BUSINESS LAW

ACCESSOR: PHAM HOANG HIEN

WRITTEN BY: PHAM HUU KHAI
ID NUMBER: B180032
1ST ASSIGNMENT OF BUSINESS LAW
TITLE: A1: LEGAL CONSULTANT TO A NEW BUSINESS ENTERPRISE
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 Table of content

Contents
Introduction .................................................................................................................................................. 4
Learning outcome 1: Explain the nature of the legal system. .................................................................... 5
I. An explanation of the English legal system. ........................................................................................ 5
1. Public law:......................................................................................................................................... 5
1.1 Constitution Law: ..................................................................................................................... 5
1.2 Administrative Law: ................................................................................................................. 5
1.3 Criminal Law ................................................................................................................................. 5
2. Private Law or Civil Law ................................................................................................................... 5
2.1 Contract Law ............................................................................................................................. 6
2.2 Tort Law .................................................................................................................................... 6
2.3 Property Law ............................................................................................................................ 6
2.4 Trust Law .................................................................................................................................. 7
2.5 Family Law ................................................................................................................................ 7
II. An overview of the different origin and sources of law ..................................................................... 8
a. Constitution ...................................................................................................................................... 8
b. Parliament (legislation) .................................................................................................................... 8
C. Judicial Precedent (judge-made case law) ...................................................................................... 9
D. Common Law .................................................................................................................................. 10
E. Equity .............................................................................................................................................. 11
F. Human Rights Legislation ............................................................................................................... 13
III. A briefly explanation of the “trias politica” model, the roles and responsibilities of each branch
in the governance of a nation, particularly the role of government in law-making. .............................. 15
A. Explanation of Trias politica, the roles and responsibilities of each branch in the governance of
a nation ................................................................................................................................................... 15
B. Explain the role of government in law-making process. (UK government) .................................. 17
IV. An explanation of how business law is applied to the running of a company. ........................... 19
A. What is business? Classification of business organizations and its characteristics ..................... 19
1. What is business? ....................................................................................................................... 19
2. Classification of business organizations and its characteristics ............................................... 19
B. How is business law defined? How is business law applied to each type of business
organization? .......................................................................................................................................... 23

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 1. How is business law defined? .................................................................................................... 23
2. How is business law applied to each type of business organization? ...................................... 23
V. An overview of the sources of law that organizations must comply with. ...................................... 32
a. Business license .............................................................................................................................. 32
b. Employment Laws .......................................................................................................................... 33
c. Tax Law ........................................................................................................................................... 34
d. Intellectual Property ...................................................................................................................... 35
e. Workers' compensation ................................................................................................................. 35
Learning outcome 2: Illustrate the potential impact of the law on a business ...................................... 40
Task 2: Mr. Nguyen Van Quyen proposes to open a new shoes manufacture company in Le Minh Xuan
industrial area when nCov-19 pandemic ends. As a legal consultant, you may give him some advises
of: ................................................................................................................................................................ 40
I. Which law should he consider when opening a new shoes manufacture company? ..................... 40
II. Process of opening a new business in HCM City, particularly in Le Minh Xuan Industrial Area. .... 42
III. What requirements does Le Minh Xuan Industrial Area require a new shoes manufacture to
meet if it wants to operate in this zone? .................................................................................................. 45
IV. Explain and evaluate the potential implications of law on a new business. ............................... 47
V. His customers are all from European Community (EU). There are some special quality standard
requirements for import products to this market, particularly shoes. As a legal consultant, how do you
explain the differences between laws in Vietnam and Quality Standard Framework in EU over
footwear products? Finally, what should he do to satisfy EU quality standard requirements on
footwear products? .................................................................................................................................... 50
1. EU legislation on Regulation and technical standards. (lefaso, n.d) ............................................. 50
A. EU regulations on footwear products (lefaso, n.d) ................................................................... 50
B. EU standards for footwear (lefaso, n.d) ..................................................................................... 53
2. Vietnam's legal system for footwear standards (lefaso, n.d) ....................................................... 54
3. Comparison of EU and Vietnam quality standard framework (lefaso, n.d) ................................. 55
4. Satisfying EU quality standard requirements on footwear products ........................................... 56
Conclusion .................................................................................................................................................. 57
References .................................................................................................................................................. 58
Bibliography ................................................................................................................................................ 58

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 Introduction
The purpose of this assignment is to provide the background knowledge, origin and source of
nature of the legal and apply business law to run of a company. Assume, I am working as a
position of Legal Consultant in a law firm. My responsibilities are to advice on legal systems,
legal requirements for new startups that they are required meet, known and apply before
opening a business. In task 1, it is going to show the importance of the role of government in
law-making and explain trias politica model, the roles and responsibilities of each branch in the
governance of a nation, so UK is an example for this assignment.

This report also explain data on the laws and processes of opening a new business in Ho Chi
Minh City. Besides, this assignment gives the explanation and evaluation of key laws that should
be considered. In addition, Nguyen Van Quynh is an example for this task 2, I provide law and
process of opening a business and give Mr. Nguyen Van Quyen some recommendation about
legal requirement for opening a new shoe manufacture company in Le Minh Xuan industrial
area when nCov-19 pandemic ends. Then, I give some advice for importing product to EU
market.

The background knowledge, information in this paper will support in analyzing the elements in
laws in order to enhance one’s professional career in the future.

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Learning outcome 1: Explain the nature of the legal system.

Task 1:

I. An explanation of the English legal system.

1. Public law:

Public law is really important because of the unequal relationship between the
government and the public. A citizen may request a judicial review if they are not satisfied with
a decision of a competent authority. The government is the only body that can make decisions
on the rights of individuals and they must act within the law. (allaboutlaw, 2020)

Public law is concerned with the relation-ship between the state and its citizens. This
comprises several specialist areas such as: Constitution law, Administrative law, Criminal law.
(Allen, 2009)

1.1 Constitution Law:

Constitutional law relates to the operation of the British constitution. It includes issues such as
the position of the Crown, the combination and procedure of the National Assembly, the
operation of central and local governments, the civil rights and the civil liberties of each citizen.
(Allen, 2009)

1.2 Administrative Law:

There has been a dramatic increase in government activities during the last hundred years.
Programs have been introduced to assist ensure a minimum standard of living for everyone. In
addition, A large number of disputes arise from the administration of these schemes and an
administrative law, body of law, has developed to deal with the com-plaints of individuals against
the decisions of the administering agency. Besides, government agencies are involved, for
example, in the provision of a state retirement pension, income support and child benefits.
(Allen, 2009)

1.3 Criminal Law

Certain types of misconduct pose such a serious threat to the good order of society that they are
considered crimes against the whole community. The criminal law makes such antisocial behavior
an offense against the state and the offenders are liable to punishment. The state accepts the
responsibility for the detection, prosecution and punishment of offenders. (Allen, 2009)

2. Private Law or Civil Law

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Private law is primarily concerned with the rights and duties of individuals towards each other in
a legal system. This type of law refers to the relationship between individuals and governments.
Besides, this is also referred to as common law. It consists of the law of property and trust, family
law, the law of contract, mercantile law and the law of tort. In addition, the state’s involvement
in this area of law is confined to providing a civilized method of resolving the dispute that has
arisen. Therefore, the legal process is begun by the aggrieved citizen and not by the state. Private
law is also known as a civil law and is often the opposite of criminal law. (Allen, 2009)
2.1 Contract Law
Contract law is a body of contract governing law in England and Wales. It is an agreement made
between two or more people or business entities, including a promise to do something in
exchange for a legally binding benefit or advantage. It necessary to ensure compliance with a
promise or allowing the innocent party to enjoy some form of relief. Therefore, it is designed to
provide stability and anticipation, as well as certainty, to both buyers and sellers in the market.
(Allen, 2009)

2.2 Tort Law

Business today involves risk, both legal and financial. Tort law is a wrong in civil and
besides intentional torts, it also has unintentional tort (negligence). A tort is a civil injury designed
to provide compensation for injury to a legally protected, harming the rights and health of
people, tangible or intangible, interest, a clean environment, property, their economic interests,
or their reputations. (Allen, 2009)

2.3 Property Law

English property law mentions to the law of acquisition, sharing and protection of valuable assets
in England. Besides, property law is concerned with between individuals or people involved in
anything that can be owned it. In addition, the property include land (real property), personal
property, goods, intellectual property law and intangible rights such as patents, debts or the
goodwill of a business. In particularly, personal and real property is usually made up of an
enterprise's assets. The distinction between the two sorts of property is mainly that real property
cannot be moved but personal property can. Therefore, it has two relationships that worth for
considering which are ownership and possession. (Allen, 2009)

• Ownership: Ownership describes the greatest rights that a person can have in relation to
property.

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 • Possession: Possession consists of two elements: physical control and the intention to
exclude others.

2.4 Trust Law

English trust law concern with the creation and protection of asset funds, which are
usually held by a party for another's benefit. Besides, a trust is a way of managing assets (money,
land, investments or buildings) for people. There are different types of trusts and they are taxed
differently for example trust include settlor, trustee, beneficiary. Therefore, trust law is
established for some reason such as to control and protect family assets, when someone cannot
handle their affairs because they’re incapacitated, when someone’s too young to handle their
affairs, to pass on assets while you’re still alive, to pass on assets when you die or under the rules
of inheritance if someone dies without a will. (Allen, 2009)

2.5 Family Law

English family law relevant to the law relating to family problems in England and
Wales. In addition, family law concerns a range of authorities, agencies and groups which
participate in or influence the outcome of private disputes or social decisions involving family
law. Besides, family law includes divorce, adoption, child custody, child abduction and parental
responsibility. Moreover, It can either be public law or private law. Therefore, a view of family
law may be regarded as assisting the understanding of the context in which the law works and to
indicate the policy areas where improvements can be made. (Allen, 2009)

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II. An overview of the different origin and sources of law
a. Constitution

The Constitution of the United Kingdom is the system of rules that shapes the
political governance of the United Kingdom of Great Britain and Northern Ireland. The UK
constitution is not contained in a single code, but what Britain has instead is an accumulation of
various statutes, case law, political conventions, social consensus, judicial decisions and treaties
which collectively can be referred to as the British Constitution. It is thus more accurate to refer
to Britain's constitution as an 'uncodified' constitution, rather than an 'unwritten' one.
(Blackburn, 2015)

There are number of important milestones light upon the British constitution of
today by means of an in-depth consideration of several key moments in British constitutional
history. The year of 1215 in England, the Magna Carta was signed by King John. The rights claimed
were mainly those of justice and property. After the English Civil War and the Glorious Revolution
1688, Parliament won supremacy over the monarch, as well as the church and the courts, and
the Bill of Rights 1689 recorded its fundamental unit of right in "Person" and that the "election
of members of Parliament ought to be free". Moreover, The Act of Union 1707 unified England,
while Ireland was joined in 1801, but the Republic of Ireland formally separated between 1916
and 1921. The European Communities Act (1972) making the UK a legal partner in the European
Union, the Great Reform Act 1832 and the 1973 membership to the European Economic
Community are milestones in the development of the UK constitution. Finally, the year of 1998 –
Devolution to Scotland, Wales and Northern Ireland: Decentralizing the Union State. (Blackburn,
2015)

In addition, there are six basic sources of the British constitution and they are: Statute
Law, Common Law, Royal Prerogative, Convention, Work of Authority, Legislation of the
European Union. (Lawteacher, 2018)

b. Parliament (legislation)

Parliament is the legislative body of the United Kingdom and is the primary law-
making institution in Great Britain’s constitutional monarchy. It alone possesses legislative
supremacy and thereby ultimate power over all other political bodies in the UK and the overseas

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territories. Legislation is law enacted by the Queen in Parliament in the form of Acts of Parliament
or statutes. Parliament is made up of two chambers: The House of Commons and the House of
Lords. (Allen, 2009)

The first English Parliament was convened in 1215, with the creation and signing of
the Magna Carta, which established the rights of barons (wealthy landowners) to serve as
consultants to the king on governmental matters in his Great Council. As in the early Witans,
these barons were not elected, but rather selected and appointed by the king. The Great Council
was first referred to as “Parliament” in 1236. By 1254, sheriffs were instructed to send
representatives to advise the king on taxation, further growing the body until four years later in
1258 when the Great Council drafted the “Provisions of Oxford,” which called for regular
parliamentary meetings and records began to be kept of the body’s meetings. (history, 2017)

In 1295, Parliament evolved to include nobles and bishops as well as two

representatives from each of the counties and towns in England and, since 1282, Wales. This
became the model for the composition of all future Parliaments. The House of Commons began
to form in the 14th Century as knights of the shire and burgesses, more like commoners than the
nobles and clergy, started to hold their own meetings apart from the more esteemed
parliamentarians. Both bodies began meeting in Westminster Hall, which eventually developed
into the Palace of Westminster. It was during this time that Parliament began to take on a more
legislative function, with “bills” passed in the Commons and the House of Lords going to the King
for his Royal assent.

Parliament grew in 1542 when King Henry VIII formally invited members from Wales
to join the body as he wanted to prevent the country from falling under the influence of the
Catholic Church. Five years later, his son, King Edward VI gave the Commons St. Stephen’s Chapel
to use for their meetings. Over course of the 17th, 18th, 19th and 20th centuries, Parliament and
its powers evolved—just as the United Kingdom itself did. Scotland formally became a part of the
United Kingdom in 1707, and thus sent representatives to the Parliament at Westminster. By the
late 1700s, Ireland was also part of the United Kingdom. Through a series of legislative acts,
known as the “Reform Acts” in 1832, a number of changes were made to the composition and
legislative process in Parliament. The Reform Act of 1918 gave women the right to vote, and the
first woman was elected to the body that same year. Meanwhile, the Parliament Acts of 1911
and 1949 established greater powers for the House of Commons, which has 650 elected
members, compared to the House of Lords, which has 90 members appointed via peerage (a
system of titles for noblemen). Besides, the Commons had fully established their dominance over
the Lords, a power balance that has remained to this day, chipped away periodically by the
commons from the 1909 “People’s Budget” through the premiership of Tony Blair.

C. Judicial Precedent (judge-made case law)

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 Large parts of our law still derive from the decisions of judges. This judge-made law
is based on a rule known as the doctrine of binding judicial precedent. The principle underlying
the doctrine is that a decision made by a court in a case involving a particular set of circumstances
is binding on other courts in later cases, where the relevant facts are the same or similar. The
idea of the judges making use of previously decided cases dates back to the formation of the
common law by the royal justices out of English customary law. But it was not until the 19th
century that the general principle of judicial consistency in decision-making developed into a
more rigid system of binding precedents. The necessary conditions for such a system did not exist
until the standard of law reporting was improved by the creation of the Council of Law Reporting
in 1865 and a hierarchy of courts was established by the Judicature Acts 1873–75 and the
Appellate Jurisdiction Act 1876.

D. Common Law

Common law is a body of unwritten laws based on legal precedents established by

the courts. Common law influences the decision-making process in unusual cases where the
outcome cannot be determined based on existing statutes or written rules of law. The common-
law system of British tradition has developed that spread to North America during the 17th- and
18th-century colonial period. Common law is also practiced in Australia, Canada, Hong Kong,
India, New Zealand, and the United Kingdom. (SEGAL, 2020)

The Norman kings ruled with the help of the most important and powerful men in
the land who formed a body known as the Curia Regis (King’s Council). This assembly carried out
a number of functions: it acted as a primitive legislature, performed administrative tasks and
exercised certain judicial powers. The meetings of the Curia Regis came to be of two types:
occasional assemblies attended by the barons and more frequent but smaller meetings of royal
officials. These officials began to specialize in certain types of work and departments were
formed. This trend eventually led to the development of courts to hear cases of a particular kind.
The courts which had emerged by the end of the 13th century became known as the Courts of
Common Law and they sat at Westminster. The first to appear was the Court of Exchequer. It
dealt with taxation disputes but later extended its jurisdiction to other civil cases. The Court of
Common Pleas was the next court to be established. It heard disputes of a civil nature between
one citizen and another. The Court of King’s Bench, the last court to appear, became the most
important of the three courts because of its close association with the king. Its jurisdiction
included civil and criminal cases and it developed a supervisory function over the activities of
inferior courts. (Allen, 2009)

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 The Normans exercised central control by sending representatives of the king from
Westminster to all parts of the country to check up on the local administration. At first, these
royal commissioners performed a number of tasks: they made records of land and wealth,
collected taxes and adjudicated in disputes brought before them. Their judicial powers gradually
became more important than their other functions. To begin with, these com-missioners (or
justices) applied local customary law at the hearings, but in time local customs were replaced by
a body of rules applying to the whole country. When they had completed their travels round the
country, the justices returned to Westminster where they discussed the customs they had
encountered. By a gradual process of sifting these customs, rejecting those which were
unreasonable and accepting those which were not, they formed a uniform pattern of law
throughout England. Thus, by selecting certain customs and applying them in all future similar
cases, the common law of England was created. (Allen, 2009)

E. Equity

Over a period of time the common law became a very rigid system of law and in many
cases, it was impossible to obtain justice from the courts. The main defects of the common law
were as follows: (Allen, 2009)

▪ The common law failed to keep pace with the needs of an increasingly complex society.
The writ system was slow to respond to new types of action. If a suit-able writ was not
available, an injured party could not obtain a remedy, no matter how just his claim.
▪ The writ system was very complicated, but trivial mistakes could defeat a claim.
▪ The only remedy available in the common law courts was an award of damages. This was
not always a suit- able or adequate remedy.
▪ Men of wealth and power could overawe a court, and there were complaints of bribery
and intimidation of jurors.

It became the practice of aggrieved citizens to petition the king for assistance. As the
volume of petitions increased, the king passed them to the Curia Regis and a committee was set
up to hear the petitions. The hearings were presided over by the Chancellor and in time petitions
were addressed to him alone. By the 15th century the Chancellor had started to hear petitions
on his own and the Court of Chancery was established. The body of rules applied by the court
was called equity.

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 The early Chancellors were drawn from the ranks of the clergy and their decisions
reflected their ecclesiastical background. They examined the consciences of the par-ties and then
ordered what was fair and just. At first, each Chancellor acted as he thought best. Decisions
varied from Chancellor to Chancellor and this resulted in a great deal of uncertainty for
petitioners. Eventually, Chancellors began to follow previous decisions and a large body of fixed
rules grew up. The decisions of the Court of Chancery were often at odds with those made in the
common law courts. This proved a source of conflict until the start of the 17th century when
James I ruled that, in cases of conflict, equity was to prevail. For several centuries the English
legal system continued to develop with two distinct sets of rules administered in separate courts.
(Allen, 2009)

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 F. Human Rights Legislation
The UK is very unusual in having no written constitution which sets out the powers
of the Crown, Parliament, the government and the judiciary, and the rights of citizens. In the UK,
a person is free to do anything which is not specifically prohibited by the law. However, there is
no statement of basic civil rights and no mechanism to prevent Parliament from passing
legislation which restricts civil rights. Most other countries have written constitutions which
incorporate a statement of fundamental civil rights guaranteed by the state and the courts.
(Allen, 2009)
In 1215, The Magna Carta was also the first step in giving us the right to a trial by a
jury of our peers. (right, 2018)
In 1689, The Bill of Rights was a landmark moment in the political history of Britain
because it limited the powers of the monarch and set out the rights of Parliament. It included the
freedom to petition the monarch; the freedom from cruel and unusual punishments and the
freedom from being fined without trial. (right, 2018)
In 1948 The Universal Declaration of Human Rights is the foundation for modern
human rights. After the Second World War, the international community recognized the need for
a collective expression of human rights. Adopted by the General Assembly of the United Nations
in 1948, the declaration sets out a range of rights and freedoms to which everyone, everywhere
in the world, is entitled. (right, 2018)
In 1950 the Council of Europe adopted a European Convention on Human Rights
(ECHR) which was based on the United Nations’ Universal Declaration on Human Rights. The UK
ratified the ECHR in 1951. The rights and freedoms protected by the ECHR and sub- sequent
amendments (known as protocols) ratified by the UK are set out in Fig 1. (Allen, 2009)

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 Figure 1: The European Convention on Human Rights

In 1997 the Labour government indicated its intention to incorporate the ECHR into
UK law. The Human Rights Act 1998 (HRA 1998), which came fully into force on 2 October 2000,
enables people to enforce their Convention rights in UK courts rather than having to exhaust all
domestic remedies before bringing a case to the European Court of Human Rights in Strasbourg.
People in the UK no longer had to take complaints about human rights breaches to the European
Court in Strasbourg – British courts could now hear these cases.
In November 2003 the Secretary of State for Constitutional Affairs announced the
government’s intention to establish a Commission for Equality and Human Rights, which would
bring together the work undertaken at that time by the separate race, equal opportunities and
disability commissions, and provide institutional support for promoting human rights. The
Equality Act 2006 established the new Commission for Equality and Human Rights (CEHR) which
commenced operations in October 2007.

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 In 2010 The Equality Act brought together more than 116 separate pieces of
legislation into one single act - a new, streamlined legal framework to protect the rights of
individuals and advance equality of opportunity for all. (right, 2018)

III. A briefly explanation of the “trias politica” model, the roles and responsibilities of each
branch in the governance of a nation, particularly the role of government in law-making.
The “trias politica” is the philosophy that there has to be a strict separation between
three independent powers in every nation: for legislation, administration, and jurisdiction.
A. Explanation of Trias politica, the roles and responsibilities of each branch in the
governance of a nation
Trias Politica is a system of government where a country’s government is divided into
three branches which are the legislative, executive, and judicial functions of government among
separate and independent bodies. Besides, each branch with separate and independent powers
and areas of responsibility so that the powers of one branch are not in conflict with the powers
associated with the other branches. The UK is one of the most peculiar states in the world. It is
one of those few states which do not have a written constitution. Due to the absence of a formal
written constitution, it is possible to claim that there is no formal separation of powers in the UK.
However, one should not presume that it does not exist. They do exist, but in a weak form
because they overlap and work together. (lawteacher, 2018)
❖ The Executive Power:

The executive consists of the Crown and the government, including the Prime
Minister and Cabinet of Ministers. Moreover, the Civil Service is also a part of the executive. The
executive mainly formulates and executes the government policies. The government is
accountable to Parliament which has the ultimate power to dismiss a government and force a
general election in which the new government will be elected. The government is mainly elected
from the Members of Parliament who sit in either House of Common or House of Lords.
(lawteacher, 2018)

❖ The Legislative Power:

The legislative power in the UK is held by the Parliament. The Parliament of UK is

composed of three parts, namely; the Monarch, House of Lords and House of Commons.
However, the monarch has only nominal powers and mainly has to listen to the advice of the
Prime Minister who in return follows the MPs. The House of Commons is made up of elected
members of Parliament, whereas the House of Lords is made up of unelected hereditary peers

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and life peers appointed by the Crown and Archbishops and Bishops of the Church of England.
However, it should be pointed out that the House of Commons is superior to House of Lords in
its law-making power. The main functions of the Parliament are to: create/amend law, scrutinize
the government, and to enable the government to make financial decisions. (lawteacher, 2018)

❖ The Judicial Power:

The main function of this branch is to hear upon and resolve the matters of law.
However, in the UK the judiciary has one more essential function: to develop the law through
their judgements. The judiciary consists of judges in courts, as well as those who hold judicial
office in tribunals. The senior judicial appointments are made by the Crown. According to various
sources, the judiciary in the UK is independent of both parliament and the executive. It may be
argued that this “independence” is not really genuine, because the Senior Judges are appointed
by the Crown. However, once these judges are appointed, they are become completely
independent and have complete authority over all their actions. Their independence in protected
in the “Act of Settlement – 1700″, according to which, Senior Judges can only be dismissed by
address to the Crown from both Houses of the Parliament. (lawteacher, 2018)

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 B. Explain the role of government in law-making process. (UK government)
Parliaments worldwide perform three core functions: to represent citizens interests,
to pass laws and to monitor the actions of the government. They perform a legislative function
because, in addition to introducing legislation on their own, they have the power to amend,
approve or reject government draft laws. This function is strongly linked to the representation
function in that it is through the will of the people that the parliament receives its authority in
democratic countries.

The exact means by which a parliament is engaged in the lawmaking process varies
depending on the type of parliamentary system. In Westminister systems (i.e. - those that derive
from the British system), the executive branch of government develops most draft laws and the
main role of parliament is to review, amend and pass laws. Individual MPs can introduce draft
laws (known as Private Members Bills) but few of these draft laws reach the committee stage
and even fewer are ever passed.

In presidential systems, individual MPs have a greater opportunity to produce draft

laws before they are reviewed, amended and passed. Some hybrid systems have developed other
methods of developing draft laws, including providing authority to parliamentary committees to
develop and introduce draft laws and, in rare cases, some parliaments allow citizen initiatives to
introduce draft laws for debate.

In most parliaments with permanent committees, proposed legislation is introduced

formally on the floor of the house, and then referred to one or more committees with jurisdiction
over the legislation. Westminster systems typically hold draft laws on the floor for a second
reading and a debate and vote on the draft law "in principle". After this, draft laws are referred
to committees where committee members typically work on technical details and amendments.

In presidential systems, draft laws introduced are immediately referred to

committee, and those draft laws over which more than one committee has jurisdiction may be
referred to multiple committees. An education draft law with financial implications, for example
might be referred to both the education and finance committees. In political systems with a very
large volume of legislation (more than 10,000 draft laws are introduced each year in the US
Congress, for example), most legislation never gets beyond committee.

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 If the parliament has two houses, draft laws may move through each house
simultaneously, or through the houses consecutively. Two house parliaments generally devise
methods of reconciling different versions of the draft laws.

For a parliament to be able to efficiently fulfill its legislative function, MPs must have
the capacity to read and review draft legislation and amendments in order to interpret any policy
changes and analyze proposed new rules. The staff of the parliament, especially committee staff,
need to be well trained in legal drafting and legislative review processes. Committees also often
rely on external expertise to assess the exact scope of a draft law and its consequences from
diverse perspectives (for example legal, social, economic or environmental). This external
expertise can be from within respective political parties or from academia or civil society. (agora,
2015)

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IV. An explanation of how business law is applied to the running of a company.
A. What is business? Classification of business organizations and its characteristics
1. What is business?
A business is defined as an organization or enterprising entity engaged in
commercial, industrial, or professional activities. Businesses can be for-profit entities or non-
profit organizations that operate to fulfill a charitable mission or further a social cause.
The term business also refers to the organized efforts and activities of individuals to
produce and sell goods and services for profit. Businesses range in scale from a sole
proprietorship to an international corporation. Several lines of theory are engaged with
understanding business administration including organizational behavior, organization theory,
and strategic management. (HAYES, 2019)
2. Classification of business organizations and its characteristics
There are 4 main types of business organization: sole proprietorship, partnership,
corporation, and Limited Liability Company (LLC).
❖ Sole proprietorship
A sole proprietorship also referred to as a sole trader or a proprietorship, is an
unincorporated business that has just one owner who pays personal income tax on profits earned
from the business. (TWIN, 2019)
A sole proprietorship is the easiest type of business to establish or take apart, due to
a lack of government regulation. As such, these types of businesses are very popular among sole
owners of businesses, individual self-contractors, and consultants. Many sole proprietors do
business under their own names because creating a separate business or trade name isn't
necessary. (TWIN, 2019)

Advantages Disadvantages
✓ Easy of start-up ✓ Unlimited liability
✓ No formal produces needed to ✓ Lack of continuity
✓ begin the trading ✓ Lack of money
✓ Flexible ✓ Limited management skills
✓ Close to their customers ✓ Difficulty in hiring employees
✓ Possible Tax advantages
Table 1 The advantages and disadvantages of sole proprietorship

❖ Partnership
A partnership is a formal arrangement by two or more parties to manage and operate
a business and share its profits. (KOPP, 2019)

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 There are several types of partnership arrangements. In particular, in a partnership
business, all partners share liabilities and profits equally, while in others, partners have limited
liability. There also is the so-called "silent partner," in which one party is not involved in the day-
to-day operations of the business. (KOPP, 2019)
Within the narrow sense of a for-profit venture undertaken by two or more
individuals, there are three main categories of partnership: general partnership, limited
partnership, and limited liability limited partnership. (KOPP, 2019)

• In a general partnership, all parties share legal and financial liability equally. The
individuals are personally responsible for the debts the partnership takes on. Profits are
also shared equally. The specifics of profit sharing will almost certainly be laid out in
writing in a partnership agreement (KOPP, 2019)

• Limited liability partnerships are a common structure for professionals, such as

accountants, lawyers, and architects. This arrangement limits partners' personal liability
so that, for example, if one partner is sued for malpractice, the assets of other partners
are not at risk. Some law and accounting firms make a further distinction between equity
partners and salaried partners. The latter is more senior than associates but does not have
an ownership stake. They are generally paid bonuses based on the firm's profits. (KOPP,
2019)

• Limited partnerships are a hybrid of general partnerships and limited liability

partnerships. At least one partner must be a general partner, with full personal liability
for the partnership's debts. At least one other is a silent partner whose liability is limited
to the amount invested. This silent partner generally does not participate in the
management or day-to-day operation of the partnership. (KOPP, 2019)

Advantages Disadvantages
✓ Ease of start-up ✓Unlimited liability
✓ Available of capital and credit ✓Lack of continuity
✓ Retention of profits ✓Effects of management
✓ Combined business skill and ✓Disagreements
✓ knowledge ✓Frozen investment
✓ Possible tax advantages ✓Selling the business is difficult—
requires finding new partner
Table 2: The advantages and disadvantages of partnership

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 ❖ Corporation
A corporation is a legal entity that is separate and distinct from its
owners.1 Corporations enjoy most of the rights and responsibilities that individuals possess: they
can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets, and
pay taxes. Some refer to it as a "legal person." (KENTON, 2020)
There are two types of corporation: private organization and public organization.

• Private Organization: is a corporation whose shares are owned by relatively few people and
are not publicly traded, not sold to the general public. (Business dictionary)
• Public organization: is a company whose share are publicly traded and are usually held by a
large number (hundreds of thousands) of shareholders. The usual British term is public
limited company. (Business dictionary)

Advantages Disadvantages
✓ Owners have limited liability ✓ Excessive tax filings
✓ Easier to raise capital ✓ Independent management
✓ Easy to transfer ownership ✓ Double taxation of corporation profits
✓ Corporations have perpetual lifetimes ✓ Forming a corporation cost more
✓ Certain expenses are tax deductible ✓ States have higher fees
(Woodruff, 2019) ✓ More state and federal regulations and
oversight
Table 3: The advantages and disadvantages of corporate

❖ Limited Liability Company (LLC)

A limited liability company (LLC) is a business structure in the United States whereby
the owners are not personally liable for the company's debts or liabilities. Limited liability
companies are hybrid entities that combine the characteristics of a corporation with those of a
partnership or sole proprietorship. (KENTON, 2020)

Advantages
✓ Pass-through taxation
✓ No restrictions on the number of
members allowed
✓ Members have flexibility in structuring
the company management
✓ Does not require as much annual
paperwork or have as many formalities
as corporations.
Disadvantages
✓ More expensive to form than sole
proprietorships and general
partnership,
✓ Ownership is typically harder to
transfer than with a corporation
✓ Limited Life
✓ Government-regulation
✓ Lack of secrecy

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✓ Owners are not personally responsible
for business debts and liabilities
(Christiansen, 2016)
Table 4: The advantages and disadvantages of Limited Liability company

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B. How is business law defined? How is business law applied to each type of business
organization?
1. How is business law defined?

Business law encompasses all of the laws that dictate how to form and run a business.
This includes all of the laws that govern how to start, buy, manage and close or sell any type of
business. Business laws establish the rules that all businesses should follow. A savvy
businessperson will be generally familiar with business laws and know when to seek the advice
of a licensed attorney. Business law includes state and federal laws, as well as administrative
regulations. Besides, there are several type of business laws as follow: Employment Law,
Immigration law, Consumer good sales, Contract drafting/ negotiations/ litigation, Antitrust,
Intellectual property, Taxes and Bankruptcy. (study, 2020)

2. How is business law applied to each type of business organization?

Tax is one of the popular business laws that must be applied to business. Therefore,
taxes fall on whomever pays the burden of the tax, whether this is the entity being taxed, such
as income, a business, estate and property taxes or the end consumers of the business's goods.

Tax laws apply to sole proprietorship (Diana Fitzpatrick, 2020)

As a sole proprietor, you must report all business income or losses on your personal
income tax return; the business itself is not taxed separately. (The IRS calls this "pass-through"
taxation, because business profits pass through the business to be taxed on your personal tax
return.) (Diana Fitzpatrick, 2020)

❖ Filing a Tax Return

The main difference between reporting income from your sole proprietorship and
reporting wages from a job is that you must list your business's profit or loss information on
Schedule C (Profit or Loss from a Business), which you will submit to the IRS along with Form
1040.

Taxed on all profits of the business -- that's total income minus expenses -- regardless
of how much money you actually withdraw from the business.

You can deduct your business expenses just like any other business. You are allowed
to expense (deduct) much of the money you spend in pursuit of profit, including operating
expenses, product and advertising costs, travel expenses, and some of the cost of business-
related meals. You can also write off certain start-up costs and the cost of business equipment
and other assets you purchase for your business.

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 Sole proprietors may also qualify for the new pass-through tax deduction established
by the Tax Cuts and Jobs Act. Up to 20% of net business income earned by sole proprietors may
be deducted as an additional personal deduction. However, see the New Pass-Through Tax
Deduction for more information.

❖ Estimated Taxes

If you own a business, normally you have to pay estimated tax so it's your job to set
aside enough money to pay taxes on any business income you bring in during the year. To do
this, you must estimate how much tax you'll owe at the end of each year and make quarterly
estimated income tax payments to the IRS and, if required, your state tax agency.

❖ Self-Employment Taxes

Sole proprietors must make contributions to the Social Security and Medicare
systems; taken together, these contributions are called "self-employment taxes." The self-
employment tax rate is 15.3%, which consists of 12.4% for Social Security up to an annual income
ceiling (above which no tax applies) and 2.9% for Medicare with no income limit or ceiling. Self-
employment taxes are reported on Schedule SE, which a sole proprietor submits each year along
with a 1040 income tax return and Schedule C. See the IRS website for current Social Security
annual income thresholds.

Tax laws apply to partnership

For partnerships, paying taxes also involves understanding difficult terms like
"distributive share," "special allocation," and "substantial economic effect."

❖ How Partnership Income Is Taxed

Generally, the IRS does not consider partnerships to be separate from their owners
for tax purposes; instead, they are considered "pass-through" tax entities. As a pass-through
business entity owner, partners in a partnership may be able to deduct 20% of their business
income with the 20% pass-through deduction established under the Tax Cuts and Jobs Act. See
The 20% Pass-Through Tax Deduction for Business Owners for more information.

❖ Filing Tax Returns

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 Even though the partnership itself does not pay income taxes, it must file Form 1065
with the IRS. The partnership must also provide a Schedule K-1 to the IRS and to each partner,
which breaks down each partner's share of the business's profits and losses. In turn, each partner
reports this profit and loss information on his or her individual tax return (Form 1040), with
Schedule E attached.

❖ Estimating and Paying Taxes

Because there is no employer to compute and withhold income taxes, each partner
must set aside enough money to pay taxes on his share of annual profits. Partners must estimate
the amount of tax they will owe for the year and make payments to the IRS (and usually to the
appropriate state tax agency) each quarter -- in April, July, October, and January. (nolo, 2020)

❖ Profits Are Taxed Whether Partners Receive Them or Not

The IRS requires each partner to pay income taxes on his "distributive share." The IRS
treats each partner as though he or she received his distributive share each year. (nolo, 2020)

The practical significance of the IRS rule about distributive shares is that even if
partners need to leave profits in the partnership. (nolo, 2020)

❖ Establishing the Partners' Distributive Shares

Unless business partners make a written partnership agreement that says otherwise,
state law usually allocates profits and losses to the partners according to their ownership
interests in the business. This allocation determines each partner's distributive share. (nolo,
2020)

In order to split up profits and losses in a way that is not proportionate to the
partners' percentage interests in the business, it's called a "special allocation," and you must
carefully follow IRS rules. (nolo, 2020)

❖ Self-Employment Taxes

Besides of income taxes, the IRS also requires individuals to pay "self-employment"
taxes on all partnership profits allocated. Self-employment taxes consist of contributions to the

25
Social Security and Medicare programs, similar to the payroll taxes employees must pay. (nolo,
2020)

There are some differences between the contributions regular employees make and
the contributions partners must make. First, because no employer withholds these taxes from
partners' paychecks, partners must pay them with their regular income taxes. Also, partners must
pay twice as much as regular employees, because employees' contributions are matched by their
employers. However, partners can deduct half of their self-employment tax contribution from
their taxable income, which lowers their tax bill a bit. (nolo, 2020)

Partners report their self-employment taxes on Schedule SE, which they submit
annually with their personal income tax returns. (nolo, 2020)

❖ Expenses and Deductions

After paying income taxes, Social Security taxes, and Medicare taxes on your share
of business income, even if you don't withdraw it from your business but you still do not have to
pay taxes on most of the money your business spends to make a buck. (nolo, 2020)

You and your partners can deduct your legitimate business expenses from your
business income, which will greatly lower the profits you have to report to the IRS. Deductible
expenses include start-up costs, operating expenses, travel costs, and product and advertising
outlays, as well as a portion of the money you spend on business-related meals and
entertainment. (nolo, 2020)

Tax laws apply to corporation

Because a corporation is a separate legal entity from its owners, the company itself
is taxed on all profits that it cannot deduct as business expenses. Generally, taxable profits consist
of money kept in the company to cover expenses or expansion (called "retained earnings") and
profits that are distributed to the owners (shareholders) as dividends. (Bethany K. Laurence,
2020)

26
 ❖ Tax-Deductible Expenses

To reduce taxable profits, a corporation can deduct many of its business expenses --
money the corporation spends in the legitimate pursuit of profit. In addition to start-up costs,
operating expenses, and product and advertising outlays, a corporation can deduct the salaries
and bonuses it pays and all of the costs associated with medical and retirement plans for
employees. (Bethany K. Laurence, 2020)

❖ Shareholder Tax Payments

If the corporation's owners work for the corporation, they pay individual income
taxes on their salaries and bonuses like regular employees of any company. Salaries and bonuses
are deductible business expenses, so the corporation does not pay taxes on them. (Bethany K.
Laurence, 2020)

❖ Tax on Dividends

If a corporation distributes dividends to the owners, they must report and pay
personal income tax on these amounts. This means that dividends are taxed twice -- once to the
corporation and again to the shareholders. Smaller corporations rarely face this problem:
Because their owners typically work for the corporation as employees, the corporation can pay
them in the form of tax-deductible salaries and bonuses, rather than taxable dividends. (Bethany
K. Laurence, 2020)

❖ S Corporation Taxes

The scheme of taxation described in this article applies only to regular corporations,
called C corporations. By contrast, a corporation that has elected S corporation status pays taxes
like a partnership or limited liability company (LLC): All corporate profits or losses "pass through"
the business and are reported on the owners' personal income tax returns. (Bethany K. Laurence,
2020)

❖ No Pass-through Tax Deduction

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 The Tax Cuts and Jobs Act established a new income tax deduction for pass-through
entities. During 2018 through 2025, owners of sole proprietorships, partnerships, limited liability
companies, and S corporations may deduct for income tax purposes up to 20% of the net income
from the entity. Regular C corporations are not pass-through entities; thus, their shareholders do
not qualify for this deduction. (Bethany K. Laurence, 2020)

Tax laws apply to Limited Liability Company

A limited liability company (LLC) is not a separate tax entity like a corporation;
instead, it is what the IRS calls a "pass-through entity," like a partnership or sole proprietorship.
All of the profits and losses of the LLC "pass through" the business to the LLC owners (called
members), who report this information on their personal tax returns. The LLC itself does not pay
federal income taxes, although some states impose an annual tax on LLCs. (Diana Fitzpatrick,
2020)

❖ Income Taxes

The IRS treats your LLC like a sole proprietorship or a partnership, depending on the
number of members in your LLC. (Diana Fitzpatrick, 2020)

❖ Single-Owner LLCs

The IRS treats one-member LLCs as sole proprietorships for tax purposes. This means
that the LLC itself does not pay taxes and does not have to file a return with the IRS. (Diana
Fitzpatrick, 2020)

As the sole owner of your LLC, you must report all profits (or losses) of the LLC on
Schedule C and submit it with your 1040 tax return. Even if you leave profits in the company's
bank account at the end of the year -- for instance, to cover future expenses or expand the
business -- you must pay income tax on that money. (Diana Fitzpatrick, 2020)

❖ Multi-Owner LLCs

The IRS treats co-owned LLCs as partnerships for tax purposes. Like one-member
LLCs, co-owned LLCs do not pay taxes on business income; instead, the LLC owners each pay taxes
on their share of the profits on their personal income tax returns (with Schedule E attached).

28
Each LLC member's share of profits and losses, called a distributive share, should be set out in
the LLC operating agreement. (Diana Fitzpatrick, 2020)

❖ Dividing up the profits between members

Most operating agreements provide that a member's distributive share is in

proportion to members percentage interest in the business. Besides, the split-up profits and
losses in a way that is not proportionate to the members' percentage interests in the business,
it's called a special allocation. (Diana Fitzpatrick, 2020)

❖ Taxes assessed on entire distributive share

However, members' distributive shares are divvied up, the IRS treats each LLC
member as though the member receives his or her entire distributive share each year. This means
that each LLC member must pay taxes on his or her whole distributive share, whether or not the
LLC actually distributes all (or any of) the money to the members. The practical significance of
this IRS rule is that, even if LLC members need to leave profits in the LLC. (Diana Fitzpatrick, 2020)

❖ File Form 1065 with the IRS

Even though a co-owned LLC does not pay its own income taxes, it must file Form
1065 with the IRS. This form, the same one that a partnership files, is an informational return
that the IRS reviews to make sure that LLC members are reporting their income correctly. The
LLC must also provide each LLC member with a Schedule K-1, which breaks down each member's
share of the LLC's profits and losses. In turn, each LLC member reports this profit and loss
information on his or her individual Form 1040, with Schedule E attached. (Diana Fitzpatrick,
2020)

❖ Consider Electing Corporate Taxation

If you will regularly need to keep a substantial amount of profits in your LLC (called
"retained earnings"), you might benefit from electing corporate taxation. Any LLC can choose to
be treated like a corporation for tax purposes by filing IRS Form 8832, Entity Classification
Election, and checking the corporate tax treatment box on the form. (Diana Fitzpatrick, 2020)

29
 Starting in 2018, all regular “C” corporations are taxed at a flat 21% rate on all their
profits. This rate is lower than the top three individual income tax rates, ranging from 32% to
37%, which would otherwise apply to LLC owners at various income levels. Thus, LLC owners can
save money on their overall taxes by choosing to be taxed as a C corporation. However, these
potential savings can prove elusive because money distributed from a C corporation to its owners
is subject to double taxation—first the 21% corporate tax must be paid and then the shareholders
must pay individual income tax on their dividends at capital gains rates, which range up to 23.8%.
However, retained earnings are not subject to double taxation. In addition, electing corporate
taxation can allow an LLC to offer owners and employees various tax-advantaged fringe benefits,
stock options, and stock ownership plans, none of which are subject to double taxation. (Diana
Fitzpatrick, 2020)

❖ Estimating and Paying Income Taxes

LLC members are considered self-employed business owners rather than employees
of the LLC so they are not subject to tax withholding. Instead, each LLC member is responsible
for setting aside enough money to pay taxes on that member's share of the profits. The members
must estimate the amount of tax they'll owe for the year and make quarterly payments to the
IRS (and to the appropriate state tax agency, if there is a state income tax) -- in April, June,
September, and January. (Diana Fitzpatrick, 2020)

❖ Self-Employment Taxes

LLC members are not employees so no contributions to the Social Security and
Medicare systems are withheld from their paychecks. Instead, most LLC owners are required to
pay these taxes -- called "self-employment taxes" when paid by a business owner -- directly to
the IRS.

The current rule is that any owner who works in or helps manage the business must
pay this tax on his or her distributive share (rightful share of profits)

Each owner who is subject to the self-employment tax reports the amount due on
Schedule SE, which must be submitted annually with his or her tax return. LLC owners (and sole
proprietors and partners) pay twice as much self-employment tax as regular employees, because
regular employees' contributions to the self-employment tax are matched by their employers.

30
(However, LLC owners also get to deduct half of the total amount from their taxable income,
which saves a few tax dollars.) The self-employment tax rate for business owners is 15.3% of net
income up to an annual threshold and then 2.9% for income above the threshold amount. Check
the IRS website for annual net income threshold amounts. (Diana Fitzpatrick, 2020)

❖ Expenses and Deductions

As you no doubt already know, you don't have to pay taxes -- income taxes or self-
employment taxes -- on most of the money that your business spends. You can deduct ("write
off") your legitimate business expenses from your business income, which can greatly lower the
profits you must report to the IRS. Deductible expenses include start-up costs, automobile and
travel expenses, equipment costs, and advertising and promotion costs. For information about
allowable expenses and deductions, see Nolo's articles Small Business Tax Deductions and Top
Tax Deductions for Your Small Business.

LLC owners may also be eligible for a new income tax deduction for pass-through
entities established by the Tax Cuts and Jobs Act. Starting in 2018, the owner of a pass-through
entity, including a single or multi-member LLC, can deduct for income tax purposes up to 20% of
the net income from the entity. (Diana Fitzpatrick, 2020)

❖ State Taxes and Fees

Most states tax LLC profits the same way the IRS does: The LLC owners pay taxes to
the state on their personal returns, while the LLC itself does not pay a state tax.

Additional taxes in some states. A few states, however, do charge the LLC a tax based
on the amount of income the LLC makes, in addition to the income tax its owners pay.

Annual fees in some states. In addition, some states impose an annual LLC fee that is
not income-related. This may be called a "franchise tax," an "annual registration fee" or a
"renewal fee." (Diana Fitzpatrick, 2020)

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V. An overview of the sources of law that organizations must comply with.
a. Business license

A business license grants the owner the right to start and run a particular type of
business in the city, county, state, or country that issues it. It is a type of permit indicating the
company has the government’s approval to operate. Government agencies can fine or shut down
a business that operates without a license, so find out if you need one as part of your start-up
process - not all businesses require a license. (shopify, 2020)

Depending on the type of business you run, you may need a local, county, state or
federal license – or none at all. Where your company is located will determine the type of license
you need and where to obtain it. (shopify, 2020)

Although some business owners think that licensing and permit fees are ways for the
government to wring even more money from the business sector, most of these programs are
intended to protect the general public. In big cities, license bureaus are set up to control business
locations--to keep people from operating an auto-repair business next door to a school, or to
keep people from running certain types of businesses from their homes. For example, most states
forbid certain things from being manufactured in the home, such as fireworks, drugs, poisons,
explosives and medical products. (entrepreneur, 2020)

Failure to comply with the licensing and permit requirements for the type of business
you plan to start in your jurisdictions could result in additional fees, penalty payments or
operational restrictions until conditions specified by the regulating authority have been met.
Therefore, no matter what you think of the licensing process, don't neglect it!

Contact your city's business license department to find out about getting a business
license. When you file your license application, the city planning or zoning department will check
to make sure your area is zoned for the purpose you want to use it for and that there are enough
parking spaces to meet the codes. If you're opening your business in a building that previously
housed a similar business, you're not likely to run into any problems.

Operating some types of businesses may require a state license or an occupational

permit from the state agency that administers consumer affairs for people engaged in certain
occupations. Licensing is commonly required for auto mechanics, plumbers, electricians, building

32
contractors, collection agents, insurance agents, real-estate brokers and workers providing
services to the human body (barbers, cosmetologists, doctors, nurses, funeral directors, and so
on). Often, these people must pass state examinations before they can conduct business.
(entrepreneur, 2020)

b. Employment Laws

Employment law comprises all the rights and obligations that define a business
owner's relationship with his or her employees. Therefore, if the business has more than one
employee, then the business likely uses employment law. This area is made up of both state and
federal laws and includes many different subjects with the common goal to protect workers'
rights. For employees, these laws work to: (study, 2020)

• Prevent discrimination
• Promote health and safety
• Establish a minimum required level for economic support
• Prevent work disruption due to disputes between labor and management

❖ Employee Rights in the Workplace

Employees have certain rights in the workplace. These rights include fair
compensation, freedom from discrimination, and a right to privacy. Certain laws - both on a
federal and state level - are in place to make sure that employees receive these rights. For
example, to provide employees with a safe and pleasant work environment, many states require
employers to implement anti-discrimination and anti-harassment policies in the workplace.
(smalbusinesss, 2020)

❖ Federal Laws Relating to Employment

There are various federal laws in place to protect employees, and as an employer,
it's important to have a basic understanding of these laws. Many of these laws are designed to
prevent discrimination against both employees and job applicants. For example, there are 15 or
more employees from discriminating against current or prospective employees based on race,
gender, color, national origin, and religion. (smalbusinesss, 2020)

Federal laws also address medical issues and provide certain medical rights to
employees. For example, the Family Medical Leave Act (FMLA) requires employers to provide 12
weeks of unpaid leave to employees who give birth or adopt a child, need to take care of a family

33
member's serious mental or physical health condition, or need to take care of their own serious
mental or physical health condition.

❖ Hiring an Employment Law Attorney

As a small business, owner you need to wear many hats, which means that you don't
have time to excel at everything that is required to run a business. It can be a helpful to get some
help in figuring out our obligations when it comes to employment laws and managing your
employees. An employment law attorney can help you make sense of all the employment laws
that are applicable to a business in your industry and location. (smalbusinesss, 2020)

c. Tax Law

Tax law is the complex body of law that governs how taxes are imposed by the
government onto citizens and non-citizens. A tax is defined as a tariff on economic transactions
by individuals and corporations. This tariff can be imposed at the federal level, by states, or even
by local communities, and is used to fund the government and allow for the provision of
government services such as schools and parks. At the federal level, taxes are codified in the
Internal Revenue Code, which is updated regularly. Although income taxes are the most widely
recognized form of taxes imposed by the government, other common taxes include property
taxes, sales taxes, corporate taxes and taxes on the transfer of wealth and assets such as the
capital gains tax, estate tax, and gift tax. (justica, 2020)

❖ Taxes on the Transfer of Wealth

Whenever money or assets are transferred from one individual to another, the
federal government and state governments may be entitled to a portion of that transfer. This can
happen when the asset is transferred as a gift while an individual is still alive, and thus subject to
the gift tax, or when the asset is transferred after death and subject to the estate tax. Finally,
when certain assets are sold for a profit, such as stocks or a home, individuals must also pay
capital gains tax on the appreciation they receive on these items. (justica, 2020)

❖ Taxes on Goods and Services

Finally, both state and federal governments impose taxes on the sale and ownership
of certain products such as goods and property. Many of these taxes are common throughout

34
our society and a part of our daily lives. Local governments also receive a great deal of funding
from property taxes, which are taxes that property owners, as opposed to users, must pay based
on the calculated value of their property. (justica, 2020)

d. Intellectual Property

Intellectual property is a broad categorical description for the set of intangibles

owned and legally protected by a company from outside use or implementation without consent.
Intellectual property can consist of patents, trade secrets, copyrights, franchises, and trademarks
or simply ideas. (KENTON, 2018)

The concept of intellectual property relates to the fact that certain products of
human intellect should be afforded the same protective rights that apply to physical property.
Most developed economies have legal measures in place to protect both forms of property.
Intellectual property can represent a competitive advantage. (KENTON, 2018)

IP is protected in law by, for example, patents, copyright and trademarks, which
enable people to earn recognition or financial benefit from what they invent or create. By striking
the right balance between the interests of innovators and the wider public interest, the IP system
aims to foster an environment in which creativity and innovation can flourish.

In most countries, there are four primary types of intellectual property (IP) that can
be legally protected: patents, trademarks, copyrights, and trade secrets. Each has their own
attributes, requirements and costs. (Ackerman, 2019)

e. Workers' compensation

Workers' compensation is a publicly sponsored system that pays monetary benefits

to workers who become injured or disabled in the course of their employment. Workers'
compensation is a type of insurance that offers employees compensation for injuries or
disabilities sustained as a result of their employment. (KAGAN, 2020)

By agreeing to receive workers' compensation, workers also agree to give up their

right to sue their employer for negligence. This "compensation bargain" is intended to protect
both workers and employers. Workers typically give up further recourse in exchange for
guaranteed compensation, while employers consent to a certain amount of liability while
avoiding potentially greater damage of a large-scale negligence lawsuit. All parties (including
taxpayers) benefit from avoiding the legal fees needed to process a trial. Most compensation

35
plans offer coverage of medical fees related to injuries incurred as a direct result of employment.
(KAGAN, 2020)

Workers’ compensation provides cash and medical benefits to workers who are
injured or become ill in the course of their employment and provides cash benefits to the
survivors of workers killed on the job. Benefits are provided without regard to fault and are the
exclusive remedy for workplace injuries, illnesses, and deaths. Nearly all workers in the United
States are covered by workers’ compensation. With the exception of federal employees and
some small groups of private-sector employees covered by federal law, workers compensation is
provided by a network of state programs. In general, employers purchase insurance to provide
for workers’ compensation benefits. (fas, 2018)

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 VI. An explanation of the key legislation that a new business needs to be aware of.

Assume, you starting a new small business partnership about watch. There are a few
issues of a new entrepreneur will encounter: legal issues, financing, marketing, product
development, intellectual property, human resources—the list is endless. Because of that, you
should write a business plan or roadmap, decide on a business structure, and understand clearly
key legislation that your business have to be aware of. Thus, you should consider the other legal
requirements involved your business operates such as employment law, tax law, copyright law
etc. that you should know when open your business.
There are some important legal requirements that a new business (start-up business)
for starting a small business are: (mbopartner, 2020)
✓ Intellectual property
Entrepreneurs should pay especially close attention to the legal implications of how
patent law can affect a business. A copyright grants the creator of a work the exclusive right to
reproduction of the work for a specified period of time. A trademark is a registration that
provides the owner the ability to use a name, symbol, jingle, or character in conjunction with a
specific product or service, and prevents others from using those same symbols to sell their
products. Besides, patent laws are strictly enforced and are intended to protect inventions. This
protection is afforded because a continuous stream of innovations can be a major source of
revenue for a firm as well as a vehicle for developing a sustained competitive advantage. A legal
patent gives an exclusive right to its patent holder or proprietor to use the invention in any shape
or form they deem necessary. It also gives the patent holder the exclusive right to block or
withhold access to others, or to sell the right to use the patent. This period of protection ranges
from fourteen to twenty years, and is essentially a government-granted monopoly, after which,
protection usually expires and competition is opened up to anyone. (openstax, 2020)

✓ Employment law (Furgison, 2015)

- Fair Labor Standards Act
This act regulates federal minimum wage, overtime rules, child labor bans, and
record keeping requirements. You’ll want to read through it to make sure you comply with the
current regulations.

- Federal Equal Employment Opportunity laws

This set of laws prohibits discrimination based on race, color, religion, sex, or national
origin. It also includes equal pay for men and women, and protects people with disabilities.

- Family and Medical Leave Act

37
 If an employee is dealing with a medical condition, or a family member with a medical
condition, there are rules an employer must follow. From time off to compensation, you’ll want
to read this guide to understand how this act affects your business.

- Occupational Safety and Health Act

This law guarantees employees a safe work environment, free from recognized
health hazards.

- Workers’ compensation
Most states require employers to buy an insurance policy that compensates
employees if they get hurt or become ill from workplace exposure. To learn more about your
responsibility as an owner and what an employee is entitled to, check out the Department of
Labor website.

- At-Will work doctrine

In all states except Montana, there is an at-will work law in place. This means
employers can fire an employee at any time for any reason, unless it’s an illegal one. Likewise, an
employee can leave the job at any-time.

✓ Tax Law (Furgison, 2015)

- Obtain an employer identification number
To file your business taxes, you’ll need an employer identification number. Visit the
IRS website to get your number, and you’ll get the number immediately after filling out the
necessary forms online.

- Know the taxes you have to pay

Whether your business has a staff of one or 100, but you still have to pay certain
taxes. Take some time to review the federal tax, social security, Medicare, and federal
unemployment tax requirements. The IRS has a breakdown of your tax responsibilities as an
owner. You’ll also want to talk with an accountant about these obligations and figure out a
budget.

In addition to federal taxes, you’ll likely have to pay state taxes as well. Use this
website to research your state tax requirements.

- Hiring employees
38
 When you plan to bring on an employee, it impacts your taxes. The amount of time
an employee works for you will make a difference when it comes to taxes, so research the
difference between a W-2 employee and a 1099 employee before making any hiring decisions.

39
Learning outcome 2: Illustrate the potential impact of the law on a business

Task 2: Mr. Nguyen Van Quyen proposes to open a new shoes manufacture company in Le Minh
Xuan industrial area when nCov-19 pandemic ends. As a legal consultant, you may give him
some advises of:

I. Which law should he consider when opening a new shoes manufacture company?

Shoes hold a major fashion and practical purpose. If you are interested in shoes and
have an entrepreneurial spirit, you might be interested in learning how to start your own shoe
company. There are several laws before you take into consideration with a shoe company
startup. Below are some laws to consider when opening up your own a new shoe manufacture
company: (Flanagan, 2019)

➢ Tax laws

Every entrepreneur’s primary financial concerns would be regarding their tax

payment and rebate. If any accidental misfortune arises on tax payment then it leads the
entrepreneur to severe penalization. Therefore, it is very important to get advice on tax payment
and get familiarized with the low taxes. Therefore, tax law is necessary to consider for opening a
new shoes manufacture company. (Parveen, 2019)

➢ Insurance laws

Usually, Insurance is very beneficial to the enterprises. Besides, it is really important

and necessary for all business. Entrepreneurs must go with the number of insurance categories
to save their business. There are many insurance policies in which firms invest like property
insurance to protect the office, equipment, Health insurance for worker and employee, worker
compensation insurance etc. Thus, this law is requirement for entrepreneur to open shoes
manufacture company. (Parveen, 2019)

➢ Employment law

It is important for entrepreneurs to have knowledge of the fair labor standards act
which regulates federal minimum wage, child labor bans, overtimes rules, and recordkeeping
requirements. Moreover, the main of this law is to protect workers’ rights. Entrepreneurs must
read and comply with the current regulations before opening shoes company. (Parveen, 2019)

40
 ➢ Copyrights law

Copyrights are a form of intellectual property. They protect things like books, music,
photographs, and software. Owners are given the exclusive right to reproduce their work,
distribute it, display or perform it, and create derivative works. Owner of shoe manufacture
company need to require copyright strictly to protect products. (Blog, 2020)

41
II. Process of opening a new business in HCM City, particularly in Le Minh Xuan Industrial
Area.

Establishing a business is a first and foremost priority for entrepreneurs. Thus, the
process of Le Minh Xuan industrial Area must have followed to these steps below for opening a
new business: (Phi, 2020)

✓ Step 1: Prepare information and documents for starting a business

In order to consult and prepare documents for establishing a business, the enterprise needs to
prepare documents and information including:
- Information on enterprise establishment according to the form;
- Personal papers of member / shareholder / company owner (identity card / ID card / passport
/ business registration) - Certified copy

✓ Step 2: Drafting documents on enterprise establishment in accordance with the Enterprise

Law
• Documents about establishing private enterprises:
- 01 Request for business establishment according to the form
- 01 copy of ID card or passport of the business owner

• Enterprise establishment dossiers for limited liability companies with 1 member and
limited liability companies with 2 or more members:
- 01 Request for business establishment according to the form
- 01 enterprise charter
- 01 Clearly stated list of members
- If member is an individual, need to provide 1 copy of ID card / ID card or passport
- If the member is an organization, it is required to provide a copy of the establishment decision
or equivalent documents
- In case the capital contributing member is an organization, it needs more decisions of the
organization on contributing capital to establish the company;

42
 • Enterprise establishment dossier for a partnership:
- 01 Request for enterprise establishment using the form
- 01 Charter of the company
- 01 full manifest of members
- 01 Copy of ID card / ID card or passport of the members

• Enterprise establishment documents for joint stock companies:

- 01 Request for enterprise establishment using the form
- 01 Charter of the company
- 01 List of full information of shareholders
- 01 Copy of ID card / ID card or passport (if the shareholder is an individual)
- 01 Copy of the business registration certificate or equivalent documents (if the shareholder is
an organization)

✓ Step 3: Submit application file for business establishment registration to the Department
of Planning and Investment
In order to be granted a license to set up an enterprise, individual or organization after finishing
the dossier, the next step is to submit the completed dossier to the Department of Planning and
Investment.

✓ Step 4: Notice the contents of the certificate of enterprise registration as prescribed

According to Article 33, Chapter II of the Law on Enterprises, after being granted a certificate of
enterprise registration by the Department of Planning and Investment, within a maximum period
of 30 days from the date of being granted, an enterprise must make a notice. publicizing business
lines, list of shareholders (if establishing joint stock companies)

✓ Step 5: Notice the seal sample after establishing the enterprise as prescribed
The seal is often used in the transactions and decisions of the business. But in order
to use the seal in accordance with the law, businesses need to post the seal sample on the

43
website. Note that the seal sample must comply with the regulations that the seal sample must
show information: business name and enterprise code.

44
III. What requirements does Le Minh Xuan Industrial Area require a new shoes
manufacture to meet if it wants to operate in this zone?
Decree 82/2018 / ND-CP stipulating the management of industrial parks and
economic zones specifies conditions for establishing export processing enterprises as follows:
(Phi, 2020)
- All manufactured goods must be exported 100% to foreign countries.
- Export processing enterprises must be separated from ordinary enterprises by a separate
fence and path system.
- Ensuring conditions for checking and supervising by customs and functional agencies.
Currently, there are many customs departments requiring export processing enterprises to install
surveillance cameras connected to the customs.
- There must be a custom written approval of the approval of the establishment of an export
processing enterprise.
- Export processing enterprises may buy construction materials, stationery, food, foodstuffs
and consumer goods from inland Vietnam to build works, serve the administration of office
apparatus and staff activities. ministries and workers working at the enterprise.
Export processing enterprises and sellers of export processing enterprises may choose to
follow or not to carry out export and import procedures for construction materials, stationery,
food, foodstuffs and consumer goods from inland Vietnam.
- Customs procedures, customs inspection and supervision of exported and imported goods
of export processing zones and export processing enterprises shall comply with the customs
legislation.
- Goods exchange relations between export processing zones, export processing enterprises
and other areas on the Vietnamese territory, other than non-tariff areas, are export and import
relations, except for cases prescribed in Clause 3 of this Article and cases of not carrying out
customs procedures shall be prescribed by the Ministry of Finance.

Export processing enterprises may sell on the domestic market their liquidated assets and
goods according to the provisions of law on investment and trade. At the time of sale or
liquidation into the domestic market, policies on management of exports and imports are not
applicable unless the goods are subject to management under conditions, standards and
specialized inspection not yet implemented when import; Goods managed by license must be
approved in writing by the import licensing agency.

45
- Cadres and workers working in export processing zones and export processing enterprises,
when bringing foreign exchange from inland Vietnam into export processing zones and export
processing enterprises, and vice versa are not required to make customs declaration.

- Export-processing enterprises, when being permitted to do business in goods purchase and sale
and activities directly related to goods sale and purchase in Vietnam, must open accounting
books to separately account revenues and expenses related to operations. purchase and sale of
goods in Vietnam and arrange a storage area separate from the storage area for production
activities of the export processing enterprise or establish a separate branch outside the export
processing enterprise or area. export processing to carry out this activity.

46
IV. Explain and evaluate the potential implications of law on a new business.

There are several potential implications of law on a new business:

❖ Employment law

Employment law is the area of law that governs the employer-employee relationship.
Therefore, if the business has more than one employee, then the business likely uses
employment law. This area is made up of both state and federal laws and includes many different
subjects with the common goal to protect workers' rights. (study, 2020)

➔ Shoe manufacture company has a lot of benefit currently required by law

including social security, unemployment insurance, and workers ’compensation insurance.
Moreover, the benefits of this employment law play an important role as workers get a job so
business should consider this law for opening business. (justica, 2018)

❖ Tax law
Taxes are involuntary fees levied on individuals or corporations and enforced by a
government entity—whether local, regional or national—in order to finance government
activities. In economics, taxes fall on whomever pays the burden of the tax, whether this is the
entity being taxed, such as a business, or the end consumers of the business's goods. (KAGAN,
2020)

To help fund public works and services—and to build and maintain the
infrastructures used in a country—the government usually taxes its individual and corporate
residents. The tax collected is used for the betterment of the economy and all living in it. In the
U.S. and many other countries in the world, taxes are the money that income could be earned
from salary, capital gains from investment appreciation, dividends received as additional income,
payment made for goods and services, etc.

There are several very common types of taxes: (KAGAN, 2020)

Income Tax —a percentage of individual earnings filed to the federal government

Corporate Tax—a percentage of corporate profits taken as tax by the government to
fund federal programs.
Sales Tax—taxes levied on certain goods and services
Property Tax—based on the value of land and property assets
Tariff—taxes on imported goods imposed in the aim of strengthening internal
businesses

47
 Estate tax—rate applied to the fair market value of property in a person's estate at
the time of death
➔ A percentage of the taxpayer’s earnings or money is taken and remitted to the
government. Moreover, payment of taxes at rates levied by the state is compulsory, so tax
evasion is very serious the deliberate failure to pay one's full tax liabilities—is punishable by law.
Most governments use an agency or department to collect taxes; Therefore, shoe manufacture
company should consider about this law before opening business.

❖ Insurance law

Insurance law is the practice of law surrounding insurance, including insurance

policies and claims, in which an individual or entity receives financial protection or
reimbursement against losses from an insurance company. The company pools clients' risks to
make payments more affordable for the insured. It can be broadly broken into three categories -
regulation of the business of insurance; regulation of the content of insurance policies, especially
with regard to consumer policies; and regulation of claim handling. (KAGAN, 2020)

Insurance policies are used to hedge against the risk of financial losses, both big and
small, that may result from damage to the insured or her property, or from liability for damage
or injury caused to a third party.

There is a multitude of different types of insurance policies available, and virtually

any individual or business can find an insurance company willing to insure them—for a price. The
most common types of personal insurance policies are auto, health, homeowners, and life. Most
individuals have at least one of these types of insurance, and car insurance is required by law.
Besides, businesses require special types of insurance policies that insure against specific types
of risks faced by a particular business.
➔ Insurance law play an important role of operating business in long-term. It
includes insurance to protect the office, equipment, Health insurance for worker and employee,
worker compensation insurance etc. Besides, employees working in factories and factories are
often exposed to chemicals that affect employee health, so the preferential benefits from this
insurance will help employees be able to more productive at work.

48
 ❖ Copyright law

Copyright refers to the legal right of the owner of intellectual property. In simpler
terms, copyright is the right to copy. This means that the original creators of products and anyone
they give authorization to are the only ones with the exclusive right to reproduce the work.
(KENTON, 2020)
Copyright law gives creators of original material the exclusive right to further use and
duplicate that material for a given amount of time, at which point the copyrighted item becomes
public domain. It's important to understand that copyright law covers the "form of material
expression," not the actual concepts, ideas, techniques, or facts in a particular work. This is the
reason behind why a work must be fixed in a tangible form in order to receive copyright
protection. (KENTON, 2020)
➔ In order to open shoe manufacture company, the worth to consider it is copyright
law. Use of the copyright notice, while not mandatory, is important because it informs the public
that the work is protected by copyright, identifies the copyright owner, and shows the year of
first publication. To protect and avoid the copyright and also to compete other company so this
law is necessary for opening business.

49
V. His customers are all from European Community (EU). There are some special quality
standard requirements for import products to this market, particularly shoes. As a legal
consultant, how do you explain the differences between laws in Vietnam and Quality
Standard Framework in EU over footwear products? Finally, what should he do to satisfy EU
quality standard requirements on footwear products?

1. EU legislation on Regulation and technical standards. (lefaso, n.d)

Trade policy of the European Union (EU) enacted by Parliament and the European
Commission (EC) provides the necessary legal provisions, through “regulations” and “directives”
about consumer safety, health, environment ...

* EU standards organizations (CEN, CENELEC, ETSI...) develop "standards" with technical

specifications.

meet the necessary rules.

* The standards are mandatory:

- Using chemicals in manufacturing process (REACH)

- Use textile names and label fiber components

- Pack...

* Voluntary standards:

- Environmentally friendly design, eco-labels ...

- ISO standards, private standards

A. EU regulations on footwear products (lefaso, n.d)

✓ Product safety directives (2001/95 / EC);
✓ Labeling directives for footwear (94/11 / EC);
✓ Regulation EC / 1007/2011 on textile fiber names and component
✓ fiber labels;
✓ Regulation EC / 1907/2006 (REACH) on chemical registration,

50
✓ notification, evaluation and licensing, relating to textile products, footwear and accessories;
✓ Directive 94/62 / EC on packaging and packaging waste, which
✓ specifies the maximum concentration of waste metal;
✓ Directive on the design of protective equipment (89/686 / EEC);
✓ Provisions on other labels: size label, eco-label, etc.
✓ The separate rules of member countries: Germany, Norway, Netherlands

❖ Product safety directives (2001/95 / EC)

The mandatory safety of products Leather shoes, focus on the physical and mechanical indicators
of the products that can affect the safety and health of users;

Other criteria related to safety: water resistance...

➢ Important indicators of product and brand quality:

✓ Outsole durability, outsole abrasion resistance; color fastness, sweat permeability, etc.
✓ Durability tied between the heel of the shoe and the parts other.
✓ Durability of heel sole with heel
✓ Durability of shoe sole
✓ Sliding strength of sole and heel sole:
✓ Sharp points, sharp edges
✓ Seam strength

❖ Labeling directives for footwear (94/11 / EC)

✓ Shoes sold in the EU must be on the material labels of the main components (uppers, lining
uppers, inner soles, outside)
✓ Only materials that occupy 80% of the main body surface must be labeled;
✓ Shoe labels may be in letters or pictures
✓ Labels must be easy to see, durable, and can be attached to a shoe of pair

51
✓ Manufacturers and importers are responsible for providing information and ensuring the
accuracy of label
✓ Warm lining complies with Circular 2008/121 / EC of 14 January 2009 on the name of textile
fibers.

❖ Labeling directives for footwear (94/11 / EC)

✓ Shoes sold in the EU must be on the material labels of the main components (uppers, lining
uppers, inner soles, outside)
✓ Only materials that occupy 80% of the main body surface must be labeled;
✓ Shoe labels may be in letters or pictures
✓ Labels must be easy to see, durable, and can be attached to a shoe of pair
✓ Manufacturers and importers are responsible for providing information and ensuring the
accuracy of label
✓ Warm lining complies with Circular 2008/121 / EC of 14 January 2009 on the name of textile
fibers.

❖ Regulation EC / 1907/2006 (REACH) on chemical registration, notification,

evaluation and licensing, relating to textile products, footwear and accessories.

This is the most stringent and complex chemical management regulations in the world.

Scope: Substances, mixtures or preparations (each leather-shoe product is a preparation).

Reporting responsibilities: Companies must notify the EU Chemical Regulatory Authority (ECHA)
of their production which contains a highly hazardous substance (SVHC) and is prohibited from
being marketed when the substance:

✓ Contained in products with concentrations above 0.1% by weight

✓ Contained in products with a total volume of > 1 ton / year
✓ Must provide free information within 45 days upon request.

52
 B. EU standards for footwear (lefaso, n.d)

European standards: The European Committee for Standardization (CEN), European

Committee for Electrotechnical Standardization (CENElEC) and the European
Telecommunications Standards Institute (ETSI) are responsible for developing common
standards (EN) of the EU.

Application of international standards: ISO (commodity), IEC (electrical), ITU

(telecommunications). EN standards are coordinated, integrated to ensure compliance with
international standards (ISO).

Leather products standards: CEN develops an EN standard for leather products that
applies IULTCS (The International Union of Leather Technologists and Chemists Societies),
incorporating the application of ISO Standards. There are currently 106 EU of EN Standards for
leather and footwear products, there are some ISO standard is applied such as EU standard.

53
2. Vietnam's legal system for footwear standards (lefaso, n.d)
The National Assembly promulgates laws:
➢ Vietnam Standard Law and Regulations – 2006
➢ Law on product and goods quality 2007

The government issued decrees to enforce the law

➢ Decree 132/2008 / ND-CP: Detailing the Law on Product and Goods Quality
➢ Decree 127/2007 / ND-CP: Stipulating the Law on Standards and Regulations
➢ Decree 89/2006 / ND-CP of August 30, 2006 on the labeling of goods

Specialized ministries shall promulgate regulations national technical and circulars

➢ QCVN 13-MT: 2015 / BTNMT of Ministry of Natural Resources and Environment on textile
wastewater
➢ Circular 37/2015 / TT-BCT (replaces 32/2009 / TT-BCT) of the Ministry of Industry and Trade
stipulating the allowable limits for formaldehyde content and aromatic amines.

The Ministry of Science and Technology promulgates and manages Vietnam Standards
➢ STAMEQ's Vietnam Standards and Quality Institute (VSQI) is responsible for developing and
publishing Vietnam Standards (TCVN).
➢ BOA is an organization that recognizes conformity assessment organizations in Vietnam.
➢ Vietnam currently has 118 Vietnamese standards related to Garments and Footwear.

54
3. Comparison of EU and Vietnam quality standard framework (lefaso, n.d)

EU Vietnam
Regulation • Mandatory Compliance • Mandatory Compliance
• Developed by EU Committees (ENTR, • Promulgated by specialized
ENV, SANCO). ministries

Standard • Voluntary compliance; • Voluntary compliance;

• The EU standards organization (CEN, •
CENELEC, ETSI, etc.) develops
standards with corresponding
technical specifications, meeting
"necessary regulations".
• EN standards are harmonized on an •
international scale: ISO and major
associations in Europe
Recognition • The European Cooperation •
Organization for Accreditation (EA) is
the agency in charge of accreditation
institutions in Europe;
• EA operates on the basis of
international standards:
• EA is responsible for joint
recognition in the EU for EA
member accreditation bodies
Table 5: comparison quality standard between of EU and VN
Vietnam Standards and Quality
Institute (VSQI) under STAMEQ
responsible for developing and
promulgating the Vietnamese
Standards.
Vietnamese Standards are
harmonized with international
and regional standards area;
criteria without Vietnamese
Standards can accept the
standards international
correspondence.
BOA is in charge of joint
recognition of CA organizations
through ILAC, IAF, PAC, APLAC
• Assessing the standard
conformity of STAMEQ,
receiving registration of CA
conformity assessment
organizations.

55
4. Satisfying EU quality standard requirements on footwear products
The most important legal requirement for footwear exporters targeting Europe that Nguyen
Van Quyen have to make sure his product complies with Europe’s extensive legislation on
chemicals. Furthermore, the General Product Safety Directive basically states that all
products marketed in Europe must be safe to use. It forms a framework for all specific
legislation established for specific products and issues. Labelling rules are also gaining
importance because they can pose a hazard to people or the environment. These restrictions
are seen are the most difficult legislative requirements Mr. Quyen will face as a producer. In
addition, Mr. Nguyen ensure footwear product must be labelled (the ‘made-in label’) with
the fibre composition and using the fibre names in accordance with European rules. In
addition, all footwear must have labels giving information on the main materials used in the
shoe. The labelling must describe the materials of the three main parts of the footwear (the
upper, the lining and sock, and the outer sole). Moreover, Nguyen Van Quyen have to comply
with the rules of the Convention on International Trade in Endangered Species of Wild Fauna
and Flora (CITES) if use materials from endangered plants or animals. Animal welfare is one
of a growing number of sustainability issues gaining importance in the leather and textiles
industries. Fair wages, better working conditions and safer buildings are also hot topics. Law
is necessary for business of Nguyen Van Quyen for importing product to EU market. There
are several laws that Nguyen Van Quyen should follow such as Tax Law, Employment Law,
Intellectual property etc. Finally, Mr. Quyen should review the table show the comparison
quality standard between of EU and VN to understand what conditions he need to meet or
supplement.

56
 Conclusion
Through this report, it provides a lot of background knowledge of law and process for opening a
business. This research has provided a few basic laws such as public law, private law and also
provides the data of origin and sources of laws like legislation, common law, case law, equity
and human right legislation, etc. for improving and adding more knowledge about law in UK.
Besides, this assignment shows the trias politica model have three branches that only used for
capitalism.

In addition, particularly is tax laws, applying business law to four types of organization in order
to show the impact or influence to each type of business. Furthermore, I give some
recommendation about laws, process of opening a business, ideas to satisfy EU quality standard
requirements on footwear products with one goal of expanding footwear to the EU market.

Finally, this report provides me a lot of good knowledge about legal requirement, types of
organization, especially is steps to start-up business (Watch company). Therefore, I will take
experience and knowledge from this assignment in order to think about my steps to open a
business and to enhance one’s professional career in the future.

57
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