Introduction to Business Law

INTRODUCTION TO BUSINESS LAW

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Introduction to

Business

Law

second edition

lucy jones

3

Great Clarendon Street, Oxford, OX2 6DP,

1

United Kingdom

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First Edition copyright 2011

Impression: 1

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Contains public sector information licensed under the Open Government Licence v1.0

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British Library Cataloguing in Publication Data

Data available

ISBN 978–0–19–966287–6

Printed in Italy by

L.E.G.O. S.p.A.—Lavis TN

Links to third party websites are provided by Oxford in good faith and

for information only. Oxford disclaims any responsibility for the materials

contained in any third party website referenced in this work.

To Allan, Sophie, Nick, and Rosie and to all the students who have inspired me over

the years.

• Expanded coverage of employment law.

• Coverage of changes brought about by the Equality Act 2010.

• Coverage of proposed reform to unfair dismissal law.

• Updated case law including coverage of recent decisions of the Supreme Court on

issues relating to age discrimination, employer’s insurance liability, and causation.

• Updated legislation and regulation coverage throughout.

New to this Edition

Guide to the Book xvi

Guide to the Online Resource Centre xviii

Table of Cases xx

Table of Statutes xxvi

PART 1 THE ENGLISH LEGAL SYSTEM

1 The Nature of English Law 2

2 The Court System and Alternative Dispute Resolution 16

3 Sources of English Law 42

PART 2 CONTRACT LAW

4 The Nature of the Agreement: Offer and Acceptance 82

5 Intention, Capacity, Consideration, and Privity 117

6 The Terms of a Contract 156

7 Vitiating Factors 194

8 Discharge of Contract and Contractual Remedies 233

9 The Law of Agency 270

10 The Sale of Goods and Supply of Services 298

PART 3 TORT LAW

11 The Tort of Negligence 344

12 Product Liability, Defective Premises, Interference with Land,

and Defences 386

PART 4 EMPLOYMENT LAW

13 The Contract of Employment and its Termination 428

14 Discrimination and Health and Safety 457

Outline Contents

viii Outline Contents

PART 5 THE STRUCTURE & MANAGEMENT OF A BUSINESS

15 Business Organisations 488

16 Company Law I Formation and Finance 524

17 Company Law II Company Officers and Liabilities 556

18 Company Law III Company Meetings, Shareholder Protection, and

Liquidation of Companies 587

PART 6 STUDY SKILLS & REVISION ADVICE

19 Study Skills 618

Index 630

Detailed Contents

Guide to the Book xvi

Guide to the Online Resource Centre xviii

Table of Cases xx

Table of Statutes xxvi

PART 1 THE ENGLISH LEGAL SYSTEM

1 The Nature of English Law 2

Introduction 2

Learning Objectives 3

What is Law? 3

Nature of English Law 4

Classification of Different Types of Laws 8

Basic Terminology 13

Summary 13

Questions 14

Further Reading 14

Online Resource Centre 15

2 The Court System and Alternative Dispute Resolution 16

Introduction 16

Learning Objectives 16

The English Court System 17

Civil Disputes 31

Alternative Dispute Resolution 35

Basic Terminology 39

Summary 40

Questions 40

Further Reading 41

Online Resource Centre 41

3 Sources of English Law 42

Introduction 42

Learning Objectives 42

Legislation 43

Custom 57

x Detailed Contents

Case Law 57

European Union Law 65

Institutions of the EU 66

The European Convention on Human Rights and Fundamental

Freedoms and the Human Rights Act 1998 72

Basic Terminology 78

Summary 78

Questions 79

Further Reading 80

Online Resource Centre 80

PART 2 CONTRACT LAW

4 The Nature of the Agreement: Offer and Acceptance 82

Introduction 82

Learning Objectives 83

Essentials of a Contract 83

Issues in Contract Law 85

The Offer 90

Acceptance 104

Basic Terminology 113

Summary 113

Questions 114

Further Reading 115

Online Resource Centre 116

5 Intention, Capacity, Consideration, and Privity 117

Introduction 117

Learning Objectives 118

Intention to Create Legal Relations 118

Contractual Capacity 126

Consideration 131

Privity of Contract 148

Basic Terminology 153

Summary 153

Questions 154

Further Reading 155

Online Resource Centre 155

6 The Terms of a Contract 156

Introduction 156

Learning Objectives 156

Pre-contractual Statements 157

Contractual Terms 160

Exemption Clauses 168

Detailed Contents xi

Unfair Contract Terms Act 1977 176

The Unfair Terms in Consumer Contracts Regulations 1999 181

Contracts in Restraint of Trade 185

Basic Terminology 190

Summary 190

Questions 191

Further Reading 192

Online Resource Centre 193

7 Vitiating Factors 194

Introduction 194

Learning Objectives 194

Misrepresentation 195

Mistake 208

Duress and Undue Influence 219

Illegality 226

Basic Terminology 230

Summary 230

Questions 231

Further Reading 232

Online Resource Centre 232

8 Discharge of Contract and Contractual Remedies 233

Introduction 233

Learning Objectives 233

Discharge of a Contract 234

Remedies for Breach of Contract 254

Basic Terminology 266

Summary 267

Questions 268

Further Reading 268

Online Resource Centre 269

9 The Law of Agency 270

Introduction 270

Learning Objectives 270

Definition of Agency 271

The Creation of Agency 272

Authority of an Agent 279

Rights and Duties 282

Relationship between Agent, Principal, and Third Party 290

Termination of Agency 292

Types of Agents 294

Basic Terminology 295

Summary 295

xii Detailed Contents

Questions 296

Further Reading 296

Online Resource Centre 297

10 The Sale of Goods and Supply of Services 298

Introduction 298

Learning Objectives 299

The Sale of Goods 299

Terms Implied into Contracts by the Sale of Goods Act 1979 301

Passing of Property (Title) in Goods from Seller to Buyer 314

Duties of the Parties of Contract for Sale of Goods 326

Remedies of the Buyer and Seller for Breach of Contract 330

Terms Implied into Other Contracts 335

Basic Terminology 338

Summary 339

Questions 340

Further Reading 341

Online Resource Centre 341

PART 3 TORT LAW

11 The Tort of Negligence 344

Introduction 344

Learning Objectives 345

Distinction between the Law of Torts and Criminal Law 345

Distinction between the Law of Torts and Contract Law 346

The Tort of Negligence 347

Element 1: Duty of Care 347

Element 2: The Defendant Broke his Duty of Care 368

Element 3: The Claimant Suffered Loss or Damage as a Result of

the Defendant’s Breach of Duty 376

Basic Terminology 382

Summary 383

Questions 384

Further Reading 384

Online Resource Centre 385

12 Product Liability, Defective Premises, Interference with Land,

and Defences 386

Introduction 386

Learning Objectives 386

Liability for Defective Products 387

Occupiers’ Liability 395

Trespass to Land 401

Detailed Contents xiii

Private Nuisance 404

Public Nuisance 409

The Rule in Rylands v Fletcher 410

General Defences in Tort 412

Vicarious Liability 418

Basic Terminology 423

Summary 424

Questions 425

Further Reading 426

Online Resource Centre 426

PART 4 EMPLOYMENT LAW

13 The Contract of Employment and its Termination 428

Introduction 428

Learning Objectives 429

Issues in Employment Law 429

Employment Status 429

Implied Terms 436

Termination of Contract 438

Statutory Notice Periods 438

Types of Dismissal Claim 440

Redundancy 450

Basic Terminology 453

Summary 454

Questions 455

Further Reading 455

Online Resource Centre 456

14 Discrimination and Health and Safety 457

Introduction 457

Learning Objectives 458

Discrimination Law 458

Protected Characteristics 459

Prohibited Conduct 467

Positive Action 476

Health and Safety 477

Civil Law 481

Basic Terminology 484

Summary 484

Questions 485

Further Reading 486

Online Resource Centre 486

xiv Detailed Contents

PART 5 THE STRUCTURE & MANAGEMENT OF A BUSINESS

15 Business Organisations 488

Introduction 488

Learning Objectives 488

Unincorporated and Incorporated Business Organisations 489

Partnerships 491

Limited Partnerships 506

Limited Liability Partnerships 507

Companies 511

Basic Terminology 520

Summary 521

Questions 522

Further Reading 522

Online Resource Centre 523

16 Company Law I Formation and Finance 524

Introduction 524

Learning Objectives 524

Setting Up a Company 525

The Constitutional Documents of a Company under the

Companies Act 2006 534

Financing a Company 541

Basic Terminology 552

Summary 553

Questions 554

Further Reading 554

Online Resource Centre 555

17 Company Law II Company Officers and Liabilities 556

Introduction 556

Learning Objectives 557

Directors 557

Company Secretary 578

Company Auditors 580

Basic Terminology 584

Summary 584

Questions 585

Further Reading 586

Online Resource Centre 586

18 Company Law III Company Meetings, Shareholder Protection, and

Liquidation of Companies 587

Introduction 587

Learning Objectives 588