Business Law: UK Legal System, Company Formation and Legal Cases

This report provides a comprehensive overview of business law, focusing on the UK legal system and company formation. It begins by discussing Parliament's sovereignty and the main sources of UK law, including statutory law, common law, and the roles of the government. The report then delves into the impact of company law, contract law, and employment law on organizations. Additionally, it explores various types of companies and their nature of formation, contrasting unincorporated and incorporated business structures. The report also includes legal recommendations and analysis of two case studies, concluding with a summary of key findings and references.

BUSINESS LAW

Table of Contents
INTRODUCTION...........................................................................................................................3
SECTION 1: LEGAL SYSTEM OF FORMATION OF COMPANIES........................................3
TASK 1............................................................................................................................................3
Discuss about the Parliament Sovereignty.............................................................................3
What are the main sources of UK law....................................................................................4
Role of Government in forming laws and regulations...........................................................5
How statutory law and common is being applied in justice court..........................................5
What is the main impact of company law, contract law and employment law on organisation. 6
TASK 2............................................................................................................................................7
Discuss about various type of company with its nature of formation....................................7
Distinguish between unincorporated and incorporate business organisation on the basis that
how they are managed and funded.........................................................................................8
Note: Capitalist are the person who invest in trade or industry for the purpose of earning
profit.......................................................................................................................................8
Advantages and disadvantage of a company over partnership firm.......................................8
SECTION 2: LEGAL RECOMMANDATION OF CASES ..........................................................9
CASE 1...................................................................................................................................9
CASE 2.................................................................................................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
The law and regulation which has been commenced for ruling the commercial market is
known an business. It has its own importance in taking any of business decisions. Multiple
branches are there which can be found under commercial law. Number of topics will be covered
in this file where major points will be related with role of government and legal system in taking
any of the business decision. As, forming the company is never an easy task and because of that
detail procedures will also be explained below. Company will face some of the situation where
they will have to face number of problem from different sector due to which several cases will be
solved below that will guide the business organisation at any of the stage.
SECTION 1: LEGAL SYSTEM OF FORMATION OF COMPANIES
TASK 1
Discuss about the Parliament Sovereignty.
Law cannot be formed if roles and responsibility are not delegated to any of the
respective department. If it is not created then various types of problem can be raised at any
period of time. In case of UK, House of Parliament has got this power and they are sovereign in
this case because it is always assumed that any of the decisions which they take are never wrong.
Even it is said that they work only for the welfare because any of the law which they commence
have some sort of purpose behind it and because of that no one has the right to question them in
any of the stage (Epstein, 2018). They have been work in best possible manner at the moment
each and every power within the premisses of UK hare in their hands. Parliament is the body in
UK which rule the nation and because of that it becomes easy for each and every person to
understand that whatever they says and enforce is always right. If any of the other department
has been delegated any sort of role then still they have to make sure that they will take the final
approval from them. They are one of the most power body in Great Britain.
It is said that Queen delivers the speech every year and whenever she address it is all
about the agenda and rules and regulation and future plans of the country. Her speech have
special role in the development of the a nation because main points are related with development
and commencement. The speech is also known as opening of the Parliament session. This
concept was started in the 18th century where it was decided that Queen will deliver the speech

and after that first session of a parliament will start every year. This speech have a special
importance in context of United Kingdom.
What are the main sources of UK law
There is not a single country who have the power to commence any of the law and
regulation with the help of single source. Even in case of United Kingdom they are also not able
to commence any of the law with the help of parliament or legislative body. To find the best
solution they have given the responsibility to multiple hands so that any type of problem will not
arise in any of the stage. The explanation about all of those sources has been mentioned below.
Act of Parliament: It is the major source of UK as they have power to enforce new law
and bring changes into existing one. The laws which they form are not unchallengeable and
everyone has to follow it as per the given guidelines. They are the one who commences the law
under surveillance of House of Common and House of Lords. They have the fix pattern which
they follows where they look all of the guidelines that how best form of laws and regulation can
be formed. Whenever they shows their interest in commencing the law, it is said that no one has
the right to interfere (Hui and Chan, 2016).
Common law: It is a source of UK law which commences any of the act as per the
situation where statutory law have not mentioned any of the section or article. This has been one
of the best source of forming the law because this types of laws and regulations are totally based
on case which do come within the premisses of UK court. This form of source is very useful
because it does give the opportunity to work on the area of law which is needed to be changed.
European Union Law: In this source of forming laws and regulation various area are
covered because they are one of the body which have to form the laws and policies for number of
country due to which they are able to form qualitative laws. They are one of the source which
mainly focuses on agricultural field to commercial field. This is one of the important source
which have to be considered by each and every business organisation.
European Convention on Human Rights: This source of law is authorised to look after
all of the acts and regulation which is connected with human rights (Haidt and Trevino, 2017).
They are the one who have to make sure that they will commence all of those laws and
regulation through which any sort of business get affected at any period of time.

All of this sources of law is important for any of the organisation because it will give the
idea to companies that how they are required to perform in any of the situation. Even this source
will have the key role at the time of taking business decisions.
Role of Government in forming laws and regulations.
There is lengthy procedure to commence any of the law in UK premisses and which
increases the responsibilities of government to take corrective decision. To address the every
point in detail their government have made the guidelines which they have to follow during the
commencement of law and policies. The process is followed in detail where each and every
points are verified by the authorised department of government. The process that government has
to follow always begins with drafting the bill in Parliament House. When bill is drafted, House
of Common has to pass the bill from different stages. In starting they present the bill in First
reading to decided that what can be title which they can give to bill.
Second Reading: After obtaining the suitable title, it is important that bill is being sent to
second reading where it is necessary that members check the points which are mentioned in it
and even they have to decided that whether it should be sent ahead or not.
Committee stage: In this, bill has to completely checked in which it is decided that what
are those points which are weaker and can build the stronger problem in future period of time.
After finding the errors, they send the bill for some of the changes so that bill can meet the
standard of legislation.
Report Stage: For meeting the standard it is being sent to report stage. They amend the
bill as per the requirement of committee stage who plays significant role in forming law
Third reading: Final chance is given to each and every member to give their opinion on
bill and even they have to do voting to check whether member are agreeing or not on bill.
House Of Lords: If bill is passed by house of commons, then all of the stages are again
conducted in House of Lords. Once, similar process is conducted in House of Lords then they
delivers the bill to for last approval i.e., Royal Assent.
Royal Assent: Here, bill has to be passed by Queen as per the requirement of Royal
Assent Act, 1961.
How statutory law and common is being applied in justice court
Statutory law and common law has its own importance as they both helps justice court to
take their decision on any of the particular day. Whenever, if judges find that legislation has

explained about the particular situation then judges do declare their decision with the help of
statutory law. If in any of the case, judges are unable to find the relevant facts and situation of
the case and they are suppose to give their best efforts by declaring the decision on the basis of
past cases.
What is the main impact of company law, contract law and employment law on organisation.
The thing which is needed to be understood is that law has its own and responsibilities on
any of the business entity and sometimes it do react negatively and in some of the cases it
doesn't. Below, list is mentioned which express that what are those law which do impact on
business organisation.
Contract law: A contract is an agreement between two or more then two different
people. This paper work includes all the policies and agreement details of the company. To
which the employee after knowing everything agrees to work with them and follow the rules and
policies mentioned in it (Hansen, Rutt and Acheampong, 2018). It is a legal document and if any
thing crashes between the employer and employee they can be taken to court in the matter of
breach of contract. The main impact of contract law is that it allows to work comfortably because
terms are explained in detail that how any of the work is needed to be done and that has the
positive impact on any of the enterprises.
Company law: The law which shows their involvement within the company since from
the first day to the day of dissolving is known as company law. It has to play the most significant
role within the organisation. This is one of the act which decides that what are those actions and
decision that organisation can take. The most significance positive impact of company law is that
there are number of guidelines which has been provide which can be used at the time of
emergency situation through which business can perform better at any period of time (Forganni
and Reed, 2019).
Employment law: The law which has been commenced just for the purpose of
maintaining the decorum of any of the business organisation is known as employment law. Every
work is required to be done according to the Act which will help to develop positive environment
within the organisation. Some of the laws and regulations which are needed to be considered
under employment law is Wages Act, Equal opportunity act, Factory Act and many more. The
main impact which can be seen just because of employment is that chance and opportunity are

being given equally and even code of ethics are also followed just because of that both
employees and organisation is benefited. Even goals are easily accomplished in it.
TASK 2
Discuss about various type of company with its nature of formation
Here, partners are trying their best enhance the working capital of the organisation and
because of that it has been found that they are trying to collect the knowledge about various
sector of business organisation so that they can perform better within the market. Now,
accountant is giving some of the advices related to formation of a company.
Sole Proprietorship: It is a business organisation which gives right to operate business
organisation even by single person also. They are not legal entity. This type of company is small
but they are free to do lots of activity which is not being given to any of the other organisation.
The way to form sole proprietorship is simple in which just place of business is decided and after
that written agreement is prepared and that paper work documents are deposited within the
Companies House (Kusiak, 2019).
Partnership: It is form of business organisation where two or more then two people share
ownership of the company. They get rights within the company as per the amount of capital
invested in organisation. The liabilities on partnership firm is never secured and every individual
is liable to clear any of the debt amount. The procedure of forming any of the partnership firm is
simple in which it starts by preparing the deed. The deed is the paper where every information
are mention in detail that association will work in future days. After preparing, it is transferred to
Companies House.
Corporation: It is defined as legal entity which is separate & distinct from its owner.
Corporations are managed and operated by appointed director who takes most of the decision
within a company. Here, business organisation has number of opportunities because they work in
large scale where they do have variety in their product due to which it becomes easy for the
company accomplish the target (Cowan, 2018). This types of business generally requires
lengthy process at the time of formation where they are needed to choose the name of a
company, prepare the Memorandum of Association and Article of Association. After that, it is
necessary that shareholder should be decided with first director.

Distinguish between unincorporated and incorporate business organisation on the basis that how
they are managed and funded
Basis Unincorporated Incorporated
Meaning This types of business have to
perform their business
activities within the limited
area and resources.
They are those who always try
to expand their strength for
earning the profit.
Managed They can be managed if
investor themselves manage
their business activities (Boldt,
Kassis and Smith, 2017).
It is simple to be managed
because department are
classified who has been
delegated the roles and
responsibilities which they to
perform for accomplishing the
goals of an organisation.
Funded They are needed to be funded
by capitalist and if they have
good sort of goodwill then
they can easily take the loan
from different sources.
This sort of business has the
capacity to manage the fund
from number of sources
because their goodwill in the
market plays crucial role.
Some of the available sources
are: Issuing Share, debentures,
bonds, peer to peer lending and
many more.
Note: Capitalist are the person who invest in trade or industry for the purpose of earning profit.
Advantages and disadvantage of a company over partnership firm.
Advantages
 Company has the option to expand its business at greater platform but it is not available
with partnership firm. Company can earn huge amount of profit but at some sort of point partnership firm do
lack this sort of things.

Disadvantages
 Paperwork makes work critical but in case of partnership firm it does not happen at any
of the stage.
 Team is required in it to setup but partnership firm can be easily managed even with the
help of two persons.
SECTION 2: LEGAL RECOMMANDATION OF CASES
CASE 1
In the given case Champion Ltd company based in London was given a task by the
premier league club to create path for new stadium, which it needed to shift the business to north
London. Due to this customer sales decreased which costed the company to fall in the business,
eventually it lead to the state where it was not able to pay the bank or any other creditors. After
giving numerous chances the creditors threatened to seek judiciary help in 'winding up' the
company.
Winding up: The term winding up means when a company is declared bankrupt or
insolvent and has no intention to formulate again. It liquidates its assets and other securities and
pay the creditors. Reaching this point includes failure from business, non payment to the
creditors, goodwill ruined in the business and no capital investment left to do further business
(Terry and et. al., 2015). This procedure leads the company for its final period of assessment
year.
Different methods for winding up a company:
Creditors voluntary liquidation: The term defines the situation where the company is
being dissolved by the directors. The creditors and shareholders agree with this decision of the
owners. The following process is completed as mentioned in the Insolvency act and Insolvency
rules 1986. The procedure for it is quite simple and easy to implement:
 The directors and the members pass a special resolution notice to wind-up.
 Then a article is published in public records, in the period of 5-14 days.
 A signed copy of resolution should be sent to the 'Company House' within 15 days.
 A liquidator is nominated for the valuation of all the assets and securities of the company.
 The board of directors take a meeting with the creditors in the period time of 14 days

 Once all the assets are liquidated and the net amount is acquired, the liquidator conducts a
meeting with the members and the creditors to provide their share of payment and
receipts (Pollman, 2016).
Compulsory liquidation: In this the company is unable to pay the loans and creditors off
and has reached the limit of being declared bankrupt. Generally a creditor is the one to file such
petition to seek the money back. In some scenarios the company seeks the help of judiciary to
dissolve. It files a petition in the court and the trail date is pronounced by the judge. The
procedure for it is quite complex and time taking:
 The directors file a petition in court to seek help in liquidation.
 The petitioner shall publish the article in the gazette for the public records and sealing the
company's bank accounts.
 The court will provide the trial date of the petition, which would decide weather the court
shall take up the petition or reject it.
 Accordingly passes the order for liquidation.
 A copy of 'certificate of service' is sent to the court, which declares the company
winding-up procedure is complete (Singer, 2018).
Members voluntary liquidation: In this case the company is nor insolvent or bankrupt.
Here, the company wants to wind up due to opening a new venture or does not wish to continue
the business any-more. Hence wants to dissolve the company and the procedures for it are very
simple and quick:
 The directors file the 'Declaration of solvency'.
 Directors take a meeting with other members.
 A liquidator is appointed to accumulate the real value of the assets and securities.
 A official notice is passed on through the gazette.
 Payments to the creditors and members is made and if any of it is left the owner either
liquidates it and en-cashes the money or sells it to purchase shares of another firm. Hold a final meeting with the members.
Relevant case law:
Case Name: Platinum villa Ltd

Facts: In this case the company was going in debts for more than 2 years and at the creditors
kept increasing. This lead to the company getting bankrupt and the creditors filled a petition in
court for voluntary liquidation. Eventually, the company got liquidation order from the court.
Judgement: The court after accepting the petition considered to liquidate the company. Since
the company was not in any extent was able to recover all its debts and the creditors were very
vigorous in nature to get their money back (Rutledge and McGuire, 2015).
Recommendation: In this case of Champion Ltd. They should consider the option of
compulsory liquidation, since the company already does not have sufficient money and other
procedures will be costly in nature. Hence the company should go with the courts jurisdiction.
CASE 2
In the following case Mr Anderson the CFO at Amber Ltd who used to handle the
confidential files of the company. The contract between him and Amber Ltd specified 12 months
notice clause of termination or resignation. Beta Ltd the competitor of Amber Ltd offered him
the post of CEO, later he gave a notice of resignation stating that he is not happy working in the
company and hence wants to quit. Amber Ltd pointed out the contract clause plus justified that
they will seek an injunction to avert Mr Anderson to join any of their competitors. Also he has
breached his duties and the contract of the period of 12 months.
Contract: It is the written legal document between two parties that comprises the policy,
rules and the terms & conditions on which the parties agree on. A contract agreement can have
any purpose from goods and services or any other form of business (Busine, 2016). It protects
both the parties in the matter of breach which avails them the compensations they acquire to
recover their loss.
Breach of contract: This is legal scenario where a contractual agreement is broken and
the opposite party objects issues and seek help to claim compensation. Depending on the
agreement it can happen if the party does not complete the work at time or its not according to
the qualitative levels mentioned. If any parties do not provide proper fulfilment of their duties the
other can file a lawsuit against the other.
Code of ethics and duties: This code provides the ethical norms for the employee,
employer, company or any other member connected to business industry. These code of ethics
generally being honest, completing task with qualitative and quantitative elements. Such as being
loyal and honest to the company and many such norms which are for the betterment of the

employee and the employer. These are not obligatory in nature but shall be followed for better
results.
Injunction: In simple terms it is a remedy provided by the order from the court for
preventing a person or company to do a specific task or any other thing that would cause harm.
Generally an injunction is of two types, prohibitory which stops a person from a specific work
and mandatory where one is forced to fulfil a task.
Alternate dispute resolution: It is the procedure to seek justice but without the need to
go court. ADR provides various methods to solve disputes which are money and time saving in
nature, plus they produce better solution. These resolution are also promoted by courts and are
more effective in nature.
Its methods are in three divisions mentioned below:
Mediation: It is process where a third neutral party intervenes between the parties. The
third party discusses the facts and nature of the disputes and the solution each of them seek.
More over this neutral party avails them the best offer after both parties have bargained for their
sides. Later provides the solution for the betterment of both sides. The third party cannot advice
or negotiate for any side, its work is clearly to just pass information and get results (Voss, 2016).
Conciliation: It is a discretionary procedure where both the parties looking for solution
agree for this procedure. Here both the parties are looking for solving the disputes and find
solutions to their problems, also here parties are free to select the time, language, place and their
area of interest. Its very time saving and money efficient also it avails a impartial and honest in
nature. In addition to that the matter is kept confidential in case the parties do not want any
intervention.
Arbitration: Its the procedure which involves the intervention of a arbitrator, who will
discuss the facts of the case either separately or together with both the parties. An arbitrator
discusses the probability to claim and negotiation they want to extend to the other party. In
addition to that an Arbitrator can provide guidelines for better and effective results. Once the
negotiation offer is accepted and becomes a legal document approved by court it cannot be
revoked.
Recommendations: In the case of Mr. Anderson vs Amber Ltd, they should consider
Arbitration because the matter is very complicated and the advice from the arbitrator will help
them negotiate better, claim the benefits and seek justice quickly. So that neither Mr. Anderson