Week 1 -definitions and development

Question 1

What is PC law

Answer 1

body of law that regulates the rights and obligations of parties in commercial transactions- Kum v Wah Tat Bank Ltd 1971

Question 2

What is the general nature of PC

Answer 2

Commerce of an international nature and requires a mechanism to facilitate success - expect to have contract of sale ( seller – buyer – sub buyer) or contract of carriage (seller/buyer/sub buyer- carrier)

Question 3

What was PC law in 12-14th centuries

Answer 3

Lex Mercatoria developed by the Mercantile Court and recognised the bill of lading as a negotiable instruments.

Question 4

PC In 15/16 century

Answer 4

Admiralty court which continued to develop the law of merchants.

Question 5

PC 17th century

Answer 5

Sir Edward Coke displaced merchant courts, which led to most commercial litigations being heard in the common law courts that combined the rules of Lex Mercatoria and commercial custom.

Question 6

PC 17/18th centuries

Answer 6

Development of modern commercial law led by
§ Sir John Holt (Chief Justice 1689–1710): began developing the law on negotiable instruments, bailment and agency.
§ Lord Mansfield (Chief Justice 1756–1788): continued the reform and brought the law in England largely in line with those of other European Countries. He is regarded as the founding father of commercial law in England.

Question 7

When was the Bills of exchange act passed and what did it do

Answer 7

Sir Mackenzie Chalmers, the draftman of The Bills of Exchange Act 1882 and The Sale of Goods Act 1893 (now 1979) prescribed that the common law, including the law of merchants should continue to apply to both legislative instruments respectively.
• S.97(2) Bill of Exchange Act 1882,
• S.61(2) Sale of Goods Act 1893,
• S.62(2) sale of Goods Act 1979.
Nevertheless, English commercial law remains fundamentally different from those of other countries – Good Faith, CISG (The Vienna Convention)

Question 8

What are sources of commercial law

Answer 8

Common, statute (CRA 2015/UCTA 1977/ SGA 1979 etc), contracts (macaulay 1974 hl), trade custom and usage (Kleinwort Benson Ltd 1999), EU law – factortame 1991 and internation conventions ie Hague 1924

Question 9

What does English law not embrace

Answer 9

the good faith doctrine

Question 10

Summarise the English laws good faith approach today

Answer 10

brought to obvious attention of other party before signing for it to be enforceable- Interfoto Picture Library 1989
• Implied duty that a party whose consent is required to trigger action by the other party will not take unreasonable steps to withhold consent- Gan Insurance 2001
• Implied duties of cooperation or fidelity to the parties bargain in performance of agreement- Rainy Sky SA 2011
• Implied duty of honesty- HH Casualty 2003
• Implied duty that power conferred from one party to make decisions that affect ALL PARTIEs to a contract is not abused/exercised irrationally or unreasonably, and will be used in good faith and honesty- Socimer International Bank Ltd 2008

Question 11

What are the key points to take from the Post office case 2019

Answer 11

• Importantly, there must be no specific express terms in the contract that prevent a duty of good faith being implied into the contract.
• Long-term Contract with parties having the mutual intention of establishing a long-term relationship.
• Parties must intend that their respective roles be performed with integrity, and with fidelity to their bargain.
• Parties’ commitment to collaborating in the performance of the contract.
• The spirits and objectives of their venture difficult to express exhaustively in a written contract.
• Parties to repose trust and confidence in one another - different to fiduciary relationships.
• The contract requires a high degree of communication, co-operation and predictable performance based on mutual trust and confidence, and expectations of loyalty.
• Some significant investment normally in the form of financial commitment by one party (or both) in the venture.
• Exclusivity of the relationship.

Question 12

What does Lord Steyn say in contract law

Answer 12

Lord Steyn: “Contract law: Fulfilling the Expectations of Honest Men” [1997] LQR 433
“The commercial advantage of the English approach is that it promotes certainty and predictability in the resolution of contractual disputes”.
Lord Denning: The Atlantic Star [1973] CA
“You may call this “forum shopping” if you please, but if the forum is England, it is a good place to shop in, both for quality of goods and the speed of service”.
But see the rebuke that Lord Denning received for this comment by Lord Reid when the case was appealed to the House of Lords in 1974. Also, see: Spiliada Maritime Corp v Cansulex Ltd [1986] HL
• Freedom of Contract
• Certainty, Predictability, Quality, Speed of service and Freedom of Contract

Question 13

What are the key features of commercial law in 21st century

Answer 13

• Harmonisation
• Advancement in technology
• Dispute resolution
• Nationalism vs. Internationality:
• Continuing effects of Brexit and developments in Europe and the United States

Question 14

What are unincorporated business forms

Answer 14

sole trader/unincorperated association/partnership

Question 15

Summarise the PR of a sole trader

Answer 15

• Keep records of business’s sales and expenses
• Send Self-Assessment tax return annually
• Pay Income Tax on profits and Class 2 and Class 4 National Insurance
For the 2021 - 2022 tax year
• Class 2 if your profits are £6,515 or more a year (£3.05 a week)
• Class 4 if your profits are £9,569 or more a year (9% on profits between £9,569 and £50,2700. 2% on profits over £50,270)

Question 16

What does UA do

Answer 16

Shares characteristics with sole trader byt involves groups of 2+ people who have joined forces for a specifc reason but fall short of a formal business structure. Examples include societies or pressure groups.

Question 17

What does a partnership do

Answer 17

• 2+ persons together for profit. Bear wholly profits and loss. Legally binding partnership typically sets up amount of capital contributed by each partner and how profit and loss will be shared. Each bear consequence of others decisions. In joint and several libility, a third party is entiled to recover from one partner the entire debt owed by the partnership. Partnership Agreements assists with recovery. Each partner is self employed, taxed on their share, make annua;l self assessment returns and the partnership must complete and return its self assessment.

Question 18

What is a limited partnership and what do they do

Answer 18

Legislation found in Limited Partnerships Act as modified by the collective investment in transferable securities regulations. Similair to a general partnership except debt liability. Legally required to have a general partner and a limited partner. Gen Partner manages business and debt, and limited partner has no management resp and are protected from malpractice or negligence of the other. Liable only to debt amounting to original investement. NOT a sleeping/silent partner. Has to register with companies House. Doesn’t acquire a separate legal entity (eng and wales). Both partners file individual tax returns and pay NI vi HMRC self assessment, and nominates a partner to file the assessment tax return annually.

Question 19

What is a limited company

Answer 19

incorporated business form, distinct legal personality, run by board of directors, divided into equal parts called shares, ownership is described in shareholders

Question 20

What is limit by guarantee

Answer 20

Company is legally separate from the people who run it (Directors)
Company’s finances are separate from personal (shareholders and directors) finances
Company has guarantors and a ‘guaranteed amount’ – in the event of liquidation
Generally, profits are re-invested back into the company
Directors are responsible for maintaining the company’s public records – including annual accounts and an annual return about the company – and to file them at Companies House.
Also, they must notify Companies House before or as soon as reasonably possible of changes in the structure and management of the company

Question 21

What happens under the Companies Act 2006 with limited companies

Answer 21

limited companies must have two docs, a Memorandum (contains record of initial members, intent to form a company and agreement to become members, cant be amended)

Question 22

Article of Association- what is it?

Answer 22

Articles of association- contract between company and its members. Sets out legally binding rules for the company like ownership and decision making.

Question 23

What is private company by limited by guarantee

Answer 23

the ownership is rep by a guarantee up to a certain amount towards business of the company, and this is made by members who guarantee to pay a set sum in the event of liquidation. Mainly used for non profits, decisions reached by votes. Company must have min 1 human director. Provides knowledge etc if providing info, even if for profit. No shareholding.

Question 24

What does a limited company attract when it comes to regulatory compliance

Answer 24

A Limited Company attracts stricter regulatory compliance in the form of accountability and transparency. In return for this stricter compliance, a limited company has greater scope to operate and separate its liabilities.

Question 25

How do you close a private limited company

Answer 25

Private limited company is the nosiness form used by most large ones- starting from a business with one shareholder director to a large company. Formal process to close/struck off a company. Conditions are-
• The company must not have traded or sold off any stock in the last 3 months
• The company has not changed its name within the last 3 months of the attempt for it to be ‘struck off’
• The company is not threatened with liquidation
• The company has no agreements with creditors

Question 26

What is a Public Limited Company

Answer 26

a PLC is similar to a priv limited company `(LTD) with the differences being the former can offer shares to public. PLC must have min 2 directors, must have shares to the public to a value of at least 50k with min 25% paid up before trading.

Question 27

Does a PLC attract stricter regulation

Answer 27

Yes, more so than a private company

Question 28

What is a Limited Liability Partnership (LLP)

Answer 28

LLP acquires a separate legal person status, distinct from its partners. Members agreement- created at the time of a formation of the business which outlines partners responsibilities to which all members adhere to. Membership can be made from corporate and human persons. All partners have limited liability and each partner is liable up to the amount of money initially invested and persona guarantees given to raise finance. Each member usually entitled to profot share depending on members agreement. Each npn corp member must register as self employed by HMRC and both the LLP and indvid members must make annual self asses returns.

Question 29

What does an LLP agreement stipulate

Answer 29

profit distribution, leaving and joining LLP etc. Must be designated members that have indiv resp like appointing auditors and signing off/filing companies house accounts

Question 30

What is a community interest company (CIC)

Answer 30

CIC is a business form limited by shares or a guarantee. Purpose is for businesses referred to as social enterprises, and whose profits and assests are used to benefit the community. SE can operate like a limited company, for profit as long as it benefits the public as a social mission.

Question 31

What must CIC companies do

Answer 31

CIC companies must;
• submit a community interest statement that gives the CIC Regulator evidence that they will satisfy a community interest test defined in law. The company must continue to satisfy the test through out its life as a CIC and must report annually to the Regulator.
• have an “asset lock” to restrict transfer of business assets (including profits) to ensure that the resources are used mainly for the benefit of the community.
• be subject to caps on dividends and interest payable – so that on one hand, it can continue to encourage people to invest in CICs and on the other hand, maintain the principle that assets and profits of a CIC are reserved for the benefit of the community.

Question 32

What is a co operative

Answer 32

co operative defined by intl co operative allicance as an autonomous association of persons united voluntarily to meet their common economc, social and cultural needs through a jointly controlled enterprise.
A Co-op is a membership Organization run for the mutual benefit of its members – serving their interests primarily by trading with them or providing them with goods, services and facilities. Surpluses are usually reinvested into the Organisation – but it s also normal to share profits among members. It is governed by rules, which must reflect the co-operative values and principles set out by the International Co-operative Alliance. A Co-operative Society is incorporated – so has a separate legal person status. It must register and submit annual accounts to the Financial Services Authority (FSA). Due to its principle of open membership, it can raise funds by issuing shares to the public.

Question 33

What is a BenCom

Answer 33

Similar to a Co-operative Society except that it operates for the benefit of the community and non members, AND NOT the members of the society. Profits are returned to the community instead of sharing among shareholders or members. BenComs often apply an asset lock, to protect their assets for future benefit of the community. A BenCom can be established as a charity, if it has exclusively charitable objects for the public benefit. This allows it to raise capital through public grants and charitable trusts. Where a BenCOm is established as a Charity, they must have an asset lock – and are referred to as ‘exempt charity’. Thus, they are required to report only to the Financial Services Authority (FSA), not the Charity Commission.

Question 34

What is a royal charter

Answer 34

Org granted royal power or right by the monarch, not used much but think of BBC etc