Analysis of UK Business Law: Case Studies and Legal Solutions

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Business Law

Table of Contents
Introduction................................................................................................................. 3
Task 1......................................................................................................................... 4
Task 2......................................................................................................................... 8
Section 2 – Legal solutions to business problems – (LO4).......................................12
Conclusion................................................................................................................ 16
References................................................................................................................17
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Introduction
A business depends on various aspects and one of the most important factors is
incorporation of resources in specified sections. The management is fully
responsible for this activity and it is necessary to ensure that they are abided by the
legislature of the country. In the following section, some of the legal factors and laws
will be discussed. Apart from that, the formation of the UK legislature will be
discussed and the formation system will be detailed. Some of the case studies will
be considered as well and in accordance with that, specific legislations and case
laws will be considered. The detailed aspects of the partnership business are going
to be highlighted and the advantages and disadvantages will be discussed as well.
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Task 1
a) Discus the meaning of this statement and discuss the various sources of
UK Laws
The concept of parliamentary sovereignty is debated in the UK. The parliamentary
sovereignty is the main principle of the constitution of the United Kingdom. The
parliament of the UK is the supreme legal authority. The statement ‘Parliament is
sovereign’ refers to the nonexistence limit on parliament’s power in its legislative
roles (Gordon, 2015). The house of parliament is attested and sovereignty is used to
emphasise the significance of joint power of the House of Parliament and House of
Commons in the UK.
The sources of various laws in the UK are listed.
Statutes: The statutes are mainly originated from the Parliament. The acts such as
equality act 2010 and others are an example of statutes.
Common law: The principles that were established in different cases over the years
during the standardisation of various laws throughout Wales and England from the
11th century (inbrief.co.uk, 2019).
EU law: The directives of these laws require to be implemented into a member
state’s national law. The law leaves an impact on the member states. The nation that
joins the European Union needs to adopt all these laws such as treaty provision,
directives, regulation, and precedents.
Case law: These laws are originated from the judicial decision-making process. The
judgment generally consists of the facts that are related to the case, the right position
of legislation and the decision.
b) Explain the role of government in the law making process and how statutory
and common law are applied in the justice courts
The government of United Kingdom has a greater contribution to the lawmaking
process. The main role of parliament in lawmaking is passing laws and debating.
The public bills are considered as the common form of legislation that is passed by
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the government ministers. The members of parliament may also pass the legislation,
which is known as private member’s bills. The legislative procedures generally start
with the first reading, second reading, committee and report stage, third
reading and royal assent process (parliament.uk, 2019). The first and second
reading process refers to the basic actions of the House of Commons and House of
Parliament. The bill is presented by the house of common to the government of the
UK. The government hears the opinions of other parties. The committee thoroughly
examines the bills so that it can be able to report the decisions in the committee and
report stage. At the final stage, the bill is reviewed again and the queen gives the
royal assent to the bill. In this way, the government of the UK takes part in the
lawmaking process.
The common law is considered as the body of the law that is made up of the
decisions by courts. The common laws are responsible for developing the bills that
are passed by the court. This is a case law, which is instructive in nature. The
statutory law is set out by the court to interpret a statute, which is started in
accordance with the language of the law. The legislature is followed by the court. For
example, it helps to understand the ambiguity in criminal cases.
c) Use specific examples to illustrate how company, employment and contract
law has a potential impact upon business. You could elaborate by
differentiating between legislation, regulations and standards to analyse
potential impacts upon business.
Employment law helps in regulating and maintaining the relationship between
workers and an employer. It determines what an employer should expect from its
workers concerning their job responsibilities and performance. The law contains
certain legal requirements, processes and checks related to recruitment. The
elements can be holidays, data protection, working hours, pays, health and safety
regulation and others (cipd.co.uk, 2019). The positive impact of employment law is
that it makes employees understand their right for which a better relationship is being
established among workers and the management. If the business strictly complies
with regulations imposed by employment law, it can avoid expensive employment
tribunal claims. The negative impact of employment law is that it increases the cost
of operating different activities. It takes a maximum time of the employer to monitor
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and remain updated. Ignorance of employment law can result create negative
consequences for employers; thus leading to reputational loss of the concerned
business.
A contract develops when an individual makes an offer, and another individual
accepts it by following the terms and conditions of the offer. Contract law allows
employers to bind in a legal term in order to create a legal relation. The positive
impact of contract law on businesses is that assets transferred under a legal contract
can be recovered and it prevents business loss. Its negative impact is that the
concerned business may have to bear the complexities associated with terms and
conditions of contract law. If a business has a specific legal problem concerning the
contract of goods, it may need specialist assistance that may increase the legal
expenses (InBrief.co.uk, 2019).
Legislation, standards and regulations
Legislation Regulations Standards
Overview A governing body
or legislature
disseminates the
legislation for a
specific purpose.
It is an abstract
concept that sets
trends and rules.
It outlines the
bases for
disseminating a
judgment. It can be
an authoritative
rule that denotes a
pattern of
guidance.
Positive impact It acts as a catalyst
for the workplace.
It motivates the
business to go for
foreign direct
investment. It
improves workers
safety and reduces
the power of trade
unions
Regulations
provide a legal
cover to a specific
business.
Adherence to
regulations can
govern safety,
discriminatory,
privacy and other
practices inside the
Using standards
can reduce the
development cost
and time for the
business. It can
establish a
recognised level of
quality for products,
services and
methods. The other
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(Rcophth.ac.uk,
2019).
workplace. impacts can be
quality and safety
assurance; thus
increasing the
business
reputation.
Negative Impact Poor knowledge on
legislation can
abridge the rights
of employees; thus
leading to a poor
employee-
employer
relationship.
Violating the
regulations can
result in legal
actions against the
concerned
business
(Rcophth.ac.uk,
2019).
Standard may force
the business to
change its existing
practices. It may
reduce productivity
by imposing
unnecessary
actions.
Businesses may
require resources
to provide
awareness and
training to
employees
regarding the
application of
standard
(Rcophth.ac.uk,
2019).
Table 1: Distinction among Legislation, standards and regulations
(Source: Created by the learner)
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Task 2
Nature and formation of different types of business
There are different types of businesses and each of them varies due to their
differences in approach strategies and capital management. In the following part
some of them are going to be discussed as well.
Sole trading
The management and control in the hands of the owner of the organisation. The
company has unlimited liability and the possibility of having a major financial
pressure is always high on the single proprietor (Smithson, 2018).
In order to form a sole trading organisation it is necessary for the person to think of a
name and the name should comply with the legal requirements of the nation. In
accordance with the new Companies Act 2006, Part 5, Chapter 1 the names of an
organisation has to comply with some aspects and they have been detailed in the
segment. (Legislation.gov.uk, 2019) The issues associated with the name are a
small hurdle. The management needs to make sure that they have enlisted the name
of the company with proper registration to the specific authority. They will get
concession on taxes as well.
Partnership
Partnership business is formed with the help of two or more investors. The
management process is controlled by the shareholders of a business and the
decision is been taken by all of the partners (GOV.UK, 2019). The profit and loss is
shared by the amount invested by the shareholders in a business. The case study
mentioned scenario says that it is a partnership business and the investors are
planning to be a private company in future.
In order to form a business in a partnership venture the management needs to
register the organisation in the HM Revenue and Customs. The services
provided by the authority needs to be in a proper formation and they should
make sure that the names and the service providers are fulfilling other legal
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requirements. Apart from that, the form S400 and SA401 can be considered
as well (GOV.UK, 2019).
Private Limited
The private limited organisations have their own legal systems and they are going to
get more benefits in the business progress. In the United Kingdom the service
providers have to enlist the company in the Companies House to be a part of the
private company list. The JPM Publishing is trying to be in the trend of private
organisations and they are going to get more benefits in this process than ever.
The private limited company has a unique benefit which is not present in the sole
trading and partnership ventures. The sole traders and partnership business workers
are going to get services that are associated with proper kind of management
strategies (Jordans.co.uk, 2019). They are liable for the debts but the private limited
company owners can keep their personal asset from being ceased. The investors
are going to be repaid from the business ventures in accordance with the profit it
earns.
Public Limited
The public limited companies are those which are going to make their individual
approach to the market. The companies are going to take money from the market
and turn them into their shareholders. This is going to result in a positive manner and
in the end it will be a beneficial aspect for the investors.
There are some requirements to for a business like this. The management needs to
have at least two members. The management needs to register the business with
the Companies House and the share value has to be at least £50,000
(Nibusinessinfo.co.uk, 2012). The company can take loans from the market and
share their profit with the people who are helping in making business with them. The
companies have to have the term Ltd., after their name.
Critical evaluation of differences between unincorporated and incorporated
business
In order to understand the business liability difference the opinion of Potter and
Heckman (2018), need to be understood where it is said that, incorporated
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businesses are independent legal identities and the unincorporated businesses are
only an extension of the business providers. It is also a fact that the unincorporated
business providing organisations have to face difficulty in asset transferring. On the
other hand the service providers of the incorporated businesses can easily transfer
the funds to the third party if they are a business investor. According to Light and
Munk (2016), the sole traders of unincorporated business providers have to give tax
once in a year, which might cause them issues in business settlement. The
Incorporated business owners have to pay tax twice a year which is a drawback but
they have to pay it from the organisation’s funds.
The service providing organisation in the case study is JPM Publishing and it is seen
that they are planning to be a private limited organisation and it is one of the biggest
decisions for them. The management has to face above mentioned issues and
benefits when they will become a private limited organisation. The management
needs to make sure that the issues are being minimised with the help of them and
they are going to get the benefits in accordance with the provided above mentioned
information.
Management and funding
The management of the partnership business needs to be defined in a proficient
manner and it is highly necessary to make sure that the service providers are willing
to make a proper distribution of task between them. In case of JPM Publishing the
service providers have to think of new strategies that are associated with proper kind
of situation analysis. In the case study it is seen that they are willing to expand the
business and the steps they are considering in the process needs to be highlighted.
The management of the organisation has planned to make it a limited organisation
and they are not aware of the requirements. The management needs to think of new
strategies first and in this aspect they have to register the name in the Companies
House to get proper legal recognition. Apart from that they should make a proper
design to approach to the people in order to gain more returns financially. The
biggest change for them will be liability meeting shift. In this case JPM Publishers
does not have to be worried about the financial downfalls because their personal
assets are going to be unharmed.
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The funding process in case of a private limited company and a partnership business
is totally different. The process if funding shifts from personal assets to market
investors. This is an important thing to be taken into consideration if JPM is going to
be a private limited organisation. The funding process includes the profit distribution
system shift as well. The profit distribution needs to be in a proficient manner and the
management needs to incorporate ratio analysis system in order to make proper kind
of distribution. It is important to have a better kind of details regarding the loss
statement as well because the same ratio will be applied for the people who are the
prior investors in the business. In this process the management is going to have
financial support from the people who are interested in investing in the business.
Advantages and disadvantages of partnership
There are different factors that are going to provide major advantages and
disadvantages for the people who are involved in the business.
Advantages of Partnership Business
 The benefits include the less formality. In accordance with the recent reports it
is seen that the partnership service providers does not have to give any kind
of corporate tax returns (Inform Direct, 2017). The entire process is really
simple and when it comes to record the income and expenses.
 The most important thing is the profits and losses both are shared and this
nullifies the issues of getting bankrupt which is a major possibility in the sole
trading option.
 The data sharing option has a major advantage and in this case it is seen that
the knowledge, skills, experience and contracts are used in order to make
proficient impact on the business data analysis.
Disadvantages of Partnership Business
 The business does not have any kind of independent status and it is seen that
the decision making has to be done with the help of other shareholders. This
makes the entire process of implementing something slower than anticipated.
 The liability is high and the possibility of having major financial pressure on
the personal life of the investors is also relatively higher than expected
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(Steingold, 2017). The involved shareholders may have to sell their personal
belongings in order to meet the debt.
 Apart from the financial sides the management of a partnership business
needs to think of new business development processes and it is also seen
that they deserve lower level of respect than the other companies in the
private limited domain.
Section 2 – Legal solutions to business problems – (LO4)
Recommending appropriate legal solutions to resolve disputes using case
laws and statutes
Recommendation for Case 1
In the case of Champion Ltd, there is core which can be made for the enterprise. The
company has failed to pay several loans which the enterprise has taken. These
loans include large sums from banks as well as loans from customers. The next
course of action which the company take is entering into a situation of Company
Voluntary Arrangement with its customers. Through this agreement the company will
be allowed to receive a grace period within which the company can either plan its
next course of action or implement methods through which it can pay off its debt
(McLaughlin, 2018). This Company Voluntary Arrangement can only performed
when a company is in a state of involuntary winding up, where external forces such
as creditors and the government put the managerial heads of the enterprise to forfeit
their assets.
Through Company Voluntary Arrangement statutory demands are implemented
whereby which the company gets a grace period of 21 days where the company can
ascertain what they will do next in terms of taking a strategic decision. Within these
21 days the company can perform multiple actions such as hiring a business
consultant, selling off unnecessary assets and others methods where by which relief
can be attained by the company. To make the Company Voluntary Arrangement
successful and be in force in the first place, 75% of Champion Ltd’s creditors must
agree and allow the company to be a position where they get this opportunity (Ostry
et al., 2015).
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