corporAte And Business lAw (ENgLIsh) Paper F4 ACCA QuAlifiCAtion Course notes June 2011 examinations OpenTuition Course Notes can be downloaded FREE from www.OpenTuition.com Copyright belongs to OpenTuition.com - please do not support piracy by downloading from other websites. Visit opentuition.com for the latest updates, watch free video lectures and get free tutors’ support on the forums For the latest free course notes, free lectures and forum support please visit opentuition.com/acca The besT Things in life are free Free ACCA Notes & Lectures by Paper (online on http://opentuition.com/acca/) F1 Accountant in Business F2 Management Accounting F3 Finanticial Accounting F4 Corporate & Business Law F5 Performance Management F6 Taxation (UK) F7 Financial Reporting F8 Audit and Assurance F9 Financial Management P1 Governance, Risk & Ethics P2 Corporate Reporting P3 Business Analysis P4 Advanced Financial Management P5 Advanced Performance Management P6 Advanced Taxation (UK) P7 Advanced Audit & Assurance June 2011 Examinations Paper F4 OpenTuition Course Notes can be downloaded FREE from www.OpenTuition.com Copyright belongs to OpenTuition.com - please do not support piracy by downloading from other websites. Visit opentuition.com for the latest updates, watch free video lectures and get free tutors’ support on the forums Contents 1 Structure of The Legal System 1 2 Courts 7 3 Statute Law 11 4 Contract Law 17 5 Common Law 35 6 Law of Tort 37 7 Employment Law 43 8 Agency Law 51 9 Partnership 53 10 Company Law 59 11 Company Law: Directors and Officers 77 12 Company Law: Meetings and Resolutions 91 13 Company Law: Loan Capital 99 14 Company Law: Liquidations 103 15 Company Law: Corporate Governance 109 16 Company Law: Illegalities 113 17 Capital Maintenance 117 18 Cases 123 Free online lectures for ACCA Paper F4 UK Paper F4 Forum Paper F4 Ask the tutor Forum Paper F4 Free ACCA Tutors’ Support only on opentuition.com one forum To rule Them all Free resources for accountancy students Ask the Tutor Chapter 1 StruCture of the LegaL SyStem Civil Law • Private law • To settle disputes between individuals • No concept of punishment • Objective is to compensate the wronged party • Need to prove ‘on the balance of probability’ • Sued in court • If liable, then compensation payable • Plaintiff and defendant • Personal action brought by the aggrieved party • Court may award damages or an equitable remedy if damages are inappropriate 1 June 2011 Examinations Paper f4 Criminal Law • Public law • A wrongdoer has broken the law • A wrong done to society • Prosecuted in court • If guilty, then punished • Community service, fine, imprisonment • Prosecutor and accused • Need to prove ‘beyond reasonable doubt’ • Police decide whether to prosecute • This decision is reviewed by the Crown Prosecution Service June 2011 Examinations Paper f4 StructurE of thE LEgaL SyStEm chapter 1 2 Common Law • Development started with effect from 1066 • King’s representatives attended local courts • Then met in London on a regular basis to discuss • Over a period of 200 years, law was commonised – “Common Law” • Cornerstone of Common Law is judicial precedent • Ratio decidendi and obiter dicta • With commonisation came recognition of deficiencies • Highlighted the need for alternative remedies – Equity • Common Law remedy is ‘damages’ – a monetary award • Common Law courts were separate from court of equity until the late nineteenth century 3 June 2011 Examinations Paper f4 StructurE of thE LEgaL SyStEm chapter 1 Equity Law • Grew from the recognition of deficiencies of Common Law • If a monetary award of damages was not appropriate, there was nothing else to offer • In fourteenth century, Aequitas • Chancellor’s court • Early seventeenth century, Earl of Oxford’s case • Equity shall prevail • Confirmed by 1873 – 1875 Judicature Acts • Main remedies : • Specific performance • Injunction • Rescission • Rectification • Remedies are given at Court’s discretion • Only given if damages is inappropriate June 2011 Examinations Paper f4 StructurE of thE LEgaL SyStEm chapter 1 4 Ratio Decidendi • Ratio is ‘the reason for the decision’ • Ratio is binding on future judges in similar cases • Reversing – higher court reverses lower court decision in same case • Overruling – higher court overrules lower court decision in different case • Distinguishing – court avoids earlier precedent by distinguishing the facts • Ratio not binding if too obscure • Ratio not binding if made without care ( per incuriam ) • Ratio not binding if in conflict with a basic principle of law • Ratio not binding if in conflict with European law • Ratio not binding if too wide • Ratio not binding if made in inferior court 5 June 2011 Examinations Paper f4 StructurE of thE LEgaL SyStEm chapter 1 Human Rights Act • Rights to: • life • free assembly • personal privacy • respect for private and family life • bodily integrity • personal liberty • participate in government • protection of the law • to own property • Freedom of expression and conscience • Freedom of association • No arbitrary searches or seizures • Economic and social rights • Gender recognition • From EU law, freedom... • of movement between EU member states • of providing services • of moving capital • of moving goods June 2011 Examinations Paper f4 StructurE of thE LEgaL SyStEm chapter 1 6 Chapter 2 Courts Hierarchy of the Courts • European Court of Justice ( ECJ ) • Binds all English courts • Not bound by anyone, not even itself • Supreme Court ( judicial capacity ) ( SC ) • Binds all English courts, but not itself • Bound by ECJ • Court of Appeal ( C of A ) • Binds all lower courts • Bound by ECJ, SC and itself …….. • ……..unless • …..unless • Two similar decisions conflict – must then decide which to follow • Earlier decision conflicts with a later SC decision • Earlier decision made per incuriam 7 June 2011 Examinations Paper F4 Hierarchy of the Courts continued • High Court ( HC ) • 3 divisions • Binds all lower courts • Bound by all higher courts • And itself • Crown Court ( Crown C ) • Criminal cases • Binds no-one, not even itself • Bound by all higher courts • County Court ( County C ) • Civil cases • Binds no-one, not even itself • Bound by all higher courts June 2011 Examinations Paper F4 Courts Chapter 2 8 Hierarchy of the Courts continued • Magistrates Courts ( MC ) • Binds no-one, not even itself • Bound by all higher courts • Tribunals ( eg Employment Tribunal ) • Less formal procedures • Quicker • Hears disputes between employees and employers • Can appeal to …. • Employment Appeal Tribunal ( EAT ) • Equal status as HC • Can further appeal to C of A • But only on a point of law, not on a matter of fact 9 June 2011 Examinations Paper F4 Courts Chapter 2 Tracking • 3 types of tracking :-small claims, fast, multi • Small claims track • < £5,000 • Quick • Informal • No need for legal representation • Fast Track • £5,000 < £15,000 • Trial will last < 1 day • Less formal court procedures • Claim will be determined within 30 weeks • Multi Track • £15,000 • Full court hearing, but management conference held to encourage alternative dispute resolution June 2011 Examinations Paper F4 Courts Chapter 2 10 Chapter 3 Statute Law Statute Law • Parliament passes laws ( statutes ), and only parliament can change / repeal those laws • Green paper – a proposal for new law • White paper – after comments received, a draft for the new law • First reading – introduction to the House • Second reading – debate about the merits of the proposed legislation • Committee stage – all-party committee discuss and amend the draft • Report stage – the amended draft then presented to the House for approval • Third reading – final approval by the House • Same procedure in the other House • Royal Assent 11 June 2011 Examinations Paper F4