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essentials of
business law
Ewan MacIntyre
third edition
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Cover © Getty Images
Essentials of Business Law is well regarded for its clear yet
succinct exposition of legal principles and key cases across
the essential legal topics relevant to business students. The
numerous diagrams are now presented in colour for the
fi rst time to better aid comprehension of legal structures
and processes.
Key changes made to the new edition include:
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essentials of
business law
Ewan MacIntyre
third edition
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A01_MACI4097_03_SE_FM1.QXD 2/15/11 9:44 AM Page ii
Ewan MacIntyre
Senior Lecturer
Nottingham Law School
Nottingham Trent University
Essentials of
Business Law
Third Edition
A01_MACI4097_03_SE_FM1.QXD 2/15/11 9:44 AM Page iii
Pearson Education Limited
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First published 2007
Second edition published 2009
Third edition published 2011
© Pearson Education Limited 2007, 2009, 2011
The right of Ewan MacIntyre to be identified as author of this work has been
asserted by him in accordance with the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this publication may be reproduced, stored in
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ISBN: 978-1-4082-5409-7
British Library Cataloguing-in-Publication Data
MacIntyre, Ewan.
Essentials of business law / Ewan MacIntyre. – 3rd ed.
p. cm.
ISBN 978-1-4082-5409-7 (pbk.)
1. Commercial law – England. 2. Commercial law – Wales. I. Title.
KD1629.6.M33 2010
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A01_MACI4097_03_SE_FM1.QXD 2/15/11 9:44 AM Page iv
Preface xiv
Guided tour xvi
Table of cases xviii
Table of statutes xxvi
Table of statutory instruments xxxi
Table of European legislation xxxiii
Study skills 1
1 The legal system 7
2 Making a contract 37
3 The terms of the contract 72
4 Misrepresentation, mistake, duress and illegality 110
5 Discharge of contracts and remedies for breach 137
6 Agency 160
7 The Sale of Goods Act 1979 182
8 The tort of negligence 223
9 Nuisance, trespass, defamation and vicarious liability 247
10 Companies (1): Characteristics and formation 272
11 Companies (2): Management, control and winding up 294
12 Partnership, limited liability partnership and choice of legal status 329
13 Employment (1): The contract of employment, employment rights
and dismissal 357
14 Employment (2): Discrimination and health and safety 380
15 Regulation of business by the criminal law 401
16 Credit transactions and intellectual property rights 419
17 The resolution of business disputes 438
Glossary 452
Index 465
Brief contents
A01_MACI4097_03_SE_FM1.QXD 2/15/11 9:44 AM Page v
A01_MACI4097_03_SE_FM1.QXD 2/15/11 9:44 AM Page vi
Preface xiv
Guided tour xvi
Table of cases xviii
Table of statutes xxvi
Table of statutory instruments xxxi
Table of European legislation xxxiii
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
What skills are you expected to show? 2
Answering problem questions 3
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
European Union Law 16
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 43
Auctions 45
Tenders 45
Certainty of agreement 46
Offer and acceptance when dealing with
machines 47
Offer and acceptance made over
the Internet 48
Termination of offers 49
Subject to contract 50
Condition not fulfilled 50
Battle of the forms 51
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 56
Contents
A01_MACI4097_03_SE_FM1.QXD 2/15/11 9:44 AM Page vii
viii Contents
Is the exclusion clause a term of
the contract? 98
The Unfair Contract Terms Act 1977 100
Contracts covered by the Act 100
The effect of the Act 100
The Unfair Terms in Consumer Contracts
Regulations 1999 105
Essential points 107
Practice questions 108
Task 3 109
4 Misrepresentation, mistake,
duress and illegality 110
The difference between terms and
representations 110
Written contracts 110
Oral contracts 111
How a representation becomes a
misrepresentation 114
Definition of a misrepresentation 114
Remedies for misrepresentation 117
Mistake 123
Common mistake 123
Unilateral mistake 126
Duress and undue influence 130
Duress 130
Undue influence 131
Illegal contracts 132
Contracts which contravene public policy 133
Essential points 133
Practice questions 134
Task 4 135
5 Discharge of contracts and
remedies for breach 137
Discharge of contractual liability 137
Discharge by performance of the contract 137
Discharge by agreement 140
Discharge by frustration 141
Rules about frustration 142
Discharge by breach 146
Legislation giving right to cancel
concluded contracts 147
Remedies for breach of contract 150
Refusal to perform the contract 150
Damages 150
Suing for the contract price 154
Specific performance 154
Settling out of court 59
Part payment of a debt 59
Promissory estoppel 60
Privity of contract 63
The Contracts (Rights of Third Parties)
Act 1999 65
Formalities 66
Contracts which must be made by a deed 67
Contracts which must be in writing 67
Contracts which must be evidenced
in writing 67
Minors 68
Valid contracts 68
Voidable contracts 68
Void contracts 68
Essential points 69
Practice questions 69
Task 2 71
3 The terms of the contract 72
Nature of terms 72
Express terms 73
Terms implied by the courts 73
Types of terms 75
Conditions and warranties 75
Innominate terms 76
Terms implied by statute 76
The Sale of Goods Act 1979 76
The terms implied by the Sale of Goods
Act 1979 77
The right to sell (s. 12(1)) 78
Correspondence with description (s. 13(1)) 79
Quality and fitness in business sales (s. 14) 81
Fitness for purpose (s. 14(3)) 86
Sale by sample (s. 15) 88
The Supply of Goods (Implied Terms)
Act 1973 89
The Supply of Goods and Services
Act 1982 90
Part I of the Act 90
Part II of the Act 91
The status of the statutory implied terms 92
Additional rights of the buyer in
consumer cases 94
The circumstances in which the new
rights apply 94
The hierarchy of rights 94
Consumer guarantees 96
Exclusion clauses 97
A01_MACI4097_03_SE_FM1.QXD 2/15/11 9:44 AM Page viii
Contents ix
Remedies of the buyer and seller 200
The buyer’s remedies 200
The seller’s remedies 204
Reservation of title (ownership) by the seller 211
Claims to goods manufactured out of
the goods sold 212
The position where the goods are sold on 212
Claims to proceeds of sale 212
All moneys clauses 213
Sale by a person who is not the owner 213
Agency (s. 21 SGA) 214
Estoppel (s. 21 SGA) 214
Mercantile agency (s. 2(1) Factors
Act 1889) 214
Sale by a person with a voidable title
(s. 23 SGA) 215
Sale by a seller in possession (s. 24 SGA) 216
Sale by a buyer in possession (s. 25 SGA) 217
Motor vehicles on hire-purchase
(Hire-Purchase Act 1964 s. 27) 217
Essential points 218
Practice questions 220
Task 7 222
8 The tort of negligence 223
Contract and tort 223
Contract remedies and tort remedies 224
Negligence 225
That a duty of care was owed 225
Breaching the duty 229
A foreseeable type of damage was
caused by the breach of duty 232
Causation 232
Foreseeability 234
Damages 235
Defences to negligence 236
Negligent misstatement 237
Occupiers’ liability 238
Lawful visitors 238
Non-lawful visitors 239
The Consumer Protection Act 1987 Part I 240
Who may sue? 240
Who is liable? 240
Defective products 241
Damage suffered 242
Defences 242
Essential points 245
Practice questions 245
Task 8 246
Injunction 156
Rectification 157
Quantum meruit (as much as he has earned) 157
Time limits on remedies 157
Essential points 157
Practice questions 158
Task 5 159
6 Agency 160
What is agency? 160
The authority of the agent 161
Actual authority 161
Apparent authority 161
Ratification 163
Watteau v Fenwick authority 164
Agency by operation of law 165
No authority 166
Liability on contracts made by agents 168
Disclosed agency 168
Undisclosed agency 168
The agent’s liability for breach of warranty
of authority 169
The rights and duties of the agent 170
Contractual duties 170
Fiduciary duties 171
Remedies for breach of fiduciary duties 173
Rights of the agent 173
Termination of agency 176
Termination and the Commercial Agents
(Council Directive) Regulations 1993 177
Essential points 179
Practice questions 179
Task 6 181
7 The Sale of Goods Act 1979 182
The passing of ownership and risk 182
The goods become lost or damaged 182
Insolvency of the buyer or the seller 185
The Sale of Goods Act rules on the
passing of ownership 186
Passing of ownership of specific goods 186
Risk, mistake and frustration 189
Passing of ownership in unascertained
goods 190
Duties of the buyer and the seller 195
The seller’s duty to deliver 195
The buyer’s duty to pay the price 200
The buyer’s duties to accept the goods
and take delivery of them 200
A01_MACI4097_03_SE_FM1.QXD 2/15/11 9:44 AM Page ix
x Contents
Ownership of property 276
Contractual capacity 276
Criminal liability 276
The corporate veil 277
Classification of companies 279
Public companies and private companies 279
Unlimited companies 280
Limited companies 280
Method of creation 281
Size of company 281
Formation of registered companies 281
Registration under the Companies
Act 2006 281
Old-style registration 284
The constitution of a company 285
Constitutionally relevant articles 285
The articles of association 285
The legal effect of the constitution 286
Off the shelf companies 288
Contracts made before the company
is formed 288
The company name 289
Prohibited names 289
Objection to a company name 290
Publication of name and address 290
Change of name 290
The Registrar of Companies 290
Essential points 291
Practice questions 292
Task 10 293
11 Companies (2): Management,
control and winding up 294
Management and control of companies 294
Appointment and removal of directors 294
The powers of directors 295
Directors as agents 296
Remuneration of directors 298
Directors’ duties 298
Disqualification of directors 302
The register of directors 303
Control of the company 304
Types of shares 304
Company meetings 305
Resolutions 307
The position of minority shareholders 309
Statutory protection of minority
shareholders 310
Protection from the courts 313
9 Nuisance, trespass, defamation
and vicarious liability 247
Private nuisance 247
Remedies 249
Defences 250
Public nuisance 251
Remedies 252
Defences 252
The rule in Rylands v Fletcher 252
Remedies 253
Defences 253
Trespass to land 254
Defences 255
Remedies 255
Trespass to the person 256
Battery 256
Assault 256
False imprisonment 257
Defences to trespass to the person 257
Trespass to goods 257
Defamation 258
Remoteness of damage 259
Defences 259
Remedies 260
Vicarious liability 261
Employees contrasted with independent
contractors 261
When is an employee acting in the course
of his or her employment? 265
Breach of statutory duty 268
Time limits for tort remedies 268
Essential points 268
Practice questions 269
Task 9 271
10 Companies (1): Characteristics
and formation 272
The Companies Act 2006 272
Enhancing shareholder engagement and
fostering a long-term approach to
investment 272
The ‘Think Small First’ approach and
better regulation 273
Ease of formation and flexibility 273
The characteristics of companies 273
The company is a separate legal entity 273
Limited liability 275
Perpetual succession 276
A01_MACI4097_03_SE_FM1.QXD 2/15/11 9:44 AM Page x
Contents xi
Company, partnership or limited liability
partnership? Choice of legal status 348
Limited liability 348
The right to manage 349
Agency 350
Withdrawal from the business 350
Business property 351
Borrowing power 351
Formation 352
Formalities 352
Publicity 352
Tax 353
Perpetual succession 353
Sole traders 353
Essential points 353
Practice questions 354
Task 12 355
13 Employment (1): The contract
of employment, employment
rights and dismissal 357
The contract of employment 357
Written statement of employment
particulars 357
Itemised pay statements 358
Implied obligations of the parties 358
Variation of the terms of the contract 359
Statutory rights of the employee 359
Maternity rights 359
Paternity leave and pay 361
Adoption leave and pay 361
Parental leave and time off for
dependants 362
Flexible working for parents and carers 362
Transfer of employees 363
National minimum wage 363
The Working Time Regulations 1998 364
ACAS grievance procedure 365
Unfair and wrongful dismissal 366
Unfair dismissal 366
Who can claim? 366
What is a dismissal? 367
When is a dismissal unfair? 368
Was the dismissal actually fair? 368
Procedure to be followed 369
Automatically unfair dismissals 370
The effective date of termination 371
Remedies for unfair dismissal 371
Wrongful dismissal 372
The company secretary 314
Company registers 315
Annual return 315
Accounts and accounting records 316
Accounting records 316
The annual accounts 316
The auditor 317
The need to have an auditor 317
Appointment and leaving office 317
Auditor’s duties 318
Liability limitation agreements 318
Loans to the company 319
Fixed charges 319
Floating charges 320
Registration of charges 321
Priority of charges 321
Winding up of companies 321
Liquidation by court order 321
Voluntary liquidation 322
Liability arising from insolvency 323
Administration 324
Company voluntary arrangement (CVA) 325
Essential points 325
Practice questions 326
Task 11 328
12 Partnership, limited liability
partnership and choice of
legal status 329
Partnership 329
Definition of a partnership 329
Characteristics of a partnership 330
Agency 331
Partnership agreements 335
The partnership deed 336
Management of partnerships 336
The partnership name 340
Fiduciary duties 341
Partnership property 343
Winding up of partnerships 343
Limited liability partnerships 346
Formation of LLPs 346
Members and designated members 346
Accounts and accounting records 347
Minority protection 347
Winding up of limited liability
partnerships 347
Are LLPs more like companies or
partnerships? 348
A01_MACI4097_03_SE_FM1.QXD 2/15/11 9:44 AM Page xi
xii Contents
Competition law 414
The Bribery Act 2010 415
The offences 415
Essential points 417
Practice questions 417
Task 15 418
16 Credit transactions and
intellectual property rights 419
Credit transactions 419
Loans 419
Hire-purchase 420
Conditional sales 421
Credit sales 422
Hire and rental agreements 422
Pledge 422
The Consumer Credit Acts 1974 and
2006 423
Interest on trade debts 428
Business property 429
Legal concepts of property 429
Copyright 430
Patents 432
Trade marks 434
Breach of confidence 435
Suing for breach of privacy 435
Passing off 435
Essential points 436
Practice questions 436
Task 16 437
17 The resolution of business
disputes 438
Jurisdiction of the county court 438
Jurisdiction of the High Court 439
Civil procedure 441
Making a claim 441
Responses to a claim 443
Allocation to a track 443
Tribunals 445
Alternative dispute resolution 445
Other types of ADR 449
Ombudsmen 449
Essential points 450
Practice questions 450
Task 17 451
Glossary 452
Index 465
Constructive dismissal 373
How much notice? 373
Redundancy 375
Who can claim redundancy? 376
Offer of suitable alternative employment 376
Redundancy payments 376
Essential points 377
Practice questions 378
Task 13 379
14 Employment (2): Discrimination
and health and safety 380
Introduction 380
The Equality Act 2010 380
The protected characteristics 380
Direct discrimination 382
Indirect discrimination 383
Harassment 384
Victimisation 384
Discrimination against employees and
applicants for employment 385
Equal pay and conditions for women 385
Burden of proof under the Act 389
Public sector equality duty 389
Positive action 389
Discrimination against part-time workers 389
Fixed-term workers 391
Persons with criminal records 391
Health and safety 391
Health and Safety at Work Act 1974 391
Common law health and safety 393
Control of Substances Hazardous to
Health Regulations 2002 394
The ‘six pack’ Regulations 395
Essential points 398
Practice questions 399
Task 14 400
15 Regulation of business by the
criminal law 401
The nature of criminal liability 401
The Consumer Protection from Unfair
Trading Regulations 2008 401
The structure of the Regulations 402
The prohibitions under the Regulations 402
The offences which the Regulations create 409
Defences 410
Product safety 411
The Computer Misuse Act 1990 413
A01_MACI4097_03_SE_FM1.QXD 2/15/11 9:44 AM Page xii
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n Summaries contextualise each case and point you to further reading so that you are fully
prepared for seminars and discussions.
mylawchamber is regularly maintained and provides the following features:
n Search tool to help locate specific items of content.
n E-mail results and profile tools to send results of quizzes to instructors.
n Online help and support to assist with website usage and troubleshooting.
For more information please contact your local Pearson Education sales representative
or visit www.pearsoned.co.uk/macintyreessentials.
*Please note that access to Case Navigator is free with the purchase of this book, but you must
register with us for access. Full registration instructions are available on the website. The LexisNexis
element of Case Navigator is only available to those who currently subscribe to LexisNexis
Butterworths online.
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