BMP4002 Business Law: Report on Legal Context for UK Organisations

This report provides an overview of the legal landscape for businesses operating in the United Kingdom. It begins by highlighting the UK's favorable business environment and the significance of the Companies Act 2006, contract law, and employment law. The report then details various business structures, including sole proprietorships, general partnerships, partnerships, and limited liability companies, outlining their respective advantages, disadvantages, and legal obligations. It emphasizes the importance of adhering to business laws for smooth functioning and growth, discussing concepts like separate legal entity status and perpetual succession. Furthermore, the report recommends a partnership model for IOM Solutions, a sole trader business seeking expansion, citing benefits such as shared liabilities, diverse skill sets, and improved management capabilities. The analysis underscores the critical role of business law in shaping the operational framework for organizations in the UK.

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:
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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 ..............................................................................................................................7
Introduction
All the laws of the country which pertains that how the activities of the business are
carried and legally allowed comes under the ambit of business law. It is a body of civil law
which governs and regulates the affairs of the business along with some other legislation's
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such as contract, employment and labor laws. Every business in order to have the smooth
functioning and continuous growth need to ensure to abide by the prevailing laws. The said
regulations states the rights, responsibilities and obligations of each concerned individuals
and corporate bodies, who are associated with the business. It also states the every possible
process of the company starting from its birth to its dissolution. The following report is going
to cover the various forms of business along with their merits, demerits and legal obligations.
Moreover, it also suggests the appropriate recommendations for Sam who being a sole trader
wants to expand the Limits of its business of IOM solutions(Berry, 2021).
Businesses & Organisations in the UK
United Kingdom, for the purpose of business is considered as one of the most safest
and easiest place in the world. Also the country has attained the highest ranking in the index
of world bank ease of doing business. The Companies Act of 2006 is considered as one of
the major legislation in the country which looks after the workings of the company. Other
than this the Contract and Employment laws also plays a major role. All the said laws works
in accordance with each other for ensuring the success of the company. Moreover, the
businesses which are being operated within the territory of the country are entitled to have
certain status and titles based on their types and products in which are dealing. For instance ,
the title of separate legal entity is enjoy by the company and its members of limited liability
form(Cabrelli and McAlpine, 2018). The perk of having this title is that both the companies
and their members are treated in the capacity of individual where both of them cannot be held
liable for the acts of other. The other is of perpetual succession where the affairs of the
company are not to be stopped even after the death of discontinuation of any of the partners.
Further, the AOA and MOA of the company are said to be the the two major drafts which
consists of every possible details with respect to the company, its members and its operations.
Both of these are required to be signed by the concerned individuals at the time of
incorporation of the company. The Partnership Act of 1890 is the other legislation which
particularly deals with the affairs of the partnership firms. As per the provisions of the
Companies Act, other than the firms there directors are also bound to follow certain
obligations for which they can be held liable. The acts for which the directors can be held
liable are of if the acts done in ultravires nature, or has acted against the interest of the
company while keeping their own personal interests, etc(Clarkson and Miller, 2020).
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The legal business structure of UK companies
There lies various forms of business in the country from which the interested person
who are willing to start or expand their business can choose for. Every form, irrespective of
their types differs in terms of their pros , cons and duties which they are required to fulfill
towards the general public as well as their employees. Also for ascertaining a form, the
prevailing laws are the one which plays a major part as it is very much required for owner to
find out that which business forms fetches the less legal implications. Thus in order to
determine the best appropriate form for Sam, one need to analyze the various forms of the
business which are as follows-
Sole Trader
It is also called as business with single ownership and sole proprietorship. In this form
the only individual, who is addressed as the proprietor, is responsible for carrying out the
different activities of the business. The control and management related to every possible
thing which also includes the task of major decision makings or of entering into agreements
lies solely on the owner themselves. In order to start a new business on small scale, this form
is considered as the first preference for the business owners of the country. There lies number
of perks for adopting the said type out of which some are as follows(Dewi, 2021). Firstly, the
owner enjoys the sole control over the business and can have the entire amount of profits with
themselves. Secondly, the concern of disclosure of internal information which are related to
the business, does not prevails as the owners themselves is the one who is aware of all such
data. But an individual for being a sole trader also need to face certain difficulties which can
be referred as the disadvantages of this form. Firstly, the proprietor needs to bear all the
liabilities on his own. Secondly, the being the only;y person to take care of, the tasks related
to management net and controlling of the business can sometimes become a tedious one.
Further, the trader is bound to pay the taxes on the total generated revenues of the business by
themselves on timely basis in order to escape from any legal action. Moreover, starting a sole
proprietorship business there stands no such compulsion with respect to its registration in the
companies house in order to mark the legal existence of the business. And similarly for the
purpose of dissolution, there lies no such prescribed process by the legislation. It only
requires the full and proper payments of taxes and the settlement of debts which has been
occurred during the tenure of the business(Girardi, 2022).
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General Partnership
It is an unincorporated form of business, where its registration is not a mandatory
requirement in order to legally operate the business. The general partnership exists by default
where two or more individuals comes together with the goal of earning profits. The two
aspects which are essential to constitute this form is that there must be an engagement of
more than two or two people. And the other is that all the concerned individuals must agree
on a point of bearing unlimited personal liabilities. In this form, every partner is free to enter
into agreements for the purpose of business and the same will stand binding on all the other
partners. Mostly for this type, the agreement of partnership is created which outlines the
rights, duties and the structure in which the business will be governed. For the purpose of
dissolution, where there stands no such agreement among the partners, then it is said to be
dissolved even with the death or discontinuation of any of the one partners. Further, the
advantages of this are, the task of its commencement and compliance as compared to the
other forms is very easy. Also, the members are not required to pay the taxes on the whole
amount of profits. The disadvantages are, one needs to bear the unlimited liabilities. Other
being specifically in the absence of agreement among the partners the business can face a
downfall as a result of conflicts between the members. Further, with respect to the legal
implications, the tax assessments rather than to be paid on the total income are required to be
paid by the partners on their respective part of shares individually(Graw, et. al., 2019).
Partnership
It is an formal arrangement where two or more than that individuals agrees to manage
and operate the said business with ban aim of achieving certain profits. In this form which is
almost similar to that of the earlier one, all the liabilities and profits which has been incurred
from the business are to be shared in equal proportions by all the concerned members. The
Partnership Act of 1890 is the one which majorly governs the affairs of the partnership
business. The creation of partnership deed is mandatory task as it is a sole document which
specifies all the rules and regulations in which the partnership firm needs to be carried on.
The said agreements and transactions of the business can be carried on by all or any one of
the members on behalf of all. This discretion lies totally on the choice and personal
understandings of the partners. One of the major perk of choosing this form of business is that
the liabilities are divided among the existing partners in equal ratios. The drawback can be
that there lies the chances of disagreement among the partners which can result in hampering
the process of decision making. Moreover, as similar to that of the general partnership, the tax
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assessment are to be paid by the individuals on their part of incomes which has been acquired
from the process of business(Myers, 2020).
Limited Liability
This form comprises of the features of both the partnership firms and the corporate
companies reason being the aspect of limited liability of partners and the functions of
business. It is an arrangement where two or more people in collaboration to each other works
with an aim of earning revenues. In this the concerned individuals acts in the capacity of co-
owners of the business and therefore are equally bound to perform the functions of business.
Moreover, the partners are required to contribute some amount as a part of total share capital.
The ratio in which the capital has been invested will further in the same ratio will determine
the share of profits and liabilities of an individual. Further as the company enjoys the status of
separate legal entity, therefore the members of the company are not bound to settle the debts
which has been occurred in the name of the company out of their own personal assets. Some
of the major advantage of this from are. The very important is that of the limited liabilities
and obligations on the part of partners. The other being the partners are treated in the
individual capacity keeping their identity aside from that of the company. Moreover, for the
payment of taxes the partners are obliged only to their share of profits(Sarah and Vida, 2020).
Recommendations for IOM Solutions
After analyzing all the above mentioned forms of business, the best suited type which
meets all the said requirements of Sam is of the Partnership business. As the Sam for his
business of IOM solutions is looking for the options in order to expand the levels of his
business which till date was being operated in the capacity of sole trader. Also as there lies
the concern of inadequate management and non fulfillment of the demand of customers ,
because of being the single owner. So in order to overcome the said issues one can go
forward with the option of Partnership model as this will engage more number of talents and
skills to the business which will help in efficient manner in taking care of the demands and
managerial tasks of the business. This form will also bifurcate the liabilities of the business in
equal share which means with this option Sam alone is not required to bear the liabilities on
his own(Schwidetzky, 2018).
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Conclusion
It can be concluded from the above report that the body which is solely responsible for
specifying the regulations for businesses which are prevailing in the country is the Business
law. There lies the various forms of business such as the sole trader, partnership, limited
liability firms, etc. The aspect which plays an important role in ascertaining the best forms are
its merits, demerits and legal implications. For the given case study of Sam for his business of
IOM solutions, the recommended business form is of Partnership as it fairly justifies the
mentioned requirements of the Sam.
REFERENCES
Berry, E., 2021. Partnership Law: Used, Misused or Abused?. European Business Law
Review. 32(2).
Cabrelli, D. and McAlpine, A., 2018. Directors’ and Officers’ Liability in the United
Kingdom. In Directors & Officers (D & O) Liability (pp. 669-722). De Gruyter.
Clarkson, K.W. and Miller, R.L., 2020. Business law: Text and cases. Cengage Learning.
Dewi, Y.K., 2021. The need to adopt a limited liability partnership for the legal profession in
the partnership law: A critical review from Indonesia’s perspective. Cogent Social
Sciences. 7(1). p.1999005.
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Girardi, G., 2022. The Courtship to Partnership. In Year One of Practice Transition (pp. 83-
88). Academic Press.
Graw, S., et. al., 2019. Understanding business law. LexisNexis Butterworths.
Myers, D.H., 2020. Corporate Implementation and Business Forms. In Sustainability in
Business (pp. 61-83). Palgrave Macmillan, Cham.
Sarah, R. and Vida, A., 2020. Business law. Pearson.
Schwidetzky, W.D., 2018. The pros and cons. Journal of Accountancy.
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