Business Law Report: Legal Aspects of Business Operations

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Business Law
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Table of Contents
Introduction................................................................................................................................... 3
Task 2............................................................................................................................................ 4
Gig Economic............................................................................................................................ 4
Pimlico Plumbers Case.............................................................................................................. 4
Difference between Employed and self-employed.....................................................................4
Opinion about the Case..............................................................................................................4
Task 3............................................................................................................................................ 5
The steps need to follow the company.......................................................................................5
The role of the company.............................................................................................................5
Legal personality........................................................................................................................7
Registered company...................................................................................................................7
Duties of directors......................................................................................................................8
Task 4............................................................................................................................................ 9
ADR........................................................................................................................................... 9
Arbitration (focus)......................................................................................................................9
Mitigation.................................................................................................................................10
Conclusion................................................................................................................................... 11
References................................................................................................................................... 12
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Introduction
Business Law is the body that assists in governing the branches of civil law and deals with the
issue of both private law and public law. The important of the business laws in the business
organisation is very imperative as it assists the organization in achieving the business goals in a
fair and transparent manner. It is crucial that all the business must follow and abide by the rule
and regulations for regulating the business function in a fair and transparent manner. Business
law plays a very vital and imperative role in regulating commercial contracts, hiring contracts
and in the manufacturing process of goods and services. In this assignment, there is a brief
discussion on rules and laws that are following by the businesses while performing their business
operations. The first task deals with the legal system and its divisions. Further, it discusses
various sources of law with a brief and detailed discussion about the parliamentary procedure for
passing the bill. The second task deals with the summarizing of the Pimlico case. The third task
deals with the formation of the company and its procedure along with the roles and relevant case
laws. Moreover, in task 4, it consists and explains about the various method of alternative dispute
resolution mechanism.
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Task 2
Gig Economic
The introduction to gig economy is made with the objective of providing flexibility to labors in
choosing their work. The disadvantage of the concept is that it does not ensure workplace
protection or job security (Johnes, 2019). The major area Recently, it has been estimated that
approx. 5 million people are engaged with the kind of employment where the workers are paid
depending on the gigs they do. Despite being criticized the gig economy provides the workers
with the advantage to control work hours with managing their personal life priorities.
Pimlico Plumbers Case
The primary fact of the Plimico case was that an engineer named Gary Smith claimed that he
was employed after falling sick although he was designated as self-employed. The Plimico
Plumbers has employed employees who were designated with self-employed which also
included the employees working in the gig economy (Prassl, 2017). The Employment Tribunal
and the Court of Appeals, both had delivered the decision in favor of Smith. Further, the appeal
was made to the Supreme Court. In the view of the Supreme Court, Plimico has controlled the
ways of working of Smith, hence he was declared as the employer of Plimico Plumbers.
Difference between Employed and self-employed
The basic difference between the mentioned terms is outlined on the basis of tax paid by the
individual. The self-employed individual has the liability to pay lesser tax as compared to the
employed individuals. He is his own boss and can control the work hours. On the other hand, an
employed individual has to pay regular taxes and gets no flexibility in the work hours but the
advantage is that they get the paid leaves and job and workplace security.
Opinion about the Case
The decision regarding the employment is purely based on the circumstances of the case and
hence precedents delivered must be applied by considering the facts of the case. And it is also the
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fact that publicity of the Pilimico’s case is going to rise challenges in future to the cases related
to disputes arising out of self-employment.
Task 3
The steps need to follow the company
In accordance with the provision of the Companies Act, 2006, the first step for the formation of
the company is to prepare the documents in relation to the Memorandum of Association (MoA).
Memorandum of Association contains the fundamental terms and condition of the company that
assists in regulating the external affairs and Articles of Association assist in governing the
internal affairs of the company (Dams, 2016). To register the company there are following steps
that are required to follow by the company are mentioned below:
 First checking up whether setting up of the limited company is right or suitable for setting
upon the business.
 The next step is to choose the name of the company as per the company rules and its
availability and also check the existing trademarks.
 Next step is to choose the directors and company secretary for the company for business
operation and management.
 Next is to decide who are the shareholders or guarantors of the company and to identify
the people who have significant control over the company.
 After that, it is important to prepare the document that is important to run the company
includes Memorandum of Association and Articles of Association (Bräuninger, 2017).
 Next is to check the company and accounting records that require keeping and
maintaining such records.
 The final step in the formation of the company is to register the company with the
Companies House.
The role of the company
The provision of the company is guided by the Companies Act, 2006. With increasing in the
roles and responsibilities of the company along with its size and scope, the company secretary is
appointed which assist in managing the business efficiently (Marson and Ferris, 2015). The
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company secretary is responsible for timely compliance as per the statutory and regularly
requirements that assist the board of directors of the company to take an effective and efficient
decision for the betterment of the company. If a company secretary does not perform his
responsibilities, then he can allege under various laws are as follows:
Public Law: The law which delineates the correlation among the citizens and the State or
Government is Public Law. Criminal Law, Administrative Law, and Constitutional law are the
major areas covered by the Public Law.
Private Law: It demonstrates the rights of the individuals and their obligations towards each
other. The issues related to private law are known as civil suits and the process of resolving the
issue is initiated by filing a written complaint. Torts, law related to family, employment and
contract are few examples of the areas covered by public law.
Criminal Law
Criminal law imposes liability on the individual for any act or omission which results in any kind
of criminal breach. The purpose of the law is to punish the person by either penalizing
monetarily or by charging with him with imprisonment.
Civil Law
The purpose of the law is to provide compensation to the aggrieved person. The person who
suffered the damages is liable to get remedy based on the amount of damage suffered by him.
Types of Organisations
There are mainly three types of business organizations that are prevailing in the business
environment includes sole proprietorship, corporation, and partnership.
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Figure: Types of Organisations
Source: By Author, 2019
Sole proprietorship
It is the business which is owned by a single person who is responsible for making all decisions
and is accountable for all the business profits generated in the business. A sole proprietor is
solely accountable for the payment of business debts and liabilities. The owner is not bound
legally for sharing the business profits with others.
Corporation
Company is a separate legal entity which is separate from its members. It is a body corporate or
incorporated business organizations which are registered under the Corporations Act, 2006. A
company can be limited by share or limited by guarantee, company can be limited or unlimited,
public or private, a company having a share capital or company in relation to the interest of the
community. A limited company is the company where the members have limited liability
towards the capital they are originally invested into the company and if the company becomes
insolvent, the assets of the shareholders remain protected and secure. On the other hand,
unlimited liability is the liability where the shareholders are unlimited up to the amount they
contributed and there is no limit of the losses which is borne by the investors and also liable
personally at the time of winding up for contribution. The provision of the company abides under
the Companies Act, 2006.
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Partnership
The partnership is the business which is owned by two or more people. In this business, the
owner gets help with financing, start-up cost or regulates the business expenses (Pisani-Ferry, et.
al., 2016). In this business, partners are sharing their knowledge and experience in their relevant
field that assists in run the business in a profitable manner. In this, partners are agreeing to share
their profits and losses in the ratio as per the clauses mentioned under the partnership deed. The
provision of partnership is governed under the Partnership Act, where one partner is liable for the
act of another partner.
Legal personality
Unlike a partnership, the Company is a separate legal personality from its members. A legal
personality is the one who is capable to exercise their legal rights and duties as per the specified
legal system include come into the contract, sue and can be sued. Similarly, the company is also
the separate legal personality that posses the ability to amend its rights and obligations and work
under its legal capacity.
The case of Lee vs Lee, this case is a good example of the consequences of the separate legal
personality. In this case, Lee who was the principal shareholder and director formed the
company. Lee was also an employee of the company and in 1956, Leer was killed at the time of
spraying the crop from his plane. Due to this, the Widow of Lee claims compensation as the
worker widow. In this case, the court decides that both Lee and the company are the separate
legal entities.
Further, Solomon’s case illustrates the working beyond the company scope by referring to the
situation under the veil of the incorporation. In this case, the court decides that the separation
among members and the company are not maintained.
Registered company
In the UK, the registered company means the company whose name is mentioned under the
official records of the Registrar of Companies.
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Duties of directors
Directors play an effective and efficient role in managing and controlling the business activities
and functions. Directors are accountable for managing the daily operations of the business on
company behalf. Companies Act, 2006, strongly recommended the duties of directors that are
mentioned under Section 170 to 178 (Andrew, 2016). There are some key and important duties
of the directors that are relevant for the medium and large sized companies are as follows:
 Section 170-It is the duty of the directors to act in the best interest of the company for
providing long term benefits to the company.
 Section 172-For the success and growth of the company, it is the duty of the directors to
perform their duties in the best interest of the company by considering the impacts of
their decision on the business operations (Kassim, et. al., 2013).
 Section 174-It is the duty of the director to exercise reasonable care and skill in relation
to the company while taking decision and judgment for running the business operations
of the company.
 Section 175-Directors do not enter into the transaction or activities that directly or
indirectly provide benefits from the transaction on company behalf.
Directors are also bound with the agreement between the employer and employees, company,
outsiders and creditors defining the rights and responsibilities of both the directors and employee
or employer under contract of employment. Following are the major areas which inscribed in a
contract of employment.
 Conditions of employment
 Rights
 Duties
 Responsibilities
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Task 4
ADR
Alternate dispute resolution method is the method of resolving disputes in a smooth and
amicable manner out of the court instead of litigation and negotiations. It is the method, where
the parties settle their clashes with the help of the third party instead of going to the court. There
are several methods of ADR are Arbitration, Mediation, Conciliation, and Negotiation.
Arbitration is another form of resolving disputes out of the court where the disputes are decided
by one or more person known as arbitrators bypassing the arbitration award, the awards passed
by the arbitrator is binding upon the parties. If both the parties do not agree on the decisions
passed by the arbitrator and any of the party is disagree with the decisions that both the parties
together appoint another common arbitrator with mutual consent (Reyes and Gu, 2018). It is one
of the speedier and cheapest methods.
Conciliation is also one of another method where the party known as conciliator assists in
settling the disputes among the parties of disputes. Conciliation is the voluntary method which is
flexible and assists in keeping the parties’ information private and confidential.
Mediation is the method where the disputes are settled by the mediator and helps out parties to
negotiate and settle the disputes in a smooth and amicable manner. It is a procedure where the
mediator discusses the issues with the parties and assists them to reach over the settlement with
mutual agreement and concern of both the parties.
Negotiation is another method of settling disputes and reaching on the agreement by avoiding
dispute. In this negotiator, understand the matter of disagreement where the main aim is to
achieve the best possible result of settling the disputes.
Arbitration (focus)
Arbitration is the most popular, cheaper and favored method for settling the dispute among the
parties. This method is less and costs consuming method. In this, parties can prefer to resolve
their disputes with the person who is able to resolve issues by governing the rules and regulations
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(Borisov, 2015). In the overall proceeding of the court, there is a possibility among the parties to
go for an appeal to the higher court and at last to the Supreme Court which means a direct loss of
time along with money. On the other hand, the ward passed by the arbitrator is final and of
binding nature where the appeal is preferred in case of urgency for the businessman. Further, the
proceeding of the arbitration is held privately which supports the parties to keep their issues
private and confidential.
Mitigation
Mitigation is a particular action, activity, process, or project that assists in reducing the long term
risk in the business in the context of hazards and its impact (Governance, 2019). Mitigation
means is to decrease the risk in relation to the loss due to the occurrence of the unexpected event.
In accordance with this law, the party who suffered loss has to take reasonable and appropriate
step to minimize the quantum of loss suffered by the party.
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Conclusion
At the end of this report, it concludes that the above relevant case laws assist the business
organizations to gain the process of learning in relation to the business laws. This not only assists
the businesses in achieving their goals about also helps in gaining the reputation and goodwill all
over the world by establishing its credibility. Further, the above-mentioned method of ADR
helps the businesses to resolve the clashes in the business out of the court. Thus, business law is
the guidance that helps the businesses, encompasses all the laws that assist to regulate and run
the business. It is crucial that every individual must act within the defined limits of the law. A
legal system is a systematic approach according to which an individual must act. He/she must
avoid doing any act or omission which is restricted by the legal system of the country. The
English Legal system sets out a number of legislation and regulations which defines the
guidelines for resolving conflicts among both the individuals and organizations. Laws
demonstrate the rights of the individuals and their obligations towards each other.
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