Business Law Report: UK Legal System, Business, Dispute Resolution

This report provides a detailed analysis of business law within the UK context, exploring its application to various business organizations and operational aspects. The introduction defines law and its different types, emphasizing the significance of business law. Task 1 delves into the English legal system, its principles, sources, and the role of government in lawmaking, using a case study of Kango to illustrate these concepts. Task 2 focuses on employment law, differentiating between employed and self-employed statuses, referencing the Pimlico Plumbers case, and highlighting the implications of each. Task 3 examines different types of business organizations, including sole proprietorships, limited companies, and partnership firms, outlining their characteristics and financial aspects. Finally, the report concludes with a discussion on dispute resolution methods, emphasizing the importance of understanding the legal framework for businesses to ensure compliance and avoid legal issues.

Law

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................3
TASK 3............................................................................................................................................4
TASK 4............................................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Law refers to a system which consists of rules which are enacted by government for
regulating acts of individuals and organizations with an objective to provide justice. There are
different kind of laws that exist in a legal system such as public and private law, common and
statutory law and many more (Baker, 2019). Each of them has their own procedure and scope of
applicability. This report is prepared to show how business law is applicable to a business and
how its impact an organization. In addition to this, main principle of legal system in UK, sources
of law, role of government in law making, difference between employed and self employed is
explained through a case study. Furthermore, various types of business organizations and from
what sources it can raise money and disputes resolution solutions which can provide a conclusion
out of court settlement have also been provided.
TASK 1
The case is about an entity named as Kango formed by Jay and Alex in 2016 with the
main business of home delivery of meals. It was established at a busy location in London and
was expanded to other areas after earning profit. However, there occurred a time in which it
started to receive many complaints from its customers regarding the food delivered by it.
Therefore, the organization is of the opinion that staff should be given the knowledge about
English legal system and related aspects.
English legal system is applicable throughout UK which is made upon the constitution.
There are courts and judges based on hierarchy in which superior courts have higher authority
whereas inferior courts have limited authority for making a decision in a case. It is based on
common law which works in doctrine of judicial precedents, according to this, a case having
same facts and issues are resolved with the application of previous case. There is no creation of
new law (Clarkson, Miller and Cross, 2014). The main principle is parliament is sovereign which
means that only Parliament has the power to enact or repeal a law. Nothing can challenge the law
enacted by Parliament because a law is implemented after a detail review and examination of all
the areas. These are for the betterment of a society and to enhance the effectiveness of a
legislations applicable in a country.
The principle, parliament is sovereign states that there is a centralised structure that is
followed in the country. The positive aspect is that, there is no mess or confusion as decision is
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taken by the Parliament only. This mitigates intervention of different courts which may give rise
to various new disputes and conflicts. Therefore, it is effective enough to understand which act
would serve its needs and provide justice by maintaining law and order. Apart from this, there is
set procedure which is followed for passing a bill in order to apply it as a law which is as
follows:
First reading: The bill passing process starts here wherein the bill is introduced.
Second reading: A debated with a discussion on the bill is held but modifications are not
made followed by voting (Bill passing process, 2019).
Committee stage: Detail discussion and amendments are done in this stage which is
usually a long procedure.
Report stage: The report prepared by committed on the basis of review is sent to the
house whereby they vote on each modifications.
Third reading: This is the time in which final debated is held whereby votes are taken.
Royal assent: The bill passing is closed here by receiving the assent of the queen which
turns a bill into an act. From this day the legislation is enforced.
Every business should adhere to laws which are applicable to it so that fines and
imprisonment can be avoided. Therefore, to know which law came into existence which may be
applicable to business, different sources may be accessed which are as follows:
a). Case law: Judgement passed by the courts are contained in a report form based on:
Common law- This is the main foundation on which the legal system in UK has been
developed. It has evolved with time on the basis of customs and cases. The main principle on
which it works is doctrine of judicial precedents in which judgement made by higher courts are
binding on lower courts. It gets updated with every case being made.
b). Legislation: This is about rules and statutes implemented by UK Parliament for
governing rights and acts of individuals. Every bill is to be passed by House of Lords and House
of Commons followed by an assent of the queen. Since, the Parliament hold the supremacy in
passing the law, it has equal power to repeal any law which it not appropriate according to it
(Goldberg, and et. al., 2014).
c). European law: European Union directives are compulsory to follow for conducting
the trade freely. UK is a member country in EU which has taken away the supremacy held by the
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the Parliament. These are important to understand as without know there applicability, trade can
face difficulties.
TASK 2
Kango's workers are claiming that they should be treated as employees instead of self-
employed because of the facts which have similarities with Pimlico. Pimlico Plumbers is a
company employs self-employed workers for carrying its work. There was a worker named
Garry Smith who was self-employed for six long years (Pimlico Plumbers case, 2019).
According to him rest of self-employed workers, they should be given the status of a employee
rather than self-employed. In order to get justice, he filed a petition in Employment Tribunal
which passed judgement putting down his contentions. He became aggrieved with this so filed an
appeal in appellate tribunal. To get the status of an employee. The appeal was rejected and the
judgement stated that, self-employed workers will remain self-employed only.
The last option which Garry had was to file a petition in supreme court which is the
highest court in any legal system. The judgement passed by the Supreme Court is still considered
a benchmark judgement which passed passed in favour of Garry and other self-employed
workers. Supreme court stated that, Pimlico Plumber had strong and rigid administrative control
over Smith. Furthermore, there were number of conditions which were imposed on him, these
included the amount which is to be paid, uniform that is to be worn, how there appearance would
be. Along with this, there is a restriction that if a self-employed worker wish to move from the
company and start working in a rival firm, then he can not do so. All these changed the
relationship between the company and its self-employed workers. There was a dominance in this
relationship which in the opinion of Supreme Court. The other element was that a self-employed
worker in Pimlico Plumber can not pass on the work another contractor as a substitution even in
presence of this right. This status of a worker or employee should be clear from the beginning
otherwise there could be disputes and conflicts (Jelsma and Nollkamper, 2017).
When a person is employed on freelance basis i.e. self-employed then an organization
cannot impose any restrictions on its workers. They are free to do their work as per their wish
also there is no conditions regarding leaves, minimum wage, switch etc. However, these
conditions become instructions and code of conduct if a person is appointed as an employee. An
employee has to wear uniform, carry identity card, follow code of conduct, serve notice period
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before moving out of the company etc. These become imperative for every individual working as
an employee to follow the rules and regulations otherwise they become liable for termination.
Along with this, there are certain rights of employees such as paternity and maternity,
paid, sick etc. which is provided in laws relating to employment. These are not available in case
a person is works on self-employment basis. Also, a contract of service or employment is
required to be executed which comprises of terms and conditions on which employee has to act
and exceeding them will make him/her liable for termination (Kaya and Vereshchagina, 2014).
There is a huge difference between employed and self-employed which should be
understood so that no case or law suit against the employer is filed. A difference has been drawn
which is as follows:
Employed- A person in the employment is paid every month, thus there is regularity in
income. Also, there are chances for employees to explore more ways in which they can have
professional development. There are benefits and perquisites which can be availed by an
employee only. But there is no flexibility in work because it has to be carried according to the
policies, objectives and guidance of the company. There is high chance to get involved in
workplace disputes and conflicts which may affect the working.
Self-employed- The rates of tax are less as compared to the tax which has to be paid in
employment. Leaves can be taken without any limitations because the work is carried on
freelance basis. Self-employed worker has the right to choose the work according to his ease and
choices. There is flexibility in work which can be carried without any imposition of rules.
However, the timings of work could be irregular thus, income is not regular. Lack of
employment rights which is a negative point in this (Difference between employed and self-
employed, 2019).
TASK 3
Business involves many activities which are required to be carried in order to make it
successful and to earn profit. However, the type of business organization that is chosen for
starting a business is very important. It should be selected carefully and after analysing all the
details and areas. Thus, different types of entities in which business can be carried are as follows:
 Sole Proprietorship: In this business type, owner who is also know as sole trader or sole
proprietor has the absolute administration. There is no difference between the entity and
the owner also, no registration is required unlike company. Profit and loss are not shared
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as the sole person has all the authority and rights to retain the profit and also the loss is
borne by him only. It is easy to establish and dissolve as there are no rules and
formalities. Generally, the size of business is small and the identity of owner becomes the
entity of entity. Tax is also pain only once on the income of entity and the rate applicable
is individual tax slab. It has limited sources for raising financial capital because investors
search for organizations in which their investment can be multiplied (Miller, 2012).
 Limited company: An association which is called body corporate is usually formed by
members. There is a separate legal identity between the company and its members also it
has perpetual succession. Common seal is also there which works as signature on
documents, contracts etc. A company is limited by either shares or guarantee. In former,
the liability is to the extent of unpaid nominal amount on share held by a person and in
latter, a specified amount is undertaken or guaranteed in MOA which is to be contributed
at the time of company being wound up. The set up cost is usually high which makes it
expensive to incorporate. It involves high paperwork, legal implications, more formalities
such as holding meetings, filing returns etc. But the taxation rate is favourable and it has
many options open for raising funds such as share, debentures etc.
 Partnership firm: It is an entity which is formed by two or more partners together to
carry a business for making profit. The business has to be lawful otherwise a partnership
firm cannot be established. Furthermore, a deed should be executed between partners
which will govern them. The procedure to form a partnership firm is simple and
inexpensive. Also, there is no compulsion to register the firm but it can be registered t
avoid any disputes or conflicts (Reimann and Zimmermann eds., 2019). Decisions are
made by partners by getting approval from all partners. Also, they are severally and
jointly liable for the acts of other partners. Furthermore, the liability can extend to their
personal assets in case debts of the firm is not paid.
 Limited Liability Partnership (LLP): It is a combined form of a partnership firm and
company which is managed by partners as they have flexibility in management. Along
with this, their liability is also limited which saves them from selling off their personal
properties if debts of LLP is not met. This type is suitable for professional like advocates,
chartered accountants, compliance office etc. It can raise funds from many sources which
can be retained earnings, personal savings, contribution by partners, crowdfunding, loans
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from banks or financial institution. The management is easy because the structure can be
modified according to the need.
A company should be registered as investors show their interest in making investment in
registered corporate because there is a security as case can filed against any misshapen such as
frauds etc. Every company which is incorporated in UK is required to get registered under
Companies Act, 2006 as without registration a company cannot come into existence (Tushnet,
2017). There is a procedure which has to be followed for getting the company registered which is
as follows:
 Application along with name of the company should be filed with Companies House.
 There are other documents which should also be accompanied which are as follows:
MOA and AOA
Consent of director
Subscription of shareholders
And other reports.
 Every registered company should give notice of its address to Companies House so
that further communication can be done.
TASK 4
In this case, K has engaged in a legal dispute with their IT suppliers which has resulted
into litigation which is time consuming and expensive process for resolving a difference. There
are number of ways in which a dispute can be resolved without going to a court. These are as
follows:
 Negotiation- It is a simple process in which a communication between both the parties
are held for working towards finding a conclusion. This is the first method which should
be given preference in settling any dispute. There is no involvement of third party and
parties deal with each other in a direct manner (Rasch and Tsebelis eds., 2013). This
method is useful as there are no rigid rules which are applied on resolving them.
Furthermore, the case in which it is applicable comprises of disputes of shareholders in
merger and amalgamation, board room dispute, etc. Terms and conditions are modified
according to need of parties so that a common solution can be ascertained which can be
applied. This method can be understood easily because of its simple techniques. This will
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not provide any help to K as suppliers may not find this method helpful because there is
no third party who can provide a judgement without being affected by anything.
 Mediation- This method is used when negotiation failed to provide a workable solution.
While using this method, a third party is appointed to be called as mediator who assist the
parties in having a communication with each other. There is no such activities in which a
judgement by mediator is given and parties reach the place which is decided by mediator
to discuss the matter. There is a two way communication in front of the mediator where
he tries to help them brining out their arguments (Craig, 2015). It is also simple, easy to
use. It is voluntary in nature which can be modified according to requirements. This
method is also not appropriate to use due to the fact that solution could be biased because
mediator only helps in communication, there is no invention of third party in giving a
judgement.
 Arbitration- This is the most appropriate method for resolving disputes wherein a third
party is appointed who is called arbitrator. Arbitrator applies his own knowledge,
intelligence, and skills to find out a solution. There is a specific procedure which is
followed in this by the arbitrator. Also, parties are required to submit evidence and
witness to prove their statements so that a judgement in their favour can be issued. It is
cheap, quick, and accurate method and the award so given by arbitrator can be relied
upon. This method can be applied to every types of situations for getting a conclusion.
The conclusion so obtained by arbitrator is final and binding on parties. This can not be
taken into courts for putting questions on this because the order is final (Lipton, Herzberg
and Welsh, 2014).
The method which can be applied by K is arbitration in which a third party with the
consent of both the parties can be chosen to listen to arguments of parties for making a
conclusion. Since, a third independent person is there a third person who has the authority to pass
a judgement which is not affected by any evidence or arguments. Thus, it can be relied upon.
CONCLUSION
From the above report, it has been concluded that law is rules which should be there in a
legal system to govern acts of people living in UK. There are number of sources which should be
used in obtaining the laws which are applicable. Along with this, role of government in law
making and main principles of legal system, difference between employed and self-employed
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have been explained. In addition to this, different types of organizations particularly registered
company and dispute legal solutions have been discussed to avoid going to court for getting a
conclusion.
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REFERENCES
Books & Journals:
Baker, J., 2019. Introduction to English Legal History. Oxford University Press.
Clarkson, K.W., Miller, R.L. and Cross, F.B., 2014. Business Law: Texts and Cases. Nelson
Education.
Goldberg, S.B., and et. al., 2014. Dispute resolution: Negotiation, mediation and other
processes. Wolters Kluwer Law & Business.
Jelsma, P.L. and Nollkamper, P.E., 2017. The limited liability company. LexisNexis.
Kaya, A. and Vereshchagina, G., 2014. Partnerships versus corporations: Moral hazard, sorting,
and ownership structure. American Economic Review. 104(1). pp.291-307.
Miller, R.L., 2012. Cengage Advantage Books: Fundamentals of Business Law: Excerpted
Cases. Nelson Education.
Reimann, M. and Zimmermann, R. eds., 2019. The Oxford handbook of comparative law.
Oxford University Press.
Tushnet, M., 2017. Comparative constitutional law. In The Oxford handbook of comparative
law.
Rasch, B.E. and Tsebelis, G. eds., 2013. The role of governments in legislative agenda
setting (Vol. 71). Routledge.
Craig, P., 2015. UK, EU and global administrative law: Foundations and challenges. Cambridge
University Press.
Lipton, P., Herzberg, A. and Welsh, M., 2014. Understanding company law (Vol. 16). Thomson
Reuters.
Online
Bill passing process. 2019. [Online]. Available through:
<https://www.gov.uk/guidance/legislative-process-taking-a-bill-through-parliament>.
Difference between employed and self-employed. 2019. [Online]. Available through:
<https://www.monster.co.uk/career-advice/article/differences-between-being-self-
employed-and-employed>.
Pimlico Plumbers case. 2019. [Online]. Available through:
<https://www.supremecourt.uk/cases/uksc-2017-0053.html>.
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