BMP4002 Business Law: Report on Key Sources of Law for UK Businesses

This report provides an overview of the legal context for business organizations in the UK, focusing on the key sources of laws that govern their operations. It discusses various business structures, including sole proprietorships, general partnerships, limited liability partnerships, and limited liability companies, highlighting the advantages and disadvantages of each. The report references the Companies Act 2006 and the Partnership Act 1890, explaining how these laws regulate business activities, management, and administration. Furthermore, it offers recommendations for IOM Solutions, a sole trader company, suggesting a transition to a limited liability partnership to facilitate growth and protect the owner from unlimited liability. The report concludes by emphasizing the wide range of business organization options and the importance of understanding the legal framework for successful business operations in the UK. Desklib provides more solved assignments for students.

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:
1

Table of Contents
ntroductionI .................................................................................................................................3
usinesses rganizations in theB & O UK..........................................................................................3
he legal business structure of companiesT UK ..........................................................................5
Recommendations for M SolutionsIO ............................................................................................7
Conclusion..................................................................................................................................8
References..................................................................................................................................8
2

Introduction
An entity that is formed to carry out the commercial activity of different organizations
is termed as business organization. A law governing body that is based on system of contract
and exchange, property rights and incorporated with the legal obligation in order to regularize
the activities of business. The jurisdiction of UK spreads all over the jurisdiction of England
and Wales, Northern Ireland and Scotland. There are certain laws that helps in regulating the
activities of business in organizations which includes the enforcement of company law,
contract law and employment law. The management and administration of business
organizations are regulated through different business practices that are to be conducted in an
organization (Adebola, 2019). The business is conducted through different types of business
organizations such as Sole trader, General Partnership, Limited liability and Partnership. This
report will cover the formation of organizations through the legal structure of UK with its
different kinds of business organizations. It will also cover the recommendation made to IOM
solution in order to expand the role of business in organizations.
Businesses & Organizations in the UK
An entity that is formed to administer the commercial activities of business is a
company that is regulated under Company Act, 2006. A company needs to be registered for
conduct of business in the market and it is a separate entity which is operated through the
members of the company. Under the Company Act, 2006 a company is a an artificial person
which is directed through a natural person in order to abide by the legal obligation of law. The
most important department in a company is the department of management as it helps in
organizing the whole company through following of rules and regulations n order o maintain
the standard of the company. The management plays a major role on appointing the
authorities of an organization n order to execute the terms and policies of an organization.
The directors, shareholders and officers are the important members of a company (Deighton,
2018). The administration and conduct of business is regulated through different departments
of the company which includes marketing department, finance department and human
resource department.
3

A company needs to be registered under certain obligations in order to direct the
functions of an organization through the following of rights and duties by the members of the
company. The members of an organization who are employee and employer are protected and
safeguarded under the enforcement of Employment law. There are various protections
provided to the employees of the company which includes in discrimination with paid leaves
and other benefits. Under the Company law, there are various legal obligations through which
the activities of business are conducted through various doctrines and provisions of the
company. There is a separate identity of company from its owners as it is a separate legal
entity. A registered company can be sued and also has the power to sue other person or entity.
A business is managed and regulated through the commercial activities that are conducted for
operational functioning of the company (Guttman‐Yassky, Nosbaum, Simpson, and
Weidinger, .et.al 2022). A company is operated through its members who are the employees
of the company and if there is any mistake or negligence of the employees then the employer
is responsible for the conduct of such negligent activity which in turn arises the principle of
vicarious liability under the company law. An individual or employee is held accountable
under the principle of vicarious liability instead of being liable for the conduct of act. There
are various other principles regulated in a company under which the principle of tortuous
liability. The misconduct of a company executes the principle of tortuous liability which
arises regularly in a company. The Directors and shareholders of a company are bound under
certain provisions of company law. The directors play an important role in shaping the
structure and functioning of the company. He is responsible for overall conduct of the
company in order to regularize the activities of business in a systematic and appropriate
manner.
A business can also be conducted through partners who form the partnership under
which the partners of a company runs a business together for earning of gain or profit. The
partners in a business are regulated under the Partnership Act, 1890. A partner can terminate
the partnership at anytime but the only requirement is that the other partners must be
informed about the termination in advance.
The document where all the necessary terms and conditions for registration of a
company are mentioned is a document of Memorandum of Association. The important
provisions for administration of a company are mentioned in a document called Article of
Association.
4

The legal business structure of UK companies
Sole Trader
An individual or a single person who has no separate liability and runs a business by
himself is a sole trader (Holmes, Burton, and Zolkiewski, 2018). The whole responsibility of
the business with the bearing of liability is on the shoulders of a sole trader as he individually
owns a business. In order to establish a separate legal personality, there is no formalities or
limitations in the business of sole trader. A sole trader can earn or get profit from its business
after paying the tax with the imposition of tax liability. After the payment of tax, the income
that is left is the profit that is generated from the business. A sole trader is the creditor and
debtor both by himself of his business.
Advantages of Sole Trader
 The process of registration of business of sole trader is very easy and simple.
 The business of sole trader is considered as the best option for establishment of small
scale business.
 The establishment of the business of sole trader requires very less investment in order
to start or run a new business.
Disadvantage of Sole trader
 A sole trader has no separate liability
 The whole responsibility of the business is beard by sole trader who is in turn also
responsible for the losses incurred in business.
 The liability associated with sole trader is unlimited liability and is personally liable
for his activities in business.
General Partnership
The association of two or more persons through which there is conduct of business in
a mutual form is considered as General partnership (Palumbo, 2022). The main purpose of
general partnership is to earn revenue and profit together for the growth and development of
business. Under the Partnership Act, 1890 a partnership is regulated and administered for
commercializing of the activities of business. An agreement is signed by the partners in the
business of general partnership.
Advantages of General Partnership
 The process of registration of general partnership is not difficult with filling of less
formalities and requirements.
5

 The responsibilities are equally shared among the partners which reduces the burden
of partners.
 The liability with the losses are also shared among the partners in the business of
general partnership.
Disadvantages of General Partnership
 There is no separate legal identity in the business of general partnership.
 There is unlimited liability of the partners in general partnership where each partner
has unlimited liability.
 The negligence or mistake done by the partner makes him personally liable for the
conduct of such negligent activity.
Partnership
A partnership where there is no separate legal liability is considered as limited liability
partnership. Under the Limited liability partnership Act, 1907 there is subjection of unlimited
liability towards the partners of the organization (Repiquet, 2018). The liability of the
partners is limited up to their contribution in the partnership. There is very much similarity
between limited and general partnership. The main purpose of partnership is to generate profit
through revenue accumulated in the business of organization.
Advantages of Partnership
 The responsibility of business is equally shared among the partners in partnership.
 The partners are able to lend more money for the development of business with the
help of more partners in a partnership.
 There is equal distribution of income among the partners where there is also
separately payment of tax by the partners.
Disadvantage of Partnership
 The partners can leave or terminate a partnership at anytime which in turn can
increase the cost of investment by other partners.
 The opinion of different partners can raise many disputes among the partners which
could affect the productivity of business.
 The partners are individually liable for the payment of debts in a partnership where
they are separately liable for payment of debt.
6

Limited Liability
Limited liability is the incorporation of a partnership where there is limited liability of
the partners. It is a legal entity that is separate from the partners and the incorporation of
which leads to limited liability (Rye, 2020). There is no limitation in limited liability as the
partner of limited liability cam be an individual or a company for the incorporation of such
business. There is a private agreement between the partners where limited liability is imposed
in partnership. The partners are not personally liable for the payment of any liability or debts.
They are liable up to their contribution in partnership where the payment of tax is up to their
share in the business.
Advantages of Limited Liability
 The partners are only liable up to their investment in limited liability partnership.
 The requirement of capital is very less in order to maintain such type of business.
 Limited liability is purely separate legal identity.
Disadvantage of Limited Liability
 The incorporation of limited liability is very essential and mandatory at companies
house.
 There are several restrictions in the business of limited liability partnership.
 The incorporation of limited liability is very expensive and requires high amount of
investment.
Recommendations for IOM Solutions
IOM Solution is a sole trader company which is into the business of making electrical parts at
a local garage. Sam who is eight years old is the sole owner of the the company of IOM
solutions (Zhongming, Linong, Xiaona, Wangqiang, and Wei, .et.al 2019). The business
started developing which arose the demand of employees in the organization for conducting
of operational activities of business. Sam was keen to decide the potential alternatives of
business, therefore it is recommended to go ahead with the Limited liability partnership as it
is the best kind of partnership which is a separate legal entity. The owner is separate from the
ownership and liability of business. The organization of IOM Solutions was progressing and
developing on a huge level through which there can be interest of any person for investment
in its business. Therefore, it is suggested to have the business of partnership where there can
sharing of responsibilities among partners which in turn can reduce the burden. The partners
are liable up to their investment in partnership where there is separate liability of the partners
7

as they are separately liable for their misconduct or negligent act. IOM solutions should opt
for the business of limited liability partnership which is the best kind of partnership for
staring of a business.
Conclusion
From the above report it is concluded that, there are various organizations for the
starting or creation of any business. The concept of business is very wide which can range
from a small to big business with its expansion in national and international market. The
business of any organization is regulated under the Company Act, 2006. there are different
kinds of business organizations such as Sole trader, general partnership, partnership and
limited liability. Therefore, IOM solutions which a sole trader company who wants to expand
its business due to its success which raised the demand of employees in the organization. The
business of limited liability is the best kind of partnership for starting of any business.
References
Adebola, S., 2019. Why do organisations run talent programmes? Insights from UK
organisations. In Managing Talent (pp. 187-213). Palgrave Macmillan, Cham.
Deighton, C., 2018. Effective information exploitation: A challenge for military and business
organisations. In Contemporary Ergonomics 2007 (pp. 99-104). Taylor &
Francis.
Guttman‐Yassky, E., Nosbaum, A., Simpson, E. and Weidinger, S., 2022. Pioneering global
best practices in atopic dermatitis: results from the atopic dermatitis quality of
care initiative. Clinical and experimental dermatology, 47(2), pp.303-311.
8

Holmes, D., Burton, J. and Zolkiewski, J., 2018, March. How Business-to-Business
Organisations Use Big Data to Enhance Customer Experience: a Preliminary
Conceptual Model. In Proceedings of EMAC 2018 Conference.
Palumbo, L.V., 2022. The relationship between economic precariousness, parental socio-
economic status, and partnership dynamics among young adults in the
UK (Doctoral dissertation, University of Southampton).
Repiquet, M.D., 2018. Report from United Kingdom: UK Private Fund Limited Partnership
2017-Preserving UK Reputation Post-Brexit. Eur. Company L., 15, p.97.
Rye, J., 2020. What is the difference between a sole trader and a limited company?. In Setting
Up and Running a Therapy Business (pp. 132-134). Routledge.
Zhongming, Z., Linong, L., Xiaona, Y., Wangqiang, Z. and Wei, L., 2019. International
partnership opportunities for UK research and innovation.
9