Fairfield School of Business - Business Law Assignment Report

This business law assignment report delves into the intricacies of the UK legal system and its impact on businesses. It begins by outlining the sources of law in the UK, including common law, statutory law, EU law, and the European Convention on Human Rights. The report then explores various laws organizations must comply with, such as contract, employment, consumer, and competition law, and the role of the government in law-making. The application of statutory and common law in justice courts is discussed, followed by an evaluation of the legal system's effectiveness and recent reforms. The assignment further examines the impact of company, employment, and contract law on businesses, providing advice on specific business scenarios. Finally, it analyzes the impact of regulations, legislations, and standards on business operations, offering a comprehensive overview of business law in the UK.

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

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Table of Contents
Task 1.............................................................................................................................2
Task 2.............................................................................................................................5
Task 3.............................................................................................................................7
Task 4.............................................................................................................................9
References....................................................................................................................12

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Task 1
The Legal System of the United Kingdom is mainly controlled by the Parliament and
the Crown where it is the Parliament that passes the law and the Crown gives its royal assent.
Different Sources of law in the UK
In the United Kingdom, there are four major sources of law: the Common Law,
Statutory Law or Legislation, European Union Law and the European Convention on Human
Rights (GOV.UK 2019). The main legal system of England and Wales is the Common law
system which makes the judgment of the senior Appellate Court a part of the law. Legislation
is the law which has been made by the Legislature or the Parliament which are the Acts,
Regulations and other statutory laws. UK being a member of the European Union (EU)
follows the EU laws as precedents (judge-made laws). UK being a signatory member of the
European Convention on Human Rights (ECHR), follows the Human Rights Act 1998
thereby protecting the rights guaranteed under the ECHR (GOV.UK 2019).
Laws that organisations must comply with
Organisations that are running a business must comply with the following laws:
 Contract law
 Employment law
 Consumer law
 Competition law
The law of contract lays down the essential requisites that make an agreement a valid
contract which is enforceable by law. An organisation having employees must observe
employment law for tackling the issues related to minimum wage, leave, termination of
employment, pension, et cetera. Consumer law guides an organisation in case it is sell goods
or services and handles consumers. Lastly, it is important for business concerns and profit

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based organisations to follow competition law in order to be aware of the fair competition
policy and anti-competitive activities.
Role of government in law-making
It is the Parliament which is the Legislature of the UK that makes law in the country.
The government cannot make laws or collect new revenue without the permission or
agreement of the Parliament. The Parliament, divided between the House of Common and the
House of Lords, develops draft laws as well as reviews, amends and passes them. It is the
Member of Parliament (MPs) who can introduce a draft law in the Parliament which then
passes through several committees to get the final royal assent. The staffs of the Parliament
must be well-versed with legal drafting as well as reviewing legislative processes in order to
be able to review the process of law-making.
Application of statutory and common law in the justice courts
A common law is the law that is being made by the court of justice while the statutory
law is the one that is being followed by the justice court. Statutory laws are the ones that has
been made by the legislature and therefore it has a wider application and jurisdiction over the
justice courts. Common law gives the basic instruction as to form the decision of the court
while it is the statutory law that prescribes the best rule laid down by the legislature through
its statutory regulations.
Effectiveness of legal system in terms of recent reforms and development
The United Kingdom has been through a tremendous legal reforms over the past 15
years which could be demarcated by two phases, the first would be by the Labour
administration under Tony Blair and David Brown government from 2000 to 2010, while the
second would be by the Conservation administration under David Cameron since 2010
(Davis and Trebilcock 2001).

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The first phase saw the creation of Ministry of Justice and making it responsible for
various responsibilities which were dealt by other departments before. The Supreme Court
was formed by restricting the House of Lords from exhibiting judicial functions. Tribunal
Service and Judicial appointments Commission was formed. Legal service Board and Legal
Services Ombudsman was formed for regulating legal services. While the second phase gave
effect to an important transformation by abolishing local police authorities and creating
Police and Crime Commissioners. Several different categories of courts were establishes like
the Family court and the county court. The national crime agency and the college of policing
was created which gave a boost to heighten the quality of criminal justice system in the
country.
Critical evaluation of the legal system and law
Therefore, to conclude, it could be held that the country has seen various legal
reforms in the past decade in which the police and the court system has been transformed
vastly. However, it could be argued that the legal system has not been made accessible to all,
irrespective of their economic condition. Some of the decisions taken by the government
pertaining to the abolition of various departments and creating new ones has made a negative
impact on several classes of people. Access to justice could, however, be improved by
implementing certain changes like improvement of information and communication
technology, introduction of more specialist courts, promoting the concept of alternative
dispute resolution, et cetera.

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Task 2
Impact of company, employment and contract law on business
Company law comprises of the rules and regulations that are imposed on the
companies. Companies Act 2006 guides the company law in the United Kingdom which
mainly govern and regulate private companies. It sets the duties of the director towards the
company, its shareholders and its employees. Employment law strives to protect the
employees and their right in an organisation where they work in relation to the employers.
However it also lays down different guidelines for the employer as well, which they could
follow to maintain a professional relation with the employees and a healthy work
environment in the workplace. On the other hand, contract law has an immense impact on the
business for all business are either providing goods or services to other which is contract-
bound and therefore needs to adhere to the basic provisions of contract law of the country.
Unless an agreement meets the basic criteria of contract, it lacks legality and enforceability.
Advice to Collin and David
In relation to naming a company, there are certain rules and regulations under the
Company law that companies need to adhere to. It is a mandate to get a name registered for a
company in the state from where it operates. It must not be too similar to another existing
registered business or a name with sensitive words (GOV.UK 2019). In addition, the name of
a company must bear a good impact on the branding and marketing strategy of the business
and therefore it should be such that it would exhibit the nature of the business. ‘F U Caterers
Ltd’ does not provide a clear view of the nature of the business, while ‘Food United Caterers
Ltd’ does. So it is advised to Collin and David to choose the latter for their business.
Advice to Sophia
As alleged by Sophia, she has been unfairly dismissed from her job for she has been
absent from her work often due to illness. While, as held by her employer, her sick leaves

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were persistent, not justified and most definitely not associated to her work. She was warned
repeatedly for her absence and was also given ample time to recover. The medical advisor
consulted by her company confirmed that the illness cited by Sophia was unverified and
therefore cannot be considered reasonable. On this account, Sophia’s dismissal cannot be
justified as unfair under the employment law of the UK. However, she can file a suit against
the company in regard to a dismissal without prior notice which is applicable in this situation
(GOV.UK 2019). Sophia is suggested to approach the Advisory, Conciliation and Arbitration
Service (ACAS) or opt for an alternative dispute resolution to settle her claims and ask for a
competition for sudden dismissal.
Advice to Mrs. Khan
In this situation, Mrs. Khan made sure that the motor parts that are being replaced in
her car were neither original nor branded. However, it was insisted by AD Motors Ltd that
they had used branded parts which are less expensive than original parts. Here, it could be
held that the garage did not abide by the terms of contract with Mrs. Khan and provided
duplicate car parts, however they completed the servicing work on time as per agreement.
Therefore, Mrs. Khan shall be liable to make the full payment of the service provided to her
but at the same time shall also be eligible to file a suit for breach of agreement by AD Motors
Ltd for not giving original motor parts if it was so agreed between them as a term of contract.
Impact of regulations, legislations and standards
It is evident that different legislations and regulations have different impact on
different matters. Legislations on contract, employment and company law would have a
different application and impact on each other. Employment law deals with the employment
related issues of a workplace in relation to an employer and an employee where company law
does not work or has a least command over. Similarly, company law has the least effect over
an employment related matter. However, contract law has a wider scope of application over

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several matters in business, from issues related to employment to matters concerning
conflicts between companies; contracts are the basic requirement in every field of business
and hence contract law finds its application in every form of business transaction as well.
Task 3
Advice to Mr. Singh in relation to the litigation that could be constituted against PHB Ltd
In the given case Mr Singh had assigned Prestige Home Building Ltd to build a 5
bedroom house for an agreed price of £500,000. PHB limited did not finish the entire
construction work and left it after completing 60% of it only. On the other hand Mr Singh had
made a substantial payment to the construction company for the work that was done and also
for a certain portion of due work as well. On this regard Mrs Singh made use of the materials
left by PHB limited and completed the remaining construction work. In this scenario PHB
limited shall not be eligible to sue Mr Singh for it is them who had breached the contract of
completing the construction work. By the statement of the scenario it could be clearly pointed
out that there was a valid contract between PHB limited and Mr Singh where the terms of
contract included construction of a 5 bedroom house for Mr Singh in exchange of a
consideration price of £500,000. Here Mr Singh made use of the building materials which
were abandoned by PHB limited when they left the construction site and did not finish the
construction work thereby breaching the contract with Mr Singh. Mr Singh in this regard can
argue that he had made a substantial payment to PHB limited get was not provided with the
amount of what that he deserved in regard to such substantial payment. Therefore it could be
justified that Mr Singh took a reasonable step in making use of the abandoned construction
material left by PHB limited (Iddon and Firth 2013).
Therefore it could be held by the court that Mr Singh can plead for a termination of
contract that he had signed with PHB limited, for it becomes a voidable contract on the

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option of Mr Singh’s discretion for he is the aggrieved party here as PHB Ltd abandoned the
construction work, thereby breaching the terms of contract. In addition, PHB Ltd shall not be
able to recover the value of the building materials that Mr Singh used in order to finish the
construction work for or he had paid a substantial amount to the construction company for
completing the construction work which most definitely includes the building raw materials
as well. Hence it would be held by the court that PHB limited shall not be successful to
recover the value of the building materials used by Mr Singh, nor for the value of the work
that has been finish by Mr Singh himself.
Advice to Samantha pertaining to the distribution of assets to the creditors of Busy Bees
Ltd
In general insolvent company lacks sufficient assets for paying the liabilities that’s it
owes to the creditors. Therefore in such case a liquidator is appointed in order to realise the
assets of the insolvent company and thereby it is his duty to distribute the available assets
among the creditors of such insolvent company. The Insolvency Act 1986 and Insolvency
Rules 1986 govern issues related to insolvency and the distribution of the assets of an
insolvent company. According to the insolvency law, creditors will be eligible to receive the
due payment from the estate of the insolvent company by liquidating: cash assets, pre-
emption rights, intellectual property, land, buildings and other forms of tangible assets like
machinery, tools or plant excluding the assets which are under leasehold interest of the
insolvent company (Corbae and D'Erasmo 2017).
As per the rules of distribution of asset in a liquidation procedure, different creditors
are given different types of priority in terms of paying the due amount from the liquidation.
In general the money owed to the creditors is distributed as per the proportion of debt that is
due to each of the creditors falling under a particular class.

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First claim: creditors having fixed charges as well as a creditor having a proprietary interest
in assets of the insolvent company.
Second claim: person or institution bearing the expense of the insolvent estate
Third claim: preferential or secured creditors
Fourth claim: creditors holding floating charges
Fifth claim: unsecured creditors
Sixth claim: shareholders
Therefore in the given case Samantha will be liable to clear the payment due to Aston
building society to whom Busy Bees Ltd owed £180,000. Aston building society happens to
have a fixed charge over Busy Bees Ltd's freehold premises and therefore it becomes the first
claim holder in relation to acquiring its debts from the liquidated assets of Busy Bees Ltd.
While Samantha being the person holding the expense of the insolvent estate as she is the
liquidator of busy bees limited shall be put under the second priority to claim her due
payments from the liquidated assets of the insolvent company.
Task 4
International Arbitration is a complex procedure of alternative dispute resolution
where the involved parties are companies or individuals situated in different states or nation.
The rules of arbitration is mainly laid down under the UNCITRAL arbitration rules along
with the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral
Awards of 1958 or, earlier known as the New York Convention (ICC - International Chamber
of Commerce 2019). The New York convention requires the nations in dispute to have
ratified the convention in order to be guided by the rules laid down under this convention.
The New York convention along with its member signatories has formed an international
legal regime that favours the enforcement of international arbitration agreements and awards.

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the international rules of arbitration include that the parties to a contract must include an
arbitration clause in the agreement along with a definition of the scope of dispute which
would give rise to arbitration, the way of the selection of arbitrator(s), choice of arbitral seat
and adoption of arbitration rules. However in case the parties to the dispute face issues
regarding agreeing upon a particular arbitral institution or seat, in that case International
arbitration specialists recommend the use of an arbitration clause which authorises different
arbitral institutions in into different arbitral seat in the nations where the parties to the dispute
are located (ICC - International Chamber of Commerc 2019).
While choosing the arbitral seat, the parties to the dispute select a particular
procedural law that would be applicable over them. For example in case the parties choose
London as their arbitral seat they would be e attracting the Arbitration Act 1996 as the
governing law or would the entire arbitral procedure. However in case the parties to the
dispute fail to settle for a specific arbitral seat for centre, in that case the arbitration specialist
recommend that the parties to the dispute can arrange to conduct the arbitration procedure in
an arbitration-friendly centre suggest New York, London, Hong Kong, Paris and Singapore.
The arbitration-friendly centre allows the parties to choose their respective lawyers who
would represent them, the kind of procedure they would like to be followed, the procedural
language in which the arbitration shall be conducted as well as the particular Tribunal that
would settle the dispute. Most significantly while choosing the arbitral seat for conducting the
arbitration procedure, the parties to the dispute must take the effect and impact of such
arbitral seat upon the procedure of the arbitration along with its effect of enforceability to
grant the ultimate award.
In the given case, there is a breach of contract between AFG Oil Company based in
Kuwait and HPG Company situated in the UK. HPG Company comments with an arbitration
procedure in the UK by claiming a breach of contract on AFG's part for it fails to deliver gas

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as per the terms of contract. However AFG challenged the decision of HPG’s commencement
of arbitration procedure in the UK by arguing that the arbitration procedure should be based
in Kuwait, from where it belongs. In this regard the arbitration clause of of the agreement
between the two disputed company e must be referred to you for deciding the actual arbitral
seat which they had pre-agreed before entering into the contract. However if the arbitration
clause lacks a proper arbitral seat then in that case the parties would be open to discuss and
settle for an arbitration-friendly centre, which would neither be the home country for AFG oil
company nor would it be for HPG plc.
This step could be critically evaluated on the basis of the fact that a nation which may
not be completely aware of the structural and functional aspects of a particular company
situated elsewhere. While an arbitrator belonging from the same Nation in which one of the
companies to the dispute, mostly the aggrieved party resides. However in case the parties to
the dispute agree not to give away the responsibility of conducting the arbitration to an
arbitration-friendly centre, and instead choose another country; in that case the arbitration
procedural law of such country shall be applicable.

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References
Corbae, D. and D'Erasmo, P., 2017. Reorganization or liquidation: Bankruptcy choice and
firm dynamics (No. w23515). National Bureau of Economic Research.
Davis, K.E. and Trebilcock, M.J., 2001. Legal reforms and development. Third World
Quarterly, 22(1), pp.21-36.
GOV.UK (2019). Dismissal: your rights. [online] GOV.UK. Available at:
https://www.gov.uk/dismissal/reasons-you-can-be-dismissed [Accessed 8 Aug. 2019].
GOV.UK (2019). Ministry of Justice. [online] GOV.UK. Available at: https://www.gov.u
GOV.UK (2019). Set up a private limited company. [online] GOV.UK. Available at:
https://www.gov.uk/limited-company-formation/choose-company-name [Accessed 8 Aug.
2019].
ICC - International Chamber of Commerce (2019). Arbitration Rules - ICC - International
Chamber of Commerce. [online] ICC - International Chamber of Commerce. Available at:
https://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/ [Accessed 8
Aug. 2019].
ICC - International Chamber of Commerce (2019). Arbitration Rules - ICC - International
Chamber of Commerce. [online] ICC - International Chamber of Commerce. Available at:
https://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/ [Accessed 8
Aug. 2019].
Iddon, C.R. and Firth, S.K., 2013. Embodied and operational energy for new-build housing:
A case study of construction methods in the UK. Energy and Buildings, 67, pp.479-488.
k/government/organisations/ministry-of-justice [Accessed 8 Aug. 2019].