BSc Business Management BMP4002: UK Legal Sources for Organizations

This report provides an overview of the legal landscape for businesses operating in the UK. It examines key sources of law, including commercial entity regulation and commercial transaction regulation, highlighting how these regulations have evolved with technological and societal advancements. The report delves into business transaction management, vicarious liability, and negligence of business liability, offering insights into directors' roles, liabilities, and duties. It also discusses various business structures such as sole proprietorships, general partnerships, and limited liability companies (LLCs), evaluating their respective advantages and disadvantages. The report concludes with recommendations for IOM Solutions, suggesting a general partnership structure to mitigate risks associated with business expansion. Desklib offers a wealth of similar resources for students seeking academic support.

BSc (Hons) Business Management
BMP4002 Business Law
Assessment 2
Report describing the key sources of laws as the legal context for business organisations in
the UK
Submitted by:
Name:
ID:
Contents
Introduction
In the professional world, the laws and the orders are considered to be crucial because it helps
in providing justice and fairness for all the people involved. In this whole process of
government plays an essential role. The report will outline the legal business structure of the
UK companies and also preventive measures for the IOM Solutions. In addition to this, it will
also evaluate the ways in which the policies affect the decision-making process of the
company. Also, the report will highlight the current expansion and advancement of the legal
framework of the United Kingdom.
Businesses & Organizations in the UK
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Business laws are divided into various categories that is commercial entity regulation and
commercial transaction regulation. With the passage of time and years the regulations have
also modified and changed because the technology and society have advanced a lot and the
market trends have also changed.
Business transaction management
It is the practice of managing the information technology as it provides a tool for the purpose
of tracking the various transactions in the IT structure. It is the category of measuring the
time performance of the components by being a link between various components. It is
responsible for making effective success in gathering the data techniques. Business
transaction management is known for providing the overall view of the information
technology from the perspective of business transactions. It allows for keeping the track of
transactions across a full IT infrastructure and also with the notification and improvement of
unforeseen alteration in technology and business concern conditions. This transaction take
place between two people who are involved in transaction for common net profit. In relation
to the given case that is Sam's company grows over concerning demand and personnel
department of the company, that is why he needs preventive measure in order to find a proper
solution to the transactional problems of the company.
Vicarious liability
It is defined as a term and situation in which a party is considered responsible for all the
unlawful activities of another party. One party is held accountable for conducting the
unlawful conduct and the liability can arise in various situations in which one is supposed to
be considered to have major control over on another party. In relation to the given case, the
supplier of electrical components such as Sam could be held responsible for the inappropriate
behavior of the employees. For example, discrimination or harassment take place at
workplace. As any employee of the company damage any equipment then Sam will be held
liable for that task.
Negligence of Business Liability
When a businessperson fails to exercise due to care and injures another party, this is called as
negligence. A negligence case must project several factors that is
 The defendant has a duty of care to the plaintiff or the general public.
 The commitment was broken by the defendant.
 The plaintiff was injured as a result of the defendant's breach of duty.
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 A rational person may have expected the plaintiff's loss.
Directors’ roles, liabilities and duties
Company has essential people such as directors, shareholders and many others as managing
and operating the business concern as a limited corporation has different plus point. For the
new comers and the starters, being a legal entity comes with various rights that means the
company is directly responsible for the debts and obligations. Also, they cannot be held
responsible for the damages done when the company goes insolvent. That is the real
substance of the limited-liability companies, and that is why the it is established in the first
spot. In relation to given case entrepreneurs like Sam should be motivated and encouraged to
take risks in a smarter manner without concern of losing everything.
The Duties of directors
There are various duties of the directors in the company that is take decisions which are best
for the company and not to make profit in false ways. Also, they do not promote conflicts
between the employees at the workplace.
Liabilities of director
Third-party duties, firm liability, co-director liability, and liability for statutory violations are
all things to think about. The directors' responsibilities will be explored next. Unlimited
Director Liability, Civil Liability, and Criminal Liability
Termination of Partnership
The legal phrase for the process of ending a commercial partnership is partnership
termination. In the vast majority of cases, such as when the partnership's commercial goal is
met, a partnership will dissolve organically. In rare situations, unexpected events such as the
death of a spouse or an illegal act may lead a partnership to terminate prematurely. A
company can be dissolved for a number of reasons, including agreement, notice, compelled
terminator, or dissolution. The firm may be dissolved if all of the partners, or all but one, have
been pronounced bankrupt. the recurrence of specific events,
Memorandum of Association (MOA)
The Memorandum of Association is a legally binding agreement that lays forth the basic
principles that govern a company's formation and management. It's the basic document that
lays out the company's structure and the types of projects it'll take on. The goal of the
memorandum is to provide information about the company's authority and activities to its
members, creditors, and the general public. The memorandum contains rules controlling the
corporation's capital structure, members' liabilities, the corporation's goals, and any other
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major corporate concerns. Only if specific conditions are met is the memorandum amended.
Articles of Association (AOA)
The company's internal rules, regulations, and bye-laws are included in the Articles of
Association, which are legally binding documents. The articles must not be in conflict with
the memorandum or the Companies Act. Articles must always be interpreted in light of the
memorandum's provisions.
The legal business structure of UK companies
Sole Trader
A sole proprietorship is easy to establish and gives you entire control over your business. If a
business does not register as another type of business, it is assumed to be a sole
proprietorship.
Taxation
Pass-through taxation applies to a sole proprietorship. The business does not file its own
taxes. Rather, the profit (or loss) is transferred by schedule to the owner's tax return.
Lability
The owner of a sole proprietorship is personally liable for the company's obligations. This
risk can be reduced by insurance and effective contracts. The most basic form of business
organization is the sole proprietorship. A sole proprietorship is inexpensive to start and
requires only the absolute minimum business paperwork.
The Advantages of a Sole Proprietorship -
 The firm is fully under the control of the owner and is simple to set up and
competitively priced.
The Disadvantages of sole proprietorship
 Business owners are individually liable for all business obligations, putting them at
danger. Also, a solo proprietorship is doubtful to attract investors.
General Partnership
A general partnership is a joint venture between two or more enterprises with the same profit
motive. While entering a partnership is straightforward, a partnership agreement is required
due to the huge number of participants. A partnership agreement specifies profit-sharing
conditions, ownership percentages, dissolution procedures, and management authority.
Taxation
Rather than paying taxes, a partnership must file reports. A partnership does not pay federal
income tax even though it is required to file an annual information return (Form 1065) with
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the IRS. Profits and losses are divided among the partners according to their profit-sharing
percentages. Taxation on each partner's profit/loss portion is their responsibility.
Liability
Owners bear unlimited personal responsibility. Each partner in a partnership is held jointly
accountable.
Formation
Forming a partnership is relatively clear, but having an attorney prepare the partnership
agreement is essential. Collaboration agreements specify the parameters of the partnership
and frequently contain the various that is contribution of capital, accounting, banking,
liquidation and many others.
Advantages
It is easy to manage and the owner's tax returns disclose revenues and losses.
Disadvantages
In the absence of a partnership agreement, management and control issues may arise and also
participants are personally liable for corporate debts and liabilities without a partnership
agreement.
Partnership
[Provide definition and explain formation, taxation, lability, dissolvent and Advantages &
Disadvantages.]
A partnership is a legal entity in which two or more parties are involved and it is the most
advanced business arrangement. A company or partnership is a statutory entity independently
of the individuals who control or govern it, such as investors. A corporation can conduct
business and pay taxes without the involvement of its owners. For larger firms with
workforce requirements or other reasons, corporations are preferred.
Taxation
As per the Section 111 of the Income and Corporation Taxes Act 1988, an entity that does not
have a separate and distinct legal personality from its members is defined as a partnership. As
a result, partners must pay taxes on their portion of the partnership's profits and losses.
Liability
A company is a legal entity that lasts longer than its stockholders. Investors in corporations
are not personally accountable for the company's debts. Losses are restricted to the amount
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initially invested. The corporation veil should be respected by investors. To avoid
misunderstandings, always use the company name when engaging with clients.
Formation
Corporate governance and control by the board of directors are significant disadvantages.
Forming and operating a corporation is more complicated than forming and operating a sole
proprietorship, a partnership, or an LLC. When there are multiple shareholders or investors
involved, decision-making takes longer.
Partnership's Benefits
 Corporate investors have limited liability that is why they are responsible for all of
the company's obligations.
 This is usually a sound investment plan.
Partnership's Disadvantages
 It's more complex, difficult and expensive to start a profit-sharing firm.
 As profit-sharing is "double taxed," meaning it is taxed twice: first at the company
level and again at the individual shareholder level.
Limited Liability
The Limited Liability Company is a state-approved business structure (LLC). If a company
wants to incorporate a Limited Liability Company, they need first check their state's
regulations.
Taxation
LLCs are classified as "pass-through entities" for tax purposes. On their tax returns, LLC
members must record their share of profits or losses (Limited Liability, 2021). An LLC, like
any other type of partnership, is required to file an informational tax return. Schedule C, E, or
F of Form 1040 can be used to declare business costs. Form 1065, Partnership Return, is a
commonly filed form.
Liability
Members are protected from corporate obligations and legal action. A limited liability
company's assets are at risk. LLC members' assets are kept confidential unless there is fraud
or wrongdoing. Personal accountability and "piercing the corporate veil" should be avoided.
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LLC owners should always use the LLC's name instead of their own when dealing with
clients.
Formation
Like a partnership agreement or bylaws, an LLC operating agreement covers ownership and
operations. An LLC must file articles of formation and pay a filing fee. Every state
encourages but does not require operating agreements.
LLC Benefits
 Limited liability means that the firm is accountable for all of its debts, not just the
owners.
 Company members are only taxed if they profit or lose money. • Allows for an
unlimited number of members.
LLC Disadvantages
 Additional state taxes are frequently imposed and even if the profit was not
distributed, each member's portion of it is taxable.
Recommendations for IOM Solutions
As per the given case in which Sam is a sole trader who is involved in selling and dealing of
the electrical parts in various garages. So, he is planning to expand his business in the market
but he faced some issues and some confusion. That is why, as per the situation it is suggested
to for his business that he should go for General Partnership because sole trading can be
risky option when he wants to expand his business That because as there are rare chances that
investors invest in sole proprietorship set up and choosing general partnership will be the
suitable option for the company. General partnership is known for expanding and building
any business in a constructive way. Another reason for choosing it, it is easy to form as
managing the business in this is quite simple as compared to others.
Conclusion
From the above report analysis, it can be said in the legal context that there are various main
sources for business companies in United Kingdom. In addition to this, the report presented
the preventive measures for IOM solution in order to take suitable steps in the business. The
report also gave the knowledge on the legal structure of the business in UK. For instance, the
report also highlighted the regulations of law with MOA, AOA, termination of partnership,
vicarious liability and many others.
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References
Books and Journal
Omar, P.J. ed., 2018. Directors' duties and liabilities. Routledge.
Schwarcz, S.L., Jones, A. and Yan, J., 2018. Responsibility of directors of financial
institutions. Forthcoming chapter in CORPORATE GOVERNANCE OF FINANCIAL
INSTITUTIONS: LAW, CONDUCT, AND CULTURE (Danny Busch, Guido Ferrarini, &
Gerard van Solinge, eds., 2018, Oxford University Press), Duke Law School Public Law &
Legal Theory Series, (2018-23).
Wevers, H., 2021. A Basic Guide to International Business Law. Routledge.
World Bank, 2018. About Women, Business and the Law.
Mayer, C., 2018. Prosperity: Better business makes the greater good. Oxford University
Press.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford
University Press.
Flower, J. and Ebbers, G., 2018. Global financial reporting. Macmillan International Higher
Education.
Comunian, R. and England, L., 2020. Creative and cultural work without filters: Covid-19
and exposed precarity in the creative economy. Cultural Trends, 29(2), pp.112-128.
Aguilera, R.V. and Grøgaard, B., 2019. The dubious role of institutions in international
business: A road forward. Journal of International Business Studies, 50(1), pp.20-35.
Corrales, M., Fenwick, M. and Haapio, H. eds., 2019. Legal Tech, Smart Contracts and
Blockchain. Singapore: Springer.
(Omar, 2018) (Schwarcz, Jones and Yan, 2018) (Busch, Guido Ferrarini, & Gerard van
Solinge, 2018) (Wevers, 2021)( World Bank, 2018)(Mayer, 2018)(Hamilton, and Webste,
2018)(Flower and Ebbers, 2018)(Comunian, and England, 2020)(Aguilera, and Grøgaard,
2019)(Corrales, Fenwick and Haapio, 2019)
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