The Legal System and the Application of Law: Business Law Analysis

This report delves into the English legal system, tracing its historical development and uncodified nature. It explores the sources of law, including legislation, common law, human rights, and EU law, and examines the government's crucial role in law-making. The report highlights key legislations impacting businesses, such as the Contract Act, Employment Act, and Consumer Protection Act, emphasizing the need for businesses to understand and comply with these regulations. It analyzes the potential implications of law on business activities, including taxation, employment, and international trade, and provides guidance on legal structures, particularly the choice between partnerships and companies, offering advice on the process of forming a company. The report provides case studies and legal advice for various business scenarios. This assignment provides a comprehensive overview of the legal landscape affecting businesses in the UK, offering valuable insights for business managers and entrepreneurs.

The Legal System and the
Application of Law

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Explanation of the Legal System................................................................................................1
Sources of Law............................................................................................................................1
Role of Government in Law Making..........................................................................................2
Legislations that a new business shall have Knowledge.............................................................2
Potential Implication of law on Business....................................................................................3
TASK 2............................................................................................................................................4
a) Advise to Bola and Tony........................................................................................................4
b) Advise to Patrick on reimbursement.......................................................................................6
c) Advise to Patrick on Resignation............................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Laws and Regulations plays a very important role in the overall development of a society
in an effective manner. These are sort of norms which regulates the functioning of participants of
society; be it individuals or businesses. Without adequate laws, it becomes difficult for a society
to operate and conduct its activities without any hassles. The current report will have a detailed
discussion on the nature of English legal system and how the same have evolved over period of
time. The legal system as well as its sources, role played by the government in the effective law
making will also be discussed in the current report ( Shackelford, 2014). Various cases and
remedies available to the plaintiffs will be talked in a detailed manner under the current report.
TASK 1
Explanation of the Legal System
English law has developed over period of time and its overall origins can be traced back
from even 11th century. There have been effective changes that has taken place in the law and
regulations based on the developments in the society. The English law is uncodified which
means that there is no codes that has been Systemized unlike other European countries like Spain
who have civil code, code of commerce and a criminal code in place. The judges do play a
significant role in framing laws of UK as well. They do so in two main ways which are.,
interpreting statutes and developing common law. When meaning of a particular statute is
unclear, judges are called to explain the same and this has been tantamount to Law making.
The law of commerce has developed considerably in the past. This is primarily because
of the fast pace development in business activities that has taken place. This has led to enactment
of various legislation to facilitate effective and smooth business functioning and also to boost the
overall growth as well as development of the economy in general. The recent law has given more
liberty for foreign investments within the country. Though certain rules have been laid down by
the European union in this regard which have to be abided by the concerned business persons
(Chemerinsky, 2016).
Sources of Law
There are various sources of English Law which includes legislation, common law,
human rights as well as EU Law. Parliament is the main body which frames the law in the form
of a bill and these bills are converted into law once it gets the assent of parliament. Later on, the
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royal assent of the royal family is also required before the law to come into existence. Common
Law is yet another form of law making. Courts can create laws by interpreting the statutes which
are not clear and they also try to clarify the will or intent of the parliament behind the law, once
the same is done the clarifications is regarded as the new law and further cases has to be dealt
with keeping in mind the current interpretation of the law. Yet another source includes the
Human rights law. The European Communities Act. 1972 was passed by British parliament to
recognise the EU law as a part of British law and thus it also started impacting the British laws
and became a major source of contributory in the legal cases as well as laws related to England
(Rugman and Verbeke, 2017).
Role of Government in Law Making
The role of government is quite huge in developing as well as framing laws in England. It
is the responsibility of government to recognise the issue which is there in society and how it can
be dealt with, whether a policy will be effective to deal with the same or a law needs to be
enacted to address the issue. The decision will be taken based on the issues and its gravity. Once
the law has been framed its implementation is also a major concern that shall be effectively
addressed by the government through its machinery and workforce. Government of UK is
making sure that business is managed in an effective and proper way through right kind of
implementation of business laws and policies that will also boost the business environment in the
country. Thus, it is essential that government keeps an eye on the various issues that are being
faced by its citizens and businesses and necessary laws shall be framed to overcome the same in
an effective as well as efficient manner (Munch, 2012).
Legislations that a new business shall have Knowledge
There are different legislations that prevails in United Kingdom and thus it is very
important for business managers to take care of these legislations before framing right kind of
policies in this regard for the organisation over period of time. There are various acts like
Contract Act which deals with agreement and contracts that takes place in day to day dealing of
the business, Employment Act is concerned with the safety, health and pay issues of employees
once they are hired in the organisation, Consumer protection act aims at protecting the
consumers from unethical as well as unfair trade practices against consumers. It lays down
stringent norms for the same and which may have a considerable impact on the overall working
of the organisation. Thus business managers should have a proper idea of the same to deal with
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various business activities. There are other acts as well like sale and supply of goods act., Trade
description act, Consumer credit act. which will have a considerable impact on the business as
well as its activities. Thus it is important to analyse the implications of the same on business and
a policy shall be framed by the business managers to effectively deal with these laws (Emerson,
2013).
Organisations shall have a legal cell built in inside the company to deal with various legal
issues that affects the business. The legal cell will analyse as well as assess the legal environment
in proper manner to frame effective business policies over period of time. The legal cell will
consist of Corporate lawyers, Company secretary and individual's who would be having adequate
knowledge of legal issues that prevails.
Some other laws that have a direct impact on the functioning of a newly setup business is
Publication of Gender pay reports which would make it mandatory to show the difference in pay
of men and women and how the same is dealt with. The Brexit or EU Withdraw Bill is yet
another law which do have a direct impact on the functioning of a newly set up business. So,
there is a need to have adequate knowledge of the same to grow and develop a business
effectively in the longer run (Schneeman, 2012).
Potential Implication of law on Business
There are severe implications of Law and Legal framework of a nation on the business
activities of a company. Business is just a part of economic activities of a nation and law of the
land affects the whole country. Thus business activities are not an exception. If laws will be
framed that will be stringent and will not promote business environment within the nation then it
can be discouragement for the business community and hence a direct impact can be seen on the
level of Foreign investments along with domestic savings that is channelised into businesses.
There is a need that UK Government ease out the process of conducting business in the country
with less approvals and Investment at place. Necessary assistance shall be given by the
government in this regard. The assistance can be in the form of financial assistance or providing
support to set up a business in an effective manner.
There are various laws which has a direct impact on the business like the taxation law;
which directly impact the pricing of products and services of the business. Employment law is
also there which deals with treatment that shall be given to employees by the employer. If the
company lacks in the same and does not treat its employees based on the provisions laid down in
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the act, there is a provision for Penalty and strict actions against the firm. International Trade is
also a major issue that is affected by the polices and laws framed by the Government. The
quantity of products and services which can be exported out and imported in is decided by the
government and is constantly changing, thus these things have a direct bearing on the overall
working of organisation (Beamish, 2013).
TASK 2
a) Advise to Bola and Tony
Case
Both Bola and Tony wants to open a new venture for the purpose of growing their
business. They want to open a business of Mobile Mechanics with the initial capital of 1,00,000
pound in which 60,000 will be contributed by Bola and 40,000 will be contributed by Tony. Both
the partners have doubts regarding the legal structure that should be chosen for the purpose of
business. Whether a partnership or a company.
Before selecting and recommending the legal structure for the business, it is important to
understand the benefits and drawbacks of both. Partnership is usually adopted for doing business
on relatively small scale and company is set up for the purpose of conducting business on a large
scale.
Partnership
It is an agreement between two or more people to conduct business activity for the
purpose of sharing profit. There are various features of a partnership which includes the partners
are jointly and severally liable for the acts of the firm, A Partnership Deed is required to be
created which will lay down the various details of the partners along with profit sharing ratio etc.
It is driven by the Partnership act and its provisions directly apply on the partners. Some of the
drawbacks of a partnership is that the liability of partners is unlimited and partner's personal
property can be booked for paying the debts of the firm in case of their default. Also there is a
specific limit on the number of partners that can be added to the partnership (Medema ed., 2012).
Company
A company is quite different from partnership as it is a legal person in the eye of law and
is having separate identity from its members. The liability of members are limited to the no. of
shares they hold and not more than that. Thus, it gives a protection to partners with regards to
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their personal liability. Also there is no limit on the number of shareholders that a company can
have, therefore a company can increase to any size going forward (Hawkins, 2012).
Advise
Thus, From the above discussion it is advisable to form company instead of partnership
as it will give benefit to both Bola and Tony with respect to their personal liability and the scope
of a company is much bigger than a Partnership.
Process of Forming a company
For the purpose of opening a company, There is a need to register with companies House.
This is also Known as incorporation. The following procedure needs to be followed for this
purpose:
 Finding a suitable company name that does not match with another one.
 Address of the company has to be mentioned.
 At least One director needs to be selected.
 Details of the company's shareholders also needs to be mentioned. At least One
shareholder shall be there.
 Proper SIC Code should be selected which specifies what he company does.
 A Memorandum and Article of Association will be needed to register a company.
 The registration can happen online or manually, it costs 12 pound and company can be
registered in 24 hours. A certificate of Incorporation will be issued in favour of the company that will be a proof
that registration of company has taken place.
Responsibility of Bola and Tony as Directors
The directors are responsible for managing the whole company and thus have to perform
following duties:
 To take strategic and operational decisions of the company.
 To manage day to day affairs of the company
 To ensure and promote success of company through various policies and decisions.
 To avoid Conflict of Interests.
 Directors are accountable towards shareholders, Here Bola and Tony are themselves the
shareholders, thus they have to manage the business in an appropriate manner.
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 They shall act within Powers and not beyond it.
b) Advise to Patrick on reimbursement
Issue
Patrick was appointed as the director of Planet Mars Limited and he has travelled to
various offices of the company for resolving some company matters that incurred him expenses.
Patrick now wants to claim the reimbursement of those expenses which the company is not ready
to pay on the ground that Patrick did not entered into a Separate contract of Employment for this
purpose.
Relevant Law
The law that relates to this issue is the Companies Act, 2006. The act lays down the
provisions related to reimbursement of director's expenses if he has to move from one place of
work to other to perform his duties even when the expenses are borne by the director himself on
a personal level (Llewellyn, 2012).
Facts
Under the current case, The director has contended that he shall receive the
reimbursement of his money that he has incurred as expense while travelling from one branch of
the company to other to sort out the company matters. However, management was denying the
same and was saying that it was the personal expenses of Director and hence the same can not be
reimbursed.
Conclusion
Thus from the above discussion, It can be concluded that though it is the responsibility of
the director to travel for work of the company from one place to another and as per law, the same
has to be reimbursed by the company till the expenses are borne by the director in performing his
duties in the usual course of work. Thus, the contention of the Director is correct with regards to
reimbursement of expenses of his travelling. The company shall pay the same to director as he
has occurred the same in connection with performing the duties for the company. The company
can claim the money that is being given to director as a reimbursement expenses in its income
tax filing and a deduction can be claimed for the same. Thus the director is right at his part and
he is entitled to receive the amount spent by him on the various expenses that he occurred while
on travelling. Patrick can claim these expenses from company as he is legally entitled for the
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same, irrespective of the fact that there was no separate contract of employment that was there in
this regard.
c) Advise to Patrick on Resignation
Issue
Patrick wants to leave the firm as he is not able to tune with the other directors of the
company and want to join some other firm which is a competitor of the current organisation. The
company is contending that the director can not take position in other company till five years of
resignation because of the verbal agreement that has taken place between director and the
company.
i) Patrick can take up the position or not.
Patrick has not entered into a written contract of employment with Planet Mars Ltd. Thus
he is not liable for the company after leaving the firm because companies act, 2006 says that if
there is a legal contract of employment and the contract specifically provides that director can
not join a competitor's firm after leaving the company then they can not join other company;
provided the contract shall be written and not verbal. Under the current case, firstly; there was no
written agreement and it was only verbal agreement between both the parties, secondly the
director was having issues with other director so he is free to resign from his post and join any
other firm, whether the other firm is a competitor or not that does not matter.
ii) Alternative Dispute Resolution
For the purpose of resolving the issue of director and company, it is necessary to adopt
the technique of ADR or Alternative Dispute Resolution. Under this there are, three specific
techniques which can be used for the purpose of resolving the issue, these are:
Mediation- As per this component one mediator is going to involved for resolving this difficulty
as well as liable to convey the message from one party to another.
Negotiation: - Both the party shall come close and negotiate on the terms like the company can
allow to resign director and director can say that he will not join other company which is a
competitor etc.
Arbitration- A legal lawyer or a legal person shall be hired to arbitrate between both the parties
and he will be responsible to take the dispute to a conclusion (Reed, and et. al., 2013).
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Hence, The company and director can use any of the above technique for the purpose of
resolving the dispute of resignation, and it will lead to better as well as effective management of
the whole issue.
CONCLUSION
From the above discussion , it can be said that there is a need to understand the legal
system of a country in an effective manner, in order to do business in a more proper manner and
frame policies that will lead to growth of the organisation in the longer run. English Law is a
very wide law and considers all the aspects of business and its management. Proper
understanding of certain laws like employment Law, Contract Law and Companies Act. Shall be
there with the managers to lead the business in a more efficient manner.
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REFERENCES
Books and Journals
Rugman, A. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.
Chemerinsky, E., 2016. Constitutional law. Wolters Kluwer Law & Business.
Shackelford, S.J., 2014. Managing cyber-attacks in international law, business, and relations: In
search of cyber peace. Cambridge University Press.
Munch, S., 2012. Improving the benefit corporation: How traditional governance mechanisms
can enhance the innovative new business form. Nw. JL & Soc. Pol'y, 7, p.i.
Emerson, R.W., 2013. Franchising and the Parol Evidence Rule. American Business Law
Journal. 50(3). pp.659-728.
Schneeman, A., 2012. The law of corporations and other business organizations. Cengage
Learning.
Beamish, P., 2013. Multinational joint ventures in developing countries (RLE international
business). Routledge.
Medema, S.G. ed., 2012. Coasean Economics Law and Economics and the New Institutional
Economics (Vol. 60). Springer Science & Business Media.
Hawkins, J., 2012. Credit on Wheels: The Law and Business of Auto-Title Lending. Wash. &
Lee L. Rev. 69. p.535.
Llewellyn, K. N., 2012. The bramble bush: On our law and its study. Quid Pro Books.
Reed, O.L., and et. al., 2013. The legal and regulatory environment of business (p. 328).
McGraw-Hill/Irwin.
Schön, W. and Konrad, K.A. eds., 2012. Fundamentals of international transfer pricing in law
and economics (Vol. 1). Springer Science & Business Media.
Warren, E. and Westbrook, J. L., 2013. The law of debtors and creditors. Apen.
Deva, S., 2012. Regulating corporate human rights violations: humanizing business. Routledge.
Gillers, S., 2014. Regulation of Lawyers: Problems of Law and Ethics. Wolters Kluwer Law &
Business.
Online
Liquidation. 2018.[Online]. Available through: < https://www.liquidation.com/>.
Compulsory Liquidation, 2018. [Online]. Available through:
<https://www.companydebt.com/liquidation/compulsory-liquidation/>.
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