Magnificent Salon Services Ltd. Legal Handbook: Unit 7 Business Law

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UNIT 7- BUSINESS LAW
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Table of Contents
Introduction................................................................................................................................3
TASK 1-.....................................................................................................................................4
The basic nature of legal system................................................................................................4
Laws which are applied on business organisations....................................................................5
Law making process in UK........................................................................................................6
Application of common law and statutory law in UK courts.....................................................7
Application of common law...................................................................................................7
Application of statutory laws.................................................................................................7
Effectiveness in terms of recent reforms and development.......................................................8
TASK 2......................................................................................................................................9
The impact of business laws on Salon run by Mrs. Ruska.........................................................9
Application of company law..................................................................................................9
Application of employment law.............................................................................................9
Application of contract laws..................................................................................................9
Difference between legislation, regulation and standard.........................................................10
Legislations..........................................................................................................................10
Regulations...........................................................................................................................10
Standards..............................................................................................................................10
TASK 3....................................................................................................................................11
Legal solutions to business problems.......................................................................................11
For termination of contract...................................................................................................11
Rescue from insolvency.......................................................................................................11
Alternate solutions for legal advice..........................................................................................13
Arbitration............................................................................................................................13
Conciliation..........................................................................................................................13
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Mediation.............................................................................................................................14
Negotiation...........................................................................................................................14
Conclusion................................................................................................................................15
References................................................................................................................................16
Introduction
Mrs. John Ruska is a business owner of a hair salon named Magnificent Salon Service Ltd
which is situated in East London. Due to a legal action brought against her organisation with
an allegation that she has failed to comply with the legal requirements which are mandatory
for the organisations operating in United Kingdom, she is in a need of legal advice regarding
the rights and obligations of her organisation. Hence, this legal handbook is submitted with a
view to advise her about the nature of the UK legal system and also the impact of business
law on her organisation.
The subsequent part of the report provides for the formation of various organisation under the
legislation named Companies Act 2006 prevailing in UK. Also, the report provides for the
legal advice for resolving corporate disputes and the adoption of the ADR modes like
arbitration and conciliation governed by the Arbitration and Conciliation Act 1996.
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TASK 1-
The basic nature of legal system
As Mrs. John Ruska is in a need of understanding the various sources of law in United
Kingdom, the first part of the report is presented for her in order to give her better
understanding of the various sources of law and how her business od salon service shall be
affected by the business laws prevailing in UK.
On a study of the UK legal system it is realised that in UK there prevails the Parliamentary
form of government which means that in UK, the Parliament is the most supreme body with
the power of making and ending laws. along with this it is also realised that UK follows a
particular law-making process under which the introduced bill is needed to be approved by
both the houses of the Parliament (Martin, 2014).
The following the sources of law in UK:
1. Statutory laws which includes the Acts of the Parliament passed by both the houses
of Parliament.
2. Case laws which are commonly called the judicial precedents or the ‘common law’.
Hence, it can be settled that in UK there prevails primary as well as secondary sources of law.
The primary sources of law include:
 Legislation i.e. Acts of Parliament
 Common law i.e. judicial precedents
In the category of primary sources, Mrs. Ruska also needs to know that UK is a member of
European Union and hence the laws of EU are made applicable on UK and all the treaties
signed by EU are automatically made applicable on UK (French, et. al., 2012).
Also, it is to note that European Human Rights Commission is also a source of law as the
rules and provisions of the commission are applied on UK and the organisations carrying
business in UK are at a compulsion to abide by the provisions and rules mentioned by the
Commission.
Along with the primary sources of aw there also exists secondary sources of law on which the
judiciary rely if there is a question in primary sources. But it is important to note for Mrs.
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Ruska that in can of reliability of secondary sources there must be citations of primary
sources. The secondary sources of law include:
 Commentaries of judicial officers and law experts
 Law reviews
 Law journals
 Reports of government agencies and bodies
 Reports of commissions
 Treaties entered by the UK government (Martin, 2014).
Laws which are applied on business organisations
In United Kingdom, there are various laws enacted for the promotion of healthy competition
and the organisations function effectively. Hence the following description shall be an aid for
Mrs. Ruska in order to understand the application of various business law on her
organisation.
The enacted statutes which shall be made applicable on Mrs. Ruska business of Salon
Services are:
1. Companies Act 2006 (Adams, 2016).
2. Competition Act 1998
3. The Consumer Rights Act 2015
4. The health and safety guides for salon services provided by the Control of Substances
Hazardous to Health (COSHH) Essentials (Startups, 2019).
5. Registration with the Care Quality Commission
Companies Act 2006:
o The Companies Act 2006 provides for the registration of Mrs. Ruska’s Salon Service
company as per the requirements provided by the legislature.
o Magnificent Salon Service Ltd is a limited liability company which is required to get
registered under the Companies Act 2006.
o The company shall find place under Section 3 of the Act 2006 (Dignam and Lowry,
2012).
The Control of Substances Hazardous to Health (COSHH)
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This provides for the safety guides for hairdressers and manicurists which includes the
following things to be abided by:
 Providing of the right protection which includes the use of powder free vinyl gloves
which are at least 300 mm long (Startups, 2019).
 To ensure that there is clean running water for the handling of chemical substances
 The use of easy to pour containers
 The busying of ready to use solutions where possible
 The storage of the chemicals in cool and dry place
 Substituting chemical products with safer products (Hannigan, 2018).
Hence, Mrs. Ruska is needed to get acquainted with the laws which shall be applied on her
business and shall also make her aware of the avoidance of unfair business practices which
shall harm her customers. She is required to take proper care while giving beauty treatments
whether for skin or hair and is required to follow the safety measures mentioned in the
provisions.
Law making process in UK
In United Kingdom a prescribed procedure is followed for the purpose of enacting Acts by
the legislature. The law-making process goes in steps which has various stages and it starts
with the introduction of the bill initially. Then the bill moves for further discussion in both
the houses of the UK parliament. At last the bill becomes the law or takes the form of the
enforced Act after receiving the consent of the queen i.e. the royal assent (Northernbridge,
2019).
The following figure demonstrate the flow of bill from house of commons and house of lords:
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Fig. 1 Law making process in UK
(Source: Northernbridge, 2019)
The law-making process in UK is in various stages which includes the following stage:
o First reading
o Second reading
o Committee stage
o Report stage
o Third reading
o Royal assent
The same procedure is followed when the bill flows from both the houses of parliament.
Before the bill is given consent of the queen, the necessary amendments are recommended by
each house of the parliament in order to modify the provisions of the bill as per the need.
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Application of common law and statutory law in UK courts
The decision of the court relies upon the provisions mentioned in the enacted statues at first
priority. The judges interpret the language of the law while giving judgment in order to make
sure they have abided by the provisions provided by the legislature for the rendering of
punishment. Hence Mrs. Ruska needs to know how the judicial bodies make the common and
statutory laws applicable on their decisions (De Lacy, 2013).
Application of common law
The application of common law can be termed as judicial precedents which means that the
decision of the superior courts shall be compulsorily applied by the lower courts in cases of
similar and like circumstances. There are certain times when the legislative statutes are not
clear in terms and language and hence the court has to depend upon previous judgments and
rulings for its decision.
The application of common law is also made applicable based on the principle of “Stare
Decisis” which means “let the decision stand”. Hence, the decision given by higher courts is
binding to be followed by the lower courts. It is also important to note that in this case the
two customers Andrea and Mariyah shall also rely upon various rulings relating to the
enforcement of the rights of the customers.
Example of the case Tesco Supermarkets Ltd v. NATTRASS UKHL 1, AC 153, can be
taken in which it was held by the court that the company providing any kind of goods or
service is under an obligation to take due care and diligence and that the company shall be
responsible if it has delegated this obligation on another person like the manager (Carpenter,
2019).
Application of statutory laws
The application of statutory laws is at first priority in the judicial decisions as this is the
written codified laws passed by the legislature. The judicial officers at first adopt the
interpretation of the statutory laws for passing their judgment. It is important for Mrs. Ruska
to know which legislations shall be interpreted by the judiciary in her case.
Hence the following legislation shall be made applicable in the court in Mrs. Ruska’s case:
The Consumer Rights Act 2015:
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 This Act is passed as a result of consolidation of the consumer protection
legislations giving a lot of rights and remedies to the customers.
 This act has consolidated the following legislations:
 Sale of Goods Act
 Unfair Terms in Consumer Contracts Regulations 1999
 Supply of Goods and Services Act 1982
 This Act is divided into three parts:
 Part 1 which provides for the contracts for goods
 Part 2 which provides for unfair terms
 Part 3 which provides for various other provisions (Collison, et. al., 2014).
 In the case of Mrs. Ruska part 2 shall be applied as this part deals with the unfair
terms which was practiced by the hair stylist Paula.
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Effectiveness in terms of recent reforms and development
Mrs. Ruska is in a need of understanding the legal system of United Kingdom with relevant
reference to the recent reforms which has taken place in United Kingdom. This shall help her
in understanding the effectiveness and the rights which are vested in the customers by virtue
of recent developments made in the legal system of UK.
One such example of the recent changes and development is the consolidation of three acts as
one Act which is the Consumer Rights Act 2015. As per the facts of case of Mrs. Ruska, the
second part of the Act shall be applied as this part deals with the unfair terms used in business
activities (Faundez, 2016).
The definition of unfair terms remains the same as was provided in the previous Act which
was Unfair Contract Terms Act 1977. The definition is as follows:
“Any term is considered unfair if it is inconsistent with or contrary to the good faith
requirement, or if it in a position of causing imbalance in the rights of the parties in such a
way that is detriment and derogating to the customers.”
The Act also provides that it is the duty of the court to consider the fairness of the words and
terms used in any business activities.
Hence these reforms since its enactment has proved to be an effective measure in the
protection of the rights of the customers (Partington, 2013).
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TASK 2
The impact of business laws on Salon run by Mrs. Ruska
As a legal advisor for Mrs. Ruska, the following report is submitted in order to make Mrs.
Ruska aware of the various laws which shall be made applicable on Magnificent Salon
Services Ltd. These laws are codified statutes enforced in United Kingdom which has been
made obligatory on the business organisations to follow and abide by the provisions
provided.
Application of company law
1. Company laws are those laws which are enacted for the governance of the
corporations which are operating in UK.
2. The example to be considered under company law is the Companies Act 2006.
3. This Act provides for the registration of the companies under the UK registrar and as
a registered company it shall be able to enjoy the rights of incorporation.
4. As the company of Mrs. Ruska is a limited company, the documents of the company
shall be registered under Section 9 of the Act (Kershaw, 2012).
Application of employment law
1. The business run by Mrs. Ruska under Magnificent Salon Services Ltd. shall also be
subjected to the employment laws as the salon has hired experts of hair styling and
other beauty treatments.
2. The example of employment laws which shall be applied on the company is the
Employment Rights Act 1996.
3. Under this Act the employees and workers of the salon shall be given employment
rights against the company.
4. Hence the Magnificent Salon Services Ltd. shall be under an obligation of providing
and securing rights of its employees (Honeyball, 2012).
Application of contract laws
1. The English contract laws shall also be made applicable to Magnificent Salon
Services Ltd.
2. The company may enter into contracts regarding the purchase of beauty products and
equipment.
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3. Hence the business transactions and contracts of sales and purchase shall be governed
by the laws of contract prevailing in UK which provides for the fulfilment of certain
terms for the enforcement of the contract (Andrews, 2011).
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