Business law

Assignment
M.Kugan
2001149
 Student assessment submission and declaration
When submitting evidence for assessment, each student must sign a declaration confirming that
the work is their own.

Student name: MURUGENDRAN Assessor name: Harsha Widanapathirana

KUGAN

Issue date: 11/03/2023 Submission date: Submitted on: 10/06/2023

11/06/2023

Programme: Pearson HND Business Management

Unit: Unit7: business law

Assignment number and title: Assignment 1

Plagiarism
Plagiarism is a particular form of cheating. Plagiarism must be avoided at all costs and students who break the rules,
however innocently, may be penalised. It is your responsibility to ensure that you understand correct referencing
practices. As a university level student, you are expected to use appropriate references throughout and keep carefully
detailed notes of all your sources of materials for material you have used in your work, including any material
downloaded from the Internet. Please consult the relevant unit lecturer or your course tutor if you need any further
advice.

Student Declaration
Student declaration

I certify that the assignment submission is entirely my own work and I fully understand the consequences of
plagiarism. I understand that making a false declaration is a form of malpractice.

Student signature: MURUGENDRAN KUGAN Date: 10/06/2023

CONTENTS
introduction 04
Sole trader 04
partnership 06
Public limited company 07
Private limited company 09
corporation 10
Task 03 12
scenario 12
recommendation 12
Legal advises for Thomas 13
conclusion 16
Reference list 18
TASK 2

Introduction on business organization

Business organization is a group of people who working in order to achieve a vision or mission of the

group, this can be in a for of professional services or even producing and distributing goods and services,

this can be classified into different types according to their structure, size, ownership and their role in the

economy as a purpose ( unacademy, 2023). Organizations operate in various types and in different sectors

in an economy with facing challenges and opportunities in the life cycle, these can be faced as poltical,

legal, social and more. In this section of report shows the advantages and disadvantages of different types

of busines organizations and how they manage and fund their business to run (openstax,2023).

♦ Sole trader

Sole trader is type of business where its owned and controlled by a single person, which is a simplest

form to start an organization. This type of business as just one owner who is responsible for all liabilities

and management of the business life cycle. Most of the sole traders are self employed and this can even

become a medium sized organization as well by the performing factors of the business. There are

different types of sole trader businesses some can be named as

• Grocery shop

• Plumber

• Technician

• Content writer

• Phone smith and etc...

Every business runs into problems as hurdles and some hype as advantages, each type of business

organizations experience advantages and disadvantages according to their style, below shows the

advantages and disadvantages of sole trader proprietorship,

Advantages

✓ Since there is just a single owner, he has the access to all of the business profits

✓ The entrepreneur, has all responsibility of timing of the company and can make every decision

made by himself

✓ This type of business can be easily started, as the initial cost may be low according to the type of

business sector

✓ Its easy to change the legal structure of the business later in any circumstances

✓ The organization has the maximum privacy compared to other form of business

Disadvantages

 The main risk of this type of form of business is that the owner is responsible for all of his debt at

its known as unlimited liability

 There is high chance of the owner to lack on some skills, this is due to less expertise options or

people to consult on tough situations

 The absence of the owner may affect the business continuity, which will impact the customers

and business life cycle

 Less capital brought up by a single person compared to having multiple owners

Management and funding of sole trader proprietorship

In managing the business organization, since it’s a sole proprietorship all the decisions and business is

managed by the owner, this includes in operations, marketing, human resources, and in finance. The

owner needs to diversed in their skill set to manage a business effectively and efficiently leading to their

business achievement on their business objectives.

Funding of a sole trader typically starts from the savings of the owner and additionally from investments,

loans etc... After business starts the owners tend to reinvest their profits into the business operation to

expand. However, a sole trader will have unlimited liability unless he has the capable of assets for

collateral,

♦ Partnership

Partnership is a type of business which is controlled and owned ty two or more people on agreeing to

carry the business to achieve the goal and receive the business outcome which can be profit as well as

loss. Partnerships need to legaly and verbally agreed on their ownership, profit sharing and resources

before starting to run a business, some of the major partnerships are,

• Law firms

• Accounting groups

• Real estate investors

These are the common types of partnership , this form of business will have advantages as well as

disadvantages,

Advantages

✓ Easy to form partnership business compared to other business forms, as this require minimal legal

requirements

✓ All the partners has the responsibilities on decision making, where they can get multiple ideas and

share workload, skills and etc,,,

✓ All the partners need to invest in any form to the business, making it easy to raise capital for the

business

✓ Partners business affairs are private

 ✓ Business can enjoy tax benefits as the profits are shared between partners

Disadvantages

 Unlimited liability , each partner is liable for their personel and business debt

 Disagreements between partner can take place

 If a partner leaves the value of th partnership need to be valued and given this might be costly

Management and funding of partnerships

Typically, a partnership organization is managed and controlled by the owners or known as the partners

who make the important decisions on the business. Partnership agreement may outline the roles and

responsibilities of each partner as they might have been dividing their tasks of business to each partner.

A partnership business can bring up funds in different way to the business, some of the common forms

are, partners investment from savings, each partner can bring up loans from financial institution to fund

the business and finally profit reinvestment.

♦ Public limited company

Public limited company is a type of business that is publicly traded in the stock market or stock exchange

for people to invest and purchase. This is a legal entity with its own identity, this type of business is

formed operated as PLC which needs to be governed by specific regulations and requirements set by

jurisdiction in the country the business operates (investopedia,2022). Some example of plc orgsnizations

are

• CIC holdings PLC

• Barclays PLC

• Rolls- royce PLC

Some of the advantages and disadvantages are shown below

Advantages

✓ Can raise more capitals and funds from selling of shares

✓ The company has limited liability

✓ Shares can be transferable

✓ Normally a plc organization has higher life span compared to sole trader and partnership

✓ High potential for growth on new invetors can be brought up

Disadvantages

 Initial and startup cost is relatively high, this can involve in legal fees, compliance cost and etc...

 Plc has numerous legal and regulatory requirements, including financial reporting, compliance

with securities regulations and more

 Loss of control, as the company sells shares to public

Management and funding of public limited company

Management of Plc companies typically carried by the group of board of directors, who are elected by the

shareholders during annual general meetinhg, shareholders elect the chief executive officer and other

senior executives to maintain and run the day-to-day operations of an organization.

Since this is a public limited company most of the funds are made from issuing shares to the general

public and to some investors in large amount. This os because shares of a public limited company can be

sold freely on a stock exchange and traded. The organization even can receive bonds in a fixed intrest

rate. Share holders lose only the amount of money they had invested if the company close downs but as

well they receive divideds as profit if the organization makes profit on their business year (iedunote,

2023).

♦ Private limited company

A private limited company is a type of business entity which is owned and controlled by a limited number

of people which can be small number of individuals. This type of organizations cannot sell or trade share

publicly. Some of the private limited companies in sri lanka are;

• Dellogistics international PVT LTD

• Hsenid software international PVT LTD

• Access international PVT LTD

This type of business organization will have some advantages and disadvantages, these are shown below;

Advantages

✓ Every limited companies will receive a benefit as limited liability, since there are limited number

of shareholders and they only liable for the debts of the company up to the amount of their unpaid

shares, no personal assets are taken in the case of bankruptcy or losses.

✓ These companies will receive tax benefits as corporation tax which on profits which is lower than

personel income tax

✓ Business can be continued even a owner leaves or dies, as the business is separate legal identity

from owners, this mean the the shares can be transferred to a new owner without affecting the

operations (iedunote, 2023).

Disadvantages

 Unlike public limited company the organization cannot sell their shares to the general public

 Most of the private limited companies are lacking are lacking on brand recognition in the public

compared to public limited company

 Private limited company needs to follow more rules and regulations than sole trader or

partnerships, this has to be registered by the government and file annual reports , pay taxes and

file accounts.
 ♦ corporation

A corporate company is legally separated distinct from the owners who can be called as shareholders, this

form of company is normally created by filing articles of incorporation with the government and issuing

shares to the shareholders (investopedia,2022). This form of business can enter contracts, loans, borrow

money, hire employees, own assets and pay taxes. Examples of a corporate company , advantages and

disadvantages are shown below;

• Amazon

• Google

• Microsoft

Advantages

✓ Since this is a large form of business organization , the compay can sell share and bring up more

capital to the business

✓ This lead to limited liability for the organization

✓ Shares will be more liquidity this mean shareholders can transfer their shares to a new person

without affecting the business operations

Disadvantages

 The company needs to pay higher taxes from their profits as well as shareholders will be taxed

on their dividends which will lead to double taxation

 This type of business needs to comply with more legal formalities on the state and federal

governmentand file annual reports, financial statements as well as deal wioth more paperworks.

 As company sells shares to the public the origianl owner may lack in power and loss of control
(cfi,2023).

Task 3

scenario

Thomas is a young entrepreneur who has expertise on software's to develop various programmes which

assist the business activities for various businesses. Currently he is acting as the sole manager and the

owner of the business with 5 work colleagues.

Thomas got an offer from a very successful supermarket chain named Supermart to develop a new system

to handle stocks and record transactions. Supermart offered £100,000 for the project and Thomas agreed

to proceed and submit the project on or before the deadline which was stated as 1st of September 2022.

Thomas acquired the hardware needed for this project from vision technologies for £35,000 with no

upfront payment paid, received on credit basis and completed the project on 30th of august 2022.

However, when Thomas submitted the project to Supermart they expressed that the project was no longer

needed and refused to pay the offered amount. Has Thomas purchased Hardwares from vision technology

in a credit basis, he was facing some issues on setting the credit payment which he was agreed to pay, and

agreement was accepted by both parties. Vision technology is considering making a formal complaint

about Thomas.

Recommendations

According to the case of Thomas, Supermart has stated Thomas has an offer, according to contract law of

uk an offer is an invitation communicated by one party to another to enter legally binding contract on

specified terms. The offer states that the project of software needs to handle the stocks and record

transactions, including hardware needed for the process, and this project needs to be completed on or

before the deadline but thomas has completed the project on 30th of august which is before the deadline.

In the context of contract law a consideration is a promise performance or forbearance bargained by a

promisor in exchange for their promise, consideration is a main element on a contract, contracts cannot be

enforced if there is no consideration involved in it (claims.co.uk, 2023). In Thomas's case in offer from

Supermart, the consideration involves in £100,000 offered for Thomas to produce software which handles
their requirements with hardware's required, this enforces the contract, has a offer and consideration are

received.

In the same situation Thomas has agreed to pay the credit of £35,000 to vision technologies which he is

currently facing issues to pay back due to the Supermart refusal to pay the offered amount. The agreement

between Thomas and vision technology contains a consideration which Thomas bought hardware's from

vision technologies where in return Thomas needs to pay vision technologies the amount of £35,000 the

value of hardware purchase.

In this case two contracts has been made by Thomas, which the first contract was failed by Supermart to

achieve the consideration which resulted Thomas to fail to settle the consideration to vision technologies

contract. Which mean there are two contract breaches.

Legal advises for Thomas

According to this case Thomas failed to pay vision technologies due to Supermart refusal, but this doesn’t

coverup to vision technologies has it is a completely different contract made by Thomas to fulfill

Supermart obligations. Like vision technologies Thomas can legally file case on Supermart for breaching

the contract offer. But there are also several other legal recommendation in resolving the disputes with

vision technologies and Supermart;

• Legal consulting advices: thomas can consult a legal lawyer in specializing the contract law

where the person can guide and help to overcome the situation.

• Negotiating : thomas can negotiate with both the companies and reach a benefit solution for all

parties

• Aquiring legal claims: by analyzing the case and contract he can asses the potential claims he can

receive against supermart such as breach of contract, misrepresentation and etc...

Thomas can even consider on alternative dispute resolution which are negotiation, mediation, arbiation

and conciliation, these ae the different ways people can resolve disputes without a trial ( nycourts,2023).

Applying ADR to Thomas situation,

➢ Negotiation : this can help thomas and potentially solve the dispute between thomas, vision

technologies and supermart by allowing all the parties to reach mutual agreement and solutions,

this might have some advantages as well as disadvantages,

Advantages

✓ Cost effective

✓ Can maintain a good relationship with each company

✓ A customized solution can be made

Disadvantages

 Lack of legal involvement

 can lead to incomplete solutions

 One party can gain more power compared to others

➢ Mediation : this is a process where a neutral third party will involve to help facilitate negotiations

between parties. Thomas can intake a mediator who can assist in reaching mutual solutions

between Supermart and vision technologies. This can result in some advantages and

disadvantages.

Advantages

✓ Cost effective

✓ Faster and harmonious way to deal with disputes

✓ The final agreement will be legally binding at court

 Disadvantages

 Anyone can ignore this form of solution as its not compulsory

 If no solutions are mutually agreed, a new or need to start a solution

➢ Arbitration : is a formal ADR process where a impartial arbitrator or a panel of arbitrators are

appointed to make binding decisions. Thomas and the other parties can agree to submit dispute to

arbitration which is governed by arbitration act 1996 in uk.

Advantages

✓ Parties can choose their own arbitrator

✓ Hearing time and place can be set by the parties

✓ Quick response can be made

✓ Cheaper method

Disadvantages

 The rights of appeal are limited

 Professional arbitrator fees may be sexpensive

 A legal question might not be answered by a arbitrator who doesn’t know about

legal laws

➢ Conciliation : Thomas can use conciliation as an alternative dispute resolution as this involves the

intervention of a neutral third part , the conciliator who helps in communicating and negotiate

between vision technologies and Supermart, this will result in some advantages and

disadvantages,

Advantages

✓ A neutral third-party involvement

✓ An informal process taken place

 ✓ A clear communication where parties open with their interest, concerns and

solutions

Disadvantages

 Lack of binding decisions unlike arbitration

 Unresolved issues can occur

 All parties need to participate in conciliation or else the effectiveness may be

limited

Conclusion

In conclusion, Thomas is facing a challenging situation in his business life, being a sole trader

has given him less mobility on monitoring the business and the tough situations like this. Thomas

has been involved in non-payment and experiencing financial difficulties. To address this

situation several legal and ADR solutions are being stated above, by considering this Thomas

can have a clear idea of which solution would be best.

By critically evaluating and analyzing the above factors, using arbitration would be an effective

and efficient way for Thomas, even though this situation considers disadvantages for Thomas,

but the solution made can be legalized at the end for a safety factor for Thomas. Arbitration is a

legalized form of solving disputes between parties. This helps both the Thomas from Supermart

refusal and vision technologies from Thomas non-payment.

Reference list

• CFI Team (2023). Corporation. [online] Corporate Finance Institute. Available

at: https://corporatefinanceinstitute.com/resources/accounting/what-is-

corporation-overview/.

• claims.co.uk TM. (n.d.). Consideration in Contract Law. [online] Available at:

https://www.claims.co.uk/knowledge-base/contract-law/consideration-in-

contract#:~:text=in%20contract%20law-.
• IEduNote (2020). Public Limited Company: Definition, Features, Advantages,

Disadvantages. [online] iEduNote.com. Available at:

https://www.iedunote.com/public-limited-company.

• Kenton will (2022). What Everyone Should Know About Corporations. [online]

Investopedia. Available at:

https://www.investopedia.com/terms/c/corporation.asp.

• Unacademy. (n.d.). Business Organization. [online] Available at:

https://unacademy.com/content/cbse-class-11/study-material/introduction-
to-small-industry/business-organization/.
• ww2.nycourts.gov. (n.d.). What is ADR? | NYCOURTS.GOV. [online] Available
at:
https://ww2.nycourts.gov/ip/adr/What_Is_ADR.shtml#:~:text=Alternative%20
dispute%20resolution%20(ADR)%20refers.