Business Law Questions: Introduction to Business Law

PART A

1.         Which legislation governs the formation of a business partnership in England and Wales?

2.         What are the main features of a business partnership?

3.         Which legislation governs the formation and management of a limited company in England and Wales?

4.         What is meant by a limited company being a separate legal entity having a legal identity separate from its owners?

5.         What is it that is ‘Limited’ in a limited company?

6.         What might happen to a limited company that cannot pay its debts but has substantial valuable assets?

7.         What happens when a partnership cannot pay its debts?

PART B

Please read the following scenarios and identify any legal issues.

Scenario I

Aaron, Bethany and Clair go into business together to produce a play after being advised that they will make a lot of money.  They do not form a company or create any documentation to describe the nature of their business.   Aaron and Bethany order expensive costumes from a theatrical costumier and hire actors on a monthly salary.  The project is abandoned when Clair discovers that Aaron and Bethany have no money.  The costumier is now demanding £5,000 for the cost of the costumes.

a)      Does Clair have any legal liability to pay?

b)      Does it make any difference to the contract with the costumiers that the play was never produced?

c)      Can Clair refuse to pay because she did not give permission to Aaron and Bethany to make contracts with the costumiers of the actors?

d)      If Clair does have a financial liability to the costumiers how much is she obliged to pay?

Scenario II

Abdul, Basil and Clarissa intend to open a restaurant specialising in Middle Eastern food.  Each has a capital of £25,000 and they all own their own homes.  Abdul is an expert in Middle Eastern cookery, Basil is a qualified accounting assistant and Clarissa has several years of experience in hotel management.  They have thought about making the business a partnership and have come to you for advice on which business model would best suit them.

a)      If the business is started as a partnership how would you advise them as to their contributions to the running of the business?

b)      What kind of a document would need to be drawn up?

c)      What is the most serious risk to the partners if the business fails?

d)      What kind of a business model would be better suited to this kind of business and why?

PART C.

In groups of three come up with a business idea and put together a plan for how you will structure your business.

This can be in the form of:

a)      A partnership

b)      A Limited Liability Company

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