What Is Law?
Law basically is the principle which guides people to follow healthy practices which may be related to their personal and professional lives. Formulating different kinds of laws is of utmost importance for the government and one of the primary functions that they have to carry out is to ensure its compliance. Business Law is a branch of law which mainly is developed so as to govern operations of various companies and corporations (Emerson, 2009). For business organizations, it is crucial that they comply with such norms and principles, or else their very existence may be out into a state of jeopardy.
This study has been conducted with a view to showing more detailed knowledge and deep understanding of the various aspects of business laws and how they affect business firms. It discusses about the differences between taking a case to the court of law and arbitrating it outside the court. Furthermore, it also sheds light on how both domestic and cross cultural negotiations can be made successful and effective. In this research, the scholar has paid major attention to describing the various rules and regulations that surround different forms of businesses whether they are in the form of a company or a partnership.
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Nature And Mechanism Of Litigating Procedure As Compared To Adr
Disputes are a common part of operations at a workplace, as views and thoughts of no two people are the same. It’s human nature. The government and its various bodies have made several rules, regulations and norms, so as to aid the management of a business organization to combat with issues and also to reduce their frequencies of occurrence (Keenan and Riches, 2007). The employees working in a company may get into disputes with either the fellow employees or with the top management as well. There are numerous policies and procedures in this regard developed by the government so as to ensure that such issues are resolved quickly and do not come up again. Most of the times, when any sort of disagreement arises between employees(s) and the senior management, they tend to go to a court of law to solve the issue. This method in most of the scenarios has proved to be of not great use, as a lot of resources, like time, money, energy, etc go into filing a lawsuit and winning it (CROSSFIELD, 2004).
In this regard, many law firms have now started giving preference to arbitrating or finishing the case outside the court, so that valuable resources are not wasted. The method of ADR may prove to be very useful to the parties, as it would enable them to resolve conflicts and issues in a far more efficient and effective manner. This will be of great help to both the parties, i.e. the senior business manager and the junior employee to resolve whatever conflict may aruise between them (Oladokun and Aluko, 2014). But herein, it must be noted that if any of the party sues the other one, then they would have to expend a lot of their valuable resources, and also the time of company as its image in the market would erode considerably. In this regard it may not be wrong to say that the two parties here would have to expend a lot of their time and other resources so as to win the case and receive compensation (if any) from the other.
The process of filing a lawsuit is a court of law is a very complex and many a times a very time consuming process. There are numerous steps and stages are involved in the process of summoning someone to the court. First of all, the victimized party would have to apply for filing a case after which the court would issue an order of summons to the other person (Andrews, 2011). This is only the first stage, when hearings are conducted and facts or details of the case are uncovered so that a result or a decision can be obtained. But this is a very long process, as the government officials would have to conduct an extensive inquiry of the problem from both parties’ points of views and try to understand what implications a decision could bring, the whole process of giving justice to an individual would become a lot more complex and lengthy (Jones, 2013). But this system of discussing the facts and events can turn out to be a lengthy one because it is not an easy task to understand the view points of parties related to the case and to analyze the facts as well. There are a lot of aspects that judge(s) would have to keep in mind when they are evaluating facts which have been presented to them regarding the case (Levi, 2008). In this regard, being careful and attentive would be the key.
On the other hand, in last some years, a number of changes and developments have been made in the process as to how lawsuits are filed and managed. One of the major developments is that of emergence of Alternative Dispute Resolution practices (ADR). In following this process, the lawyers try to make truce between the parties and to resolve case outside the court (Easterbook, 2004). There are some tools and techniques which can be used in this regard such as arbitration, mediation, etc. Lawyers use a number of forums through which they can arbitrate a case between parties such as the Financial Industry Regulator Authority (FINRA); JAMS, etc. While in the process of Mediation, it is seen that attorneys like to devise and develop their own methods or ways through which a conclusion can be reached to (RASNIC, 2004). But, it also sometimes becomes a very complex, tedious and lengthy process, mainly because of the reason that it is not easy to understand the view point of each and every party to the case. Further, since identifying the aggrieved and defendant is difficult, reaching to a final conclusion is also very difficult. This is so because it is a very tough task to understand the view point of every person concerned with the case and to satisfy them (Harner, 2013).
Key Strategies Of Successful Negotiation
Business managers can be seen to be highly efficient and effective in their work, only if they are able to handle and negotiate at both domestic and cross cultural levels. Those who cannot perform such a task, have to face a lot of difficulties in their work and their management (Simintiras and Thomas, 2008). This facet becomes all the more important for managers of multinational companies, as they are the ones who have to function in various kinds of cross cultural regions. Business managers can consider a number of strategies and techniques through which they can successfully negotiate at local and cross cultural levels. Respecting the local cultural norms and principles is one of the best techniques through which such a negotiation can be done with the locals. In this regard it can be said that the manager first would have to understand the surroundings and then try to follow what the locals believe in and think. There are some ways through which it can be done and are very useful in the process where manager does not know the language and local norms and principles. In this regard, keeping a translator can turn out to be a very good option through which the manager can negotiate with the locals (Webera, Belkina and Tarbab, 2011). Respecting the culture of a place is one of the best ways through which process of negotiation can be made a lot simpler yet effective for a manager. This way, such a situation can be reached from where the manager would be in a position to interact with the locals and make them understand the objectives and requirement(s) of the company from them. Herein, it must be noted that the manager would have to acquire an in-depth knowledge of the region that he is intending to operate in so as to be able to much effectively deal and negotiate with local population members (Sheppard, 2007). Through such an approach, business managers will not only understand the view point of others, but also in make the locals comprehend own thoughts. This way, efficient and effective working of the company in that region can be ensured. There is another aspect to it as well, which states that the manager must spend a considerable time in the region so as to interact with locals in a much efficient and effective manner. Use of such a strategy would mean that not only will the manager respect local culture and norms, but will also negotiate better (Fletcher and et. al, 2014).
Other strategy that can help the managers is to reduce cultural shocks. This means that if a member of administrative staff of a business organization goes to such a place, with culture of which he is not familiar with, then there are chances that he would be in a state of shock. Different authors and industry experts have cited that one of the main reasons as to why managers are not able to perform their duties in an efficient and effective manner is that they are not good at negotiating with people at cross cultural levels (Yagi1 and Kleinberg, 2011). There are some ways through which individual or the manager can overcome such a problem. One of them is to hire a culture mentor. Essentially, he is a person who would guide and teach the business manager about local culture, the norms and principals present in it. If such aspects of cross cultural negotiations are kept in mind, then the work of managers would become a lot easier and they would be in a position through which they can function much more efficiently and effectively. Another way through which such a task can be performed is to reduce the stress levels and keep them under check. If the manager of a business organization is under a lot of strain and anxiety, then there is no way that he can interact and negotiate with the locals. This method is also applicable to situations when dealing in a domestic and known culture (Herbig and Kramer, 2007).
Another way through which such issues can be dealt with is to keep a frame of reference. They basically are the common things of interest to parties to the negotiation. Business manager would have to pay keen attention to ensure, while discussing at both domestic and cross cultural or multinational levels, that they use the frames of references regularly. This facet of negotiation would have to be given a lot of attention by the managers, to be successful in it (Cruickshanka, Chenb and Warren, 2012). This is so because it would help the negotiator in keeping the other party interested into the talk and also a meaningful result could be obtained.
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Advantages And Disadvantages Of Various Business And Corporate Forms
Business organizations mainly can take two forms – whether they can be established in partnership or in the form of a company (Marson, 2013). They are extremely distinctive from each other. The UK government has formulated different laws and legislations so as to ensure that working of business firms is ethical and healthy. In this regard, Partnership Act 1890 and Companies Act 2000 have been formulated.
The Partnership Act 1890 defines partnership to be a relationship between two or more persons who carry on a business with a view to earn profits. It states that partnership can be formulated through conduct, oral agreement, or a written contract. Since 2002, the minimum number of members or partners required to form a partnership are 2 while maximum are unlimited (Morse, 2010). Provisions which have been stated in the act are applicable by default until and unless expressly they have been excluded by all the partners. Further, it also states that the partners have to contribute to management related activities. They are also entitled to get share from profits and liabilities or losses as well, depending upon the amount that they have contributed to the firm.
The Partnership Act divides the types of partnership businesses on the basis of liability that they have – unlimited and limited liability (Berry, 2011). The unlimited liability business is a very risky form of partnership, as in it the firm can acquire liabilities or debts from market without any upper limit. In such a association, there is no limit in regard to how much money can be borrowed by organization from the market, which would have to be repaid by the partners when time comes. Partners would be held responsible for timely repayment along with interest to lenders. The law does not considers partners and the business separate from one another; rather they one single unit. But this is not the case with limited liability firms, as according to provisions of the act, firm and partners are separate from one another. This means that the debts and loans that the partnership business takes from market do not have to be repaid by partners. Rather, it would be paid by selling off whatever assets the firm may possess (Cross and Miller, 2008).
Establishing a partnership business is a very complex and tedious task, as there are a number of steps and facets which would have to be fulfilled by the partners. The designated set of rules and regulations would have to be followed by the organization. First of all a written contract would have to be developed which then would have to be duly signed by all the partners. Although the law does not make it a compulsion, but it recommends that such a contract be developed, so as to insure all the parties to it, from default of any of the other (Spadaccini, 2007). If this objective is not followed or kept in mind by associates, then a partnership business cannot be formed. It is also essential to be met so as to ensure continuous running of business at marketplace.
There are two ways through which a partnership business can be finished – termination and dissolution. They are very different from one another. A partnership can be terminated only when 50% or more than that of the capital invested and profits earned have been sold or exchanged during a period of 12 months or more (Martino, 2012). On the other hand, association between the partners ends when one of the partners dies. But, there is also a condition to it which if fulfilled would lead to dissolution of the partnership. Provisions of the act state that a partnership can be ended only when no prior arrangements have been made by partners for scenario where one of them dies. It must also be noted that there are some more conditions to it as well which state that a partnership can be dissolved when one or more partners retire from the business or the reason for which the business was formed is attained (Cramton, Gibbons and Klemperer, 1987).
Companies Act 2006
The Companies Act 2006 is an act of the UK Parliament which was formed with the purpose of reforming and modifying the company law and to make it more efficient and effective. It describes the companies as those bodies which have been formed and registered under the act. According to the law, an organization can be seen as a company which has been formed and registered since initiation of the act. It also takes into purview, those corporations which were established and registered under Companies Act 1985 or the Companies Order 1986 (Companies Act, 2006).
The act divides companies into 4 types: Limited and Unlimited Companies; Private and Public Companies; Companies limited by guarantee and having share capital; and community interest companies. Further, the act also describes a complete procedure which has to be carried out so that a company can be brought into existence. One aspect that would have to be kept in mind while establishing a company is that there should be one or more than one persons involved in the process. Names, addresses and other details of such members should be well recorded and mentioned in the Memorandum of Associations (MOA) of the company. It is a document which contains all the details about the members of the company (Degenhardt, 2010). The MOA must be formed in the prescribed format. In next stage, documents related to the organization stating its name and type would have to be submitted with registrar. This application of registration must include business’s proposed name; address; liability of the members; and its type – private or public. After this, if the company would have any kind of share capital, then a statement detailing such information would also have to be released. It must give details of the total number of shares of the company to be taken by subscribers.
The next step entails that a statement of guarantee also to be released. It is of particular importance in those instances where the company would be limited by any sort of guarantee (Ashraf, 2012). It must discuss about the contribution each member would make in the scenario where the company is wound up after one year of its formation. Through this guarantee, it can be ensured that in case if the organization is terminated or dissolved, then as well various debts (if any) are repaid.
The main purpose of starting a company is to earn a good amount of profit. Therefore, it can be said that if this objective is not attained due to any reasons, then formation and establishment of the company would not be a success. There are various types of companies that the individual (client) can look to initiate, such as limited and unlimited liability; private and public; limited by guarantee and having share capital; community interests. All of them are very different from one another as their features and objectives also differ by a considerable margin (Taylor, 2012). A company can be termed as a limited one when the liability of the members is limited by its constitution. This essentially means that the company can borrow only a limited sum of money from the market which, if it is not able to repay, then would be recovered through assets that it possesses. On the other hand, in unlimited companies, members or the owners and company itself are separate identities in the eyes of law (Sheikh, 2013). For members of this company there is no limit to their liability. Companies can also be segregated on the basis of their purpose or objective. Private corporations are the ones where profit motive is placed very high. It is the main aim of the organization. In contrast to it, public companies are the ones which are owned and run by the government (Birds, 2007). Main purpose behind their establishment is public welfare. This means that they tend to provide the best products and services to the general people. They work for upliftment of the society. Law defines private company as one which is not a public company. On the other hand, public companies are the ones which are limited by shares. In this sense, it can be said that limited companies can also be known as public companies. Companies Act further states that organizations on whose registration paper it is stated that it is public firm, would be referred to as a public company (Alcock, Birds and Gates, 2007).
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Primarily there are two methods through which a company can end its operations in the market – either it is removed from list of companies by the registrar himself; or is gets dissolved. To strike off a company, either it or a part of its departments must not be functional for a considerable period of time. In such an event, the registrar can send a letter to the company seeking explanation of reason(s) why it is not operational. If any reply is not received within a month of sending the letter, then registrar can send a registered letter stating that no reply yet has been received. And even after there is no communiqué, then an official notice can be published in the gazette with an objective to remove the name of the firm from list of companies operating in market.
Business law is a very complex aspect of operations of an organization, mainly because of reason that there are a lot of aspects which are involved in it and have to be taken care of by management of the firm. By having a complete and thorough knowledge of the law, managers would be able to much effectively carry out their tasks and make the firm reach new heights. During the study, it was seen that to file a law suit and winning it is a very complex, tedious and time consuming task. Due to this very reason, lawyers nowadays practice concepts of Alternative Dispute Resolution, through which the case can be solved in a fast and efficient manner outside the court. Similarly, it was also noticed that managers, while negotiating or interacting with people belonging to regions that they do not belong to, experience culture shock and then attempts would have to be made to reduce them. Keeping frames of references can also turn out to be a very good and effective option.
A major focus of this study was paid on how partnership organizations and companies are formed and dissolved. To start the former one, two or more than two persons are required to invest money and share profits and losses in a predetermined ratio. It can be dissolved when any of the partners dies or retires. On the other hand, forming a new company is a very lengthy process, as a lot of steps are required to be fulfilled like proposing a name, list of names and addresses of the initial members, etc. But it can be dissolved or terminated only by registrar of companies.
- Berry, E., 2011. The Zone of Interaction Between Partnerships, LLPs and Human Rights in United Kingdom Law. Human Rights Law Review. 11(3).pp. 503-526.
- Birds, J., 2007. The Companies Act 2006 – revolution or evolution? Managerial Law. 49(½). pp. 13 – 15.
- Cross, F. and Miller, R., 2008. The Legal Environment of Business: Text and Cases -- Ethical, Regulatory, Global, and E-Commerce Issues. Cengage Learning.
- CROSSFIELD, A., 2004. CITY DISPUTES PANEL: SPECIALIST ARBITRATION FOR THE FINANCIAL SERVICES INDUSTRY. Journal of Financial Regulation and Compliance. 2(4). pp.331 – 339.
- Cruickshanka, K. Chenb, H. and Warren, S., 2012. Increasing international and domestic student interaction through group work: a case study from the humanities. Higher Education Research & Development. 31(6).pp. 797-810.
- Degenhardt, K., 2010. Companies Act 2006, Part 46. BoD – Books On Demand.