Business Law Report: Impact of UK Law on Business Organizations

This report provides a comprehensive overview of business law, exploring various facets of the UK legal system and its impact on business organizations. It begins with an introduction to the definition and purpose of law, followed by an examination of different sources of English law, including primary and secondary sources. The report then delves into specific areas of law relevant to businesses, such as employment law, consumer rights, and competition law, and analyzes the role of the UK government in law-making. It further contrasts statutory and common law, providing examples of their application in UK justice courts. The report includes a case study of ASDA to illustrate the impact of company, employment, and contract law on a business. It differentiates between legislation, regulation, and standards, and critically evaluates the UK legal system. The report also analyzes different types of business organizations, such as sole proprietorships and partnerships, discussing their advantages and disadvantages, and concludes with recommendations for resolving conflicts within a partnership firm.

BUSINESS LAW

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1 ...........................................................................................................................................3
TASK 2 ...........................................................................................................................................7
TASK 3..........................................................................................................................................10
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
.......................................................................................................................................................15

INTRODUCTION
Business is the exchange of goods and services for a consideration. An entity earns its
profit from commercial transactions held during the life span of the organization. Hence, it
requires a legislation that will regulate and protect against fraud and mismanagement. Business
law refers to law that governs affairs of corporation (Baker and Logue, 2017). It has two distinct
areas viz. Law of Partnership, company, bankruptcy and agency through which each of such
business organization of governed and the other area being law of contract which applies to
various contracts or agreements that have contractual capability entered between company and
parties. The report covers different sources of law, role of government in law making, difference
between statutory and common law and potential impact of company, employment and contract
law upon a business. Along with this, different types of business organization, their management
and funding and legal solutions for resolving conflicts together with recommendation.
TASK 1
a. Introduction to definition and purpose of law
According to John Austin, “Law is the aggregate set of rules set by a man as politically
superior, or sovereign to men, as political subjects.” Laws are made to serve various purposes of
society such as developing standards, maintaining order, resolving disputes and protecting rights
and properties of citizen of a country.
b. Different sources of English law by giving examples
There are two sources of English law which are as follows:
 Primary sources: These contain the information that are fresh and first hand. Further,
these have not been used or interpreted earlier. Such information is used for future
references. For example, case law, in which decision passed by courts, legislation passed
by Parliament and EU directives (Bayern, 2016).
 Secondary Sources: These includes information which have been interpreted, explained
and analysed. These are used by authors and researcher for their research work. The
various sources are Legal encyclopaedias, parliamentary and non-parliamentary
publications, law journals and textbooks.

c. Explanation with examples of English laws that a business organization must comply with
There are many laws that are applicable to a business, however, these may vary according
to nature and scale of business. The following laws are common to all organization:
 Employment law: This law governs provisions regarding minimum wage/salary, leave
including maternity and paternity, redundancy and termination of employment, pensions,
gratuity etc. For example, an employee of an organization asked for maternity leave, but
she's been denied, hence she can go to employment tribunal and file and case against her
employer.
 Consumer rights: The provisions of this law applies to a business that sells product or
service. These are to protect consumer against unfair business trade practices (Burley,
2017). For example, a customer has been cheated by a shopkeeper by charging increased
price, in such case customer can apply in consumer forum against the shopkeeper.
 Competition law: These are made to promote fair trade practices by preventing market
dominance and anti-competitive agreement. The market should be competitive and every
entity should get a chance to conduct their business in such an environment. The pricing
should be competitive and fixed for all customers without any discrimination.
d. Role of UK government in law-making
The UK constitution is partially written and government has enacted laws for governing
rights of citizens so that justice can be given to the culprit. Laws are important to maintain a
peaceful environment by giving justice to wrong doers. The process of enacting acts starts from
presenting a bill by a member of House of lords or House of common. After this, it goes through
a number of readings, followed by receiving royal assent. Hence, the government has a huge role
and responsibilities in law making process.
e. Application of statutory and common law in UK justice courts
Basis Statutory law Common law
Meaning These are made by legislature
through a formal and official
process (Flume, 2014).
These are formed on the principle of
judicial precedents. These are the
judicial decisions of courts which are
used for future references.
Operational level Procedural Substantive

Other name Case law or judge made law Written law
Nature Instructive Prescriptive
Roots/origin On the basis of judiciary or
precedent
Formed by legislature or government
In the case of Fisher v Bell, statutory law was applied wherein the judge passed a
decision judgement where Bell was proved innocent. The statue law, together with literal rule
was applied to get a conclusion.
In the case of R v Harris, in this case, the acts were defined not treated as an offence,
hence, the defendant was set free by rescinding his conviction. This was solved by applying
statutory law as common law failed to get a judgement.
In the case of Elliot and Grey, the defendant was charged with the offence, whereby, he
was not provided any kind of compensation Earlier the case was to solve through statutory law
but later transferred to a court for applying common law.
f. Using a chosen business organization as an example, illustrate the potential impact of major
laws on its business
ASDA has been chosen to analyse impact of company, employment and contract law are
as follows:
 Companies Act, 2006: This act regulates number of issues ranging from establishment,
minimum directors to be appointed, required number of meetings to be conducted etc. A
company can commence its commercial only after obtaining registration (Friedman,
2017). Hence, it is compulsory ASDA to have certificate of incorporation for its
existence and carry business activities in UK.
 Employment Act, 2002: The provisions of this Act govern rights of employers and
employee, conflicts of disputes, working hours, equal treatment to all employees,
dismissal, leaves, minimum wages etc. Company achieve its goals and objectives through
its employees by using their skills and talent. Hence, it is important for ASDA to provide
healthy, safety and workable conditions to keep them in the company.
 Contract law: The Contracts as made by company with suppliers, clients, or any other
party is governed through Sale and Supply of Goods Act, 1994. The law protects sellers

and buyers against fraud or breach of terms and conditions (Gaillard, 2014). ASDA
should form contracts that are legal and make sure to not to breach any terms and
conditions.
Difference between Legislation, regulation and standard:
Legislation Regulation Standard
The statues are enacted
legislative body after getting
royal assent. Every person is
bound to abide by laws that are
applicable in a country.
Similarly, it is mandatory to
follow Companies Act, 2006.
Legislation protects investors,
creditors and consumers.
Further, the employees are also
treated fairly and directors
exercise their powers in a right
way. This increases the faith of
various parties in the company
which increases it profits and
create opportunities for
expansion.
These are set of instructions
that ensure the effective
enforceability of legislations
so made and enacted. It is also
mandatory for companies to
comply with. A company that
follows regulation can see
positive impact on it
innovation efficiency (Harner
and Rhee, 2014). Further, a
formal uniform system is
followed which promote
growth.
These are guidelines
mentioned in the form of
document that is used as
supplement to maintain quality
of laws to increase their
efficiency. This assures that
output produced matches
industry benchmarks. This
maintain a consistency in its
process and procedures.
Critical evaluation of legal system and law:
UK system has a partially written constitution, in which laws have been passed for
written portion. There are increased number of legal provisions making it a complex system
which is not easy to understand and use. This makes it as ineffective legal and judicial system.
Further, there are separate laws and courts, and no common procedure to deal with variety of
cases, hence, increases the problems. Thus, the judicial system is not effective in providing
justice. It is outdated, which requires major reforms. For examples, a person charged with

murder is dealt under criminal law. In such case he may apply for an appeal and request to
reduce the sentence, which is easily accepted and reduced (Jacobs, 2015).
The legal system in United Kingdom is divided into three separate legal systems viz.
England and Wales, Scotland and Northern Ireland. Each of these have their own courts and
judiciary procedures to deal with both civil and criminal cases. It has gone through number of
reforms and developments. The system needs modifications in existing legal system which will
make it suitable and effective to implement and use. Further, it has a centralisation in power,
which means all the decisions are taken by Parliament, which does not engage people or their
opinions. This creates an environment of inequality and uncertainty in legal process. The public
feels that legislations are being imposed on them by the government. They do not follow them in
true spirit. Hence, major changes are required to make it a better system.
TASK 2
In the given case, Lama and Simsons is a partnership firm engaged in the business of
selling LED lights. However, it has been facing many problems such as disagreements between
partners regarding investment, lack of funds to expand business. Further, less freedom of
management, unlimited liabilities of partners, high rate of personal tax, raising new capital as it
does not want to raise capital through borrowings (Kraakman and Hansmann, 2017).
Furthermore, profits are distributed in equal ratio among all the partners even when there are
some of the partners not putting their efforts completely. Hence, from the above case scenario, it
can be said the partners should consider to dissolve this firm and look for other types of business
organization for making profits. There are other business types that can be assessed by
considering their advantages and disadvantages. Further, analysing each of them, a suitable type
will be chosen which will help in conducting business activities smoothly with reduced conflicts
and challenges. Hence, a detail evaluation of various types business organizations along with its
advantages and disadvantage have been mentioned under.
Critical review of various types of business organization
 Sole proprietorship: The business is incorporated by a sole trader. He has the absolute
authority of making all the decisions (Mann and Roberts, 2015). Further, the profits and
losses borne by sole proprietor himself. There is no distinction between the entity and his
owner. It is very easy to establish and wind up. This form of business is easy to
incorporate as a single person can set up it and there is no requirement of registration.

Similarly, dissolution is also simple and easy as the decision and management lies with
owner only. Further, there is no additional tax other than tax on personal income.
However, if sole proprietorship suffers loss then it is borne by sole trader only, there is no
sharing which is seen in the case of partnership. Also, the liability of sole proprietor is
unlimited and may extend to his personal assets.
Management: The business is managed and controlled by the sole trader. This means that,
the owner receives all profits. Further, the losses are also borne by him. He has the decision-
making power.
Sources of funds: It is not a registered entity; investors do not show much interest.
Therefore, the only option it has is to finance its business activities through own capital.
 Partnership: It is an association of two or more persons formed for a common interest in
order to earn profit (Morley, 2016). The members of group are called partners and
collectively known as partnership firm. It is governed by Partnership Act 1890. The
formation is easy as its required minimum two persons. Along with this, there exist a
contractual relationship due to partnership deed. Furthermore, there is no illegal business.
On the other hand, partners have unlimited liabilities and a partner is held liable jointly
and severally for the acts another partner. Moreover, there is lack of implied authority.
(Nonet, Selznick and Kagan, 2017)
Management: The business of a partnership firm is managed by all the partners. Further,
decision regarding expansion, funding, entering into contracts etc. must be made with the
consent of all partners.
Sources of funds: The sources of funding personal savings, retained profits, working
capital etc.
 Company: It is an association of people (natural or legal) to create a legal entity separate
from its members with a common seal and perpetual succession. It also has capacity to
sue or be sued and own properties in its own name. The liability of a company may be
limited by shares, or guarantee or even unlimited. The members have limited liabilities if
it is a limited company. They are liable to pay the unpaid amount of share. Along with
this, there is no restriction of transferability of shares and wider options are available to
raise capital (Norris, 2016). Further, the tax rate is low as compared to other form of
business organization. Hence, it is easy for them to raise funds. On the contrary, it

involves huge costs in setting the business also, it requires huge number of formalities
regarding reporting. Further, shareholders have to pay huge tax on the income so
distributed as profits.
. Management: A company is an artificial person, thus, cannot carry its activities on its
own. So, to manager the affairs and make decisions it appoints directors as specified in
Companies Act, 2006.
Sources of fund: It has many options to raise finance because it is a registered entity.
The major sources of funds are share capital and debentures by issuing shares and debentures,
respectively (Wilson and Sipe, 2014). The other ways through which it can finance its operations
are bank loans and borrowings.
 Limited Liability Partnership: It a hybrid form of partnership and company, whereby,
members have limited liabilities as to debts of company. The business is managed by
partners. It is governed by Limited Liability Partnership Act, 2000. It is suitable for
advocates etc. The partners have flexibility in management. Also, it is a legal person and
have corporate ownership, hence, it is easy for it to get investor who can provide funds.
However, the personal income of partners is taxable and minimum two persons are
required to form it.
Management: The partners are responsible for managing business activities. The decision
must have get approval from all the partners.
Sources of funds: Fund sources for LLP are personal investment, government grants, bank
loans etc.
The partners of Lama and Simsons may assess other options which can provide high
advantages and limit the challenges it is facing currently or may face in future. The suitable
business type may be Company. There will be better opportunities for expanding business.
Further, more options will be available to raise funds for financing.
TASK 3
An organization cannot ignore disputes arising within organizational premises. The
problems may be with employees, clients, suppliers etc. Every such situation requires immediate
resolution to limit worse outcomes. There are many disputes resolving legal solutions are
available which can be applied for prompt action. However, each situation is different which

should be managed and resolved through suitable method. An organization should evaluate each
of them before their application. The number of legal solutions are as follows:
 Negotiation: in this process, a back and forth communication is held between parties to
dispute for finding a solution. It the simplest form of solving conflicts (Raz, 2017). The
parties may solve it directly or may appoint a an attorney to talk and resolve the matter on
behalf of each other. Further, it parties agree, they may execute a negotiation agreement
which can be enforceable as contract. It is voluntary in nature, quick and inexpensive,
unstructured, the parties have absolute ownership to control the process etc. Negotiation
can be seen in everyday work, however, some situation may demand taking help of
lawyer to reach a fair solution. It is used as first method for problem, however, it must be
used before filing a lawsuit.
 Mediation: In this process, a communication is held with the help of a mediator to reach
to mutually acceptable solution or agreement for faster resolution of conflict. Parties
participate in the communication directly, and are absolutely responsible for negotiating
their own settlement. The parties get a chance to present their side of the dispute. The
parties hear each other to understand the situation better. There may come situation,
where mediator will personally meet the parties to know the factual issues in detail.
However, the help of mediator can be taken when parties themselves can not reach to
conclusion. This is used in cases of disputes between consumers and buyers, employees
and employers, etc.
 Arbitration: It is an out-of-court method whereby a person is appointed as arbitrator for
giving a judgement in the matter. He listens to both the parties in order to make a
decision. The testimonies presented are considered for determining solution. It is a cost-
effective and less time consuming. Further, it involves less formalities. The conflicts are
solved by forming own procedure and administration is done by arbitrator. The
judgement is final and of binding nature. Further, an appeal for arbitration award is very
limited. Both the parties may choose a third party mutually. It is a voluntary process,
which gives prompt results, the decision can be enforced in court (Singer, 2018).
 Litigation: In this, a case is filed in the court to be decided by judge. The intention to file
a litigation is to compel defendant from involving in the solution. The process starts by
filing a lawsuit, which is followed by trial wherein evidence and facts are submitted by

each parties to the judge. Then, evidence and testimonies of witnesses are examined so
that a decision can be passed. Such decision is enforceable in courts and appeal can be
filed by an aggrieved party to review the judgement so passed. It can be made to a higher
court only.
The above-mentioned methods can be applied in the cases which are as follows:
Case 1.
In the given case, Lina was employed at BP Petrol station in London where the salary
offered to her was low, however, she was happy with her work because of amicable nature of
fellow workers and the office was just 5 minutes' walk away. The BP station started a rota
system whereby every worker needed to work at least two weekends per month. Lina failed to
meet the requirement due to family issues. After that also, she took two weeks’ holiday because
of her mother's ill health. However, manager put an objection for the leaves.
On returning to work after, she found that her working hours have been changed majorly,
her locker was given to somebody else, along with this, her photographs were removed from
staff notice board and many other modifications were made in her absence. Her manager was not
happy with her work, hence, made such changes. He also asked her strange and weird questions
which made her confuse and uncomfortable (Stout and Blair, 2017). She even felt that manager
sometimes encourages or let other bully her. She finally decided and left the job after suffering
for two months with this situation.
After three months’ form date of her resignation, she felt that it was an indirect and unfair
dismissal. Therefore, she searched about her dismissal on internet, which shown the result of
constructive dismissal. It means when an employee is forced to leave her job against her will
because of employer's conduct.
After analysing the above case, Arbitration would be the right option. The manager made
the situations worse for her so Lina herself resigns the job. The manager did not want to
terminate her due to the fear of wrongful dismissal as Lina's reasons were genuine and
justifiable. He could have made her work extra in coming weekdays or on weekends, but making
changes in her absence was absolutely wrong (Scheuer, 2015). Further, it is the duty of an
employer to provide a healthy and friendly environment to all personnel, which he failed to
provide to Lina. Thus, the events were created knowingly by the manager to make her move out
the company. Thus, the arbitrator will examine all the facts and make a decision accordingly.

Case 2.
In the given case, Darum bought a TV to watch videos on YouTube. The internet service
that he had failed to provide the minimum speed, due to which he switched to Little Britain
Telecom Ltd. He paid a price of £29.33 per month as provided in the terms and conditions.
However, Little Britain Telecom did not provide even 25Mb per second speed at most of the
evening hours. After several months, it sent a notice to Darum about increase in broadband
service fee by £5. along with this, an option for cancellation of contract without any termination
fees was also provided. Darum decided to end the contract, where he was requested to pay a
broadband-cease-charge of £31. When he searched about this on the internet, he realised that
Little Britain Telecom is breaching English contract law.
From the above case scenario, Little Britain Telecom mentioned that a person is not
required to pay fees on terminating the contract. However, it asked for a broadband-cease charge,
which is totally unfair as their contract had no such clause (Tushnet, 2017). This is similar to
cancelling charge only, and the company clearly mentioned of no such fees. It was indeed a
breach of contract. Hence, Darum should file a litigation against the it in order to get justice so
that Little Britain Telecom and other companies operating similar business do not charge any
such fees from its customers, when it has mentioned in the contract. Further, the company also
failed to provide required speed in the evening which is again a valid reason to file a case to get
justice.
Case 3.
The case is about Uber and its drivers. James Farrar and Yaseen Aslam are two of its
licensed drivers who argued that they are employed by Uber but didn't have basic workers' rights
regarding minimum wage, holiday pay. Furthermore, they state that their actions were controlled
by it, which made them its employees. However, Uber denied the fact that drivers were
employed by the company. Further, said that it does not change shifts or minimum working
hours or make drivers work only for Uber. Also, Uber gave data about the average wage that all
the drivers made an hour.
This can be solved with negotiation, wherein, drivers will put their set of arguments along
with enough facts and evidence such as receipts or other documents to shows the wages they
have earned. On the other side, Uber will provide relevant evidence to prove that drivers are not
its employees. A third person will be appointed to help with communication for prompt solution

(Rosenbloom, 2018). Negotiation is a simple, inexpensive and out of the court settlement. Hence,
this method must be adopted.
CONCLUSION
From the above report, it can be concluded that business law is necessary to govern
company's affairs legally so that legal actions can be sought in case of any breach or
contravention of provisions. The citizens as well as organizations in UK have to follows
legislation in order to protect from illegal acts. Along with this, there are many types of business
organization available to choose from. Hence, a person should always research about types of
business organizations along with their advantages and disadvantages so that a suitable structure
can be selected. Along with this, an appropriate method must be adopted for resolving conflicts
or disputes arising within the entity.

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Online:

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