Business Law Report: Sources, Impact, and Organizations

This business law report provides a comprehensive overview of the UK legal system, including its sources of law such as legislations, precedents, human rights law, and EU law, along with the role of the government in law-making. It delves into the impact of employment and contract law on businesses, using the case study of Pimlico Plumbers v Smith to illustrate the complexities of worker classification and associated rights. The report also examines different types of business organizations, including sole proprietorships, partnerships, and corporations, and the processes involved in their formation. Furthermore, it addresses how business organizations are managed and funded, and explores legal solutions for dispute resolution. The report concludes with a summary of the key findings and provides relevant references.

Business Law

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different sources of law.........................................................................................................1
P2 Role of government in law-making.......................................................................................2
TASK 2 ...........................................................................................................................................4
P3 Impact of Employment and contract law on a business with case study...............................4
TASK 3............................................................................................................................................5
P4 Different types of business organisations and their formation..............................................5
P5 How business organisations are managed and funded...........................................................6
TASK 4............................................................................................................................................7
P6 Legal solutions for dispute resolution....................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business law also called as commercial law or mercantile law is a broad area of law
governing the business or commercial transactions between people and the business
organisations (Adams, 2017). The business law covers the governance of business entities under
the law of partnership, company law, law of agency, etc. as well as regulates the commercial
transactions under the law of contract.
The report talks about the nature of legal system existing in Britain along with the role of
government in law making and application of these laws in the courts. The report also gives a
brief about the types of business organisations and how the employment law and contract law
impacts the business in context of the company Pegasus Ltd. And, lastly the report focuses on the
importance of alternate dispute resolution.
TASK 1
P1 Different sources of law
In every society, irrespective of size or type there has always been presence of a legal
system which governs such a society. It is difficult to classify the law into categories but for
better understanding law can be broadly categorised under two heads – public and private. Public
law is the law governing relationship between individuals and the state and private law deals
with the relationship between individuals rather than with state.
Sources of law
There are four sources of law which could be considered to understand the English law,
which are – legislations, precedents or the common law, human rights law and the EU law
(Mann and Roberts, 2011).
 Legislations – These are the laws which are formulated by the legislature in the country.
The UK parliament is the principal legislature which is situated in London and is
primarily responsible for making and passing the laws which would be applicable in all
the four countries.
 Precedents or Common law – The legal system prevalent in the countries in the UK is
based on the common law, which means the decisions of the superior courts becomes the
part of law and is followed by the other courts of law.
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 European Union Law – Since UK is a member state of European Union, the laws passed
by EU takes precedence over the local laws.
 European Convention on Human Rights (ECHR) – The Human Rights Act, 1998
empowers the courts in the country to protect the human rights which are specified in the
ECHR, as the UK is a signatory to the convention being a member state of EU
(McAdams and et. al., 2015).
Division of law
There are three distinct legal systems in the UK, one each for England and Wales,
Scotland and Northern Ireland and in the UK the legal systems are administered by the court of
laws (Knapp, Crystal and Prince, 2016). There is a hierarchy of courts followed in Britain which
is as follows:
 The Supreme Court – which was formerly known as the House of Lords, is the highest
appellate court in the UK. It hears the appeals on both the matters – civil and criminal in
England and Wales, and Northern Ireland, as in Scotland the criminal appeals are made to
the High Court from the lower courts.
 The Court of Appeal – is the senior court of appeal and decides on both the matters, civil
and criminal, as it is divided into these two division.
 The High Court – is another senior court in terms of appeals and hears the serious and
complex matters comprising of civil issues and family cases. It includes three divisions –
the Queens' Bench, Family and Chancery division.
 The County Courts – are for hearing the civil matters, such as money claims, within a
particular geographical catchment area.
 The Crown Court – are the courts primarily dealing with the criminal cases including the
serious criminal cases and the cases transferred by the Magistrates' courts.
 The Magistrates' Courts – are the justices' court which hear the criminal matters at first
instance and deals with less serious criminal matters (summary), and certain civil matters.
The justices of peace are the member of the local community.
P2 Role of government in law-making
The creation of a law or legislation is one of the powers of the parliament. The parliament
consists of the House of Commons and the House of Lords, and the laws formulated by it, is
applicable in all the four countries of UK. The parliament can pass two types of bills – private
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members' bill which are non – governmental bills and public bills which affects the public and is
considered to be a law (Raz, 2013). A bill can be introduced in either house and the steps
involved in formation of a law are as follows:
 First Reading: This is the first stage and the bill is formerly introduced in this
stage with its title and is then published.
 Second Reading: In this stage the bill is debated upon in the House of Commons
on the basic principles constituting the bill.
 Committee Stage: This stage involves the examination of a bill in detail and
amendments, if required are made in this stage.
 Report Stage: This stage is required if any amendments are made in a bill in the
previous stage. The amendments are debated and votes are taken on the
amendments in this stage.
 Third Reading: This stage is the final stage under which the amendments in a bill
are considered and voting is done.
 Proceeding in the House of Lords: This stage is initiated after the third reading
wherein a similar procedure is adopted for a bill as in the House of Commons.
The amendments in a bill, if any, made by the Lords then the bill is sent back to
the House of Commons.
 Royal Assent: This is about getting the assent of the monarch, once that is
received a bill becomes a law, applicable in all the four countries of the UK.
Whenever any law is passed by the legislature it impacts the business of the business
entities as it requires certain compliances. The business organisations such as Pegasus, can come
to know about the latest legal updates by keep visiting the official websites, and other websites
which comprises of expert legal advice pertaining to the provisions of the latest legislation. The
courts of law apply these legislations and common law while coming to a decision in any matter
that comes before it.
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TASK 2
P3 Impact of Employment and contract law on a business with case study
In the times of fast growing businesses a new trend of gig economy is emerging, which is
free market including temporary positions and various contracts between the organisations and
independent workers for short span of time. Though, the contracts are short term but often
disputes arises when the terms of a contract are not clear or ambiguous. There are various case
laws under which the status and rights of such independent workers are decided by the appellate
courts and the latest judgement of Pimlico Plumbers Co. v Smith [2018] UKSC 29 is the leading
authority in deciding the employment status (Prassl, 2017).
In this case the Supreme Court rejected the appeal of the company Pimlico Plumbers and
decided that the employment status of Mr. Smith is that of a worker and not a self employed
contractor. The case was initially heard by the Employment Tribunal. The plaintiff Mr. Smith
who worked as a plumber for Pimlico Plumber for six years, argued on the grounds of unfair
dismissal from work, deduction of salary and not given any holiday pay, which he was entitled
to, being a worker of the company. On the other hand Pimlico argued that Mr. Smith was not an
employee of the company but a self-employed contractor providing services. The Employment
Tribunal decided that Mr. Smith was not an employee but is a worker and claim for the unfair
deduction of the wages. The case was further appealed.
The Supreme Court upheld the decision of the Employment Tribunal stating that Mr.
Smith was not a self-employed contractor but a worker and is entitled to the benefits of holiday
pay and other benefits under the employment law, even though, he filed tax returns as self-
employed, had a VAT registration, was allowed to reject work and take work from outside .
In case of Pegasus, the status of the 35 drivers who have hired the vans of the company
and working for the company, is to be decided, which the company states as self-employed. The
facts suggest that the drivers have to wear the branded uniform of the company, use the branded
vans and have to bear the company's identity cards. Also, the terms of contract which was drafted
few years ago, has terms such as, 'gross misconduct' and 'wages'.
These facts are similar to the facts which were considered by the Employment Tribunal in
the case of Pimlico Plumbers. Therefore, following the judgement it can be inferred that the
employment status of the drivers is of a worker and not that of a self-employed contractors. And,
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they are entitled to the benefits covered under the employment legislations according to the terms
of the contract. This clearly reflects that the employment law and contract law are crucial as one
regulates the dealings of employer and employee while the other covers the elements of contract
law.
TASK 3
P4 Different types of business organisations and their formation
Under the case scenario Alex and Jay have been advised by their accounts to set up a
registered company. There are various types of business organisations which can be considered
before setting up a business, such as – sole proprietorship, partnership and corporation.
 Sole proprietorship – This consists of only one individual running and managing the
business. This is easy to form and is not that costly in comparison to all the other forms
of business organisations. The owner has unlimited liability, meaning thereby the
creditors can recover their money from the assets of business and after that from the
personal assets of the owner.
 Partnership – This is a business started by two or more persons called as the partners. A
partnership firm can be started by entering into an agreement which specifies the scope of
business and the rights & liabilities of the partners. Though, it is not mandatory to
register a partnership but it is suggested. In a partnership the liability of the partners is
unlimited.
 Corporation – A corporation is a type of business organisation which has a distinct entity
from that of its members, as decided in the case of Saloman v Saloman [1896] UKHL 1
(Painter and Holmes, 2015). The members of a corporation has a limited liability up to
the unpaid share capital. A corporation is run and administered by the selected group of
members known as the board of directors. Corporation is further classified as – Public
limited company (PLC), Private company limited by shares (LTD), Private company
limited by guarantee, Unlimited company (Unltd), Limited Liability Company (LLC) and
Cooperatives. Formation of a company is a process for registration of a business at the
Companies House which is the Registrar of the Companies, after which the company gets
a separate legal entity and can start doing its business (Goulding, 2013).
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Alex and jay can incorporate a limited liability company by filing for incorporation at the
Companies House with all the legal documents required, such as memorandum and articles of
association and complying with all the other requirements of the Companies Act, 2006.
Role of Directors
Any organisation functions through its shareholders and directors. The directors are in-
charge for managing the business activities and making the strategic & operational decisions in a
company. A director should act within the powers in accordance to the constitution of the
company. The other duties of a director are to promote the success of the company by exercising
his independent judgement. A director should exercise reasonable care, skill and diligence and
work in good faith for the benefit of the company. The directors should avoid any conflict of
interests and disclose any interests he has which might be contrary to the interests of a company.
P5 How business organisations are managed and funded
For any business organisation funds are required to manage and run the business
effectively as well as for the growth of business (Sealy and Worthington, 2013). The range of
funding depends upon the size of a business, and the government helps small to medium sized
enterprises by providing grants, which are:
 Regional Growth Fund is financial support for the businesses ranging less than one
million pounds, which are run by national or local organisations which are given funds to
offer provide support and financial aid to the businesses.
 Start-up loans are government funded loans which are to provide support to the start-ups,
small businesses and budding businesses having potential but were unable to gain
investment from the banks.
 Government grants are provided to the small business organisations by the government.
There is a different process and criteria for applying for the grant according to the
businesses.
 UK export finance is providing funds to the exporters by means of underwriting bank
loans.
 Business finance partnership is funding through non-banking lenders in which the
government invests around 1.2 billion pounds.
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TASK 4
P6 Legal solutions for dispute resolution
The traditional way of resolving disputes is litigation which is often considered as
expensive, time consuming and confusing by the business organisations. So, Pegasus can opt for
alternate dispute resolution (ADR) which is another way of resolving disputes without going to a
court. The ADR is a way by which consumers and traders can resolve their disputes and come to
a decision amicably, which is encouraged by the government (Mackie, and Mackie, 2013). The
common forms of ADR are – arbitration, conciliation and mediation. The common forms
recognised in the UK are arbitration and mediation. Arbitration involves an independent third
party who takes a decision by considering the facts, which is binding on the parties. Mediation
on the other hand, involves an independent third party who helps the parties at dispute to come to
an acceptable decision amicably (Blake, Browne and Sime, 2016).
The legislation regulating the ADR schemes in the UK were laid down by the parliament
in the year 2015, which are (GOV.UK, 2015) -
 The Alternative Dispute Resolution for Consumer Disputes (competent Authorities And
Information) Regulations, 2015.
 The Alternative Dispute Resolution for Consumer Disputes (amendment) Regulation,
2015.
These regulations provide for establishment of competent authorities to provide ADR
schemes, set standards for carrying out the ADR process, etc. In the UK there are structured
ADR schemes for the regulated sectors, which includes – finance services, energy, telecom etc.
Apart from these regulated sectors, ADR schemes are taken up many businesses voluntarily
(Park, 2012). Therefore, even Pegasus can also go for voluntary ADR schemes as a mechanism
for resolution of disputes.
CONCLUSION
It can be concluded from above that business law governs and regulates the commercial
transactions in any organisation. The organisations such as Pegasus, have to comply with various
laws, such employment law, contract law etc. to run their business successfully. Also, the
importance of alternate dispute resolution as an effective means of dispute resolution is briefly
discussed in the report.
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REFERENCES
Books and Journals
Adams, Alix, 2017. Law for Business Students. Pearson.
Blake, S. H., Browne, J. and Sime, S., 2016. A practical approach to alternative dispute
resolution. Oxford University Press.
Goulding, S., 2013. Principles of company law. Routledge-Cavendish.
Knapp, C. L., Crystal, N. M. and Prince, H. G., 2016. Problems in Contract Law: cases and
materials. Wolters Kluwer Law & Business.
Mackie, K. J. and Mackie, K., 2013. A handbook of dispute resolution: ADR in action.
Routledge.
Mann, R. A. and Roberts, B.S., 2011. Smith and Roberson’s business law. Cengage Learning.
McAdams, T., Neslund, N., Zucker, K. D. and Neslund, K., 2015. Law, business, and society.
McGraw-Hill Education.
Painter, R. and Holmes, A., 2015. Cases and materials on employment law. Oxford University
Press, USA.
Park, W.W., 2012. Arbitration of international business disputes: studies in law and practice.
OUP Oxford.
Prassl, J., 2017. Pimlico Plumbers, Uber Drivers, Cycle Couriers, and Court Translators: Who is
a Worker?.
Raz, J., 2013. Legal positivism and the sources of law. Arguing About Law. 117.
Scarborough, N. M., 2016. Essentials of entrepreneurship and small business management.
Pearson.
Sealy, L. and Worthington, S., 2013. Sealy & Worthington's Cases and Materials in Company
Law. Oxford University Press.
Online
Legal systems in UK: Overview. 2018. [Online] Available through
<https://uk.practicallaw.thomsonreuters.com/5-636-2498?
transitionType=Default&contextData=(sc.Default)&firstPage=true&comp=pluk&bhcp=
1>./
Pimlico Plumbers Co. v Smith [2018] UKSC 29. 2018. [Online] Available through
<https://www.magdalenchambers.co.uk/pimlico-plumbers-ltd-mullins-v-smith-2018-
uksc-29-2/>./
Alternate Dispute Resolution for Consumers. 2015. [Online] Available through
<https://www.gov.uk/government/publications/alternative-dispute-resolution-for-
consumers/alternative-dispute-resolution-for-consumers>./
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