A B Business Management E Study Manuals business growth S T U D Y M A N U A L P R I Diploma in N C I P L Business Management E S O F B U S I N E S PRINCIPLES OF S L A W BUSINESS LAW The Association of Business Executives The Association of Business Executives 5th Floor, CI Tower • St Georges Square • High Street • New Malden Surrey KT3 4TE • United Kingdom Tel: + 44(0)20 8329 2930 • Fax: + 44(0)20 8329 2945 E-mail: [email protected] • www.abeuk.com i Diploma in Business Management PRINCIPLES OF BUSINESS LAW Contents Unit Title Page Introduction to the Study Manual v Syllabus vii 1 Nature and Sources of Law 1 Nature of Law 2 Historical Origins 5 Sources of Law 8 The European Union and UK Law: An Overview 11 2 Common Law, Equity and Statute Law 21 Custom 23 Case Law 24 Nature of Equity 30 Application of Principles of Equity 32 Equity and Common Law 34 Classification of Equity 35 Legal and Equitable Rights 36 Nature of Statute Law 37 Interpretation of Statutes 39 Codification and Consolidation 43 Appraisal of Statute Law 44 Delegated Legislation 44 3 The Administration of Justice 47 Organisation of the Courts 48 Administrative Justice 59 Public International Law 70 Judges and Juries 71 Organisation and Role of the Legal Profession 73 4 The Law Relating to Associations 79 The Concept of Corporations 81 Corporations in Law 81 Companies 83 Companies in Law 91 Unincorporated Associations 111 Partnerships 111 ii Unit Title Page 5 Contract Law 1: Fundamentals of Contracts and their Creation 125 What is a Contract? 127 The Agreement 131 Classification of Statements and Terms 140 Consideration 142 The Intention to Create Legal Relations 151 Capacity to Contract 153 6 Contract Law 2: Contract Regulations 155 Privity of Contract 157 Joint Obligations 162 Assignment 163 Mistake 165 Misrepresentation 172 Undue Influence 174 Void and Illegal Contracts 178 Exclusion Clauses 186 7 Contract Law 3: Performance and Discharge 191 Performance 192 Discharge by Agreement 195 Discharge by Breach 197 Discharge by Frustration 199 Remedies for Breach of Contract 204 8 The Sale of Goods 1: The Contract, Property and Title 213 Sale of Goods 214 Distinction between Sale and other Supply Contracts 217 Formation of Contract of Sale 219 Passing of Property 222 Transfer of Title by Non-Owners 233 9 The Sale of Goods 2: Terms and Conditions 237 Frustration 238 Delivery 240 Acceptance and Payment 244 Statements Relating to Goods 246 Statutory Implied Terms as to Description and Quality 248 Exclusion Clauses 255 10 The Sales of Goods 3: Disputes and Remedies 261 Remedies of the Seller 262 Remedies of the Buyer 269 Supply of Goods and Services Act 1982 272 Role of the Commercial Court 272 iii Unit Title Page 11 Law of Agency 1: Agency Agreements and Agents 275 General Nature of Agency 277 How Agency Arises 280 Ratification 283 Categories of Agents 286 Duties of Agents to their Principals 289 Rights of Agents against Principals 295 Commercial Agents (Council Directive) Regulations 1993 299 12 Law of Agency 2: Authority, Liability and Termination 301 Authority of Agents 303 Delegation of Authority 306 Rights and Liabilities of the Principal to Third Parties 308 Liability of the Principal for the Wrongs of the Agent 309 Relations between Agents and Third Parties 311 Termination of Agency 315 13 Employment Law 1: The Contract of Employment 319 Distinction between Independent Contractor and Employee 321 Other Categories 328 Consequences of Employment Status 330 Contract of Employment 334 Equal Pay 338 Other Terms and Conditions 340 14 Employment Law 2: Termination of the Contract, Discrimination and Tribunals 347 Notice 349 Constructive Dismissal 349 Unfair Dismissal 349 Wrongful Dismissal 356 Written Statement of Reasons for Dismissal 358 Redundancy 358 Employment Tribunals 360 Race Relations Act 1976 362 Sex Discrimination Acts 1975 and 1986 368 Disability Discrimination Act 1995 373 Health and Safety at Work Act 1974 375 15 Principles of Consumer Credit 379 Hire Purchase 380 Consumer Credit Act 1974 (as amended by the Consumer Credit Act 2006) 380 The Consumer Credit Agreement 387 Withdrawal and Cancellation 389 Rights during the Currency of the Agreement 391 Obligations of the Creditor in Relation to the Quality (etc.) of the Goods 394 iv Unit Title Page 16 Consumer Protection 397 Introduction 398 Trade Descriptions Act 1968 398 Fair Trading Act 1973 403 Consumer Safety 404 The Role of Local Government 407 Manufacturers and Product Liability under the Law of Tort 409 17 Negotiable Instruments 1: Bills of Exchange 415 Introduction 417 Characteristics of a Bill of Exchange 417 Acceptance 419 Transfer of Bills of Exchange 422 Methods of Discharge 426 Liability of Parties on the Bill 426 Release from Liability 430 Liability "Outside" the Bill 431 Forgeries 432 Dishonour of a Bill 433 Consequences of Dishonour 435 Incomplete Bills and Alterations 437 18 Negotiable Instruments 2: Cheques 441 Introduction 443 The Nature of a Cheque 443 Banker/Customer Relationship 445 Crossing a Cheque 448 Special Protection of Paying Banker 450 Special Protection of Collecting Banker 453 Promissory Notes 454 v Introduction to the Study Manual Welcome to this study manual for Principles of Business Law. The manual has been specially written to assist you in your studies for the ABE Diploma in Business Management and is designed to meet the learning outcomes specified for this module in the syllabus. As such, it provides a thorough introduction to each subject area and guides you through the various topics which you will need to understand. However, it is not intended to "stand alone" as the only source of information in studying the module, and we set out below some guidance on additional resources which you should use to help in preparing for the examination. The syllabus for the module is set out on the following pages and you should read this carefully so that you understand the scope of the module and what you will be required to know for the examination. Also included in the syllabus are details of the method of assessment – the examination – and the books recommended as additional reading. The main study material then follows in the form of a number of study units as shown in the contents. Each of these units is concerned with one topic area and takes you through all the key elements of that area, step by step. You should work carefully through each study unit in turn, tackling any questions or activities as they occur, and ensuring that you fully understand everything that has been covered before moving on to the next unit. You will also find it very helpful to use the additional reading to develop your understanding of each topic area when you have completed the study unit. Additional resources ABE website – www.abeuk.com. You should ensure that you refer to the Members Area of the website from time to time for advice and guidance on studying and preparing for the examination. We shall be publishing articles which provide general guidance to all students and, where appropriate, also give specific information about particular modules, including updates to the recommended reading and to the study units themselves. Additional reading – It is important you do not rely solely on this manual to gain the information needed for the examination on this module. You should, therefore, study some other books to help develop your understanding of the topics under consideration. The main books recommended to support this manual are included in the syllabus which follows, but you should also refer to the ABE website for further details of additional reading which may be published from time to time. Newspapers – You should get into the habit of reading a good quality newspaper on a regular basis to ensure that you keep up to date with any developments which may be relevant to the subjects in this module. Your college tutor – If you are studying through a college, you should use your tutors to help with any areas of the syllabus with which you are having difficulty. That is what they are there for! Do not be afraid to approach your tutor for this module to seek clarification on any issue, as they will want you to succeed as much as you want to. Your own personal experience – The ABE examinations are not just about learning lots of facts, concepts and ideas from the study manual and other books. They are also about how these are applied in the real world and you should always think how the topics under consideration relate to your own work and to the situation at your own workplace and others with which you are familiar. Using your own experience in this way should help to develop your understanding by appreciating the practical application and significance of what you read, and make your studies relevant to your personal development at work. It should also provide you with examples which can be used in your examination answers. vi And finally … We hope you enjoy your studies and find them useful not just for preparing for the examination, but also in understanding the modern world of business and in developing in your own job. We wish you every success in your studies and in the examination for this module. The Association of Business Executives September 2008 vii Unit Title: Principles of Business Law Unit Code: PBL Level: 5 Learning Hours: 160 Learning Outcomes and Indicative Content: The candidate should have a knowledge of the principles of law, common law, statutes and primary cases and be able to use this knowledge in the examination.