BMP4002 Business Law Report: Key Legal Sources for UK Businesses

This report examines the legal context for business organizations in the UK, focusing on key sources of law and different legal structures. It begins by analyzing the UK business environment and relevant laws like the Companies Act 2006, contract laws, and employment laws. The report discusses the importance of the Memorandum of Association (MOA) and Articles of Association (AOA). It then defines various legal structures, including sole proprietorships, general partnerships, partnerships, and limited liability companies, highlighting their advantages, disadvantages, and legal implications. The report concludes with recommendations for IOM Solutions, advising a partnership structure to manage workload and facilitate business growth. Desklib provides access to similar solved assignments and study resources for students.

BSc (Hons) Business Management
BMP4002 Business Law
Assessment 2
Report describing the key sources of
laws as the legal context for business
organizations in the UK
Submitted by:
Name:
ID:
Contents
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Introduction
Business law is a subject that comprises of the legislatures of the government
that have an impact on the business environment of all the organizations or
particularly a type of industry. It is also known as commercial and mercantile law. All
type of agreements and related policies of national and international level according
to the area of diversification of a company is concluded in a business law (Madaus,
2018). The following report is abased on identifying different areas that are consisted
in a business law. It is divided into different headings and subheadings. The report
file start from analyzing a detailed information about the businesses and organization
in UK through scanning business environment, certain important business related
laws and two types of termination of partnership that are – MOA and AOA. The
report then moves to defining some different types of legal structures. At last, it
includes some recommendation based on the areas of report for the company IOM
solutions.
Businesses & Organisations in the UK
United kingdom is a huge and leading market that have a strong impact on
the business factors all around the world. It has diversified types and forms of
commercial and professional industries present that deals and trade in different parts
of the world. For maintaining a decorum in the country business practices, there are
several types of laws made by the legislation bodies. The primary act which governs
the enterprises in UK is the Companies act 2006. For maintaining a peace in the
country and employees and to avoid the conflicts that happens due to the mis
treatment of workers, it has provision of certain contract laws and employment laws.
These employment acts bounds to both, to the workforce and to the employers. To
provide the organizations with the rights that helps in working smoothly, there are
certain rights such as – title of separate legal entity, perpetual succession, common
seal, rights to sue and also to be sued. These help is maintaining a decorum and
avoid wrong practices. There is also a act that works in maintaining the security
through not disclosing certain important agreements and letter of intent (Wial, 2018).
The business can also lead to make a person or a group of people liable to the legal
punishments if he /she or they perform any activity that are against the norms and
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standards of the constitutional bodies. The directors are the people that have the
responsibility of maintaining and considering the activities perform in their related
company. If any conduction of wrong practices according to the provided laws
happen around the surrounding or in relation with the company, then these directors
are most liable of the consequences when found guilty or at some fault and
questioned on firstly by the responsible bodies of government in the related case.
The two primary types of documents required by every types of enterprise are – the
Memorandum of association (MOA) and Article of Association (AOA). These involves
the guidelines for formation and operation of the company. At the time of
incorporation, the Memorandum of Association are needed to by viewed and signed
by the stakeholders. While the Article of Association is a written document
comprising of rules and regulations considering the objectives of the firm. These are
decided by the management that involves the directors and the shareholders.
The legal business structure of UK companies
Sole Trader
This form of businesses is most commonly practiced and found type of legal
structure. It is also known as sole proprietorship. This is the most simple way to start
a business organization. It involves least type of formalities that are required before
establishment and some in the process of operating (Moringiello, Kim and Ottaviani,
2020). It is owned and handled by a single person who is known as the proprietor
and owner. He / she is has the responsibilities of the operations and activities that
are being practiced in the company and the profits are also enjoyed by the individual
only after deducting the different types of expenditures incurred in the operations and
taxation. But with the profits, the responsibility to bear all the liability alone also
comes. The owner is prior to bear all the losses (if any occurs) if in case he / she has
sell its personal assets as the identity of the company and individual are not
separate. These types of firms generally work on small scale and need less
investments, thus are considered the pocket friendly method of establishing a
business. Whatever the types of legal structure, there are certain legal implications
implied on them. The legal implications that apply on sole trader or sole
proprietorship are – fillings of corporate and income taxes on a particular timely basis
given by the tax collecting departments and maintaining a data of the customers or
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clients to consider the general data protection regulation. There are different types of
disadvantages and advantages of sole proprietorship that are mentioned in the
following points :
 Advantages :
◦ Ownership of a single person who do not need any permissions form
others in making the strategies and managing the company.
◦ Profits are not needed to distributed and can be used by the owner in any
way.
 Disadvantages :
◦ The unlimited liability p[art is a disadvantage that comes with a risk to the
personal assets in case the company faces loss.
◦ In the absence of the owner, the management will be weak (Orozco,
2019)
General Partnership
This is another basic type of legal structure that have the involvement of two
or more individuals on the ownership. These individuals come together with an idea
of business operations and start the company by contributing their monetary or non
monetary resources. The capital can also be made by taking loans from certain loan
proving agencies or some types of informal loans from families or friends. The
involved individuals are known as the partners. The involvement of a partnership
agreement is not important in this. The profits and losses are divided into an equal
ratio. The control over the management practices are also equal this can work in
making the conflicts due to the differences of ideas and beliefs. It is also a one of the
most easiest form of legal structure that odes not require any registration and
permissions from the related government bodies. The legal implications that imply on
the general partnership firms are – the filling of criteria taxes to the income and
corporate taxation departments and in case of conflicts or dissolution of the firm, the
profits and losses are to be dividend into equal ratio without considering the oral
agreements that have been made for divining different proportions. Certain
advantages and disadvantages of the general partnership are included in the
following points :
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 Advantage :
◦ The losses are divided into proportions that decrease the level of risk.
◦ There is on=involved of different ideas which when formed effectively can
lead to identification of the best ideas that can help in the growth process
of the company.
 Disadvantages :
◦ The absence of much documentations and formalities provide with a risk
to the security of the organization and its management (Cheng and
Wang, 2018).
◦ The involvements of different individuals also come with the availability of
different beliefs and method of management that promote the amount of
conflicts.
Partnership
This type of legal structure is also formed with the involvement of more than
one individuals. The most numbers of partners in this can reach to 50. An agreement
is made that involves all the important information about the company it in. This
document is known as partnership deed. The partnership deed must involve the ratio
of capital investment, ratio of profits and loss distribution and the power / time
analyzed in management. The capitals invested are contributed by these partners
that can be equal or in different amount. The profits and losses are also divided in
the equal or agreed proportions. This type of legal structure have certain need legla
formalities such as – filling of taxes according to the income of the individual partner
and the requirement of filling as an organization whole is not needed and the
different important aspects of between the partners mus be involved in the
partnership deed and provided to the related governmental bodies. Different
advantages and disadvantages of partnership are as follows :
 Advantage :
◦ The important aspects are clearly mentioned in the partnership that
decrease the complexity and specifically mention the role and
responsibility (Okoye and Onyejekwe, 2019).
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 Disadvantage :
◦ The formation and management practices of the business entity becomes
rigid and the decisions need time to implemented.
Limited Liability
This is a type of legal structure is basically the combination of both the
corporate business firms and partnership firms as it has different features that are
from these different legal structures. It is formed by two individuals or a group of
individuals that collaborates together with the motive of establishing a business
enterprise and making profits (Bělušová and Brychta, 2018). As specified by the
name, the owner or directors of these types of firms have limited liability to them and
are not prior with the risk to their personal assets in case of losses as they have
separate legal identity form the company as their own. These include a lot formalities
in establishment sand is also rapidly interfered and checked by certain governmental
bodies because of high chances of fraudulent that can happen because of the
absence of personal risk with limited liability. The government promote this type of
legal structure due to the presence of tow ways of getting tax, once by the company
as once from the directors separately. Advantages and disadvantages of limited
liability legal structure are mentioned in the following :
 Advantages :
◦ The directors can use innovative methods that involve risk in them and
also have high chances of success as this type of legal structure helps in
avoiding the risk factor through having limited liability.
 Disadvantage :
◦ The requirement of complex and high number of documentation
consumes time and proves to be a disadvantage of limited liability (Liu,
Tong and Sinfield, 2021).
Recommendations for IOM Solutions
Considering the recommendation for Sam who runs a electrical parts
business and facing high pressure due to the increased demand of product /
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services and employees management, the recommended type of legal structure that
can be opted by him to divide and work load and focus on growing the business it
partnership. As the limited liability is only recommended in the case of innovative
ideas that involve high risks due to high taxation, the sole proprietorship is already
used by and him and general partnership involves risk due to the absence of
partnership deed that can lead to conflicts and bad management. The partnership
will help Sam to divide the operations of management of the company into different
individuals that are its partners and it will also help in decreasing the risk for him by
dividing the liability in case of losses.
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Conclusion
From the above report it has been concluded that business is an important
factor that provides security to the organization. It is a broad topic that involves many
different elements in it. United Kingdom is huge market and involves various types
and forms of businesses and have a impact on the global trade. Legal structures are
the form of business in which the power of management is determined. The different
types of legal structure have their own advantage and disadvantages. These type of
legal structure have certain legal implications on them that must be considered by
the directors / owners to avoid legal issues such as penalties and fines.
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References
Madaus, S., 2018. Leaving the shadows of US Bankruptcy law: a proposal to divide
the realms of insolvency and restructuring law. European Business Organization Law
Review. 19(3). pp.615-647.
Wial, H., 2018. 21. New Bargaining Structures for New Forms of Business
Organization. In Restoring the promise of American labor law (pp. 303-313). Cornell
University Press.
Moringiello, J.M., Kim, N.S. and Ottaviani, J., 2020. Notice and Assent Through
Technological Change: The Enduring Relevance of the Work of the ABA Joint
Working Group on Electronic Contracting Practices. The Business Lawyer, 75.
Orozco, D., 2019. A Systems Theory of Compliance Law. U. Pa. J. Bus. L., 22,
p.244.
Cheng, L.T. and Wang, J.W., 2018. Enhancing learning performance through
classroom response systems: The effect of knowledge in a global economic
environment. Journal of Teaching in International Business. 29(1). pp.49-61.
Okoye, A. and Onyejekwe, C., 2019. Law’s ethics and sustainability: corporate tax
and sustainable social structures. In Sustainability and the Humanities (pp. 525-538).
Springer, Cham.
Liu, J., Tong, T.W. and Sinfield, J.V., 2021. Toward a resilient complex adaptive
system view of business models. Long Range Planning. 54(3). p.102030.
Bělušová, K. and Brychta, K., 2018. Taxonomy of holding structures operating in
construction industry–a case of the Czech Republic. In Proceedings of the
International Scientific Conference Economic and Social Policy.
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