London School of Science and

Technology

Pearson BTEC Level 5 Higher

National Diploma in Business

Unit 7: Business Law

Assignment Title: Business Contract Law

Module Leader: Mr. Ashbel Ndewere
Internal Verifier: Mr. Mohammad Haider
nd
Issued on: 02 October 2017
th
Formative Assessment Week: 30 October 2017
nd
Deadline: 22 December 2017
Submitted on:

Student Name: Rahima Hafiz

Student ID:
Campus: Alperton/Luton/Birmingham (delete as appropriate)

Pearson Registration Number:

Instructions & Learner Declaration

Signature & Date:

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 Introduction
Legal system is considered as backbone of the country. This ensure that the fundamentals rights of
the citizens are being protected by the country and make them loyal to country. This report is based
on British legal system which carries customs and tradition along with it. The most important laws
regarding business organisation and contracts are discussed in this report. To provide example,
various case has been solved too by the author.

Task 1: The basic nature of the legal system

To: Ms Helena Mller

Sub: describing the basic nature of the legal system

Dear Madam,

With due respect, currently I am serving as paralegal of the Stuart and Little, LLP which is law firm
based on UK. MR John Carter, who is a solicitor, who asked me to inform you abouth legal system
of UK. This report is all about this topic.

P1: Different sources of law and laws that organizations must comply with
The sources of Law in English legal system is described below-

Common law: The Common law is followed from precedents of Judges and customs of United
Kingdom. Common law does not follow any statutes. This is the originality of the English Law.
The decision of the Judges are practiced for the future cases. This is different from Civil Law of
UK. (Austen-Baker, 2017)

Equity law: The Equity laws used by the judges to supplement any law applied if necessary. If the
stature failed to addressee the case, then Judge applied this law. (Austen-Baker, 2017)

Private law: The principles of Law cover the legal issue regarding to matter of private individuals
like trust, contracts, wills and torts. (Gray, 2011)

Primary legislation: The Primary legislation is body of principles which are approved by the
parliament of UK. Parliament of UK can change any sections of this legislations. (Gray, 2011)

Secondary legislation: Secondary legislation is body of principles which a made in several form.
This is called delegated legislation, the delegated authority can pass any law. This is acts as
direction of the primary law. This laws are not passed by the Governments. (Gray, 2011)

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Judicial precedents: Judicial Precedents are the important source of Common law. This is known
as judge made law also. The higher court of UK is so powerful that if any judge made any
precedents, then this become law for lower court. (Stone, 2013)

Customs: Customs are the norms which had been practiced in a specific territory for a long period
of time. In United Kingdom, customs are followed as Law and a source of legal system. In UK, the
traditions and customs are not be violated by any one. (Stone, 2013)

EU law: The member of European Union Countries follow the EU law. UK used to follow the EU
law to maintain stability in the European countries. But After Brexit, United Kingdom does not
follow this law anymore. This is not mandatory to follow in British territory. (Stone, 2013)

Laws that organizations must comply with

An organisation requires to imply various types of laws to run the company smoothly and to avoid
the legal hazards. The organizations must implement following laws-

The Company Law

Contract law

Employment law

EU Law

Consumer protection law

Competition law

Equal Pay Act 1970

Sex discrimination Act 1975

Employment Protection Act 1978

Health and Safety at Work Act 1974 (Beale, 2002)

P2: The role of government in law-making and how statutory and common law is
applied in the justice courts
Role of Government in law making: In every country, government designed the law for the
betterment of the citizen and the country to cop up with changing society and world. The
Parliament of UK are the highest law maker of the country. (A guidebook to court information
systems - no. 1, 1976)

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Superiority of parliament: The parliament of UK are the highest command of the legal system of
the UK. The representative of parliament can pass any law. The lower court must follow these laws
except till it hampers basic rights of the citizen. There are few stages of passing law in the
parliament and they are-

Bill: The first step is covered by submitting bill in House of Lords. It can be presented in House of
Common Chambers. After submission following steps are followed to complete-

1. First reading: Firstly, the bill requires to be presented in the house of chamber. Then it is
forwarded towards the parliament house to present in front of members.
2. Second reading: The members of parliament evaluate the bill and forward it for vote. In
voting, members can give veto in the proposal or support the bill.
3. Committee stage: In this steps, the Member of Parliament can propose any changes in the
submitted bill.
4. Report stage: After amendment, the proposed bill should reported to house so that
everyone can analyze the bill.
5. Third reading: This is the final voting stage. After voting, no amendment will be granted.
MPs cast their final vote.
6. Passes to the House of Lords: After passing by the member of parliaments of UK, the bill
is submitted in the House of Lords. If the House of Lords think that the bill requires further
amendment, the House of Common changes it accordingly and passes the amendment bill
for final stage.
7. Royal Assent: In the last stage, the bill is submitted ot Royal Assent and after it becomes
part of Act of Parliament. (A guidebook to court information systems - no. 1, 1976)

How statutory and common law is applied in the justice courts

The statutory law is applied by the courts which is also known as mandatory laws in UK. It is
applied through following stages-

Structure of the courts: the British Court System has been illustrated below-

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Fig: court system of UK. Source: http://image.slidesharecdn.com, Accessed on 21.10.17

Application of common law: along with statutory law, common law is applied through following
way-

Doctrine of Precedents: This is the important part of common law which influences the British
court system as a part of their customs. Here, if the decision of the judge is considered as the final
decision and the precedents are being followed by the others. The higher court may not follow the
decision of Judge but the lower court is bound to follow. This is the way of applying common laws
in United Kingdom. (Beale, 2002)

From: Rahima Hafiz

Stuart and Little LLP

London, UK

Dated: 25.10.17

Task 2: The potential impact of the law on a business

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P3: Potential impact of the law on a business
Dated: 26.10.17

Briefing to: Collin and David

From: Junior Legal Executive in a small law firm, London, UK

As per the scenario, it is clear that Collin and David are about to set a private limited company.

Separate legal entity: Food catering service is private company and the main feature of private
company is that is a separate entity and only owner is the liable for any kinds of loss or profit.

Duties of the directors: the directors of Collin and Davids company should be entitled to work
freely for the interest of the company. The relationship between company and directors should be
transparent and directors must work to maximize the profit but directors are not liable for any
occurred loss. (Turner, 2015.)

Naming a company: Collin and David have planned to between F U Caterers Ltd and Food
United Caterers Ltd but they should choose a unique name for their company to avoid any
copyright claim with an existing name.

Registration of the company: This is final stage of starting a company. The private limited
companies are regulated by Company act of United Kingdom. To complete registration following
data is needed

1. Name of the company

2. Address

3. Name of directors

4. Memorandum of the company and

5. Articles of association of the company (Turner, 2015.)

Collin and David can complete registration process though online government site or they can do
registration by post which is costlier than online process. After completion, their company will get
legal certification to run business.

Dated: 26.10.17

Briefing to: Sophia

From: Junior Legal Executive in a small law firm, London, UK

This case will be solved with the help of Employment Rights Act 1986.

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Employment Right Act-1986: Employment Rights Act 1986 has several sections regarding Fair
and Unfair dismissal. Some key points of these are-

Fair and unfair dismissal:

The employer cannot dismiss an employee unfairly as it is stated in section 94 of this act. The fairs
reason are as follows according to section 98(2)

If the qualification is not adequate

If the conduct of employee is not good

If the employee is not capable for the position

Other sustainable and fair reasons. (Black and Garner, 2007)

Without these reason, the dismissal is not fair. If Sophia covered any one of the point, then the
dismissal will fair.

International Sport Ltd v Thompson [1980]: This case was held in Employment Appellate
Tribunal for the unacceptable number of absence of employees. In this case, the employer must

Analyse the attendance log with reasons

Give warning for dismissal

Give opportunity to improve condition and chance of representation.

If employees fail to comply, then the dismissal will be fair. (Black and Garner, 2007)

According to scenario, Sophia was warned of dismissal for her frequent absence from the
workplace though she provided legal medical certificate for her illness. She was dismissed by she
was not given any chance of representation and prior notice of dismissal.

That is why the dismissal is unfair and Sophia can apply to Employment Tribunal for justice.

Dated: 26.10.17

Briefing to: Mrs Carter

From: Junior Legal Executive in a small law firm, London, UK

The contract of Mrs Carter was executed under Contract Law.

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Expressed terms: The express term of contract mention all the term of contracts in written or oral
form. The statement of the contract as it carries all information about the contracts. (Duxbury,
2015)

Implied terms: When the terms of the contracts are not verbally expressed but parties agree to
imply the terms are call implied term of contract. (Duxbury, 2015)

Smith v Hughes, 1871: Here, the claimant bought wheat thinking that was oats. After that, he
found that was not that oats what was looking and quantity was not sufficient. The defendant knew
that but he did not tell him not to buy. The claimant brought charges for misrepresentation.
(Duxbury, 2015)

The judge dismissed the charge as the seller did not mislead the buyer to buy that product as he was
silent that time. On the other hand, his silence did not violate any basic rights rather it just mislead
the quantity. (Duxbury, 2015)

Here AD motors provided original parts. Mrs. Carter provided 50% of payment and contracted to
pay rest 50% after completion. Firstly she thought that AD motors provided old parts but the
allegation proved wrong. So according to the Contract Law, Mrs. Carter must pay rest of the
money. AD motors can necessary legal actions as per the agreement among Mrs. Carter and AD
motors.

Task 3
P4: Appropriate legal solution to business problems
Dated: 22.10.17

Briefing to: Mr. Smith

From: Junior Legal Executive in a small law firm, London, UK.

The problem of Mr. Smith covers the condition of doctrine of part performance as well as doctrine
of substantial performance

Doctrine of substantial performance: Doctrine of substantial performance refers to establish trust

to do all the actions according to terms and conditions of the contract. The doctrine of substantial
performance is considered as complete if the essential requirements are fulfilled whether it meets
all the terms of the contracts or not. Doctrine of substantial performance cannot be applied in this
case that the construction is not completed. (Ruff, 2014)

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Doctrine of part-performance: This doctrine of part performance allows court to take action on
the basis of oral contract as the principle of the term can be fulfilled orally. (Ruff, 2014)

Sumpter v Hedges, 1898:

The Sumpter was a constructor in this case. Hedges agrees with Sumpter to build houses for 560.
He did not completed that work and left the work saying had no money to continue that work. The
builder was paid to do the rest. After that, Hedges completed that work using the left materials of
Sumpter. Sumpter brought charges against Hedges to the outstanding money (Ruff, 2014)

Court found Sumpter guilt for abandoning the work and he got the money of materials but not for
the building work.

This case has similarity with the Sumpter vs. Hedges. PHB ltd got their sustainable payment but
this company abandoned the work without building. PHB ltd left the terms of contacts without
completing the work. PHB ltd will get the value of their materials, not for their work for Mr Smith.

Dated: 22.10.17

Briefing to: Samantha

From: Junior Legal Executive in a small law firm, London, UK

Definition of liquidation: Liquidation is process of end a company buy selling. Here, owner
terminates all the functions by liquidate its all assets and capital along with properties to the
creditors. This is last way to survival strategy where owner winding up the company. (Beale, 2002)

Order of priority: The order of priority refers to a process where company finds the entity who
will get the distribution first. The owner must meet the requirements of creditors and expense. The
liable creditors will be prior concern while liquidating a company. (Beale, 2002)

MS Samantha can follow The order of priority to liquidate property by following process-

Samantha's Expenses: Samantha will cover her expenses which is required to liquidate the
company. This is the foremost requirements.

Secured Creditors: After covering the expenses, Samantha will cover the requirement of secured
creditors. Secured creditors are those who bear share of the company. (Beale, 2002)

Unsecured Creditors: After cover secured creditors, Samantha will distribute the assets to the
unsecured creditors. (Beale, 2002)

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P5: Justifications for the use of appropriate legal solutions
The legal solutions for the above case are appropriate because they are based on the existing
legislation of the British court system. The precedents of the UK are used in the problems too.

The decision of British court has been used to solve the various problem described above with
required principles derived from legislations. Others appropriate legal solutions are-

Legal solutions provide clarity, transparency and effectiveness when faced with issues. The
legal solutions provide solutions to the problem with historical data and relevant example which
makes the decision more clear and strong on favour of true and effective justice. The legal system
protect human rights that why it bears transparency in the UK. (Austen-Baker, 2017)

UK governed by law thus, appropriate legal solutions as those discussed above are required.
The legal solution for the above cases are on the basis of the exiting legislation and common laws
of United Kingdom. Every elements of this country is governed by the law which is basis one the
history and tradition as well as precedents of the court well preserved by the court. That why the
above solutions are appropriate and legal for the bot defendant and claimant. (Austen-Baker, 2017)

Task 4
P6: Appropriate legal solutions based upon alternative legal advice provided
To,

AFG Oil Company

Sub: Legal rights of AFG Oil Company requires to solve problems.

Definition of Alternative Disputes Resolutions (ADR): Alternative Disputes Resolution is kind

of solution of disputes without any legal actions. When agree to solve the disputes by mutual
settlements, this is called Alternative Disputes Resolution. It has two parts named Arbitration and
mediation along with negotiation and so on. (Austen-Baker, 2017)

Arbitration: Arbitration is main featured part of the ADR. Here a neutral party settles the disputes
among the parties involves without any legal hazards. This process is encouraged by the law to do
it voluntarily. (Austen-Baker, 2017)

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Arbitration Clause: Arbitration clauses is the process through which two parties can solve their
disputes with any legal actions. This clauses shows in which cases the Arbitration can be used by
the parties. Sometimes it compels people to follow the Arbitration process.

UNICITRAL- Model of Law: The model of Law which provide guidance to upgrade and reform
the arbitrational process. This also covers the arbitration agreement for the parties.

Mitsubishi Motors case: In this case, the US Supreme Court ordered to do arbitration agreement
between Mitsubishi and Soler. Court thought that US antitrust can be arbitrated by the foreign
panel. (Stone, 2013)

In the AFG oil case, according arbitration clause, HPG PLC can settle with AFG oil without
bringing it in court. Before the forming the contract, it was mentioned that disputes of AFG oil
must be solved through arbitration in its country. That is why it is valid arbitration agreement.

Difference between ad hoc and institutional arbitration

The differences are as follows-

Ad hoc arbitration Institutional arbitration

Ad hoc arbitration is not guided by institution. Institutional arbitration is a process of
arbitration followed with a specific
framework. There specialized institution for
this.
In this process, parties are bound to list all The number of arbitrators and procedure are
elements of arbitration like number of fixed in the Institutional arbitration that is
arbitrator, procedure and so on. why this is not required like Ad hoc method.
The institution provide the arbitrators and
manners.
Ad hoc arbitration is very much flexible with Institutional arbitration follows standards
process. which bound them to not be flexible
Ad hoc arbitration the appointed arbitrator Institutional arbitration follows formal
and their selected procedure is the main procedures that is why it requires more time
concern which make Ad hoc arbitration is than ad hoc arbitration.
faster process the institutional.
The cost is not as much that of institutional This is most expensive process of arbitration.
arbitration. In some case, there might be The charges and fees are also fixed by
exceptional. Institutions.
(Stone, 2013)

From:

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Rahima Hafiz
Commercial solicitor in a large city firm

Dated: 26.10.17

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 Conclusion
The British law system is different as it has common law which has been practiced for a long
period of time. This is the main difference of British law than others. This laws maintains equity
and equality among the citizens. These laws also ensures that every human rights are being
protected by this laws and people can serve their country with loyalty and freely.

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 References
A guidebook to court information systems - no. 1. (1976). [Victoria?]: The Division.
Arnell, P. (2012). Law across borders. Milton Park, Abingdon, Oxon: Routledge.
Austen-Baker, R. (2017). Implied terms in English contract law. Northampton, MA: Edward Elgar
Pub.
Banakas, E. (1988). United Kingdom law in the 1980s. London: Butterworths/Sweet & Maxwell.
Beale, H. (2002). Contract law. Oxford [GB]: Hart.
Black, H. and Garner, B. (2007). Black's law dictionary. St. Paul, Minn.: Thomson/West.
Duxbury, R. (2015). Contract law. London: Sweet & Maxwell.
Gray, K. (2011). Land law [electronic resource]. Oxford: Oxford University Press.
Lockton, D. (2014). Employment law. Basingstoke: Palgrave Macmillan.
Ruff, A. (2014). Contract law. London: Sweet & Maxwell.
Stone, G. (2013). Constitutional law. New York: Aspen.
Turner, C. (n.d.). Employment law.

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