BMP4002 Business Law: Analyzing the UK Legal Context for Businesses

This report provides an overview of the UK's legal system as it applies to business organizations. It identifies key sources of law, including the Companies Act 2006 and the Equality Act 2010, and discusses various business structures such as sole proprietorships, general partnerships, limited partnerships, and limited liability partnerships (LLPs). The report analyzes the advantages and disadvantages of each structure, focusing on liability, control, and capital raising. It concludes with a recommendation for IOM Solutions, a sole trader business, suggesting a transition to an LLP to facilitate growth and limit liability. The report emphasizes the importance of understanding business law for effective business management and organizational success within the UK legal framework and highlights the role of employees in enhancing the performance of an organization.

Business Management
BMP4002 Business Law
Assessment 2
Report describing the key sources of
laws as the legal context for business
organizations in the UK
Submitted by:
Name:
ID:
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Table of Contents
Introduction ...............................................................................................................................3
Businesses & Organizations in the UK...................................................................................3
The legal business structure of UK companies......................................................................4
Recommendations for IOM Solutions...................................................................................7
CONCLUSION..............................................................................................................................8
REFERENCES...............................................................................................................................9
Introduction
The English legal system is based on common law and has uncodified law. It has
diversified legislation framework that aims to secure the general interest of its citizens. The
business law of UK regulates and governs the business activities imposes certain rights and
obligation on the employees and employers, ensure their safety and security within an
organization. Such legislation also defines the various kind of business organization that
varies according to the nature, type and size of the business (Abramson and Billings, 2020). These
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organization have their own benefits and drawbacks, involves certain liability with the owner.
The main objective of UK legal system is to provide the safe and health environment to the
employees so that performance of an organization can easily be achieved which is directly
enhance the growth of an economy. This report will cover various kinds of business
organization that are available as an option for the Sam. Further, this report will recommend
the IOM solution, in to order to diversify their business from sole trader to other potential
business structure.
Businesses & Organizations in the UK
A company is a separate legal entity that has been recognized by the Corporation Act of
2006. This legislation has provided the vast range of protection and responsibilities towards
their employees and members who are the core part of a company. The business law covers
the company law, contract law and employment law that are significant to operate the
business activities of an organization and improve the performance of an employees. The
company Act of 2006, provides the essential feature to the company and right of the
employees, also impose certain obligation over the members to legally bind them with the
terms and condition of an organization. The employment law plays crucial role in the UK
legal system as it protect the employees from all kinds of discrimination that may take place
within an organization against the them. The Equality Act, 2010 ensures the equality of all
the employees at workplace so that no one can violate their legal right. All the essential
legislation emphasis on the performance of employees so, that their efforts can easily be
recognized while achieving the success of an organization. The director and the shareholders
has greater contribution within an organization as they are take part in raising the capital of
the company and take effective decision for internal management of an organization. The act
of negligence and mistake on part of employees creates liability over them and vicarious
liability will raise liability over the employees for the act of his employees (Baars, 2019). The
comprehensive legislation helps the employees and management to smoothly perform their
part of business activities for effective running of a business. Each organization imposes
certain liabilities over their members such as partnership and sole traders have unlimited
liability whereas the company and LLP has limited liability so it depends on the nature and
type of business organization.
The employment contract are binding upon the parties and governed by the principle of
equity. The contract law of UK is a legally signed agreement that impose rights and
responsibilities over the employees and employers to perform certain duties that are laid
down under the terms of the employment contract.
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The main reason for enforcing the contact law is that it avoid the misconduct and conflict
among the parties and create positive environment within an organization. This contract are
binding upon both the parties and breach of such duty made them liable for their act, also
allows the other party to claim compensation and damages (Butturini, 2020). However, the
business law facilitates the commercial transaction between the organization in more
systematic manner. As company is a separate legal entity distinct from its members so it is
allowed to sue and can be sued on their own name. It is important for a company to prepare
fundamental document named AOA and MOA, as it is relevant for governing the internal
activities of an organization. Directors are the higher authority of an organization as they take
part in formalizing effective plans and policies to survive in the competitive market.
The legal business structure of UK companies
Sole Trader
Sole proprietor is the single owner of a business. He has full control and flexibility
over their business. It is a most simple and easy form of business organization that requires
less legal formalities to incorporate a business. The liability of the owner is unlimited and
they has to use their own personal asset to pay off their debts. Such kinds of business
organization is most useful if the owner has lack of resources to expand their business. The
sole trader is not obliged to share their profits and gains from the others. There is complete
privacy over the management of the sole proprietorship kinds of business organization.
Advantages of Sole Trader
 Simple and easy process: This form of business organization is easy and simple to
incorporate a business. There is no legal formalities and compulsion to register a sole
trader.
 Compete Control: The sole trader enjoys full control over their business. They are
free from all kind of interference and flexible to manage a sole proprietorship form of
business organization.
 Complete Privacy: a sole trader is only person who carry out their business activities
and keep financial information secretive from others.
Disadvantages of Sole Trader
 Unlimited Liability: The major drawback of this form of business organization is
that the liability of sole trader is unlimited due to which they has to used their
personal assets to pay off their debts to the creditors.
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 Less chance of expansion: this form of business organization has less opportunity to
grow and diversify their business as he is solely responsible to manage all the
resources and funds to run a business.
 No separate legal entity: Sole trader business is not characterized as a separate legal
entity like a company. It is always attached to the owner which means if owner is
surviving then the business will run otherwise just after the death of the owner, the
business will come to an end.
General Partnership
The General partnership is defined under the Act of Partnership, 1890 which means tow
or more people come together to carry out business activities with a view to earn profit. In
this, partners are manage and carry out their part of duties through making contribution in
relation to skill , time and capital (Demirel and Danisman, 2019). It is almost like a sole trader as
the liability of the partner is unlimited and liable the partner to use their asset for repayment
of debts. It is far different from the limited partnership and limited liability partnership. It is
formed by a professionals such as solicitors, doctors , CA etc.
Advantages of General Partnership
 Easy to form: It is very easy to establish the general partnership form of business
organization. It requires only few formalities to register a business in order to well
defined the rights and responsibilities of their partners, to avoid future conflicts and
misunderstandings.
 Flexibility: it has key advantage of flexibility that helps the partners to convert their
business into LLC. The liability has been shared by the partners according to the
contribution they have made in the General partnership form of business organization.
Disadvantages of General Partnership
 Difficult to achieve higher profit: An investors avoids to invest their money in such
form of business organization and because of that, they find difficulty in raising their
funds and attaining growth of their business.
 Disputes: There may be a chances of conflicts and misunderstanding among the
partners as they came from different culture, backgrounds and having difference of
choice.
Partnership
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The limited partnership is governed by the Limited Partnership Act of 1907. The
liability of the partners is unlimited like a general partnership and consist of more than two
persons who comes together to manage and carry out the operation of a business.
Advantages of Limited Partnership
 Attracts investors: This form of business organization is the great source of
attracting the investors and getting them involved to add value in the business.
 Less paperwork: It is not important to register the limited partnership but can be
made written to avoid future uncertainties among the partners.
Disadvantages of Limited Partnership
 Compliance challenges: It requires partnership firm to be legally comply with all the
norms and regulation to attract the investors towards their business by conducting
annual meetings every year.
 Huge risk involved: this form of business organization involves huge risk which may
insolvent their business.
Limited Liability
It is a corporate body that has legal existence as per the Limited Partnership Act of 2000
and has a mixture of partnership firm but impose limited liability on the partners (Freedland and
Dhorajiwala, 2019). It is compulsory for them to form a partnership agreement to define the
rights and responsibilities of each partners. There is no scope of director and shareholders and
lax liability has been paid from the profits they earned from the partnership firm. There is no
partners are liable to pay their debts for their personal assets.
Advantages of Limited Liability
 Separate legal entity: This form of business organization has been recognized as per
the limited partnership Act of 200 which entitled the business as a separate legal
body.
 Low investment required: This form of business organization requires low
investment to start a business and ultimate source of investor to invest money in
limited liability partnership as there is more opportunity to grow and expand the
business.
Disadvantages of Limited Liability
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 Public Disclosure: LLP is required to submit relevant details of their business to the
Companies House and these information are disclosed to the general public which
may affects their privacy.
 Penalty for Non compliance: The said Act has defined the strict penalty for non
compliance of the provisions by the partners. It is major drawback of this form of
business organization that impose heavy penalty over the partners.
Recommendations for IOM Solutions
The IOM solution is a sole trader form of business organization that was run by the Sam
from last eight years. In order to grow a business, there are certain alternatives are available
to the Sam to exoplanet their business by adopting the potential business structure. It is
recommended to the Sam that they can go ahead with the option of LLP (Limited Liability
Partnership). This form of business organization is beneficial for the IOM solution as, it has a
feature of both the partnership as well as the Corporation (Green, 2019). It has characteristics of
separate legal entity that gives special recognition to their business. Further, it will provide
the limited liability to the partner and reduce the burden of heavy penalty in case of defaulters
of payment. They will not be held liable for the misconduct and negligent act of owners.
Therefore, the IOM solutions has suggested to take the option of LLP to attain the potential
growth and bring necessary changes in their business.
CONCLUSION
From this above report, it has been concluded that the UK legal system is complex.
The business law helps the business to deal with the uncertain and dynamic business
environment so that growth of an organization can easily be achieved. Business is a broader
term that varies according to the need and demand of the society. An employees plays
significant role in enhancing the performance of an organization. In the same manner, an IOM
solution also looking for alternative business opportunities where they can expand their
business. There are various forms of business organization such as sole trader, partnership,
LLP etc which has their own pros and cons and can use by the Sam according to their
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available resources. The option of LLP is suitable for IOM solution to sustain growth and
success of the business.
REFERENCES
Abramson, A.J. and Billings, K.C., 2020. New legal forms for hybrid organizations. In The Routledge
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Baars, G., 2019. The corporation, law and capitalism: A radical perspective on the role of law in the global
political economy. In The Corporation, Law and Capitalism. Brill.
Butturini, P., 2020. Written Resolutions in UK Companies Act 2006 and Their Possible Relevance beyond UK
Borders. European Company and Financial Law Review, 17(6), pp.760-784.
Companion to Nonprofit Management (pp. 513-529). Routledge.
Demirel, P. and Danisman, G.O., 2019. Eco‐innovation and firm growth in the circular economy: Evidence from
European small‐and medium‐sized enterprises. Business Strategy and the Environment, 28(8), pp.1608-1618.
Freedland, M. and Dhorajiwala, H., 2019. UK response to new trade Union strategies for new forms of
employment. European Labour Law Journal, 10(3), pp.281-290.
Green, A., 2019. Low-skilled employment in a new immigration regime: Challenges and opportunities for
business transitions. National Institute Economic Review, 248, pp.R17-R27.
Leighton, P., 2021. Violence at work: the legal framework. In Work-related Violence (pp. 19-33). Routledge.
Scott-Patel, K., 2019. UK Employment Law-A Good Plan for Workers?. Int'l. In-House Counsel J., 12, p.1.
Udemezue, S., 2021. Role of Company Employees in Promoting Corporate Governance: A Comparative
Analysis of the Approaches in Nigeria and the United Kingdom. Available at SSRN 3907553.
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