Qualification - Higher National Diploma in Business

Unit Name - Business Law

Unit Number - Unit 7

Assignment Title - Running a business with related legal concepts

Learning Outcome 1: Explain the basic nature of the legal system

Learning Outcome 2: Illustrate the potential impact of the law on a business

Learning Outcome 3: Examine the formation of different types of business organizations

Learning Outcome 4: Recommend appropriate legal solutions to resolve areas of dispute

Running a business with related legal concepts

Executive Summary
The report focuses on the legal issues, concepts and advises for issues related to legal and the report concentrates on the case of the client Marvin Lee who is willing to open a store of cafe chain in Hong Kong and the client is requesting the advice of legal for issues associated to legal. In the meantime, the client is looking for an exact location for his restaurant cafe and getting ready to employ office staff and work force to run the business but the client does not aware whether there is definite order for controlling health and safety, recruitment for the environment of working space and the client also as various queries related to the issues in business opening and functioning. Hence the underlying queries are answerable by the hired consultant. The questions include exploration of answer to the concepts like fundamental nature of legal system, representing the probable influence of law over the business, observing the various kinds of business organisations formation and appropriate legal solutions recommendations to solve dispute areas.

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Assignment Brief

You are a solicitor and working in a famous legal professional consultancy firm as a legal consultant. One day, your potential client, Marvin Lee, who is planning to open a café chain store in Hong Kong and asking for your legal advice for related issues. Meanwhile, he is seeking an appropriate place for his café restaurant and preparing to employ working labour and office staff for his business running. But he does not know whether there are certain ordinances for monitoring the recruitment, health and safety for working environment. He has lots of inquiries about the problems in opening his business.


This report is a report offered to the client Marvin Lee as a consultancy report to offer legal advices related to the legal issues and the client also requires the city labour law consultancy, Hong Kong legal system and the distinction between the city criminal and civil law and the government role in making law with the city judiciary, recognizing the issues of tort and protection law of consumer to eliminate unwanted liabilities in near future, regulation on competition and making sure on work force safety against any associated government regulation. The client data also requires the support of literacy on the computer; hence the client also needs security guidance and concern on data protection and contract ordinance knowledge for employment agreements with various employees on the organisation. The client also requires further assistance or guidance on the formation of corporate or business to be set up and registered and the client has various choices which includes partnership, sole proprietorship, company, etc,. The client also requires more legal solutions for various kinds of disputes from the zone of issues related to commercial property, employment and commercial and corporate issues. As an end result, the legal advisor or the consultant is needed to explore the advice related to terms of citizen to the client with the ADR - Alternate Dispute Resolution role in the region Hong Kong. The issues related to the client Martin Lee is explored in this report in detail wit subsequent exploration and adequate resolution

Therefore, you are hired and are preparing to answer his following questions.

1) He requests a clear and detail of legal environment / system of Hong Kong and the differences between civil and criminal law. How does the role of Hong Kong government in law-making together with the justice system and the organization of the judiciary. Therefore, a precise structures of HK jurisdictions and the structures of the court together with a series of legal knowledge, such as statutory law, common law and equity and the principles of company law and contract are required to introduce to Mr. Lee.

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Suggestion of legal opinion in relation to the Hong Kong legal environment

The Hong Kong city has an own framework for legislative and an independent judiciary and it has a completely independent system of legal from the China Mainland. The legal system of the region Hong Kong offers a heavy assistance to its competitive and free markets. The region has a system of court to make sure that the established contracts are imposed and offers an efficient resolution for any sort of issues and for setting up a business or a company, there is only a minimal legal procedure. The proceedings of civil is instituted for civil laws to provide security and restore properties or to insist on obligations and the Hong Kong proceedings of civil is established by the government towards the private organisations and individuals and established by individuals or private organisations towards the government and can be introduced by individuals towards the other individuals while the proceedings of criminal is established for criminal laws which is explored under the Hong Kong Special Administrative Region HKSAR which projects to overcome crime and penalize the offenders. When the proceeding of civil is considered, a jury is available to identity the proof standard has per the probabilities and possibilities and represented by the defendant or the plaintiff. Under the Hong Kong civil law regulations, law of tort, contract law, revenue, property, administrative and family are enclosed. The property rules law over the properties rights and ownership incorporates most of the assets like building, land, copyrights, trademarks and patents and the law of contract is associated to contract established between the corporations and individuals as an element of their day to day business activities, concerns in the tort law emerges because of the duty of care breach which is taken with the responsibility from 1 individual to an another. The law related to administration focuses to safeguard the individual from the power abuse of government or bodies of public. The laws related to family is concerned with custody of children, couples divorces, etc. At last the laws related to revenue are proposed to control the recovery and assessment of taxes and duties (Ho, 2016). With the represented civil laws in various divisions, the property laws, law of tort, contract law, revenue law and administrative law can be implemented or applied in a few ways to the client Mr. Martin Lee Cafe restaurant business

It is the responsibility of the HKSAR government secretary of Justice to take care of criminal laws. In the case of criminal law, the prime decisions are considered from the decisions of secretary. To support proceedings, it is decision of the secretary to identify whether the proof or the evidence is appropriate and in the case yes scenario, in the public interest, prosecution is needed. The executives of the government are free from the secretary of justice. The client may incur certain scenario related to criminal cases like rape, murder, robbery, manslaughter, offences of drugs, etc which are to be filed in opposition to the offender. The client is needed to be aware of the proceedings of both criminal and civil laws clearly when issues arise due to criminal or civil offences. As a whole, there are numerous China laws which are amenable to the region of Hong Kong too that are enclosed in the Hong Kong city Basic Law. The Hong Kong government structure adheres the level or chain of command in which the chief executive officer is considered has head of HKASR. The government of Hong Kong is trusted by the laws of basic with the authority of introducing and preparing motions, legislations and bills in the SAR - Special administration Region of Hong Kong. To implement the budgets, basic law, promulgating laws and signing bills and effective date's declaration tasks, the executive council and the chief executive officer are entrusted. The legislative of HKSAR is the legislative council that has a particular formatting methodology which are recommended by the Law of Basic which offers a certain rules and regulations for passing motions and bills. The council of legislative generates budgets and bills, approves budgets, creates laws and incurred public expenditure and controls and monitors the entire functioning of the Hong Kong government. Under the Hong Kong Basic Law, there are numerous sub laws which include Rules of Equity and Common Law, Statutory Law, etc. The rules of equity and the common law jurisdictions hold a collection of filed cases which are handled by judges over many years and all these cases explore the principles of legal form which includes freedom of assembly, freedom from arrest, speech freedom, etc. Now all these laws of cases have been underpinned with the Basic Law provisions. The local law of the Hong Kong statue law is employed to create a legislative under the power or authority delegation which is termed has legislations of subsidiary (Ho, 2016)

In case the client is planning to launch a new company in the region of Hong Kong, the company must be controlled by the ordinance of new companies which were initiated in the year 2004 which offers a progressive and new amendment to the earlier legislation. The company associated information are significant as it influences the important issues in the formation of company and the way of its operation. The old legislation of the ordinance of the company governs the disqualifications and winding up of official and insolvency legislations, etc. On the other and, the law of contract could interlink the client as the business legal owner to satisfy the agreements otherwise it may proceed to the proceedings of civil. Consequently, by considering the overall knowledge of the different kinds of laws and the information governed by every division of law, the client may begin his functionalities by keeping in mind to follow all applicable statutory measures.

2) When Mr. Lee starts his café business, fundamental negligence in tort issues and consumer protection ordinances are required to recognize in order to avoid certain unnecessary liabilities being arisen in future. At the meantime, competition ordinances in Hong Kong are also required to introduce to him in ensuring a fairness competition during the business operation. Also health and safety issues for his employees/labours are required to set up in order to ensure all employees inside his organization are under protection and without against the related regulation of Hong Kong government.

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Assistance or Consultancy related to consumer protection, issues related to tort, employees and competition ordinances

Towards the protection of consumers, the Hong Kong region has various regulations which incorporate the safety ordinance of consumer goods and the goods sale ordinance. In Hong Kong, it is not strict that the liability under tort. In the case that the consumer is given with unsafe or faulty products or services, the consumer can file a case towards the unit of business which can be legally accountable for imprisonment and fine or both as per the scenario happened. The penalty can go as much as of hundred thousand HKD for initial conviction and moves up to 5 times the penalty for conviction consequently. The client is required to aware that it is possible to incur a liability of civil in the case of negligence of tort. Suppose the client is not able to take care adequately of his work forces to make sure protection towards safety precautions in the zone of restaurant and kitchen and in case the client fails to fulfil or obey the agreements terms as per contract wit the suppliers, employees or any other parties, the client can be accountable legally towards the contract breach. In addition, in case that the client offers food which does not satisfy the certain requirements of goods sale ordinance under the Hong Kong Law in Chapter twenty six, the client may be fall under the statutory duty breach (Yu-Hsin, 2019). In case that the claimant approved in the court of civil that the client or is restaurant cafe has a care duty and the duty is breached which may proceed to the plaintiffs injury and has arrived damage and injury to the plaintiff because of the client negligent act then the client may be moved to the court of civil for law breaches. Towards the tort, it is not very strict on the liability; the parties who are injured can claim only the negligence recovery or contract breach of the defendant. The client will be accountable to the services or goods buyer towards the goods sale ordinance in the case of sale of bad quality or defective product or services or goods are found. The client is also accountable for such negligence or act on his part in these cases towards tort. Under CAP 619, turning to the ordinance of competition, the ordinance restricts the completion prohibitions in the Hong Kong city via 3 regulations. This regulations is completely effective from the year 2015. The first and second rule of conduct restricts the agreements of anti competitive and market power respectively. In the economy of Hong Kong these regulations are applied completely. At last the rule of merger restricts the anti competitive merger and acquisitions which suits to the license holders only under the coverage of ordinance of telecommunication (Ho, 2016)

Under the labour legislation chapter 57, the Hong Kong employment conditions are covered which is termed as the ordinance of employment. From the year 1968, the ordinance is offering considerable advantages and security to the work force. The protection and benefits incorporates the paid leaves, wage protection, holidays wit pay, rest days, paternity leave, maternity and sickness allowances, severance payment, long service payment, termination of contract wit work forces and protection towards the anti union discrimination and the law restricts strictly the children below the age of 15 from working in an enterprise or an industry. The agencies of employment are needed to receive a license from the department of labour to carry out business of job placement. The taxation system is simple in the Hong Kong with respect to salaries tax, taxation, property tax, profits tax and stamp tax

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3) As Mr. Lee's business will be running with the aid of computing literacy, therefore, a set of software security and data protection issues must be under consideration for his guidance.

Issues related to information technology data security and protection

Under the CAP 486, the protection of data legislation in the region of Hong Kong is enclosed as the ordinance of privacy or personal data which is shortly termed as PDPO. When it is not possible to go with the protection of data legislation will proceed with bad actions towards the users of data in front of the commissioner. There are regulations in Hong Kong which influence the protection of data. For an instance, certain regulations permit the various bodies of government to take users personal data and they are permitted even to reveal personal data. The commissioner is permitted under the section forty four to obtain personal or individual information when the data is needed for an examination .Beyond these regulations, there are certain various ordinances such as communication interception and surveillance ordinance which permit the top level officials to seize database and perform surveillance or need work force to provide information about employees. The laws such as counter terrorist financing and anti money laundering offer the regulators and the top level official the authority of revealing information related to financial crime. There is no other law that safeguards data related to Information technology in the region of Hong Kong other than the ordinance of privacy or personal data (Kong Shan Ho, 2017)

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4) Since Mr. Lee will recruit a team of employees, including restaurant attendances and office administrative staff (e.g. for accounting, marketing, management and human resources departments), a detail and precisely contract law concept (e.g. employment contract, dismissal, redundancy and discrimination ordinances etc.) must be catered to him. (LO2)

Work Force or Employee Contract Law Concept
When the ordinance of employment is considered, the contract of employment can be written has well has verbal. When both the cases are considered, the work force gets advantages over their permissions and benefits and rights are safeguarded by the ordinance. The Hong Kong ordinance of employment offers many advantages and safeguard only to permanent workers or employees through the contract in a continuous basis. The term of contract may or may not give the period of contract which specifies fixed or open term. The term of open contract is treated for the period of month and it has to be renewed in a monthly basis. In Hong Kong it is not very common that hiring by the agency workers and the employment can be terminated easily by the employers. The period of probationary is not having any control and the notice is not offered by the employers prior to the employment contract ends. In addition, in the region of Hong Kong , there is no regulation related to the working periods but the city offers annual leaves, statutory leaves or holidays and in a week there is one day off for taking rest. The work force are allowed to take annual paid leave to the maximum of 14 days and the work forces are also allowed to take sick leave for maximum of one hundred and twenty days and they are allowed for maternity leave to the maximum of 10 weeks and the paternity leave is offer for 5 days. At present the wage of employee is determined as HKD of thirty four and which is anticipated to rise to HKD of thirty eight. The plan of default pension is a fund of mandatory provident which is mandatory to be registered within the initial 60 days of employment and the least employee and employer contribution separately is five percentage of the income of employee with subject to the limit of HKD of 1500. The discrimination related to marital status, sex, disability, family race etc are prohibited strictly in the region of Hong Kong. Under the jurisdiction of Hong Kong labour Tribunal, disputes of any form related to breach of employment or employment contracts ordinance are covered and there is no representation legally permitted in the Tribunal and the workforce can join freely in the trade unions but the representation of union is completely minimum. There is no provision for job to work forces of their competitors by the competitors. In Hong Kong the employment termination is very simple and the notice period varies from the minimum 7 days to a month based on the terms of contract. When there is any kind of dismissal unreasonable, in which the employer sends away the work force without any reason of valid, as per the ordinance of employment the employer can claim the remedy (Kong Shan Ho, 2017). Consequently, the client has relatively a few duties related to ordinance of employment if not the client violate any of the law

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5) As Mr. Lee is still considering whether he should set up the firm in form of sole proprietorship or in partnership/limited companies, you are required to distinguish the differences (advantages & disadvantages) of these three types of companies. A detail set up procedures in forming a company including registration, raising capital and liquidating process are required to illustrate for Mr. Lee's consideration.

Various option for Cafe Registration

There are various options available for the client to register his restaurant. It can be form of partnership, sole proprietorship or company under the ordinance of companies. Business firms or company are sole proprietorship that is least requirements. Public limited company suits for huge business houses, common partnership where share holders take complete liability and in the limited partnership partner has liability in an unlimited way where in the private limited company suits for different category of businesses and it is most famous. The business environment is improved in Hong Kong through the ordinance. There is existence of relaxations pertaining to documents preparation, audits and accounts, duties and appointment of directors and company's administration and transaction of share capital. As the liabilities are very less and simple in the legislation of Hong Kong, the client can go for sole proprietorship. If the client goes for limited liability, it involves more cost and the public limited is suggested in later years when the business is turned into an established one (Kong Shan Ho, 2017). The underlying steps are to be followed when the client goes for registering his company

Decide the company name and its type
Go for CR e filling or e registry for registration process
Once approved, business registration document and incorporation certificate can be collected or downloaded

The client is required to see the department website of industry and trade to receive permits, licenses and approvals for various categories of business functionalities, once the registration is performed

At the corporate registration stage, the funds can be obtained via issuing preference shares, equity shares, bonds and debentures. The client can also believe source of funding through long term debt
To process the liquidation process, a liquidator is to be fixed on the liquidation

The client needs to make sure that the accounts books are closed and shareholders authority towards liquidation via resolution of extraordinary passed at the meeting of shareholders

In case the company is not capable to clear the debts, or the court orders the company to close or the court identifies the company is equitable, there can be wind up of the company mandatory through the Hong Kong high court

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6) As recently there have been lots of negative news about the failure of faithfulness among some companies' directors, you are required to write for the role of the shareholders, a usual practice in appointing directors, company secretary/auditor and their responsibilities.

Auditors, company secretary and Director Appointment

The director has the authority on the organisation affairs and business based on the article of association and company ordinance provisions and the director can be fixed in an organisation through the manner of executing an effect of an ordinary resolution or through other existing director unanimous decisions. It is the duty of the shareholders to make sure that the directors perform in the business best notion. In case the director fails to satisfy the duties of a director, then the director may be un qualified under law. In case the director performs major misconduct, then the director may be punished appropriately under the criminal or civil law. The name of the director, residential information and passport information are recorded in the registry of company once company director is trying to register. In case the director is not succeeding to adhere the responsibilities and duties in the role of director, then the director can be eliminated through executing a normal resolution in the meeting of shareholders (Yu-Hsin, 2019). It is to be informed to the register of the company related to the removal of director within the fifteen days period of time from the removal. As per the ordinance of the company under the section one of 131, the companies in the Hong Kong are compulsorily needed to recruit an auditor. Before the yearly general meeting, it is necessary to be arranged with an auditor and retain the office until the meeting ends. In case of auditor is recruited, the auditor may be utilized for the meeting of shareholders

If the auditor is got appointed, he can be appointed at a shareholder's meeting. An auditor can be re-appointed at the next annual general meeting (Yu, 2005). The duties and responsibilities of auditors include auditing the books and records of the company, auditing the profit and loss account and balance sheet and identifying any risk of possible threat or issue like misstatement, fraud etc. and ensuring that the financial statements present true and fair view. If the auditor fails to comply with his duties, he can be dismissed from the role of auditor and a new auditor can be appointed at the next meeting.

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7) Highlight the general legal solutions for different types of dispute, such as:

- Area of employment (e.g. health & safety and equality of pay claims, compromise and severance agreements, wrongful or unfair dismissal claims);
- Corporate and commercial disputes, e.g. breach of contract, contesting a damages claim and dispute between directors;
- Commercial property problems, e.g. commercial lease transactions, real estate and investment properties.

Common legal solutions to handle disputes

Hong Kong is a pioneering centre in relation to the resolution of disputes. The region has sound system of legal with more number of professionals, links with China mainland and supports government and has better geographic boundary. The ordinance of employment is employed in the case of any issue among the employee and the employer. In the same way, ordinance of company is employed to handle the disputes among the directors. The pretender can approach a criminal court or civil court which is appropriate to file a case. The pretender is required to offer an evidence for the raising issue. There are specific law such has fixing holidays thresholds and working hours, guidance of minimum wage, etc. this makes sure parity pay and proper and health safety for work forces. If there is any issues, the organisations or the company proprietor are left which no option than to end the services of specific work force in the region of Hong Kong (Low, 2017). The closing process is completely simple. In case of contract disputes pertaining to claim of damages, the final decision lies with the court to decide the fate of the defendant in the same way equivalent chance is offered to the defendant and the pretender to move forward their statements of defending. In Hong Kong the issues related to property is covered by the property law

8) Also explain the terms of Citizens advice and the role of Alternative Dispute Resolution (ADR), e.g. specific tribunals or the role of unions etc., to your potential client if there is any dispute occur during business operation in future.

Role of ADR - Alternate Dispute Resolutions and the Citizens advice terms

The citizens in the region of Hong Kong receive legal assistance and advice from the court in case of any issues. The citizen affected may arrive to the department of legal aid for legal assistance for dealing to the court of district, magistrates' courts and courts of upper level. There are different courts in the region of Hong Kong which includes appeal court, first instance court, district court, final appeal court, coroner court, magistrates court and review tribunal for mental health (Low, 2017). From the department of legal aid the non residents and the residents in the region of Hong Kong can state resolution for the disputes. Supplementary legal and the ordinary legal aid scheme are the 2 legal schemes to aid and cover civil cases. The general form of resolutions to dispute alternatively focuses on the mediation, counselling, arbitration and conciliation. The major form of issue resolution is mediation. With the approval of 2 parties, a 3rd party is recruited to resolve the issue with the private and voluntary processes of ADR which saves times and it is cost effective relatively to the litigation and it has the business relationship preserving power among the parties disputed. Hence, the ADR is good when related with litigations as the ADR offers definite resolution and results with cost efficient


By knowing the variant ordinances and laws pertinent to the region Hong Kong, the client Mr. Martin Lee can develop a plan for his business to initiate the business operations as fast has can. The client needs to finalise the business plan by considering the variant rewards and risk alternatives. By employing ADR disputes can be settled down easier and the citizens must avoid running towards courts to solve the issues. As an end result, the client Mr. Martin Lee can run his business and grow by understanding and knowing the laws pertaining to the region of Hong Kong.







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Learning Outcomes and Assessment Criteria:

Learning Outcome




LO1: Explain the basic nature of the legal system

P1: Explain different sources of law and laws that organizations must comply with.


P2: Explain the role of government in law-making and how statutory and common law is applied in the justice courts.

M1: Evaluate the effectiveness of the legal system in terms of recent reforms and developments.





D1: Provide a coherent and critical evaluation of the legal system and law, with evidence drawn from a range of different relevant examples to support judgements.

LO2: Illustrate the potential impact of the law on a business

P3: Using specific examples illustrate how company, employment and contract law has a potential impact upon business.

M2: Differentiate and analyze the potential impacts of regulations, legislation and standards.

LO3: Examine the formation of different types of business organizations


P4: Suggest appropriate legal solutions for a range of business problems e.g. termination of contract, rescue from insolvency and liquidation.


P5: Provide justifications for the use of appropriate legal solutions.

M3: Assess the positive and negative impacts of legal solutions to business problems.

D2: Critically review and evaluate the use of appropriate legal solutions in comparison with alternative legal advice.

LO4: Recommend appropriate legal solutions to resolve areas of dispute

P6: Recommend legal solutions based upon a different country's legal system and/or a different legal framework.

M4: Compare and contrast the effectiveness of these recommendations.

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