Unit 7: Business Law Case Study - Magnificent Salon

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Unit 7- Business Law

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Table of Contents
Introduction................................................................................................................................3
TASK 1......................................................................................................................................4
Nature of legal system............................................................................................................4
Sources of law........................................................................................................................4
Laws applicable on Mrs. Ruska’s business............................................................................7
Application of statutory and common law in UK courts.......................................................8
Recent reforms and developments in UK..............................................................................9
TASK 2....................................................................................................................................10
Effect of law on Mrs. Ruska’s business...................................................................................10
Difference between legislation, regulation and standard applicable on Mrs. Ruska’s
business................................................................................................................................11
TASK 3....................................................................................................................................13
Solutions for Mrs. Ruska’s business problems........................................................................13
Positive and negative impact of recommended solution on Mrs. Ruska’s business............15
TASK 4....................................................................................................................................17
Comparison of legal solutions provided in provisions of US, UK and Australia....................17
Conclusion................................................................................................................................19
References................................................................................................................................20

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Introduction
The United Kingdom business laws are a set of codified laws which includes the application
of certain statutes and Acts on the organisations working in United Kingdom. The
organisations in UK are operating in various forms and types which are incorporated
including limited and unlimited liability companies or unincorporated including sole trading
and partnership firms. The presented handbook is drafted for Mrs. Ruska who is the owner of
a Salon service company named Magnificent Salon Service Ltd situated in London. Mrs.
Ruska is facing breakage in clientele as her products caused reaction in skin and hair of two
of her customers Andrea and Mariyah. Hence the following report is presented to make Mrs.
Ruska aware of the business laws applicable on her company and the sources of law from
which the legislations gained base.
The second part of the report provides for the description on the legal problems and its
solutions including termination of contract, insolvency and its rescue and winding up. To
make it convenient for Mrs. Ruska to understand the report also highlights the positive and
negative impact of these solutions on Mrs. Ruska’s business. At last the report summarises
the comparison of legal solutions between countries like UK, US and Australia.

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TASK 1
Nature of legal system
Due to the breakage in clients and customer dissatisfaction, Mrs. Ruska is in a need of getting
aware about various legislative provisions which are made applicable on businesses running
in UK. Hence, the following part of the report provides for the various sources of law
prevailing in UK.
Sources of law
The following are the sources of law in the UK legal system:
1. Common law:
 The English law has found place mainly from the common law that is the
previous judgments given by the courts. These judgments act as ‘judicial
precedents’ which means that the lower courts are bind by these judgments in
cases where the circumstances are similar and like.
 Hence the common law becomes a source of law for the policy makers in
making and drafting policies for the functioning of the business in UK
(Martin, 2014).
2. Acts passes by legislative body:
 The Acts passed by the UK Parliament are considered as the primary source of
law in UK. These rules are written and codified in a prescribed form which
provides for the acts and avoidance to be taken into consideration by the
companies working in UK.
 The UK Parliament follows a prescribed law-making process which requires
the passing of the bill in both the houses of Parliament (Evel, 2019).
 This law-making process is carried in various stages as mentioned in the
Figure 1 below.

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Figure 1: Law making process in each house in UK Parliament
(Source: Evel, 2019)
3. European Union law:
 United Kingdom is a member state of European Union and it shall be bound
by the laws and policies of EU till it withdraws its membership.
 All the policies and rules framed by EU shall be made inevitably applicable on
the member states of EU (Barnard, 2012).
 UK shall also be bound by the provisions of the treaties entered by EU.
4. European Convention on Human Rights:
 As UK is a member state of the European Council, UK is inevitably bound by
the European Convention on Human Rights by virtue of being a signatory to
it.

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 Hence the enactment of the Human Rights Act 1998 is done and the courts in
UK are under an obligation to protect human rights enshrined in the
Convention (French, et. al., 2012).
All the above-mentioned sources are called the primary sources of laws. Along with these
primary sources in UK there is also reliability on the secondary sources. Though secondary
sources are less considered but in case of absence of primary source, the court takes into
consideration the secondary sources but it is important to note that the secondary sources
must contain the citations of primary sources.
Some of the examples of secondary sources are:
the commentaries of experts
writings of judicial officers
articles of law experts
reports of various government bodies and agencies (Partington, 2013).
Hence, Mrs. Ruska shall be aware of the sources from which the business laws are evolved
which shall be made applicable on her business. These laws shall also provide for the
obligations which Mrs. Ruska owes towards her customer’s safety and protection.

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Laws applicable on Mrs. Ruska’s business
Mrs. Ruska was running a Salon in East London and had a business of providing beauty care
services and products. Two of her customers Andrea and Mariyah suffered from severe
itching and hence the Salon business suffered loses in profits and also breakage in clientele.
Hence Mrs. Ruska is in a need of getting aware with the various laws she is at an obligation
to abide by and the laws which shall be applied in the running of her business.
The following are the business laws and legislations applied on Mrs. Ruska’s business:
 Control of Substances Hazardous to health (COSHH) (Startup, 2019).
 Consumer Rights Act 2015
 Competition Act 1998
 Employment Rights Act 1996
 Applicability of vicarious liability
1. Control of Substances Hazardous to health (COSHH)
 This is the law which requires the employers and owners of the company to
avoid the use of substances which are hazardous to health.
 Under this they are also under an obligation to decide the method through
which they can avoid the use of such substances.
 They also provide controlling measures to prevent harm to health.
 They also plan for steps to be taken in cases of emergencies (Startup, 2019).
2. Consumer Rights Act 2015
 This law governs the rights to be given to the consumers in case they are
dissatisfied by the quality of goods or services they have purchased.
 It also provides for the right of customers in case they are sold faulty products
and services of poor quality (Adams, 2016).
 This act has a wider scope as it is a consolidated form of three main Acts.
3. Competition Act 1998
 This Act is enacted to prevent unfair business practice by the organisations
and also to prevent companies from securing dominant and controlling
positions through fraudulent means.
 This statute also promotes healthy practice among organisations and make
them stand in competition through fair means (Hannigan, 2018).

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4. Employment Rights Act
 This statute protects the rights of the employers as well as employees as it
contains provisions for the interest of both.
 It protects the employees from dismissals and provide provisions for their
leaves and other benefits (Honeyball, 2012).
5. Vicarious liability applied
 Mrs. Ruska shall also be held liable under the law of tort as she is vicariously
liable for the act of her employee Paula.
 Under tortious liability she was under a duty of care towards her customers
which she has failed to observe (Mondaq, 2019).
Hence, for the convenience of Mrs. Ruska’s understanding the example of the case judged by
Supreme Court of UK The Catholic Child Welfare Society and others v. Various Claimants
and others [2012] UKSC 56, can be taken in which the court held that the employees
employed in the salon for providing beauty care and services are under the control of the
owner and hence in any case of negligence or misconduct the owner shall be held vicariously
liable for the act of the employees.
Thus, in Mrs. Ruska’s case, the hair stylist Paula attended the two customers who suffered
itching due to fault in treatment and it was Mrs. Ruska’s duty to carefully examine the
products before using. Hence, she shall be held vicariously liable for the act of her employee.

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Application of statutory and common law in UK courts
The court at first priority interprets the statutory law for rendering judgments. hence the Acts
passed by the Parliament are at first consideration for the judiciary of UK. But there are
instances where the statutory laws are in question or the language of the clause does not deem
fit. In such cases the court applies the previous rulings of the supreme court or the high court.
As discussed earlier, there are two main sources of law in UK which are the legislation and
the case laws. Hence the application of both are seen in UK judiciary equally.
Application of statutory laws
The statutory laws are the written codified laws passed by the parliament after getting
approval from both the houses. Hence Mrs. Ruska is in a need of knowing the statutes which
shall be applied in her case.
The following laws shall be interpreted by the court in her case:
 Part 2 of the Consumer Rights Act 2015 as this part provides provisions for the unfair
terms as are practised by one of the employees named Paula of Mrs. Ruska’s salon.
Application of common law
Along with the statutory laws, the common laws are also made applicable by the courts in
delivering judgments. hence Mrs. Ruska’s case shall also be relying on case laws which are
based on previous judgments of the courts. One such example which can be taken is the case
of Cox v. Ministry of Justice [2016] UKSC10, in which the court held that the owner of the
salon and beauty care service shall be vicariously liable for the act of the employees
employed in the salon. (Mondaq, 2019).
Hence, Mrs. Ruska is at a position of undergoing liability for the act of Paula, the hair
dresses.

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Recent reforms and developments in UK
Mrs. Ruska who is the owner of Magnificent Salon Service Ltd is in a dispute with two of her
customers and hence she is in a need of getting acquainted with the recent developments in
the related industry in UK laws.
Hence the following part of the report provides for the effectiveness of UK legal system in
terms of reforms and developments in the past few years.
One of the recent developments seen in UK legal system for the rights of customers is the
consolidation of three Acts in one single Act which is the Consumer Rights Act 2015.
The three Acts which are consolidated are:
 Unfair Terms in Consumer Contracts Regulations 1999
 Supply of Goods and Services Act 1982
 Sale of Goods Act
The new Act is drafted in three different parts dealing in three different issues.
Part 1 of the Act deals with the entering of the company in a contract for the purchasing of
goods.
Part 2 of the Act deals with the unfair terms practised by the employees or the company.
And finally, Part 3 of the Act deals with other provisions relating to the rights of the
customers prevailing and purchasing services and goods respectively.
Along with the introduction of Act of 2015, there are also other reforms in UK legal system
in the personal care industry like the application of the Health and Safety Act 1974 which
contains provisions that the salon is at a liability of taking proper care and caution while
giving treatment to the customers (Brock, et. al., 2012).
Further the Act also contains the provision that where more than 5 employees are employed
the salon shall display the Health and Safety Poster for the knowledge of the employees as
well as customers.
Hence the imitation on the wall regarding the liability of manufacturer for poor quality of
products is not legal in terms of safety of the customers.

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TASK 2
Effect of law on Mrs. Ruska’s business
Mrs. Ruska’s business shall be subjected to various provisions of laws which are enforced for
the functioning and governance of companies in UK. Along with codified laws i.e. Acts of
parliament, there are also unwritten laws that is the law of contract, the law of tort which
shall be made applicable on Mrs. Ruska’s business.
Hence the following are the set of codified laws to which Mrs. Ruska’s business shall be
subjected to:
Company law:
The Companies Act 2006 is the codified statute that govern the formation and
registration of companies in UK.
As Mrs. Ruska’s business of salon service is a limited company, it shall be governed
under the provisions of Companies Act 2006.
The salon service company need to comply with all the provisions laid down for the
running and functioning of the company in the Act.
In case of any violation of the provisions, the company shall be held liable for loss
and damages (Dignam and Lowry, 2012).
Employment law:
Employment laws in UK are also codified in several Acts among which the major
ones are the Employment Rights Act 1996 and National Minimum Wage Act 1998.
Under the provisions of these Acts, Mrs. Ruska is under a liability of protecting the
rights of the employees and pay them the minimum wage which is prescribed by law.
Various rights of the employees as well as employers are protected under these
provisions like unfair dismissal, paid leaves, maternity and parental leaves, etc.
Along with codified laws, the business shall also be subjected to uncodified laws which
include:
Law of contract:
The law of contract in UK is not codified in one single statute but is governed by the
basic principles of contract (Andrews, 2011).

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These principles include the valid formation of contract on fulfilling the essential
requirements.
There requirements are the formation of agreement, valid and legal consideration and
object and the intention of the parties.
Law of tort:
Law of tort is also not codified in a statute but is governed and applied on the basis of
case laws and court’s judgments.
This law is completely applicable through case laws that is common law.
Mrs. Ruska’s business shall also be subjected to the principles of law of tort as she
stands in a position of being vicariously liable for the acts of her employees (Mondaq,
2019).
Under the law of tort, the principle of negligence is also covered and hence the
business shall also be subjected to the same.
Difference between legislation, regulation and standard applicable on Mrs. Ruska’s
business
Mrs. Ruska’s company Magnificent Salon Service Ltd shall be subjected to various business
laws which are enforced in UK. But these laws are not always in form of statutes and Act.
These laws are also in form of regulatory procedures called regulations or in form of
accredited ethics by the government which is called standards.
Hence Mrs. Ruska need to understand the difference between legislation, regulations and
standards.
The following table provides for the same:
Legislation Regulation Standard
These are the enacted
Acts of the Parliament
which are made applied
on Mrs. Ruska’s
business.
These are regulatory
provisions which are
drafted for the
implementation of
legislations.
These are also codified
laws which are approved
ethics to be followed by
the companies and are
passed by the
government.
Some of the examples of Examples of prescribed Standards applicable on