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Beginning Business Law

Short Questions and Answers

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Chapter 2

Q. Why was the UK Supreme Court created by the Constitutional Reform Act 2005?

A. The UK Supreme Court was established to replace the Appellate Committee of the House of Lords, which was a committee that was part of the House of Lords. The Constitutional Reform Act 2005 was intended to give affect to the separation of powers between the judicial branch and the legislature and executive.

Q. Who is the Head of the Judiciary in England and Wales?

A. Traditionally it was the Lord Chancellor. As a consequence of the Constitutional Reform Act 2005 the Head of the Judiciary in England and Wales is now the Lord Chief Justice of England Wales.

Q. Why does Scotland have its own legal system?

A. The Acts of Unions 1707 preserved the Scottish legal system and Scots law. Northern Ireland also has its own legal system.

Q. Why was the Human Rights Act 1998 needed?

A. The Human Rights Act 1998 was enacted to incorporate most of the European Convention on Human Rights into domestic law. Prior to the enactment of the Human Rights Act 1998 the European Convention on Human Rights could be relied upon in domestic courts. In order to enforce the rights contained in the European Convention on Human Rights, UK citizens needed to bring a case before the European Court of Human Rights. Today the European Convention on Human Rights can be enforced in domestic courts, although cases can still be brought to European Court of Human Rights.

Chapter 3

Q. What is meant by consideration?

A. Consideration can be defined as the price for which the promise is bought. In Currie v Misa (1874-75) L.R. 10 Ex. 153 at 162, Lush J stated that, ‘[a] valuable consideration, in the sense of the law, may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility, given, suffered, or undertaken by the other’.

Q. Will a false statement of opinion amount to an actionable misrepresentation?

A. As a general rule a statement of opinion is not actionable.  However, if the maker of the statement of opinion is sufficiently knowledgeable then it could amount to a statement of fact. Two cases which are relevant here are Bisset v Wilkinson [1927] A.C. 177 which supports the general rule, and Esso Petroleum Co Ltd v Mardon [1976] Q.B. 801 which is an exception to the general rule.

Q. How many types of duress are there?

A. There are two types of duress, physical duress and economic duress. Physical duress relates to threats to your person, whilst economic duress relates to threats to the economic health of your business.

Q. What are the consequences of breaching a warranty or a condition?

A. If a warranty is breached the innocent party is entitled to claim damages. However, the contract still must be performed. Whereas, if a condition is breached, the innocent party may choose to repudiate the contract and this wish discharge the contract, or claim damages.

Chapter 4

Q. What is meant by an entire agreement clause?

A. An entire agreement clause will prevent the parties from relying on any terms that are not contained in the written contact, such as a collateral contract or claiming that the contract is partly oral and partly written.

Q. How could the contract for the sale of goods protect a seller who wishes to sell goods to a buyer where there is a risk that the buyer might not be able to pay for the goods?

A. The seller could include a retention of title clause in the contract with the buyer. The seller would supply the goods to the buyer and retain legal title until the buyer has paid for the goods. In the event that the buyer becomes insolvent the seller can recover the actual goods, rather than having to recover the outstanding purchase price. It must be noted that the buyer is able to resell the goods to third parties who will obtain good title to the goods. If the buyer uses the goods as part to create manufactured goods, then the seller will lose title to the goods used in the manufacturing process.

Q. Can liability under the terms implied by the Sale of Goods Act 1979 be excluded in a contract?

A. This depends on the type of contract that you are looking at. According to the Unfair Contract Terms Act 1977 liability for the implied terms cannot be excluded in consumer contracts. However, it is possible to exclude certain implied terms where the buyer is a business, as opposed to a consumer. The exclusion clause used to exclude liability must be reasonable.

Chapter 5

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Chapter 6

Q. How can implied actual authority arise?

A. This is where an agent acts in accordance with what is required to achieve the task given to him by the principal, or when the agent acts within the scope of what is usual for someone in his position to do. Examples include where an agent is appointed to a position such as managing director and will in addition to the express actual authority that is conferred on the office holder, will also have the implied actual authority to do everything that is usual for someone in that particular position to do.

Q. How has the Commercial Agents (Council Directive) Regulations 1993/3053 improved the position of agents?

A. To begin with it is important to note that the Commercial Agents (Council Directive) Regulations 1993/3053 only apply to commercial agents. Commercial agents have considerable protection as they have increased rights against their principal. This ensures that commercial agents are protected in the event that the agency is terminated and will either receive compensation or be indemnified. There is also a notice period for agents before the agency can be terminated. The Commercial Agents (Council Directive) Regulations 1993/3053 improves the position of agents at common law.

Chapter 7

Q. How can harassment be committed for the purposes of s.26 of the Equality Act 2010?

A. Harassment can occur where the employer or a co-worker ‘engages in unwanted conduct related to a relevant protected characteristic’, which has the purpose (i.e. it was deliberate) or the effect of violating the employee’s dignity or ‘creating an intimidating, hostile, degrading, humiliating or offensive environment’.

Q. Who can claim wrongful dismissal?

A. It is not just an employee who can claim wrongful dismissal. A Worker can also bring a claim for wrongful dismissal. Anyone who has a contract and who has been dismissed before the end of a fixed term contract, or without the required amount of notice in an on going contract (i.e. continuous) can bring a claim for wrongful dismissal. Because this is a clam based on breach of contract, a claim may be brought to the County Court (or High Court), or the Employment Tribunal.

Q. What is a gardening leave clause?

A. A gardening leave clause is an express term of the contract which is intended to permit the employee to send an employee home rather than permitting them to serve out their notice in the office. Such a clause is intended to protect the business interests of the employer, as it will prevent the employee from learning about new projects and from poaching clients or soliciting colleagues during the remaining duration of his contract of employment. Once the employment contract is terminated the employer may wish to rely on a restrictive covenant to continue to protect his legitimate business interests.

Chapter 8

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Chapter 9

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Chapter 10

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