Law for Business Students

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SIXTH EDITION

LAW FOR

BUSINESS

STUDENTS

ALIX ADAMS

From hiring and fi ring, to selling goods or

starting your own company, the world of

business is inextricably linked to law and

legal regulation. Alix Adams’ lively and

understandable introduction to all aspects of

law encountered in business will provide you

with a clear appreciation of the main rules and

legal principles.

Utilising a host of features in a colourful

and clear design, Law for Business Students

encourages you to understand how the law

works in everyday business situations and apply

it to your course, your own experiences and the

world around you.

ALIX ADAMS has over thirty years’ experience

of teaching law from GCSE to degree and

postgraduate level and is a qualifi ed barrister.

‘Its lucidity, structure and ease of use is a sure

winner with business students while the boxed

cases make the approach to the study of law

not just interesting but comprehensible and

accessible. The activities and assignments

after each chapter reinforce understanding

and provide an opportunity for students to put

theory into practice.’

Dr Vick Krishnan,

Principal Lecturer and Subject Leader in Law,

Regent’s College, London

LAW FOR BUSINESS STUDENTS

SIXTH

EDITION ADAMS

Visit www.mylawchamber.co.uk/adams to access

interactive exercises and fl ashcards designed so

that you can test yourself on topics covered in the

book. There are also legal updates and live weblinks

to help you impress examiners and lecturers with

knowledge of the latest developments.

CASE

N A V I G AT O R POWERED BY

Worried about getting to grips with cases?

Case Navigator offers unique online support that helps you

improve your case reading and analysis skills in Business

Law. Cases contained within this resource are highlighted

throughout this book. The LexisNexis element of Case

Navigator is only available to those who currently subscribe to

LexisNexis Butterworths online.

Do you want to give yourself a head start

come exam time?

Lecturers: use the site to access resources to

help you teach the subject, including a testbank

of multiple choice questions which can be used

to assess students’ progress.

SIXTH EDITION

LAW FOR

BUSINESS

STUDENTS

ALIX ADAMS

CVR_ADAM5455_06_SE_CVR.indd 1 20/1/10 12:49:55

Law for Business Students

We work with leading authors to develop the strongest educational

materials in business and law, bringing cutting-edge thinking and

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Under a range of well-known imprints, including Longman, we craft

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Law for Business

Students

Sixth edition

Alix Adams

LLB (Bristol), LLM (Cardiff), Barrister, Cert. Ed.

Pearson Education Limited

Edinburgh Gate

Harlow

Essex CM20 2JE

England

and Associated Companies throughout the world

Visit us on the World Wide Web at: www.pearsoned.co.uk

First published under the Pitman Publishing imprint in Great Britain in 1996

Second edition published 2000

Third edition published 2003

Fourth edition published 2006

Fifth edition published 2008

Sixth edition published 2010

© Pearson Professional Limited 1996

© Pearson Education Limited 2000, 2010

The right of Alix Adams to be identified as author of this work has been asserted by her in accordance with

the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted

in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either

the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom

issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS.

All trademarks used herein are the property of their respective owners. The use of any trademark in this text

does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the

use of such trademarks imply any affiliation with or endorsement of this book by such owners.

Crown Copyright material is reproduced with the permission of the Controller of HMSO and the Queen’s

Printer for Scotland

Law Commission Reports are reproduced under the terms of the Click-Use Licence

ISBN: 978-1-4082-2545-5

British Library Cataloguing-in-Publication Data

A catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data

Adams, Alix.

Law for business students / Alix Adams. -- 6th ed.

p. cm.

Includes index.

ISBN 978-1-4082-2545-5 (pbk.)

1. Business law--England. I. Title.

KD661.A33 2010

346.4207--dc22

2009047012

10 9 8 7 6 5 4 3 2 1

14 13 12 11 10

Typeset in 9.5/13 pt Frutiger Light by 30

Printed and bound by Rotolito Lombarda, Italy

The publisher’s policy is to use paper manufactured from sustainable forests

For Cherry, with much love and gratitude

vii

Brief contents

Contents ix

Guided tour xx

Acknowledgements xxiv

Preface xxv

Table of cases xxvi

Table of statutes xxxvii

Table of statutory instruments xliv

Table of European and international legislation xlvi

Part 1: Introduction 3

1 Getting started: an introduction to studying law 4

2 How the law is made 16

3 Resolving legal disputes 40

Part 2: Law of contract, agency and sale of goods 61

4 The law of contract: offer and acceptance 62

5 The law of contract: consideration, intention and privity 82

6 The terms of the contract 100

7 Defects in the contract: misrepresentation, mistake, duress and undue 126

influence

8 More defects: illegality and incapacity 152

9 Discharge of the contract and remedies for breach 168

10 The law of agency 198

11 Sale of goods: the contract and its terms 216

12 Sale of goods: transfer of ownership, performance and remedies for breach 234

of contract

Part 3: The law of tort 255

13 Tort liability for defective goods 256

14 Tort liability for defective services 276

15 Tort liability for premises 316

viii

Part 4: Elements of employment law 347

16 Rights at work: the contract of employment and health and safety at work 348

17 Rights at work: protection against discrimination 368

18 Rights at work: protection against dismissal and redundancy 396

Part 5: Introduction to company law 417

19 Business organisation 418

20 Forming a registered company 440

21 Running the company: raising and maintaining capital 454

22 Daily management of the company: functions of directors, secretary

and auditors 466

23 Company meetings and shareholder participation 486

Part 6: General principles of intellectual property law 501

24 Statutory intellectual property protection: copyright, designs, patents and 502

trade marks

25 Common law protection of intellectual property: passing off, malicious 522

falsehood and breach of confidence

Part 7: Study skills 539

26 Study skills, and revision and examination hints 540

Appendix 1: Additional resources 550

Appendix 2: Worth thinking about? and quiz solutions 556

Index 569

BRIEF CONTENTS

Contents

Guided tour xx

Acknowledgements xxiv

Preface xxv

Table of cases xxvi

Table of statutes xxxvii

Table of statutory instruments xliv

Table of European and international legislation xlvi

Part 1: Introduction 3

1 Getting started: an introduction to studying law 4

Introduction 5

What is law? 6

The characteristics of English law 6

Why do we need law? 8

The differences between criminal and civil law 9

Changing the law 10

Essential legal terms 11

Introductory study tips 12

Chapter summary 14

Key terms 14

Quiz 1 15

2 How the law is made 16

Introduction 17

European law 18

Parliament 21

The courts 24

The Human Rights Act 1998 (HRA 1998) 32

ix

Chapter summary 36

Key terms 36

Quiz 2 38

Take a closer look 38

Web activity 38

Assignment 1 38

3 Resolving legal disputes 40

Introduction 41

The court system 42

Bringing a case in the civil courts 46

The Woolf reforms 1999 47

Settlement out of court 47

Payment into court and offers to settle 48

Civil litigation procedures 48

The trial of the case 50

Executing the judgment 51

Alternative dispute resolution (ADR) 52

The tribunal system 54

Chapter summary 56

Key terms 57

Quiz 3 58

Web activity 59

Assignment 2 59

Part 2: Law of contract, agency and sale of goods 61

4 The law of contract: offer and acceptance 62

Introduction 63

The essentials of a binding contract 64

The offer 64

The acceptance 72

Chapter summary 78

Key terms 78

Quiz 4 79

Take a closer look 80

Web activity 80

Assignment 3 80

x

CONTENTS

5 The law of contract: consideration, intention and privity 82

Introduction 83

Consideration 84

Intention to create legal relations 92

Privity of contract 94

Chapter summary 97

Key terms 98

Quiz 5 98

Take a closer look 99

Web activity 99

Assignment 4 99

6 The terms of the contract 100

Introduction 101

Express and implied terms 102

The relative importance of contractual terms 103

Limitation and exclusion of liability 106

Chapter summary 121

Key terms 122

Quiz 6 122

Take a closer look 123

Web activity 123

Assignment 5 123

7 Defects in the contract: misrepresentation, mistake, duress

and undue influence 126

Introduction 127

Misrepresentation 128

Mistake 134

Duress and undue influence 142

Chapter summary 147

Key terms 148

Quiz 7 149

Take a closer look 149

Web activity 149

Assignment 6 150

xi

CONTENTS

8 More defects: illegality and incapacity 152

Introduction 153

Illegality 154

Contractual incapacity 160

Chapter summary 163

Key terms 164

Quiz 8 164

Take a closer look 165

Web activity 165

Assignment 7 165

9 Discharge of the contract and remedies for breach 168

Introduction 169

Discharge of contracts 170

Remedies for breach of contract 183

Chapter summary 193

Key terms 194

Quiz 9 194

Take a closer look 195

Web activity 195

Assignment 8 195

10 The law of agency 198

Introduction 199

The creation of agency 200

The rights and duties of the agent 205

The rights and duties of the principal 209

Termination of agency 209

Some common types of specialist agents 211

Chapter summary 212

Key terms 213

Quiz 10 214

Take a closer look 214

Web activity 214

Assignment 9 215

xii

CONTENTS

11 Sale of goods: the contract and its terms 216

Introduction 217

The sale of goods contract 218

The terms implied by the Sale of Goods Act 1979 220

Implied conditions in other Acts 229

Chapter summary 230

Key terms 230

Quiz 11 231

Take a closer look 231

Web activity 232

Assignment 10 232

12 Sale of goods: transfer of ownership, performance and

remedies for breach of contract 234

Introduction 235

The statutory rules governing transfer of title from seller to buyer 236

Transfer of title by non-owner 240

The passage of risk 242

Performance of the contract 243

Remedies for breach of the sale of goods contract 245

Chapter summary 251

Key terms 251

Quiz 12 252

Take a closer look 252

Web activity 252

Assignment 11 253

Part 3: The law of tort 255

13 Tort liability for defective goods 256

Introduction 257

Negligence liability 258

The Consumer Protection Act 1987 (Part I) 264

Chapter summary 271

Key terms 272

Quiz 13 273

xiii

CONTENTS

Take a closer look 273

Web activity 273

Assignment 12 274

14 Tort liability for defective services 276

Introduction 277

Part 1 – problematic duty situations 278

Part 2 – breach of duty 300

Proving consequent damage 305

Chapter summary 311

Key terms 312

Quiz 14 312

Take a closer look 313

Web activity 313

Assignment 13 313

15 Tort liability for premises 316

Introduction 317

The occupier’s liability to people on the premises 318

Duties of an occupier to people outside the premises 325

Defences in tort 335

Vicarious liability 339

Chapter summary 342

Key terms 343

Quiz 15 343

Take a closer look 343

Web activity 344

Assignment 14 344

Part 4: Elements of employment law 347

16 Rights at work: the contract of employment and health and

safety at work 348

Introduction 349

The employment contract: a contract of service 350

The law of tort: employers’ civil liability for industrial injuries 356

Criminal law regulation of safety in the workplace 361

xiv

CONTENTS