BUSINESS LAW

UNIT – 7

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HND BUSINESS

JANUARY 2019

SUBMITTED TO: Mr HILLARY KORAKEGHA

SUBMITTED BY: Mr MURUGESAN PANCHATCHARAM

Introduction
Business law refers to the rules and regulations through which commerce and business
are being carried out. It oversees the hiring practices, corporate contracts and the
production and sales of the services and goods to the consumers. The law and legal
system of the UK are among the oldest legal systems globally. This report will discuss
the nature of the legal system in the UK and the impact of the legal system on a specific
business. Apart from that, accurate legal solutions will be suggested to the problems
faced by the business and the suggestion will depend on alternative legal advice. This
assignment will help in enhancing the understanding and application of business law in
an organisation. The impact of business law on the decision-making and business
operations will be perceived after completing this assignment. By assessing the case
study, the legal problems and their solutions will be identified. The impact of different
rules and regulations governing the business operations will be recognised and the law
required in the registration of a business and the investment of the shareholders will be
perceived through this assignment. Apart from this, knowledge will be gained about the
application of the employment laws between the employees and the business laws.

The case is about Andrea & Mariyah Vs. Magnificent Salon Services Ltd which is a
popular salon in East London. It has been operating for 6 years and has a stable and
loyal client base. Andrea and Mariyah went to the salon to get a hair treatment done
and this was suggested by the lead stylist, Paula. However, after a while both the girls
started facing problems regarding the hair treatment and after asking the salon about it,
they denied to take responsibility about the damage as they consider that it was the
fault of the manufacturer for providing defective products. This irked the customers of

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the salon and many wanted to file a lawsuit against the salon. The owner Mrs Ruska
wanted to advise about the issue from her lawyer.

TASK-1
To make Mrs Ruska understand the nature of the English legal system, it would be
important for her to initially understand the different sources of law and their
implications. These have been explained below:

Sources of law

In the UK, the legal system remains largely based on primary and secondary sources of
law. The primary sources of law comprise of different precedents and business laws.
The secondary sources, on the other hand, include various legal opinions and
anecdotes.

Common-Law and equity

This implies a system where courts pass different preventive regulations for work
obstruction as well as obstructions of work that may happen sometime in future. The
legal system of the UK follows the equity process and common law which is supervised
and monitored by the Chancellor of the Territory. (Dignam, A. and Lowry, J., 2012).

Civil Law

Civil law remains another crucial aspect of the UK legal system. This is based on
different regales and regulations. These do not involve any degree of grievances or
criminality and is civil. Some of the most significant concepts that are intrinsically linked
with the concept of civil law in the UK are Law of Tort along with various other revenue-
based rules and regulations. (Andrews. N, 2011)

Parliamentary Conventions

These parliamentary conventions are a significant facet of the UK legal system. It takes
into active consideration various rights and arrangements which decide how
organisations such as Magnificent Salon Services Ltd must behave. Primary

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conventions are undisputed and unanimous whose role is to guide and monitor the
smooth functioning of organisations based in the UK.

Common laws and statutes

These imply the combined accretion of different judgement processes and judicial
decisions which are based on specific constitutional beliefs. These are important as it
helps in enhancing and speeding up of the system of delivery of different UK legal
processes. It can be stated that in the UK, the statutes and common laws are applied in
different cases which help in influencing the way jurists respond to these cases. (French
et al, 2012)

The statutory and common laws in the courts in the UK

In UK courts the statutory and common laws have been successful in creating a
landmark for appropriate judgement for different prevalent systems in the UK. These are
generally used over a wide range of aspects relating to the UK legal processes. One of
the most significant applications of the common and statutory laws in the UK courts is
the 1932 case of Donoghue Vs Stevenson. As far as this case was concerned, a snail
was found in one of the beer bottles and it is for this reason that Donoghue claimed a
heavy compensation in the court. Legal court proceedings and hearings followed and
eventually, Donoghue won the case and received the necessary compensation for all
the expenses that were needed for his treatment. This case led to the creation of
negligence laws in the UK.

The different kinds of laws may be discussed as follows:

Banking law: This law covers all the facets of finance from complex business
transactions to personal bank loans.

Commercial law: These laws relate to advising governments and companies regarding
business-related issues. Commercial lawyers handle various corporate deals and
transactions and remain responsible for creating and negotiating contracts.

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Constitutional law: These laws govern the operation and functioning of political
communities and the state. It revolves around the idea of the state protecting the
fundamental rights of everyone residing within the boundaries of the state.

Contract law: This is a contract that legally binds agreements between parties regarding
the sale of goods, exchange of ownership interests and provision of different services.

Corporate law: Corporate lawyers work on shareholders and directors’ rights, articles of
association, public listing, incorporation and delisting of organisations.

The legal system in the UK has undergone various changes and developments over the
last few years. These changes can be broadly classified into two distinct phases. The
first was initiated during the period of labour administrations, whereas the second was
introduced during the conservative and coalition administrations. These included the
creation of the Ministry of Justice in 2007 by replacing the UK Department for
Constitutional Affairs. Besides, there the responsibility for probation and prisons were
transferred to the Ministry of Justice from the Home Office. (Partington, 2013). It would
be important to advise Mrs Ruska about the functioning of the UK courts. The courts in
England and Wales are supported by the Majesty Courts and Tribunals Service. It is the
criminal and civil courts that remain responsible for the administration of proper justice
in England and Wales. The subordinate courts in the UK comprise of the County Court,
Magistrates Courts, Family Courts and Youth Courts.

In 2009, the Supreme Court was established by replacing the various judicial functions
of the UK House of Lords. In 2007, The Tribunals Service was also created which was
eventually merged in 2011 with the Courts Service. Apart from that, in 2007, the Legal
Services Board was established to regulate and control the legal professions and for
promoting innovation within the legal services delivery. (Partington, 2013). These have
had a crucial role in acting as an effective guideline regarding what is acceptable in
society. Without the English legal system, there would be various conflicts between
communities and social groups. These laws facilitate easy change adoptions in society.

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Task 2
The businesses of the country such as Magnificent Salon Services Ltd must follow
various laws and regulations such as contract-based regulations, competition-based
regulations, employment laws and company laws. Each of these has a potential impact
on the functions of the chosen business and these are discussed below.

Employment Law

These laws are concerned with the grievances and complaints of the employees within
a workplace and the measures that should be undertaken to tackle these issues. These
are based on the legal system of the UK and include the Employment Rights Act 1996,
Pensions Act 2008 and various others. The laws and regulations provide proper
guidelines so that the issues faced by the employees are solved efficiently. Hence, the
employees of Magnificent Salon Services Ltd need to be aware of the employment laws
and seek guidance in case of any mishap. (Legislation.gov.uk, 2019).

As per the Employment Law, all employees will be entitled to an employment contract
that will act as the base of the relationship between the employer and the employee.
According to the Employment Rights Act 1996, the employers are supposed to offer the
employees a written record of the terms and conditions of the employment contract
within two months of their joining in the organisation. The contract should include- the
names of the employers and the employees, job description and job title, address of the
employer, place of work and the date of employment, the compensation and benefits,
holiday pay, hours of work and medical leaves, arrangements for pension, notice period
and the appeal and grievance arrangement.

Company Law

The laws associated with the company involve the wellbeing of the organisation and
states a proper guideline for carrying out the operations in a methodical manner. Along
with this, these laws also enable the organisation to overcome any discrepancies and
implement corporate governance in the workplace (Dignam and Lowry, 2012).

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Magnificent Salon Services Ltd needs to implement proper company laws and policies
to safeguard the rights of the employees and protect the organisation from getting into
any legal proceedings. The Companies Act 2006 is one such law that is followed by
Magnificent Salon Services Ltd, as it includes different types of policies regarding the
way operations are to be carried out within the company (Legislation.gov.uk, 2019).
Company law, also known as corporate law mediates the rights and duties among the
creditors, employees, shareholders and directors. Businesses need to abide by the
rules and regulations stated under the Company Law such as the Companies Act 2006
to run the business successfully. A sole trader is responsible for acquiring the duties
and the rights under the general law of obligation. If a business is run under the
partnership, then they should form a partnership under the Partnership Act 1890,
Section 1. Here both the partners will be liable for the contract and must share the
profits and losses equally among themselves.

Competition Law

This law emphasises on reducing the competition among the different organisations in
the same sector. Competition arises due to the enhancement in free trade and an
increase in the disposable income among the population. Magnificent Salon Services
Ltd has become one of the leading organisations in its sectors and hence they need to
implement the Enterprise Act 2002 and the Competition Act 1998 to maintain their
competitive position in the market (Legislation.gov.uk, 2019). It is essential for the
business to comply with the UK competition law, failure of which will lead to severe
negative consequences. If any organisation or business is found to have indulged in any
kind of anti-competitive behaviour, their agreements cannot be enforced and can be
fined 10% of the global turnover due to damaging behaviour along with exposing
themselves to possible damaging actions. Hence, all businesses irrespective of their
size, legal status and sector should be aware of the competition law so that the
obligations are met and they can avoid the penalties stated. Along with it, the company
will be able to assert its rights and maintain its position in the market.

Potential impacts of regulations, legislation and standards on your organisation

Magnificent Salon Services Ltd.

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The legal system of the UK has undergone many changes and amendments and this
has enhanced the effectiveness of the system. The judicial system has become
progressive and has enabled the organisations to reduce the legal proceedings they
had to undergo previously. The legal services commission has also changed and this is
regarded as one of the most important changes in the legal system of the country. This
has ensured that the poorer section of the society is provided justice at a faster pace.
Moreover, the Judicial Appointments Commission and Tribunals Service were
developed in the legal and judicial system of the country. Magnificent Salon Services
Ltd operates in the private sector and the organisation must follow all the rules and
regulations laid down by the government to function appropriately. (Beatty et al, 2018).

The organisation did not take any responsibility regarding any manufacturing defect of
any product. Andrea & Mariyah faced issues after using the services of the company
and stated that they were not being made aware of the company policies before using
the services. However, this issue resulted in the loss of customers of the organisation
and they filed for a legal proceeding. The customers needed to get justice in an
organised and timely manner. Additionally, solutions will be provided to both the
customers and the business owner of Magnificent Salon Services Ltd. (Mayss and
Reed, 2018).

The laws followed in the UK refer to the primary legislation, regulations and standards.
These policies have been approved by an authorised agency or authority empowered
by the government. Along with this, there are also various guidelines with directive rules
and regulations, which are generally issued by a specific ministry or the general
government. The various laws and regulations can have a significant impact on
operations of Magnificent Salon Services Ltd as they did not protect the rights of the
customers and did not inform them about the negative effects of the services. Standards
are different from legislation and regulations as every business might have different
standards for their service. The current judicial and legal system will be used in regards
to Magnificent Salon Services Ltd and it will reduce the barriers existing in the system. It
was observed that the changes in specialised courts could boost the functions of the
judiciary and make them more organised. Along with this, it can also be observed that

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the changes have positively influenced the legal systems and established equity among
the different courts of justice. Hence, it can be said that laws and regulations
significantly impact the business of an organisation (Miller, 2015).

There is the various positive and negative impact of legislation, regulation and
standards that might have a significant impact on Mrs Ruska and the salon. The positive
impacts are that by setting the standards, the rights and duties of the employees and
the stakeholders can be regulated and ensure fairness in the business operations,
protect the people such as Andrea and Mariyah dealing with damages caused by
defective products or services used by the salon, ensure that the employees are treated
in an un-discriminatory and fair manner, protect the consumers, creditors and investors
of the salon, ensure and regulate the dealings between the suppliers and the salon and
lastly they must ensure that the business has a competitive edge in the market.
However, the legislation, regulation and standards can be changed and amended by the
government from time to time and the salon needs to stay up to date with the changes.
Mrs Ruska should have fostered awareness among the customers about them not
taking responsibility for using defective products. This way the customers would know
that it was not the fault of the salon if any suffer any damage or harm after using the
services of the salon. As the salon failed to do this, they are not suffering from
misleading the customers and indulging in fraudulent behaviour.

Task 3
Business Law in the UK offers various guidelines and related legislation that help in
conducting different functional activities for new and existing organisations smoothly.
These ensure that all the business practices are conducted with appropriate fairness
and justice. These legal provisions help in protecting the rights of the weaker party to
ensure that they are not the victims of any unfair practices involved in business
transactions. As has been seen from the case study related to Andrea & Mariyah Vs.
Magnificent Salon Services Ltd, the salon is reportedly not ready to take responsibility
for the damage that has been done to Mariyah and Andrea, customers at the
Magnificent Salon Services Ltd. Over the years, it has gained enormous popularity
among its clients and locals who range from middle-aged gents and ladies and a huge

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number of youngsters. According to the case study, Mariyah and Andrea had got an
expensive hair treatment done at the salon under the recommendation of Paula, the
lead stylist of the salon. However, a few days later, both of them were experiencing
severe colour facade. Also, Andrea needed medical assistance for severe scalp itches
that she had developed right after the hair treatment. However, the salon stated that it
would not liable for any kind of damage or losses that are caused by defective products
used or sold in the salon. Rather, it stated that the entire liability would be that of the
manufacturers.

As far as this case is concerned, Mariyah and Andrea may approach the courts with
laws relating to substantial damages. This is also called as substantial damages and
entails the situations where damages are awarded as per the losses that are suffered
by the claimants. It aims at compensating claimants for various pecuniary as well as
non-pecuniary losses. Also, the different legal systems may be discussed as the
following:

Termination of contract:

The employees of an organisation have the right to terminate their employment contract
through resigning from their posts. One of the most effective procedures of this is by
giving proper notice in writing. However, this should be done a few weeks in advance.
The statutory notice stated in this Agreement is a full week of each year of employment
completed, which may be a maximum of 12 weeks. This usually depends on the nature
of the contract and the service. (Andrews, 2011)

Dismissal from employment:

Dismissal from employment due to behavioural actions may be immediate. It depends

on the kind of dispute and whether resolutions can be identified. It also takes into
consideration the factor of union leaders being involved in the issue of employment law
breaching.

Mutual agreements:

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This is usually done in the form of an agreement from the end of both employers and
employee based on the results of a meeting. For example, in case of a person suffering
from long-term illnesses disabling him to work, there can be a mutual understanding
and he can be excused from further employment.

Rescue from insolvency:

Due to insolvencies in Magnificent Salon Services Ltd., the company is evidently in a

position of risk. When the terms of service expire or project contract terminates,
organisations usually hire employees with a project in mind and this may take more than
a year. The Sooner this project gets completed, the sooner this employment comes to
an end. However, the contracts may get extended for further requirements. Business
organisations often suffer losses due to reasons like holiday period, increase in the
rental rates, unfavourable weather conditions, insufficient cash flow in the economy and
staffing issues (Honeyball, 2012).

The justification of these legal solutions can be emphasised by stating how it helps in
reducing risks. Companies need to be able to save capital and ensure taking proactive
precautions for facing the various risks and challenging circumstances effectively. It is
because of these reasons that the organisations must save capital and take effective
precautions to face challenging situations efficiently. This would be important for
Magnificent Salon Services Ltd as it would help it in facing adverse and financially risky
situations. Even if the business comes to a standstill and fails to operate effectively, the
loss, in this case, would at least be capital invested. Therefore, it can be stated that it is
essential for the organisation to take up appropriate legal solutions if it wants to make a
consistent profit in a highly challenging and competitive business environment.

One of the most important positive impacts of such legal solutions is that it makes the
organisation fit for solving challenging situations that it might encounter throughout its
operations. It would be beneficial in handling financially risky situations. However, legal
solutions are often a complicated, expensive, and time-consuming process, devoid of
any instant benefits.

Positive and negative impacts:

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One of the most important positive impacts of such legal solutions is that it makes the
organisation fit for solving challenging situations that it might encounter throughout its
operations. It would be beneficial in handling financially risky situations. However, legal
solutions are often a complicated, expensive, and time-consuming process, devoid of
any instant benefits.

Task 4
USA:

The legal system in the USA puts an enormous amount of emphasis on consumer
protection laws. The Bureau of Consumer Protection fights against any kind of
deceptive, fraudulent and unfair business practices through a collection of complaints
and conducting necessary investigations. It sues people and organisations that break
existing laws, educates consumers and organisations about their responsibilities and
develops rules for maintaining a fair and justified marketplace. According to the US
consumer protection agency, complaints are taken by the FTC regarding businesses
which do not fulfil their promises or cheat their customers in any manner. These
complaints are shared with the law enforcement partners and they are used for
investigating frauds and it helps in eliminating unfair and wrong business practices. The
Federal Trade Commission is primarily entrusted with the responsibility of combating
anti-competitive and trust issues within the business practices (Hg.org, 2019). It
considers all the relevant facets of consumer rights and ensures that they are not
cheated in any way. In the US, consumers are also entitled to make the best use of
Consumer Rights Class Action Lawsuits.

One of the most common problems being faced by the victims of consumer rights is the
comparatively fewer amount of financial damages that they suffer because of an
organisation’s improper conduct. For example, when consumers fall victims to different
fraudulent practices as a result of purchasing a product or a service, the customer
suffers a loss that is equal to the entire amount that was paid. In some cases, he is paid
an extra incidental expense. However, the overall loss to the customers represents only

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a small fraction of the total amount of money that would be needed to bring lawsuits
against the specific seller. The consumers in the USA have the legal option to file
complaints with the state or federal authorities for having sanctions against fraudulent
organisations and unfair organisational practices. However, these usually do not help
the customers in getting their paid money back. (Hg.org, 2019).

UK:

The legal system in the USA has been playing a crucial role in ensuring the protection
of consumer rights so that they are not cheated in any manner. These have proved to
be effective in helping the consumers getting adequate compensations for the losses
that they have encountered because of any malpractice or negligence on the part of an
organisation.

Alternative legal advice for Magnificent Salon Services Ltd.

It would be crucial for Magnificent Salon Services Ltd to think of strategic initiatives that
would help in coping with the crisis. Similar consumer protection laws are in place in the
UK and it is the responsibility of Magnificent Salon Services Ltd see to it the interests of
consumers are protected. They must see to it that they can function in the most efficient
manner possible so that there can be no legal grounds for customer dissatisfaction and
complaints. It must always guarantee its customers the necessary consumer protection
laws and must function on ethical grounds. As has been stated in the case study, it is
the responsibility of the Magnificent Salon Services Ltd to see and evaluate the reason
behind the dissatisfaction of two of its customers. It must inspect the services that are
being given in the salon and if proved guilty, it must be prepared to provide appropriate
compensations to them as is stated by the country’s law. This would ensure that it
abides by the laws of the nation as can function on justified and legal grounds.

Conclusion:
This report examines the nature of the UK legal system and the impact of different laws
and regulations on Magnificent Salon Services Ltd, an organisation operating in the
private sector. The standards of the private organisations are unique due to the type of

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services provided by them and the number of shares they contain. The various laws
such as employment laws, company laws and others have significantly affected the
functions of the organisation and contributed to the development of the judicial and legal
system of the country. Moreover, suggestions were provided to improve the operations
of the organisation based on the company policies and rules implemented by the
government. This assignment has helped in gaining better knowledge and
understanding of the different business laws and their impact on the business
operations through the case of Andrea & Mariyah Vs. Magnificent Salon Services Ltd.

References:
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Beatty, J.F., Samuelson, S.S. and Abril, P.S., 2018. Business law and the legal
environment. Cengage Learning.

Dignam, A. and Lowry, J. 2012 Company Law. Oxford: Oxford University Press.

French, D., Mayson, S. and Ryan, C. 2012 Company Law. Oxford: Oxford University
Press.

Hg.org. 2019. [online] Available at: https://www.hg.org/consume.html [Accessed 8 Jul.

2019].

Honeyball, S. 2012 Employment Law. Oxford: Oxford University Press.

Legislation.gov.uk. 2019. Competition Act 1998. [online] Available at:

https://www.legislation.gov.uk/ukpga/1998/41/contents [Accessed 8 Jul. 2019].

Legislation.gov.uk. 2019. Employment Rights Act 1996. [online] Available at:

https://www.legislation.gov.uk/ukpga/1996/18/contents [Accessed 8 Jul. 2019].

Mayss, A. and Reed, A., 2018. European Business Litigation. Routledge.

Miller, R.L., 2015. Business Law Today, Standard: Text & Summarized Cases. Nelson
Education.

Partington, M. 2013 Introduction to the English Legal System. Oxford: Oxford University

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Uk.practicallaw.thomsonreuters.com. 2019. [online] Available at:

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