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Legal Environment Of Business

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Introduction: Legal Environment Of Business

The legal environment of business[1] plays a serious role in shaping the operations and strategies of businesses operating in the UK. This environment is shaped by a complex web of laws, regulations, and legal principles that are planned to make certain that businesses operate reasonably and equitably, and that the interests of all stakeholders are protected. In this report, the various aspects of the legal environment of business in the UK are examined by the key legal principles that govern business activities, including contract law, company law, employment law, and intellectual property law. The reports also analyze the impact of Brexit on the legal landscape in the UK[2] and how businesses can navigate this changing environment. Overall, this report aims to provide a comprehensive indulgence of the legal environment of business in the UK, and how businesses can operate effectively within this environment.

The relevant legal principles that govern the business environment that professional accountants operate within

Professional accountants operate in a complex and dynamic business environment, where they are subject to a range of legal principles that govern their actions and responsibilities. Professional accountants operate within a complex legal environment[3] that is governed by a range of legal principles. It is essential for professional accountants to have a thorough understanding of these legal principles and to comply with them at all times to maintain the integrity of the profession and to ensure that they provide high-quality services to clients. In this context, several relevant legal principles are particularly important for professional accountants to understand and comply with. These include:

  • Statutory Law: Statutory law is enacted by the government and has the force of law[4]. It includes laws such as the Companies Act and the Taxation Acts. Professional accountants must comply with these laws when performing their duties and providing services to clients.
  • Common Law: Common law[5] is derived from judicial decisions and is based on legal precedent. It includes principles such as duty of care and negligence, which are relevant to the work of professional accountants. For example, if a professional accountant fails to exercise due care and diligence in carrying out their duties, they may be liable for damages if their client suffers a loss as a result.
  • Professional Standards: Professional standards are established by professional bodies such as the Institute of Chartered Accountants in England and Wales (ICAEW)[6] and the Association of Chartered Certified Accountants (ACCA)[7].
  • Regulatory Framework: Professional accountants are topic to a choice of authoritarian necessities, including anti-money laundering regulations, data fortification regulations, and financial reporting regulations. They must comply with these requirements to ensure that they operate within the legal framework and maintain the integrity of the profession.
  • Fiduciary Duty: A fiduciary duty is a legal obligation to act in the most excellent interests of an additional party. Professional accountants have a fiduciary duty to their clients, which means that they must act for the greatest well-being of their consumers at all times and avoid conflict of interest.
  • Confidentiality: Professional accountants are required to maintain confidentiality to their clients’ information. This means that they must not disclose any private information without the client’s consent, except in certain circumstances where disclosure is required by law.
  • Due Diligence: Professional accountants must exercise due diligence when carrying out their duties[8] and providing services to clients. This includes conducting thorough research and analysis to ensure that the information they provide is accurate and reliable.

The essential legal principles of the English legal system

The essential legal principles relating to contracts are founded on common law, which is based on judicial decisions rather than statutory laws. Several key principles govern the formation, enforcement, and breach of contracts in the English legal system, including:

  • Offer and Acceptance: For a contract to be formed there must be a proposal by one party and acceptance of that offer by the other party. The offer must be clear, definite, and made to be legally binding. Acceptance must also be unequivocal.
  • Consideration: Consideration is the benefit or value that each party gives or promises to give to the other in exchange for the other's promise or performance. It is a necessary element of a contract and must be something of value, such as money, goods, or services.
  • Purpose to Create Legal Relations: The parties must have an objective to form permissible relations for a contract to be enforceable. If the parties are simply making a social arrangement or a promise between friends, there may not be an intention to create legal relations.
  • Capacity: The parties to a contract must have the capacity to enter into a legally obligatory agreement. For example, minors, persons with psychological incapacity, and those under the pressure of drugs or alcohol may need the capacity to come into a contract.
  • Legality: The subject matter of the contract must be legal. Contracts that engage in illegal behaviour or that are contrary to public policy will not be enforceable.
  • Misrepresentation: If one party make a false declaration that induces the other party to come into the contract, the contract may be voidable. The misrepresentation must be material and must have induced the other party to enter into the contract.
  • Duress and Undue Influence: If one party is forced or coerced toward the inside into a contract, the agreement may be voidable. Similarly, if one party uses excessive influence to persuade the other party to enter into a contract, the contract may also be voidable.
  • Breach of Contract: If one revelry fails to execute its obligations under the agreement, it may be liable for breach of contract[10]. The guiltless party may be entitled to damages or other remedies, such as specific performance or injunctions.

The essential legal principles of the English legal system relating to contracts are founded on common law and are designed to ensure that contracts are formed and enforced fairly and equitably. These principles provide a framework for parties to enter into agreements and resolve disputes when contracts are breached.

Case study about the essential legal principles of the English legal system

Some recent UK cases related to the essential legal principles of the English legal system, particularly relating to contracts. These cases demonstrate the relevance of the essential legal principles of the English legal system relating to contracts in recent years and the importance of these principles in resolving legal disputes in the UK.

  • Uber BV and others v Aslam and others (2018): This case[11] involved a legal challenge brought by a group of Uber drivers who argued that they should be classified as "workers" rather than self-employed contractors. The court ultimately ruled in favour of the drivers, holding that they were true "workers" and at liberty to pursue employment protections, such as least amount wage and holiday pay. This case highlights the importance of properly classifying the status of workers and the legal principles surrounding contractual relationships.
  • Lloyd v Google LLC (2019): In this case[12], a group of individuals sued Google over alleged data protection breaches. The claimants argued that Google had unlawfully collected their data without their consent and used it for targeted advertising. The court allowed the case to proceed as a representative action, meaning that one person can bring a claim on behalf of a larger group of individuals who have all been affected by the same issue. This case illustrates the importance of transparency and consent in contractual relationships, particularly when it comes to data protection and privacy.
  • Phones 4U Ltd (in administration) v EE Ltd (2018): This case[13] involved a dispute between mobile phone retailer Phones 4U and telecommunications company EE over the termination of a supply agreement. Phones 4U argued that EE had breached the agreement by terminating it prematurely, while EE argued that it had the right to do so because Phones 4U was in financial difficulty. The court ultimately ruled in favour of EE, holding that the termination was lawful. This case highlights the importance of carefully drafted contractual terms and the potential consequences of a breach of contract.

Range of issues relating to the general principles of business and corporate law

Business and corporate law[14] covers a broad range of legal principles that govern how businesses operate and interact with one another. The general principles of business and corporate law are essential to the success and sustainability of businesses. These principles cover a range of issues, including legal structures, corporate governance, directors’ duties, shareholder rights, contract law, intellectual property, competition law, and employment law. Businesses must ensure that they comply with these principles to avoid legal Barriers. Below are some of the key issue that occurs about the general principles of business and corporate law:

  • Legal Structures: Businesses can take different legal structures, such as sole proprietorships, partnerships, companies, or limited liability partnerships. Each structure has its advantages and disadvantages in terms of liability, tax, and regulation. Choosing the appropriate structure for a business is crucial to its success.
  • Corporate Governance: Corporate governance is the coordination of rules, practices, and processes by which a company is heading and prohibited. It covers issues such as the roles and responsibilities of the panel of directors, the connection amid the panel and administration, and the accountability of the company to its shareholders.
  • Directors’ Duties: Directors have a range of duties to the company, including a duty to act in superior belief and in the best interests of the corporation, a liability to implement realistic care and skill, and a duty to evade conflicts of attention. Failure to comply with these duties can result in individual liability for the director.
  • Shareholder Rights: Shareholders have definite rights, such as the right to choose on certain matters, the right to accept dividend, and the precise to examine the company’s books and records. Shareholders also have the right to bring legal action against the company or its directors in certain circumstances.
  • Contract Law: Contract law[15] is fundamental to business and covers issues such as offer and acceptance, consideration, and breach of contract. Businesses must ensure that their contracts are properly drafted and executed to avoid disputes and legal action.
  • Intellectual Property: Intellectual property law[16] covers issues such as patents, trademarks, and copyrights. Businesses must ensure that they protect their intellectual property rights and do not infringe on the rights of others.
  • Competition Law: Competition law[17] is designed to promote competition and prevent anti-competitive behaviour. It covers issues such as price-fixing, market sharing, and abuse of dominance. Businesses must ensure that they comply with competition law to avoid fines and legal action.
  • Employment Law: Employment law[18] covers issues such as discrimination, harassment, and wrongful dismissal. Businesses must ensure that they comply with employment law to avoid legal action and reputational damage.


In conclusion, the legal environment of business in the UK is complex and constantly evolving. The legal framework that governs business activities is designed to ensure that businesses operate fairly and equitably and that the interests of all stakeholders are protected. The UK legal system provides a range of legal principles and protections, including contract law, company law, employment law, and intellectual property law.

Based on the analysis provided in this report, several recommendations can be made for businesses operating in the UK. Firstly, businesses should ensure that they are compliant with all relevant laws and regulations, and should seek legal advice where necessary. Secondly, businesses should prioritize the defence of their intellectual property, particularly in the context of increasing global competition. Finally, businesses should consider the implications of Brexit on their operations and should seek advice on how to navigate the changing legal landscape. In summary, while the legal environment of business in the UK can be complex and challenging, with the right approach and guidance, businesses can thrive in this dynamic and innovative business environment.

[1] RE Meiners, AH Ringleb, FL Edwards - 2022 . The legal environment of business (Online).< https://books.google.co.in/books?hl=en&lr=&id=xZ1OEAAAQBAJ&oi=fnd&pg=PP1&dq=legal+environment+of+business+&ots=cQZ2HloG66&sig=MXrZ4B76Jk4k-ohsBYLdx3IR7pk&redir_esc=y#v=onepage&q=legal%20environment%20of%20business&f=false> accessed on 30.03.2023.

[2] "Brexit: Implications for the UK Legal System" by the UK Constitutional Law Association: https://ukconstitutionallaw.org/2016/08/08/paul-daly-brexit-implications-for-the-uk-legal-system/

[3] BPP Learning Media Ltd, 'Chapter 1: The Legal Environment' in AAT Professional Diploma in Accounting: Synoptic Assessment Study Text (BPP Learning Media Ltd 2019) para 1.4.

[4] Derrida J. Force of law: The “mystical foundation of authority”. InDeconstruction and the Possibility of Justice 2016 May 13 (pp. 3-67). Routledge.

[5] Llewellyn KN. The common law tradition: deciding appeals. Quid Pro Books; 2016 May 21.

[6] "Brexit: The Legal Implications" by the Law Society of England and Wales: https://www.lawsociety.org.uk/topics/brexit/brexit-legal-implications

[7] Adams C, Druckman P, Picot R. Sustainable development goals disclosure (SDGD) recommendations.

[8] Bonnitcha J, McCorquodale R. The concept of ‘due diligence’in the UN guiding principles on business and human rights. European Journal of International Law. 2017 Aug;28(3):899-919.

[9] Wang L, Wang L, Zhang M. Contract?Based Knowledge Protection and Cooperation Performance: The Effects of Technological Turbulence and Legal System Completeness. British Journal of Management. 2022 Oct;33(4):2033-51.

[10] Barnett RE, Oman NB. Contracts: Cases and doctrine. Aspen Publishing; 2021 Jan 31.

[11] Uber BV and others v Aslam and others [2018] EWCA Civ 2748

[12] Lloyd v Google LLC [2019] EWCA Civ 1599

[13] Phones 4U Ltd (in administration) v EE Ltd [2018] EWHC 49 (Comm)

[14] Pollman E. Constitutionalizing corporate law. Vand. L. Rev.. 2016;69:639.

[15] Smits JM, editor. Contract law: a comparative introduction. Edward Elgar Publishing; 2017 Jun 30.

[16] Bently L, Sherman B, Gangjee D, Johnson P. Intellectual property law. Oxford University Press; 2022 Nov 9.

[17] Whish R, Bailey D. Competition law. Oxford University Press; 2021.

[18] Carlson R, Duff MC, Flake DF, Bales RA. Employment law. Aspen Publishing; 2023 Jan 2.

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