Application of Business Law in Running a Business Organization

This report provides a detailed overview of business law and its practical applications within organizations. It begins by defining law and exploring its various sources, including constitutional, statutory, and judicial law, emphasizing their relevance to businesses like Carrefour. The report then examines the roles of the legislature, executive, and judiciary in law-making, followed by an analysis of the application of statutory and common law in justice courts. It assesses the effectiveness of the legal system, focusing on the impact of the 2020 tax policy on Carrefour, including VAT, PAYE, and turnover tax. Furthermore, the report delves into employment and contract law, highlighting their impact on Carrefour's operations, and discusses company law. It also covers the legal formation, advantages, and disadvantages of different business organization types, such as sole proprietorships, partnerships, corporations, and LLCs, along with management and funding aspects. Finally, it explores methods for resolving conflicts and disputes, and provides sources of legal advice.

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BUSSINESS LAW
ASSIGNMENT TITLE: APPLICATION OF BUSINESS LAW IN
RUNNING A BUSINESS ORGANIZATION
DATE: 11/15/2021

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Contents
PART A...........................................................................................................................................7
DIFFERENT SOURCES OF LAW.................................................................................................7
CONSTITUTIONAL LAW.........................................................................................................7
STATUTORY LAW...................................................................................................................7
JUDICIAL LAW.........................................................................................................................7
THE ROLE OF GOVERNMENT IN LAW MAKING..................................................................8
LEGISLATURE..........................................................................................................................8
EXECUTIVE...............................................................................................................................8
JUDICIARY................................................................................................................................8
THE APPLICATION OF STATUTORY AND COMMON LAW IN THE JUSTICE COURTS.9
EFFECTIVENESS OF THE LEGAL SYSTEM IN TERMS OF RECENT REFORMS AND
DEVELOPMENTS........................................................................................................................10
IMPACT OF THE 2020 TAX POLICY ON CARREFOUR....................................................10
VAUE ADDED TAX (VAT)................................................................................................10
PAY AS YOU EARN TAX..................................................................................................10
THE POTENTIAL IMPACT THAT EMPLOYMENT AND CONTRACT LAW HAS ON
CARREFOUR...............................................................................................................................11
EMPLOYMENT LAW.............................................................................................................11
CONTRACT LAW....................................................................................................................11
COMPANY LAW.....................................................................................................................12
THE IMPACT ON CARREFOUR THROUGH DIFFERENTIATION BETWEEN
LEGISLATION, REGULATIONS AND STANDARDS............................................................12
LEGISLATION.........................................................................................................................12
REGULATIONS.......................................................................................................................12
STANDARDS...........................................................................................................................13
EVALUATION OF THE LEGAL SYSTEM AND LAW............................................................14
JURY SYSTEM.........................................................................................................................14
THE LEGAL FORMATION OF THE DIFFERENT TYPES OF BUSINESS
ORGANIZATIONS.......................................................................................................................15
SOLE PROPREITORSHIP.......................................................................................................15
1.PICK A NAME...................................................................................................................15
2.ACQUIRE PERMITS AND LICENSES...........................................................................15

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3.ESTABLISH SEPARATE FINANCES.............................................................................16
4.REPORTING TAXES........................................................................................................16
PARTNERSHIPS......................................................................................................................16
1.CHOOSE A PARTNERSHIP NAME................................................................................16
2.REGISTERING THE FICTITIOUS NAME......................................................................16
3.CREATING AND SIGNING THE PARTNERSHIP AGREEMENT...............................16
4.WORKING WITH REGULATIONS AND TAX REQUIREMENTS..............................17
5.INSURANCE.....................................................................................................................17
CORPORATION.......................................................................................................................17
1.HIRE A TRANSACTIONAL ATTORNEY......................................................................18
2.APPOINT A REGISTERED AGENT AND FILE THE ARTICLES OF
INCORPORATION...............................................................................................................18
3.CREATE THE CORPORATE BYLAWS AND APPOINT DIRECTORS.......................18
4.ISSUE STOCK...................................................................................................................18
5.FILE DOCUMENTS REQUIRED BY SECRETARY OF STATE..................................18
6.FILE ANY NECESSARY KRA FORMS..........................................................................18
LIMITED LIABILITY COMPANY (LLC)..............................................................................19
1.PICK A NAME...................................................................................................................19
2.CREATE THE ARTICLES OF ORGANIZATION..........................................................19
3.SELECT A REGISTERED AGENT..................................................................................19
4.FILE WITH THE SECRETARY OF STATE....................................................................19
5. FEE....................................................................................................................................19
6.PUBLICATION REQUIREMENTS..................................................................................20
7.OBTAIN AN LLC CERTIFICATE...................................................................................20
8.REGISTER FOR AN EIN..................................................................................................20
9.GET PERMITS OF LICENSES.........................................................................................20

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10. CREATE AN OPERATING AGREEMENT..................................................................20
THE ADVANTAGES AND DISADVANTAGES OF THE FORMATION OF DIFFERENT
TYPES OF BUSINESS ORGANISATIONS................................................................................20
SOLE PROPRIETORSHIP.......................................................................................................20
PARTNERSHIPS......................................................................................................................21
CORPORATION.......................................................................................................................21
LIMITED LIABILITY COMPANY.........................................................................................21
HOW BUSINESS ORGANISATIONS ARE MANAGAED AND FUNDED............................22
SOURCES OF FUNDING........................................................................................................22
PERSONAL CAPITAL.........................................................................................................22
CROWD FUNDING.............................................................................................................22
ANGEL INVESTORS...........................................................................................................22
BANK LOANS......................................................................................................................22
MANAGEMENT......................................................................................................................23
SOLE PROPRIETORSHIP...................................................................................................23
PARTNERSHIPS..................................................................................................................23
CORPORATIONS.................................................................................................................23
LIMITED LIABILITY COMPANY.....................................................................................23
METHODS FOR RESOLVING CONFLICTS AND DISPUTES...............................................24
MEDIATION.............................................................................................................................24
ARBITRATION........................................................................................................................24
LITIGATION............................................................................................................................24
NEGOTIATION........................................................................................................................24
SOURCES OF LEGAL ADVICE.................................................................................................25
FEDERAL TRADE COMMISSION........................................................................................25
KENYA REVENUE AUTHORITY.........................................................................................25
SCORE......................................................................................................................................25
TRADE ASSOCIATIONS........................................................................................................25
PRO BONO SERVICES...........................................................................................................26
REFERENCES..............................................................................................................................27

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PART A
DIFFERENT SOURCES OF LAW
Law is defined as a set of rules and regulations set by a certain authority in a community or
organization and the people are subject to penalty if violated. This can be a type of policy or law
that is acknowledged and imposed by court. For instance, a person who committed an act of theft
is subject to imprisonment if guilty (Dictionary.com, 2021). Sources of law also known as
sovereign are where the laws are originating from. Carrefour needs to make sure that it’s
business operations are in line with the Kenyan law.
The three main sources of law include;
CONSTITUTIONAL LAW
Constitutional law is a set of principles, rules and practices of a nation or community, which
determine the authority and obligations of the government. These obligations include making
sure that people’s rights and needs are addressed. An example of constitutional law is that the
employees of Carrefour should have the right to freedom of speech (Shugart, 1999).
STATUTORY LAW
Statutory law is inferior to constitutional law. The constitution is directed to government conduct
whereas the statutory law is directed to private relations. A statutory law is a written piece of
legislation that is either implemented through written or voting by a legislative branch
(UniversityOfMinnesota, 2015). Some examples of statutory rights relating to Carrefour are, it
should pay a salary to employees that is above the legal minimum wage, awarding employees
with vacations, sick leave etc. (Davis, 2021).
JUDICIAL LAW
Judicial law also known as case law is the source of law a set of legally binding standards of
conduct that are imposed, recognized, and implemented by governing authorities. Common law

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is under judicial law and is characterized as a set of laws created by judges when they give
decisions on cases (Yourdictionary, 2021). Common law has an effect on how businesses are
operated within a nations jurisdiction. This source of law has an impact on international
businesses. For example, Carrefour being an international business it affects how it is regulated
in terms of tax regulations and compliance (Weaver, 2016).
THE ROLE OF GOVERNMENT IN LAW MAKING
The government is divided into 3 branches, the judiciary, the executive and the legislative. All
the branches are autonomous of one another and their respective duties are defined by the
constitution (Gĩthĩnji, 2021).
The following are the distinct roles of the individual branches of the government;
LEGISLATURE
The legislature is the branch of government in charge of enacting legislation. It is the agency's
job to define the state's will and provide it with legal power and authority. A bill will go through
nine stages before fully becoming a law (Gĩthĩnji, 2021).
EXECUTIVE
The executive is the branch of government in charge of the state's day-to-day operations. The
executive branch carries out and enforces laws (Weaver, 2016).
JUDICIARY
The judiciary is the system of courts that resolves legal disputes and interprets, defends, and
implements the law in legal matters (Weaver, 2016). The judges know how to apply laws when
they decide the cases that come before them. Every legislation requires the correct interpretation
before it can be applied to a specific circumstance. The judges are in charge of this role. (Ghai,
2014).
The following are the nine stages that a bill must go through to become a law;
The bill has to first be drafted by a congress member such as the senate or house of
representatives. The bill must then be submitted after it has been written and presented either in

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the house or senate. The bill is taken to the committee upon proposal. When a bill is sent to a
committee, it is thoroughly studied to evaluate its chances of passing by the entire Congress.
Frequently, committees submit bills to subcommittee for their consideration. When a bill is not
acted on by the committee, it is considered a dead bill. The committee will mark up the bill and
make modifications and amendments before presenting the bill to the floor then there is more
debate and representatives of the whole chamber vote to accept the modifications. The bill is
then referred to another chamber and has the authority to accept it, reject it, ignore it or alter it.
Finally, the bill is then delivered to the president when it has been accepted by the senate and
house. The president can approve the law or decide to decline it (Steinkraus, 2014).
THE APPLICATION OF STATUTORY AND COMMON LAW IN
THE JUSTICE COURTS
The method of determining common law for certain cases commences with research, discovery
of the prior relevant cases, and the collection of statements issued to eventually identify the
applicable common law. Higher court decisions take precedence over lower court decisions and
previous cases. Statutory laws have already been drafted and only need to be applicable to a
particular case. On a daily basis, common law is being developed without any extra cost to state.
Statutory law is created by a government and then structured into law codes. They include all
areas that are governed solely by statutes and also where common law is inapplicable The bill is
forwarded to the President once it has been passed in identical form by both the House and the
Senate. If the law is approved by the President, it is approved and becomes law if not then it is
vetoed. If somehow the President vetoes a bill, Parliament may try to override it. If the bill is
passed by both the Senate and the House with a two-thirds majority, the President's veto is
overturned, and the bill becomes law (Gĩthĩnji, 2021).

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EFFECTIVENESS OF THE LEGAL SYSTEM IN TERMS OF
RECENT REFORMS AND DEVELOPMENTS
The following are the different reforms and developments of the 2020 tax policy and the
impact they had on Carrefour;
IMPACT OF THE 2020 TAX POLICY ON CARREFOUR
VAUE ADDED TAX (VAT)
VAT is one of the government's most important sources of revenue. VAT is a consumption tax
that is levied anytime a value is added to eligible products and services at every level of the
supply chain, from manufacture to consumers. It is charged on the consumption of taxable goods
and services provided or imported into Kenya. The tax is collected and submitted to KRA by
registered individuals at specific points in the supply chain (Munandi, 2021).
The change from a 16% to 14% VAT will decrease the taxable value of the products and hence
the VAT amount. Because of this change, Carrefour was able to make their products more
affordable to consumers and also create more promotional material to attract newer customers.
Ultimately it led to a positive correlation from the amount of revenue being generated after as
products became cheaper to the average consumers that were being affected financially by the
pandemic (EYGlobal, 2021).
PAY AS YOU EARN TAX
The Kenyan government had suggested a complete tax exemption for persons making up to
24,000 Kenyan shillings per month. Many Kenyans gained from this as it increased spending
power for those in this income bracket. Pay as you earn rates were reduced from 30 percent to 35
percent. This enabled the government to allocate extra resources to comfort impacted individuals
in the event of a salary decrease. It also benefited Carrefour because it’s employees were more
motivated to continue working even in the middle of a pandemic (Mwangi, 2020).
TURNOVER TAX
Turnover Tax (TOT) is a tax levied on a company's gross sales under section 12(c) of the Income
Tax Act (KRA, 2021). Marking the onset of the Covid-19 outbreak, the Kenyan government
reintroduced new tax policies in an effort to protect taxpayers from the negative impacts of the

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virus. This initiative reduced turn over tax from 3 percent to 1 percent. Carrefour was advised to
submit and pay for turn over tax each month or it would result in penalty. Missed payments
would result in the 5 percent penalty on tax owed, whilst late submission results in five thousand
Kenyan shillings penalty each month (Mgkconsulting, 2020).
THE POTENTIAL IMPACT THAT EMPLOYMENT AND
CONTRACT LAW HAS ON CARREFOUR
A contract is a formal agreement that describes the conditions of a deal between two or more
parties. It typically describes the work that will be completed, as well as key details such as
deadlines and expenses, in a business. The agreement is formed by one party giving the offer and
the other(s) accepting it (Faris, 2019).
EMPLOYMENT LAW
Carrefour has employment contracts in place which is an important document since it governs
the terms and conditions of work between the employer and the employee. For employees to
work at Carrefour they must have an agreement with Carrefour that addresses matters such as
working conditions, health and safety and leave days. Carrefour may wish to establish a contract
that ensures any work generated by the employee while working for the business stays property
of Carrefour. If a dispute arises in the future this sort of clause might save Carrefour on legal fees
(Humphries, 2015).
CONTRACT LAW
Carrefour has supplier contracts in place with its suppliers, which is a contract in which a
supplier offers to deliver all of the specified products or services that a business requires over a
set time period. By Carrefour creating a contract with their supplier such as Brookside, it has
enabled them to outsource non-critical operations, allowing Carrefour to use specialized product
or service expertise while lowering internal workloads and boosting efficiency. Examples of
these include full-fledged services like supply chain management and logistics (Upcounsel,
2021).

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COMPANY LAW
Carrefour has company law set in place to safeguard everyone including employees,
shareholders and executives. Through company law Carrefour’s directors cannot utilize their
authority for anything besides the intended purpose. For instance, adjusting who held shares in
Carrefour to prevent a takeover bid can be considered an inappropriate use of authority and so
prohibited (Access2barristersdirect, 2021).
THE IMPACT ON CARREFOUR THROUGH
DIFFERENTIATION BETWEEN LEGISLATION,
REGULATIONS AND STANDARDS
LEGISLATION
Legislation is a collection of laws enacted by the government to safeguard companies,
employees, and customers. Carrefour must follow the laws to guarantee that all parties
participating in a business are treated fairly and safely (BBC, 2021).
Legislation can be important to Carrefour as it helps improve employee relations and boosts
employees' feeling of impartiality and confidence in Carrefour. It can also contribute to the
achievement of strategic HR and Carrefour objectives (Horgan, 2021).
Carrefour has to be in compliance with government regulations which entails a number of both
time and capital. Some expenses are spent as a result of time necessary to implement certain
processes such as employing more staff and ensure legal requirements are satisfied (BBC, 2021).
REGULATIONS
Regulations serve a significant and required function to businesses. Regulations are laws that are
enacted by government regulatory bodies after being approved by their Congress (Swanson,
2019). Examples of Kenya regulatory bodies include the capital market authority and the Kenya
bureau of standards.

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Regulations are generally important to Carrefour as they help give it a general sense of direction
and also standardize its processes. Regulations are necessary since certain businesses are not
self-regulating and may engage in acts that are destructive to their societies. For instance, if the
Kenyan government did not set in place regulations on factory emissions, businesses like
Carrefour would be unconcerned about detrimental impacts of emissions coming from factories
in order to save money from methods of safe emissions (Bohatala, 2019).
Regulations aid in the prevention of consumers being exploited. When there aren’t any
regulations, companies can exploit customers at huge costs, businesses such as Carrefour would
not make items with high quality standards and the negative effect of using specific products
would not be put in place (Bohatala, 2019).
Regulations may have a lot of positive impacts on businesses such as Carrefour, but they also
have some negative impacts. A lot of African countries including some parts of Kenya have
weak implementations of government regulations. As a result, multinational businesses such as
Carrefour may take advantage of this and underpay employees and also put them in bad working
conditions (Bohatala, 2019).
STANDARDS
A standard is a predetermined manner of executing something. Standards can include a wide
variety of actions conducted by businesses and utilized by their consumers, such as
manufacturing a product, managing a process, providing a service, or distributing materials
(Bsigroup, 2021).
Standards help Carrefour to mitigate risk and grow in a sustainable way, Standards specify
quality and minimal criteria and give accepted solutions for consumer, health, safety, and
environmental conservation. The probability of accidents may be clearly decreased by adhering
to quality and safety standards such as the hazard communication standard from the
Occupational Health and Safety Administration (OHSA), thus greatly contributing to the health
protection of Carrefour’s customers and employees (SNV, 2021).

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A set of criteria can be put in place for manufacturing companies so that the goods match the
requirements as every other manufacturer in the sector. Standardization applies to items
marketed in a single geographical place or on a worldwide scale. Though this Carrefour can
make sure that their customers receive comparable items irrespective of the manufacturer (SNV,
2021).
A disadvantage of standards is that, market conditions change regularly, and organizations that
adapt fast are better able to capitalize on them. Standardization can also limit creativity,
especially in product design. For instance, mployees at Carrefour may believe they are taking an
unwarranted risk by proposing new ideas or demanding modifications to long-established
policies (Contributor, 2020).
EVALUATION OF THE LEGAL SYSTEM AND LAW
The legal system consists of laws, processes and organizations that enable private and public
endeavors to be conducted legally. The legal system also expounds on the general rights and
obligations in many forms such as the tax system and the electoral system (Alvendia, Kelly, and
Demarest, 2021). Common law, civil law and religious law are the globe’s 3 main legal systems.
Jury systems are judicial methods used to determine evidence discovered in a lawsuit. A tax
system is a legislative framework that assesses and collects taxes. The electoral systems are legal
structures that allow democratic decisions to be made (Alvendia, Kelly, and Demarest, 2021).
JURY SYSTEM
A jury is made up of individuals who have been called and pledged to rule on the evidence in
question during a trial. The jury is made up of individuals that represent a bridge of a
community. During a case, the judge takes earing of all evidence, assesses the facts established,
then makes conclusions out of the findings to create the foundation for a verdict. For instance, in
criminal trials the judge rules if a defendant is guilty of an offence or not while in civil cases he
or she rules if the defendant is to be liable or not (Americanbar, 2021).