the UK courts: case-law
developments 2013-2016. Global Competition Litigation Review.
Twomey, D.P., Jennings, M.M. and Greene, S.M., 2016. Anderson's Business Law and the Legal
Environment, Comprehensive Volume. Nelson Education.
Willett, C. and Koutsias, M., 2016. UK Implementation of the Unfair Commercial Practices
Directive. In The European Unfair Commercial Practices Directive. (pp. 33-56).
Routledge.
Yeoh, P., 2016. UK Financial Services Sector’s Future on Leaving the European
Union. Business Law Review. 37(5). pp.175-180.
Online
Business Law and Regulation. 2019. [Online]. Available through:
<https://www.icaew.com/library/subject-gateways/law/business-law-and-regulation>.

Pimlico Plumbers Ltd & Mullins v Smith [2018] UKSC 29. 2019. Online. Available through:
<https://www.magdalenchambers.co.uk/pimlico-plumbers-ltd-mullins-v-smith-2018-uksc-
29-2/>.
RE McArdle (1951). 2019. Online. Available through:
<https://theblipblopblog.blogspot.com/2019/07/contract-law-cases-re-mcardle-1951.html>.
Salomon v A Salomon & Co Ltd [1897] AC 22. 2019. Online. Available through:
<https://lawcasesummaries.com/knowledge-base/salomon-v-a-salomon-co-ltd-1897-ac-
22/>.