Business Law Report: Unit 7 - Legal System, Business Impact Analysis

This report provides a comprehensive overview of business law, beginning with an introduction to the English legal system and its primary and secondary sources, including legislation, case law, legal encyclopedias, and textbooks. It explains the roles of Parliament and the government in law-making, detailing the process of passing a bill and the application of common and statutory laws in justice courts. The report then illustrates the potential impact of company, employment, and contract law on businesses through specific examples. It explores the legal formation of different types of business organizations, such as sole proprietorships, partnerships, and companies, and discusses their management and funding. Finally, the report recommends appropriate legal solutions for resolving various disputes, covering areas from contract breaches to employment issues, and concludes with a summary of the key findings and insights.

Unit 7- Business Law

Table of Contents
INTRODUCTION................................................................................................................................3
TASK 1.................................................................................................................................................3
P1 Explain the different sources of law...........................................................................................3
P2 Explain the role of government in law making and how statutory and common law is applied
in the justice courts..........................................................................................................................4
TASK 2 ................................................................................................................................................5
P3 Illustrate, using specific examples, how company, employment and contract law has a
potential impact upon business........................................................................................................5
TASK 3 ................................................................................................................................................6
P4 Explore how different types of business organisations can be legally formed...........................6
P5 How business organisations are managed and funded...............................................................8
TASK 4.................................................................................................................................................8
P6 Recommend appropriate legal solutions available to resolve range of disputes........................8
CONCLUSION..................................................................................................................................10
REFERENCES...................................................................................................................................12

INTRODUCTION
Business law is the branch of civil which deals with operating the business working. There
are many legislation under the umbrella of business law that wholly governs their working which
includes contract, company, employment law and many other. Every business deals in everyday
transaction which is to be regulated by contract law an agreement is present in them in order to
prevent any breach of contract. The employment law regulates the relationship of employer and
employees and protect their rights from exploitation (Augenstein, 2018.). This report shall deal with
nature of English legal system, different business organisations, impact of business law and
alternate dispute resolution.
TASK 1
P1 Explain the different sources of law.
English law means the rules followed in legal system in both civil and criminal matters and
administered by the courts in England and Wales. English law is based on principles of common
law. It has its own legal doctrines which are different from civil law legal system.
The sources of law can be classified in 2 parts:
Primary sources of law are basically the original source of law that are authoritative. It
includes the following-
Legislations
These are the law made by Parliament which is the supreme authority to enact a law in UK.
These legislations are superior from all other sources of law. There is no written Constitution in UK.
It is 'partly written and not wholly codified. These are called statutory laws.
Case laws
One of the fundamental and primary source of law in UK is case laws which are decisions of
the courts of UK which are published in publications called law reports. It consists of facts, issues,
decisions, reason for decision and legal principles upon which a decision is based by the judge. The
reported decisions are binding source of law for future decisions. A subordinate court's judge is
bound by the decision of superior court's judge. These are called common laws (Ma and Marquis,
2016).
Secondary sources of law refers to commentaries of law. It includes the following-
Legal encyclopedia
To start a research in law, it is the best as it includes cases, key points and issues which will
help in excellent research. Example – Halsburg's Law of England and Wales

Parliamentary and non parliamentary publications
These includes command papers, debates of Parliament, House of Commons and House of
Lords papers and Non Parliamentary publications includes consultation papers from government
agencies and departments, reports of government.
Law journals
They may cover general or specific areas of law. It may contain a mix of articles and case
commentaries which helps in understanding the legal issues in detail.
Text Books
For any legal topic to be researched, text books written by academics for students are best.
For example, Smith &Hogan's Criminal Law (Turner, 2020).
P2 Explain the role of government in law making and how statutory and common law is applied in
the justice courts.
Parliament is a place where all government politicians meets and decide to make law and
make decisions on working of the country. The government proposes a bill in either of two houses
to make it a law.
A bill is an idea or a draft of a new law or a change to an existing law. A bill make be
proposed in either House which includes House of Common or House of Lords. There are stages to
debate, examine and suggest changes to the proposed bill (Tepe, 2016).
The stages to pass a bill to make it a law are -
 First reading, where bill is arrived and the name of bill is read.
 Seconding reading, where the debate or discussion on purpose and key areas of the bill
begins. There is no vote at this stage.
 Committee stage, where detailed scrutiny is done line by line of the bill and changes are
suggested by the members. Whether to make changes in the bill or not, voting can be done.
 Report stage, where another chance is given to make changes in the bill. Voting can be done
on whether changes are needed or not.
 Third reading, where final chance for amendments are given. This stage aims to close the
loopholes in the bill.
 Consideration of amendments, where a process of 'ping pong' is done, that is, if Lords have
made changes, it is send to Commons for agreeing, they may accept or reject it. And
Commons changes are sent to Lords as well.
 Royal assent, when both houses pass the bill, it is sent to Monarch for approval. When
approval is given, it becomes Act of Parliament (Blair and Vidak- Gojkovic, 2018).
Application of common and statutory laws in justice courts -

The common law is the law made by judges in any case. It is enforced equally in whole
country. The doctrines are binding and inferior courts are bound to follow the precedents of superior
courts. This is called 'court of records'.
Hierarchy of courts in UK legal system are divided into 2-
Subordinate court consists of - Magistrate's Court, it hears minor criminal cases, Youth
Courts, it hears cases of offenders from 10-17 years of age, Family Proceedings Court, it deals
with family matters, and County Courts, it deals with civil cases.
Senior courts consist of – Court of Appeal, it is now being replaced by Supreme court, High
Court of Justice is appellant court in respect of civil and criminal case. It has 3 divisions, Queen's
bench, Chancery and Family division, Crown Court has both original and appellant jurisdiction of
criminal and some civil cases and Supreme Court, it is the final court appeal for civil and criminal
matters.
The statutory laws are the laws made by the Parliament which are also known as
legislations. The judges apply the legislations in every case and through their skills, knowledge and
laws, a decision is given in every case. Statues are interpreted through common law principles and
in case of dispute between common and statutory law, common law to prevail (Davis and Geyfman,
2017).
TASK 2
P3 Illustrate, using specific examples, how company, employment and contract law has a potential
impact upon business.
Laws are the set of rules that are made by the government to protect the business, its
employees and the consumers. It states the relationship between employee and employer. All
businesses must operate within the framed laws to ensure effective functioning of businesses. There
are several legal actions, penalties, restrictions etc. on business if it does not comply with the set
norms and laws.
Among different legislations being enacted for businesses, The Contract Act, Employment law
and The Companies Act have a very potential impact on the business.
The Contract Act affects the business because it generally involves buying and selling of
goods or providing service. For each of these transactions, there is a need of a legal binding contract
between the parties so that no party is at loss. The contact act protects the rights of the parties, helps
to enforce the legal obligations between the parties and also provide for remedies in case of breach
of contract. Usually, the contract is made for every transaction of the business to make the business
easier and not complex. Every contract's legality and enforceability depends upon the rules of
contract embodied under the legislation. In every unforeseen situation which may arise in any

transaction, contract law helps to bring legal action to prevent the loss to the business or party. To
anticipate legal danger and to protect the business from unnecessary risk, The Contract Act was
enacted for the benefit of the parties engaged in the contract (Peterson and et. al., 2016).
Another important legislation having impact on the business is the Employment law. This
legislation is designed to protect the employees from exploitation. The Employment law mainly
focuses on the employee's rights in the workplace such as recruitment, pay, discrimination, working
conditions etc. For better understanding, under employment legislations, there are many Acts
enacted for protecting the rights of the workers such as National Minimum Wage Act, 1998 which
provides for minimum hourly rate, National Equality Act, 2010 which prevents discrimination on
many grounds, Health and Safety at Work Act, 1974 which provides responsibilities for both
employer and employee to keep the working environment safe for all, the Working Time
Regulations (1998, amended 2003) which place limits on working hours etc.
Another important legislation is the Companies Act. The Companies Act provides for rules that
regulate the incorporation of company, conduct of business, how transparency can be maintained
with government etc. Companies Act plays an important role for a company in every aspect such as
from incorporation of a company to dissolution of the company, this legislation provides every
detail on management of the company. This Act has 1300 sections and 16 schedules which covers
every aspect of the law which is needed for the management of the company (Barrédy, 2016).
So all the three legislations that is, the contract act, employment act and the companies act play a
vital role in managing the business and have a potential impact on the functioning of the businesses.
TASK 3
P4 Explore how different types of business organisations can be legally formed.
Every business structure has some legal configurations that defines the rights and liabilities
of owner and its participants. Every business structure has different ownership control, financial
structure, liability and even the lifespan.
When a new business structure is to be adopted by anyone, following are the factors which need to
be focused on -
 Control level in businesses
 Structure of business which the owner is willing to adopt
 Tax implications
 Expected return from the business, etc. (Novák and Darmo, 2019)
There are broadly 4 business organisations in UK -

Sole Proprietorship
It is for small businesses where there is single owner who manages and control its business
affairs. The owner is responsible for the day to day management of the business. He is independent
and free to work in its own space. The owner is personally liable for all the actions of the business
and has legal and financial responsibilities of the business. There is limited funding in the sole
proprietorship as it depends upon the subject on which the sole proprietorship is based on. (Trad and
Kalpić, 2019). it requires the registration at HMRC in order to register the business with a name and
no other formality is required.
Partnership
In this, there are two or more persons who share the ownership of the business. There must
be an agreement between the partners so that the rights and liabilities of each partner is certain. The
agreement must also clear many things like share of profit, how decisions are to be made, dispute
resolution, manner for dissolution of partnership etc. The written agreement eliminates the risk of
future disputes as it makes clear how and who is responsible to what extent. The partnership is same
as sole proprietorship except the number of owners. The partnership must have 2 or more persons
and sole proprietorship have only one owner. It requires registration at HMRC to legally form the
partnership firm and an agreement (Mitchell, 2017).
Company
This type of business organisation is complex as it has many formalities for its
incorporation. The company is the separate legal entity distinct from its members. It has its own
perpetual succession and a common seal. It is managed and controlled by its directors and the
directors has their limited liability to the extent of their share. They cannot be made personally
liable. The directors are paid as employees and is more tax efficient than other business organisation
as profits of the company belong only to company, and not the directors (Rohlin and Ross, 2016).
The members of the company may opt to become its shareholders and take dividends or may
become employee of the company and take salaries.
Corporations
It is a unique entity as it is separate from its owner. It is a distinct entity and can be sued or
can sue anyone. It can come in contractual agreements as well. It also have perpetual succession,
which means owners may come and go but corporation remains till its dissolution. The corporation
and company has a minor difference like company is incorporated for small businesses while
corporation is incorporated for large businesses (Holloway and et. al., 2017).
It is of 2 types, C-Corporation and S-Corporation
In C-Corporation, the corporation is subjected to double taxation that is, from Corporation
and shareholders both. Its incorporation is costlier and has more administration duties like holding

annual meetings, etc.
In S-Corporation, the owners have limited liability and no tax is paid rather the profit and
earnings are treated as distributions. The shareholders pay tax by showing their income on
individual income tax return.
P5 How business organisations are managed and funded.
Sole proprietorship
This is managed by the owner of the business as it is thee person who carries out all the
responsibilities and operations of the business. The owner is personally liable for all its operations
in firm. The sole proprietor may opt for loans from banks to establish its business or may start a
business from its own fund like personal savings.
Partnership
The business affairs in partnership is managed by all the partners according to their share or
as mentioned in agreement and is funded according to their share in the partnership firm. Usually in
every partnership firm, the more capital investment by the partner in the business, the more is the
share of profit of the partner. The funds many be arranged either from personal saving of the
partners or they may opt for the loan from banks or other financial institution (Barrédy, 2016).
Company
These are managed by the board of directors who are elected by the shareholders to manage
the affairs of the company on behalf of all. They have the decision making power and can be or may
not be held liable for the company, depending on their type of company as to private or public
company. These are funded either through investors or by raising the capital by inviting the public
to issue shares.
Corporations
It is managed by its owners, that is, directors. They make decisions on behalf of
corporation. These are funded by the shareholders or the investors, creditors, etc. The director are
elected by the members who represent their interest and work accordingly (Boldt and et. al., 2017).
TASK 4
P6 Recommend appropriate legal solutions available to resolve range of disputes.
Legal solutions available to the people -
There are many legal solutions available like litigation, but litigation has been a very lengthy
and time consuming process which involves huge time and cost for settlement. So the UK
government has illustrated number of alternatives which are not time consuming and are
inexpensive than litigation. These alternatives are illustrated under Civil Procedure Rules, 1998 by

the Legislature (Greenleaf, 2018).
Case 1:
Legal Point:
In this case scenario, the main legal point is whether Gordon is entitled to ask for the wages
of the year 2015, 2016 and 2017 in context to contract and employment law. In this scenario, there
is a valid employment contract between the parties and the variation clause is also accepted by
Gordon freely.
Legal solution:
The solution for Gordon is Negotiation which is a very straightforward means of Alternate
Dispute Resolution. Under negotiation, the parties negotiate with each other and come to a solution
that is beneficial for both the parties. It is like bargaining between the parties which will result in
the compromise between them. It basically involves discussion on the problem to bring a solution.
After a solution is brought, there is an agreement between the parties which is binding on both the
parties.
Justification:
Under this, as Gordon agreed to varied the terms of the contract to financial instability of the
company. Now that the company is flourishing and has adequate funds, Gordon can negotiate with
the firm claim its wages for the year 2015, 2016 and 2017. Though negotiation, both the parties
shall remain at win win situation and an amicable solution can be brought. And to give it a binding
effect, the parties can sign the agreement. As the employment can be varied if it contains the
variation clause and the employment contract between the parties is also valid. Moreover, the
variation was accepted in the contract with the consent of Gordon so the contract is valid between
them.
Case 2:
Legal Point:
In this scenario, the issue is whether Janet is liable to pay the bill of telephone for whole
month despite her installation was delayed ? And what is the legal position of company and its
consumer Janet. In this scenario, the main issue is regarding the contract between Virgin media and
Janet as the company when providing its services comes into an implied contract which states that
the services shall be charged for the time when it was installed in the house of consumer and here
there is a breach of contract.
Legal solution:
In this, Mediation is suggested to parties as it is a dispute resolution which involves an
independent third party which shall mediate between them in order to reach a mutually acceptable
solution. The Mediator cannot give solution but can add a formal communication between the

parties to reach a voluntary agreement(Nieman, 2020). The solution found through mediation may
not be binding on the parties but this can help the parties to understand each other and come to a
compromise where there is a win- win situation. Once the parties agree to mediation, the parties
must agree to the time and place for mediation, nomination of mediator, etc.
Legal justification:
In this case, mediation can be the best solution for the parties as this method requires
suggestion offered by independent third party who can hear bot parties and bring amicable solution.
By using mediation, the company can also protect its goodwill as the matter shall be solved
internally and a quick solution can be brought so that Janet can also be relaxed.
Case 3
Legal Point:
In this case, the main legal point is about the law of companies. Here the creditors have filed
the petition for winding up the company failed to repay their amount. The organisation have
recently faced the failure from their customers who did not repay their amount and resulted in bad
debts.
Legal Solution:
In this scenario, Arbitration is suggested as it is basically a dispute resolution where an
arbitrator is appointed by the parties who considers the facts and circumstances of the case and
brings out the decision after taking all evidences and records from the parties (Allen and et. al.,
2016). The decision given by arbitrator is called an award and it is binding on the parties. Under
arbitration the time and place is decided by the parties.
Legal justification:
In this scenario, the parties are facing serious issues relating to money and the matter has
gone to court for winding up. Here through arbitration, the parties can settle their dispute outside the
court and a binding decision can also be brought in short period of time. This method of dipure
resolution shall help the parties in coming to quick solution.

CONCLUSION
It is concluded from above report that business law is referred to as the branch of civil law
which regulates the working of business. It consists of many legislations which are specifically
being enacted in order to regulate them like companies law, partnership act and many other. There
are different forms of business organisation which are legally formed which includes the sole
proprietorship, partnership, companies and corporations. These are managed and funded according
to their structure and form. At last it is concluded that there are different alternate dispute resolution
which are different from litigation that offers speedy disposal and cost effective decisions.

REFERENCES
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