Business Law for Managers

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 Table of Contents
Introduction ..................................................................................................................................... 1

Question 1 ....................................................................................................................................... 2

Alteration dispute resolution ....................................................................................................... 2

Arbitration ................................................................................................................................... 2

Mediation .................................................................................................................................... 3

Question 2 ....................................................................................................................................... 4

Question 3 ....................................................................................................................................... 8

Partnership Act 1890................................................................................................................... 8

Companies Act 2006 ................................................................................................................. 11

Conclusion .................................................................................................................................... 13

references ...................................................................................................................................... 14

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INTRODUCTION
Business law is part of civil law which is applied on issues of commercial criteria regarding
conduction of persons and organizations. Several schemes related to organization structure and
behavior is regulated by this law. It deals with establishment of new businesses and issues arise in
existing businesses such as partnerships and corporations (Rush and Ottley, 2006). Present project
report is based on Business law for managers. Other popular areas are also included in business
laws which are insurance, planning, contracts of employees, management of business etc.

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Business law for managers
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Project report will comprises of description of mechanisms of litigation in the event of dispute
among management and employees. It will include practices of mediation and arbitration. Along
with it, key strategies will be discussed which can be used for cross-cultural and domestic
negotiation. In last part of project explanation will be provided for partnership and companies Act
which are established by parliament of UK with its positive and negative factors.

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QUESTION 1
Alteration dispute resolution (ADR)
Alternative dispute resolution is wider term which includes techniques arbitration and
mediation and other techniques to resolve issues. These methods are replacement to legal
proceedings which is in informal manner (Rimmington, Smith, and Hawkins, 2006). In modern
economy all business organizations desires to prevent legal issues and binding and prefer non
judicial methods for solution. Such techniques are cost and time effective and it is less critical in
comparison to traditional litigation. Concept of ADR is highly promoted by legislatures due to its
convenience. This approach is beneficial for clients as it created mutual understanding among
them.
ADR is usually classified into four terms which are negotiation, mediation, collaborative law
and arbitration. Along with legal proceedings ADR can also be used within jurisdictions of
common law. In this solution to disputes are provided outside official judicial mechanisms by
using informal methods (Schaffer, 2009). It is combination of informal and formal tribunal and
meditative processes. Use of ADR is increasing even on international level. Procedure of these
techniques is flexible and can be molded according to requirement. It has less complexity and
cost while execution. By this preservations can be made in relationships and reputation.
In modern economy employment issues are in general practices. For resolving issues
following techniques can be used by business organizations-
Arbitration
It is technique to resolve issues without inserting legal parties. In this settlement is made
outside the court. Parties under arbitration are known as arbitrators. In this third party is
appointed which should be neutral and capable to impose decisions. Judgment given by third
party created obligations for arbitrators which is enforceable by law (Slapper, and Kelly,
2011). Arbitration is the hearing done for settlement of dispute between parties by a person
chosen by them. In event of employment issues managers and employers are allowed to select an

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unbiased and independent outsider to determination of solution of problem of business. Role of
arbitrator is like a judge who provides decision for the case.
Arbitration is quick way which can be selected by management and employee for resolving
problem. It is time and cost efficient in comparison of procedure of employment tribunal. It is
less formal way to solve dispute. According to scheme of arbitration of Acas (Advisory,
Conciliation and Arbitration Service) cases are solved for issues of unfair dismissal and dispute
regarding to flexible working. It is suitable in situation where there are not critical legal issues.
Suggestions for such option can be taken by local Citizens Advice Bureau (CAB) who will
provide free and unbiased advice.
For the given situation manager and junior employee can refer technique of arbitration to
resolve the issue. In this option arbitrator can be appointed by either party. If any of the party is
not agreeing for arbitrator, in that situation they can go to chief justice officer for selection of
person who will judge the situation. After appointment of arbitrator evidence and facts will be
presented by both manger and junior employee which will use for discussion regarding to issue.
By facts problem will be identified by arbitrator and solution will be provided.
Mediation
Mediation is procedure which helps in finding of solution which can be accepted by both
sides. It is done to create win-win situation where both parties will be satisfied with judgment.
For this procedure an impartial expert is appointed (i.e. mediator) who will have communication
with both parties separately and may talk jointly if required. It is quick and effective techniques
which can be used to solve disputes. Method of mediation is less stressful comparatively from
legal action. Along with provide solution for issue, mediator also suggests to make improvement
to prevent it in future.
It is techniques used in form of alternative dispute resolution, which is method for resolving
issues among two or more parties with concrete effects. The term mediation refers to situation
where third party helps main parties in settlement. Procedure of this technique is private and
confidential which may be enforced by law (Thomas-Mobley, and Khuncumchoo, 2006). Several
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techniques are used by mediators for open, improve, dialogue and empathy between disputants.
Objective of mediator is to help parties to reach on common conclusion. It depends on the skill
and training of mediator. There are many convincing reason for promotion of excess use of
mediation in individual employment. Major advantage of this technique is flexibility due to
informal approach. By this technique open and honest discussion is made which make ease to
provide solution to resolve issue.
Using this technique in current scenario junior employee and manager are required to
appoint a mediator of their choice. Meeting will be arranged by disputing parties to provide
general idea for facts and evidence. Separate meeting will be conducted. For discussion of
favorable result common meeting will be held will concluded result will be given by mediator. It
will be equivalent to official decision which will be required to be followed by both the parties.
QUESTION 2
Negotiation refers to settlement between two or more parties to reach on common agreement
to solve difference. Objective of negotiation is to gain understanding by entire parties to satisfy
several interests. It can said to be mutual discussion and arrangement of terms regarding to a
particular transaction (Negotiations, 2014). It is a procedure commit by disputants to find
solution for common problem. Purpose of negotiation is to avoid arguments and conflicts among
parties to attain best available outcome in that situation. Styles and techniques of negotiation
may differ as it is differently shaped by countries and their cultures. In the modern era procedure
of cross cultural negotiation is becoming more critical to execute and it is growing exponentially.
In the age of global economy Domestic and cross cultural negotiation is becoming more
important and getting crucial part of management. It is procedure to resolve difference and
perceptions of different countries. It will be tuff to survive in modern era for all business
organizations without Domestic and cross cultural negotiation. Factors that affect such activities
are protocol, communication, and propensity of risk taking and view of time (What is
negotiation?. 2014). Negotiation forms an agreement which provide assurance in unexpected
events. It is predictable that differences regarding to needs, wants and aims will be arise of
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people who comes together for business operations. If technique of negotiation is not adopted
than this differences will be converted into argument which will create conflicts. In order to
attain best outcome it is required to adopt structured approach of negotiation. Procedure of
negotiation is comprises of following steps-
Preparation
Discussion
Clarification of goals
Negotiate towards a win-win outcome
Agreement
Implementation of course of action
Domestic and cross cultural negotiation is not an easy task due to individual differences.
Moreover negotiation with foreign citizen is more critical process due to contradictions between
policies and strategies. Issues in negotiation arise because of conflicts in perception of
individuals (Palmer, 2014). In cross cultural negotiation another hurdle is language. It is
important to communicate problem effectively but due to changes in language proper codes are
not used. Such problem can act as barriers in establishment of credibility and trust. Different
culture sets different aspects of negotiation. Goal of such procedure can be substantive outcome
or long lasting relationship.
In order to perform effective intra and inter cultural communication, most crucial element
understanding among parties. Further it requires solving issue of language, values and beliefs to
having effective negotiations. There are several key strategies that can be adopted by business
organization for Domestic and cross cultural negotiation. Some of these strategies are described
as follow-
Deep understanding of others culture: For negotiation it is essential to have deep insight
about facts of other culture and their belief. In this manner knowledge will be gained and
trust will be built among parties of negotiation. Benefits will be attained by business

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 organizations in selection of right strategy and tactics in the procedure of domestic and
cross cultural negotiation (Hendon, 1996). Erudition for other side's culture shows
symbol of respect which is major factor for creation of good relationship and to solve
conflicts. Moreover, having knowledge for other culture in detail which should be
sufficient for strategy of negotiation is tuff to attain but principles can be identified by
them which influence foreign culture of other party in dealing. Following strategy is
suitable for both aspects that are domestic as well as international cross-culture
negotiation. Learning for culture can be done by Parties by regular contacts and meetings
which will also help in creating strong bond between them.
Find ways to bridge the culture gap: Parties entering into the contract for the purpose of
business can adopt third culture in order to develop healthy persona relationship. They
can use combination of both cultures so as to adjust with situation apart from the
adoption of other side's culture. When there is difficulty in identification of common
ground than this concept can be use by parties as it will assist them in creation of strong
business relationship. It can be use at international as well as domestic trade transactions.
This approach can be use in joint venture of business as it will helps parties to settle their
differences and successfully carry out trade operations. The use of third culture will
helps to develop healthy relationship and to achieve growth in context of market share.

Maintain personal integrity, build solid relations and converse concessions: It is

important that both the parties should have knowledge about each other as it will help
them to create the feel of comfort. In addition to this, there should be personal integrity
and good relationship among parties as will offer more value for long run and help to
successfully carry out business operations as domestic as well as international level
(Morgan, , 2011). It is required that parties should develop trust and should show respect
towards each other as it will helps in effective negotiation. Further lack of trust can create
barrier in development of relationship as well as in business operations. In addition to

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 this, credibility is also important effective negotiation. Parties can use this strategy at
both international as well as domestic level. It will help them to effectively carry out
cross cultural negotiation and to achieve success.

Don't Stereotype: The parties entering into the contract are required to have better
understanding about culture of each other. In addition to this, parties should put efforts in
order to treat everyone with respect instead of generalizing. They should learn about each
other culture as making assumption can develop distrust or barriers. In addition to this,
beliefs, values and culture should be represented by one party (Miller, 2011). Further they
can build trust among parties as it will assist them to properly understand culture of each
other and will develop healthy relationship. This will helps them to effectively carry out
business operations at domestic as well as international level.

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Business law for managers
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Use simple and accessible language: It is important that people should understand before
they agree on something. In order to be successful negotiator, the key aspects needs to be
communicated properly. In the process of negotiation both parties communicate with
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 another. Hence it is essential that parties should use common, simple and accessible
language that will be understand by both the parties (Miller, and Cross, 2012). It will help
both the contracting parties to understand culture of each other and will result in creation
of healthy personal relationship. The use of this strategy will help to effectively carry out
business operations and to achieve success.

QUESTION 3
Business law is established for the management of establishment of new organizations. In
this rules and regulations are create for purpose of litigations and resolving contradictions.
Business can be set up either is form of sole trader or partnership or company. For selection of
better option among partnership and Limited liability Company, evaluation of both options is as
follow-
Partnership
Partnership refers to agreement commonly formed by more than two peoples who
mutually accepted to come together to form business. In such firms ownership, liabilities and
profits are shared between partners. Following are clauses and terms which are determined by act
that governs operations of partnership.
Partnership Act 1890
According to Partnership Act 1890 partnership can be defined as relationship between two
or more parties to run business with common objective for earning profits. Agreement among
them can be oral or return it depends on their convenience. Minimum number of partners
according to Act is 2 and after amendment maximum numbers of partners can be unlimited.
Forming organization as partnership is really good option in some cases. To run business as
individual there be comparatively low turnover and capital. Partnership is appropriate legal
structure which is suitable for new businesses. Rules and regulations of partnership Act, 1980
applies in all organizations of partnership unless it is not excluded (in implied or expressed
manner). As per partnership there is right with all partners to participate in management and get

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equal share of profit (Gulbro, and Herbig, 1995). Any of the partners cannot be expelled from
firm. Existence of partnership comes to end on the event of death of any party. Exception to this
clause is prior agreement between parties before death. All the partners are jointly and severally
liable for debt and obligation till the date of agreement. With the end of partnership, estate of
partners also became severally liable.
According to act of partnership postulation is made regarding to indemnity of liability. All
the partners are jointly and severally liable for the offensive acts performed by other partners.
Act done by partner within ordinary course of business will bind the entire firm. As per law act
performed by partners should be in utmost good faith toward his fellow partners. It includes duty
of honesty, restriction on making secret profits and not to get engaged in such activity which is
against or competitive to existing business. For ordinary operations decisions under firms are
taken by majority. If there are some extraordinary issues such as alteration in kind of business or
to admit or expel partners then unanimity will be required.
Advantages of partnership
Capital- As per nature of organization funds are provided by partners as initial capital.
Therefore more the partners, more the capital will be introduced for business. It will lead more
potential profit which will be equally allocated among the partners (Gillies, 2004). Partners can
contribute either capital or assets. Once the capital is introduces it will be ceased till the
existence.
Flexibility and decision making- Business in form of partnership are easy to run and
manage comparative to other organizations. They have to face less regulation than companies.
Flexible decisions can be taken by partners with the help of each other. More brains generate
ideas which provide quick and effective solution for problems.
Distributed responsibility- Obligations and liabilities are share among partners who are
running the business. By this factor the put efforts by best of their abilities instead of dividing of
work and management (Donohoe, 2011). They do not have motive to distribute work equally,
work is done by them according to their skills and qualities to attain better results.
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 Liability- Generally partnerships firms are subjected to unlimited liability. It means
liability and financial risk of business are shared by partners. This clause can be excluded for
some partners. It can be countered to formation of limited liability partnership. This flexibility
provides advantages in comparison to company as firm can enjoy concept of limited liability
with factors of partnership.
Disadvantages of partnership
Contradiction- This is most common negative point of partnership. There is always threat
of disagreements among partners. It is obvious that, where there will be more than one idea there
will be conflicts to determine what will be best of business. Contradiction does not only harm
business it will also have negative impact of relationships of partners (Clarkson, 2010). It will
lead to reduction in faith. It is the only for which draft of deed is suggested to partners.
Taxation- Crucial disadvantage which has to be faced by business is law of taxation.
According to taxation law partnership firms are required to pay taxes similarly as sole
proprietorship firms on the basis of self assessment. In comparison to company higher tax is
charged by partnership organizations. Partners are under obligation for registration with HM
revenue and customs as self employed.
Profit sharing- Earned profits are equally allocated among partners irrespective of other
factors. Equal part of profit is not fair is some situation where there is unequal capital or different
efforts by partners (Chadwick, 2011). If such clause is expressly or impliedly excluded than
profit can be allocated according to their deed.
Agreement- Business in such firms is jointly managed hence it is required for all partners to
agree on terms which are done for operations. It means there are chances of situation where
freedom for work will restricted regarding to management or other operations. In this context
limited liability companies had more flexibility as directors consider will of members.
Disagreements among partners can be expensive and prolonged to resolve. It will affect the
reputation of business in outer environment.
Limited liability Company
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 Limited Liability Company is an organization where obligations are limited to their
contributed share for business. It refers people who are investors and owners of company are
only obliged up to the amount of their investment. In such forms there is distinct identity of
business apart from their members (Camn, Gottfridsson, and Rundh, 2012). Owners of
company are allowed to keep separate assets and earnings from business itself. In aspect of risk it
is good form of business where there is no burden and responsibility on personal wealth. Such
organizations are governed by Companies Act, 2006 which has following clauses.
Companies Act 2006
According to this a company is an organization which is formed and registered under this
act. Companies Act, 2006 was established by parliament of United Kingdom which forms the
primary source of UK company law. Present act is amendment of previous Companies Act,
1985. Company is an entity which is distinct from its shareholders and directors. Power of it is
according to articles which are exercised by directors. There are certain rights which may be
restricted by shareholders in annual general meeting.
For formation of Limited Liability Company there are certain criteria which are required to
be satisfied. Such conditions are defined by Companies Act, 2006. First and foremost condition
is that organization should be registered with Companies House. For establishment of limited
company entrepreneurs can take help of TheCompanyWarehouse.co.uk. Second condition is
there should be at least one director and two if it is plc According to previous Act there were also
criteria for maximum and minimum age of director that was 16-70 (Bowyer, 2000). For it issues
were raised by various so this clause was removed by new Act. In such organization
management of operations are handled by directors and funds are provided by shareholders who
are entitled for reward.
Advantages of limited company
Limited liability- General advantage in Limited Liability Company is of financial
assurance. It is previously described that owners or shareholders will only be liable for the undue
debt. Security is provided to investors for risk and reward.
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 Taxation benefits- Such organizations are required to pay taxes only on their profits
(generally @ 21%). No personal taxes are required to be paid as sole proprietors and partnership
firms in which can rise to 40%. There is also advantage to members and directors who are
running limited company. They can pay themselves wages at minimum level to take advantage
of personal allowance of 6,475.
Asset utilization- Usually people feel pride to use assets of company specially cars but in
Limited Liability Company it is recommended to not to do so. Instead of this director should use
their personal cars for business purpose. By this strategy they can charge amount for such work
from business and enjoy advantage of tax free fuel (Best, and Banes, 2007). Similarly if personal
premises are used for business purpose cost of it can also be claimed. It is beneficial for taxation
strategies.
Ownership and control- In the organizations of private limited company directors and
shareholders are usually same persons. Hence power and ownership remains in their hands. By
this they can make quick and easy decisions with little fuss. It provides business platform for
successful management.
Name of company- With the registration of organization name is also registered. It creates
protection of name which cannot be copied by other businesses. This establishes separate identity
of business in industry.
Disadvantages of Limited Liability Company
Cost and restriction in enhancement in capital - Formation of companies is relatively
higher in comparison to partnership and sole trader. For complying legal requirements,
registration and other factors increases cost of setup of company. Companies can increase
amount up to an extent via sales of shares. There is option for plc to increase funding by sale of
shares but this ability is adverse for limited liability companies.
Dilution of powers- According to nature of Limited Liability Company there are always
conflicts between shareholders and director for rights and powers. In several situations there are
contradictions between them for selection among available options. For generation of funds
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share are sold by company which increase dilution in management (Bar, and Drobing, 2004). By
this more people will get right to participate in operations and varieties of idea will be there to
run company. It will increase conflicts. There is also threat of takeover by other companies
because other business organizations can also purchase shares.
Complex accounts- More restrictive and complicated regulations are required to be
followed by companies in the procedure of book keeping. Such process is time and cost
consuming. It reduces flexibility of business for maintenance of financial accounts.
According to above description it is recommended to client to start business in form of
Limited Liability Company. By selection of this organization client can attain advantages for
criteria of taxation, earnings, brand image and effective management.
CONCLUSION
Business law is mandatory to follow by all business organizations. From the present project
it can be expressed significance of business law in set up of new businesses and solving issues in
existing entities. Cost and time effective strategies are explained by business laws which are
effective to refer in event of contradiction in internal environment of business (Alkhamees,
2012). In the law there are alternative techniques available which can be used for effective
negotiations in both aspects that are domestic and cross cultural. In context of formation of new
business rules and regulations are described by Act of partnership and companies which is set up
by parliament of UK. Both structures have their own advantages and disadvantages which are
required to consider while formation of new business.

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REFERENCES

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Best, A., and Banes, W. D., 2007. Basic tort law: cases, statutes, ad problems. Aspen
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Bowyer, M. L., 2000. Insurance contract law and regulation and competition in the UK
insurance industry: The missing link. Journal of Financial Regulation and Compliance.

Camn, C., Gottfridsson, P. and Rundh, B., 2012. Contracts as cornerstones in relationship
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Chadwick, A., 2011. The English Legal System. Straightforward co Ltd.

Clarkson, K.W., 2010. Business law. Text and Cases: Legal. Cengage learning

Donohoe, S., 2011. The WW Gear case. conditions precedent and construction contracts",
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Gillies, P.,2004. Business law. Federation press.

Gulbro, R., and Herbig, P., 1995. Cross-cultural negotiation behavioural differences:
domestic-focused versus worldwide-oriented firms. Cross Cultural Management: An
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Hendon, W. D., 1996. Cross cultural business negotiations. Greenwood Publishing Group.

Miller, R. and Cross, F., 2012. Business Law, Alternate Edition: Text and Summarized Cases.
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