HND_商法outcome3

1.Actually Sole trade illustrates a person business in which the take full responsibilities in both
managing and having the possession of the business.
Advantages
Because there are no legal formalities, naturally the business is easy to set up
Usually, the sole trader could take all key decisions without concerning other unnecessary effects
It is the simplest form of business organization recognized by Scots Law. The only one who takes responsibility for the owner is himself.
It is convenient for owner to keep personal touches with customers.
The owner could keep all the profits because he owns the company.
Disadvantages:
Unlimited liability: The owner has unlimited liability for all debts or obligations owed by the business if the business fails.
His business is firmly associated with his personal possession which means he maintains a lot of pressures in raising finance.
Intense competition will lead the company lacking of continuity and worry about the pressure from larger units.
As the owner of the business.
All major business decisions can be taken by X
X has rights to lay down contracts and decisions about the management of the business.
If the business is a success, X will share all profits. If not, he will be responsible for every penny owed. (可写可不写，X代表公司名字）
Partnership is a business operated by 2 or more people, in which each partner contributes something to the business, whether it be a skill or merely capital investment.
Advantage:
Comparing to sole trader, partnership is much easier to raise finance and attract investment.
Because two or people can have more ideas than one, partnership would take less risks in managing.
It is an undeniable fact that it maximize the possibility to introduce limited liability.
Disadvantage:
For some situations, partners might have conflicts in managing decisions making.
Partnership is normally sued for its debts first. All debts owed must be separated to all other partners equally.
The liability of the partnership is normally unlimited.
The capital is limited because of lack of finance.
According to Partnership Act 1890, the right of partners in the running of the business and decision making is equal. Every partner’s act can bind the firm and their partners, and it is the partner’s implied authority. If this is not the case, the other partners have to their customers.
pany is an organization that has been incorporated under Companies Act 2006 and must
follow extensive legal requirements when setting up the business.
Advantage:
Limited liability: The members of a company are not responsible for the company’s debts without agreement. The way the members have made the risk lowest and cannot be asked to make contribution to further finance, especially when it’s in debts.The only responsibility for the debts is the investment in the company.
Separate corporate personality: The Company becomes a separate legal person different from the members.
The company can have assets, sue and be sued and takes responsible for company debts.
The company has legal rights and becomes a part of contract which in participate in.
The ownership can be exercised by company over property.
Salomon V A Saloman& Co Ltd (1897)
Mr. Aron Salomon made leather boots and shoes in a large Whitechapel High Street establishment. And he set up a company with his partners. But the business was not successful and ended up with liabilty of ￡7,733. The company’s liquidator claimed that the company’s business was still Salomom’s.
The original judge agreed with the liquidator.
The Court of Appeal agreed with the liquidator stating the principle of limited liability was privilege conferred by the Companies Acts only on genuinely independent shareholders and not on “one” substantial person and six mere dummies.
It is easier to raise finance than other business and has less involvement.
The ownership and control are separated to members.
Disadvantage
There are extensive legal requirement when setting up the business.
It must be registered and comply with Companies Act 2006.
3.Sole trader
There are no formalities and agreements needed or documents to be registered. Just do the business when you want, in the common law.
Partnership
A agreement about the details of the duties and obligations and authority of partners is needed.
Partnership is leaded bu the Partnership Act 1890, if there is no agreement.
The treats to all partners of the act are equal in the managenment of the type of business.
Limited Company
It is the most difficult to set up because of the extensive legal requirement.
The document and application must be sent to Companies House and be registered.
Under previous Companies Acts, every registered company was required to have a memorandum of association.And now, it plays a minor role in company formation,providing the name of the company, the registered office address, items which must be kept at the registered office, statement of limited liability, capital clause, statement ofproposed officers, statement of compliance.
It is mandatory for acompany to have articles of association., which are the regulations for the inrerna arrangements and the management of the company.
Some fees are needed to pay for the process.。