Business Law Assignment: Business Structures, Employment, and Torts

This business law assignment explores various aspects of business law, including the selection of appropriate business structures for different scenarios, the determination of employment status, and the application of tort law principles. Part 1 analyzes the suitability of sole trader, Limited Liability Partnership (LLP), and company structures for a musician, a group of architects, and a group of beauticians respectively, considering the benefits and liabilities of each. Part 2 examines the employment status of an individual, Taran, who signed up as a self-employed driver, assessing his situation against the control, integration, and multi-factor tests, along with the mutuality of obligation test, to determine if he is an employee or an independent contractor. The assignment references relevant case laws such as Salomon v Salomon & Co Ltd (1897) (HL), Yewens v Noakes (1881) 6 QBD 530 and Stevenson, Jordan Harrison Ltd v MacDonald & Evans [1952] 1 TLR 101, to support the legal arguments and conclusions regarding the business structures and employment status. The assignment concludes by summarizing the key findings for each section, providing clear recommendations for the business structures and the employment status.

Running head: BUSINESS LAW
BUSINESS LAW
Name of the Student
Name of the University
Author Note

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Part 1
Issue
The primary issue is what may be the most adequate business methods in relation to the
clients mentioned below:-
(a) A collection of a quantum of twenty architects who all desire to form a minor business
for attracting the property developers.
(b) A quantum of three friends who all have recently qualified as and possess the skills to be
beauticians.
(c) A musician with good prospects.
Rule
Sole trader is considered to be the easiest and simplest structure of business for
registration purposes. A sole trader is self-employed and in this kind of business structure one
always works for itself. A sole trader business is registered with the HMRC, which is, ‘HM
Revenue and Customs’. The owner of the sole trader business shall have the entitlement in
relation to the profits and benefits of the business, although he must make the payment of the
taxes. He shall be accountable in relation to the liabilities regarding the business (Robertson
2016).
A partnership is considered to be a business structure where two individuals or
associations or more than two individuals or associations come together and start a business. All
the partners in a partnership share the common intention to earn profits and incomes. The
partners share the benefits, costs, risks, responsibilities and obligations in relation to the
administration and governance of an organization. A partnership in created with the help of a

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partnership agreement. The ration of sharing the profits and the obligations relating to the
partners shall be mentioned in the partnership agreement. A maximum quantum of twenty
partners may be present in a partnership business (Bennett et. al. 2019).
A ‘Limited Liability Partnership’ (LLP) is considered to be similar in relation to a
partnership. However, in this case the accountability of the partner is restricted to the quantum of
money that is invested by them in the business. The registration of LLP must be done with the
HMRC and at Companies House. The incorporation of an LLP can be done with two members or
more than two members. Members may be an organization or any particular individual (Rahman
and Ghadas 2018).
A company (limited company) is considered to be a business structure where the owner
of the business shall be the shareholders and the business shall be managed by the directors. As
stated in the case of Salomon v Salomon & Co Ltd (1897) (HL), the company itself shall be a
distinct legal personality. It shall have its own legal obligations and rights. The company itself
shall be held to be accountable in relation to the operations of the company. The liability
regarding the members and the shareholders shall be limited only up to the value of the shares
that are owned by them. In certain instances, the liability or the accountability of the members
are restricted by guarantee. However, the principle of distinct legal entity of the company may be
lifted by the courts in specific situations, where the directors are involved in any kind of
fraudulent and deceptive conduct that may have caused damage to the company. Such situations
have been perceived by the court in cases such as Gilford Motor Co Ltd v Horne [1933] Ch 935
and Adams v Cape Industries PLC [1990] Ch 433. A company should be incorporated and it
should be registered with the HMRC. Article and Memorandum of Association should be drafted
in order to set the objectives of the company. It may be said that in a private company there may

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be a minimum of 2 members and a maximum of 200 members. A private company should have
at least two directors. In a public company there should be a minimum of 7 members and the
maximum quantum in public companies is unlimited. A public company should have at least
three directors.
Application
The sole trader business method should be applied in the provided situation. Sole trader is
considered to be the easiest and simplest structure of business for registration purposes. A sole
trader is self-employed and in this kind of business structure one always works for itself. The
owner of the sole trader business shall have the entitlement in relation to the profits and benefits
of the business, although he must make the payment of the taxes. He shall be accountable in
relation to the liabilities regarding the business. Hence, it can be said that the musician with good
prospects may engage itself in this business structure, as the business shall be managed solely by
him and he shall be entitled to the profits of his own musical works.
The concept of ‘Limited Liability Partnership’ (LLP) must be applied in relation to the
provided scenario. LLP is considered to be similar in relation to a partnership. However, in this
case the accountability of the partner is restricted to the quantum of money that is invested by
them in the business. The incorporation of an LLP can be done with two members or more than
two members. Therefore, this business structure shall be suitable for the three qualified
beauticians. They shall be able to commence a partnership business having limited
accountability. They shall be able to conduct the business with the common intention of earning
profits.
The company business structure should be applied in the provided situation. A company
(limited company) is considered to be a business structure where the owner of the business shall

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be the shareholders and the business shall be managed by the directors. As stated in the case of
Salomon v Salomon & Co Ltd (1897) (HL), the company itself shall be a distinct legal
personality. It shall have its own legal obligations and rights. The liability regarding the members
and the shareholders shall be limited only up to the value of the shares that are owned by them.
In certain instances, the liability or the accountability of the members are restricted by guarantee.
However, the principle of distinct legal entity of the company may be lifted by the courts in
specific situations, where the directors are involved in any kind of fraudulent and deceptive
conduct that may have caused damage to the company. Such situations have been perceived by
the court in cases such as Gilford Motor Co Ltd v Horne [1933] Ch 935 and Adams v Cape
Industries PLC [1990] Ch 433. Therefore, this kind of business structure shall be adequate for
the twenty architects in order to attract the property developers. Through this business the
architect shall be able to raise the capital by allowing the property developers to make an
investment in their company. The accountability of the architects shall be restricted to the value
of their shares.
Conclusion
To conclude, it may be said that:-
(d) The company business structure shall be adequate for the twenty architects in order to
attract the property developers.
(e) The LLP business structure shall be suitable for the three qualified beauticians.
(f) The musician with good prospects may engage itself in the sole trader business structure.

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Part 2
Issue
The primary issue in the given scenario is what shall be the employment status of Taran.
Rule
The control test may be referred to the degree of control that the employer has in relation
to its employees. In this regard, the case of Yewens v Noakes (1881) 6 QBD 530 shall be
considered to be an important case in relation to the given scenario. In this case, it was stated that
the control of an employer in relation to its workers shall not be restricted to what work must be
done. It shall also include in what way the work should be done.
The integration test or the organization test denotes to the fact that the employees shall be
considered to be a substantial group in relation to the organization. The case of
Stevenson, Jordan Harrison Ltd v MacDonald & Evans [1952] 1 TLR 101 must be regarded as
an important case in connection to the given scenario. In this case, it was stated that the primary
question or query that has to be determined is to what extent is any particular employee
integrated in the business of the employer. If the employee is considered to be completely
integrated in the business of the employer, then he shall be considered to be an employee. It is a
known fact that an independent contractor never gets entirely integrated or become a substantial
part in relation to the business of the employer. It was suggested in the aforementioned case that
an individual shall be considered to be an employee, if the work of that individual is regarded as
an integral part in connection to the business of the employer, even when the employer does not
exercise any kind of control in relation to the employee.

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The multi-factor test is considered to be much wider than the two tests mentioned above.
As per this test, the courts should consider several factors in order to determine that whether a
particular individual would be an independent contractor or an employee. The case of Short v. J.
& W. Henderson, Ltd. (1945) 79 Ll.L.Rep. 271 shall be considered to be relevant case in relation
to the given scenario. In this case, it was stated that four criteria must be ascertained in order to
determine the issue that whether an individual would be independent contractor or an employee.
These four criteria include power to choose, remuneration and wages, right or authority to
dismiss or suspend, and the right or authority to control.
The ‘mutuality of obligation’ test states that both the employee and the employer must
follow an obligation. For instance, the obligation of the employee shall be to perform the work,
and the obligation of the employer to provide the work. As per this test, no contract relating to
the employment may exist if there is absence of mutual obligations. The case of Carmichael v
National Power PLC [1999] UKHL 47 shall be regarded as an important case in connection to
the provided scenario. In this case, the workers signed a statement or a declaration, which stated
that their employment was casual. It was held by the court that the workers shall be considered to
be independent contractors and not employees because as per the declaration, their position in
the organization was casual.
Application
In the given scenario, an individual named Taran established a contract with the company
named Sleek Driving Ltd based on the advertising, which stated that the company wanted to hire
self-employed drivers and the hired drivers shall have the flexibility in connection to the working
hours, vehicles and tax payments. However, after Taran started his work in the company, Taran
understood that the work is more like an employee without any kind of flexibility. He believes

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that he has been misled. He is forced to work as per the instructions of the company, including
wearing a uniform.
The control test shall be applied in the given scenario. This test may be referred to the
degree of control that the employer has in relation to its employees. The case of Yewens v
Noakes (1881) 6 QBD 530 shall be applied in relation to the given scenario. In this case, it was
stated that the control of an employer in relation to its workers shall not be restricted to what
work must be done. It shall also include in what way the work should be done. Therefore,
applying the case in the given scenario, it may be said that the control of the company in relation
to Taran was not restricted to what work had to be done. It also included the way in which the
work had to be done.
The integration test or the organization must be applied in the given scenario. This test
denotes to the fact that the employees shall be considered to be a substantial group in relation to
the organization. The case of Stevenson, Jordan Harrison Ltd v MacDonald & Evans [1952] 1
TLR 101 must be applied in connection to the given scenario. In this case, it was stated that the
primary question or query that has to be determined is to what extent is any particular employee
integrated in the business of the employer. If the employee is considered to be completely
integrated in the business of the employer, then he shall be considered to be an employee. It is a
known fact that an independent contractor never gets entirely integrated or become a substantial
part in relation to the business of the employer. Although, in the given scenario, it may be said
that the work of Taran in the company named Sleek Driving Ltd was very much substantial and
integrated. The work of Taran was essential in relation to the business of the company.
The multi-factor test must be applied in the given scenario. This test is considered to be
much wider than the two tests mentioned above. As per this test, the courts should consider

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several factors in order to determine that whether a particular individual would be an
independent contractor or an employee. The case of Short v. J. & W. Henderson, Ltd. (1945) 79
Ll.L.Rep. 271 shall be applied in relation to the given scenario. In this case, it was stated that
four criteria must be ascertained in order to determine the issue that whether an individual would
be independent contractor or an employee. These four criteria include power to choose,
remuneration and wages, right or authority to dismiss or suspend, and the right or authority to
control. Therefore, applying the case in the given scenario, it may be said that considering the
aforementioned criteria, Taran had no choice of his own. The working hours, wages, and
dismissal or suspension, everything is under the control of the company, contrary to the
advertising by the company, upon which the contract had been established between Taran and
the company.
The ‘mutuality of obligation’ test shall be applied in the given scenario. This test states
that both the employee and the employer must follow an obligation. For instance, the obligation
of the employee shall be to perform the work, and the obligation of the employer to provide the
work. As per this test, no contract relating to the employment may exist if there is absence of
mutual obligations. In the given scenario, the company had the obligation to pay Taran and
Taran was obligated to do the work. The case of Carmichael v National Power PLC [1999]
UKHL 47 shall be applied in connection to the provided scenario. In this case, the workers
signed a statement or a declaration, which stated that their employment was casual. It was held
by the court that the workers shall be considered to be independent contractors and not
employees because as per the declaration, their position in the organization was casual.
Similarly, in the given scenario, the contract relating to the employment of Taran stated that the

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work would be flexible and the workers shall have the freedom to choose. However, in actuality,
there was no flexibility at the workplace. Taran had to follow the directions of the company.
Conclusion
In conclusion, it may be said that in the given scenario, the employment status of Taran
would be that of an employee and not that of an independent contractor.

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Part 3
In order to receive a grant of patent under the Patents Act of the year 1977, the inventive
work must fulfill the following conditions:-
 The patent should be new. The inventive work should not be public knowledge. No other
individual should be aware in relation to the inventive work, except the individual who
performed the work and who may apply for a patent.
 The patent should encompass an inventive thing or precision. The inventive work should
not be merely an obvious advancement regarding anything, which may already be known
by the general populace.
 The patent should be capable of being utilized and created in connection to any market or
industry, which shall include agriculture.
 The patent should belong to the excluded category. Such excluded category encompass
works such as art, mathematical methods, scientific theories and other presentation
relating to information (Trimble 2016).
There are several likely disadvantages and advantages in relation to patents. While deciding
to make an application for patent, one must look at the invention and reflect upon or deliberate
the risks and dangers relating to the scenario of not patenting the invention.
Advantages regarding Patents
 A patent delivers the right and authority to stop other individuals or organizations from
manufacturing, copying, importing or selling the invention without any kind of
permission.

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 Patent provides protection for a time period that is pre-determined period, keeping the
competitors far away.
 One may utilize the invention itself.
 One shall be able to license the patent, so that other shall be able to utilize. One may also
sell the patent. This may create a significant source for income in relation to business.
Undeniably, certain businesses are present that accumulate royalties from a specific
patent that has been licensed (possibly in amalgamation with a trade mark and a
registered design).
Disadvantages regarding Patents
 The application for patent shall mean making specific technical data and facts regarding
the invention available to the public. The secrecy of the invention helps to keep the
competitors far away from the thing invented.
 Application in connection to a patent might be a lengthy process as well as time-
consuming (naturally three years or more). The markets might alter or modify, or
technology might surpass the invention during the time that would be taken to obtain the
patent.
 The patent shall cost money, irrespective of one being successful or unsuccessful. The
application in relation to the patent, explorations regarding any existing patent, and the
fees for the attorney of the patent, may contribute to a sensible expenditure. It may also
be said that every patent does not have a financial worth or value.
 Annual fee must be paid in order to avoid the lapsing of the patent.

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 Implementing action in order to defend the patent against any individual who may have
infringed the patent might be expensive. Although, it may also be said that a patent may
act as a warning or preventive measure, which may make the defense unnecessary
(Przygoda 2019).

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References
Adams v Cape Industries PLC [1990] Ch 433.
Bennett, R.J., Smith, H., Van Lieshout, C. and Montebruno Bondi, P., 2019. Identification of
business partnerships in the British population censuses 1851-1911 for BBCE.
Carmichael v National Power PLC [1999] UKHL 47.
Gilford Motor Co Ltd v Horne [1933] Ch 935.
Patents Act, 1977.
Przygoda, A., 2019. The International Registration of Trade Marks under the Madrid System:
Advantages and Disadvantages. Eastern European Journal of Transnational Relations, 3(1),
pp.67-79.
Rahman, H.A. and Ghadas, Z.A.A., 2018. The Evolution of Partnership Structure; Special
Reference to Governance Legal Framework for LLPs. PROCEEDINGS–ICLG 2018, p.511.
Robertson, J., 2016. A proportionate approach to accreditation for sole traders and small-to-
medium providers of forensic services—a UK versus Australian perspective.
Salomon v Salomon & Co Ltd (1897) (HL).
Short v. J. & W. Henderson, Ltd. (1945) 79 Ll.L.Rep. 271.
Stevenson, Jordan Harrison Ltd v MacDonald & Evans [1952] 1 TLR 101.
Trimble, M., 2016. Patent working requirements: Historical and comparative perspectives. UC
Irvine L. Rev., 6, p.483.

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Yewens v Noakes (1881) 6 QBD 530.