Business Law in UK: Legal Sources, Government Role, Impact on Business

This report provides an overview of business law in the UK, focusing on the sources of law, the role of the government in law-making, and the impact of various laws on business operations. It examines sources such as legislation, case law, European Union law, and the European Convention on Human Rights. The report also discusses the role of the government in formulating and altering laws, particularly in response to events like Brexit. Furthermore, it analyzes the impact of contract, company, and employment law on businesses, emphasizing the importance of legal compliance for long-term sustainability. The report also outlines different types of business organizations and their legal structures, management, and funding, and provides legal solutions for resolving business disputes.

Business Law

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Sources of law in UK.............................................................................................................1
P2 Role of government in law making........................................................................................3
TASK 2............................................................................................................................................4
P3 Impact of contract, company and employment law on business............................................4
TASK 3............................................................................................................................................5
P4 Types of business organisations formed legally.....................................................................5
P5 & M3 Management and funding of business organisations...................................................6
TASK 4............................................................................................................................................9
P6 Legal solutions for resolving business disputes.....................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Economy of a nation needs guidance in the correct direction to grow and develop in long
run. Establishing legal system in the country is one of the clear motive to manage huge economy
of a country. English legal system refers to the laws administered by the courts in England and
Wales. Laws are designed for both civil and criminal matters after 1200 when common law was
established. As law helps in governing the nation and enhancement of businesses is taking place
on continuous basis (Bilchitz, 2016). This gives rise to need of establishing a law that helps in
governing businesses at national and international level. Business law that is designed for
smoothing business operations is introduced in UK. Legal system in the country gives power to
government to make bound to each and every citizen to follow the law. Designing a legal system
was never been an easy task as it requires combination of science and arts that reduces loop
holes. Global business environment of UK is managed through business law which are formed
with various sources and upgraded time to time to minimise obsolescence.
In this project report different sources of law and role of government in formation of
various laws is mentioned. Impact of other laws like employment, contract and company law is
described. Together with this formation, management and funding of different forms of
businesses are elaborated. Range of disputes and solutions of these are also mentioned in this
report.
TASK 1
P1 Sources of law in UK
Legal system of UK has evolved over a period of time considering the changes in the
global environment (Catan and Kahan, 2016). When laws are designed their needs to be some
basis on which the are established as public at large will be affected with introduction of any law.
A law before formation is considered as bill that includes all information regarding requirements
and benefits of the law. This bill is presented in the UK parliament and when both the houses of
parliament is agreed on the bill then it becomes a law. Parliament in UK is considered as highest
authority to pass any law. When any law or legislation is passed through parliament then it
becomes a statutory obligation for all the citizen of the nation to follow these rules and
regulations. England, Wales, Scotland and Northern Ireland forms United Kingdom. Various
sources of laws are evolved through these countries such as-
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Illustration 1: Sources of law,2015
Source: Sources of law, 2015
Legislation: Laws that are created or formed through legislature are termed as
legislation. These are the act of parliament that have existence through application or in some
written form. Legislations are considered as important source because only this source reflects
quick change by passing a statute (Sources of law, 2015). Parliament based in London, UK is the
principal legislation of the nation. Formation of laws for all the four countries of UK are done
through this parliament and any country can be set aside not to follow any rule when it is viable.
Parliament is formed with two houses named as House of Commons and House of Lords. Laws
are passed with the approval of both the houses.
Case law: Common law is the important source of key legal principles and considered as
good source that helps in formation of law. Case law arises from judicial decision making and
contains facts on the basis of which verdict is given. When a case that arises with some different
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issue then its ruling become a set benchmark for future cases involving the same issue. It helps in
formation of doctrine of precedent in the legal system of the nation. Decision of the cases are
published in the law report of the country so that can be termed as benchmark for other cases.
European Union Law: UK is the member state of the European Union this brings
another source of information (Cole, 2018). Their are various rules and regulations formed by
European Union these needs to be followed by its member state and considered as new laws for
UK. Laws that are formed by the Union is compulsorily followed by states to avoid any legal
actions.
European Convention on Human Rights: Laws that helps humans and protect them
from any sort of misconduct is mentioned in Human Rights Act, 1998. UK is the signatory to the
European Convention on Human Rights and this leads in formulation of a source that helps in
bringing another source of law formation.
In DPP v Bull [1995], a man was charged with an offence under Street Offence Act,
1959. Offence of common prostitute to loiter or solicit in a public street place for the purpose of
prostitution is imposed. Divisional court of the Queen's Bench Division held him not guilty on
the ground that 'Common Prostitute' only related females not males. This case law acts as an
source of law (DPP v Bull, 1995).
P2 Role of government in law making
Designing law for the country is a process that is really huge and requires various
permutations and combinations to implement it correctly (De Schutter, 2016). Setting rules that
needs to be followed is not one day task it requires hard work for many years so that all the sides
of its implementations can be judged properly. Implementation of laws is the secondary work to
do but before this information on the basis of which law is formed is important. Grabbing
information which is highly accurate is very tough task to do and this leads to government
intervention in the process of law making (Dierksmeier and Seele, 2018). Government of the UK
deals with public at large through its various departments and this gives information regarding
various loop holes in the legal system. When any issue that is affect benefits of common people
or leads to any misconduct then it is considered by government. After considering the issue a
report is prepared with collecting all the reliable information and that is presented to the houses
of parliament as bill. Parliament of the country deals will number of issue generating at national
and international level and can only check viability of the report prepared by government
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officials. This bill is represented to both the houses and with majority of consent of the houses
and royal consent if considered right then held as new law of the nation.
Government not only helps in formulation of new laws for the country but also helps in
altering old laws that goes obsolete with time. Receiving royal consent in favour of the bill is
very important as no bill can be passed to form law without royal consent to it. Government
keeps on intervening to the legal system of the country whether in recession or when there is
come policies changed at international level (Dunning, 2013). When BREXIT is announced in
the recent times all the business got highly effected that leads to demolishing in the UK
economy. Government plays important role in designing new policies for business houses in the
nation and helps in minimising the negative effect of BREXIT.
TASK 2
P3 Impact of contract, company and employment law on business
With passage of time one thing that is highly increasing is competition in the business.
This makes each business organisation from small to large to be more effective and efficient in
adoption of legal rules and policies. As businesses that follow legal system creates goodwill
which is highly required to sustain in long run. Together with business law there are various
other laws that impacts business in which are as follows-
Contract Law: Businesses in its day to day operations uses an agreement on which
parties involved got agreed to minimise uncertainties of future (Gostin and Wiley, 2016). This is
the most commonly used law in the business that helps in governing various business operations.
Competition in business is at peak and this bring high amount of fluctuations in business
transactions. These fluctuations can be managed through contract by establish certainty for some
activities. Contracts are done in the present for future transactions to b done on predetermined
basis. Breach in the contract brings legal implications and to avoid them all business houses
needs to follow laws mentioned in the contract act. For example- Payment when contracted to be
made in instalment then no party can demand that amount in lump-sum. Is demanded in full then
it will be termed as breach of contract and resolved legally.
Company Law: Companies are one of the form in which businesses are established.
When business is registered as company then all the rules and regulations of companies law
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needs to be followed (Hughes and Middlebrook, 2015). This law will guide for registration
process of the company, management of business, rising of funds, preparations of accounts till
liquidation. All the business decisions will be taken as per regulations prescribed in company law
and other laws will also be considered if they brings any effect. Establishing a business as per
company law will gives business a separate legal entity and business object can be achieved
legally at large scale. For example- Issue of share capital at the time of incorporation of company
must be as per company law.
Employment Law: Rules and regulations are written in the laws but these laws are
followed by businesses through employees working on behalf of the business houses. Employees
are considered as the most important resource in the business and to manage them and guide
them a law is designed named as employment law. Policies regarding appointment, minimum
wages, maximum working days, mandatory holidays, lay off and resignation all are mentioned in
this law. Any dispute among employees and business organisation are resolved through
employment law (Markus and Loebbecke, 2013). For example- Each business organisation needs
to follow the rule of minimum wage payments to its employees as mentioned in the law to avoid
any legal intervention.
TASK 3
P4 Types of business organisations formed legally
Establishment of a new business is available with number of options and the most
suitable as per business object is chosen. Jane, Penny and Marie after graduation started a
partnership business. A zest of exploring other other business formation to grab more funding
induces them to find other forms of business formation which are as follows-
Sole proprietorship: This form of business formation is highly used as one person with a
business idea starts mostly with sole proprietorship. This formation requires one person who is
owner of the business and who also takes all decision in the business. Funds used in the business
is invested through borrowing or owners own capital (Simkovic and McIntyre, 2014). Business
is conducted in the identity of the owner only and the person is liable for all the liability of
business and own all the assets. Formation of sole proprietorship is simple as no legal
registration is required and minimum laws are applied to this. This form is not suggested to Jane,
Penny and Marie as they are more then one individual.
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Partnership: When two or more persons come together to carry out business operations
with the motive to earn profits is call partnership. Partnership business involve more then one
individual in business that leads to more funds and effective management. Partnership is
governed with the partnership act and it is compulsory to have partnership deed to make business
legal. Partners involved in business to not need to participate in day-to-day business operations
as role of sleeping partner can be performed by them. Process of registering business as
partnership is quite simple only by registering under partnership act. Jane, Penny and Marie is
already working under this form of business and enjoying all the benefits of partnership.
Limited Companies: Formation of business as limited company have special status in
the eyes of the law (Southworth, 2012). These companies are incorporated to get separate legal
entity ho can sue or own assets in their own right. Ownership in the limited companies are
divided through shares. Who owns share of the company is called as shareholder. Because
limited company have their own existence then their owners are not liable for debt in the
business. Formation of company is done as per companies law and all the legal requirements
needs to be followed to bring business into legal existence. This form of business can be
suggested to Jane, Penny and Marie as requirement of more funds to expand business will be
complemented.
Limited Liability Company: This is a new type of hybrid business structure that is not
permissible to establish in all the states. These are designed to provide the limited liability
features of corporation and gives tax efficiencies and operational flexibility as a partnership
business. Formation process is complex then partnership business but simpler then company.
When business is formed as LLC then more funds will be available and due to operational
flexibility decision can be taken on time.
P5 & M3 Management and funding of business organisations
Unincorporated business: A business that do not possess a separate legal entity distinct
from its owners will be termed as unincorporated. All the risk and rewards associated with the
business is that of the owners. Personal assets of the owners can be used to meet business
liability. When any legal suite is filled then it will be filled in the name of person operating
business activities (Stewart and Hitt, 2012). Unincorporated enterprises includes sole
proprietorship, partnership and family trusts.
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 Sole proprietorship- As a simplest for of business formation there is no complexity in the
business structure. Their is no difference between business and owner and operations are
managed by owner only. As single person is involved in the business availability of funds
is quite limited. Due to involvement of a single individual amount of risk in the business
is high and availability of funds as loan is minimised.
 Partnership- This form of business involves two or more individual to operate business
activities. This leads to more accurate and secure decision as involvement of more person
will help in taking wise decisions. Assignment of work between partners must be present
to avoid conflicts and this will also help in performing activities on time. Funds in the
partnership business is more then sole proprietorship as size of capital investment gets
high. Investors and banks are also prefer partnership business over sole trader to make
investment or to grant loans for business.
Incorporated Business: Business organisations that used a legal process to form a
corporate entity or registered as company these type of organisations form incorporated
businesses. This gives benefit of availability of huge amount of funds and good management.
Limited companies and limited liability companies are form of incorporated business.
 Limited companies- Management and ownership of the company is in separate hands in
this form of business organisation. Directors and managers are appointed by shareholders
to manage business operations. This gives less manipulation in management, correct and
quick decision making with experience and knowledge. Shares are issued to third party to
obtain funds and availability of investors in business is high. When a business needs to
operate at large and requirement of funds is more then this form of business is suggested.
In the present case it will be advisable to Jane, Penny and Marie to convert their
partnership in limited company by following all the legal rules and regulations.
 Limited Liability Company- When business is established as LLC then management is
done by persons who are authorised to manage business operations by owners of the
company. They enjoys the privilege of a company but owners can be held liable for some
liability (Weisberg and Appleton, 2015). Availability of funds to LLC is not as much as
to the limited company. Jane, Penny and Marie are not suggested to choose this form if
they want to expand business and required more funds.
Partnership:
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Advantages Disadvantages
 Ease of organisation
 Combined skills and knowledge of
partners
 Regulatory control over business
operations
 Effective decision making
 Unlimited liability
 Limited sources of funds
 Life of partnership business
 Distribution of profits
 Taxation policies
Limited Company:
Advantages Disadvantages
 Owners possess limited liability
 Access to greater source of funding
 Separate legal entity
 Incorporated business
 Complicated to set up a company
 Decisions required approval of
shareholders
 Required large amount of expense to
establish
 More legal rules and regulations to
follow
Sole proprietorship:
Advantages Disadvantages
 Low start-up cost
 Decision making freedom to owner
 Minimum working capital requirement
 All profits belongs to owner
 Unlimited liability
 Difficulty in rising funds for business
 Poor decision making
 No separate legal entity to business
Limited Liability Company:
Advantages Disadvantages
 Limited liability company
 Flexible ownership rules
 Limited life span
 More paperwork
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 Flexible distribution of profit and loss
 Operating flexibility
 Taxes
 Liberalisation does not attracts
investors
TASK 4
P6 Legal solutions for resolving business disputes
There are mainly three major techniques used in alternative dispute resolution to guide
parties in resolving their issues without bearing any court proceedings, these three are
mentioned below:
 Conciliation: In this method clients are approached by a neutral third party to lean
towards their common interest. This conciliator tries best to match their negotiations to
solve their dispute without any need of interruption from court. In the case of Gordon,
this method is suitable as it will help in making the amicable solution between the parties
regarding the terms of contract.
 Mediation: In this method both parties seek help from mediator who listens to both sides
of dispute. After this, common area of interest is chosen to avoid any further delay in
decision making. This procedure is easy and saves time. This method is suitable in the
case of Virgin Media and Janet as they both can solve the issue with the help of mediator
and there can be smooth working between the two. This will also help in bringing
solution in amicable manner.
 Arbitration: In this method a skilled person in negotiation and communication is hired by
both parties known as “arbitrator”. Main aim is to end dispute without getting stuck in
long procedures of court. This procedure renders solution faster and less expensive, in
cases where parties can’t bear expenses of court. This solution is applicable in the case of
Blackhorse company as it involves formal proceeding which will help in solving their
dispute in speedy manner.
CONCLUSION
From the above project report it has been concluded that presence of effective legal
system in the country helps in managing business operations in most efficient manner. Their are
various sources available to forms laws of the country and legal system keeps on upgrading with
the passage of time to be more effective. Government plays important role in law formation by
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presenting a bill to parliament for any new law required to be pass. Business law provides
various options for formation of business. Selection of form in which business will be
established is done on the basis of management and availability of funds to that form of business.
Their are various disputes arises in business and they are resolved through various legal advise
available as per law.
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