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University of Edinburgh MBA Business Law Assignments 2012

Assessment Continuous, by means of written answers to five hypothetical problems; only the best four to count. Each is worth 25% of the final mark. All assignments are to be submitted to the Postgraduate Office reception desk by 10:00am on the due date: Assignment 1 Monday 30 January (week 3) Assignment 2 Monday 13 February (week 5) Assignment 3 Monday 27 February (week 7) Assignment 4 Monday 12 March (week 9) Assignment 5 Monday 19 March (week 10)

In each of the following scenarios, explain the points of law that apply to the various problematic circumstances contained therein. You should indicate what the applicable law is, what the remedy to the legal difficulty is and what should actually have been done to prevent the difficulty arising. Some of the problems may be remedied in more than one way, depending on what further information would be required: so for each possible resolution, indicate the applicable law. While for some of the problems, there might well in practice be a commercial solution (such as agreeing to meet half way), for the purposes of this exercise, please imagine that you are dealing with people or businesses that are not prepared to settle and will want a court decision one way or the other. For every assertion you make about the law, you should produce a case, or a section from a statute, to prove your point. You should give the citation for the case in the footnotes. You do not need to explain the case to me (after all, I know the cases already) unless there is something very important about it you want me to know about, but you do need to demonstrate to me the right case or the right piece of legislation for the point about the law that you are trying to make. Do not copy out sections from legislation unless there is something in the wording to which you particularly wish to draw my attention. Law is all about clarity of expression and the avoidance of confusion. So make sure your work is well written and makes sense. If you are not sure about how intelligible it is, try reading it out aloud and see if it makes sense to you for if it doesnt make sense to you, it certainly wont make sense to me. I dont mind whether your text is single-spaced or double-spaced, but I do like high standards of presentation. Do not write more than 1,000 words for each assignment. Footnotes and endnotes do not count as part of this word limit. There are good reasons for this. The first is that I do not want to read long, boring essays full of waffle and padding. No one has the time nowadays to read anything that is too long. The second is that it is harder to write succinctly than it is to write at length; it is therefore more of a challenge for you. Please type your answers and keep a copy in case anything goes missing.

Assignment 1 Contract law problem Florence owns a Highland estate. It is not very profitable, but it has a few useful features, one of which is ore-bearing rocks. She is approached by the British Titanium Company (BTC) which wishes to extract titanium ore from her land. BTCs manager asks if he may carry out some surveys on her land to see whether it is worth mining titanium. Florence agrees that he may do so. Eventually it is agreed that she will let BTC extract ore from her land for a period of ten years, subject to the following terms: that a new road is constructed at their expense to her house, as part of which a burn is to be diverted and culverted to ensure that the road is not flooded, and that BTC will pay a flat fee of 35,000 a year to her for the extraction rights. She shows BTC the route for the road. Her own surveyors tell her it would cost 450,000 to get the road made, together with the diversion and culverting of the burn. She helpfully provides BTC with a copy of the survey done for her. The terms of the survey indicate that the road-building cost of 450,000 is purely an indicative estimate and may not be relied upon by anyone other than Florence, although she is at liberty to disclose its contents to others. After a few years, Florence discovers that that the price for titanium is rocketing as more and more titanium is used in mobile telephones and as the worlds known deposits of titanium become harder to access. She complains that BTC did not tell her that titanium was going to be so valuable and she feels she has been taken in by them. In return, BTC complain that the building of the road is proving a great deal more complicated and expensive than anticipated because there turns out to be a previously unnoticed Neolithic site on the route which the county archaeologist and planning regulations require them to tunnel under rather than merely knock down. Meanwhile, Florences son, Hamish, is running a steel business in Lanarkshire. His company needs 20,000 tons of steel each year. On 1st March 2012 he invites tenders from various steel producers to supply over the next twelve months 20,000 tons of top quality steel, delivery for specified amounts thereof to be made on demand by Hamish. A steel supplier, Clunk Ltd, tenders at a price of 600 per ton and Hamish replies to the tender with the words I accept your tender. On 1st April 2012 Hamish requests a first 2,000 tons of steel from Clunk Ltd, which is supplied by return and paid for on delivery. On 1st May 2012 Hamish asks for a further 3,000 tons of steel. Unfortunately from 2nd May 2012 there is a national coalworkers and steelworkers strike, and steel becomes hard to find. The price on the open market for steel rises to 800 per ton. The managing director of Clunk Ltd tells Hamish that the price of steel has risen and that he must charge Hamish more for the steel. Hamish is not happy. Hamishs son, Neil, aged 15, is a forward youth. He is tall for his age, and started shaving at 12. He also has perhaps more money than is good for him. He goes to a dance where he meets the local ministers daughter and takes a shine to her, so much so that he decides to buy her a present. He goes to an antiques shop to buy her a nice necklace. The shopkeeper sees that Neil has no idea about the value of jewellery and persuades Neil to buy a very expensive necklace for far more than it is actually worth. Neil gives the necklace to the girl, who initially accepts it, but having explained to her mother that Neil had given her the necklace, the mother very properly, and to the daughters disappointment, returns the necklace to Hamish. Hamish goes back to the antiques shop and demands Neils money back. The shopkeeper refuses to take the necklace back or return the money. Meanwhile, Hamishs daughter, Anne, is persuaded, against her better judgement, to sell a palomino (a type of horse) to Jim, a person she met at a local agricultural fair. Jim explains that he is a bit short of cash, and gives Anne a post-dated cheque. The cheque is for 3,000. Anne accepts the cheque, unwisely trusting Jim. Anne writes down Jims name and address on the back of the cheque. When Anne comes to pay in the cheque, the cheque is dishonoured by the bank, and the address turns out to be fictitious. Jim has stolen the chequebook and the card, and has forged the chequebook owners signature. However, more to the point, Jim, in the meantime, and before the cheque is lodged at the bank, sells the horse to Mike, who pays cash for it. Anne hears that Mike has the horse and drives over to Mikes farm to ask for it back. Mike refuses to hand the horse over.

Hamish, fed up with his childrens fecklessness, decides to sell his steel business and move to be near his mother. He signs a contract with the company that buys his steel business and agrees not to start another business involving ferrous metals for three years anywhere in the United Kingdom. He takes legal advice about the wisdom of doing this. After two years he is bored of sitting at home, and so sets up an aluminium smelting business near Fort William, using a new process that he has designed. As part of his particular process of smelting aluminium, he uses a small quantity of steel to make his final product tougher. The company that bought his previous steel business take out an interdict to prevent him operating his aluminium smelting business. He wants to have the interdict reduced on the grounds that the amount of steel involved is negligible and that while he did agree to it at the time, the three year restriction throughout the UK is now unreasonable.

Assignment 2 Some more contract law and Sale of Goods Jim is a freelance haulier, ferrying goods from warehouses to shops. He takes his van to the garage to be repaired and says that he will pay the bill once it is repaired provided it is repaired in 48 hours, as he has an important delivery (the details of which are not specified to the garage) to make once it is repaired. The garage manager says that he will see what he can do, fixes the faulty clutch and brakes but takes 96 hours to do so. He also charges Jim 500 for doing so. Jim unfortunately finds himself unable to produce the 500 because he suffered a burglary at his home and a large sum of cash was stolen. Jim tells the garage about the burglary and explains that he needs the van for his business and without the van he cannot raise the money to pay the garage. Under the circumstances he asks the garage if he may have the van back for the time being. The garage refuses to let him have the van back. Jim wants to go to court to get an order from the court to let him have the van back on the grounds that the garage broke their contract to him by not repairing the van quickly enough. He also wants to sue the garage for damages because he was unable to carry out the important delivery. Jims brother, Tom, owns a shop selling all sorts of useful things, some new, some second hand. Being young and foolish, he is concentrating more on getting cash into the shop than on keeping customers happy, so decides to put up a notice outlining the terms of his business. He places this notice on the front door and on the counter where customers lay their purchases before paying for them. He drafts the wording of the notice himself without taking legal advice. This is the notice: All refunds must be accompanied by a receipt; If the customer has damaged or used the goods in any way, no refund will be given; If second hand goods are sold, and those goods turn out actually to belong to someone else originally, we shall not give a refund and the purchaser must sort out the matter with the true owner; While we in this shop shall do our best to make sure that our goods are in a reasonable state when sold, we give no such assurance for any second hand goods that we sell (i.e. that they are entirely at the purchasers risk) and in respect of any goods that we sell, we shall not give refunds where there are only minor blemishes or other trivial faults. We shall be the one who decides whether or not goods are deficient in some way, and if the goods may be used in some other way for some other purpose, we shall only be required to give a part-refund, being the difference between our sale price and the value of the goods if sold for some other purpose. We shall be responsible for the goods up to the moment the purchaser pays for them. Purchasers may only bring back goods within two weeks or they have missed their chance; If purchasers, or any members of their family, or friends, use goods sold by us and suffer physical or other injury arising from the use of those goods, we shall only be responsible for the first 50 of damage. How valid are these terms that Tom is proposing? If the wording is invalid, in what respects would the wording need to be changed to comply with the law?

Assignment 3 Employment law Imagine that you are the training manager for lay members of employment tribunals. The lay members are being taught by you about four specific matters, these being (a) the legal difference between employment and self-employment, (b) the significance of that distinction, (c) why specialist employment tribunals are used rather than the courts, and (d) why politicians keep rewriting the rules relating to employment law. Write the talk that you will be giving to the lay members. (Do not merely repeat what you can find on Wikipedia or reproduce what is in textbooks. Put all this in your own words and in your own way.)

Bankruptcy Law Sam is a driven, successful and well rewarded telesales agent aged 28, with a serious gambling habit. There is an earnings order against him requiring him to support a child from his former wife; the support payments are deducted from his wages. He has spent much of his money on cars, computer games, ill-fitting clothes and unsuitable friends. He owns a smart flat in Leith worth 300,000 with a mortgage of 100,000. He earns 50,000 a year. His income is not enough for his outgoings. Sam owes Her Majestys Revenue and Customs (HMRC) 15,000 and owes tradesmen about 20,000 for work carried out on his flat. Sams car is about to be seized by the hire purchase company from which he bought it. One of his other creditors, a credit card company, after repeated requests that he pay his credit card bill of 35,000, sues him, and after having not been paid despite a charge being served upon him, sequestrates him under the Bankruptcy (Scotland) Act 1985 s.5(2)(b). Sam is secretly relieved as he believes that he now will not have to pay the child support or any other creditors. Sam ceases to make payments towards his mortgage. The Accountant in Bankruptcy (who is appointed his trustee) obtains a list of Sams assets, such as they are, but also looks into what Sam had been doing in the months before the sequestration. It turns out that Sam had given his car away to his brother, Mac, six weeks before the date of sequestration. He has also repaid a loan from a back street loan shark, called Luigi: the loan was for 3,000 plus interest at 40%. Luigi has made it all too clear to Sam what might happen to Sam if payment was not made. Fortunately Sam is able to keep his job after the sequestration but Sam tells the Accountant in Bankruptcy that if he only earns 50,000 a year he cannot possibly pay anything out of his income towards his creditors. As before, explain the law relating to all this. You will need to look up the Bankruptcy (Scotland) Act 1985. No calculations are required.

Assignment 4 Delict, agency and partnership Don, a shopkeeper, is out in his car, driving down a Perthshire road at a sensible speed. Suddenly a red squirrel falls out of the trees above him and lands with a thump on his windscreen. It makes a terrible mess of the windscreen. Don is so shocked that he temporarily loses control of the car and drives off the road into a high wall, the brakes squealing as he does so. A woman on the other side of the wall, pushing her baby in a brand new buggy, hears the squealing noise and thinks the car is coming towards her. She starts running away, pushing the buggy in front of her. The buggy overturns and her baby falls out, hurting its head. It appears that the straps holding the baby have worked loose. It is not clear whether this was because the mother had failed to secure the baby properly, or because the straps were faulty. In either event, the mother wants to sue Don and the buggy manufacturer for the injuries to her child, and for her own distress and suffering at seeing her baby hurt. Don, having got back to his shop, orders his employee, Bill, to go out to Livingston to fetch certain supplies from a depot. Bill is not very bright and cannot read or write well. The manager at the warehouse lets Bill have a certain amount of supplies, and then says that if Bill will pay the manager 500 in cash, the manager will drop in the remaining required supplies in two days time at Dons shop. As Bill has paid the manager in cash before, he agrees to this. The supplies never arrive. The receipt for the cash does not have the depot name on it, and the signature of the name of the manager bears no relation to the managers real name. Don wants the supplies but the depot says it is not obliged to send them and has no knowledge of what Bill says the manager has done. The manager, meantime, has not been seen for a few days. Don is in partnership with two other friends, Peter and May. They collectively run a small printing business and they have not bothered to incorporate because they do not think the business is large enough. Peter has a new cleaning lady for his home and she one day asks him if he would give her a reference for another cleaning job, but this time as an office cleaner. In due course the reference request came in and Peter dictates a letter giving the reference. Unfortunately the secretary types it up on the printing business headed paper, and as Peter is ill at the time of typing, she signs it on his behalf. The cleaning lady turns out to be disastrous at her job, being dishonest, unreliable and careless. She breaks important equipment and feigns ignorance of her misdeeds. Her new employer wants to sue Dons, Peters and Mays printing business. At the same time, May signs a contract on behalf of the partnership to take over the lease of office premises. Later on there is a fire at the premises and it turns out that the firms insurance is inadequate. The landlords expect reimbursement of the fire damage but the partnership assets are insufficient. As before, explain the law relating to all this.

Assignment 5 Company law Bill, Ben, Mary, Meg and John are the directors of a prosperous meat wholesaling company in the Borders. Together they own 26% of the shares, the rest of the shares being held by various trusts, family members and other investors. The companys net asset value is 1 million. Bill wishes to buy one of the companys vans for himself. The true value of the van is 10,000 but he pays the company 2,000 for it. Bens friend, Alice, says that she would like to be a shareholder in the company, but she hasnt any money. Ben agrees with Alice that in his capacity as director he will draw a cheque on the company account in her favour for 10,000, and then she can use that 10,000 to buy shares in the company. Alice can repay the loan to the company out of the dividends she will receive. Mary has a substantial shareholding in the small private bank that the company uses to refinance its existing borrowings. She takes the view that her personal affairs are no business of the companys, and does not see any need to mention the matter to her fellow directors. Meg has been negotiating a deal with a haulage company to deliver the companys meat to various supermarket depots. The haulage company very much wants the contract and entertains her royally. They take her to watch the rugby at Murrayfield, find her a great seat at the Edinburgh Tattoo, give her a weekend (with all meals) at Gleneagles, and give her a days salmon fishing on the River Spey, during which she catches three sea trout, a large cock salmon and an eel. After all this she recommends to her board of directors that they accept the contract with the haulage company. John is in charge of the accounts. He recommends that the company pay a dividend and the board accepts this. He calculated the extent of the dividend on the basis of existing profits. The board approves it and duly pays it. However, when blue tongue disease later afflicts the farming industry, the wisdom of his recommended dividend is called into question, because so confident has he been of continued profits that there is little by way of retained profits from which future years dividends might be paid. Some of the non-director shareholders are unhappy about this. The same group of unhappy shareholders indeed often make a nuisance of themselves, criticising the directors and complaining about the management of the company. This minority group of shareholders owns 11% of the issued share capital. The directors need advice on what steps they could lawfully take to get rid of the minority shareholders without, as it were, being held to ransom by them. As before, explain the law relating to all this, and furthermore, explain what, if anything, may need to be done to validate, approve or carry out any of these actions.