- Explain the different sources of law that an organisation needs to follow
- Explain role of government in forming laws along with application of statutory and common laws in courts.
- Explain how statutory and employment law impact business
- Suggest solutions to a range of business problems
- Justify the use of legal solutions in company
- Explain solutions related with legal system of country that can be applied in business.
Business laws are the significant and obligatory statutes in order to perform a business in a state. It is basically comprise of Laws of Contract, Sale of Goods, Employment Laws, Companies Law etc. These laws are mandatory to fictionalize a business. An organisation has to work in the ambit of these laws. Moreover it provides a guideline to a newly setup organisation for functioning in the market. In the given scenario Country Pine is an emerging furniture sole trader. They want to expand their business and convert themselves into a Limited Company but they lack the knowledge of such incorporation. So they are looking for legal and business advice from Business Future. Business Future is a consultancy organisation, providing help to start-ups and organisation who wants to expand their business. There are various problems that Country Pine is facing such as the expansion, appointment of workers and dispute with the supplier of timber from Poland. So they are consulting with Business Future about such problems. Moreover this report deals with the sources of laws in United Kingdom and how laws are made, in order to provide Country Pine a better view of understanding the laws of incorporation of a company.
P1. Various sources of law
Laws are made to control the society, but the formation of laws are related to the Customs and Usages that a society is following. It is actually a collected form of duties and liabilities in the form of statutes. Generally, there are two types of sources, Primary and Secondary sources. A primary source is comprise of statues, customs and usages, codified laws etc. Secondary sources are mainly comprise of Courts judgements and precedents. In the United Kingdom, there are three sources of laws, the European laws, legislature and the Courts. (Pepper v Hart (1993, HL)
The European laws includes treaties, directives, regulations and decision. Treaties are the main source of business laws. The main purpose of treaties was to bind two states into an obligation to perform duties mentioned in it. European Union acts an executive to the administration. These laws came into force in 1973. EU was formed under the European Communities Act 1972. The laws are implemented by the European Commission, it acts as an implementing entity to the administration. (Alix & Adams)
Similarly, statues that withhold the business laws are controlled by this commission. In order to start an organisation it is essential; to comply with these laws. But before that it is evident to have a knowledge on which sector the company is going to perform their business. There are two types of sector, public and private. Public sectors are controlled by states unlike private one, these are administered by individual body. Apart from the sectors it is also necessary to get the organisation incorporated under Companies Act 2006. There are three types of liabilities in a company, limited, unlimited and limited liability partnerships. In an unlimited liability, the profits and debts are earned by an individual but in limited the liabilities are limited.(Fisher v Bell (1961)
Country Pine is going to expand there business for that they have to register their company under the Companies Act 2006 by the Registrar of the company. According to the provisions of the Act it is mandatory to form a Memorandum of Association, comprise of a detail information of how much capital is invested in the company and details about its shareholders. Also to manage the work in the the organisation an Article of Association should be made, it is comprise of the appointment of Directors, their liabilities and duties also of their employees. After all these documentation, it is presented before the registrar for the allocation of a certificate.(Adler v George (1964)
It is essential for Country Pine to abide by the laws of business in order to perform marketing with investors and consumers. Moreover, it is an obligation over the organisation to comply with the statutes that are enforced by the states upon its people.
P2. Role of government in law making
A government is made up of three bodies the legislature, executive and the judiciary. The purpose of legislature is to form the laws and that are passed through the parliament as an Act. An Act is formed by passing a bill in the parliament. European Commission is the executive body in UK, laws that legislature passes are implemented by EC. In United Kingdom there is hierarchy of Monarch, that is nothing is above the Royal Assent. Laws are formed by the process of producing a Bill in the legislature.(Smith v Hughes (1960)
Bills are of three kinds, Private, Public and Hybrid Bills, A private bill is such which is binding on an individual that is it affects the interest of individuals where as in a public bill the interest of public are influenced. A hybrid bill is an amalgam of both, private and public, it is a public bill which affects the interest of an individual. A bill is proposed in the legislature in its First Reading, where the facts related to the bill is considered by the members then in the Second Reading a debate or discussion regarding the positive and negative effects of the bill takes place. After the completion of the latter stage it is scrutinise by a committee in its Report Stage. After such process it is presented again in House of Commons for any amendment or changes. A Bill becomes an Act of Parliament after getting the consent of the Queen in Royal Assent stage. This is how a law is passed by the governing bodies.
M1English legal system is highly effective in various terms because it helps overall society in various manner such as; applying necessary acts like equal wage act etc. designing rules and regulations for reducing business problems and so on. However, legal system of nation support overall society in acquiring equal development opportunities by introducing suitable acts. Apart from this, one thing is also determined that number of problems are identified by various sources of laws such as; changes in consumer demand, denying by few member of parliament and so on. It means, establishment of legal laws is not an easy task because number of factors get fluctuates on regular basis.
According to the one of the major article which is “6 key method shows that British legal system are differing from rest of the world” it has been understood that English legitimate bodies are coming with numerous of unique and different idea. Their main objective is to focus on each or every aspect before making final decisions in order to develop the country by uplifting overall society. For example; one of the most distinguish thing is that Britain have a unwritten constitution. Hence, it shows the major different example of legal system which may attract number of members.
P3. Impact of employment and contract laws on business
Contracts are the basic element of performing a business in the market. It is consists of terms and conditions according to which the parties have to perform their duties. A contract is an agreement which is enforceable by the law. In order to construct a valid contract certain principles are needed to be followed. A valid contract has an offer. An offer should be a legal one to which an acceptance is made by the other party, without any inducement. For a valid contract there must be an intention to form it, without such it is null and void (Fisher v Bell). In United Kingdom, contract laws are regulated by English Laws of Contract. A consideration shall be provided in order to bind the parties. A consideration is the amount for which the promise4 has been made by the parties. It should not be prohibited by the law. Generally, consideration are made in the form of money.
P4 Solution to the business problem
There is a strict competition in the market. New organisation are emerging with great innovative ideas. In order to make stand in the market tit is essential for existing one to expand their business. In the expansion they have to face a lot of problems such as, appointing new and creative employees, technology, uncertainty of future, competition, costumer service etc. The challenges are the part of business.Bagley, 2010)
Country Pine is a sole trader, all the profits earned by them are vested in the owner of the company. But the demand of their furniture has grown immensely so they want to expand their business. In order to do so they have to get incorporated as a Limited Company. For now, they don't have to share the profits but on going limited they are entitled for such profits what they have invested in the organisation. Also it will increase the paperwork, especially for the Director . It is the fiduciary duty of the Directors to file annual tax report. Also they have to obliged with the statutory duties of the state. The debts that company incurred is payable by the partnerships for which are liable, also they are only responsible for their act not of others.(Bodie, Kane and Marcus, 2014)
If Country Pine is going to expand then they have to face these changes. But it is better to become a limited company than being a sole trader as they can do business all over the world unlike a sole trader has its reach in their local market.(Crane and Matten, 2016)
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