Essentials of Business Law, Sixth Edition
Ewan MacIntyre
Contents
Preface xv
Table of cases xvii
Table of statutes xxvi
Table of statutory instruments xxxii
Table of European legislation xxxv
Study skills 1
Get organised from the start 1
Take advantage of what your lecturer
tells you 1
After the lecture/tutorial 1
Answering questions 2
Using cases and statutes 6
1 The legal system 7
Introduction 7
Sources of law 8
Legislation 8
Rules of statutory interpretation 9
Judicial precedent 11
The hierarchy of the courts 11
The binding part of a case 12
The institutions of the EU 17
Sources of EU law 20
Supremacy of EU law 22
The Human Rights Act 1998 24
Civil law and criminal law 26
Common law and equity 28
Features of the English legal system 29
Antiquity and continuity 29
The adversarial system of trial 29
Absence of a legal code 30
The law-making role of the judges 30
Importance of procedure 30
Absence of Roman law 30
Other features 31
The legal profession 31
The Legal Services Act 2007 32
The judiciary 33
Judicial review 34
Juries 34
Essential points 35
Practice questions 36
Task 1 36
2 Making a contract 37
Definition of a contract 37
Offer 37
Invitation to treat 38
Offer of a unilateral contract 39
Goods in shops 40
Acceptance 41
The postal rule 42
Acceptance of the offer of a
unilateral contract 43
Counter offer 44
Auctions 44
Tenders 45
Certainty of agreement 45
Offer and acceptance when
dealing with machines 47
Offer and acceptance made over
the Internet 47
Termination of offers 48
Subject to contract 50
Condition not fulfilled 50
Battle of the forms 50
Intention to create legal relations 51
Agreements made in a business or
commercial context 52
Agreements made in a social or
domestic context 52
Consideration 53
Executed, executory and past
consideration 54
Sufficiency and adequacy 55
Performing an existing duty 55
Settling out of court 59
Part payment of a debt 59
Promissory estoppel 61
Privity of contract 63
The Contracts (Rights of Third
Parties) Act 1999 65
Formalities 67
Contracts which must be made
by a deed 67
Contracts which must be in writing 68
Contracts which must be evidenced
in writing 68
Minors 68
Valid contracts 68
Voidable contracts 69
Void contracts 69
Essential points 69
Practice questions 70
Task 2 72
3 The terms of the contract 73
Nature of terms 73
Express terms 74
Terms implied by the courts 74
Types of terms 75
Conditions and warranties 75
Innominate terms 76
Terms implied by statute 77
The Sale of Goods Act 1979 78
Scope of the Sale of Goods
Act 1979 78
The terms implied by the Sale
of Goods Act 1979 79
The right to sell (s. 12(1)) 80
Correspondence with description
(s. 13(1)) 81
Quality and fitness in business
sales (s. 14) 83
Fitness for purpose (s. 14(3)) 87
Sale by sample (s. 15) 90
The Supply of Goods (Implied Terms)
Act 1973 90
The Supply of Goods and Services
Act 1982 91
Part I of the Act 91
Part II of the Act 92
The status of the statutory
implied terms 94
The Consumer Rights Act 2015 95
Exclusion clauses 104
Is the exclusion clause a term of the
contract? 104
Does the exclusion clause cover
the breach which occurred? 106
The Unfair Contract Terms Act 1977 106
Contracts covered by the Act 107
The effect of the Act 107
Essential points 113
Practice questions 114
Task 3 115
4 Misrepresentation,
mistake, duress and
illegality 117
The difference between terms
and representations 117
Written contracts 117
Oral contracts 118
Actionable misrepresentation 121
Definition of a misrepresentation 121
Remedies for misrepresentation 125
Mistake 130
Common mistake 130
Unilateral mistake 133
Duress and undue influence 137
Duress 137
Undue influence 138
Illegal contracts 139
Contracts which contravene
public policy 140
Essential points 140
Practice questions 141
Task 4 142
5 Discharge of contracts and
remedies for breach 143
Discharge of contractual liability 143
Discharge by performance of
the contract 143
Discharge by agreement 146
Discharge by frustration 147
Rules about frustration 148
Discharge by breach 152
Legislation giving right to cancel
concluded contracts 153
Remedies for breach of contract 157
Refusal to perform the contract 157
Damages 157
Suing for the contract price 161
Specific performance 163
Injunction 163
Rectification 164
Quantum meruit (as much as he
has earned) 164
Time limits on remedies 164
Essential points 165
Practice questions 165
Task 5 166
6 Agency 168
What is agency? 168
The authority of the agent 169
Actual authority 169
Apparent authority 169
Ratification 171
Watteau v Fenwick authority 172
Agency by operation of law 173
No authority 174
Liability on contracts made by agents 176
Disclosed agency 176
Undisclosed agency 176
The agent’s liability for breach
of warranty of authority 177
The rights and duties of the agent 178
Contractual duties 178
Fiduciary duties 179
Remedies for breach of fiduciary duties 181
Rights of the agent 181
Termination of agency 184
Termination and the Commercial Agents
(Council Directive) Regulations 1993 186
Essential points 187
Practice questions 188
Task 6 189
7 The Sale of Goods Act 1979 191
The passing of ownership and risk 191
The goods become lost or damaged 191
Insolvency of the buyer or the seller 193
The Sale of Goods Act rules on
the passing of ownership 195
Passing of ownership of specific
goods 195
Risk, mistake and frustration 198
Passing of ownership in
unascertained goods 199
Duties of the buyer and the seller 204
The seller’s duty to deliver 204
The buyer’s duty to pay the price 208
The buyer’s duties to accept the
goods and take delivery of them 210
Remedies of the buyer and seller 210
The buyer’s remedies 210
The seller’s remedies 215
Reservation of title (ownership)
by the seller 220
Claims to goods manufactured
out of the goods sold 221
The position where the goods are
sold on 221
Claims to proceeds of sale 222
All moneys clauses 222
Sale by a person who is not
the owner 223
Agency (s. 21 SGA) 223
Estoppel (s. 21 SGA) 223
Mercantile agency (s. 2(1)
Factors Act 1889) 224
Sale by a person with a voidable
title (s. 23 SGA) 224
Sale by a seller in possession
(s. 24 SGA) 226
Sale by a buyer in possession
(s. 25 SGA) 226
Motor vehicles on hire-purchase
(Hire-Purchase Act 1964 s. 27) 227
Essential points 229
Practice questions 229
Task 7 231
8 The tort of negligence 232
Contract and tort 232
Contract remedies and tort remedies 233
Negligence 234
That a duty of care was owed 234
Breaching the duty 238
A foreseeable type of damage was
caused by the breach of duty 241
Damages 243
Defences to negligence 244
Negligent misstatement 246
Occupiers’ liability 247
Lawful visitors 247
Non-lawful visitors 248
The Consumer Protection
Act 1987 Part I 249
Who may sue? 249
Who is liable? 249
Defective (unsafe) products 250
Damage suffered 251
Defences 251
Essential points 254
Practice questions 254
Task 8 255
9 Nuisance, trespass,
defamation and vicarious
liability 256
Private nuisance 256
Remedies 258
Defences 259
Public nuisance 260
Remedies 261
Defences 261
The rule in Rylands v Fletcher 261
Remedies 262
Defences 262
Trespass to land 263
Defences 264
Remedies 264
Trespass to the person 265
Battery 265
Assault 266
False imprisonment 266
Defences to trespass to the person 266
Trespass to goods 266
Defamation 267
Defences 268
Remedies 270
Passing-off 270
Vicarious liability 271
Employees contrasted with
independent contractors 272
When is an employee acting in the
course of his or her employment? 275
Breach of statutory duty 279
Time limits for tort remedies 279
Essential points 280
Practice questions 280
Task 9 283
10 Companies (1):
Characteristics and
formation 284
The Companies Act 2006 284
Enhancing shareholder engagement
and fostering a long-term approach
to investment 284
The ‘Think Small First’ approach
and better regulation 285
Ease of formation and flexibility 285
The characteristics of companies 285
The company is a separate
legal entity 285
Limited liability 287
Perpetual succession 288
Ownership of property 288
Contractual capacity 288
Criminal liability 288
The corporate veil 289
Classification of companies 291
Public companies and private
companies 291
Unlimited companies 292
Limited companies 292
Method of creation 293
Size of company 293
Formation of registered
companies 294
Registration under the Companies
Act 2006 294
Old-style registration 296
The constitution of a company 297
Constitutionally relevant articles 297
The articles of association 297
The legal effect of the constitution 299
Off-the-shelf companies 300
Contracts made before the company
is formed 301
The company name 301
Prohibited names 302
Objection to a company name 302
Publication of name and address 302
Change of name 303
The Registrar of Companies 303
Essential points 304
Practice questions 304
Task 10 305
11 Companies (2):
Management, control
and winding up 307
Management and control of
companies 307
Appointment and removal of
directors 307
The powers of directors 308
Directors as agents 309
Remuneration of directors 311
Directors’ duties 311
Disqualification of directors 315
The register of directors 316
Control of the company 317
Types of shares 317
Company meetings 318
Resolutions 320
The position of minority
shareholders 322
Statutory protection of minority
shareholders 323
Protection from the courts 326
The company secretary 327
Company registers 328
Annual return 328
Accounts and accounting records 329
Accounting records 329
The annual accounts 329
The auditor 330
The need to have an auditor 330
Appointment and leaving office 330
Auditor’s duties 331
Liability limitation agreements 331
Loans to the company 332
Fixed charges 332
Floating charges 332
Registration of charges 334
Priority of charges 334
Winding up of companies 334
Liquidation by court order 334
Voluntary liquidation 335
Liability arising from insolvency 336
Administration 337
Company voluntary arrangement (CVA) 338
Essential points 338
Practice questions 339
Task 11 341
12 Partnership, limited
liability partnership
and choice of legal status 342
Partnership 342
Definition of a partnership 342
Characteristics of a partnership 343
Agency 344
Partnership agreements 348
The partnership deed 349
Management of partnerships 349
The partnership name 353
Fiduciary duties 354
Partnership property 356
Winding up of partnerships 356
Limited liability partnerships 358
Formation of LLPs 359
Members and designated members 359
Accounts and accounting records 360
Minority protection 360
Winding up of limited liability
partnerships 360
Are LLPs more like companies
or partnerships? 360
Company, partnership or limited
liability partnership? Choice of
legal status 361
Limited liability 361
The right to manage 361
Agency 363
Withdrawal from the business 363
Business property 364
Borrowing power 364
Formation 364
Formalities 365
Publicity 365
Tax 365
Perpetual succession 366
Sole traders 366
Essential points 366
Practice questions 367
Task 12 368
13 Employment (1): The
contract of employment,
employment rights and
dismissal 370
The contract of employment 370
‘Gig’ economy 370
Written statement of employment
particulars 371
Itemised pay statements 372
Implied obligations of the parties 372
Variation of the terms of the contract 373
Statutory rights of the employee 374
Maternity rights 374
Paternity leave and pay 374
Shared parental leave and pay 375
Adoption leave and pay 375
Parental leave and time off for
dependants 376
Flexible working for parents
and carers 376
Transfer of employees 376
National minimum wage 377
The Working Time Regulations 1998 377
ACAS grievance procedure 379
Unfair and wrongful dismissal 379
Unfair dismissal 380
Who can claim? 380
What is a dismissal? 380
When is a dismissal unfair? 382
Was the dismissal actually fair? 382
Disciplinary and dismissal procedure 383
Automatically unfair dismissals 384
The effective date of termination 384
Remedies for unfair dismissal 385
Wrongful dismissal 386
Constructive dismissal 387
How much notice? 387
Redundancy 389
Who can claim redundancy? 389
Offer of suitable alternative employment 389
Redundancy payments 390
Essential points 391
Practice questions 392
Task 13 393
14 Employment (2):
Discrimination and
health and safety 394
Introduction 394
The Equality Act 2010 394
The protected characteristics 394
Direct discrimination 396
Indirect discrimination 397
Harassment 399
Victimisation 399
Discrimination against employees
and applicants for employment 400
Equal pay and conditions for women 401
Remedies under the Act 404
Burden of proof under the Act 405
Public sector equality duty 405
Positive action 405
Discrimination against part-time
workers 405
Fixed-term workers 406
Persons with criminal records 406
The Agency Workers Regulations 2010 407
Health and safety 408
Health and Safety at Work Act 1974 408
Common law health and safety 410
Control of Substances Hazardous
to Health Regulations 2002 411
The ‘six pack’ Regulations 412
Essential points 415
Practice questions 416
Task 14 417
15 Regulation of business
by the criminal law 418
The nature of criminal liability 418
The Consumer Protection from Unfair
Trading Regulations 2008 418
The structure of the Regulations 419
The prohibitions under the Regulations 419
The offences which the Regulations
create 426
Defences 427
Product safety 429
The general safety requirement 429
The Computer Misuse Act 1990 430
The unauthorised access offence 430
Intent to commit a further offence 431
Unauthorised modification of
computer material 431
Competition law 431
Articles 101–102 of the Treaty on the
Functioning of the European Union 432
The Competition Act 1998 432
The Enterprise Act 2002 432
The Bribery Act 2010 433
The offences 433
Essential points 435
Practice questions 435
Task 15 436
16 Credit transactions
and intellectual property
rights 437
Types of credit transactions 437
Loans 437
Hire-purchase 438
Conditional sales 439
Credit sales 440
Hire and rental agreements 440
Pledge 440
The Consumer Credit Acts 1974
and 2006 441
The definition of a regulated
agreement 441
High net worth debtors and business
exemptions 443
Formalities which must be
complied with 444
Cancellation rights 444
Creditor regarded as agent of
the supplier 445
Creditor responsible for dealer’s
misrepresentations and breaches
of contract 445
Cooling-off period 446
Early settlement 446
Repossession of the goods 446
Unfair relationships 447
Misuse of credit cards 447
Interest on trade debts 447
Business property 447
Legal concepts of property 447
Copyright 448
Patents 451
Trade marks 452
Breach of confidence 454
Suing for breach of privacy 454
Essential points 455
Practice questions 455
Task 16 456
17 The resolution of business
disputes 457
Jurisdiction of the County Court 457
Jurisdiction of the High Court 458
Civil procedure 460
Making a claim 460
Responses to a claim 461
Allocation to a track 461
Tribunals 464
Alternative dispute resolution 464
Other types of ADR 468
Ombudsmen 468
Essential points 469
Practice questions 469
Task 17 470
Glossary 471
Index 486