Business Law Report: English Legal System, Companies, and Disputes

This report provides a comprehensive overview of key aspects of business law within the English legal system. It begins with an introduction to business law and the English legal system, outlining its core principles and the process of passing a bill in the UK Parliament. The report then delves into the d...Read More

Business Law

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
TASK 2............................................................................................................................................6
TASK 3............................................................................................................................................7
TASK 4 .........................................................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Business law is a part of whole legal system in a country implemented for regulating the
matters of commercial nature. It is also known as commercial law. The main motive of enacting
these statutes are to provide a legal support in carrying business activities lawfully (Clarkson,
Miller and Cross, 2014). This provide confidence in general public to make contracts with
organizations for a mutual transactions. This report is exhibits main principle of English legal
system, evaluation of the effectiveness of system, bill passing procedure, sources of UK law
have been included. Apart from this, difference between employed and self-employed has been
described with the use of a real case. Along with this, different types of organizations by putting
focus on registered company and various methods of dispute resolutions are also covered in this
report.
TASK 1
English legal system is old and wide in scope which has its individual courts and
judiciary. There are different kinds of laws exist in this system. It still follows traditional
methods to a major extent. It has taken as a foundation in building legal systems of different
countries. Also, it has evolved in past decades by undergoing number of reforms. UK follows
English legal system which has implemented statues for governing the acts of citizens living the
country. There are courts and tribunals which can be approached for seeking justice in case any
breach or contravention has been made.
The main principle on which UK legal system works is “Parliament is sovereign”. This
principle gives the highest authority to the Parliament to make, repel or modify any existing as
well as new law. The courts can not deny to follow the law passed by the Parliament. In other
words, it has the supremacy to decided which should be implemented or not and every court
irrespective of its jurisdiction has the binding. Courts can not supersede decision of the
Parliament (Craig, 2018). Furthermore, Parliament can not pass any law which can not be
changed by future Parliament. English system has underwent reforms in order to transform it.
Other countries in the world which were lagging behind English legal system have made huge
modification in their legal system in order to make it effective as per the changes taking place in
the business world. However, changes incorporated in English legal system are sufficient to form
a co-ordination with the advancement that has taken place in the past. For example, UK still have

the same Companies Act, 2006 whereas other countries have altered their statutes regarding
company a long time back. This shows the inefficiency of the English Legal system. Hence, it
requires some more amendments to reduce the loopholes which will further mitigate incidents of
legal consequences.
The system has a fixed process for passing a bill which is divided into stages, the same is
provided below:
First reading- This is the initial step of the whole process in which bill is introduced in
the house in a draft form.
Second reading- This stage is concerned with taking votes by both the houses of the
Parliament. A discussion or debate is held between them for making changes in the draft bill
before finalisation (Bill passing procedure UK, 2019).
Committee stage- A standing committee is constituted by the Parliament which is
responsible for reviewing the draft bill and give their suggestions which can improve the bill.
This committee is dissolved after the recommendation is provided.
Reporting stage- The recommendations of the committee is prepared in a report form
which is sent to the House of Lords for taking their advices.
Third reading- By this stage, it is assumed that all the changes have been made hence, no
changes can be made further. But more amendments can be made with the consent of both the
houses.
Royal assent- This is the last stage in which the assent in the form of signature of the
queen is received to certify that bill has been passed and will be enacted as a law.

Procedure of Passing a bill in UK Parliament
This was the bill passing procedure which by which statutes are made. Each law has
different scope and ambit therefore, its applicability also varies business to business. In addition
to this, there are amendments which can have significant impact. This is the reason to keep the
updates information of the laws which can be gained from various sources which are mentioned
below:
Case laws- Courts pass decisions with the application of legal provisions and on the basis
of evidence produced by the parties (). These judgements are recorded in a report for subsequent
use. English legal system make its conclusion by following the doctrine of judicial precedents.
As per this doctrine, courts use previous judgements to make future decisions. It is a reliable
source of information. This doctrine is widely used in Common law which is called as judge
made law. There is creation of a new law but the prior case judgement is used in prospective
cases.

Legislations- These are the statutes which are formed by passing bills in the Parliament.
Discussions and debates are held for making amendments in the draft bill before converting them
into acts. These are responsible for governing the acts of people. The houses of Parliament have
the role behind making statutes which will be made applicable throughout UK. Also,
amendments are suggested by them as per the needs (Sources of UK law, 2019).
EU directives- EU commission is a body which is made up with the combination of
number of different European countries. The countries which have the membership of EU are
required to follow directives provided by the commission. Mainly, the directives are
implemented for governing the trade between these states. Therefore, one should have the
knowledge of such directives.
TASK 2
Self-employed person is different from employed person because of numerous factors
which can be understood by going through a real case in the gig economy. Gig economy is a free
market system in which temporary positions are common and entities contract with independent
workers for short-term basis. A landmark decision was taken in the past which changed the way
business organizations used to consider their self-employed workers. It is the case of Pimlico
Plumbers v Gary Smith. Gary Smith was an independent worker who served the company nearly
six years before filing the case. He was appointed on a freelance basis which means that there
was an independence to choose the owner, flexibility of working hours, right to move out of the
entity without the permission or notice etc. on the other hand, a person is given the status of
employed when he gets all the rights as provided in the Employment laws. In this case, Gary was
a freelancer who was made to follow the code of conduct, wear the uniform of the company,
carry identity card bearing the name of entity, etc. This made Gary and other self-employed
workers to file for a case in order to get the status of employed. Hence, Gary filed a case in the
Employment Tribunal which passed an order against the him quoting that there is no validity in
the grounds of the case. Subsequently, Gary approached appellate tribunal for filing appeal as he
was aggrieved with the decision. Appellate tribunal also denied the contentions of Gary. Finally,
after getting no justice, a case was filed in the Supreme Court (Pimlico case, 2018).
Supreme Court being the apex court of the country passed a judgement which changed
the scenario for the self-employed workers like Gary Smith. In the view of Supreme Court,
Pimlico exercised tight administrative control over Smith and other workers, restrictions and

conditions were imposed on them such as provision of identity care, uniform, appearance. Also,
there was clause that Smith can not join competitor's company after moving out the company.
Supreme Court cited that all these conditions are meant for those who are in the employment
with whom a contract of employment has been executed. If a self-employed worker is made to
follow these terms then he will get the status of an employed person. With this decision, Gary
Smith and other self-employed workers were made the employees of the company by which they
got various rights as given in the laws related to employment.
If the self-employed workers were hired as employees only, then Kango would have
executed an employment contract with all such employees comprising of terms and conditions
governing their acts. Employees are bound to follow the instructions of the company. On the
other hand, self-employed workers are not bound by any such provisions.
The main difference between employed and self-employed is as follows:
Basis Self-employed Employed
Freedom Self-employed workers enjoy great
freedom as there are not required to
follow any instructions.
They are required to follow the terms
and conditions of the contract.
Expenses The cost or loss are incurred by the
person himself (De Stefano, 2015).
Employers have the responsibility to
take the accountability and borne
expenses on behalf of its employees.
Social
benefits
Social benefits are less in the case of
self-employed.
It is high as compared to self-
employed.
Leave They can take leave for as many days as
they want. There is no one above them
to whom they need permission for
taking leaves.
Employee has to inform his/her
employer before taking leave. Also,
there are limited leaves.
Decision
making
Self-employed workers have absolute
charge of making decisions.
The decisions made by the employer
will be the final and every employee is
required to follow them.

TASK 3
Company is an association of people who are responsible for the management of its affairs.
it is an artificial judicial person having a separate legal entity with a perpetual succession and a
common seal. It has right to acquire properties, enter into contract, sue or be sued, and open an
account in the bank. The nature of the company has been divided into three categories limited by
shares in which the liability of the shareholders is limited up to the nominal amount which is
unpaid on the shares held by them. Company limited by guarantee wherein a certain percentage
has been guaranteed to be contributed at the time of company being wound up. the last time
being the unlimited company in which the liability of the shareholders is unlimited and their
personal assets can be used in paying off the financial obligations of the company which are
outstanding.
There are some advantages and disadvantages of the limited company which are as follows:
Advantages:
 Liability of the shareholder is limited to the unpaid nominal amount on the shares held by
them. In no circumstances the liability can extend to their personal assets.
 Tax rate applicable is much favourable than any other types of business. Also the rate of
tax is table and it does not fluctuate. Shares can be transferred by one person to without any restriction.
Disadvantages:
 The income of the company is taxed twice. When the income is earned by the company
then fixed rate of tax is charged and when the same income is distributed and received in
the hands of the shareholders, then again it is charged at the individual tax rates.
 There are high chances of disputes because of differences between the decisions of
directors and shareholders (Limited company, 2019).
The company has legal personality which is distance from its members. There is a corporate
veil between the shareholders and the entity which is required to be lifted when some questions
arises on the involvement of the company. This process is called lifting of corporate veil. The
principle of separate legal entity gives individual rights to the company for owning properties,
open bank account, enter into contracts etc. By using its own name. In the case of Salomon v
Salomon, Shoe Company was registered under Companies Act by Salomon. Salomon received
10000 euros debentures which were assigned to third person. After sometime the company went

into liquidation and the creditors wanted to hold Salomon liable. In this case the corporate veil
was lifted to know the truth.
The procedure for establishment of a new limited company is mentioned below:
 An application in form IN01 is required to be filed with the companies House along with
the name of the prospective entity.
 Memorandum and article of association should be prepared and printed which forms the
foundation of the company.
 Minimum number of directors must be appointed such as public company should appoint
minimum 3 directors, private company should have at least two directors and one person
company may be incorporated with one director.
 Subscription to the MOA should be done by the shareholders by subscribing to the
shares.
 Issuance of certificate of incorporation by the registrar.
There are many other kinds of business organisations other than a limited company. Same are
as follows:
Sole proprietorship- When a single person own and manage a small business then it is
known as sole proprietorship. The individual is called owner or sole trader who is responsible
with all the activities from raising funds to decision making. Furthermore, members of the family
or outsiders can be appointed to help with day to day activities. The sources of funds are personal
savings and bank/financial institution loan.
Partnership firm- It is formed by two or more persons for carrying business lawfully with a
motive to make profit. Registration of partnership firm is voluntary. A partnership deed is
executed between all the partners which comprises of terms entered mutually. Firm is governed
by the deed. Furthermore, a partner is jointly and severally liable for the acts of other partners.
Limited Liability Partnership (LLP)- Wendy features of a company in the partnership
combined become a limited liability partnership. The liability of the partners is limited which
cannot extend to their personal properties (Horspool and Humphreys, 2012). There is flexibility
in the management which can be exercised by the partners for conducting the business peacefully
and smoothly. There is no much difference between a partnership firm and LLP. The sources
available for raising funds are personal savings, retained earnings, contribution by the partners,
loan from Bank or financial institutions, crowdfunding and many more.

TASK 4
Disputes and conflicts are very common in business world which need quick resolution to
carry the business smoothly. Litigation is not the only option for getting a solution as there are
other methods which can be used for settling down the differences without going to court or
without the intervention of the court (Singer, 2018). The alternative dispute resolution which
may be opted are as provided:
 Negotiation- this is the first preferred method for resolving every type of disputes as it
enables both the parties to have a direct and two way communication. This enhances the
chances of better understanding between the parties. This method is most common in
issues arising in a company. There is no particular procedure or structure the four it is an
organised and voluntary in nature.
 Mediation- this method is chosen when negotiation fails to provide the appropriate
solution as required by the parties. In this a third person is appointed who is called
mediator. The role of mediator is to facilitate an effective conversation between the
parties so that things can get more clear. No judgement is taken by third party unlike
arbitration. Also and agreement can be formed mutually.
 Arbitration- in this dispute resolution method, third independent party is appointed with
mutual consent who is known as arbitrator. Arbitrator is responsible for applying the
knowledge for judging the facts and issues. there is a procedure followed in arbitration
which is set up by the arbitrator. Both parties put their arguments in front of the arbitrator
along with evidence and witnesses to prove their statements. It is is an expensive and
expeditious way for resolving the disputes (Paulsson, 2013).
Kango limited can use arbitration for settling down the differences created between the IT
suppliers and the company. This is cheap as compared to filing and the whole procedure of a
litigation also there is no intervention of the court. Hence, a conclusion can be attained faster.
CONCLUSION
From the above report, it has been concluded that every business requires legal provisions
for carrying its activities lawfully. This protects the customers and other stakeholders from
fraudulent acts. When a business follow laws, the chances of legal consequences get reduced.
Furthermore, the main principle of English legal system along with various sources and

effectiveness have been explained. Along with this, difference between employed and self-
employed, various types of business entities and variety of dispute legal solutions are also
included in this. The main aim of business law is to motivate the companies, partnership firms
and many other kinds of organizations to follow applicable legislations.

REFERENCES
Books & Journals:
Clarkson, K.W., Miller, R.L. and Cross, F.B., 2014. Business Law: Texts and Cases. Nelson
Education.
Craig, P.P., 2018. Sovereignty of the United Kingdom parliament after Factortame.
In Constitutional Law (pp. 359-394). Routledge.
Horspool, M. and Humphreys, M., 2012. European Union Law. Oxford University Press.
De Stefano, V., 2015. The rise of the just-in-time workforce: On-demand work, crowdwork, and
labor protection in the gig-economy. Comp. Lab. L. & Pol'y J., 37, p.471.
Singer, L., 2018. Settling disputes: Conflict resolution in business, families, and the legal system.
Routledge.
Paulsson, J., 2013. The idea of arbitration. OUP Oxford.
Online:
Bill passing procedure UK. 2019. [Online]. Available through:
<https://www.parliament.uk/about/how/laws/passage-bill/>.
Sources of UK law. 2019. [Online]. Available through:
<https://uk.practicallaw.thomsonreuters.com/5-636-2498?
transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1>.
Pimlico case. 2018. [Online]. Available through:
<https://www.employmentlawwatch.com/2018/06/articles/employment-uk/supreme-
court-decision-announced-in-pimlico-plumbers-case/>.
Limited company. 2019. [Online]. Available through:
<https://www.reviso.com/accountingsoftware/accounting-words/limited-company>.

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