CASE STUDY N6

What type of breach is at stake?

What are remedies?
Offeror = local department
Oferee = John
-> Discharge of contract through breach
Breach of a condition = very important element of the contract for John
Lawsuit -> remedies : John claim damages + contract repudation
Financial + legal compensation
= claim for breach of contract = under section 14(3) of sales of good act 1979
This act may be invoked for any purchase of goods by description (no wool) or by sample.

CASE STUDY N7
Offeror = construction company
Offeree = Sarah
Type of contract = bilateral contract for sale of a garage door + installation
Incident during the installation -> breach of condition
Legal action = Sarah will claim repudiation of the initial contract + - damage unliquidated) -> financial
compensation. Legal remedies -> specific performance to I have the garage door replaced

PART 2
COMPANY LAW
Introduction the field of company law (corporate law / corporation law)

Definition of corporate law

Definition of corporation

Company law
=the field of law concerning companies and other business organizations. Originally derived from the
common law of England but has evolved significantly in the 20th century.

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Deals with the structures , rights and obligations of corporations= is related to commercial and contracts
law
Corporation
= a legal entity created under the laws of the state it's incoporated within.
a body corporate an independant entity with rights before the law similar to those of a human being
Corporate legal personnality
A corporation creates legal or artificial person or entity that has standing to :

Sue and be sued

enter into contracts
Perform other duties necessary to maintain a business, seperate from its stockholderes

1)Types of business organisation

State authorize or forbid different business forms based on political ideology and economics as well as
social needs. As a result, the company law in various countries may have unique features.
Some generalisations can be made, however as most domestic company laws derive from the common
law, especially English law.
A) Sole traders
The simplest type of business structure defined in UK laws
It refers to an individual who own their own business and retains all the profits from it
Sold traders duties

Sole traders must complete a registration as self-employed for tax and national insurance
purposes.
Maintaining the businesses records
Submitting an annual tax return for all income from self employment and other work

In the event of financial problems affecting the business, they are personally responsible for any losses.
Forming and ending up a sole traders business
There are no formal rules to form such a business enterprise, as there are no regulatory requirements
There are very few formalities to end the sole traders business
Advantages / disadvantages
Advantages :

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control (sole traders maintain full control of their business -> running it how they please without
the interferences of others)
profit retention: sole traders retain all the profits of their business
private data: information about sole traders is kept private = unlike that of limited companies
which is necessarily made public after registration.
Specialist: often a small business, sole traders can offer a more personal service with local
roots and ties
Personal: because there is no need to confer with other decision makers -> sole traders can
make decisions quickly and act on them swiftly, providing for the needs of their customers

Disadvantages: linked to the simplicity of the structure:

liability : = sole traders are not seen as a separate entity by the law. lacks the clear cut
definition between personal and business income.
Therefore, they are subjects to unlimited liability. This means if the business gets into debt, the
business owner is liable. + in the worst case, this may mean a person risks their home,
personal savings and any other assets they have both in and outside of the business.
finance = sole traders often find it difficult to raise finance to fund their business. They may
struggle with expansion in the future. Forming a limited company can enable to access greater
levels of financing.
reverse economies of scale : sole traders will be unable to take advantages of economies of
scale in the same way as limited companies and larger corporations, who can afford to buy in
bulk. This might mean that they have to charge higher prices for their products or services in
order to cover the costs.
Decision making: All decisions must be made by the sole trader. There is no room for help by
others. So the success or failure of the business rest on ...

b) partnerships
Commonly formed where two or more people wish to come together to form a business. The business
owners necessary share :

the profits
the liabilities
the decision making

The partners in a partnerships may be :

o
o
o
o
o

individuals
businesses
interest based organisations
schools
governments

The motivations for such partnerships may be :

o to find new expertise
o To establish new....
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Part II COMPANY LAW

o to find new .............

Types of partnerships

general partnerships (GP) or "simple" partnership / unlimited partnerships

ii) Limited partnership (LP)
iii) limited liability partnerships (LPP)
iv) Secret partnerships

i) general partnerships
Also called "simple" partnership or unlimited partnership
= The basic form of partnerships
-> all partners manage the business and are personally liable for its debts.
II ) limited partnerships
Must have at least one general partnership (GP) and at least one limited partner. = consists of two or
more persons.

who co own and manage a business for profit

who are each liable to the full extent of their persona l assets for its debt

The limited partnerships

Have no management authority. They are not liable for the debt of the partnerships. and are provided a
return on their investment (similar to a dividend), usually defined in the partnership agreement
The general partners
bear more...... than do limited partners = in case or financial loss, the GPs will be the ones which are
personally liable.
iii) limited liability partnerships (LPP)
A relatively new modification of the limited partnerships (Limited Liability Partnership Act 2000)
The LLP is concidered a separate legal entity , with its own legal personality. The LLP is registered with
the registrar companies.
A limited partnerships in which all partners have limited liability, while the LLP has unlimited liabilities. As
such consist of : one more general partners + one or more limited partners. While the general partners
manage the LLP, the limited partner's interest is purely financial.
GPS is a protected investment, L partners cannot be liable for more than what they have invested in the
partnership.
iv) Secret partnerships
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A partnership in which the participation of one or more persons as partners is not so disclosed to the
public by any of the partners. All of the partners have unlimited personal liability
Characteristics of partnerships

Identification of partners : the names of the partners must be shown on the letterheads
Partnerships property : Each partners has the property of the partnership. If the business is
dissolved, they will take back the property they brought to the firm
Partnerships ratio: A 50/50 ratio split is not advised as the two partners may disagree on the
business strategy
Liability of partners : joint liability for debt, contracts or losses. The liability is equally shared
between the partners based on their perspective percentage ownership.

Forming and ending up a partnership

Establish a partnerships = simple agreement between people to form a business, preferable
to create a contractually brinding agreement the :partnership agreement (purpose of he
partnership duration, names of partners business address % of ownership distribution of profits,
responsibility of each partner)
The partnerships agreement

purpose of partnerships
duration of the partnership
names of the partners
business address
percentage of ownership
distribution of profits
responsabilities of each partners

Duties on partners :
o Duty to act with loyalty to the partnerships and in "good faith"
o Duty in discolsure (full information has to be submitted to the others partners)
o Duty to account (partners have to account for any benefits they have obtained)
o Duty not to enter into competition with the organisation
Rights of partners
o to share equally the capital and profits of the firm
o to be indemnised by the firm,
o to take a role in the management of the firm
o to inspect the partnership's accounts
o to veto the entry of a new partner
Brinding the partnerships
o Dissolution on the agreement of the partners
o an end on lapse of time
o when a specific task has been completed
o on the death of any partners
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in case of bankruptcy or illegality of the business

Advantages and disadvantages of partnerships

Advantages

Capital ; the partners will fund the business with start up capital. This means that the more
partners there are, the more money they can put into the business = which allows better the
flexibility and more potential for growth. I t also means more potential profits, which will be
equally shared between the partners
Flexibility = a partnership is generally : easier to form, manage and run + less strictly regulated
than companies. In terms of the laws governing the formation + because the partners have the
only say in the way the business is run (without interference by shareholders)
Shared responsibility: this allows partners to make the most of their abilities. Example: if one
partners is good with figures, they might deal with the book keeping and accounts, while the
other partner might have a flare for sales and therefore be the main sales person for the
business
Shared Decision making: Partners share the decision making and can help each other out
when they need to. More partners means more brains that can be picked for business ideas
and for the solving of problems that the business encounters

Disadvantages
Disagreements One of the most obvious disdvantages of partnership. Can lead to
disagreements and disputes which might not only harm the business, but also the relationship
of those involved.
This is why it is always advisable to draft a deed of partnerships during the formation period to
ensure that everyone is aware of what procedures will be in place in case of disgreements and
what will happen if the partnerships is dissolved.
Agreement : Because the partnerships is jointly run, it is necessary that all the partners agree
with things that are being done.
Less freedoms with regards to the management of the business. Especially compared to sole
traders.
Still more flexibility than with limited companies where the directors must be bow to the will of
the members (shareholders)
Liability: ordinary partnerships are subject to unlimited liability= each of the partners share the
liability and financial risks of the business. Which can be off putting for some people
Taxation : One of the major disadvantage of partnership.
Partners must pay tax in the same way as sole traders, each submitting a self assessment tax
return each year. If the partnership (and the partners bring in more than a certain level, then
they are subject to greater levels of personals taxation than they would be in a limited company.
Profits sharing: Partners share the profits equally. this can lead to inconsistency. Where one or
more partners aren't putting a fair share of effort into the running or a management of a
business.
C) Corporate entities
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Part II COMPANY LAW

i) Limited companies
Definition: a company in which the liability of membersor subscribers is limited o what they have
invested or guaranteed to the company. Very popular forms of business entreprises. Concerns a
majority of SMEs (Small & medium size entreprises) PME
Three different kind of limited companies:

Private companies limited by shares (LTD)

Private companies limited by guarantee (LBG)
Public limited companies (PLC)

Private companies limited by shares (LTD)

Usually called a private limited company. It has the shareholders with limited liability. The liability of teh
shareholders is limited to the capital originally invested . Its share may not be offered to the general
public, unlike hose of a public limited company. = therefore cannot be traded on a public stock
exchange.
Private limited companies by guarantee (LBG)
used primarly for non profit organisations at require legal personality. Company without a share capital
or shareholders, but with members who act as guarantors
= The guarantrs give an undertaking to contribute a nominal amount (typically very small) in the event of
the winding up of the company (liquidation). The guarantee is established in a memorandum.
Establishing the limited company
= most private limited companies are created through registration
o Memorandum is a document available for public inspection, identify features of the company;
name of the company and adress
o The article ; contractual agreements between the parties and the company, describes teh
constitution of the company and how it is run
o Form IN01 identifies the first directors (age , occupation) the secretary and the registered office
o Certificate of incorporation = formally establishes the existence of the company (legal status
and personality)

Advantages and disadvantages of private limited companies

Advantages of private limited companies

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 Limited liability : financial security that comes with businesses The company's shareholders
will only be liable for any debt for the company accrues according to the levels of their own
investment and no more
Separate entity : is a separate legal entity form its owners= the company will exist beyond the
life of its members If they retire or die, the company will continue to exist and operate This
ensures security for employees and others members
Taxation and tax advantages = only taxed on their profit (usually rate of 21 % = not subject
to the higher (personal) tax rates placed on sole traders or partnerships which can reach 40%
Ownership and control = the directors are also usually the main shareholders . of the
company = both teh ownership and control of the business remain in their hands. = decisions
can be made quickly and easily.
Company name : the company name is protected from the registration date It rewards the
employee's for their work, providing extra motivation beyond a mere salary
Employee Shareholders; in some instance employees can purchase shares and become
shareholders of the company. It rewards the employee's for their work providing extra
motivation beyond a mere salary.

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Part II COMPANY LAW