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ACCA APPROVED CONTENT PROVIDER ACCA Passcards Paper F4 Corporate and Business Law (English) ThiNganHang.com Passcards for exams up to June 2015 ThiNganHang.com
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First edition 2007, Eighth edition June 2014 All rights reserved. No part of this publication may be ISBN 9781 4727 1122 9 reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, e ISBN 9781 4727 1178 6 photocopying, recording or otherwise, without the prior British Library Cataloguing-in-Publication Data written permission of BPP Learning Media. A catalogue record for this book is available from the © British Library BPP Learning Media Ltd Published by Printed in the UK by RICOH 2014 BPP Learning Media Ltd UK Limited BPP House, Aldine Place Unit 2 142-144 Uxbridge Road Wells Place London W12 8AA Merstham RH1 3LG www.bpp.com/learningmedia Your learning materials, published by BPP Learning Media Ltd, are printed on paper obtained from traceable sustainable sources. ThiNganHang.com ThiNganHang.com
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Preface Contents Welcome to BPP Learning Media's new syllabus ACCA Passcards for Fundamentals Paper F4 Corporate and Business Law (Eng). They focus on your exam and save you time. They incorporate diagrams to kick start your memory. They follow the overall structure of the BPP Learning Media Study Texts, but BPP Learning Media's ACCA Passcards are not just a condensed book. Each card has been separately designed for clear presentation. Topics are self contained and can be grasped visually. ACCA Passcards are still just the right size for pockets, briefcases and bags. Run through the Passcards as often as you can during your final revision period. The day before the exam, try to go through the Passcards again! You will then be well on your way to passing your exams. Good luck! ThiNganHang.com Page iii ThiNganHang.com
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Preface Contents Page Page 1 Law and the legal system 1 12 Corporations and legal personality 81 2 Sources of English law 7 13 Company formation 87 3 Formation of contract I 15 14 Constitution of a company 93 4 Formation of contract II 25 15 Share capital 99 5 Content of contracts 31 16 Loan capital 107 6 Breach of contract and remedies 39 17 Capital maintenance and dividend law 113 7 The law of torts and professional 18 Company directors 117 negligence 45 19 Other company officers 129 8 Contract of employment 53 20 Company meetings and resolutions 133 9 Dismissal and redundancy 63 21 Insolvency and administration 139 10 Agency law 71 22 Fraudulent and criminal behaviour 149 11 Partnerships ThiNganHang.com77 ThiNganHang.com
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1: Law and the legal system Topic List This chapter explains some basic principles of English law and how the system of courts operates. What is law? System of courts ThiNganHang.com ThiNganHang.com
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What is law? System of courts What is law? 'Law is a formal mechanism of social control', Business Law 5th Edition, David Kelly, Ann Holmes and Ruth Hayward Types of law Common law and equity Statute law The earliest elements of the English legal system. This is law created by Parliament in the form of statutes. Common law is judge-made law which developed by amalgamating local customary laws into one 'law of the land'. Statute law is usually made in areas so Remedies are monetary. complicated or unique that common law alternatives are unlikely or would take too Equity was brought in to introduce fairness into the legal systemThiNganHang.comlong to develop. and offers alternative remedies when money is not sufficient. ThiNganHang.com
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Private law and public law Criminal law and criminal liability A crime is conduct The state prosecutes. It Private law deals with relationships must prove beyond between private individuals, groups or prohibited by law. Crimes are punishable, usually by fine or reasonable doubt that the organisations. accused committed the The state provides the legal framework imprisonment. crime. (such as statutes) that allows individuals to handle the matters themselves. The Civil law and civil liability state does not get involved. Public law is concerned with government Civil law exists to regulate The claimant must prove on and the functions of public organisations. disputes over the rights and balance of probabilities The key difference between public and obligations of persons that the defendant caused private law is that it is the state that dealing with each other. the damage. A key area for prosecutes under public law whereas businesses is contract. the individual takes up the action inThiNganHang.com private law. The distinction is not the act but the legal consequences. Page 3 1: Law and the legal system ThiNganHang.com
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What is law? System of courts Civil Criminal The simplified diagram below sets out the English The simplified diagram below sets out the English civil court structure. criminal court structure. Supreme Court Supreme Court Court of Appeal Court of Appeal High Court EAT High Court Crown Court County Court Magistrates' Court Magistrates' Court Note. EAT means the Employment Appeals Tribunal.ThiNganHang.com ThiNganHang.com
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Status of courts Function Appeals to Bound by Binds Magistrates' Court Tries minor crimes summarily Crown Court High Court No one Committals to Crown Court High Court Court of Appeal Not even itself Limited family and other civil jurisdiction Supreme Court ECJ County Court Majority of civil cases in UK High Court High Court No one Cases are allocated to one of three tracks Court of Appeal Court of Appeal Not even itself Small claims (civil) for multi-track Supreme Court Fast track cases ECJ Multi track Crown Court All indictable crimes with a jury Court of Appeal High Court (QBD) No one Appeals and Committals from MagistratesThiNganHang.com' Court (criminal) Court of Appeal (However, cases are Limited civil cases High Court (QBD) Supreme Court persuasive) ECJ Page 5 1: Law and the legal system ThiNganHang.com
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What is law? System of courts Function Appeals to Bound by Binds High Court QBD: Civil matters such as contract and tort Court of Appeal (civil) The relevant Magistrates' Court Chancery: Traditional equity matters (eg Supreme Court divisional court County Court partnership, mortgages, wills) (leapfrog procedure) Court of Appeal Crown Court Family: Matrimonial, children Supreme Court, ECJ Court of Appeal Civil division Supreme Court Own decisions All inferior UK Criminal division Supreme Court courts (subject to an Itself (subject to an exception); ECJ exception) Supreme Court The highest UK appeal court ECJ Itself (except in All UK courts exceptional cases) Itself (usually) ECJ ECJ Interpretation of EU treaties ThiNganHang.comNo appeal No oneNot even itself All UK courts ThiNganHang.com
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2: Sources of English law Topic List In this chapter, the sources of English law are identified and outlined. Case law and precedent Legislation and statutory interpretation Delegated legislation Human rights ThiNganHang.com ThiNganHang.com
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Case law Legislation and Delegated Human and precedent statutory interpretation legislation rights Case law Rules The basis of case law is that the law is interpreted A precedent must be based on a proposition by the courts and evolves as cases are heard. of law, not a decision on a question of fact It must form part of the ratio decidendi of the The doctrine of judicial precedent case, that is, the judge's reason for deciding The material facts of each case must be the Judicial precedent is based on the view that a same function of the judge is to decide cases in accordance with existing case law. It provides The status of the previous court must be such consistency. A judge must follow precedents in that it binds the court seeking precedent accordance with certain rules. A judge may make statements 'by the way', ie, not part of the ratio. These are obiter dicta ThiNganHang.com ThiNganHang.com
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Avoidance of a binding precedent Distinguishing the facts Declaring the ratio decidendi obscure The courts may decline Stating the previous decision was made per incuriam to follow an apparently (carelessly) binding precedent by Stating it is in conflict with a fundamental principle Declaring an earlier precedent too wide Advantages and disadvantages of judicial precedent Advantages Disadvantages Encourages certainty and consistency Risk of illogical decisions or inconsistencies to Flexibility avoid unfair result Detail Restricts discretion of judges Practicality ThiNganHang.com Bulk of case law May create unfair precedents Page 9 2: Sources of English law ThiNganHang.com
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Case law Legislation and Delegated Human and precedent statutory interpretation legislation rights Legislation Statutory interpretation Legislation or statute, is law made by Parliament. The key rules of statutory interpretation are: Parliament can make the law as it sees fit, or as Literal rule: plain, ordinary or literal meaning. directed by the EU. Parliament makes new law and Purposive approach: reference made to context and repeals and overrules old law. This is known as purpose of legislation.What is it trying Parliamentary sovereignty. to achieve? Contextual rule: looks at the statute as a whole to discover the meaning of a word. Advantages Disadvantages Responsive to public opinion Bulky Can deal with any problem Time pressure may mean legislation lacks detail Carefully constructed Takes up a lot of parliamentary time Can respond to problems in society or case lawThiNganHang.com Cannot anticipate every possible scenario ThiNganHang.com
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Case law Legislation and Delegated Human and precedent statutory interpretation legislation rights Delegated legislation Acts of Parliament may contain sections giving power to ministers or public bodies to make delegated Delegated legislation is law, often of a detailed legislation for specific purposes. nature, made by subordinate bodies who have been given the power to do so by statute. Advantages Types of delegated legislation Saves parliamentary time Allows technical expertise Statutory Instruments, Bye-laws, Rules of court, Professional regulations, Orders in Council Allows swift alteration without referring back to Parliament Control of delegated legislation Disadvantages Some require positive Parliamentary approval Most is laid before Parliament for 40 days before Lack of accountability enactment to allow negative resolutions Power given to civil servants There are Scrutiny Committees in both housesMay be challenged in court asThiNganHang.comultra vires Volume and complexity Page 11 2: Sources of English law ThiNganHang.com
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Case law Legislation and Delegated Human and precedent statutory interpretation legislation rights The Human Rights Act 1998 The Human Rights Act 1998 incorporates the articles of the European Convention for the Protection of Human Rights and Fundamental Freedoms into UK law. This is a convention which the UK signed in 1951, but which previously had not been given legal status in the UK. The Human Rights Act became effective in the UK in October 2000. It continues to have far-reaching effects on UK law. Human rights cases can be brought in UK courts, with the highest court of appeal being the European Court of Human Rights. The effect of the Human Rights Act will continue to be felt over time as cases are brought to the courts. ThiNganHang.com ThiNganHang.com
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