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Business Law Final Review

Business Law Final Review

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Published by: Vikas Sivaraman on Jun 05, 2011
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Business Law

Final Review

Subject Areas
The exam covers the areas we have looked at since the midterm Employment Law Negligence (Tort) Agency Partnership Company Law

Contract of Employment
A person who does work in terms of a contract of service is an employee. A contract of service is a contract of employment A person who does work in terms of a contract for services is not an employee They are an independent contractor Therefore, they have no rights as an employee


Contract of Employment (cont.)
The relationship between employer and employee is governed by a contract of employment It is very important to know if a person is an employee because only employees have certain rights in Employment Law 

Discrimination Unfair dismissal Redundancy Notice on termination of employment

Also an employer may be vicariously liable for the negligence of an employee

Contract of Employment (cont.) The courts have developed several tests to decide what is a contract of service Control Test  Integration Test  Multiple Test  Mutuality of Obligations Test  5 .

holidays. sick pay and hours of work 6 .Equal Pay The Equal Pay Act 1970 requires that employers treat men and women equally in terms of pay.

Sex Discrimination The law relating to sex discrimination in employment is in the Sex Discrimination Act 1975 It applies to people who seek employment under a contract of services. or those employed under a contract of services 7 .

In order to show that you have been discriminated against.Direct Discrimination Direct discrimination occurs where a person is treated less favourably because of his/her sex or marital status. you have to compare yourself with a person of the opposite sex 8 .

degrading or offensive environment Sexual harassment includes physical behaviour. sexual banter. etc 9 .Sexual Harassment Sexual harassment is a form of direct discrimination Harassment occurs where someone¶s actions have the purpose or effect of violating another person¶s dignity. pornographic images. or create a hostile.

Indirect Discrimination Indirect discrimination occurs where there is behaviour which does not seem to treat people differently. but the effect of the behaviour is discriminatory This occurs where some condition or practice is applied to men and women equally. but which has a negative effect on a larger number of women than men (or vice versa) 10 .

5 and 28 years old Price complained that this condition was indirect discrimination as women between those two ages were more likely to be temporarily out of the labour market because they were having children or were looking after young children The court agreed 11 . applicants had to be between 17. Price v. The Civil Service Commission To get a particular job in the Civil Service.) For example.Indirect Discrimination (cont.

or ethnic or national origins´ 12 .Race Discrimination The law relating to race discrimination in employment is in the Race Relations Act 1976 Discrimination is unlawful if it is based on racial grounds ³Racial grounds´ is defined in the Race Relations Act as any of ³colour. race. nationality.

In order to show that you have been discriminated against.Direct Discrimination Direct discrimination occurs where a person is treated less favourably because of his/her race. you have to compare yourself with a person of another race 13 .

Racial Harassment Racial harassment is a form of direct discrimination Harassment occurs where someone¶s actions have the purpose or effect of violating another person¶s dignity. or create a hostile. degrading or offensive environment Racial insults are a form of harassment 14 .

but which puts some races or ethnic groups at a disadvantage when compared with other people 15 .Indirect Discrimination Indirect discrimination occurs where there is behaviour which does not seem to treat people differently. but the effect of the behaviour is discriminatory This occurs where some condition or practice is applied to people of different races equally.

) For example. if an employer requires its female employees to wear skirts. Muslim women will not be able to follow this rule as their religion requires them to keep their legs covered However.Indirect Discrimination (cont. it is not indirect discrimination if the employer can show that the condition or practice is justified 16 .

Unfair Dismissal Under the Employment Relations Act 1996. employees have the right not be unfairly dismissed That means the employer has to show that it was reasonable to dismiss the employee The Act provides greater protection and more remedies than Common Law 17 .

Qualification Protection under the Employment Relations Act is limited to employees ie people employed under a contract of service This is one times when it may be important to know if a person is an employee or not In addition. the employee must have at least 1 year¶s continuous employment 18 .

but makes life so unpleasant for him/her that s/he is forced to quit 19 .Constructive Dismissal One of the most important protections for employees in the area of unfair dismissal is the idea of constructive dismissal This means that the behaviour of the employer gives the employee no choice but to resign This is intended to prevent situations where the employer does not dismiss the employee directly.

a duty of care owed by the defendant a breach of that duty by the defendant the breach resulted in injury/damage to the claimant In other words. the claimant must show 1. 2. but he breached that duty and the breach caused some injury to the claimant 20 . the defendant owed a duty of care to the claimant. 3.Negligence Negligence is a kind of tort which aims to give compensation to an injured party In order to make a successful claim in negligence.

Foreseeable Consequences A defendant is not liable for consequences which are too remote A defendant can only be liable for foreseeable consequences It is not necessary for the defendant to foresee how severe the injury could be Nor does the defender have to foresee the exact way in which the injury could be caused 21 .

Novus Actus Interveniens The question of remoteness and causation can arise where some new event occurs after the negligent event For example. On the way to the hospital the ambulance driver crashes into a tree and causes Calum severe injuries. David negligently collides with Calum¶s car and injures him. Is David liable not only for the original injuries but also for the more serious later injuries caused by the ambulance driver? 22 .

Novus Actus Interveniens (cont. Clearly if it had not been for David¶s negligence Calum would not have been in the ambulance and would not have suffered further injuries. 23 .) This is the problem of a new and intervening cause (in the cases this is often expressed in Latin as nova causa The technical name for this is novus actus interveniens.

) There are 3 categories where a new act can break the chain of causation A natural event An act of a third party An act of the claimant 24 .Novus Actus Interveniens (cont.

Defences The defendant may be able to reduce his liability or avoid liability altogether by pleading one of the following defences Contributory Negligence This is where some action by the claimant contributed to his injury  This only reduces the amount of compensation which the defendant has to pay  25 .

for example  If the court accepts this defence then the defender will not be liable in negligence to the claimant 26 . this does not mean that the defendant can behave recklessly   Must observe µthe rules¶.Volenti Non Fit Injuria Volenti Non Fit Injuria This means that the claimant consented to his injury or to the risk of injury  However.

Employers¶ Liability Employers¶ Liability is a special kind of Negligence It gives employees the right to sue the employer if they are injured at work due to the negligence of their employer arising out of the course of employment 27 .

) The employer¶s duty of care means providing: competent staff  safe plant and equipment  a safe place of work  a safe system of work  28 .Employers¶ Liability (cont.

you need to show the following 1. like toilet breaks 29 . The person who injured you was negligent 2. The person was an employee (that is.Vicarious Liability Vicarious Liability means that an employer can be held liable for the negligence of an employee To make a claim based on vicarious liability. The employee caused your injury during the course of their employment ‡ Includes things which are incidental to employment. s/he had a contract of service) 3.

who is called the principal.Agency Definition:  An agent is a person who is authorised to represent another person.  The agent creates a legal relationship between the principal and a third party. 30 .

Creation of Agency The principal/agent relationship can be created in several ways Express Appointment Ratification Implication Necessity Estoppel 31 .

whether or not the agent has been given those powers expressly 32 . a third party can assume that someone has the powers which a person in the agent¶s position usually has. even though the agent may not have been give that power expressly In other words.Implied Actual Authority This authority covers the situation where a third party is entitled to assume that the agent has been given the power to do something by his principal.

the new owners of a hotel employed the previous owner as the manager They expressly told him that he could not buy certain things. in Watteau v Fenwick. the manager bought cigars from a third party The third party sued the owners for payment as the manager was their agent 33 .) For example.Implied Actual Authority (cont. including cigars However.

Implied Actual Authority (cont.) The court held that buying cigars was within the usual authority of the manager of a hotel If the owners wanted to limit the manager¶s authority in buying things then they would have to tell third parties of the limits of his authority 34 .

Partnership Partnership is one of the three ways of owning a business The Partnership Act 1890 defines a partnership as the relationship ³between two or more persons carrying on a business in common with a view to profit´ 35 .

a partnership can have its own name and sue and be sued in that name Partners are agents for their firm and the other partners.Partnership (cont) A partnership does not have a separate legal identity from its partners However. so the rules from the law of agency apply  especially implied authority 36 .

2. .What is a Company? A company is a body corporate or corporation Because of this. companies have their own separate identity This concept of separate legal personality has several consequences Limited liability of members for company debts Perpetual succession A company does not end due to the death or bankruptcy of its members 37 1.

4.What is a Company? (cont. Liability in tort and crime A company can be vicariously liable for the negligence of its employees Companies can be convicted of crimes 6. The rule in Foss v Harbottle A majority of shareholders must agree to take action to protect their company 38 .) 3. Business property is owned by the company and not its shareholders Court actions and Contracts A company can sue and be sued in its own name A company can enter into contracts in its own name 5.

Comparison of Ownership It is useful to compare the advantages and disadvantages of the three forms of business Sole trader  Partnership  Company  39 .

You just literally go into business on your own.Advantages No legal filing requirements or fees and no professional advice is needed to set it up. 40 . Simplicity ± one person does not need a complex organisational structure.Sole Trader .

Disadvantages The disadvantages are that it is not a particularly useful business form for raising capital (money). Unlimited liability ± the most important point to note in terms of comparing this form to the company in that there is no difference between the sole trading business and the sole trader himself. As a result he has personal liability for all the debts of the business. 41 .Sole Trader . For most sole traders the capital will be provided by personal savings or a bank loan.

Partnership . all of whom could pool their investment within the partnership. 42 .Advantages No formal legal filing requirement involved in becoming a partnership beyond the minimum requirement that there be two members of the partnership. Easier to obtain capital as there can be up to 20 members of the partnership.

) If you are aware of the problems the Partnership Act can cause (see disadvantages) then you can draft a partnership agreement to vary these terms of the Act The partnership agreement can therefore be used to provide a very flexible organisational structure although this usually involves having to pay for legal advice.Partnership ± Advantages (cont. 43 .

This means that each partner can be sued for the total debts of the partnership 44 . If you are unaware of this when the partnership is formed.Disadvantages A partnership will end on the death of a partner. the Act may not reflect the intention of the partners. The partners are jointly and severally liable for the debts of the partnership.Partnership .

Limited liability also minimises the risk for investors and is said to encourage investment. 45 .Company . Companies have the ability to subdivide their capital into small amounts.Advantages Companies are designed as to make it easy to raise capital. allowing them to draw in huge numbers of investors who also benefit from the sub-division by being able to sell on small parts of their investment.

46 .Company ± Advantages (cont. The constitution of the company provides a clear organisational structure which is essential in a business venture where you have large numbers of participants.) It is also said to allow managers to take greater risk in the knowledge that the shareholders will not lose everything.

Disadvantages Forming a company and complying with company law is expensive and time consuming.Company . It also appears to be an very complex organisational form for small businesses. where the Board of Directors and the shareholders are often the same people 47 .

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