C05

Delivered by Catherine Gregory

EXAM
Computer Based Assessment with 75
Multiple Choice Questions 2 hours
long Answer them all.
Syllabus is as follows:
Ethics & Business 15%
Ethical Conflict 10%
Corporate Governance 10%
Comparison of legal systems 10%

Syllabus Cont
The law of contract - 20%
The law of employment 10%
Company Administration & Finance
25%
Learning Outcomes
Study Techniques Attend lectures
and do the questions

Class Timetable
Lecture 1 Comparison of English law with other
legal systems
Lecture 2 Law of Contract
Lecture 3 Employment Law
Lecture 4 Company formation
Lecture 5 Company administration and
management
Lecture 6 Corporate finance
Lecture 7 Ethics and Business / Corporate
Governance
Lecture 8 Revision and Test!!!

By the end of today you will be able

to:
Explain the essential elements of the English
Legal System and the tort of negligence by
explaining how behaviour in society is regulated,
the sources of English Law and the operation of
the doctrine of precedence and negligence rules
for professional advisers.
Describe the essential elements of alternative
legal systems by considering systems in other
countries, describe the elements of Shariah law
and describe the role of internal regulations.

The English Legal System What is

law?
A set of procedures and rules
There is a difference between criminal and civil
law one regulates behaviour, the other
relations, particularly business.
There are three main sources of law in the English
Legal System Equity & Common Law led to
Judicial Precedent, Legislation and EU Law.

Criminal Law
A crime is conduct prohibited by law it regulates
behaviour.
State prosecutes e.g R v Brown.
Objective is to punish fines or imprisonment
Judge and Jury prosecute
Burden of proof must be beyond reasonable
doubt.
Public law

Civil Law

Regulates relationships and disputes.

Judge will decide liability
Compensation is normal remedy
Burden of proof is on the balance of probability.
Private law

The Court Structures

See Class Notes

Sources of Law
Common law a complete system of rights
Equity was applied at the courts discretion
Custom was a major source of law in the olden days
rights to property, rights of way.
Common law means a system which is common to
everyone, evolved after the Norman invasion in 1066.
Where justice appeared not to be done, Equity was
applied as a principle of fairness with discretionary
remedies.
Where there is a conflict, equity prevails.
Equity and common law interacted to produce new
rights, better procedures, fairer remedies.

Case Law
Common law and equity evolved into case law
decisions made in courts by Judges who examine
the facts on a case by case basis, consider and
apply the law.
Judicial precedent is a system whereby decisions
made in previous cases with similar facts, must
be applied in other cases it ensures consistence.
Stare Decisis means to stand by a decision.

Ratio Decidendi and Obiter

Dicta
Latin terms but ratio means that if the material
facts of the case are a same, then the decision
must be the same.
Obiter dicta are other statements which do not
form part of the ruling words said by the way.
The hierarchy of the courts is important in
determining which court is bound which
decisions.

Court structure

Hierarchy of the Courts

Magistrates bound by all higher courts,
binds no-one not even itself
County Court, all higher courts, binds noone not even itself.
Crown Court, all higher courts, binds no-one
High Court, all higher courts, binds all lower
courts
Court of Appeal, all higher courts, binds all
lower and itself.

Hierarchy
Supreme Court binds itself and all
lower courts.
ECJ All English Courts.
CofA Young v Bristol Airways
decided that court usually binds itself
unless two of its decisions conflict, it
conflicts with a subsequent Supreme
Court decision or made with a lack of
care.

Precedent
Can be departed from if overruled, reversed,
distinguish the facts, obscure result, lack of care.
Case: Mendoza v Ghaidan (2003)
The 1977 Rent Act states that a spouse can inherit
a statutory tenancy. The House of Lords in a
previous case (Fitzpatrick v Sterling House Ltd)
declared this rule not to apply to same sex couples.
This now goes against the human rights convention
of discrimination and so the precedent could not be
followed in the Mendoza v Ghaidan case (2003)
making the inheritance rights now equal setting a
new precedent to be followed by lower courts.

Advantages

Advantages are:
Certainty
Clarity
Flexibility
Practicality

Legislation
Made by Parliament
Parliamentary Sovereignty means Parliament can
repeal, overrule and make new law.
Types of Legislation
Public Acts Affects all members of the public
Private Acts individuals or institutions
Enabling Acts Delegated legislation
Consolidating and Codifying legislation

Procedure

Green Paper
White Paper
First Reading
Second Reading Debate
Committee Stage 20 members
Report Stage
Third Reading
Royal Assent

Interpretation
A Court can question the validity of an Act
(contravenes EU Law)
Literal rule gives words their ordinary meaning
Whiteley v Chappel
Golden rule avoids absurdity Re Sigsworth,
murderer inheriting
Mischief rule interpret it in line with the mischief
it was designed to prevent

Secondary / Delegated
Legislation
a) Statutory Instruments
b) Bye- Laws
c) Order in Council Emergency
powers

EU Law
The United Kingdom has been a
member of European Community
since 1973
Therefore subject to European
Community Law

Primary Law of the EU

Treaty of Paris
Treaty of Rome
These are directly effective and
binding they become law without
the country having to make any
further law themselves

Secondary legislations
Regulations directly applicable
uniformity throughout e.g working
time regulations
Directives requirements to change
the law of the member state, they
are not directly effective
Decisions of the European Court
directly binding on the recipient
state.

Quick Test
Which ONE of the following is the
highest court in England?
A The Court of Appeal
B The Supreme Court
C The High Court.
D The Crown Court

Quick Test
Which ONE of the following statements is correct?
A The aim of the criminal law is to regulate
behaviour within society by the threat of
punishment.
B The aim of the criminal law is to punish offenders.
C The aim of the criminal law is to provide a means
whereby injured persons may obtain compensation.
D The aim of the criminal law is to ensure that the
will of the majority is imposed upon the minority.

Tort
A tort is a civil wrong. There does
not have to be a contract in place.
The person wronged can sue for
compensation if they have suffered a
loss.
Various types of tort personal injury
claims, professional negligence.
Landmark case was Donoghue v
Stevenson which introduced the
neighbour principle.

Tort
There has to be a wrong committed,
damage or loss suffered and there
must be causation i.e. the acts of the
defendant have caused the damage.
Negligence must prove that a duty
of care existed, breach of that duty,
damage suffered.
Landmark case of Donoghue v
Stevenson introduced the neighbour
principle

Neighbour
Persons so reasonably close, they
should have been in contemplation.
Whether a duty of care exists is a
matter for the courts. Normally take
into account - proximity,
forseeability and just and reasonable
to impose a duty of care Alcock v
Chief Constable of South Yorkshire

Negligence
Has to be a duty and has to be a breach of
that duty.
Need to determine whether the defendant
acted reasonably the reasonable man test.
Standard of care will be higher if you are a
professional.
Children lower than adults
Take your victim as you find then eggshell
or thin skull principle Paris v Stepney BC

Res ipsa loquitur

The thing speaks for itself normally
burden of proof is on claimant.
This is reversed where it can be
inferred that negligence was present
i.e. Mahon v Osborne Surgeon
leaving a swab in a patient!

Causation
Loss suffered as a result of the
breach
but for test i.e. but for the
defendant negligence, the loss would
not have been suffered.
Defendants act must be directly
linked to the loss the chain of
causation The Wagon Mound

Defences
Contributory negligence Sayers v
Harlow
Volenti non fit injuria or consent
Statute of Limitations have to bring
an action within six years however
coal mine cases, PPI!

Negligence extended
Careless statements Auditors
Hedley Byrne v Heller financial loss

Negligence extended
Caparo v Dickman extended the
principle to financial loss and
introduced a three step test:
1.That harm was reasonably
foreseeable
2. That there was a relationship of
proximity
3. That it is fair, just and reasonable
to impose a duty of care

Caparo
No duty of care to the public at large but
did owe a duty of care to shareholders as a
body.
Duty of accountants is higher when
advising on takeovers ADT Ltd v BDO
specific statement made at a meeting.
To establish negligence look at capacity,
reliance and forseeability
CA 2006 introduced ways in which auditors
could limit liability

Quick Test
The Caparo test for duty of care
provides that three factors must be
taken into account. Which of the
following is not included?
a) 'Fair, just and reasonable'
b) Proximity
c) Morality
d) Foreseeability

Quick Test
Which of the following is not a
required element in establishing a
negligence action?
a) Breach of duty
b) Malicious intent on the part of the
defendant
c) Duty of care
d) Causation of damage of a legally
recognised type

Quick Test
Which of the following best describes the
main function of 'duty of care' in negligence?
a) It ensures that the correct defendant is
sued
b) It ensures that the claimant is always
within the time limit for binging an action.
c) It ensures that the tort of negligence does
not extend too widely
d) It ensures that the wrongdoer has actually
been careless

Alternative Legal Systems

A legal system is a mechanism for
developing law in particular
countries.
It is a set of rules and it regulates
relationships, behaviour and offers a
course of redress.
All countries have some sort of legal
system.

Legal systems
Three types of law
Common law Judge Made law, basis
of English system and spread to RSA,
Australia, Canada.
Civil law Statutes and
administrative regulations Roman
Law. Needs to be certain
Sharia Law Founded on the religion
of Islam

Different types of law

Private law actions between private
individuals
Public law public interest, breaches
of regulations
Procedural law regulates access to
system and rights of disputing
parties
International law regulates relations
between different countries

Legal Systems

England
Common Law
Public Law
Private Law

Poland
A democratic republic operating a codified legal
system
Main sources
Parliament
Regulations
International laws
Local laws
Courts
Within each district or province

Germany

Germany
A democratic state in which all are equal
Main sources
Parliamentary

Codified law including delegated legislation (Ordinance and

statutory instruments
Customary law
Not based on necessarily judicial precedents but binding
judgements filter from higher courts to lower who respect
their earlier decisions.

France
L.O Compare and Contrast the elements of alternative legal
systems, Sharia Law and the role of international legal relations
France

Typically a codified system except for the law of tort

Main sources
Private law
Public law

Courts
- Trial level
- Appeal level
- Supreme level

Denmark
Denmark
Has a strong influence from German and
Nordic laws
Man sources
Constitutional acts
Acts of Parliament
Case Law
Custom Law

EU Countries
Emerging pattern of similarity
between European Law systems

International systems
Russia
Split into three branches
1. Arbitration court system business entity
disputes
2. High court of arbitration
3. Regular court system The peoples court
The Supreme Court sits at the top of this system,
there is also a constitutional court which acts as a
single body with no courts underneath it.

USA
Operates a federal system with a national
constitution to guarantee certain rights and
freedoms
Sources of law
Federal courts
United states congress National government
enact law, no royal assent!
Individual states can also create their own law
through common law and statute

China
Traditionally based on social relationships
such as control, order, justice and sincerity.
Modernisation
Has led to new law being created in order to
bring the legal system up to the same level
as other countries
Piece meal
Mediation committees
Trial periods

Sharia
Sharia Law (Islamic Law)
Based on the religion of Islam
It is ordained by Allah as guidance
for mankind
The path to be followed
It is not based in one nation but
the law of Muslims regardless of
where they live

Sharia
It is essentially in two parts
1. Religion - Setting out rules on praying and fasting
2. Judicial process - such as the administration of law including
the rules on the use of evidence
Its main focus
Family law (rules on marriage, divorce, children,
inheritance)
Rules on food or drink
Peace and war
Penal punishments
Financial operations
Business operation

Main principles

The main principles are

Law is divine
The divine way
Harmony
Allah

Sharia
The belief is Sharia Law provides physical
and spiritual wellbeing.
Five broad categories (five pillars of Islam)
which govern actions. The five pillars are:
Obligatory
Meritorious
Permissible
Reprehensible
forbidden.

International Law
International Legal Relations
Deals with the relationships between nations and between individuals
and various organisations in different states
Two types
1. Public law

Agreements between nations

Conventions
Treaties
International customary law
2. Private law

Considers how a nations law can regulate the international dealings of

its individuals

Conflict
Sometimes there is conflict between
individuals as the law of each nation
will apply:
Answer Regulations and International
Practices e.g.
International Standardisation
Organisation
International Federation of
Accountants

Quick Test
Which one of the following is not in
the five categories of action
recognised as the Five Pillars of
Islam?
A Permissible
B Reprehensible
C Meritorious
D Tolerated

Quick Test
Question 33
Which one of the following areas of
law is not codified in France? CBA
Model Question Paper C05 Page 11
A Contract Law
B Employment Law
C Company Law
D Tort