Module 2, Chapter 7 - Law and Business

Question 1

What is the advantage of contracts?

Answer 1

The advantage of contracts is that they allow the parties to effectively create their own law via the agreed
terms in the contract.

Question 2

What is the purpose of contract law?

Answer 2

Contract law ensures contracts can be regulated.

Question 3

Contract law puts rules in place that help clarify certain issues. Provide examples.

Answer 3

1. Whether a contract has been created and when the contract comes into existence. Contract law provides for several ingredients that must be present for a contract to exist and, once those ingredients are present, a valid contract comes into existence.
2. Powerful parties may seek to impose unfair or onerous terms on weaker parties. Contract law therefore provides protection to certain parties by regulating the use of certain terms (e.g. the Unfair Contract Terms Act 1977 and the Consumer Rights Act 2015 stringently regulates the use of exclusion and limitation clauses).
3. Contract law provides that certain events may terminate a contract (or allow a party to terminate if they so choose)
   and also sets out the consequences of termination.
4. Contract law provides remedies (e.g. damages, injunctions, specific performance) to parties who have suffered loss
   due to the other party not performing their contractual obligations, or performing them in an unsatisfactory manner.

Question 4

What does the word ‘tort’ mean?

Answer 4

The word ‘tort’ derives from the Latin ‘tortus’, meaning ‘twisted’ or ‘wrong’ and therefore a tort is a particular form of
civil wrong.

Question 5

The law of torts consists of a series of these torts, with many of them being applicable to businesses. Provide 6 examples.

Answer 5

1. The principal tort is the tort of negligence, under which liability can be imposed on persons who engage in certain
   negligent acts or omissions.
2. Persons who unlawfully interfere with other people’s goods may have committed the tort of wrongful interference with goods.
3. The tort of occupiers’ liability provides that liability can be imposed on occupiers of premises who fail to take
   adequate care of persons upon those premises (e.g. a business which fails to adequately protect the safety of
   customers in its stores).
4. The tort of nuisance can result in liability being imposed on those whose land or property (including the use of land
   or property) causes loss to others (e.g. fumes or waste from a factory that causes damage to nearby property).
5. The tort of defamation imposes liability on persons who make untrue and harmful statements about others (e.g. a
   shareholder falsely states that a director is stealing from the company).
6. A group of torts (often known as the ‘economic torts’) aim to protect businesses against unlawful interference with
   contract, trade or business.

Question 6

What is the doctrine of vicarious liability?

Answer 6

This provides that certain persons can be liable for the tortious acts of others (e.g. an employer can be vicariously liable for the negligent acts of his employees whilst in the course of their employment).

Question 7

True or false? The law of torts, like contract law, is largely judge-made, but with statutory inroads in relation to certain torts.

Answer 7

True!

Question 8

What does employment law focus on?

Answer 8

Employment law not only focuses on the rights and obligations of employees, but also on persons who
are workers.

Question 9

What is the distinction between workers and employees?

Answer 9

Certain rights (e.g. the right to sue for unfair dismissal) only apply to employees, whereas other rights (e.g. the right to the national minimum wage) also apply to workers.

Question 10

What is included within employment law?

Answer 10

1. What employment rights are provided to employees and workers
2. Health and safety in the workplace
3. The prevention of discrimination in the workplace
4. Providing a remedy to those who are unfairly or wrongfully dismissed
5. Rights provided to employees following a business transfer
6. Rights relating to collective action (e.g. strikes)

Question 11

True or false? Employment law is a mixture of statute and case law.

Answer 11

True!

Question 12

Where are employment cases heard?

Answer 12

Most are heard in tribunals.

Question 13

Arguably, what is the most important employment law statute?

Answer 13

Employment Rights Act 1996.

Question 14

What is the purpose of commercial law?

Answer 14

Commercial law seeks to regulate and facilitate the commercial dealings of businesses.

Question 15

What are the three most notable topics covered under commercial law?

Answer 15

1. Domestic sale of goods
2. International sale of goods
3. The law of agency

Question 16

What types of rules does commercial law establish for the domestic sale of goods?

Answer 16

Many businesses sell goods and commercial law establishes detailed rules regarding what ‘goods’ are, what types of sale contracts exist, when the goods are transferred to the buyer, rules regarding payment and delivery of goods, implied terms and remedies afforded to the buyer or seller if the other party fails to uphold their obligations.

Question 17

Define ‘international sale of goods’?

Answer 17

The sale of goods from a business based in one country to a business or person based in another country.

Question 18

What does the law of agency involve?

Answer 18

The law of agency establishes rules regarding when an agency relationship is created, what acts the agent is authorised to undertake, the relationship between the parties in an agency relationship and how a relationship of agency can be terminated.

Question 19

True or false? Commercial law is a mixture of statute and case law.

Answer 19

True!

Question 20

What is the purpose of consumer law?

Answer 20

The principal aim of consumer law is to protect consumers.

Question 21

How does consumer law protect consumers?

Answer 21

1. Establishing standards that providers of goods and services must meet.
2. Providing consumers with a remedy (e.g. damages, right to repair/replacement/rejection of goods) if goods and
   services fail to meet the required standards or are in breach of contract.
3. Prohibiting anti-consumer trade practice.
4. Establishing a system of licensing or authorisation, so that only licensed/authorised persons can provide certain
   services.
5. Requiring providers of goods and services to provide specified information regarding those goods and services.
6. Providing consumers with cancellation rights in certain cases.

Question 22

The framework of consumer law is set out in?

Answer 22

The framework of many areas of consumer law is set out in legislation with case law applying and interpreting the relevant statutory rules.

Question 23

What is the purpose of environmental law?

Answer 23

The dominant purpose of environmental law is the protection of the environment.

Question 24

List prominent environmental law topics.

Answer 24

1. Regulating activities that can affect air and water quality
2. Measures designed to combat climate change
3. Requiring businesses that engage in certain activities to obtain an environmental permit
4. Rules regarding the disposal of waste
5. The decontamination of contaminated land
6. Conservation of plants, wildlife and habitats

Question 25

List examples of intellectual property.

Answer 25

1. The names or designs of products or brands 2. Business inventions 3. Certain other outputs, items or images

Question 26

What is the purpose of intellectual property law?

Answer 26

Enabling businesses to protect their IP, where appropriate, is the principal goal of IP law.

Question 27

How does intellectual property law enable businesses to protect their IP? List 4 examples.

Answer 27

1. Patents 2. Copyright 3. Designs rights 4. Trade marks

Question 28

What is the purpose of a patent?

Answer 28

Patents are used to protect any innovative technological inventions businesses develop. The effect of which is to prevent others from making, using or selling the patented invention without the patent holder’s consent for a period of 20 years (the patent can be renewed).

Question 29

How does copyright protect intellectual property?

Answer 29

Businesses can obtain a copyright over their output for a certain period, which basically means that certain activities (e.g. copying or distributing the output) are prohibited without the copyright holder’s consent.

Question 30

Businesses that produce goods may wish to prevent others from copying the design (e.g. the shape or appearance) of that product. How might a business do this?

Answer 30

This can be done by obtaining a design right over the product, the effect of which is to prevent others from copying the product’s design for up to 15 or 25 years (depending on the type of design right obtained).

Question 31

A business will wish to protect certain items, such as the name of a product, or a company name or logo. How might a business do this?

Answer 31

This can be done by obtaining a trade mark over the item in question, the effect of which is to prevent others from utilising the trade mark (e.g. by placing it on goods or services sold) without the trade mark holder’s authorisation.

Question 32

Where is the framework for most areas of Intellectual Property found?

Answer 32

The framework for most areas of IP law is found in UK legislation (e.g. the framework for patents is found in the Patents Act 1977).

Question 33

List common forms of cyber attacks.

Answer 33

1. Fraudulent e-mails, especially phishing e-mails. 2. Infecting computer systems with viruses and malware, which can disrupt the business’s systems or steal data. 3. Ransomware (a malicious piece of software that blocks access to the victim’s data or threatens to publish it, unless a ransom is paid). 4. Denial of service attacks, under which attackers send large amounts of data to a company’s network, so that the network is disrupted.

Question 34

What is the aim of competition law?

Answer 34

The aim of competition law is to maximise competition in order to benefit consumers.

Question 35

List two EU legislation that protect cyber-security and data.

Answer 35

1. The EU General Data Protection Regulation came into force in May 2018 and seeks to harmonise data protection laws across the EU by setting out the legal framework for data protection law. The Regulation was implemented in the UK by the Data Protection Act 2018. 2. The Directive on Security of Network and Information Systems places obligations (i) upon Member States to put a national framework in place to promote the security of network and information systems; and (ii) upon businesses that provide essential services to take appropriate and proportionate security measures to manage risks in their network and information systems. In the UK, the Directive was implemented by the Network and Information Systems Regulations 2018.

Question 36

Why is competition in business beneficial?

Answer 36

Competition in businesses produces a wider choice of products, lower prices, better quality products and increased efficiency.

Question 37

What are some of the disadvantages of monopolies?

Answer 37

Monopolies can result in opposite effects (e.g. reduced choice, higher prices, etc.).

Question 38

What is the purpose of competition law?

Answer 38

At its broadest level, competition law seeks to maximise competition both to benefit consumers and to prohibit certain anti-competitive practices.

Question 39

What are some of the topics covered under competition law?

Answer 39

1. Prohibiting businesses from engaging in activity that can prevent, restrict or distort competition. 2. Preventing businesses from abusing their dominant position in the marketplace. 3. Prohibiting cartel activity. 4. Determining whether proposed mergers or takeovers will adversely affect competition in the marketplace and blocking those that will. 5. Empowering certain bodies to investigate competition concerns in the marketplace and impose solutions.

Question 40

What is the UK competition law framework set out in?

Answer 40

The UK competition law framework is largely set out in statute, notably the Competition Act 1998 and the Enterprise Act 2002.

Question 41

Responsibility for investigating and enforcing UK competition law is placed not just on the courts, but on a series of bodies that are known as the competition authorities, of which the most noteworthy is the Competition and Markets Authority (CMA). List the roles of the CMA.

Answer 41

1. Investigating breaches of EU and UK competition law. 2. Conducting marker studies and investigations into markets where a lack of competition could be adversely affecting consumers. 3. Prosecuting those who engage in cartel activity. 4. Investigating mergers that could affect competition, with the following example demonstrating this.