Business Law in the UK: Sources, Government Role, & Business Forms

This report provides a comprehensive overview of business law in the United Kingdom. It begins by identifying the various sources of law, including statutory legislation, delegated legislation, common law, European Union law, and the European Convention of Human Rights, highlighting their hierarchi...Read More

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
TASK 1 ...........................................................................................................................................3
P1 . Identification of various sources of law ..............................................................................3
P2. Analysing the role of government in law making procedure................................................4
M1 Evaluating the effectiveness of UK legislative system in relation to recent reforms and
developments ..............................................................................................................................6
LO 2 ................................................................................................................................................6
P3. Effect of contract, employment and company law on business ..........................................6
M2. Comparison between standards, regulations and legislation .............................................8
LO 3 ................................................................................................................................................8
P4 Analysing the ways different types of business organizations are legally formed ..............8
P5 Identifying the way business are managed and funded ......................................................10
LO 4 ..............................................................................................................................................11
P6. Recommendations related to legal solutions for resolving of disputes ............................11
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business law is the legislation in UK legislative system which governs the various
commercial practices performed by the companies located in England and wales. The objective
of formulating as well as implementing the business law is to assist enterprises in resolving
various issues related to business. Business law in UK also governs as well as regulates the
commercial transactions and contracts between two parties. It is the legislation designed in order
to ensure fair trade practices in the country. Business law in the united kingdom has made
significant contribution in preventing companies from unfair competition. Amendments in the
business laws has direct as well as significant effect on the plans, strategies and procedures of
company. Business law is applicable top formation of new organization and also on winding up
of enterprise.
The present study will have emphasizes on addressing the important sources of law in
UK. It will have focus on analyzing the contribution of government in law making procedure.
Assignment will highlight the key difference between legislation, standards and regulations. It
will also include the detailed assessment of advantages and disadvantages of forming different
types of business.
TASK 1
1.1 Various sources of law
Laws in UK legislative system are applicable to the companies operating business in
England and Wales. UK legislative system have hierarchical structure, where the parliament and
supreme court are at top position. In addition to this, decision taken by members in parliament
and supreme court are binding on lower tribunals. But in UK legislative system, members in the
parliament has the right to make as well as implement law in the nation. The majority of norms
in legislative system of UK are formed by the act of parliament (Keith, 2018). In addition to this
other sources of legislation are :
Statutory Legislation : It is the main source from where the norms in UK legislative system are
Evolved. Such types of norms are formed by the act of parliament.
Delegated legislation : Few norms in UK legislative system are made by the government in the
basis of power or authority given by parliament.

Common Law: Few norms in UK legal system are originated as a result of decisions announced
by the judge in the supreme court in some special kind of law suits.
European union law: Many of the norms such as employment law are highly influenced by the
EU legislation. Many of the laws are formed by the EU government before brexit. But, after UK
leave EU, government in United kingdom has decided to develop their own legislation.
European convention of human rights : This law is formed by the EU government with the
motive of preventing the human rights which is also followed by companies in UK.
The parliament in United Kingdom comprises house of lords as well as commons. There
are approximately six hundred and fifty members in parliament. An individual member in
parliament represents defined geographic constituency (Terziev, Petkov and Dragomir, 2018). In
context of house of commons there are approx. eight hundred people among them six hundred
members are employed directly by queen on the basis of recommendation by Prime Minister.
Both parliament and government has important role to play in law making process. The
law making procedure is very lengthy and begins in the house of common and ends at the house
of lords. It is the house of the lords where the final decision related to the passing of the bill is
taken by members in parliament. Government has role to play at the different phases of the law
making procedure. The various stages involved in law making are :
At the initial stage of the procedure, role of the government is to identify the problem
faced by people or companies/ industries in the nation. After identification of the issue, it is the
duty of government to determine the solution for the problems. At the next step, role of legal
authority is to prepare the proposal consisting of problems and solution. In other words,
important role of the government in law making process is to represent the interest of
stakeholders that is people or companies (Marett, 2018).
Starts in the house of commons :
First reading :At this stage, the proposal prepared by the government is to presented in front of
members in house of commons for the first reading.
Second reading : After the completion of first reading, it is required by the government to make
changes as per the feedback given by members in house of commons.
Committee stage: role of legal authority is to forward the proposal to the committee for special
investigation. At this phase, the effectiveness of the solution or law suggested is measured.
Report stage: At this stage, role of the government is to wait for the report by special committee.

Third reading: After the getting the report, it is the duty of government to present the proposal
for third reading, where the judgment related to forwarding of proposal to house of lords are
taken by the members in house of commons. Role of government at this phase is to get approval
for presenting the bill in front of house of lords. It is the duty of government to prepare proposal
in form of bill.
Moves to house of lords
First reading: At this stage, role of government is to prepare and present the notice in order to
inform that bill is going to present.
Second reading: After getting approval for presenting the bill in front of members in parliament,
it is required by government to present the bill for second reading in front of members in
parliament.
Committee stage: At this phase, role of government is to forward the bill to special committee
for investigation.
Report stage: At this phase, duty of government to wait for the report. The changes can not be
made in the bill.
Third reading : After getting the report, role of government is top present the bill for the third
reading. At this phase, a voting might take place related to the passing of the bill. Once the third
reading get completes, the bill is to be presented by government for further reading until and
unless the final decisions taken by the members in parliament.
Fourth reading : At this stage, role of government is to present the bill for fourth reading where
the final decision related to passing the bill is taken by members in house of lords. Voting related
to passing of the bill might take place.
Royal assent :Once a Bill has passed through both Houses, it is role of government present the
bill for the final approvals by queen. In case, bill get approved then in such situation duty of
government is to help in implementation of law.
But if in case, bills get rejected by members in house of lords then role of government ios
to find alternative solutions for the problems.
Analyzing the way statutory and common law are applied in court
Statutory law is already in written form and it is directly applied to the law suit in the
court. Judge need to incorporate both written statues and case precedent when issuing a ruling.

Statutory legislation are applied by judges during the trials. In context of common law,
ascertaining of the facts are required to be done, then research and analysis in order to locate
relevant law suits and statues. For instance, A case study related to the enforcement of civil law
in courts of England and wales. An individual who perceives that other person or company has
committed a civil wrong can fill the complaint form and forward the same to suitable tribunal.
Country court is located at different locations, this type of tribunal handles the law suits which
includes claim of twenty five thousand pounds and less than fifty thousand pounds. The high
court in UK mainly handles as well as deals with high value law suits (Wilson and Wortley,
2018).
Other instance is, case study related to enforcement of criminal law. An individual who
thinks that the crime has been done by other person can directly inform the police who will
execute the further investigation. After investigation, if an individual is found to be criminal
them police will charge fine from the colpurate. Then after, report of law suit will be sent to the
crown prosecution services.
M1 Evaluating the effectiveness of UK legislative system in relation to recent reforms and
developments
The various laws in English legal system is highly effective as all the norm provides
remedies for the losses or harm caused to one person by the act of other. Laws in English legal
system provides people and companies with suitable solutions for their problems. The new
reforms enforced in 2005, has provided clear detail about the powers of judiciary and executives.
Current reforms in context of English legal system is effective as it does not allow both Judiciary
and executive to use their power in illegal way (Bell, 2018). Current reform has clearly defined
the obligations as well as duties of individual member in legislative assembly.
LO 2
Employment law, this legislation controls the relationship between employees and employers. It
also governs the expectation of employer from employees. Employment act provide the complete
detail about the rights of employees at workplace. This norm covers various aspects as right of
trade union, recruitment or hiring practices, dismissal, health as well as safety etc. Employment
law has direct effect on the relationship between employer and employee. This legislation also
have great influence on human resource practices and strategies adopted by them for managing

people. For instance, if employees feel that they are being dismissed by the employer without
giving proper justification and notice then they can file law suit again employer. Employment
law have significant impact on different business issues such as bullying and harassment; equal
pay , discipline and grievances etc. It also has great influence on the terms and conditions of
employment. Employment law directly effects the working culture as well as environment in an
organization. For instance, if in case employer have fails to provide the all facilities as well as
services as per the terms and conditions in the employment contract then this can have negative
effect on the relationship between employer and employee.
Company law: The companies act 2006 in UK, provides the detailed information about
the need for preparing, filling and distributing of accounting reports. It also defines the forms as
well as contents of financial statement. Part 16, in company law highlights the accounts which
are to be audited. This norm has direct as well as great effect on the accounting practices which
involves, preparation, storage and presentation of financial data. Part 16, in company law also
defines the liability as well as resignation of auditors (Creutzfeldt, 2018.). It is very much
important for companies to get themselves with the latest provisions the law, as this will help
them in getting various benefits or relaxation under new regimes. For instance, the number of
provision has been introduced in context of shares as well as share capital. According to new
provisions in company law 2006, shareholder approval is now no longer for allotment of shares.
A private enterprise is required to pass shareholder resolution in order to get benefit of such
provision in companies act (Hannigan, 2018).
Contract law : This legislation governs as well as regulates the commercial contracts
between the companies operating business in Wales and England. Contract law has direct as well
as significant effect on business relationship. The impact of contract law is that it increases the
certainty in context of business relation. Contract law provides an individual right to file law suit
if in case contract has been breached by other party. For instance, PHB ltd. Has entered into a
legally binding contract with Mr. Singh. PHB has made promise to Mr. Singh that they will
construct building for him, but to due some reason, PHB has failed to perform his duty. In such
situation, Mr. Singh has the right to file law suit against the PHB limited which will have
negative effect on the relationship between both parties. If in case, PHB limited would have
breach contract by informing and by giving proper notice to Mr. Singh then they might not have

to face legal issues. In addition to this, Mr. Singh. Has right to demand the compensation for the
losses suffered by him or asked PHB ltd to complete the work.
Legislation verses regulations
Regulations are developed as well as implemented by minters. Whereas, only parliament
has authority to pass law in British legal system.
Other biggest difference between both is that, legislation is to be complied by all the
people residing in the nation and also by companies operating business in England and Wales.
On the other hand, regulation is to be followed by citizens residing in particular geographical
area (Giliker, 2018.).
Legislation are formed as well as implemented for solving specific issues faced by
society and organizations. Whereas, regulation are enforced especially for ensuring that all the
laws are being complied by enterprises and people in the nation.
Regulations verses standards
Regulation can be referred to as rule of order having the force of legislation. On the other
hand, standards can be considered to be a starting point of regulation.
Standards are basically the guidelines related to the procedure, products or services offed
by organization. Whereas regulation are the code of conduct which are to be followed by
companies while producing goods.
Main purpose of implementing the standards is to bring improvement in industrial or
companies practices. On the other hand, objective of enforcing regulation is to monitor that all
the guidelines are properly followed by organizations in different sectors.
The formation of the different types of organizations are regulated as well as governed by
companies act 2006 in UK. In context of UK, it is very simple to establish sole proprietor
company. An individual planning to start sole proprietor business either in England and Wales at
initial stage is required to select an appropriate structure for business. At the first phase a person
promoting business for attracting investment, under companies act 2006, are required to disclose
the complete information about the business and finances. There are limited number of
formalities as well as capital is required for establishing sole proprietor company (McLaughlin,

2018). Few legal formalities which are required to be fulfilled by an individual in order to
establish sole proprietor business in legal manner are:
Business license: A person planning to establish sole proprietor business is required to consult
with the clerk and get information related to requirement of any type of license for running
business in locality. In addition to this, an individual is required to obtain the necessary license
application forms from the county clerk. In addition to this, it is required by an individual to
inform HMRC that they are self employed.
Naming of business: While selecting the name for organization, an individual is required to
select such name which is not used by other firms. In addition to this, a person has to take
permission from legal authority in case of using special symbol or character, as this is important
provision in companies act 2006.
Registration for Self assessment tax : An individual for establishing the sole proprietor
business is required to get register for Self assessment tax. A person who want to become sole
trader is required to have a national insurance number as well as registration for self assessment
tax.
Documentation : After deciding the name of organization, an individual is required to arrange
all the documents required for getting the company registered. The documents which are
required to be submitted are memorandum as well as articles of association, information of
shareholders, directors, name and address of company etc. All these documents are to be
submitted to the registrar for approval. One registrar approves the documents, it is required by
director of organization to call first board meeting in order to fulfill other legal formalities.
Advantages of sole proprietor company
One of the major advantages of establishing sole trader business is that an individual have
full control on business. In addition to this, Tax advantage associated with forming sole
proprietor firm.
Disadvantages
Sole proprietor have unlimited liability. In addition to this, Tax inefficiency is the other
major drawback of forming sole proprietor business.
Formation of partnership organization
In context of partnership firm, under limited liability partnership act 2000, an enterprise
is not required to be registered with companies house. An individual willing to establish

partnership firm it required to nominate one partner who will be held liable for getting the
partnership enterprise registered with HMRC. At the next stage of formation of firm partners
through mutual consent need to select the name of organization. According to limited liability act
2000, company name should consist of word 'Ltd'. It is required by partners to get firm registered
with HMRC. An individual can registered firm online by completing the documentation. After
the partnership firm get registered the nominated partner will automatically will get registered
for Self assessment tax. In context of limited liability partnership organization, it is to be
registered with companies house. Partners has been provided with the advice to have partnership
agreement, as this will assist partnership in having control on the various activities. For instance,
according to the limited liability partnership act 2000, it is not possible for other partners to
remove current members from the partnership, or add members without consent from all
members.
Advantages of forming partnership firm
Separate legal entity to the members and flexibility in managing business is considered to
be as two main advantages of forming limited liability organization.
Disadvantage
Profit can not be retained, it is considered to be as a major drawback of limited liability
partnership firm.
Funds are required for establishing as well as running business in successful manner. There are
different sources from where organizations can borrow financial resources in order to meet
business requirement these are :
Debt capital : It is a source of raising funds which is generally utilized by Public organization
and also by partnership firms. Debt capital can be raised through bank loans. It can also be
borrowed by issuing of debts. Such source includes high interest rate which is considered to be

as a major drawback. Main advantage of using debt financing is that it allows retention of more
cash.
Equity capital: This is the sources which is generally utilized by sole proprietor for raising the
funds. Sole proprietor can generate by money by selling few shares to investors. The advantage
of equity funding is that investors do not require interest payments like bondholders do. Major
drawback is that sharing of the profit., as additional income is to be divided among stakeholders.
Personal saving : It is the another source of funding which is used by both sole proprietor and
partnership companies (Ridley-Duff, 2018). Personal saving become source of funds when the
sole trader or a partnership member is willing to invest in business. Complete control on business
and no other charges on raising the funds is considered to be as major advantage of raising funds
through personal saving. Lack of mentoring and mentoring opportunities is considered to be as
major drawback.
LO 4
P6. Recommendations related to legal solutions for resolving of disputes
PHB Ltd. Which manufactures wooden furniture imports Timber for an organization
located in Poland. Timber arrives in form of flat backs which is then assembled by workers of
Phb. There is one circumstances where some flat packs were found to be defective. Both
companies have disputes related to the non payment for material supplied by firm of Poland .
Both parties in order to resolve their disputes can utilize alternative dispute resolution
mechanism, as this is the best method of resolving the conflicts without going to the court. It is
the best method to resolve conflict in cost effective manner (Haigh, 2018). There are three
methods which can be utilized by both parties for resolving the dispute these are :
Mediation : In this method, mediator helps parties in solving their conflicts. It is the best
method for resolving the conflicts at the spot.
Negotiation : This is the best method where both the parties can get chance to facilitate
negotiation. It helps parties in reaching to the conclusion. In context of negotiation , the decision
is taken by parties themselves.
Arbitration : In this method, where parties seek support from arbitrator in order to solve
their issues. This is the best method which can be used by the parties facilitating dispute at
international level. In context of above case study, both the parties can use this method for

solving their issues (Guerrina and Masselot, 2018). The decision taken by arbitrator is binding
on both the parties.
In addition to this, both parties can take legal advice from solicitor. They use the
government portals in order to find solution for their problems. Parties facing commercial
disputes can seek legal support or advice from law centers. It is the institution which provides
legal advice on following subject matters such as criminal, housing and discrimination.
CONCLUSION
From the above study, it has been summarized that the different laws in English legal
system is very much effective in context of resolving various business issues. The other fact
which has been found in the assignment is that in UK legislative system only house of lords or
parliament has authority to pass law. It has been concluded from the assignment that
government has crucial role to play at different phases of law making process. Alternative
dispute resolution is the best mechanism for resolving commercial conflicts without going to the
court.
There are different sources has been highlighted in the report from where parties facing
commercial dispute can seek legal advice.

REFERENCES
Books and Journals:
Guerrina, R. and Masselot, A., 2018. Walking into the footprint of EU Law: unpacking the
gendered consequences of Brexit. Social Policy and Society, 17(2), pp.319-330.
Ridley-Duff, R., 2018. The internationalisation of FairShares model: where agency meets
structure in US and UK company law.
Haigh, R., 2018. Legal English. Routledge.
McLaughlin, S., 2018. Unlocking company law. Routledge.
Giliker, P., 2018. Examining English contract law in the light of Brexit–an end to the European
dream?. In Essays in Memory of Professor Jill Poole (pp. 14-32). Informa Law from
Routledge.
Hannigan, B., 2018. Company law. Oxford University Press, USA.
Creutzfeldt, N., 2018. A European Informal Justice System?. In Ombudsmen and ADR (pp. 119-
138). Palgrave Macmillan, Cham.
Bell, J., 2018. Sources of Law. The Cambridge Law Journal, 77(1), pp.40-71.
Wilson, S. and Wortley, N., 2018. English Legal System. Oxford University Press.
Marett, P., 2018. Information law in practice. Routledge.
Terziev, V., Petkov, M. and Dragomir, K., 2018. Sources of European Union law.
Keith, K.J., 2018. Sources of Law, Especially in Statutory Interpretation, with Suggestions about
Distinctiveness. Victoria University of Wellington Legal Research Paper Series, Keith
Paper, (26).
Online:
Sources of legal advice. 2019.[Online]. Available through:
<http://hub.unlock.org.uk/knowledgebase/sources-legal-advice/>.
Sources of Finance for Sole Traders & Partnerships. 2017.[Online]. Available through:
<https://bizfluent.com/list-6632960-sources-finance-sole-traders-partnerships.html>.