Business Law Report: UK Legal System, Business Structures and Cases

This report provides a comprehensive overview of business law within the United Kingdom. It begins by exploring the sources of UK law, including legislation, common law, European law, international treaties, and the constitution. The report then examines the government's role in the law-making process, detailing the stages of bill enactment. It further analyzes the implications of employment, contract, and company law on business operations, highlighting key aspects such as equality, minimum wage, and health and safety regulations. The report also covers different types of businesses, differentiating between incorporated and unincorporated entities, and comparing the advantages and disadvantages of partnerships and companies. Finally, the report includes legal solutions for case studies, providing a practical application of the legal principles discussed.

BUSINESS LAW

Table of content
INTRODUCTION...........................................................................................................................3
SECTION 1......................................................................................................................................3
TASK 1............................................................................................................................................3
a) Sources of United Kingdom law..............................................................................................3
b) Role of government in Law making and application of statutory and common law in the
justice courts................................................................................................................................4
c) Impact of employment, contract and company law on business.............................................6
TASK 2 ...........................................................................................................................................9
Different types of business ..........................................................................................................9
Difference between Incorporated and Unincorporated businesses............................................10
Advantages and disadvantages of Partnership and a company..................................................10
SECTION 2 ...................................................................................................................................11
TASK 3..........................................................................................................................................11
CASE 1..........................................................................................................................................11
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business law which is also called by name of commercial law refers to all such laws and
regulations which lays down the provisions regarding how to create and operate a business
entity. Such laws include provisions related to formation of a company, winding up of a
company, takeover, sell of , appointment of directors etc. In other word, business law regulates
contracts of a company, hiring rules and policies, sale of consumer goods, company formation &
liquidation (Miller, 2015). The purpose of company law is to create an organized environment
within which all the business activities must be conducted. Business law's objective include
protection of rights, maintaining order, creating standards and resolving disputes related to
business.
The present project report is about business law in United Kingdom like; different
sources of English law, government's role in law making process of country, contract, company
and employment law's impact on the business. Further, the report will highlight different kinds
of business, difference between incorporated and unincorporated business and how they are
financed and managed along with the advantages and disadvantages of partnership and a
company. Lastly, a segment of this report will include appropriate legal solutions for the given
case studies.
SECTION 1
TASK 1
a) Sources of United Kingdom law
The State Opening of Parliament is a meeting or an event which is conducted for
notifying the beginning of a session of United Kingdom Parliament. This State Opening exhibits
British culture, history, and politics to large number of people. Queen's Speech is the way
through which list of number of laws which the government desires of getting approved by
Queen in the coming year is showcased. By custom, it is presented in the presence of MPs, peers,
dignitaries in the Parliament's upper house which is House of Lords. The contents of the Queen's
Speech highlights the priorities of new ministers and sets the scene for the upcoming
Parliamentary battle (Mann, and Roberts, 2015).
UK has derived its legislation from several sources over the time. These are discussed as
follows:
Legislation/ Statue:

The rules and regulations which is formed by the country's legislative body is known as
Legislation or Statute. This includes all the Acts of Parliament which are applicable on each and
every citizen equally. Legislative body of UK is British Parliament which is based in the capital
city of England that is London. This body have the ultimate power of passing the laws for all the
nations of UK.
Common Law:
It means decisions of courts which are recognized as legal precedents that are to be
complied by all the subordinate courts in the nation. These are unwritten laws unlike statute,
which are applied by the courts for passing the decree in the similar cases. It is called as case law
(Allen and Kraakman, 2016). It is a source of law in the sense that they are required tom be
considered by the judges when they are confronted with similar kind of cases. The decision of
upper courts becomes a part of English law.
European Law:
United Kingdom is associated with European Union which signifies that law of European
Union (EU) is considered first than UK Law or EU law is prioritized over UK law. For
example,A convention of EU on Human Rights is one of the regulation which have to be
compulsorily followed by United Kingdom since, it is part of EU.
International Conventions/ Treaties:
Conventions and treaties means written agreements which countries willingly signs and
ratifies. This ratification on such written agreements by the nations are incorporated into their
respective legislation and becomes a part of law. There are many UK laws which are the
outcomes of convention and treaty such as UN Convention on Elimination of all forms of Racial
Discrimination which was ratified by UK in 1969 (Sources of International Law, 2019).
Constitution:
Constitution is a source of law as it is the body which segregates the law making power
between the legislature, executive and judiciary. Constitution of UK along with this, also lays
down the fundamental rights of citizens of country. It states the fundamental principles through
which government exercises its powers and authority (Cox, 2015).
b) Government's role in law making process and application of Legislation and common law in
the justice courts
Government's role :

Government plays a crucial role in law making process of the country. Government is
the body which develops draft laws. Proposed laws or draft bill are almost created by the
government which are presented in the parliament for getting approved. They are developed by
the government' department which are then issued to interested parties. These draft laws might
either be approved or rejected by the Parliament (Fici, 2016). The process of law making with
this step i.e., creation of draft bill by the government of UK.
There are different kinds of bills which are presented in Parliament. These are :
Public bill: It is a bill which created by government minister which is created for general
population.
Private bill: When a bill is created and presented by a MP or a Lord but not government
minister, then it is called as private bill which is aimed to effect specific number of people or
organizations (James, 2017).
The process then proceeds and involves various stages till the draft bill becomes an
enacted law. The stages are as follows:
First Reading:
In this phase, draft bill is bestowed in the lower parliament which is House of Commons.
No decisions and debates takes place at this stage.
Second Reading:
In this phase of law making process, debates over the presented bill is done in the House
of Commons. Opinions of opposition and other are heard in this second reading session over the
component of the bill presented. Votes are taken at this stage for the purpose of proceeding
further and sending the bill in the committee stage.
Committee Stage:
When the proposed law gets the vote of member of House of Commons, it is entered into
this phase. In this stage, the proposed bill is reviewed by the standing committee which
comprises 16 to 20 MPs, wherein each of the component and aspect of the proposed bill is
reviewed in detail and amendments are recommended by the committee (Procedure for passing
laws in the UK, 2019).
Report Stage:
In this step of law making process, the committee reports all of its decisions and suggests
recommendations and amendments if required. The bill after such amassments is sent to the

House of Commons for debating over the amendments provided by the committee on which
again the voting is taken for accepting or rejecting the amendments.
Third Reading:
When the amendments provided by the committee is sanctioned by the House of
Commons, third reading of the bill is done in the Parliament's upper house which is House of
Lords. The members of House of Lords reviews the bill and if required, make some amendments.
This draft document is then again sent to House for Commons, for getting the approval and
consent over such amendments. The process continues till both the houses of Parliament agrees
on the final draft. Once, there is mutual consent of both the houses is attained, the draft bill is
sent to next stage which is attaining royal assent (Mikami, 2016).
Royal Assent:
This is the last phase in law making process in UK. The bill is sent to Queen for attaining
her assent for the proposed law. It is only after her assent that a bill is termed as law and become
effective in country.
Implications of Legislation and Common law in courts
Statutory laws are those regulations which are created by parliament in the word of
legislation. Statutes codifies certain rules and regulation which are to be compulsorily applied by
the all justice courts irrespective of the hierarchy level in the legal system.
While, common laws are the legal precedents which are the legal decisions passed by the
justice courts. They are to be applied by all the subordinates courts in the country when they are
presented with similar kinds of cases. Common law facilitates the judges with interpretations and
clarification of the facts and aids the judges in passing the appropriate decisions (Rohlin and
Ross, 2016).
c) employment, contract and company law's impact on business
Employment law refers to the rules and regulations which governs the employee-
employer relationship. The intent of this law is to defend the rights and liberties of employee at
workplace. The law contains various aspects such as equality at work area, equal pay, minimum
wages, health and safety of employee, leave entitlement, work timings, data protection,
employment's terms and conditions in the employment contract etc.
Employment law impacts greatly the business activities of an organisation and its
decision-making. For example:

As per the Equality Act, 2010, employer has to make sure that no discriminative
practises are exercised within the business. Like, while recruiting people, employer must not
discriminate any person on someone's disability, gender, religion, age, marital status etc. If it is
indulged in any such practises, then it would result into legal actions, suits and penalty for the
company and would also lead to deterioration in the image of business entity in the market
(Overview of UK Employment Law, 2019).
Likewise, as per the Minimum Wage Act, the establishment have to prepare its
remuneration policy which is in line with the provisions of the above mentioned act. A company
which offers fair remuneration to its employee has a positive impact on its business as people
would desire to work in such company where they being paid good and being valued. Further,
safety and health of employees is the utmost duty of an employer. There is a law called Health
and Safety at Work 1974, which lays down the provisions regarding the health and safety of the
employee at workplace. The law states that an employer must make all the reasonable steps for
ensuring the complete safety of its employee and others at work area (Epstein, 2018).
Contract Law:
A contract is a term which refers to a legal enforceable agreement created by different
parties In other terms, it signifies a legal boundation either written or oral wherein parties are
required to perform their part of obligations for discharging themselves from the contract.
For terming a contract valid, there are following elements that are needed to be followed
by the parties. These are :
 Offer & Acceptance: An offer must be initiated by a party to other party which must be
accepted by the other party for creating a valid promise between them. Offer when
accepted with same terms and conditions are only termed as valid promise or agreements.
 Consideration: There must a lawful consideration- meaning of which is something in
return, in the contract, absence of lawful consideration would render the contract void
(Kraakman, 2017).
 Mutual & Free Consent: Consent must be mutual and free, this signifies that there must
be meeting of minds of parties and consent shall be free of any fraud, coercion,
misrepresentation,mistake.
 Capacity of entering into contract: The parties shall be capable of entering into
contract in terms of age, soundness of mind and qualification by law.

Contract law significantly impacts the business activities of a business. When company
makes valid and legal contracts for its transactions, it impacts it in positive way. For example, for
any transaction with a supplier of raw material, if a valid contract is made, company have a
conclusive evidence which can be used in court, in case when other party has not performed its
part of obligations. Contract minimizes the risks of uncertainty of business transactions.
Company law:
Company law regulates all the organization which are under Companies Act, 2006. This
act lays down the provisions for formation, liquidation, conversion, filing of accounts and other
company related aspects in United Kingdom.
For example: Part 16 states the general requirements for company's accounts that are to
be audited. It also includes exemptions for certain types of companies. Appointment, removal
and resignation of auditor's liability are all included in this Part 16 of Companies Act.
The businesses are greatly impacted by the company law in the sense that it recognizes a
business as a separate legal entity from its owner which limits the liability of the members of a
company (Levine, 2016). For example, if a company has to be incorporated, it firstly has to be
registered with House of Companies, and meets the criteria for starting the business. Like for
public company, it is necessary for promoters to have minimum of 50,000 pounds and at least
two members acting as directors along with a company secretary. Moreover, a company can be
dissolved only by the way of law. Proper procedure have to be followed by the company when it
wishes for liquidation.
Difference between Legislation, Regulations and standards
Laws can be defined as statutes or set of rules which are created by the government and
legislative body of the nation. These laws must be signed by Queen for terming it as enacted law.
Everyone in the state is bound to adhere to such legislation.
While regulations can be described as comprehensive details on the enacted laws
regarding how such laws are to be implemented. These are also called by the name of
Administrative law. Since, they carry the force of law, application of regulation is compulsory
(Laws vs. Regulations vs. Standards, 2019).
Whereas, Standards are the reference document which facilitates the details regarding
the criteria which is involved in a law. It provides the guidelines and characteristics of the law.

However, the compliance of standards are not mandatory as in the case of legislation and
regulations.
TASK 2
Various kinds of business
There are various form of businesses which are different in respect to their nature,
formation and legal requirements. These are as followed:
Sole proprietorship:
It is a kind of organization which is formed by a single person who owns that business.
Business has not separate legal entity from its owner. This implies that person is solely
responsible for the all business risk, entitled to all the business profits and is single handedly
liable for all the business losses (Mitchell and et.al., 2016).
Nature & Formation: It is easily formed and does not require any legal formalities since it not
legal entity. Any person can open this type of business and can enter into contracts in its own
name.
Partnership:
Partnership refers to collaboration of two or more person that have together for
conducting a common business. It is an agreement between various parties for sharing the profit
and loss of the business.
Nature & Formation: The nature of partnership is such that all the partners acts as a principle
and agent of one another which makes them liable for another's action. The liability of partners
is limited up-to the share they hold in the partnership firm. Moreover, death, lunacy, insolvency
or leaving of any partner dissolves the original partnership and a new agreement has to be made.
There is no legal requirements of forming a partnership, simply an agreement is required
by the partners which can be either in oral or written. However, registration of partnership allows
the firm to sue and can be sued against third party (Jones and Sufrin, 2016).
Company:
A company is term which means an association of group of individuals who have come
together for the purpose of attaining specific goals and objectives and for earning profits.
Nature & Formation: It is a separate legal entity and have to be registered with Companies
House for getting the title of company. It has perpetual succession which means that it does not

get affected by the entry and exit of any member of a company and can be put to an end by the
legal procedure only mentioned in the companies act, 2006.
Differentiating between Incorporated and Unincorporated businesses
Grounds for differentiating Incorporated business Unincorporated business
Nature It has a separate legal identity.
For example, public and
private companies.
It does not have any separate
legal identity. For example,
partnership, sole
proprietorship.
Managed It is managed by the BOD who
are elected by the shareholders
in case of public company. In
case of private organisation,
the business managed by the
members of company (Singer,
2018).
The business is managed by
owners.
Funded Public company is funded by
equity capital, debentures,
loans from public financial
institutions, banks etc.
It is financed by personal
investments, loan from friends,
family or banks.
Liability The liability of the members of
the company is limited.
Liability of the owners of the
business is unlimited.
Benefits and Drawbacks of Partnership and a company
Partnership
Benefits
 It is simple to form without any legal restrictions and requirements.
 Loss of the business is shared by the partners.
 It is flexible form of business organisation. There is no need to publish any financial information which results into maintenance of
secrecy.

Drawbacks
 Conflicts amongst partners and lack of harmony in the business (Whincop, 2017).
 Entry and exit of any partner disturbs the partnership agreement.
 Since there are no rules and regulations for partnerships, people have less faith in
partnerships which at times limits the partners in raising large amount of capital.
Company
Benefits
 The liability of shareholders is limited in a company up to the extent of share they hold in
the company.
 It has perpetual existence, meaning of which is – it does not get affected by entry and exit
of any member.
 The business activities of a company is managed in a professional way. It can raise large amount of capital as compared to partnerships (Raz, 2017).
Drawbacks
 As per the legal requirements, company needs to publish its information which results
into lack of secrecy.
 Company have to confront large number of legal restrictions as compared to partnerships
and sole trader.
SECTION 2
TASK 3
CASE 1
ISSUE:
Champion limited is facing financial troubles since it relocated its business. This has
made company make defaults in making payments to creditors. The issue here is that creditors
have threatened to apply for compulsory liquidation of company. Can the creditors take such
action and what are the ways through which company can avoid such legal action?
RULES:
Insolvency act, 1986:
As per the section 122 creditors have a right to file petition in the courts for company's
liquidation in case company is not paying their dues. However, there are conditions for such
filing such as amount must be higher than 7 pound and default has been made.

Compulsory voluntary Arrangement:
As per the provision of this act, entering into CVA a company is facilitated with an
choice of paying off its debts in a fixed time duration. Further, it also gives an opportunity to
address its issues with management and business operation which are not effective (Allen and
Kraakman, 2016).
With CVA the company enters into agreement with its creditors, organization continues to
operates and the creditors are paid proportionately over a time of 2-5 years. With this company
continues to operate as a solvent business and the creditors are also paid off. The benefit of CVA
is that creditors can not bring any legal action against until the CVA procedures completes.
Application:
By looking at the above rules, it can be said that creditors have a right to take a legal
action against the company as it is continuously making defaults in repaying its dues. It is
recommended to company its shall go voluntary liquidation wherein creditors will be paid
proportionately and company would continue to operate.
Conclusion:
It can be summarized that Champion Ltd and its creditors shall go compulsory voluntary
arrangement where company can proceed its business activities and creditors will receive their
due amount over time period of CVA. Also, CVA will also restrict in bringing of any legal action
against the company by its creditors.
CASE 2
Issue:
Anderson who is an employee of Amber Ltd. entered into an employment contract which
contained a term that 12 month prior notice would be needed to provide before leaving the job
from the company. Moreover, Anderson begin working with a company's competitor of Amber
Ltd, which was Beta Ltd. The issue in this case is he did not serve any notice period before
leaving the job for which Amber Ltd. Wishes to claim for injunction orders against Anderson.
Rules:
Employment law: This law consist of several rules and regulations which the employer
and employee have to adhere to at the time of performing any activity in context to
employment.