Business Law Report: UK Legal System, Business Forms, and Disputes

This report provides a comprehensive overview of UK business law, covering the sources of law including legislation, directives, case laws, and treaties. It analyzes the role of the government in law-making and the impact of various laws such as contract law, competition law, data protection law, and employment law on business operations. The report further explores the formation of different types of business organizations, differentiating between unincorporated structures like sole traders and partnerships, and incorporated entities such as public and private limited companies. Additionally, it examines legal solutions for resolving a range of business disputes. The report includes a detailed comparison of civil and criminal law, and also provides a court structure in the UK.

Unit 7- Business Law

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
P1 Different sources of law in UK..............................................................................................1
P2 Role of government in law-making.......................................................................................4
P3 Impact of different laws on a business...................................................................................4
P4 Formation of different types of business organisation in legal form.....................................5
P5 Management and funding of different form of business organisation...................................7
PART 2............................................................................................................................................8
P6 Legal solutions for resolving range of disputes.....................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Law is defined as set of rules and regulations that are implemented and enforced through
governing institution in a country so that behaviour of individuals and organisations can be
regulated in well defined manner. Laws in a country is established with a mix of science and arts.
English legal system is one of the oldest and laws in UK are created by the legislature. The most
important pieces of legislation are act of parliament. In UK legal system is comprised of different
laws that are designed to deal with a particular group or an issue. Business law defines set of
laws through which each form of commercial organisation is governed (Beattie and Smith,
2013).
In this project report basic nature of legal system in UK is defined with potential impact
of the law on a business. As per business law formation of different types of business
organisation and appropriate legal solutions to resolve different areas of dispute is discussed in
this project report.
PART 1
P1 Different sources of law in UK
A legal system is referred as process through which rules and regulations that needs to be
implemented or enforced by law is defined. In UK legal system is administrated by England and
Wales courts which provides regulations in relation to civil, criminal and common laws. Purpose
for which a legal system is established is to bring governance in the economy. As offences
against a federal, state or local community subject to any law will help to punish an offender
when legal system is available and defined in the country. When laws are established they must
accomplish the purpose of their establishment such as establishing standards, maintaining law
and order, resolving disputes and protecting rights and liberties of each citizen in UK. Formation
of laws was started even before any record of history was made. These laws were formed on the
basis of disputes that arises in the society (Blair and Stout, 2017). Slow and study changes are
made in legal system and law formation on the basis of changes that are taking place around.
From that time till now legal system is evolved for betterment. Their are several sources in UK
legal system that are considered for formation of laws. Some of the sources are defined as
follows-
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Legislation: These are the laws that are implemented by the governing body in a country.
In UK parliament based in London is considered to be the legislative body that possess all the
power for formation of laws for England, Wales, Scotland and Northern Ireland. In parliament a
proposal to become a law needs to be approved with house of common and house of lords with
royal consent.
Directives: As UK is the member state of European union and all the laws applied by the
union on member state become a source for UK law (Cane and Atiyah, 2013). Directives are the
laws that are implemented by the union to accomplish a particular objective and is a good source
of law.
Case laws: A law report is published which determine decisions of the court that are very
important and one of its kind. These decisions become basis to resolve issues in the same context
for future. They are termed as one of the important source through which laws in UK is defined.
Treaties: These are the written agreements that are entered among to countries in relation
to a particular situation. For example- business treaty of UK with America is one of the source
through which business law is established in UK.
Difference between civil law and criminal law-
Basis Civil law Criminal law
Meaning Laws that are formed to
resolve disputes take place
among individuals and various
organisations.
Criminal law deals with
offense committed by an
individual against society as a
whole.
Purpose Civil law is established to
bring sustainability in the
rights.
Criminal law is implemented
to maintain law and order in
the country.
Matter considered Harm and violation to rights of
an individual.
Actions that are considered as
offense as per law.
Results This law provide remedy to
compensate.
Punishments are provided for
offense.
Power of court Implementation of charge for
damages.
Imprisonment, fine and
discharge is applied on guilty
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person.
Court structure in UK-
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Source: Court Structure in UK, 2019
P2 Role of government in law-making
Government in UK is termed as supporting body which helps parliament for formation of
laws and regulations applicable in UK. Parliament only formulas laws and its implementation all
lies in the hands of government. In the process of implementation of laws and various other legal
regulations in the country various flows are recorded by government in the legal system. Each
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Illustration 1: Court Structure in UK, 2019

situation is analysed by government officials and head of the departments are reported with the
same (Court Structure in UK, 2019). A group of qualified professional is appointed by
government in UK to access the whole scenario on the basis of facts and figures available for the
same. Government after analysing the whole scenario finds it important that certain law needs to
be passed in this relation then a draft is filled with parliament. Both the houses of parliament
checks viability of the draft and then a decision is made with royal consent. For example- A to
generate more government revenue rate of tax needs to be modified then a draft will be filled to
parliament to make such changes in the law. Officials in the parliament will analyse impact of
the new law on general public and on economy. After first, second, third reading and report and
committed stage formation of law takes place.
The structure of the organisation of the judiciary covers some defined areas that are as
follows-
 The judicial executive board
 The tribunal judicial executive board
 Judges council
 Allocation of responsibilities in day to day operations
 Judicial responsibilities
 Court and tribunal organisational structure
P3 Impact of different laws on a business
Business operations are conducted in an economy where individuals and different
organisations are present. While performing any activity number of actions are performed that
involves different individuals (Felipe and Kumar, 2014). To legalise operations performed in UK
a business unit together with business laws several other laws needs to be complied with. This
will help to maximise efficiency as legal hurdles will be minimised for non compliance. Some of
the laws that needs to be followed are defined as follows-
Contract law: In the process of conducting day-to-day business operations such as
purchase, sale. delivery and payment umber of contractual agreements are made by businesses to
third party. These formation of contracts must follow contract laws so that legal contracts is
entered by both the parties. All the elements and terms of the contract are as per contract law so
that a business can operate legally at national and international level.
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Competition law: Businesses in UK while operating needs to consider rules and
regulations implemented by Competition Act 1998. As per this law no business organisation is
allowed to take advantage to unfair competition (Friedman, 2017). No anti-competing
agreements, price controlling. Refusal of deal will be allowed in legal format of a business.
Data protection law: In UK Data Protection act was implemented in the year 1988. AS
per this law a business organisation that possessed personalised information for their consumers
in their computers are not allowed to share that information with any individual. This was done
to ensure safety of general public.
Tort of negligence: As per this law each business organisation must take reasonable care
so that any individual and organisation is dealing with business must not damaged in any
situation.
Consumer protection Law: As per this law each consumer is protected against unfair
trade practices and ban misleading sales tactics. This law give rights to each consumers to get
fair trading reporting and receiving correct information in relation to a product.
Employment law: This law in UK exists to regulate the relationship between businesses
and their employees. This law is followed by businesses to ensure hiring process, dismissal
process and regulations at workplace for employees must be fair to avoid any legal compliances
for violation of laws.
Company law: Businesses that are established in UK as company needs to follow
company law in the process of formation, rising of capital, appointment of director, registration
etc (Haley, 2017). Following all the rules and regulations as per company law will business a
separate legal entity in the eyes of law.
P4 Formation of different types of business organisation in legal form
In the process of establishment of a business entity there are number of options available.
Selection in which form a business will be established can be made among two major criteria i.e.
unincorporated and incorporated business structure.
Unincorporated business: A business structure where business is not registered as a
separate legal entity. In this form of business structure business and owner are consider as one
and the same and no legal registration takes place. All the risk and rewards are that of the owner
and liability is unlimited and personal assets of owner can be used to met business liabilities. For
example- sole trader and partnership (Heminway, 2013).
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 Sole Trader: Large number of businesses are registered as sole trader at initial state as
this is one of the simplest form in which a business can be started. All the capital
investment in business is done by a single person who is owner and takes all the risk to
get return. All the operations are performed by one persona and responsibility for
business is that of the owner.
 Partnership: This is a form of business organisation in which two or more individuals
comes together with a same objective to earn profits by performing allocated roles and
responsibilities. Risk and reward in the business belongs to all the partners in profit
sharing ratio. This form of business is governed as per agreement and partnership deed
signed by all the partners. No separate legal existence is provided to business different
form its owners.
Incorporated business: Businesses that are registered as a separate legal entity distinct
form its owners is incorporate form of business. Business organisation is different form its
owners and can sue and be sued in the process of business operations. This form of business
enjoys certain benefits such as limited liability, perpetual success, separate legal entity etc.
Companies are one of the best example for incorporate business form (Jadhav, 2012).
 Registered company: When a business is registered with companies house and possess a
unique number then this form of business is termed as company. A registered company
possess separate legal entity and liability of owners is limited up to capital contribution
made by them. Registration of companies can be made in form of public and private,
limited and unlimited. These are described as-
Public Limited and Private Companies:
Basis Public Limited Company
(PLC)
Private Company
Number of directors At least 2 directors must be
present.
A private company can come
into existence with one
director only.
Company Secretary It is mandatory for PLC to
appoint CS.
No CS is required to be
appointed.
Annual meetings It must be held within 6 No requirement to held AGM.
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months of the financial year.
Share capital requirement Minimum share capital is
required which is mentioned in
the memorandum.
No minimum share capital is
required.
Financial accounts Submission must be done
within 6 months form end of
financial year.
Submission must be done on 9
months.
Limited Company: Formation of a limited companies provides financial security to
owners as their liability remains limited to capital contributed.
Unlimited Company: Owners in this form of company formation are exposed to
unlimited amount of potential loss and their liability remains unlimited.
P5 Management and funding of different form of business organisation
Sole trader: As this form of business is operated by owner so all the operations and
decision making power in relation to management lies with a single person. Skills and ability of
owner is used to manage the operations (Mukhopadhyay, 2016). Funding of a sole trader
business is done through capital contribution of owner and loans taken form financial and non-
financial institutions. It is difficult to generate more finances for sole trader as less reliability on
single person.
Partnership: Management of operations for partnership business lies with all the active
partners. They mutually decide the role and responsibility they are going to perform on the basis
of skills and ability possessed by them. Operations are conducted more appropriately as they are
managed with more number of persons. Funds to a partnership business is available through
capital contribution of all the partners and together with this financial institution prefer
partnership business then sole trader to provide finances.
Company: In a registered company power to manage operations lies in separate hands
from that of owners. Management in a company is done through directors who are appointed as
per companies. Name of first director in a company is mentioned in the memorandum and after
that directors are appointed in AGM by shareholders. Company secretary in an organisation
helps to manage legal operations such as registration process or compliance with any legal
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requirements. Auditor helps to manage books of accounts of business by analysing it and
representing correct financial performance (Pierce and Fox, 2012). Funds in a company is raised
through issue of shares to public at large and also with loan and advances form financial
institutions and banks.
PART 2
P6 Legal solutions for resolving range of disputes
Case 1: Gordon works as a salesman in Orange Computers Ltd store and in his
employment contract annual salary £10,000 and a commission of 9% on sales is mentioned. In
the last three years an average of £11,000 is received as commission. In 2015, due to competition
business is affected negatively and manager as Gordon to forgo salary for 2015, 2016 and 2017
by accepting only commission. Gordon accepted the variation in the contract and in the year
2016 when economy started to establish profits started to be incurred. Gordon now wishes to
receive wages for the year 2017 and also for 2015 and 2016.
This issue will be resolved through contract law and as per variation clause in contract
law, changes will be permissible only when both the parties are agreed with changes. In the
present case variation to forgo salary was made on the basis that financial condition of Orange
Computers Ltd was poor (Pittroff, 2014). Gordon forgo salary for survival of business and in
case financial conditions become stable then salary must be provided to him. In the present case
for the year 2017 he is liable to receive his salary. For past year i.e. 2015 and 2016 salary a case
can be filled to take legal order to receive salary or both the parties can take support of Dispute
Resolution Panel. Through mediation a solution on which both the parties are agreed is selected
without approaching to court for the same.
Case 2: A internet package of £35 per month including line rent of £11 was initiated by
Janet. An engineer was send by Virgin Media for installation, he could not find the switchboard
and suggested that he will come with supervisor for the same. He never returned and after many
calls and emails installation takes place after 3 weeks. Now Janet was charge for the whole
month but she pleaded that only rent can be charged for the whole month but charges for
package will be mentioned after 3 weeks only when installation takes place.
This issue will be resolved through contract law regulations. As per contract law
completion of a contract is necessary to charge the full price as per agreement. In this case Virgin
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media not do completed installation process and Janet was not in default. So changes for internet
package must be charged after 3 weeks only even if the rent is charged form starting. To resolve
this case without intervention of the court Dispute resolution will be considered. Collaborative
divorce facility will be used so that specific terms and conditions will be added to contract for
completion.
Case 3: Black Hours Limited a security organisation suffered bad debts from one of its
main customer for £100000. In coming three years cash flow of the organisation gets disturbed
and repayment period got starched. One of the creditor of the organisation fills winding up
petition due to non payment.
The issue will be resolved through policies in relation to winding up in companies law.
When demand for payment is made and no satisfactory answer is provided to creditors and 3
weeks passed then in that case winding up petition can be filled in the court (Roxas, Chadee and
Erwee, 2012). The issue can be resolved with formal manner through decision of court. Together
with this Alternative Dispute Resolution is also available to avoid legal compliances.
Arbitration method can be adopted in this case and a qualified judge who is not related with
parties is appointed to resolve the case on priority basis. Most appropriate solution will be
provided by arbitrator which is binding on the parties involved. Through this method a security
for payment can be provided to creditors and business operations can be continued.
CONCLUSION
From the above project report is has been concluded that laws and regulations that are
implemented in a economy is important to maintain law and order. Laws are form on the basis of
various sources available and keeps on modifying to meet the requirements of the changing
environment. Government in UK plays significant role in formation of laws and helps in
implementing laws and policies formed in parliament. Business law guides all form of business
units and their formation in UK. Management and funding of incorporated and unincorporated
business and different forms of companies are done as per business laws and various other laws
implemented on business organisations. Disputes are resolved in court structure or through
Alternative Dispute Resolution which ever is most suitable to the parties involved in the issue.
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