Business law

682 Pages·2002·2.031 MB·English

by  David Kelly, Ann E M Holmes, Ruth Hayward, L. L. B

BUSINESS LAW

Fourth Edition
David Kelly, PhD
Principal Lecturer in Law
Staffordshire University
Ann Holmes, M Phil, PGD
Associate Dean of the Law School
Staffordshire University
Ruth Hayward, LLB, LLM
Lecturer in Law
Staffordshire University
Cavendish
Publishing
Limited
Sydney • London • Portland, Oregon
Fourth edition first published in Great Britain 2002 by
Cavendish Publishing Limited, The Glass House,
Wharton Street, London WC1X 9PX, United Kingdom
Telephone: [phone] Facsimile: [phone]
Email: [email protected]
Website: www.cavendishpublishing.com

Published in the United States by Cavendish Publishing
c/o International Specialized Book Services,
5804 NE Hassalo Street, Portland,
Oregon 97213–3644, USA

Published in Australia by Cavendish Publishing (Australia) Pty Ltd
3/303 Barrenjoey Road, Newport, NSW 2106, Australia

© Kelly, D, Holmes, A
and Hayward, R 2002
First edition 1995
Second edition 1997
Third edition 2000
Fourth edition 2002
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic, mechanical,
photocopying, recording, scanning or otherwise, without the prior permission in
writing of Cavendish Publishing Limited, or as expressly permitted by law, or under
the terms agreed with the appropriate reprographics rights organisation. Enquiries
concerning reproduction outside the scope of the above should be sent to the
Rights Department, Cavendish Publishing Limited, at the address above.
You must not circulate this book in any other binding or cover
and you must impose the same condition on any acquirer.

British Library Cataloguing in Publication Data
Data available

Library of Congress Cataloguing in Publication Data
Data available
ISBN 1-85941-730-2

1 3 5 7 9 10 8 6 4 2
Printed and bound in Great Britain
CONTENTS
Preface v
Table of Cases xxiii
Table of Statutes lv
Table of Statutory Instruments lxv
Conventions, Treaties and EC Legislation lxix
Table of Abbreviations lxxi
1 LAW AND LEGAL SOURCES 1
1.1 The nature of law 1
1.2 Categories of law 2
1.2.1 Common law and civil law 2
1.2.2 Common law and equity 3
1.2.3 Common law and statute law 6
1.2.4 Private law and public law 6
1.2.5 Civil law and criminal law 7
1.3 The Human Rights Act 1998 8
1.3.1 Cases decided under the Human Rights Act 1998 11
1.4 Sources of law 14
1.4.1 European Community 14
1.4.2 Sources of EC law 16
1.4.3 The institutions of the EU 18
1.5 Legislation 22
1.5.1 The legislative process 22
1.5.2 Types of legislation 24
1.5.3 Delegated legislation 25
1.5.4 Advantages of the use of delegated legislation 27
1.5.5 Disadvantages in the prevalence of
delegated legislation 27
1.5.6 Control over delegated legislation 28
1.6 Case law 29
1.6.1 The meaning of precedent 29
1.6.2 The hierarchy of the courts and the setting
of precedent 30
1.6.3 The nature of precedent 32
1.6.4 Evaluation 33
vii
Business Law
1.6.5 Advantages of case law 33
1.6.6 Disadvantages of case law 35
1.7 Statutory interpretation 37
1.7.1 Problems in interpreting legislation 38
1.7.2 Rules of interpretation 38
1.7.3 Aids to construction 39
1.7.4 Presumptions 40
1.8 Custom 41
1.8.1 Books of authority 42
1.9 Law reform 43
Summary of Chapter 1 45
2 THE CRIMINAL AND CIVIL COURTS 49
2.1 Introduction 49
2.2 The criminal court structure 49
Figure 1: The hierarchy of the courts 50
2.3 Magistrates’ courts 51
2.3.1 Powers of magistrates’ courts 51
2.4 The Crown Court 52
2.4.1 Jurisdiction 52
2.5 Criminal appeals 53
2.5.1 Appeals from magistrates’ courts 53
2.5.2 Appeals from the Crown Court 53
2.6 House of Lords 55
2.7 Judicial Committee of the Privy Council 55
2.8 The civil court structure 55
2.9 Magistrates’ courts 55
2.10 The Woolf Reforms to the civil justice system 56
2.10.1 Judicial case management 56
2.10.2 Pre-action protocols 57
2.10.3 Alternatives to going to court 57
2.10.4 Allocation to track (Pt 26 of the CPR1998) 58
2.11 County courts 58
2.12 The High Court of Justice 59
2.12.1 The Queen’s Bench Division 59
2.12.2 The Queen’s Bench Divisional Court 60
viii
Contents
2.12.3 The Chancery Division 60
2.12.4 The Chancery Divisional Court 60
2.12.5 The Family Division 60
2.12.6 The Family Divisional Court 61
2.12.7 Specialist courts 61
2.13 The Court of Appeal (Civil Division) 61
2.13.1 The Civil Procedure Rules 62
2.14 House of Lords 62
2.15 Judicial Committee of the Privy Council 62
2.16 The European Court of Justice 63
2.17 The European Court of Human Rights 63
Summary of Chapter 2 67
3 ALTERNATIVE DISPUTE RESOLUTION 69
3.1 Introduction 69
3.2 Arbitration 70
3.2.1 Arbitration procedure 71
3.2.2 Relationship to ordinary courts 74
3.2.3 Advantages 75
3.2.4 The small claims track (Pt 27 of the CPR) 75
3.2.5 Small claims procedure 77
3.2.6 Evaluation 78
3.2.7 Arbitration under codes of conduct 79
3.3 Administrative tribunals 80
3.3.1 Tribunals and courts 81
3.3.2 Composition of tribunals 82
3.3.3 Statutory tribunals 83
3.3.4 Domestic tribunals 85
3.3.5 Advantages of tribunals 85
3.3.6 Disadvantages of tribunals 86
3.3.7 The Leggatt Review of Tribunals 89
3.4 Ombudsman 91
3.4.1 Procedure 92
3.4.2 Evaluation 95
3.5 Mediation and conciliation 96
3.5.1 Mediation 96
ix
Business Law
3.5.2 Mediation in divorce 97
3.5.3 Conciliation 100
Summary of Chapter 3 101
4 THE NATURE AND FUNCTION OF CONTRACT LAW 103
4.1 Introduction 103
4.2 Definition 104
4.3 Formalities 104
4.4 The legal effect of agreement 105
Summary of Chapter 4 109
5 THE FORMATION OF A CONTRACT 111
5.1 Introduction 111
5.2 Offer 111
5.2.1 Identifying an offer 112
5.2.2 Offers to particular people 114
5.2.3 Knowledge of the offer 115
5.2.4 Rejection of offers 115
5.2.5 Revocation of offers 116
5.2.6 Lapse of offers 117
5.3 Acceptance 118
5.3.1 Form of acceptance 118
5.3.2 Communication of acceptance 119
5.3.3 Tenders 121
5.4 Offer, acceptance and the classical model of contract 121
5.5 Consideration 123
5.5.1 Forbearance 123
5.5.2 Types of consideration 124
5.5.3 Rules relating to consideration 125
5.5.4 Performance of existing duties 126
5.5.5 Consideration in relation to the waiver
of existing rights 129
5.5.6 Promissory estoppel 131
5.5.7 Promissory estoppel after Williams v Roffey 132
5.6 Privity of contract 132
5.6.1 Contracts (Rights of Third Parties) Act 1999 135
x
Contents
5.7 Capacity 136
5.7.1 Minors 136
5.7.2 Mental incapacity and intoxication 139
5.8 Intention to create legal relations 139
5.8.1 Domestic and social agreements 139
5.8.2 Commercial agreements 140
5.8.3 Collective agreements 141
5.8.4 Letters of comfort 141
Summary of Chapter 5 143
6 CONTENTS OF A CONTRACT 145
6.1 Contract terms and mere representations 145
6.2 Conditions, warranties and innominate terms 146
6.2.1 Conditions 146
6.2.2 Warranties 146
6.2.3 Innominate terms 147
6.3 Implied terms 148
6.3.1 Terms implied by statute 148
6.3.2 Terms implied by custom 148
6.3.3 Terms implied by the courts 148
6.4 The parol evidence rule 149
6.5 Exemption or exclusion clauses 150
6.5.1 Has the exclusion clause been incorporated
into the contract? 150
6.5.2 Does the exclusion clause effectively
cover the breach? 152
6.5.3 What effect does UCTA1977 have
on the exclusion clause? 153
6.5.4 The Unfair Terms in Consumer Contracts
Regulations 156
Summary of Chapter 6 159
7 VITIATING FACTORS 161
7.1 Introduction 161
7.2 Mistake 161
7.2.1 Common mistake 162
7.2.2 Mutual mistake 163
7.2.3 Unilateral mistake 165
xi
Business Law
7.2.4 Mistake in respect of documents 166
7.3 Misrepresentation 167
7.3.1 There must be a false statement of fact 168
7.3.2 The statement must actually induce the contract 169
7.3.3 Types of misrepresentation 170
7.3.4 Remedies for misrepresentation 171
7.4 Duress 173
Figure 2: Forms of misrepresentation 174
7.5 Undue influence 175
7.5.1 Special relationships 175
7.5.2 No special relationship 176
7.5.3 Inequality of bargaining power 177
7.6 Contracts and public policy 177
7.6.1 Illegal contracts 178
7.6.2 Void contracts 178
7.6.3 Contracts in restraint of trade 179
Summary of Chapter 7 183
8 DISCHARGE OF A CONTRACT 185
8.1 Introduction 185
8.2 Discharge by agreement 185
8.3 Discharge by performance 185
8.3.1 Tender of performance 187
8.4 Discharge by frustration 187
8.4.1 Situations in which the doctrine of frustration
does not apply 189
8.4.2 The effect of frustration 190
8.4.3 Law Reform (Frustrated Contracts) Act 1943 190
8.5 Discharge by breach 191
8.5.1 Effect of breach 191
8.5.2 Anticipatory breach 191
8.6 Remedies for breach of contract 193
8.7 Damages 194
8.7.1 Remoteness of damage 194
8.7.2 Measure of damages 195
8.7.3 Liquidated damages and penalties 198
8.7.4 Quantum meruit 199
xii
Contents
8.8 Specific performance 200
8.9 Injunction 201
8.10 Action for the agreed contract price 202
8.11 Repudiation 202
8.12 Quasi-contractual remedies 202
Summary of Chapter 8 203
9 SALE AND SUPPLY OF GOODS 205
9.1 Introduction 205
9.2 The Sale of Goods Act 1979 206
9.2.1 Definition 206
9.2.2 Form of the agreement 207
9.2.3 The price of the goods 207
9.2.4 Seller’s implied obligations 208
9.2.5 Delivery and payment obligations 218
9.2.6 Seller’s personal remedies 218
9.2.7 Seller’s real remedies 219
9.2.8 Buyer’s remedies 221
9.2.9 Acceptance 224
9.2.10 Exclusion and limitation of liability 225
9.2.11 Guarantees 227
9.2.12 Transfer of property and risk 228
9.2.13 Sale by a person who is not the owner 232
9.3 The Supply of Goods and Services Act 1982 236
9.3.1 Implied terms 236
9.3.2 Exclusion clauses 237
9.4 The Consumer Protection (Distance Selling)
Regulations 2000 238
9.4.1 Application 238
9.4.2 Main provisions 238
9.5 The Consumer Protection Act 1987 239
9.5.1 Introduction 239
9.5.2 Meaning of ‘producer’ 239
9.5.3 ‘Defective’ product 240
9.5.4 Extent of liability 240
9.5.5 Exclusion of liability 241
xiii
Business Law
9.5.6 Defences 241
9.5.7 Limitations on action 241
9.6 Criminal liability 242
9.6.1 Introduction 242
9.6.2 Part II of the CPA1987 242
9.6.3 The General Product Safety Regulations 1994 242
9.6.4 Misleading price indications 243
9.6.5 The Trade Descriptions Act 1968 244
Summary of Chapter 9 247
10 NEGLIGENCE 251
10.1 Introduction 251
10.2 Elements of the tort 252
10.3 Duty of care 252
10.4 Nervous shock 256
10.5 Economic loss 261
10.6 Negligent misstatements 262
10.7 Professional negligence 263
10.7.1 Accountants and auditors 263
10.7.2 Lawyers 265
10.7.3 Surveyors 266
10.8 Breach of the duty of care 267
10.9 Res ipsa loquitur 270
10.10 Causation 271
10.10.1 The ‘but for’ test 271
10.10.2 Novus actus interveniens 273
10.11 Remoteness of damage 275
10.12 Defences 276
10.12.1 Contributory negligence 276
10.12.2 Volenti non fit injuria 277
Summary of Chapter 10 279
11 AGENCY 283
11.1 Introduction 283
11.2 Definition of‘agency’ 283
11.3 Creation of agency 285
11.3.1 Express appointment 285
xiv