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BXI251 - Business Law, Literal, Ready Mixed Concrete (SE) v Minister of…

- - - - Invitation to treat w/ weapons in window display
      - Literal rule → Not Guilty
    - - Inside Prohibited Area = in vicinity Guilty → Golder Rule
    - - Used for interpreting rule society intended to fix -> Mischief Rule
    - - European Convention of Human Rights Ms Ewieda's rights violated about religion
  - - - Criminal Constitutional Admin
        
        Constitutional law relates to the UK / It regulates relationships between individuals and state
        
        Admin Law = Public bodies that act legally, reasonably and fairly
        
        Criminal Law = See Unit 8
    - - Contract Personal Family
  - - - Crown Court = Serious Criminal Issues / Either way offences (theft etc)
        
        Court of Appeal = Sees both criminal and civil cases on appeal
        
        Supreme Court = final court of appeal
    - - High Court = comprises of Chancery, Kings Bench and Family Divisions
  - - - Grandson penned
        
        Magna Carta = First document to prevent the monarch from exploiting power
        
        UK Parliament
        
        Two Houses of Parliament
        
        Supreme law-making body
        
        Parliamentary Sovereignty - the right to make or unmake any law / one of the essential pillars
        
        Primary Legislation = an Act of Parliament or Statute
        
        Pass through a distinct process and scrutinised (unit 1, s2, s1.2)
    - - Case Law & Precedent
        
        Can bind comparative cases in the same way
- - - - A binding agreement on how to pay creditors
      - Insolvency Rules 8.2-8.7
    - - Part 7a of IA 1986
      - Only available if certain criteria are met
        
        Debt > £30,000
        
        Not enough money for repayments
        
        Do not own a vehicle worth over £2,000
        
        Savings < £2,000
        
        Lived or worked in Eng or Wal in last 3 years
        
        No current IVA or Bankruptcy and no DRO in prev 6 months
    - - The Debtor
        
        Required to prove they cannot pay
        
        Apply online and pay £680
      - Creditor
        
        Declare the debtor bankrupt by filing a petition to the court
        
        Debt of over £5000
        
        Unable to pay
      - Supervisor of an IVA
        
        After an IVA made and a debtor fails to comply with their agreement
      - Director of Public Prosecution
        
        The head of the Crown Prosecution Service
        
        Prosecute serious cases
        
        Can petition the court for bankruptcy again the person convicted of an offence
  - - - Simplicity which does not involve the courts
      - Special Resolution to wind up must be passed with a majority of over 75%
      - Solvent = Able to pay debt in full
        
        Members' Voluntary Liquidation
        
        Shareholders determine the liquidator's responsibilities
      - Insolvent - Unable to pay debts
        
        Creditors' Voluntary Liquidation
        
        Creditor's have the power to appoint the liquidator
      - Once a liquidator is chosen a company must cease trading
    - - Court-Ordered winding up of the company under s117-162
      - Named persons must only petition the court
        
        Special resolution wind up
        
        No Trading certificate within a year
        
        Old Public Company
        
        Not commence business within a year
        
        Unable to pay debts
        
        1 more item...
  - - - Preferential debts / Fixed Charges → HMCR etc
        
        Floating Charges → Some form of security
        
        Unsecured creditors → no security
        
        Deferred Debts → ei loans and dividends
        
        Members → may be ranks of members
  - - - Fails the Cash Flow test
    - - Failed Balance Sheet test
    - - Total Assets - Total Liabilities
  - - - Order of the Court
        
        Person making the application must prove there is a probability they will be unable to play
        
        Powers to sell, dispose or grant security and raise or borrow money for the company
      - Holder of a floating charge
      - Company or its Directors
- - - - Contract Type
        
        Bilateral - Promises not bound unless commits to action → Contract Made
        
        Unilateral - Promise on Act or Condition
      - Mirror Image = Accepting clear offer
        
        Brings offer to an end
      - Creates an agreement but also:
        
        Intention
        
        Simplify if there was an intention to create legal relations
        
        Domestic Presumption
        
        Not intended to create legal relations
        
        Commercial Presumption
        
        Presumed that cases involving commercial transactions are intended to create legal relations
        
        Unit 2, s1, s3.7
        
        Capacity
        
        Parties must be adults over 18 and of sound mind
        
        Minors not bound
        
        Exception - Apprenticeships, education or service
        
        Mental Capacity
        
        Imperial Loan Co Ltd v Stone (1892) - The person alleged they were insane and not aware of what they were doing. Bound by the contract unless they can prove they weren't of sound mind
        
        Voided if party incapable of making the contract and the other person knew it
        
        Consideration
        
        Needed unless they are made in deed.
      - Methods of Acceptance
        
        Acceptance by conduct = acceptance indicated by conduct / Shopping as an example
        
        Carlill v Carbolic Smoke Ball Company [1893]
        
        Acceptance by following directions unless expressly stated otherwise
        
        Postal Rule = acceptance is binding from time it is posted
        
        Adams v Lindsell (1818) = wool sale, required to reply by post, contract exists when letter was posted even if acceptance was delayed
        
        Depending on the wording and if "notice" of acceptance was given. This means actual notice, as in physically received
        
        Email or Text = Instantaneous communication
        
        Entores Ltd v Miles Far East Corporation [1955] = electronic acceptance must be received to be effective
    - - Counter offers destroy the original offer; therefore, only if the original offeror accepts
        
        Acceptance
        
        Declines
  - - - Donoghue v Stevenson [1932]
        
        Duty of Care owed to those closely and directly affected by actions - Negligence Tort
      - Caparo Industries plc v Dickman [1990]
        
        3 Stage test = Foreseeability → Proximity → Fair, just and reasonable
        
        Foreseeability = showing the claimant was a victim of negligence
        
        Proximity = Does not require physical closeness, can be relationship
        
        Fair, Just and Reasonable = Enables courts to limit new duties of care
        
        Inaccurate audited accounts, No Duty to shareholders relying on info
        
        Limiting to neighbour principle
        
        Only really used if the duty is relatively new
      - Duty of Care
        
        Proving a duty of care is owed
        
        Accountants and auditors can be liable for criminal and civil offences
        
        Duty of care for specific purpose is a special relationship
      - Breach of Duty
        
        Proving the duty of care has been breached
        
        Done in multiple ways
        
        Reasonable Person Test
        
        Objective view about the standard of behaviour in certain circumstance
        
        Standard of Care
        
        Decide if defendants have acted with the degree of care and skills expected of a reasonable person
        
        Special skills
        
        No excuse, saying they lack skill and experience. Is compared with Standard of Care
      - Causation
        
        The claimant must establish the link between the breach of duty and the harm which occurred
        
        Factual Causation = AKA "but for" test, would the harm have occurred if the actions were different
        
        Legal Causation = Necessary to establish harm caused in the law
        
        The answers to both need to be "no" to establish legal causation
        
        Chain of Causation
      - Defences
        
        Volenti = Voluntarily assuming the risk
        
        Illegality = Injured during an illegal act
        
        Contributory Negligence = Defendant has contributed to their own harm
        
        Partially at fault, damages proportional to reflect contributory negligence
      - Damages refer to monetary compensation
      - Injunctions refer to behaving in a certain manner
    - - Vindication = what and who is to blame
      - Compensation = Amendments for the wrong, but can't always make up for loss
      - Corrective Justice = Righting the wrong
      - Deterrence = looking to the future and deterring a similar wrong
    - - Reputation Negatively impacted
      - Misrepresentation
      - Claimant suffered a loss and should be able to claim damages
      - Ewing v Buttercup Margarine Co Ltd [1917]
        
        Sued because could cause confusion with Ewing's brand Buttercup Dairy Company worried the public would think they are linked.
  - - - Concern only rules around the agreement not fairness/goodness, known as freedom of contract
      - Principles:
        Anson's Law 2016 promise shall be legally binding.
        McKendrick 2020 Lack of definition.
        Teitel on the law of contract 2015 agreement giving rise to obligation
      - Purpose: creates formal structure 4 parties to define obligations, manage risks & established remedies.
    - - Express Terms - agreed by parties
        
        Consequences if breached
        
        Must have been incorporated into the contract
        
        Thake v Maurice [1986] - A surgeon’s statement is not a contractual guarantee of success unless explicitly phrased as such.
      - Implied Terms - implied by courts, statute or custom
      - Parol Evidence Rule
        
        Makes sense to get contracts in writing as oral contracts not as reliable
        
        Considered if the contract is wholly in writing
        
        Rebutting this
        
        Can contend if can prove the agreement is partly oral
        
        Couchman v Hill [1947] = catalogue contained a written statement that a cow was not used for breeding, verbal assurance was untrue, and the auctioneer was held liable
    - - Incorporations must be present before contract executed
        
        Other party must be aware
        
        Incorporation by signature, when signed, they are deemed aware of the clause
        
        Incorporation by notice - was enough notice given about the clause, considering the nature, timing and if it unusual
        
        Timing - Olley v Marlborough Court Hotel [1949] - exclusion clause in hotel room claimed items left, they would not be liable for. Courts held it was not incorporated into the contract signed at check-in
        
        Reasonable steps taken to make sure other party aware
    - - Misrepresentation
        
        Innocent - where one party genuinely believe it to be true
        
        Negligent - One party who did not have reasonable grounds to assume it to be true
        
        Fraudulent - Untrue fact by one party, intending to mislead the other party
      - Illegality
        
        Because of it's Illegal purpose, ei selling alcohol or drugs to under 18s
      - Duress
        
        Improperly forced into the contract using physical threat or blackmail
        
        Usually voidable and rescinded
      - Undue Influence
        
        If one party was coerced into the contract, eg coercing an elderly person into a service or item they did not need
    - - Warranties = injured party entitled to claim damages but not terminate contract
      - Conditions = injured party can choose to terminate or affirm the contract. Courts will look at intentions.
      - Innominate Terms = whether the injured party has the right to terminate
      - If party expresses an intention to break the contract, or sufficient grounds to believe they won't perform. If proven they can terminate or affirm the contract
  - - - See Gibson v Manchester CC
        
        Maybe Prepared to Sell = Invitation to treat not offer
  - - - A third party cannot sue on a contract they did not provide consideration
- - - - Horse Breeder, Greville helped w/ accounts
      - Partnership was rejected → Courts said whilst partnership was implied it was a Express Rejection
  - - - Assets transferred by looking behind identity → No veil pierced
      - Concealment vs Evasion
        
        Concealment - does not involve piercing the veil at all
        
        Evasion - The only instance the courts can disregard Corporate Personality
    - - Salomon v Salomon and Co ltd [1896]
        
        Mr Salomon claimed priority repayment → claim initially denied
        
        House of Lords overturned → confirmed Separate Legal Entity
        
        Exceptions to Salomon's rules
        
        Fraudulent Trading s213(1) of the Insolvency Act 1986
        
        Trustor AB v Nutritet [2013?]
        
        Fraud Case, £39m diverted by director → Veil Pierced
        
        Failing to obtain a trading certificate s767(3) CA 2006
        
        Phoenix Companies
        
        Companies could be used to evade owner liability
      - Connecting with business before incorporation
      - Contracts not binding because it's not yet separate
  - - - Sole Traders
        
        Report Income Tax
        
        Unlimited Liability (-)
        
        Full Control (+)
        
        No Separate Legal Entity (-)
      - Partnerships (Partnerships Act [1890]
        
        LLP is a legal entity, other types are not
        
        Bespoke Agreements
        
        Jointly liable
      - Companies
        
        Separate Legal Entity once incorporated
        
        Laws Established in 19th Century
        
        Private Limited Companies - Ltd, Limited by Shares
        
        Companies Act [2006]
        
        Annual Filing Obligation
        
        Companies House Registration
        
        Must have at least 1 director
        
        Articles of Association sets out the rules and forms a contract between members and members of the company
        
        Public Limited Companies
        
        Far Fewer in number
        
        Only public companies can list their shares on the stock exchange
        
        Limited by Guarentee
        
        Underwrite companies debts
        
        Unlimited Liability Companies
        
        Members are liable for all the companies debts
        
        Community Interest Companies
        
        Entrepreneurs who trade with a social purpose for the benefit of the community
      - Partnerships
        
        Ordinary Partnerships
        
        Between persons carrying a business in common with a view to profit
        
        Formalisation not a requirement but sometimes can be formed without knowledge
        
        Equal everything, profit / management / liabilities
        
        Agreements
        
        Deliberate choice to write up an agreement and preferred terms
        
        Bespoke documents by lawyers
        
        Liability
        
        Jointly and severally liable
        
        Business assets must be used
        
        Dissolution
        
        Can come to an end w/o court intervention
        
        s35 PA 1890 applies here with court application outlining causes of this
        
        Rights and Responsibilities
        
        Duty of skill and care
    - - Ltd = Limited by shares → Receives shares → shares = voting, ownership, dividends
      - PLC = Min 2 shareholders → AGM required → Shares on stock exchange
- - - - Usually not repayable
      - Dividends are an option but ONLY if the company has cumulative profit available
      - Paid capital back after creditors
      - Is riskier, but with greater returns
    - - Repaid at a specified future date
      - Pre-Arranged contractual interest
      - Paid capital before shareholders
      - Low risk but low pre-arranged return
  - - - Ordinary Shares
        
        No Upper and lower limit
        
        Can have different classes of shares, some of which carry different dividends and voting rights
        
        Different classes of rights are registered with companies house
        
        Multiple class not common in UK PLCs
      - Preference Shares
        
        No voting rights unless its relating to Preference Shares
        
        Fixed Percentage Dividends, and can be cumulative carrying forward to the next year
        
        Priority to capital distribution compared to ordinary shareholders
      - Redeemable Shares
        
        Has the option for the company to buy shares back
        
        Redemption date could be fixed in advance
        
        Can only be issued if they have non-redeemable shares in issue
      - Deferred Shares
        
        Carry fewer rights
        
        Can only be paid after all of the others are paid
      - Treasury
        
        When a company buys back its own shares from shareholders following specific legal procedures
        
        Shares a company has bought back but is allowed to hold and resell under CA 2006 s.724
  - - - Share = Interest of Shareholder, measured by a sum of money
        
        Max amount shareholder would pay if the company faced insolvancy
      - Purpose of Liability = Sum of money for this first, and interest second
        
        More shares = greater influence, and entitlement to profit
      - Mutual Covenants = agreements by all shareholders, that creates obligations on both sides
        
        They enter into a contract with the company and other shareholders s33 CA 2006
  - - - Shares offered at a discount to encourage purchases
      - Pre-emption means existing shareholders get first offering
        
        Ensures no dilution of voting rights
      - Rights Issue
        
        Allots shares to existing shareholders in proportion to their current shares at a discount
      - Bonus Issue are issued at no cost to existing shareholders and again issued in proportion
    - - Consideration
        
        Cannot be offered for less than nominal value (or par value)
        
        Companies cannot sell non-cash without them first being independently valued
      - Partly Paid Shares
        
        Issuing shares for a promise from new owners
        
        Attractive to investors
        
        Same liability as fully paid shares
  - - - Implied power to borrow money for business purposes
      - May include more than one lender
      - Contract between borrower and lender(s)
      - Banks will be owed money for the life of the loan
    - - Maybe more attractive to loan capital
      - Loan Arrangements may be scrutinised and may be disallowed
    - - Most obvious source of debt finance
      - Their loan at the highest priority
      - Banks will conduct a credit assessment of the potential borrower
        
        Character = Record and Reputation
        
        Conditions = Considers the state of the market or industry
        
        Collateral = The value of assets owned by the company
        
        Capital = How much money the owners committed to the company
        
        Capacity = Whether the business has the financial capacity to meet the debt obligation
  - - - Have higher priorities and right to be paid before unsecured creditors
  - - - Applied to a specific asset
        
        eg premises, equipment or a vehicle
      - Agnew v Commissioner of Inland Revenue [2001]
        
        Tests to determine if asset(s) have characteristics of a fixed or floating charge
        
        By identifying the rights and obligations to determine the type of charge
      - An asset remaining in the business in the long term
      - Forfeits the right to dispose of the asset
    - - More flexible
      - Company is permitted to deal with the assets unless the bank enforces it's security
      - Right to sweep up any assets not caught by fixed charges
    - - Free to deal with asset(s) until a certain event fixes the charges
      - Lender can step in to enforce its security and repay the debts
    - - Priority depends on when and if it is registered at companies house
      - Registered by the Chargeholder but it only effective if within 21 days
      - If not the charge is ignored and considered an unsecured creditor
- - - - Responsible for the day-to-day running of the business
      - Each director may have a special title and be full-time employed by the company
    - - Part-time roll, and are not employees
      - Considered comfy retirement rolls
      - Independent of mind to provide a challenge to Executive Directors
    - - Latin meaning "by law"
      - Formally appointed in accordance with the articles of association companies house hold
    - - Latin meaning "as a matter of fact"
      - Not formally appointed
    - - Person whose gives directions or instructions to the directors
    - - Public
        
        Needs 2 directors minimum
        
        Must be voted in at AGMs
        
        MUST notify companies house within 14 days
      - Private
        
        Needs only 1 director
        
        Can be appointed by resolution of the board or by ordinary resolution > 50%
      - Min Age 16
      - Directors Service Contracts
        
        Must not exceed 2 years without shareholder approval
    - - Can be removed by ordinary resolution
        
        28-day special notice must be given of the proposed resolution and must be communicated with the director concerned
      - Bushell v Faith [1970]
        
        Directors were allowed triple voting rights of the number of shares held
        
        Sisters tried to remove Mr Faith but they weren't directors so 200v300 shares
        
        Nothing in the CA 2006 prevents this from occurring
      - Disqualification
        
        Prevents directors who have committed breaches of company law from continuing
        
        Misconduct
        
        Breaches s2 and 3 Companies Directors Disqualification Act (CDDA) 1986
        
        Serious offences
        
        Unfitness
        
        Investigation by a liquidator or Department for Business and Trade finds the person unfit to manage the company
        
        Wrongful or fraudulent trading
  - - - Only exercise powers granted to them and only for the purposes given
      - Company members can ratify the act of a director who abuses their powers
    - - Must consider the way they act
      - Primary duty to make profits for the company and owners
      - Attempt to balance stakeholders and wider society interests
      - Better Business Act [2022]
    - - Must not be influenced by third party
      - Can be restricted with company agreement or if authorised by articles
    - - Closely aligned with Tort law
      - Twofold Test
        
        Objective Test
        
        The General Knowledge etc reasonably expected
        
        Level of Care expected
        
        Subjective Test
        
        The Actual Knowledge etc of the Individual in Question
        
        Higher level of care expected eg Finance Director
    - - Avoid situations that have direct or indirect conflict of interest
      - Applies to property, information and opportunity
      - Director is in a position of fiduciary towards the company and cannot benefit from opportunities arrising
    - - No bribes!
      - No unauthorised commissions
      - Courtesy gifts excluded - eg xmas chocolates
    - - Arises when there is interest even if the Director is not party to the transaction
  - - - Certain acts require formal approval of the board
      - Any Director can call a meeting giving notice to the other directors
      - Notice doesn't need to be in writing but must be given to all directors
      - Min 2 directors present
      - Notice
        
        Quorum
        
        Declarations of Interest
        
        Resolutions
        
        Voting
        
        Admin
    - - Meetings of Shareholders
      - AGM for public companies
        
        Within 6 months of yr end
      - An ad hoc event to pass specific resolutions
  - - - Greater than 50% Majority
      - Appointment or Removal of a Director
    - - Greater than 75% majority
      - Decisions including:
        
        Changing Articles
        
        Changing Name
        
        Winding Up
        
        Reducing Share Capital
    - - Only for private companies
        
        Usually Electronically by email
        
        Greater than 75% of ALL POSSIBLE votes
- - - - Placement → Collected dirty money and placing it into the financial system
      - Layering → Transferring money to offshore bank accounts
      - Integration → Making the money available in legitimate assets and investments
    - - Obstructs and prevents Money Laundering
      - s330 failure to report a crime
      - s333a Criminal offence to tip off in money laundering operations
      - s334(1) Laundering → Max 14yrs prison and/or fine
      - s334(2) Failure to report → Max 5yrs prison and/or fine
      - s333a Tipping off → Max 2yrs prison and/or fine
    - - Systematic process of evaluating the potential risks that a business may face
      - Need to conduct regular assessments to evaluate the risk of money laundering
      - Helps develop effective policies etc to detect and prevent money laundering
      - Policies and procedures in place to ensure systems operate efficiently and effectively as intended
      - UK Corporate Governance Code (FRC, 2024)
      - The Association of Certified Fraud Examiners (2022)
      - Almost half the fraud cases are attributed to a lack of control or overriding existing controls
      - Firms are legally obliged to appoint a money laundering compliance principle and a money laundering reporting officer
  - - - R v Grantham [1984]
        
        Ordered potatoes that the director knew they couldn't affor
    - - RE Maidstone Buildings Provisions Ltd [1971]
        
        A Person taking active steps should be classified as party to fraudulent trading
  - - - Recognised liquidation was inevitable but kept trading for a further 2 years
- - - - Dismissal Rules (ERA 1996 s.95) = Unfair, Constructive, Wrongful
      - Redundancy (ERA 1996 s.139)
        
        Inform → Make representation → Right to appeal
        
        Consultation and appeal Rights
      - Statutory Employment Rights
        
        Work wage and working conditions.
      - Employee → Contract of Employment
        
        Employee status tests: Control test, Integrity test, mutuality obligation test & Multiple test
      - Workers
        
        Contract → Obligation Personal → Not Client / Customer
        
        Agency Workers etc.
        
        Fewer rights afforded to workers
      - Self Employed
        
        A person who owns their own business and is responsible for the risks
      - ERA 1996 sect 230(3)(b) Elements to define worker: Contract, personal service & Specified employer
    - - Work-Wage Bargain
        
        Employees = All Statutory
        
        Emp =Can claim unfair dismissal after 2 years
        
        Workers - Written Particular / Min Wage / statutory holiday and rests
      - Individuals
        
        No Statutory, take on the risk and responsibility themselves
        
        Health and Safety protection and Unlawful discrimination protection only
  - - - Working ≠ Full entitlement of rights
    - - →Control Test = if an individual is an employee → Is the individual told what, where and how a task is done → If yes, then employee
      - Integration Test = The extent to which the individual is integrated in the organisation → More integration = More likely to be an employee
      - Mutuality of Obligations Test = The obligations of both individuals and Employers → Employer provides work, Individual personally performs it
      - Multiple / Economic Reality Test = Factors include own equipment, assistants, regularity of pay etc.
  - - - Western Excavating (Ecc) ltd v Sharp [1978]
        
        Tests for Constructive Dismissal - Breach, resignation, no delay
        Employers Conduct = Root cause
      - Employee terminates a contract due to the employer's conduct, which results in a fundamental breach of contract
      - Repudiatory Breach = actual or anticipatory breach
        
        Resignation = Employee elects to accept breach and end contract
        
        Delay = Must Not delay too long as employer may "waive" the breach and treat it as continuing
    - - Polkey v AE Dayton Services [1988]
        
        Failure to follow procedure - unfair dismissal
      - Statutory Right not to be unfairly dismissed
      - A dismissal occurring
        
        Qualifying period of employment (usually continuously employed for 2 years)
        
        Proof of Dismissal was unfair and not one of the fair reasons categories
      - Must be within 3 months of dismissal
    - - Fair reason of dismissal
      - Procedure to follow
        
        Notice
        
        Invited to refute
        
        Right to appeal
      - Unfair Redundancy
      - Fair Redundancy
        
        At least 2 years service
        
        Know from experience
  - - - Contract terms in writing, orally or both from the date the contract is made
      - Legal requirement with particulars relating to the jobs
      - ERA 1996 section 1
      - Stefanko v Doherty and Maritime Hotel [2019] - right to a written statement
    - - Did not agree on but are imposed to override or fill gaps for express terms
      - Imposed by Statute = Changes in Law that impose changes ei National Min Wage Act 1998
      - Imposed by Custom and Practice = ei bonus at the end of the year written into contract
      - Imposed by the Court = implying obvious terms if both parties would have agreed to it