Business Law Report: Analysis of Legal Challenges in Business

This business law report examines key legal aspects relevant to business operations. It begins by outlining the sources of law and the legal obligations for organizations, differentiating between primary and secondary sources, and discussing the roles of government and legal bodies in law-making and application, including the impact of EU law. The report then delves into the impact of company law on incorporation, specifically addressing the advantages of transitioning from a sole trader to a limited company. It also covers the influence of employment and contract laws. The report further provides appropriate legal solutions for specific business problems, justifying these solutions with relevant legal arguments. Finally, it addresses the challenges of expanding a business outside the European Union. The report is structured around a case study involving Sunrise Retail, Sunset Ltd, and Smart Clothing, offering practical advice on legal issues such as incorporation, contract termination, and international expansion.

Business Law

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
P1 Sources of law and laws that an organisation must comply with......................................1
P2 Role of government ion law making and how these laws laws are applied......................4
M1...........................................................................................................................................5
D1...........................................................................................................................................5
TASK 2............................................................................................................................................5
P3 I Impact of Company Laws on the incorporation.............................................................5
P3 II Employment laws impact on the appointment of new employees................................6
P3 III Impact of contract laws. ..............................................................................................8
M2...........................................................................................................................................9
D1...........................................................................................................................................9
TASK 3..........................................................................................................................................10
P4 Appropriate Legal solutions for given problem..............................................................10
P5 Justification to the solution.............................................................................................11
M3.........................................................................................................................................11
TASK 4..........................................................................................................................................11
P6 Key Challenges to be faced in order to perform business outside European Union......11
M4.........................................................................................................................................12
D2.........................................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business laws are prime subject for performing trade and commerce in market with other
organisations. These laws regulates the course of business and are obligatory over the entities
engaged at market place. Business laws are the significant part of Civil statutes, every state has
their own legalities. And it is essential for the organisations to comply with these legal
formalities. There are certain statutes such as Employment laws, Law of Contract , Consumer
laws, Sale of Goods etc., which conclusively form business laws. This report is formulated
according to these laws. As per the given case study Sunrise Retail is expanding their business,
they are incorporating themselves into a limited company and wants some legal advice. In the
another one, Sunset Ltd a mobile selling company has incurred loss so they are closing a branch
in White chapel, legal solution regarding termination of contract has been provided in this report.
In the third scenario Smart clothing is expanding their business outside European Union they are
concerned about the challenges they are going to face during such expansion and has asked for
leagl advice. This report deals with the advices related to above problems. Moreover, it also
explains the various sources of laws and what are the legal obligations needed to start an
organisation.
TASK 1
P1 Sources of law and laws that an organisation must comply with
Laws are generated from various sources, its main purpose is to provide guidelines to the
people in order to perform their statutory liabilities. These sources are typically a cluster of
various factors such as Custom and Usages. Laws are the result of historical practices. These
practices are modified and are enforced as laws on the people. The nature of these laws changes
from time to time. Legal system is a cluster of various norms, rules and regulation as their main
objective is to control possibilities of fraudulent activities by imposing distinct acts on entire
nation. Basically, their main motive is to create a nation free from wrongful conducts in order to
promote ethics across the international borders. It helps various organizations in various manner
such as; design policies for free trade and commerce, assist towards corrective path and so on.
Legal system is classified into various departments as powers are distributed amongst the distinct
members for handling overall corporate world in suitable manner. As the civilisation is growing
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the sources from which laws are created are varying. This is a necessary process and it is
mandatory to evolve periodically.
In a Broader view there are two types of sources, Primary and Secondary. Both the
sources have their own significance and are use accordingly.
 A primary source contains, customs, constitution, international conventions, treaties etc.
 Whereas, secondary sources includes precedents of courts and their judgements. (Bagley,
2010)
(Source:- Sources of law, 2014)
In United Kingdom, the primary sources of laws are the European Laws and the
organisation that creates it is the parliament. The parliament is consist of House of Lords and
House of Commons. European union is comprise of 28 states and it regulates the economical and
political matters inside the Union. European union is responsible for the application of business
laws in UK. It was found under Communities Act 1972. A European Commission is a legal
2
Illustration 1: Sources of law

entity which acts an executive of the Union and its main job is to implement the laws made by
the legislature. A European Union is a cluster of Council of Ministers, Cabinet, European
Parliament and Court of justice.
Laws related to business are created by the help of these sources and legal bodies. These
statutes are mandatory to be followed by the members of an organisation. To start a business it is
very essential to follow the rules and regulations of business but before that one must have a
knowledge of various sectors for discharging their business. Eventually, there are only two
sectors in which a business can be carried out, Private and Public. The public sectors are
managed by the State Government while a private one is regulated by the individuals. (Bodie,
Kane and Marcus, 2014)
Apart from sectors there are various kinds of partnerships, limited and limited liability
partnership or an Unlimited Partnerships. Each one has there own significance. A limited and
limited liability partnership is such in which the liabilities are divided between the members.
Debts and Profits are dived according to the capital invested by the members of the company. In
an unlimited partnership, the liabilities are upon an individual. Such person is responsible for
paying debts and incurring profits. The best example of Unlimited partnerships are Sole Trader.
For starting a business it is also essential to abide by the provisions of Companies Act
2006. According to it an organisation has to be registered by the Registrar of Companies under
this Act. Moreover, they have to comply with the procedures of forming a company. It includes
formation of Memorandum of Association and Article of Association. A Memorandum of
Association contains all such details related to capital, investment and shareholder. It also
includes the objective or purpose for which it has been created. An AOA is comprise of the
constitution of the company, it is consists of appointment of Directors and their duties. Also
liabilities of its members are also mentioned in AOA. In order to set up a business one has to
follow these above mentioned laws and procedures otherwise they wont be able to perform
business in the market place.
Instead of this some of the major sources of laws are discussed as follows:-
 Case law:- Number of incidents are identified at marketplace as exploitative activities are
going on due to which sometime legal bodies get enforced towards amendments. For
example; some of the emergency cases are incurred which enforced parliamentary and
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higher authorities to enact few major laws. Their main objective is to act according to the
situations and trying to control several wrongful conducts.
 Judges:- Tribunal are encountering various complicated phases because of emerging of
several complicated cases due to which Judges or decision maker enforced to take some
instant judgement. As main motive is to control the unusual circumstances by taking
correct initiatives.
P2 Role of government ion law making and how these laws laws are applied
Laws are binding upon the people of states. These laws are created by a process of
enforcement. A government is a legal body which is a group of the legislature, executive and the
courts. These entities are responsible for making laws and also its implementation. In United
Kingdom law making bodies are House of lords, House of Commons and the Queen. It is
mandatory to have consent of the Queen in order to enforce the law. Implementation of these
statutes are done by European Commission (Crane and Matten, 2016)
A Bill is a key factor of introducing new rules or to change the existing one. There are
three types of Draft Model Bills, Private, Public and Hybrid. A private bill is introduce to make
laws affecting the interest of individual while a public bill is enforced to form such laws which
influences the interest of public. In hybrid bill is a public one in which laws are proposed to
change or form such regulations which affects the interest of individual. In order to create a new
statute the governing body has to imply with certain procedure.
In United Kingdom, the bill is proposed in to the parliament in its First Reading, in which
members are given a chance to think over the provisions of the bill. A debate or discussion is
conducted in its Second Reading, which provides the members to discuss over the facts of it and
make changes accordingly. After passing through these stages it is then presented before a
committee to file a report of such bill and then it is presented back for an amendment which has
to made if any, in its Third Reading. The Bill is then proposed in front of the Queen for her
consent in Royal Assent stage. After betting the Royal Assent a bill becomes an 'Act of
Parliament'.(DiMatteo, 2010)
After understanding various appropriate stages of amending acts its time to focussed on
some statutory and common law which is applied in justice tribunal as they are known as
decision maker. All the major responsibilities are rely on the judges of court because they are
engaged in numerous of activities and most indispensable work is to listen things properly in
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order to make correct decision without discriminating amongst members. Some of the major
roles of judges are discussed as follows:-
 Liable for interpreting the distinct laws.
 Authority to assessing the evidence presented by legal member in the court while doing
proceedings.
 Known as “trier of fact”
As discussed above the implementing body in European union is the European
Commission, so enacted laws are implemented by that commission. EU is responsible for the
implication of these statutes all over the 28 states and they are also liable for the implementation
of business laws in this union.
M1
Legal system changes periodically with the change in circumstances. It is evident that
sources of laws used then is completely different which is used now. Also there is a lot
distinction between the laws that are being enforced in historical and in present scenario. Taking
an example of information technologies laws, sources of these laws are entirely different than the
sources which are generally use to interpret the laws. Moreover the nature of crime and other
punitive acts are evolving that the use of old sources cannot be considered as prudent.
D1
Laws are made to conduct the function of a society in a disciplined way. It is mandatory
to abide by the laws which is enforced by the governing bodies. In order to keep oneself away
from the threat of opposition by the people it is necessary to create such laws with reference of
custom and usage of that particular region. Which means the laws are made according to the
culture and needs of he people so they can be followed with an ease and no revolt can take place
against the enactments of such laws. It is evident that sources should change periodically as the
society is advancing and new concept of jurisprudence is originating from such advancement.
TASK 2
P3 I Impact of Company Laws on the incorporation
Sunrise Retails wants to expand their business so it is mandatory for them to abide by the
principle of Company Laws. It is mandatory to get the company incorporated as per the
guidelines of Companies Act 2006. The client has to comply with the hectic process of the
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incorporation but changing from sole trader to limited one is good decision. This step comes with
various advantages such as in limited company the members liabilities are limited and also there
are various types of shares and as per that liabilities are enforced upon its members.(Eren and et.
al., 2012)
moreover, on such conversion the organisation can expand their business not only in the
local market that European Union but also in various countries. It is certain that paper work
increases due to incorporation especially it becomes the fiduciary duties of its director to file
annual tax report. But it is also beneficial as the turnover then company will increase.
A limited company is more likely to attract investors for the investment of capital in the
company and also it creates a bond of trust between the producer and their consumer. Being a
limited one makes a company authentic and more reliable and that would remark as strength of
it. So it is better to be a limited company in order to expand the business and to earn more
profits. The main difference is that liabilities upon partners are limited so they are not
responsible for the acts of other members. It is conspicuous and certain to convert into a limited
company then being a sole one.
 Consequences of incorporation:- According to the associations incorporation act 1985
act it is identified that company needs to have common seal after getting incorporate as
well as name. As per the section 20(3)(a) property is automatically transferred to the
trustees and it is indispensable to register the changes.
 Statutory Books:- As per this element official records are falls under this legal
documents which is mainly kept at registered office of an organization.
 Accounting Records:- Consist of various necessary financial data and expenses
incurred at workplace for running business entity.
P3 II Employment laws impact on the appointment of new employees
In order to expand the business it is certain that the workforce also increases so to avoid
this problem it is essential to recruit new members. The market is full of challenge and everyday
new companies are emerging and the existing one are expanding with new innovative ideas. So
to compete these changes Sunrise has to appoint new employees. (Foss and Knudsen, 2013)
The employees get into contract of service with employer. It is the obligation of
employees to follow the instruction given by the employer but he is not confined to follow such
which is against the ethics and laws (Morrish Vs Henlys Ltd 1973). There are certain other
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fiduciary duties of an employee to perform in the course of his employment. It is the duty of him
to obey and not work against the interest of his employer. If an employee does any act which is
against the terms & condition then he is liable for the breach of contract. It is essential to follow
the constitution of the company and follow the responsibility as per the Article of Association.
Laws are made by keeping in mind the principle of natural justice, so employees are also
provided with certain rights in some statutes. Employment Rights Act 1996, deals with provision
of the rights which has been invested to an employee such as rights against discrimination,
redundancy and dismal. Also there are certain other statutes which provides immune to the
workers in addition with the decided cases by the court. According to section 230 of the act a
worker is an employee performing his duties under an employee. Moreover, he is liable for
minimum amount of wages and paid sick leaves (Aslam v Uber BV).
The Equality Act 2010- This act came in force from 1 October 2010 & amend existing
civil laws. This act give legal framework to protect rights of the individuals and equal
opportunity to all. It provide equal aid to private & public employees on the basis of
race,age ,color,gender,national origin,religion and disability. It is beneficial for Sunrise ltd as in
their organization everyone get a fair chance to earn their living and to provide good life &
infrastructure to their families without fear of favoritism or harassment. If discrimination is
present in the company than employees are not able to work with full concentration and focus,
led to difficult in achieving objectives.
Employment Rights Act 1996- This act give right to employees through saving from the
situation of dismissal,unfair dismissal, Sundays off,time off rights for parenting,
suspension,employers insolvency and more. Workers get the benefit as they know about their
powers in the organization. Sunrise ltd should adopt this because it help to claim breach of some
right in a court done by employee.
Health and Safety Act 1974- General principle of this act is to provide protection to
employers health and safety at workplace. This Act include safe environment,proper
maintenance of plants and equipment ,safe access and exit, ionizing radiations,protection at
height and from hazardous chemical and substances. It include all types of employees who visit
the premises such as casual, temporary,permanent,clients visitors,self employed workers,and the
public. If any discrepancy find in the enforcing act employees inform to respective authority if
they don't follow than to court which penalized them for not meeting requirements. Sunrise also
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have benefit from following this because it act tell employees what activities they are not
allowed to perform in the organization like drinking ,mishandling, misleading, improper
Behavior etc.
Data protection Act 1998- This act regulates the use and protection of personal data of
individuals, stored in a computer or organised paper format. For employees its beneficial as such
company is not allowed to pass their personal data and info to others. Sunrise helped under this
as no one has the right to take their personal data even their employees are not allowed to take
and use it for private reason. For this they make strict rules in the business as no worker is
allowed to have pen drives,CD'S,hard disk and any transmission gadget in the work premises.
In order to expand their business Sunrise has to comply with the statutory contents of the
Acts which has been passed by the governing body of that area.
P3 III Impact of contract laws.
Contracts are the basic element of performing a business. An agreement which can be
enforced by the laws are contract. In UK contracts are modulate by English Law of Contract.
According to it a contract is valid only when there is an offer, acceptance and consideration in
the construction of it. An offer can made publicly or to a specific person, moreover a contract
can be a simple one and specific too. In the specific contract the parties has to perform a specific
duties to enforce the agreement and covert it into a contract. Every offer has an acceptance, it is
essential that it should be made without any inducement.(Grundfest, 2010).
Sunrise Ltd. Needs to consider necessary elements of contract while involving in various
types of contracts with stakeholders and partners in order to control probabilities of mistakes and
errors. Some of the major elements of contracts are discussed as follows:-
 Offer and acceptance:- There must be offer before entering into a contract so that other
party get a chance of accepting it after understanding the depth knowledge about
agreements.
 Consideration:- Parties needs to set some legal norms, rules and regulations in order to
assist other parties towards corrective direction as well as clear hidden matters in best
manner.
 Mutuality and obligation:- Requires consent of both the persons whosoever are entering
into certain agreements as well as must have accountability of any drawback.
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 Competency:-- Must have the ability to compete in various terms such as; physically,
mentally, legally.
Thus, it has been understood that selected firm needs to consider all the above
components while entering into a contract as it is influencing overall agreements in various
manner. For example; creates confusion for manager of cited company while making contracts
with their suppliers for raw materials, employees relations also get affected and so on.
A valid contract must not be prohibited by law that is it should abide by the provision of
law and when it get enforced then it shall not contradict any provision of the law. It is must for a
valid contact to have an intention to form a contract. Without such it is invalid and void. A
contract is incomplete without a valid consideration. Mostly it is in the form of money, so it can
said that a contact is a promise which is brought with some amount of price.(Johnson, 2013)
Contracts are an essential part of business whether to deal with other companies, supplier,
employees, etc. For conducting a business it is also require to have a good knowledge about the
construction of a valid contract. It is also prudent to follow the conditions in order to avoid
breach of contract. Contracts are binding upon the parties do their part of duties.
M2
Employment and Contract laws are mandatory to be followed by the parties getting into a
business. It has positive impacts for the regulation of marketing strategies. These laws provide a
structure and guidelines to the members of organisation to perform in market. In order to prevent
Unfair business and trade it is essential to abide these regulations. In order to prevent dominant
organisation to take over the market business statutes are prominent to be applied on such
conditions.(Kinicki and Kreitner, 2012)
D1
The legal system is comprise of all governing bodies, the legislature, executive and the
courts. These bodies are not entirely independent but they work hand in hand. Royal family, the
Queen is above all and it is necessary to have their consent in order to enact any law,. There is a
mixture of monarch and democracy. The laws are not codified so it becomes difficult to interpret
them. Moreover, the legalities are complex which makes it difficult for a layman to understand it.
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TASK 3
P4 Appropriate Legal solutions for given problem
Business companies are surrounded with various types of major problems because
number of changes are incurred at workplace and it is influencing several situations of an
association. For example; company might go through fair or unfair dismissal which is affecting
the employees minds in several ways as well as influencing entire staff members and so on.
Thus, these type of issues are creating problem for organization while running a smooth business
because all the activities are handled by labours only. Hence, it is essential to consider all the
necessary procedures and process while removing employees from organization. As in given
case selected firm is facing a major problem due to which director wanted to close the company
but they need to follow useful procedure such as redundancy in order to minimize probabilities
of mistakes.
However, following of redundancy process aids in creating positive connection with staff
members so that in case if there is any further acquirement then company can easily contact with
them. Along with this, it has been analysed that governing bodies are involved in enacting
number of legal rules for this procedures such as; trade union and labour relations act 1992. The
collective redundancies an transfer of undertakings henceforth. According to the said case
Sunset Ltd has incurred loss for 3 years from its branch situated in White Chapel. In order to
recover the loss managing director is closing the branch. In order to do so he has to follow
certain statues and laws related to winding up of the company. Before that it is essential to know
about the termination of contract. (Ye and et. al., 2011)
A contract of employment is terminated in certain conditions such as on the completion
of the period , breach of duty and winding up of company. In this case the company is going to
close their branch so they have to follow the liquidation procedures which makes the
employment of contract terminated by his implied term.
The managing director is not responsible for any breach of contract or any further legal
obligations as the contract terminates on winding up of company. A notice can be provided to the
employees for termination of employment.
Termination of contract: Termination or dismissal of employees is done when
employees are not performing their work according to work standards or when the compaby is
going to liquidate. As from the case study, Sunset Ltd has been facing loss from last 3 years and
10

now they are thinking of closing the company. Sometimes, closure of company leads to
termination of employees as their duties towards company will be cut off due to liquidation. In
order to terminate employees, it is necessary for employers to brief their employees related top
termination so that they can plan their future job from that moment of time.
Redundancy procedures: This redundancy occurs when employee loose their job due to
some situations like closure of business. As from the case study, company is closing their
business due to heavy loss and for that they have to follow necessary redundancy procedures.
Employers are liable to follow the procedures when an employee becomes redundant. Proper
notice with necessary payments should be done to employees.
P5 Justification to the solution
According to the statutory provision it is mandatory to provide a reason of termination of
employment. An employer has all right to end an employment on the liquidation of the company.
The loss in financial statement is a proof of incapacity of the workers. It is the liability of the a
worker to provide profits from his skills if they are fail to do so then they are not eligible for the
job.
In this case it was exactly what happened to the company, so the managerial committee is
entitled to liquidate the company to pay the debts of such loss and terminates the employment of
their employees. Adopting of redundancies process and norms related with this is beneficial for
company image as it aids in maintaining the company reputation at marketplace so that an
organization must think for re-establishment procedures. Their main motive is to prevent the
goodwill at marketplace which is only possible if there image is properly maintained.
M3
There are many positive and negative effect of ending up the employment contract also
liquidising the company. As it will be more difficult to gain trust of people in the market. The
loss that company has incurred is immense and to balance such they have to deduct it from their
capital. But it is also true if they continue to work in that branch the losses will increase and that
would be difficult for them to incur.
From the case study, below are the justification of legal solutions:
Termination of contract: As the company was about to close, so it become necessary to
terminate their employees as they were unable to handle workforce because they have to pay
11

them salaries and payments which they were unable to pay at current situation. They were facing
losses for last three years and were unable to provide salary. Another reason is that, as the
company was at the end, it was necessary to communicate employees about the closure sop that
they can find new jobs at some other places. This will provide enough time for employees to find
suitable job for themselves.
Redundancy procedures: These procedures are adopted by employers when there is
dismissal of employees due to circumstances. As from the case study, company was facing heavy
losses and employees were losing their jobs. It has become necessary for superiors to close their
company due to loss and in that situation they can dismiss their employees and provide them
with suitable payments.
TASK 4
P6 Key Challenges to be faced in order to perform business outside European Union
As per the given the case Smart Clothing are going to conduct their business outside EU.
To perform such activities they have to abide by the legalities of that country. Taking the
example of India if Smart Clothing is investing tin the market of India they have to comply with
legal formalities of that country. In India most of the business laws are based on Common law
and English business laws, so it would not be that difficult for them to get into the market.
(Alternative dispute resolution (ADR), 2017)
For performing their business some laws are different such as employment laws and
consumer laws. These laws are based on the particular region. Moreover, they have to pay taxes
and customs for managing their business in the other country. These customs are based on the
norms of such country. Also they have to register their company under the laws of such region. It
is mandatory for them to follow the provisions of statutes enacted by the government of such
country.
In India contact laws and business laws are similar to that of UK, so it would not be a
problem to understand the legal formalities of that country. But it would be difficult to
understand the market and business in that state.
These steps would include dispute with the other parties and it can be solve by
Alternative Dispute Analysis. It is mainly comprise of Arbitration, Negotiation and Mediation.
An arbitration is involves a third party that involves in the solving of disputed issue. The person
12

appointed is known as an arbitrator. In negotiation the parties are involve and come up to an
agreement which is enforceable by law. But in mediation a third person known as mediator is
involve to solve the dispute between the parties.
An arbitration is the best method to solve the dispute as it is cheap[ and time consuming.
These laws are same all over the world as their sources are international conventions and treaties
between different countries. Moreover, it would be harmonious to solve a dispute by negotiang
with the parties and end up in a result which is beneficial for both of them. It is advised to the
client, for solving their dispute, methods mentioned in ADR can be use to avoid any loss and
misconducts.
In order to operate business online, it is necessary for company to carefully analyse
different forms and legislations that will help them to perform their business smoothly. Some of
policies and forms which they need to analyse are trad policies, tariff, export related laws,
international trade compliance, intellectual properties, finance and exchange controls, etc.
M4
In order to perform business in other country Smart Clothing has to comply with statutory
obligations of that country but it would be more easier to perform in the EU. As the company is
situated in that region so it would be easier for them to operate the business effectively moreover
the they are known to the laws of EU. But on such expansion it would provide them a chance to
earn more profit and perform globally. For establishing their empire they to comply with the
laws of that state.
D2
Using a appropriate legal solution can help the company to solve any dispute between
them and the other parties. Arbitration is one of the best legal method to solve a dispute. This
method is recognised internationally and has effect all over the world. So it is evident to comply
with this method in order to perform business outside the European Union.
CONCLUSION
It is evident from above discussion that various laws are originated from the customs,
constitution and international convention. Moreover, courts precedents and judgements are used
as secondary source of law. These laws are enacted by a process in which a bill becomes an Act
of Parliament. It is the demand of situation according to which a bill is made. Also this report
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includes solutions to the problem of various companies regarding their business venture. The
impact of contract laws and employment laws are being also discussed in this report with a
detailed analysis. Apart from that it also deals with the termination of contract and the laws
related to it. It is a complete content of business laws and the impact of it on an organisation who
wants to expand their business. Evident solutions has been provided in this report regarding the
problems given in the brief with decided cases, precedents and the judgements.
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