Concise notes on the pre-programme reading for Business Law & Practice (BLP). These notes formed an excellent basis to begin BLP, helping me achieve 75% in the exam.
Have you left the pre-programme reading to the last minute? Don't stress. These notes cover everything you need to know AND then ...
BLP pre-module reading
Section 1: Considerations when starting a business
1. Why businesses are set up
• To make a profit
2. The requirement for a business to raise finance
• Businesses need to raise finance for a number of reasons
including: purchasing premises; employing staff; obtaining
professional advice; and growth and expansion.
• Businesses raise finance in four basic ways
• Owners may invest capital
• Outside investors may invest capital in order to share in its
future profits
• Borrowing
• A proportion of profits may be retained rather than
distributed to investors and owners
3. The different ways of carrying on a business, including some of the
factors influencing the choice of business medium
• Types of business media
• Sole trader
• Legal status
• Sole trader and business are one and the same
entity
• Unlimited personal liability
• Relevant legislation
• No specific legislation, governed by relevant
commercial and tax legislation, common law
and accounting rules
• Unlimited personal liability to third parties
• Partnerships
• Wide definition in S1 Partnership Act 1890 with no
intention needed-> clients may be conducting
business as a partnership without even knowing it
• Many types of partnerships e.g. informal family
businesses to large law firms
• Legal status
• No separate legal identity -> technically unable
to own property or enter into contracts
, • Individual partners will conduct legal action in
their own name e.g. they will own property
jointly
• Relevant legislation
• Partnership Act 1980
• Other relevant legislation and the common law
• Unlimited personal liability to third parties on either a
joint, or joint and several, basis
• Limited partnerships
• Some partners are not liable for the debts and other
liabilities of the partnership -> ‘limited’ partners vs
‘general’ partners (need at least one of both)
• 6 April 2017 new sub-category -> private fund limited
partnership -> a list of permitted activities in which
limited partners can be involved in without being
“involved in management”
• Legal status
• No separate legal identity
• Relevant legislation
• Limited Partnerships Act 1907
• Liability to third parties
• Limited partners have limited liability, but only
if they are not involved in the day-to-day
management of the partnership
• If they become involved, they lose their limited
status and become general partners =
unlimited personal liability
• Limited liability partnership (LLP)
• A hybrid -> flexibility of a partnership with the added
advantage of limited liability
• Legal status
• Separate legal entity, it is a body corporate
• LLP may own property, enter into contracts,
and sue and be sued in its own name
• For tax purposes, it is treated as a partnership
and members are taxed as partners -> each is
liable to pay tax on their shares of income or
gains
• Relevant legislation
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