Legal Aspects of Business Management: Case Studies and Analysis

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LAW FOR BUSINESS MANAGERS

Contents
INTRODUCTION........................................................................................................................2
Q1 A. WHAT IS THE CONTRACT AND WHAT ARE THE REQUIREMENT FOR A VALID
CONTRACT TO BE FORMED UNDER THE LAW OF ENGLAND AND WALES............................3
Q1 B. WOULD RINGO BE ABLE TO PAY PAUL BASED ON THE FACTS ABOVE?.....................4
Q2 IN LIGHT OF THE FACTS ABOVE, DISCUSS THE CRITERIA THAT JERRY WOULD NEED TO
SATISFY IN AN ACTION FOR NEGLIGENCE.............................................................................5
Q3 IDENTIFY THE MAIN BUSINESS MEDIUMS AVAILABLE TO RINGO AND HIS FRIENDS
JOHN AND YOKO AND THE ADVANTAGES AND DISADVANTAGES OF EACH OF THESE
MEDIUMS............................................................................................................................. 6
Q4 DISCUSS WHY IT IS IMPORTANT FOR RINGO, JOHN AND YOKO TO IDENTIFY THE
CORRECT EMPLOYMENT STATUS OF ANY WORKER THAT THEY RECRUIT FOR THEIR
BUSINESS.............................................................................................................................. 9
CONCLUSION.......................................................................................................................... 12
REFERENCES........................................................................................................................... 13
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INTRODUCTION
Law relates to the rules and regulations that are made for the people and for their general
safety. Various laws are made that relate to food safety, traffic, licensing and against the
discrimination. A contract is a written agreement that relates to the employment or sale of
good and service. By framing the contract act, any business can have its operation anywhere
in the world. The assignment studies a case relating to Ringo who was a sole trader and his
son Paul. The relevant case relates the law and legislation and the contract that is required
to prove the case.
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Q1 A. WHAT IS THE CONTRACT AND WHAT ARE THE REQUIREMENT FOR A
VALID CONTRACT TO BE FORMED UNDER THE LAW OF ENGLAND AND
WALES
CONTRACTS
They are the agreement which is enacted by the professionals and can be written or oral.
According to this agreement, the parties promise and assist the court to form the judgment
based on the legal legislation for the provision under contract act (Buxton, 2015). All
important elements present in the contract should be fulfilled, only then the agreement
made would be thought valid. For a contract to valid, it should have offer, consideration,
and acceptance along with the intention of the party to join hands with another firm.
Offer: An offer or a promise should abide in the contract to be valid since without the offer
there can be no contract. This is an important element that should be made in the contract
to ensure that the contract made is legal and valid (Hughs-Baird, 2010).
Acceptance: The offer made should now be accepted. The party should accept the offer
made under the contract only if they are clear with the rules and regulations offered in the
contract. After accepting the offer, the party should have legal intentions rather than illegal
objective behind the contract made (Hughs-Baird, 2010).
Consideration: It is one of the important elements that should be present for a contract to
come into action. Consideration in a contract means confirmation by the other person to
give their best in return. For a contract to be legally valid and acceptable there should be a
consideration.
Intention to create legal relations: The contact cannot be termed as agreement if the
intention of the party is not legally enforceable. The contract would be subject to a lawsuit if
the intention of the party is not according to the contract (Buxton, 2015).
Certainty: This is another main element present in the contract. The rules and regulations
made in the contract should be clear and easily understandable by the parties forming the
contract. The party should inform about all the laws and terms to the other parties
effectively.
Capacity: It states that the contract should include the legal capacity to be accepted. 18 year
is a major age that can enter the contract. The people below 18years and who have an
unsound mind cannot enter the contract (Buxton, 2015).
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Therefor for a contract to be valid, all the above-mentioned elements should be present
while forming the contract. A contract would be termed legal only if the main elements are
present in it. And so people should be careful while forming the contract and make sure that
the parties coming in the contract should have the intention to make legal connections with
the other party.
Q1 B WOULD RINGO BE ABLE TO PAY PAUL BASED ON THE FACTS ABOVE?
According to the law of England and Wales, it is very important that the parties should have
an intention to make legal relations with the other party while forming an agreement. The
communal and social agreements are not considered under contractual relationship and so
they are not included in the contract. According to the case discussed, Paul a son of Ringo is
not accountable for 10GBP in exchange of mowing the lawn as the agreement made
between both of them are formed under social and domestic nature which is not valid to
fulfil the regulations of the contract.
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Q2 IN LIGHT OF THE FACTS ABOVE, DISCUSS THE CRITERIA THAT JERRY
WOULD NEED TO SATISFY IN AN ACTION FOR NEGLIGENCE
Law of Tort is also included in the contract law under civil law. Law of Torts relates to
providing the compensation to the harm suffered by the people relating to the health and
safety, clean environment, economic interest and their image (Van, 2013). In the case, jerry
should fulfil that the action taken by George falls under negligence act. There are three
conditions that should be satisfied by Jerry. In the first condition, the accused individual
should possess the moral and legal obligations regarding the safety, the second condition
explains that the duty of care violates by the accused and the third condition says that
violation of such will incur recoverable damages that should be claimed by the victim.
According to the scenario, it is the responsibility of George to look towards the cutting down
of the tree and be careful while implementing his duties. In the case of Donoghue v
Stevenson, the court stated that the accused should make sure that the proper amount of
care should be provided to limit the risk at someone's property. Such laws and regulations
could be divided into three categories which state that the liability should be rational and
honest.
In the second situation, breach of duty is applied by George since he forgot to measure the
estimation about the falling tree and caused damage to the roof of the customer. English
Tort Law explains the case of Bolam v Friern where the process for negligence was laid down
by the court which consisted of skilled professionals (Van, 2013).
It can be observed that the damages caused to the wounded person can be recovered and
be easily recognized. The third condition that relates to the case states that the harm
caused to the person is recoverable and can be foreseen. In the case, the damage made at
the customer's roof due to the carelessness of George can be recovered in monetary terms
and can be anticipated. And so it can be said that the damages that are made can be
determined in advance and compensation could be provided for the same.
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Q3 IDENTIFY THE MAIN BUSINESS MEDIUMS AVAILABLE TO RINGO AND HIS
FRIENDS JOHN AND YOKO AND THE ADVANTAGES AND DISADVANTAGES OF
EACH OF THESE MEDIUMS
There are various mediums which can be undertaken by Ringo and his friends John and
Yoko. Following are the mediums along with their advantage and disadvantages:
SOLE PROPRIETORSHIP
It is one of the business forms where one can undertake the operations of the business.
Here, an individual can own a business and can run independently on their own. Sole
proprietors are the people who manage the functions of the company and control its
working (EI, 2019). Therefore to guide the working of business no specific rules and
regulations are necessary. A person should have the license to run a business under owing
sole proprietorship. For Ringo and his friends to start their business, the sole proprietorship
is the most suitable business medium wherein they can work according to their will and
interest. They can make their own rules and regulations and can earn profit from the
business.
Advantages of using sole proprietorship as a medium are:
 Decision-making process will be quick and correct since the decision would be taken
by only a few individuals (EI, 2019).
 A sole proprietorship does not require the laws and regulations to be followed.
 The profits generated from the business would only be distributed among the few
members and according to the case, it will be shared among Ringo, John and Yoko.
 Since the ownership lies in the hands of Yoko, Ringo and John they are not
accountable to any other person for any losses incurred in the business. They are
responsible for their losses and will suffer themselves (EI, 2019).
Disadvantages of using sole proprietorship as a medium are:
 The funds invested in the business are limited as the ownership lies in the hands of
only a few people (EI, 2019). For running such business, banks also hesitate to
provide them with a loan.
 The liability is very limited to the owner and therefore this is one of the major
reasons not to adopt for sole proprietorship (EI, 2019).
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 As the business and firm are considered the same body, the loss incurred will also
affect an individual (EI, 2019).
PARTNERSHIP
It is the agreement that is done between two or more parties formally where they agree to
manage the overall working of the organization and share profits according to their
contribution to the business. The agreement made the partners include that the liabilities
and profits of the company would be shared equally among them while other partners have
limited hold over the working of the company (Capling, 2011). The UK partnership act 1890
accounts for some of the rules that need to be followed by the partners before making any
decision and carry out any activity. If Ringo and his friends agree to be partners in the
business then they can go for partnership agreement wherein they all will contribute to the
capital and share the profit according to their contributed capital. Here, by following
partnership agreement Ringo and his friends can perform according to their will or an
individual can work on behalf of other partners,
Advantages of partnership:
 Startup cost and establishing the business are low since many partners are involved
to contribute in term of money (Capling, 2011).
 More capital can be gained as compared to sole proprietorship since according to
the case Ringo, John and Yoko will be a contributor (DSG, 2019).
 Employees having more knowledge and skills can be formed as a partner.
The disadvantage of partnership:
 Every partner under the partnership agreement is liable for the losses that would be
shared equally among all.
 Conflict may arise between the partners if they do not agree on the same situation
and conclusion (DSG, 2019).
 If one of the people leaves the business the burden of assets would be on the other
existing partners (Capling, 2011).
 Profits incurred in the business would be divided among all the partners (DSG, 2019).
CORPORATION
It is a business made by a group of people and has several rights and liabilities from that of
the individual. It can be an organization which is may not aim for the profit maximization
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and engaged in the activities such as a municipal corporation or carrying public goods
(Means, 2017). The corporation is similar to the rights of an individual since they can buy,
sell, bring lawsuits, enter into a contract or can even own property. Fines are incurred by the
government if the law is violated. This medium may not work well for Ringo, John and Yoko
as they might not share profits of the business with the shareholders of the company (INC,
2019).
Advantages of the Corporation are:
 The assets owned by the owners are safe from the debts and liabilities as the
shareholders are not liable for the losses (Means, 2017).
 The sale of stocks and bonds makes easier for the owners to raise capital. There can
be an unlimited number of investors for the business (Jim, 2019).
 Ownership can be transferred easily.
 Tax-free benefits can be received to the owners such as dedication for the insurance
and retirement plans (Jim, 2019).
Disadvantages of the corporation are:
 Annual franchise fee charged by the states is high for the corporation.
 Federal and state tax is paid on the profits incurred by the corporation. Dividends
that are paid to shareholders are treated as income.
 Forming a corporation is expensive and complicated (Jim, 2019).
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Q4 DISCUSS WHY IT IS IMPORTANT FOR RINGO, JOHN AND YOKO TO
IDENTIFY THE CORRECT EMPLOYMENT STATUS OF ANY WORKER THAT
THEY RECRUIT FOR THEIR BUSINESS
Employment status relates to the status of the employee on the contract made or the time
period of the work. An employee can be for full time, part-time or on a casual basis. Rights
of the person are decided on the basis of the type of employee (Alniacik, 2012).
The proper agreement should be made by the company and the correct employment status
should be assigned to the employee before he/she is recruited in the company. Employment
type helps the recruiter in knowing the skill, abilities, knowledge, dedication and character
of an individual towards the job. This, in turn, helps the business in appointing the right and
deserving candidate into the business through which organizational objectives and goals
could be achieved.
The employment status available for Ringo, John and Yoko are:
1. Employee status: Here, the employee is an individual person who works under
certain terms and conditions made by the contract of employment (Fried, 2015).
Ringo and his friends can work under this status but there are certain points that
they have to keep in mind such as:
 They should provide the work to the employees and the employees should
be constrained to accept the work.
 They should have control over the working of the employees.
2. Worker status: Some statutory rights are provided to the workers that the
employees but they do have legal rights such as:
 Protection against discrimination.
 Entitle to national minimum wage system.
 Law against the deduction of wages.
3. Self-employed status: There are no such statutory employment rights imposed on
them. There are the number of factors that are considered by the courts and HMRC
for self-employed such as agreement in written, mutual obligations, various
services, benefits and pay, facilities and equipment, the financial risk involved as
well as taxation policies (Fried, 2015). Ringo and his friend should enter into
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contract only after evaluating all the factors that are considered by courts and
HMRC so that smooth working can take place in the business.
Providing the correct employee status to the employees’ accounts for various benefits such
as:
Satisfaction: Appropriate status makes the employee satisfied with their job and it is one of
the main factors that employee status has on employees (Rack, 2019). The business could
grow and expand only if the level of satisfaction among the employees is high. A satisfied
employee will also be dedicated towards the work and put its best to achieve the objective
of the organization (DSG, 2019).
Trust: By giving proper employment status to the employee creates a positive impact on
their minds and increases their trust in the company. Satisfied employees are an important
resource for the organization since they help the company in achieving success and spread
positive word of mouth (Fried, 2015).
Productivity: The productivity of the employee also increases since they would be satisfied
with their job and employment status. Productivity can be termed as the output that is
generated by the employee for the company effectively leading to profits (Rack, 2019).
Confidence: The confidence level of the employees is also enhanced by providing the status
of employment. The productivity of the employee also increases if he/she is confident and
self-motivated (DSG, 2019).
There are certain disadvantages of not assigning appropriate employment status to the
employee. Such as:
 Not providing appropriate employment status to the employee may lead to
decreased productivity of the organization as well as may also affect an individual.
 There can be a negative image of the organization in the minds of employee and will
also lead to dissatisfaction.
 The unsatisfied employees will not create a good image about the organization and
employees will trust no more in the operations of the organization.
The above mentioned are the factors that may hamper the business may create a good
reputation in the minds of employees. Therefore, it is very important for the organization to
designate the right employment status to the employees.
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CONCLUSION
The assignment includes the problems that are faced between Ringo and his son. Also,
Ringo was undergoing through various issues in his business which needs be resolved soon.
From the above assignment report, it can be concluded that there are various laws that
should be kept in mind while entering into any business or providing employment status to
the employees. Different business mediums could be used by Ringo and his friends to carry
out business as well as they should critically analyse the advantages and disadvantages of
those business mediums. After analyzing, the best medium should be implemented into the
business. Lastly, it can be said that the case study provided a clear understanding about the
laws and regulations related to the business.
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