BMP4002 Business Law: Analysis of Legal Context for UK Organisations

This report examines the legal context for businesses operating in the UK, focusing on key sources of law and different business structures. It discusses various types of laws including formation law, employment law, and business liability. The report also outlines the roles, liabilities, and duties of directors. Different legal business structures such as sole trader, general partnership, and limited liability are analyzed, highlighting their advantages and disadvantages. Recommendations are provided for IOM Solutions, a sole trader business, suggesting a transition to a general partnership to better manage increasing demand and employee needs. The report concludes that adhering to business law is crucial for successful operation in the UK market.

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
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Contents
Introduction...............................................................................................................................2
Businesses & Organisations in the UK........................................................................................2
The legal business structure of UK companies..........................................................................5
Recommendations for IOM Solutions........................................................................................7
Conclusion..................................................................................................................................7
REFERENCES...............................................................................................................................8
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Introduction
Business is described as enterprising and organization entity which is engaged in
commercial, industrial or every professional activity. Business can be run for profit
motive and non-profit motives in market and there are many different types of
business are running, like sole professorships, corporations and partnership. In
enterprise, business owner must have to know about what is legal and illegal activity
which is performed in business activity. This is very important for management that
the follow company law regulates corporation which is formed under companies act
2006 by UK government (Clifford and Zarafopoulos, 2019). This help organization to
run their business operation smoothly in market. This report is based on an
entrepreneur who is Sam and it operates a sole trader organization which is IOM
Solution in which they are selling electrical parts to their local garages. Sam is
operating this business from last 8 years in UK but from last two years Sam observe
that this business and employees have great demand in market of UK. Present
report includes nature and management in UK and legal business structure of UK
companies. Further, it also highlights recommendation for IOM Solutions.
Businesses & Organisations in the UK
Business and management is coordination and organization of their business
activities. An organization need to oversee their operations which is done in
organization and it help employees to improve their performance level and they can
reach to their top productivity levels. A management need to supervise or train to
employees which help business to reach their operational and financial objectives. In
UK, business is characterized as British which are known as tongue-in-cheek and
ironic humour which are used while they are operating their business activities. The
business culture is very less hierarchical in their company and managers is keeping
very marginal power distance. Sam need to focus on the business that how they
going to expand their business for fulfilling the demand which is arise in UK. For IOM
Solutions, Sam needs to follow all business ethics which is necessary for their
business to run their business operation smoothly in market. There are many things
which Sam need to concern when they operating their business in UK, which are
explained below in brief:
Different types of law:
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In UK, various different business law is implemented in organization which is
necessary for their enterprise to follow in their organization are:
 Formation Law: It is frame work of law which enterprise need to follow which
is incorporated and recognized as it is an official for their business law. The all
activities of business must be done on paper documents then only it should
be considered as legal and it is legal document which is consider in court
(Salbu, 2018). The Sam need to take care that Formation Law must be there
In IOM company so that if any problem is raised in future then they have legal
document to proof them right.
 Employment Law: The employment law refers to responsibilities and rights
between employers and employees in company (Eisenstadt and Pacella,
2018). In employment law there are various different section includes which
are workplace conduct, wages, discrimination, workplace safety, sexual
harassment, etc. This all need to consider in IOM firm, so that they able to
retain their employees for long term and make them comfortable and provide
better workplace.
Business transactions management of a company:
Business transactions refers to monitoring and supervision for critical business
application and services for auditing individual transaction which flow across their
infrastructure. The business transaction which is recorded must be in term of money.
Like buying insurance for their organization and buying supplier for their raw material
for their product. IOM enterprise need to record all the money transaction which is
related to money (Goforth, 2021). So, that in future if anything happen related to
accounts department of their organization then they can verify all transaction and
have legal proof that management is done transaction for their business.
Business liability in negligence:
It is a liability for company for doing negligent actions. The person is liability in
negligence for damage which it is depend upon for their existence of their duty care.
It is failure to meet standard of their behavior which is established to protect society
which is against unreasonable risk (Boyd, Brian and Kane, 2018). In IOM company,
Sam need to identify risk and protect their society, this is a responsibility for Sam to
do this in their organization.
Directors’ roles, liabilities and duties:
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In organization directors is responsible for controlling, directing and managing
of their business activities. Directors need to plays many several roles in company
like as agent, employees, officer and trustee in their company (Abera and Mulugeta,
2018). This all thing must be developed in Sam in their company. There many
different roles, liabilities and duties which director need to play in their organization
are explained below:
Roles of Directors:
Directors have to determine their company strategic objectives and policies. In
IOM enterprise Sam need to prepare effective strategy for accomplishing their
objectives and prepare policies which must be suitable for their organization process
and it must be suitable for their employees.
Liabilities of Director: In company, director is having liability for breach in
fiduciary duty, issues of prospectus with intent to defraud, etc. if anything happen in
organization related to this then only director is responsible for this. In IOM firm, Sam
is a director so if anything happens in company related to breach in fiduciary duty,
issue of prospectus with intent to defraud, etc. Then only Sam is liable for this in the
business.
Duties of Director:
In a company, directors having so many responsibilities which need to played
with responsibility in their business. The duties which perform by director like Duty of
reasonable care, duty of honestly, liability to company, etc. This is all duties must be
performed by director effectively in organization (Palmaccio, Dicuonzo and Belyaeva,
2021). It also important for Sam that they played this all responsibility very sincerely.
Termination of Partnership
It refers to dissolution of partnership in an enterprise which is process by
which relationship between their partners which is terminated and it comes to an end
with their all assets, shares, accounts and liabilities which need to be disposed of
and settled. The organization of IOM need to dissolute their partnership which need
to which is processed by relationship of their partners which is terminated and comes
end to their all necessary activity required to be disposed and must be settled.
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The legal business structure of UK companies
Sole Trader
It refers to the sole proprietorship in which a single owner is there who manage all
business activity and take every decision by their own. If business is gain profits or
loss, then owner is only liable for this. IOM organization is also running under single
owner, any decision which is taken in IOM by Sam only. The taxation, liability,
dissolvement are only be liable for their business (Eling, 2020). The taxation which is
incurred in business must be occurred by owner and it is very big threat for sole
proprietorship company.
Advantages:
If Sam continue IOM Solutions in sole proprietorship, then advantages are:
 They do not need to share profit with anyone.
 There is no foundation when owner want to take any decision in enterprise.
Disadvantages:
 The liability which is raised in enterprise, It must be owed by business owner
only.
 In sole proprietorship, the capital is very limited.
General Partnership
It refers to those types of partnership in which agreement is made between
two or more individuals in which they both are agree to sell their assets, profits, and
liabilities of their business. It has tax benefits for an individual owner of business in
general partnership and they have to share their all loss and profit equally (Keeling,
2018). The all liability which is raised in organization then they can distribute the
liability equally so that it will not burden for one owner. If IOM solution run their
business in general partnership, then Sam need to follow all this policies and
procedure in their organization.
Advantages:
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 It is easy in general partnership for establishing the business, it has cheaper
and it includes very less paperwork.
 In general partnership then it became easy to dissolve.
Disadvantages:
 The liability of their partners of their debts of organization is unlimited.
 There is limited potential for raising capital for business process.
Partnership
It refers to the formal agreement which is done between two or more parties
who going to operate business activity. In this all liabilities and loss which incurred in
an enterprise is divide all equally with their partners in their organization. The
organization of IOM, if Sam form their business in partnership then they don't require
to raise more capital and they share all profit equally with their partner in company.
Advantages:
 It is for business to established in partnership because it required low start-up
cost.
 The organization is having great capacity for borrowing for their business.
Disadvantages:
 In partnership each partner is liable for their partnership's debts and each
partners are equally liable for their share.
 In partnership sometime it becomes very difficult for transferring the
ownership and managing the activities of business.
Limited Liability
In limited liability, it is condition which come under which owner losses of their
business firm which may raise limited liability according to their amount of capital
which they invested by owner to their business and they do not extend to their
personal assets. In IOM Solution, if Sam face losses and they do not have potential
to invest money in IOM Solutions, then they have to sell their business assets.
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Advantages:
 There is liability in organization for owner.
 It is very flexibility of income distribution for their organization.
Disadvantages:
 In this, it must be required at least two partners then only limited liability is
possible for an enterprise.
 It is very difficult to raise capital for their organization.
Recommendations for IOM Solutions
It is suggested that currently IOM solution is running their business on sole
proprietorship but ue to increase in demand of organization and employees. The
Sam need to change their business into partnership and General partnership is good
for IOM solution because it is easy to established new business at very low startup
cost and it also includes very limited liability for their business (Lima, McMahon and
Costa, 2021). This also help in Taxation policy that if Sam run their business in
partnership then they have to pay less tax and tax saving is increased. If in case
Sam want to run their business in sole proprietorship again in future or dissolve their
company, then it became easy procedure and it doesn't not include more paper
work. This is best way for Sam to continue their business in future in market of UK,
which will help to meet the demand of their organization and employees.
Conclusion
From this above report it has been state that if business want to operate their
business then it is necessary for them to follow business law which is implemented
by organization to run their business successfully in market. The business and
organization in UK and all laws need to followed in their organization and what are
the legal structures of business in UK. Further, if management want to run their
business from sole proprietorship to another then which one is suitable for their
business.
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REFERENCES
Abera, G. and Mulugeta, W., 2018. Comparative study of undergraduate information
seeking behavior of English language and business management students
in Adama Science and Technology University, Ethiopia. International Journal
of Management and Development Studies, 7(3), pp.28-34.
Boyd, G.S., Brian, P. and Kane, S.F., 2018. Video game law: Everything you need to
know about legal and business issues in the game industry. AK Peters/CRC
Press.
Clifford, M.C. and Zarafopoulos, D.S., 2019. An Entrepreneurial Case Study: A
Bridge from Pedagogy to Practice in Business Education. Proceedings of the
Northeast Business & Economics Association.
Eisenstadt, L.F. and Pacella, J.M., 2018. Whistleblowers need not apply. American
Business Law Journal, 55(4), pp.665-719.
Eling, M., 2020. Cyber risk research in business and actuarial science. European
Actuarial Journal, 10(2), pp.303-333.
Goforth, C.R., 2021. Regulation of Crypto: Who Is the Securities and Exchange
Commission Protecting?. American Business Law Journal, 58(3), pp.643-
705.
Keeling, D., 2018. Management in government. Routledge.
Lima, E.S., McMahon, P. and Costa, A.P.C.S., 2021. Establishing the relationship
between asset management and business performance. International
Journal of Production Economics, 232, p.107937.
Palmaccio, M., Dicuonzo, G. and Belyaeva, Z.S., 2021. The internet of things and
corporate business models: A systematic literature review. Journal of
Business Research, 131, pp.610-618.
Salbu, S.R., 2018. Mitigating the Harshness of FCPA Enforcement Through a
Qualifying Good‐Faith Compliance Defense. American Business Law
Journal, 55(3), pp.475-535.
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