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Law Business & Career
- Book Cover (Page 1) - Title (Page 2) - Copyright (Page 3) - Contents (Page 4) - A note about copyright (Page 5) - Helping you to pass (Page 6) - BPP Learning Media – Approved Learning Partner – content (Page 6) - The PER alert (Page 6) - Tackling studying (Page 6) - Developing exam awareness (Page 6) - Using the Syllabus and Study Guide (Page 6) - Testing what you can do (Page 6) - Chapter features (Page 7) - Studying F4 (Page 8) - 1 What F4 is about (Page 8) - 2 What skills are required? (Page 10) - 3 How to improve your chances of passing (Page 10) - 4 Brought forward knowledge (Page 10) - The exam paper (Page 10) - Format of the paper (Page 10) - Syllabus and Study Guide (Page 11) - Part A Essential elements of the legal system (Page 20) - Chapter 1 Law and the legal system (Page 22) - Introduction (Page 22) - Study guide (Page 23) - Exam guide (Page 23) - 1 What is law? (Page 23) - 2 Types of law (Page 23) - 2.1 Common law and equity (Page 24) - 2.2 Statute law (Page 24) - 2.3 Private law and public law (Page 24) - 2.4 Criminal and civil law (Page 24) - 2.4.1 Criminal law (Page 25) - 2.4.2 Civil law (Page 25) - 2.4.3 Distinction between criminal and civil cases (Page 25) - 3 The system of courts (Page 26) - 3.1 The civil court structure (Page 26) - 3.2 The criminal court structure (Page 27) - 3.3 Magistrates' Courts (Page 27) - 3.3.1 Appeals (Page 28) - 3.3.2 Personnel (Page 28) - 3.4 The County Court (Page 28) - 3.4.1 Appeals (Page 28) - 3.4.2 Personnel (Page 28) - 3.5 Civil Procedure Rules (Page 28) - 3.5.1 Tracking (Page 29) - 3.5.2 Case management (Page 29) - 3.6 The Crown Court (Page 29) - 3.6.1 Appeals (Page 29) - 3.6.2 Personnel (Page 29) - 3.7 The High Court (Page 30) - 3.7.1 Queen's Bench Division (Page 30) - 3.7.2 Chancery Division (Page 30) - 3.7.3 Family Division (Page 30) - 3.7.4 Appeals (Page 31) - 3.7.5 Personnel (Page 31) - 3.8 The Court of Appeal (Page 31) - 3.8.1 Civil Division (Page 31) - 3.8.2 Criminal Division (Page 31) - 3.8.3 Appeals (Page 31) - 3.8.4 Personnel (Page 31) - 3.9 The Supreme Court (Page 31) - 3.10 The European Court of Human Rights (Page 32) - 3.11 The European Court of Justice (Page 32) - 3.12 The Privy Council (Page 32) - Chapter Roundup (Page 33) - Quick Quiz (Page 34) - Answers to Quick Quiz (Page 35) - Chapter 2 Sources of law (Page 36) - Introduction (Page 36) - Study guide (Page 37) - Exam guide (Page 37) - 1 Case law and precedent (Page 37) - 1.1 Common law and equity (Page 37) - 1.2 Doctrine of judicial precedent (Page 38) - 1.3 Law reports (Page 38) - 1.4 Ratio decidendi (Page 39) - 1.5 Distinguishing the facts (Page 39) - 1.6 Status of the court (Page 40) - 1.7 Court of Appeal exception (Page 40) - 1.8 Persuasive precedents (Page 41) - 1.9 Avoidance of a binding precedent (Page 41) - 1.10 The advantages and disadvantages of precedent (Page 41) - 2 Legislation (Page 42) - 2.1 Parliamentary sovereignty (Page 42) - 2.2 Types of legislation (Page 42) - 2.3 Parliamentary procedure (Page 43) - 2.4 Advantages and disadvantages of statute law (Page 43) - 2.5 Delegated legislation (Page 44) - 2.5.1 Control over delegated legislation (Page 44) - 2.5.2 Advantages and disadvantages (Page 44) - 3 Statutory interpretation (Page 45) - 3.1 Rules of statutory interpretation (Page 45) - 3.1.1 The literal rule and golden rule (Page 45) - 3.1.2 The mischief rule (Page 46) - 3.1.3 The purposive approach (Page 46) - 3.1.4 The contextual rule (Page 46) - 3.2 General rules of interpretation (Page 46) - 3.2.1 The eiusdem generis rule (Page 46) - 3.2.2 Expressio unius est exclusio alterius (Page 47) - 3.2.3 Noscitur a sociis (Page 47) - 3.2.4 In pari materia (Page 47) - 3.3 Presumptions of statutory interpretation (Page 47) - 3.4 Other assistance in interpretation (Page 47) - 3.4.1 The Interpretation Act 1987 (Page 47) - 3.4.2 Intrinsic aids (Page 48) - 3.4.3 Extrinsic aids (Page 48) - 4 The European Convention on Human Rights (Page 48) - 5 The Human Rights Act 1998 (Page 48) - 6 The impact of the Act (Page 49) - 6.1 Impact on new legislation (Page 49) - 6.2 Impact on statutory interpretation (Page 50) - 6.3 Impact on the common law (Page 50) - Chapter Roundup (Page 51) - Quick Quiz (Page 51) - Answers to Quick Quiz (Page 52) - Part B The law of obligations (Page 54) - Chapter 3 Formation of contract I (Page 56) - Introduction (Page 56) - Study guide (Page 57) - Exam guide (Page 57) - 1 Definition of contract (Page 57) - 2 Factors affecting the modern contract (Page 57) - 2.1 Inequality of bargaining power (Page 57) - 2.2 The standard form contract (Page 57) - 2.3 Consumer protection (Page 58) - 2.4 The electronic contract (Page 58) - 3 The essentials of a contract (Page 58) - 3.1 Validity factors (Page 58) - 4 Form of a contract (Page 59) - 4.1 Contracts by deed (Page 59) - 4.2 Contracts which must be in writing (Page 59) - 4.3 Contracts which must be evidenced in writing (Page 60) - 5 Offer (Page 60) - 5.1 Supply of information (Page 60) - 5.2 A statement of intention (Page 61) - 5.3 An invitation to treat (Page 61) - 5.3.1 Auction sales (Page 61) - 5.3.2 Advertisements (Page 62) - 5.3.3 Exhibition of goods for sale (Page 62) - 5.3.4 Invitation for tenders (Page 62) - 6 Termination of offer (Page 63) - 6.1 Rejection (Page 63) - 6.2 Counter-offer (Page 63) - 6.2.1 Request for information (Page 63) - 6.3 Lapse of time (Page 64) - 6.4 Revocation of an offer (Page 64) - 6.5 Failure of a condition (Page 65) - 6.6 Termination by death (Page 65) - 7 Acceptance (Page 65) - 7.1 Silence (Page 66) - 7.2 Acceptance 'subject to contract' (Page 66) - 7.3 Letters of intent (Page 66) - 7.4 Acceptance of a tender (Page 67) - 7.5 Counter-offers and requests for information (Page 67) - 8 Communication of acceptance (Page 67) - 8.1 Waiver of communication (Page 67) - 8.2 Prescribed mode of communication (Page 68) - 8.3 No mode of communication prescribed (Page 68) - 8.4 The postal rule (Page 68) - 8.5 Cross-offers (Page 69) - 8.6 Unilateral contracts (Page 69) - 9 Collateral contracts (Page 70) - Chapter Roundup (Page 71) - Quick Quiz (Page 72) - Answers to Quick Quiz (Page 73) - Chapter 4 Formation of contract II (Page 74) - Introduction (Page 74) - Study guide (Page 75) - Exam guide (Page 75) - 1 Consideration (Page 75) - 1.1 Valid consideration (Page 75) - 1.1.1 Additional rules for valid consideration (Page 76) - 1.2 Past consideration (Page 76) - 2 Adequacy and sufficiency of consideration (Page 78) - 2.1 Adequacy (Page 78) - 2.2 Sufficiency (Page 78) - 2.2.1 Performance of existing contractual duties (Page 79) - 2.2.2 Promise of additional reward (Page 79) - 2.2.3 Performance of existing contractual duty to a third party (Page 80) - 2.2.4 Waiver of existing rights (Page 80) - 3 Promissory estoppel (Page 81) - 4 Intention to create legal relations (Page 82) - 4.1 Domestic arrangements (Page 82) - 4.1.1 Husband and wife (Page 82) - 4.1.2 Relatives (Page 83) - 4.1.3 Other domestic arrangements (Page 83) - 4.2 Commercial agreements (Page 83) - 4.3 Statutory provisions (Page 84) - 4.4 Letters of comfort (Page 84) - 4.5 Transactions binding in honour only (Page 84) - 5 Privity of contract (Page 85) - 5.1 Exceptions (Page 86) - 5.2 Contracts (Rights of Third Parties) Act 1999 (Page 87) - 6 The electronic contract (Page 87) - Chapter Roundup (Page 89) - Quick Quiz (Page 90) - Answers to Quick Quiz (Page 91) - Chapter 5 Content of contracts (Page 92) - Introduction (Page 92) - Study guide (Page 93) - Exam guide (Page 93) - 1 Contract terms (Page 93) - 2 Express terms and implied terms (Page 94) - 2.1 Express terms (Page 94) - 2.2 Implied terms (Page 95) - 2.2.1 Terms implied by custom (Page 95) - 2.2.2 Terms implied by statute (Page 96) - 2.2.3 Terms implied by the courts (Page 96) - 3 Conditions and warranties (Page 96) - 3.1 Innominate terms (Page 97) - 4 Exclusion clauses (Page 98) - 4.1 Incorporation of exclusion clauses (Page 99) - 4.1.1 Contractual documents (Page 99) - 4.1.2 Signed contracts (Page 99) - 4.1.3 Unsigned contracts and notices (Page 100) - 4.1.4 Onerous terms (Page 101) - 4.2 Interpretation of exclusion clauses (Page 101) - 4.2.1 The 'main purpose' rule (Page 101) - 4.2.2 Fundamental breach (Page 102) - 5 The Unfair Contract Terms Act 1977 (Page 102) - 5.1 Clauses which are void (Page 103) - 5.2 Clauses which are subject to a test of reasonableness (Page 103) - 5.3 Exclusion of liability for negligence (Page 103) - 5.4 Standard term contracts and consumer contracts (Page 103) - 5.4.1 Consumers (Page 103) - 5.5 Sale and supply of goods (Page 103) - 5.6 The statutory test of reasonableness (Page 104) - 6 The Unfair Terms in Consumer Contracts Regulations 1999 (Page 104) - Chapter Roundup (Page 106) - Quick Quiz (Page 107) - Answers to Quick Quiz (Page 107) - Chapter 6 Breach of contract and remedies (Page 108) - Introduction (Page 108) - Study guide (Page 109) - Exam guide (Page 109) - 1 Discharge of contract (Page 109) - 2 Breach of contract (Page 109) - 2.1 Repudiatory breach (Page 110) - 2.1.1 Types of repudiatory breach (Page 110) - 2.1.2 Anticipatory breach (Page 110) - 2.1.3 Termination for repudiatory breach (Page 111) - 2.1.4 Affirmation after repudiatory breach (Page 111) - 3 Damages (Page 111) - 4 Remoteness of damage (Page 112) - 5 Measure of damages (Page 113) - 5.1 Market price rule (Page 114) - 5.2 Non-financial loss (Page 114) - 5.3 Cost of cure (Page 115) - 5.4 Mitigation of loss (Page 115) - 6 Liquidated damages and penalty clauses (Page 116) - 7 Other common law remedies (Page 117) - 7.1 Action for the price (Page 117) - 7.2 Quantum meruit (Page 117) - 8 Equitable remedies (Page 118) - 8.1 Specific performance (Page 118) - 8.2 Injunction (Page 118) - 8.2.1 Mareva or 'freezing' injunctions (Page 119) - 8.3 Rescission (Page 119) - Chapter Roundup (Page 120) - Quick Quiz (Page 121) - Answers to Quick Quiz (Page 122) - Chapter 7 The law of torts and professional negligence (Page 124) - Introduction (Page 124) - Study guide (Page 125) - Exam guide (Page 125) - 1 Tort and other wrongs (Page 125) - 1.1 Tort (Page 125) - 1.2 Types of tort (Page 125) - 1.2.1 ‘Passing-off’ (Page 125) - 1.2.2 Negligence (Page 126) - 2 The tort of negligence (Page 126) - 2.1 Definition (Page 126) - 2.2 Liability (Page 126) - 3 Duty of care (Page 126) - 3.1 The basic rule (Page 127) - 3.2 Development of the doctrine (Page 127) - 4 Breach of duty of care (Page 127) - 4.1 The basic rule (Page 127) - 4.2 Res ipsa loquitur (Page 128) - 4.3 Example (Page 129) - 5 Causality and remoteness of damage (Page 129) - 5.1 Damage or loss (Page 129) - 5.1.1 Pure financial loss (Page 129) - 5.2 The 'But for' test (Page 129) - 5.2.1 Multiple causes (Page 130) - 5.3 Novus actus interveniens (Page 130) - 5.3.1 Act of the claimant (Page 130) - 5.3.2 Act of a third party (Page 130) - 5.3.3 Natural events (Page 131) - 5.4 Remoteness of damage (Page 131) - 6 Defences to negligence (Page 132) - 6.1 Contributory negligence (Page 132) - 6.2 Volenti non fit injuria (Page 132) - 6.3 Vicarious liability (Page 133) - 7 Professional advice (Page 133) - 7.1 Development (Page 133) - 7.2 The special relationship (Page 133) - 8 The Caparo decision (Page 134) - 8.1 Non-audit role (Page 135) - 8.2 The law since Caparo (Page 135) - Chapter Roundup (Page 138) - Quick Quiz (Page 139) - Answers to Quick Quiz (Page 139) - Part C Employment law (Page 140) - Chapter 8 Contract of employment (Page 142) - Introduction (Page 142) - Study guide (Page 143) - Exam guide (Page 143) - 1 What is an employee? (Page 143) - 1.1 The control test (Page 144) - 1.2 The integration test (Page 144) - 1.3 The multiple (economic reality) test (Page 145) - 1.4 Agency workers (Page 145) - 1.5 Relevant factors (Page 146) - 2 Why does it matter? (Page 147) - 3 Employment contract: basic issues (Page 148) - 3.1 Implied terms (Page 148) - 3.2 Requirement for written particulars (Page 149) - 4 Common law duties (Page 149) - 4.1 Employee's duties (Page 149) - 4.2 Employer's duties (Page 150) - 5 Statutory duties (Page 151) - 5.1 Pay and equality (Page 151) - 5.1.1 Equal Pay Act 1970 (Page 151) - 5.1.2 National Minimum Wage Act 1998 (Page 151) - 5.1.3 Pay statements (Page 151) - 5.1.4 Equality (Page 151) - 5.2 Time off work (Page 152) - 5.3 Maternity rights and the 'work-life balance' (Page 153) - 5.3.1 Ante-natal care (Page 153) - 5.3.2 Maternity leave and pay (Page 153) - 5.3.3 Paternity leave and pay (Page 153) - 5.3.4 Adoptive parents (Page 153) - 5.3.5 Flexible working (Page 153) - 5.3.6 Parental leave (Page 153) - 5.4 Health and safety (Page 154) - 5.4.1 Employment rights (Page 154) - 5.5 Working time (Page 154) - 6 Varying the terms of an employment contract (Page 154) - 6.1 Varying terms without changing the contract (Page 154) - 6.2 Changing the existing contract (Page 155) - 6.3 Signing a new contract (Page 155) - 7 Continuous employment (Page 155) - 7.1 Transfer of undertakings (Page 155) - Chapter Roundup (Page 156) - Quick Quiz (Page 157) - Answers to Quick Quiz (Page 157) - Chapter 9 Dismissal and redundancy (Page 158) - Introduction (Page 158) - Study guide (Page 159) - Exam guide (Page 159) - 1 Termination by notice (Page 159) - 1.1 Minimum period of notice (Page 159) - 2 Termination of employment by breach of contract (Page 160) - 2.1 Summary dismissal (Page 160) - 2.2 Constructive dismissal (Page 161) - 2.2.1 Mobility clauses (Page 161) - 2.2.2 Establishing constructive dismissal (Page 161) - 2.3 Employer's inability to continue employment (Page 161) - 2.4 Repudiation of the contract by the employee (Page 161) - 3 Wrongful dismissal (Page 162) - 3.1 Justification of dismissal (Page 162) - 4 Remedies for wrongful dismissal (Page 162) - 4.1 Employment tribunals (Page 162) - 5 Unfair dismissal (Page 163) - 5.1 Scope (Page 163) - 5.2 Making a claim (Page 164) - 5.3 The reason for dismissal (Page 164) - 5.3.1 Reasonableness of employer (Page 164) - 5.3.2 Disciplinary procedure (Page 165) - 5.3.3 Warnings (Page 165) - 5.3.4 Concluding on reasonableness (Page 165) - 6 Unfair dismissal – justification of dismissal (Page 166) - 6.1 Potentially fair reasons for dismissal (Page 166) - 6.1.1 Capability/qualifications (Page 166) - 6.1.2 Misconduct (Page 167) - 6.1.3 Redundancy (Page 167) - 6.1.4 Other substantial reason (Page 167) - 6.1.5 Automatically fair reasons for dismissal (Page 167) - 6.1.6 Automatically unfair reasons for dismissal (Page 168) - 6.2 Proving what was the reason for dismissal (Page 168) - 7 Remedies for unfair dismissal (Page 168) - 7.1 Reinstatement (Page 168) - 7.2 Re-engagement (Page 168) - 7.3 Compensation (Page 169) - 8 Redundancy (Page 169) - 8.1 What is redundancy? (Page 169) - 8.2 Calculation of redundancy pay (Page 170) - 8.3 Exceptions to the right to redundancy payment (Page 170) - 8.3.1 Misconduct of the employee (Page 171) - 8.3.2 Offer of further employment (Page 171) - 8.4 Lay-off and short time (Page 171) - 8.5 Strike action (Page 171) - Chapter Roundup (Page 172) - Quick Quiz (Page 173) - Answers to Quick Quiz (Page 173) - Part D The formation and constitution of business organisations (Page 174) - Chapter 10 Agency law (Page 176) - Introduction (Page 176) - Study guide (Page 177) - Exam guide (Page 177) - 1 Role of agency and agency relationships (Page 177) - 1.1 Types of agent (Page 177) - 2 Formation of agency (Page 178) - 2.1 Express agreement (Page 178) - 2.2 Implied agreement (Page 178) - 2.3 Ratification of an agent's act: retrospective agreement (Page 178) - 2.4 Formation of agency agreement without consent (Page 179) - 2.4.1 Implied agreement (Page 179) - 2.4.2 Agent by estoppel (Page 179) - 2.4.3 Agent by necessity (Page 179) - 3 Authority of the agent (Page 179) - 3.1 Express authority (Page 180) - 3.2 Implied authority (Page 180) - 3.3 Actual authority (Page 181) - 3.4 Apparent/ostensible authority (Page 181) - 3.4.1 The extent of ostensible authority (Page 181) - 3.4.2 Example: partnership (Page 181) - 3.4.3 Example: companies (Page 181) - 3.4.4 Representations creating ostensible authority (Page 182) - 3.4.5 Reliance on representations (Page 182) - 3.4.6 Alteration of position following a representation (Page 182) - 3.5 Revocation of authority (Page 182) - 3.6 Termination of agency (Page 182) - 4 Relations between agents and third parties (Page 183) - 4.1 Liability of the agent for contracts formed (Page 183) - 4.2 Breach of warranty of authority (Page 183) - Chapter Roundup (Page 184) - Quick Quiz (Page 185) - Answers to Quick Quiz (Page 185) - Chapter 11 Partnerships (Page 186) - Introduction (Page 186) - Study guide (Page 187) - Exam guide (Page 187) - 1 Partnerships (Page 187) - 1.1 Definition of partnership (Page 187) - 1.1.1 The relation which subsists between persons (Page 187) - 1.1.2 Carrying on a business (Page 188) - 1.1.3 In common (Page 188) - 1.1.4 A view of profit (Page 188) - 1.2 Consequences of the definition (Page 188) - 1.2.1 Terminology (Page 188) - 1.3 Liability of the partners (Page 188) - 2 Forming an unlimited liability partnership (Page 189) - 2.1 Common formation formalities (Page 189) - 2.2 The partnership agreement (Page 189) - 3 Terminating an unlimited liability partnership (Page 189) - 3.1 Events causing termination (Page 190) - 4 Authority of partners in an unlimited liability partnership (Page 190) - 5 Liability of partners in an unlimited liability partnership (Page 191) - 5.1 Supervision and regulation (Page 191) - 5.2 Property (Page 192) - 6 Limited liability partnerships (Page 192) - 6.1 Definition of limited liability partnership (Page 192) - 6.2 Formation (Page 192) - 6.3 Internal regulation (Page 192) - 6.4 External relationships (Page 193) - 6.5 Dissolution (Page 193) - 6.6 Limited partnership (Page 193) - Chapter Roundup (Page 194) - Quick Quiz (Page 194) - Answers to Quick Quiz (Page 195) - Chapter 12 Corporations and legal personality (Page 196) - Introduction (Page 196) - Study guide (Page 197) - Exam guide (Page 197) - 1 Sole traders' and companies' legal identities (Page 197) - 1.1 Sole traders (Page 197) - 1.2 Legal status of the sole trader (Page 197) - 1.3 Companies (Page 198) - 1.4 Definition of a company (Page 198) - 1.5 Legal personality (Page 198) - 2 Limited liability of members (Page 199) - 2.1 Protection for members against creditors (Page 199) - 2.2 Protection from business failure (Page 199) - 2.3 Members asked to contribute identifiable amounts (Page 199) - 2.4 Liability of the company for tort and crime (Page 199) - 3 Types of company (Page 200) - 3.1 Limited companies (Page 200) - 3.1.1 Liability limited by shares (Page 200) - 3.1.2 Liability limited by guarantee (Page 200) - 3.2 Unlimited liability companies (Page 200) - 3.3 Public and private companies (Page 201) - 3.4 Conditions for being a public company (Page 201) - 3.4.1 Registrar's trading certificate (Page 201) - 3.4.2 Minimum membership and directors (Page 202) - 3.5 Private companies (Page 202) - 3.6 Differences between private and public companies (Page 202) - 3.6.1 Capital (Page 202) - 3.6.2 Dealings in shares (Page 202) - 3.6.3 Accounts (Page 202) - 3.6.4 Commencement of business (Page 203) - 3.6.5 General meetings (Page 203) - 3.6.6 Names and Identification (Page 203) - 3.6.7 Disclosure requirements (Page 203) - 4 Additional classifications (Page 203) - 4.1 Parent (holding) and subsidiary companies (Page 203) - 4.2 Quoted companies (Page 204) - 4.3 Small companies regime (Page 204) - 4.4 Multinational companies (Page 205) - 4.4.1 Examples: multinational companies (Page 205) - 5 Effect of legal personality (Page 205) - 5.1 Veil of incorporation (Page 206) - 6 Ignoring separate personality (Page 206) - 6.1 Lifting the veil by statute to enforce the law (Page 206) - 6.1.1 Liability for trading without trading certificate (Page 206) - 6.1.2 Fraudulent and wrongful trading (Page 207) - 6.1.3 Disqualified directors (Page 207) - 6.1.4 Abuse of company names (Page 207) - 6.2 Lifting the veil to prevent evasion of obligations (Page 207) - 6.2.1 Public interest (Page 207) - 6.2.2 Evasion of liabilities (Page 208) - 6.2.3 Evasion of taxation (Page 208) - 6.2.4 Quasi-partnership (Page 208) - 6.3 Lifting the veil in group situations (Page 208) - 6.4 Summary of situations in which the veil can be lifted (Page 209) - 6.5 Lifting the veil and limited liability (Page 209) - 7 Comparison of companies and partnerships (Page 210) - 7.1 The differences (Page 210) - Chapter Roundup (Page 211) - Quick Quiz (Page 212) - Answers to Quick Quiz (Page 213) - Chapter 13 Company formation (Page 214) - Introduction (Page 214) - Study guide (Page 215) - Exam guide (Page 215) - 1 Promoters and pre-incorporation contracts (Page 215) - 1.1 Duties of promoters (Page 215) - 1.1.1 Remedy for breach of promoter's fiduciary duty (Page 216) - 2 Pre-incorporation expenses and contracts (Page 216) - 2.1 Pre-incorporation expenses (Page 216) - 2.2 Pre-incorporation contracts (Page 216) - 2.3 Liability of promoters for pre-incorporation contracts (Page 217) - 2.4 Other ways of avoiding liability as a promoter for pre-incorporation contracts (Page 217) - 3 Registration procedures (Page 217) - 3.1 Documents to be delivered to the Registrar (Page 217) - 3.1.1 Application for registration (Page 217) - 3.2 Certificate of incorporation (Page 218) - 3.3 Companies 'off the shelf' (Page 219) - 3.4 Re-registration procedures (Page 219) - 3.5 Commencement of business rules (Page 220) - 3.5.1 Public companies (Page 220) - 3.5.2 Private company (Page 221) - 4 Statutory books and records (Page 221) - 4.1 The requirement for public accountability (Page 221) - 4.2 The Registrar of Companies (Page 221) - 4.3 Statutory books (Page 222) - 4.4 Register of members (Page 222) - 4.5 Register of charges (Page 223) - 4.6 Register of directors (Page 223) - 4.6.1 Corporate directors (Page 223) - 4.7 Records of directors' service contracts (Page 223) - 4.8 Register of debentureholders (Page 223) - 4.9 Accounting records (Page 223) - 4.10 Annual accounts (Page 224) - 5 Statutory returns (Page 225) - Chapter Roundup (Page 226) - Quick Quiz (Page 227) - Answers to Quick Quiz (Page 227) - Chapter 14 Constitution of a company (Page 228) - Introduction (Page 228) - Study guide (Page 229) - Exam guide (Page 229) - 1 Memorandum of association (Page 229) - 2 A company's constitution (Page 229) - 2.1 Resolutions and agreements (Page 230) - 2.2 Articles of association (Page 230) - 2.2.1 Model articles (Page 230) - 2.2.2 Alteration of the articles (Page 232) - 2.2.3 Making the company's constitution unalterable (Page 232) - 2.2.4 Restrictions on alteration (Page 233) - 2.2.5 Expulsion of minorities (Page 233) - 2.2.6 Filing of alteration (Page 234) - 2.2.7 Interaction of statute and articles (Page 234) - 3 Company objects and capacity (Page 235) - 3.1 The objects (Page 235) - 3.1.1 Alteration of the objects (Page 235) - 3.2 Contractual capacity and ultra vires (Page 235) - 3.3 Transactions with directors (Page 236) - 4 The constitution as a contract (Page 236) - 4.1 Effect (Page 236) - 4.2 Constitution as a contract between members (Page 237) - 4.3 Constitution as a supplement to contracts (Page 237) - 4.4 Shareholder agreements (Page 238) - 5 Company name and registered office (Page 238) - 5.1 Statutory rules on the choice of company name (Page 238) - 5.2 Omission of the word 'limited' (Page 239) - 5.3 Change of name (Page 239) - 5.4 Passing-off action (Page 239) - 5.5 Appeal to the Company Names Adjudicators (Page 240) - 5.6 Publication of the company's name (Page 240) - 5.7 Business names other than the corporate name (Page 240) - 5.8 Registered office (Page 240) - Chapter Roundup (Page 241) - Quick Quiz (Page 242) - Answers to Quick Quiz (Page 243) - Part E Capital and the financing of companies (Page 244) - Chapter 15 Share capital (Page 246) - Introduction (Page 246) - Study guide (Page 247) - Exam guide (Page 247) - 1 Members (Page 247) - 1.1 Becoming a member (Page 247) - 1.2 Subscriber shares (Page 247) - 1.3 Ceasing to be a member (Page 247) - 1.4 The number of members (Page 248) - 2 The nature of shares and capital (Page 248) - 2.1 Shares (Page 248) - 2.2 Types of capital (Page 249) - 2.2.1 Authorised share capital (Page 249) - 2.2.2 Issued and allotted share capital (Page 249) - 2.2.3 Called up and paid up share capital (Page 249) - 2.2.4 Loan capital (Page 249) - 2.3 Market value (Page 250) - 3 Types of share (Page 250) - 3.1 Ordinary shares (equity) (Page 250) - 3.2 Class rights (Page 250) - 3.3 Preference shares (Page 250) - 3.3.1 Advantages and disadvantages of preference shares (Page 251) - 3.4 Redeemable shares (Page 252) - 3.5 Treasury shares (Page 252) - 3.5.1 Variation of class rights (Page 252) - 3.5.2 When variation rules apply (Page 252) - 3.5.3 Examples: Not a variation of class rights (Page 252) - 3.5.4 Special situations (Page 253) - 3.5.5 Minority appeals to the court for unfair prejudice (Page 253) - 3.6 Statement of capital and initial shareholdings (Page 254) - 4 Allotment of shares (Page 254) - 4.1 Definition (Page 254) - 4.2 Public company allotment of shares (Page 254) - 4.3 Private company allotment of shares (Page 255) - 4.3.1 Directors' powers to allot shares (Page 255) - 4.4 Pre-emption rights (Page 255) - 4.5 Rights issues (Page 255) - 4.5.1 Exclusion of pre-emption rights (Page 255) - 4.5.2 Disapplication of pre-emption rights (Page 255) - 4.6 Bonus issues (Page 256) - 5 Issuing shares at a premium or at a discount (Page 256) - 5.1 Private companies (Page 257) - 5.2 Public companies (Page 257) - 5.2.1 Valuation of non-cash assets (Page 257) - 5.3 Allotment of shares at a premium (Page 258) - 5.3.1 Example: Using a share premium account (Page 258) - 5.4 Uses of the share premium account (Page 258) - Chapter Roundup (Page 259) - Quick Quiz (Page 260) - Answers to Quick Quiz (Page 261) - Chapter 16 Loan capital (Page 262) - Introduction (Page 262) - Study guide (Page 263) - Exam guide (Page 263) - 1 Borrowing (Page 263) - 1.1 Personal guarantees (Page 263) - 2 Debentures and loan capital (Page 264) - 2.1 Loan capital (Page 264) - 2.2 Debentures (Page 264) - 2.3 Types of debenture (Page 264) - 2.4 Debenture trust deed (Page 265) - 2.5 Register of debentureholders (Page 265) - 2.6 Rights of debentureholders (Page 266) - 2.6.1 Advantages and disadvantages of debentures (for the company) (Page 266) - 3 Charges (Page 267) - 3.1 Definition (Page 267) - 3.2 Fixed charges (Page 267) - 3.3 Floating charges (Page 267) - 3.4 Identification of charges as fixed or floating (Page 268) - 3.4.1 Charges over receivables (Page 268) - 3.5 Creating a floating charge (Page 268) - 3.6 Crystallisation of a floating charge (Page 268) - 3.7 Comparison of fixed and floating charges (Page 269) - 3.8 Priority of charges (Page 270) - 3.8.1 Negative pledge clauses (Page 270) - 3.8.2 Sale of charged assets (Page 270) - 4 Registration of charges (Page 271) - 4.1 The registration process (Page 271) - 4.2 Rectification of register of changes (Page 271) - 4.3 Failure to deliver particulars (Page 271) - 4.3.1 Late delivery of particulars (Page 271) - 4.4 Register of charges (Page 272) - 5 Debentureholders' remedies (Page 272) - 5.1 Rights of unsecured debentureholders (Page 272) - 5.2 Rights of secured debentureholders (Page 272) - Chapter Roundup (Page 273) - Quick Quiz (Page 274) - Answers to Quick Quiz (Page 275) - Chapter 17 Capital maintenance and dividend law (Page 276) - Introduction (Page 276) - Study guide (Page 277) - Exam guide (Page 277) - 1 Capital maintenance (Page 277) - 2 Reduction of share capital (Page 277) - 2.1 Solvency statement (Page 277) - 2.2 Why reduce share capital? (Page 278) - 2.3 Role of the court in reduction of share capital (Page 278) - 2.3.1 Confirmation by the court (Page 279) - 3 Distributing dividends (Page 279) - 3.1 Power to declare dividends (Page 279) - 3.2 Distributable profit (Page 280) - 3.3 Dividends of public companies (Page 280) - 3.4 Relevant accounts (Page 281) - 3.5 Infringement of dividend rules (Page 282) - Chapter Roundup (Page 283) - Quick Quiz (Page 284) - Answers to Quick Quiz (Page 285) - Part F Management, administration and regulation of companies (Page 286) - Chapter 18 Company directors (Page 288) - Introduction (Page 288) - Study guide (Page 289) - Exam guide (Page 289) - 1 The role of directors (Page 289) - 1.1 De jure and de facto directors (Page 289) - 1.2 Shadow directors (Page 289) - 1.2.1 Shadow directors and de facto directors (Page 290) - 1.3 Alternate directors (Page 290) - 1.4 Executive directors (Page 290) - 1.5 Non-executive directors (Page 290) - 1.6 The Chief Executive Officer (Managing Director) (Page 290) - 1.7 Number of directors (Page 291) - 1.8 The board of directors (Page 291) - 1.9 The Chair (Page 291) - 2 Appointment of directors (Page 291) - 2.1 Appointment of first directors (Page 291) - 2.2 Appointment of subsequent directors (Page 291) - 2.3 Publicity (Page 292) - 2.4 Age limit (Page 292) - 3 Remuneration of directors (Page 292) - 3.1 Directors' expenses (Page 292) - 3.2 Compensation for loss of office (Page 292) - 3.3 Directors' remuneration report (Page 292) - 3.4 Inspection of directors' service agreements (Page 293) - 4 Vacation of office (Page 293) - 4.1 Retirement and re-election of directors (Page 294) - 4.2 Removal of directors (Page 294) - 5 Disqualification of directors (Page 295) - 5.1 Disqualification under statute (Page 295) - 5.2 Grounds for disqualification of directors (Page 295) - 5.3 Disqualification periods (Page 297) - 5.3.1 Mitigation of disqualification (Page 297) - 5.4 Procedures for disqualification (Page 297) - 5.5 Acting as a director whilst disqualified (Page 297) - 6 Powers of directors (Page 297) - 6.1 Restrictions on directors' powers (Page 297) - 6.1.1 Statutory restrictions (Page 298) - 6.1.2 Restrictions imposed by articles (Page 298) - 6.1.3 Members' control of directors (Page 298) - 6.1.4 Control by the law (Page 298) - 7 Powers of the Chief Executive Officer (Managing Director) (Page 298) - 7.1 Agency and the CEO/MD (Page 299) - 8 Powers of an individual director (Page 300) - 9 Duties of directors (Page 300) - 9.1 Who are the duties owed to? (Page 300) - 9.2 Who are the duties owed by? (Page 301) - 9.3 The duties and the articles (Page 301) - 9.4 The duties of directors (Page 301) - 9.4.1 Duty to act within powers (s 171) (Page 301) - 9.4.2 Duty to promote the success of the company (s 172) (Page 303) - 9.4.3 Duty to exercise independent judgement (s 173) (Page 303) - 9.4.4 Duty to exercise reasonable skill, care and diligence (s 174) (Page 304) - 9.4.5 Duty to avoid conflicts of interest (s 175) (Page 305) - 9.4.6 Duty not to accept benefits from third parties (s 176) (Page 306) - 9.4.7 Duty to declare interest in proposed transaction or arrangement (s 177) (Page 306) - 9.5 Consequences of breach of duty (Page 307) - 9.6 Declaration of an interest in an existing transaction or arrangement (s 182) (Page 307) - 9.7 Other controls over directors (Page 307) - 9.8 Examples of remedies against directors (Page 308) - 9.9 Directors' liability for acts of other directors (Page 308) - 9.10 Directors' personal liability (Page 308) - Chapter Roundup (Page 309) - Quick Quiz (Page 310) - Answers to Quick Quiz (Page 311) - Chapter 19 Other company officers (Page 312) - Introduction (Page 312) - Study guide (Page 313) - Exam guide (Page 313) - 1 The company secretary (Page 313) - 1.1 Appointment of a company secretary (Page 313) - 1.2 Duties of a company secretary (Page 313) - 1.3 Powers and authority of a company secretary (Page 314) - 2 The company auditor (Page 314) - 2.1 Appointment (Page 314) - 2.1.1 Eligibility as auditor (Page 315) - 2.1.2 Ineligibility as auditor (Page 315) - 2.1.3 Effect of lack of independence or ineligibility (Page 315) - 2.2 Reappointing an auditor of a private company (Page 315) - 2.3 Auditor remuneration (Page 316) - 2.4 Exemption from audit (Page 316) - 2.5 Duties of auditors (Page 316) - 2.6 Rights of auditors (Page 317) - 2.7 Auditors' liability (Page 317) - 2.8 Termination of auditors' appointment (Page 317) - 2.8.1 Resignation of auditors (Page 318) - 2.8.2 Removal of the auditor from office (Page 319) - Chapter Roundup (Page 320) - Quick Quiz (Page 320) - Answers to Quick Quiz (Page 321) - Chapter 20 Company meetings and resolutions (Page 322) - Introduction (Page 322) - Study guide (Page 323) - Exam guide (Page 323) - 1 The importance of meetings (Page 323) - 1.1 Control over directors (Page 323) - 1.2 Resolution of differences (Page 323) - 2 General meetings (Page 324) - 2.1 Annual general meeting (AGM) (Page 324) - 2.2 General meetings at other times (Page 324) - 2.2.1 Directors (Page 324) - 2.2.2 Members (Page 324) - 2.2.3 Court order (Page 325) - 2.2.4 Auditor requisition (Page 325) - 2.2.5 Loss of capital by public company (Page 325) - 3 Types of resolution (Page 325) - 3.1 Differences between ordinary and special resolutions (Page 325) - 3.2 Special resolutions (Page 326) - 3.3 Written resolutions (Page 326) - 3.3.1 Written resolutions proposed by directors (Page 326) - 3.3.2 Written resolutions proposed by members (Page 326) - 3.3.3 Agreement (Page 326) - 4 Calling a meeting (Page 327) - 4.1 Electronic communication (Page 327) - 4.2 Timing of notices (Page 327) - 4.3 Special notice of a resolution (Page 328) - 4.4 Members requisitioning a resolution (Page 328) - 4.5 Content of notices (Page 329) - 4.5.1 Routine business (Page 329) - 5 Proceedings at meetings (Page 329) - 5.1 How a meeting proceeds (Page 329) - 5.2 The Chair (chairman) (Page 330) - 5.3 Quorum (Page 330) - 5.3.1 Proxies (Page 331) - 5.4 Voting and polls (Page 332) - 5.4.1 Voting on a show of hands (Page 332) - 5.4.2 Voting on a poll (Page 332) - 5.4.3 Result of a vote (Page 332) - 5.5 Minutes of company meetings (Page 333) - 5.6 The assent principle (Page 333) - 6 Class meetings (Page 333) - 6.1 Types of class meeting (Page 333) - 6.2 Quorum for a class meeting (Page 334) - 7 Single member private companies (Page 334) - Chapter Roundup (Page 335) - Quick Quiz (Page 336) - Answers to Quick Quiz (Page 337) - Part G Legal implications of companies in difficulty or in crisis (Page 338) - Chapter 21 Insolvency and administration (Page 340) - Introduction (Page 340) - Study guide (Page 341) - Exam guide (Page 341) - 1 What is liquidation? (Page 341) - 1.1 Who decides to liquidate? (Page 341) - 1.1.1 Creditors (Page 342) - 1.1.2 Members (Page 342) - 1.2 Role of the liquidator (Page 342) - 1.3 Common features of liquidations (Page 342) - 2 Voluntary liquidation (Page 342) - 2.1 Members' voluntary liquidation (Page 343) - 2.1.1 Declaration of solvency (Page 343) - 2.2 Creditors' voluntary liquidation (Page 344) - 3 Compulsory liquidation (Page 345) - 3.1 Company unable to pay its debts (Page 345) - 3.2 The just and equitable ground (Page 346) - 3.2.1 Examples: When companies have been wound up (Page 346) - 3.3 Proceedings for compulsory liquidation (Page 347) - 3.4 Effects of an order for compulsory liquidation (Page 348) - 3.4.1 Investigations by the official receiver (Page 348) - 3.4.2 Meetings of contributories and creditors (Page 349) - 3.5 Order of payments on liquidation (Page 349) - 3.6 Completion of compulsory liquidation (Page 350) - 4 Differences between compulsory and voluntary liquidation (Page 350) - 5 Saving a company: administration (Page 350) - 5.1 What is administration? (Page 350) - 5.2 Appointment without a court order (Page 351) - 5.2.1 Floating chargeholders (Page 351) - 5.2.2 Company and directors (Page 352) - 5.3 Appointment with a court order (Page 352) - 5.4 The effects of appointing an administrator (Page 352) - 5.5 Duties of the administrator (Page 353) - 5.6 Administrator's proposals (Page 353) - 5.6.1 Creditors' meeting (Page 353) - 5.7 Administrator's powers (Page 354) - 5.8 End of administration (Page 354) - 5.9 Advantages of administration (Page 354) - Chapter Roundup (Page 356) - Quick Quiz (Page 357) - Answers to Quick Quiz (Page 357) - Chapter 22 Fraudulent and criminal behaviour (Page 360) - Introduction (Page 360) - Study guide (Page 361) - Exam guide (Page 361) - 1 Financial crime (Page 361) - 1.1 Example: international financial crime (Page 361) - 2 Insider dealing (Page 361) - 2.1 What is insider dealing? (Page 362) - 2.1.1 Dealing (Page 362) - 2.1.2 Encouraging another to deal (Page 362) - 2.2 Securities covered by the Act (Page 362) - 2.3 Inside information (Page 362) - 2.4 Insiders (Page 362) - 2.5 General defences (Page 363) - 2.6 'Made public' (Page 363) - 2.7 Penalties (Page 363) - 2.8 Territorial scope (Page 363) - 2.9 Problems with the laws on insider dealing (Page 363) - 3 Market abuse (Page 364) - 3.1 Examples of market abuse (Page 364) - 3.1.1 Misuse of information (Page 364) - 3.1.2 Manipulating transactions (Page 364) - 3.1.3 Manipulating devices (Page 364) - 3.1.4 Market distortion (Page 364) - 3.1.5 Dissemination of information (Page 365) - 4 Money laundering (Page 365) - 4.1 What is money laundering? (Page 365) - 4.2 Categories of criminal offence (Page 365) - 4.3 Penalties (Page 366) - 4.4 The Money Laundering Regulations 2007 (Page 366) - 5 Bribery (Page 367) - 5.1 Bribery offences (Page 367) - 5.1.1 Bribing another person (Page 367) - 5.1.2 Being bribed (Page 367) - 5.1.3 Relevant function or activity (Page 368) - 5.1.4 Bribing a foreign public official (Page 368) - 5.1.5 Defences and penalties for individual offences (Page 368) - 5.1.6 Corporate failure to prevent bribery (Page 368) - 5.1.7 Defence and penalties for corporate offences (Page 368) - 6 Criminal activity relating to companies (Page 369) - 6.1 Criminal offences in relation to winding up (Page 369) - 6.2 Declaration of solvency (Page 369) - 6.3 Fraudulent trading (Page 369) - 6.4 Wrongful trading (Page 370) - 6.5 Other offences in relation to winding up (Page 370) - 6.5.1 Acting as a director whilst disqualified (Page 370) - 6.5.2 Phoenix companies (Page 370) - 6.5.3 Fraud and deception (Page 371) - 6.5.4 Defrauding creditors (Page 371) - 6.5.5 Misconduct during a liquidation (Page 371) - 6.5.6 Falsification of company books (Page 371) - 6.5.7 Omissions (Page 371) - 6.6 Examples: offences in relation to winding up (Page 371) - 6.7 Companies Act 2006 offences (Page 372) - 6.7.1 Company records (Page 372) - 6.7.2 Accounting records (Page 372) - 6.7.3 Trading disclosures (Page 372) - 6.7.4 Filing accounts (Page 372) - 6.7.5 False information (Page 372) - 6.7.6 Annual return (Page 372) - 6.8 The Fraud Act 2006 (Page 372) - Chapter Roundup (Page 373) - Quick Quiz (Page 374) - Answers to Quick Quiz (Page 375) - Practice question and answer bank (Page 376) - Questions (Page 378) - Question 1 (Page 378) - Question 2 (Page 378) - Question 3 (Page 378) - Question 4 (Page 378) - Question 5 (Page 378) - Question 6 (Page 379) - Question 7 (Page 379) - Question 8 (Page 379) - Question 9 (Page 379) - Question 10 (Page 379) - Question 11 (Page 380) - Question 12 (Page 380) - Question 13 (Page 380) - Question 14 (Page 380) - Question 15 (Page 381) - Question 16 (Page 381) - Question 17 (Page 381) - Question 18 (Page 381) - Question 19 (Page 381) - Question 20 (Page 381) - Question 21 (Page 382) - Question 22 (Page 382) - Question 23 (Page 382) - Question 24 (Page 382) - Question 25 (Page 382) - Question 26 (Page 383) - Question 27 (Page 383) - Question 28 (Page 383) - Question 29 (Page 383) - Question 30 (Page 383) - Question 31 (Page 383) - Question 32 (Page 384) - Question 33 (Page 384) - Question 34 (Page 384) - Question 35 (Page 384) - Question 36 (Page 384) - Question 37 (Page 384) - Question 38 (Page 385) - Question 39 (Page 385) - Question 40 (Page 385) - Question 41 (Page 385) - Question 42 (Page 385) - Question 43 (Page 386) - Question 44 (Page 386) - Question 45 (Page 386) - Question 46 (Page 386) - Question 47 (Page 386) - Question 48 (Page 386) - Question 49 (Page 387) - Question 50 (Page 387) - Question 51 (Page 387) - Answers (Page 388) - Answer 1 (Page 388) - Answer 2 (Page 388) - Answer 3 (Page 388) - Answer 4 (Page 388) - Answer 5 (Page 388) - Answer 6 (Page 388) - Answer 7 (Page 388) - Answer 8 (Page 389) - Answer 9 (Page 389) - Answer 10 (Page 389) - Answer 11 (Page 389) - Answer 12 (Page 389) - Answer 13 (Page 389) - Answer 14 (Page 389) - Answer 15 (Page 390) - Answer 16 (Page 390) - Answer 17 (Page 390) - Answer 18 (Page 390) - Answer 19 (Page 390) - Answer 20 (Page 390) - Answer 21 (Page 390) - Answer 22 (Page 390) - Answer 23 (Page 391) - Answer 24 (Page 391) - Answer 25 (Page 391) - Answer 26 (Page 391) - Answer 27 (Page 391) - Answer 28 (Page 391) - Answer 29 (Page 391) - Answer 30 (Page 391) - Answer 31 (Page 392) - Answer 32 (Page 392) - Answer 33 (Page 392) - Answer 34 (Page 392) - Answer 35 (Page 392) - Answer 36 (Page 392) - Answer 37 (Page 392) - Answer 38 (Page 393) - Answer 39 (Page 393) - Answer 40 (Page 393) - Answer 41 (Page 393) - Answer 42 (Page 393) - Answer 43 (Page 393) - Answer 44 (Page 393) - Answer 45 (Page 393) - Answer 46 (Page 394) - Answer 47 (Page 394) - Answer 48 (Page 394) - Answer 49 (Page 394) - Answer 50 (Page 394) - Answer 51 (Page 394) - List of cases and index (Page 398) - Index (Page 404) - Review Form (Page 432)