Criminal, Common Law and Legislation

Criminal vs. Civil Law

• Criminal Law addresses offenses against society, such as murder or theft.
• "Beyond reasonable doubt" is the standard of proof in Criminal Law.
• Civil Law handles disputes between individuals or organizations like breach of contract or personal injury.
• "On the balance of probabilities" is the standard of proof in Civil Law.

Common Law and Equity

• Common Law is judge-made law based on previous cases (judicial precedent) where courts must follow higher court decisions on similar matters.
• Binding Precedent means decisions from higher courts must be followed.
• Persuasive Precedent is when lower courts may follow decisions from higher courts but aren't bound to.
• Equity is a system for fair outcomes, which allows for remedies like injunctions and specific performance, rather than just monetary compensation.
• Equity focuses on fairness and flexibility compared to common law.

Legislation (Law Making Process)

• Primary Legislation consists of laws directly made by Parliament via Acts of Parliament.
• Primary Legislation goes through several stages, including:
  • House of Commons stages: First reading, second reading, committee stage, report stage, final vote.
  • House of Lords stages: Same as the House of Commons.
  • Royal Assent is King approval of law to make it official.
• Secondary (Delegated) Legislation consists of laws made by other bodies under powers granted by Parliament.
  • Statutory Instruments (SI) are used for more detailed laws.
  • Bye-Laws are local laws made by local authorities.
  • Orders in Council are emergency laws made by the Privy Council.

Court Structures

• Civil Courts handle disputes like contracts, torts, and family matters.
• County Courts handle smaller civil cases.
• High Courts deal with complex or high-value cases (over £100,000) and appeals from lower courts.
• Supreme Court is the highest court, handling major appeals.
• Criminal Courts handle criminal offenses.
• Magistrates Court deals with minor criminal offenses and preliminary hearings for more serious crimes.
• Crown Court handles serious criminal cases (e.g., murder, robbery) with a judge and jury.
• Court of Appeal hears appeals from both civil and criminal cases.
• Supreme Court is the final court of appeal for both civil and criminal cases.

Key Legal Principles

• Judicial Precedent means that courts follow previous case decisions (especially higher courts) to ensure consistency in the law.
• Equitable Remedies are remedies provided by equity, like injunctions or specific performance, which aren't available under common law.

Money Laundering (POCA - Proceeds of Crime Act)

• Money laundering occurs when one attempts to make criminal property appear legitimate by disguising its source and ownership, which makes illegally obtained money look like it comes from legal activities.
• Laundering (Section 327 POCA): It is an offence to conceal, disguise, convert, transfer, or remove criminal property from the UK and criminal property is defined as any property the offender knows or suspects is obtained through criminal conduct.
• Failure to Report (Section 330 POCA): Relevant businesses (e.g., banks, lawyers, accountants) must report suspicions of money laundering to their Money Laundering Reporting Officer (MLRO) or the National Crime Agency (NCA).
• Tipping Off (Section 333 POCA): It is an offence to disclose to a suspect that a Suspicious Activity Report (SAR) has been filed, potentially prejudicing a money laundering investigation.
• There are three phases of Money Laundering:
  • Placement is when criminal money is introduced into the financial system, often through businesses like restaurants or shops.
  • Layering is the process of transferring money between different accounts or businesses to hide its original source, often using complex transactions.
  • Integration is the final phase, where the laundered money appears legitimate and can be used without suspicion, such as withdrawing the money as a salary.

Bribery (Bribery Act 2010)

• Bribery involves offering, giving, receiving, or soliciting something of value to influence the actions of an official or a person in power.
• There are four offences under the Bribery Act:
  • Bribing (Section 1) occurs when one offers or gives a bribe to induce or reward improper performance of a function.
• Being Bribed (Section 2) consists of requesting, accepting, or receiving a bribe in exchange for performing a function improperly.
• Bribing a Foreign Official (Section 6) involves offering a bribe to a foreign official to gain a business advantage.
• Failure to Prevent Bribery (Section 7) occurs when a company can be held liable if it fails to prevent bribery by employees or associated persons, unless it shows that it has adequate anti-bribery procedures in place.

Insider Dealing (Criminal Justice Act 1993)

• Insider dealing involves buying or selling securities based on non-public, price-sensitive information about a company or its securities.
• Categories of Insider Dealing:
• Dealing (Section 52) involves using inside information to buy or sell securities (e.g., stocks, shares).
• Encouraging Others (Section 52) means encouraging others to trade based on inside information.
• Disclosing Information (Section 57) is disclosing inside information to someone who might use it for insider trading.
• Inside Information is information that:
  • Relates to a specific company or security.
  • Has not been made public.
  • If disclosed, is likely to affect the price of the company's securities.
• Defences to Insider Dealing include:
  • No knowledge or expectation that the information would lead to profit.
  • Belief that the information was already public.
  • That the individual would have made the same trade without the insider information.
• Penalties for Insider Dealing:
  • Summary conviction can include up to 6 months imprisonment or a fine.
• Indictable offence can include up to 10 years imprisonment or an unlimited fine.

Share Capital

• Issuing Shares at a Discount vs. Issuing Shares at a Premium involves:
  • Issuing Shares at a Discount means selling shares for less than their nominal value, which is forbidden under section 580 of the Companies Act 2006, such as selling £1 shares for 40p each. If shares are issued at a discount, the shareholder must pay back the discount plus interest.
  • Issuing Shares at a Premium means selling shares for a higher price than their nominal value, which is permitted by law, where the premium amount is credited to the Share Premium Reserve, which is part of undistributable reserves.

Dividends (Private and Public Companies)

• Dividends can only be paid from distributable profits, not from capital or undistributable reserves.
• Distributable profits are accumulated, realised profits minus accumulated, realised losses.
• Public Companies can only pay dividends if net assets are greater than or equal to the value of called-up share capital and undistributable reserves (e.g., Share Premium Reserve, Revaluation Reserve).
• Consequences of Unlawful Dividend
• Consequences occur if dividends are paid unlawfully:
• The company must recover payments from shareholders (unless they had no reason to know it was unlawful).
• The company must recover payments from directors (unless they exercised reasonable care in reliance on audited accounts).
• The company must recover payments from auditors (if they provided incorrect financials on which the dividend was paid).
• Case Study: Abacus Ltd (Steven's Liability)
• Steven bought 10,000 shares in Abacus Ltd at £1 nominal value each, and was told to pay only 75p per share, with the remainder potentially due later.
• In 2014, Steven bought another 5,000 shares at 50p each, with no further payment required.
• Steven is liable for the remaining 25p per share on 10,000 shares, i.e., £2,500 for partly paid shares (February 2014 purchase).
• The discounted shares (June 2014 purchase) are illegal under s.580 CA06 since the shares were issued at a discount; Steven is liable to pay the £2,500 discount plus any interest on it.

Class Rights Variation (Longton Court Lodge)

• Class Rights Variation: A special resolution (75%) or class consent is required to vary class rights.
• Courts will only cancel the variation if it involves a change to the rights themselves (e.g., change in voting rights, dividends, etc.), not just a reduction in value.
• Greenhalgh v Aderne Cinemas Ltd represents that a variation of rights (e.g., splitting shares) that did not change the rights themselves was not invalid.

Loan Capital and Debentures

• A debenture acknowledges the company's debt to a creditor.
• Types of debentures consist of:
  • Single debentures that are a single document.
• Multiple debentures that are multiple documents to different creditors.
• Series debentures that are issued as part of a series.
• Types of Secured vs Unsecured Debentures include:
  • Secured debentures that have a charge against specific assets.
  • Unsecured (or "bare") debentures that have no charge and are a general creditor.
• Types of Redeemable vs Irredeemable Debentures:
• Redeemable debentures are repayable on a fixed date.
• Irredeemable debentures are perpetual and cannot be redeemed until dissolution.
• Advantages of Debentures over Equity include:
  • No dilution of control (no voting rights).
  • Lower cost than equity (interest payments are tax-deductible).
  • Debentures can be issued at a discount and there is no requirement for shareholder approval (unlike shares).
  • Debentures aren't subject to capital maintenance rules.
• Disadvantages of Debentures include:
  • Interest payments that are mandatory, even if there are no profits.
  • Risk of default (may lead to liquidation).
  • Restrictive covenants (e.g., secured loans often come with restrictions on the company). High debt impacts the company's stock price.
• Charges (Fixed and Floating)
  • Fixed Charge: Has security over specific assets (e.g., property or machinery). The company cannot sell the asset without the creditor's consent and it ranks higher in priority than floating charges in case of liquidation, which presents a lower risk for lenders, so often comes with a lower interest rate.
  • Floating Charge has its security over a class of assets (e.g., stock or receivables) where the company can sell or trade these assets freely until the charge crystallizes. Crystallization occurs when certain events (e.g., liquidation) turn the floating charge into a fixed charge over the assets which presents a higher risk for creditors, so higher interest rates are usually charged, and it ranks lower than fixed charges in liquidation priority.
• Order of Repayment in Liquidation:
  • Liquidator's Costs
• Fixed Charge Holders
• Preferential Creditors (Employees, HMRC for VAT/PAYE)
• Floating Charge Holders
• Unsecured Creditors (e.g., suppliers)
• Shareholders
• Registration of Charges consist of:
  • All charges must be registered with Companies House within 21 days of their creation. Failure to register means the charge is void in liquidation and loses its priority.
  • Northern Industries PLC states that Fixed Charges rank higher than floating charges, even if created later.
  • Negative Pledge Clauses prevent future charges from taking priority over a floating charge.
  • Unregistered charges have no priority over registered charges.

Director and Types of Directors

• "Director" definition (Companies Act 2006): The term includes any person occupying the position of director, regardless of the title, which is determined by their function rather than the title they hold.
• Legal consequences apply to someone who is deemed a director, so a definition is important. Types of Directors:
• De Jure Director: A person who is formally and legally appointed to the board due to the company's Articles of Association.
• De Facto Director: A person who functions as a director but has not been formally appointed that still carries out the role and duties.

Company Directors (Disqualification) Act 1986

• The Act aims to prevent individuals from being directors who are unfit for the role and stops people who have caused substantial mismanagement from starting new companies and repeating their mistakes.
• Grounds for Disqualification:
  • General Misconduct includes serious criminal offenses related to company management, persistent breaches of company law, and failure to keep proper records.
• Unfitness: Directors can be disqualified if an investigation by liquidators or the Department for Business & Trade shows they are unfit to manage a company.
• Fraudulent or Wrongful Trading occurs when directors involved in fraudulent activities or wrongful trading can be disqualified, as can undischarged bankrupts.
• Consequences of Breaching a Disqualification Order:
  • A director breaching a disqualification order faces criminal penalties, including fines or imprisonment. The company's veil of incorporation is lifted, meaning the director becomes personally liable for any debts incurred by the company during the breach.

Authority of Directors to Bind the Company in Contract

• Directors can only bind the company to contracts if they have the proper authority, which can be granted in one of three ways:
  • Express/Actual Authority: A director has explicit permission to act in a certain way. All decisions made within this authority are binding on the company.
  • Implied/Usual Authority: Authority comes with the title of a director, such as the Managing Director who typically has implied authority to bind the company in all commercial contracts, which depends on the specific situation and what can be reasonably expected from their role for other directors.
  • Apparent/Ostensible Authority: This arises when the company or other board members present a director as having authority, where the company may be estopped (prevented) from denying the authority existed as long as a third party enters into a contract relies on this representation.
• Exceeding Authority: If a director acts outside authority, the company is not automatically bound by the contract, which can be ratified by the board. A director who acts outside authority may be personally liable for the breach of contract if the third party suffers harm and they may also be liable under the tort of deceit for misrepresenting their authority and causing harm.

Fixed and Floating Charges

• Fixed Charges represent security over a specific asset (e.g., land or property), preventing the company from selling or dealing with the asset without the lender's approval. The advantages of fixed charges include:
  • Higher security for lenders
  • Lower interest rate
  • Priority over floating charges in liquidation
• Disadvantages include:
  • The company has less flexibility in dealing with the assets
  • The lender is at risk if the asset's value decreases or is destroyed.
• Floating Charges represent a form of security over a class of assets (e.g., inventory, receivables), allowing the company to deal with the assets in the ordinary course of business (buying and selling) with the Advantage of the company that has more flexibility in managing assets and can deal with them freely.
• Disadvantages include:
• The value of the security is uncertain until the charge "crystallizes" into a fixed charge
• Floating charges rank lower in priority than fixed charges in liquidation
• Floating charges that are Usually riskier for lenders, resulting in higher interest rates.

Debt vs. Equity (Loan Capital vs. Share Capital)

• Loan Capital (Debentures) is a form of debt and do not carry voting rights for creditors.
  • Creditors are entitled to interest payments, but the company does not give up control by issuing debentures with the advantage for Borrowing Company consisting of:
  • No dilution of control
  • No need for shareholder approval to issue debentures
  • Not subject to capital maintenance rules
• Disadvantages for Borrowing Company include:
  • Interest payments that must be made regardless of profits
  • Failure to repay interest can lead to liquidation
  • High levels of debt can affect the company's share price
• Share Capital:
  • Shareholders receive voting rights and may influence the company's management, however, they only receive dividends if the company has profits.
• Advantages:
• No obligation to pay dividends if profits aren't available Shareholders influence management decisions
• Disadvantages:
• Shareholders rank lowest in liquidation -Shareholders may not receive payments in the event of company failure.

Priority of Charges in Liquidation

• Fixed charges take priority over floating charges in liquidation.
• Floating charges can become fixed charges if they "crystallize" (turn into fixed charges due to specific conditions).
• The priority of charges is based on the registration and creation dates. Unregistered charges rank lower and are placed last in the order of priority in liquidation.
• Key Concepts of Insolvency:
  • Insolvency Tests:
• Cash Flow Test asks if the company can pay its debts when due.
• Balance Sheet Test asks if are liabilities greater than assets. A company that fails either of these tests is considered insolvent. - Conditions of Financial Distress: Inability to pay debts or liabilities exceeding assets signals financial distress.

Types of Insolvency Procedures

• Members Voluntary Winding Up (MVL) is for solvent companies that want to wind up (e.g., no future purpose, tax reasons, directors retiring) where the process involves passing a special resolution, declaring solvency, and appointing a liquidator.
• Creditors Voluntary Liquidation (CVL) is for insolvent companies where liquidation is necessary to distribute assets to creditors.
• Compulsory Liquidation: A court-ordered liquidation typically initiated by creditors.
• Administration aims at rescuing the company as a going concern, where the administrator takes over company management to maximize creditor returns or restructure.
• Corporate Voluntary Arrangement (CVA) is a method to rescue a company in distress by negotiating a payment arrangement with creditors. The company continues to operate under this agreement. Directors' Duties in Insolvency: -Directors must avoid taking further credit when the company is insolvent. They must ensure that no preferential payments are made to creditors while assets must be safeguarded for creditors.
• Failure to comply with these duties can lead to personal liability for company debts.
• Freshco represents being insolvent due to declining sales and losses as well as being unable to pay wages.
  • Potential options consist of:
  • Administration where one can attempt to save the company as a going concern.
  • Creditors Voluntary Liquidation where if recovery is impossible, this procedure will wind down the business.
• Creditors' Payment Priority in Liquidation:
  • Liquidators' costs
  • Fixed charge holders (e.g., secured creditors)
• Preferential creditors (e.g., employees, HMRC for VAT)
  • Floating charge holders (e.g., creditors with security over fluctuating assets)
  • Unsecured creditors (e.g., suppliers)
  • Shareholders
• Key Points for Directors in Insolvency:
• Directors must be cautious about paying bills and taking credit during financial distress.
• Wrongful trading, including favoring one creditor over others, can lead to personal liability.
• CVA allows a company to continue operating while paying back creditors under a new arrangement, usually involving a reduction in debt.
• Pre-pack Administration involves selling assets to external buyers or directors in advance of formal proceedings to preserve business value and jobs.

Elements of a Negligence Claim

• To bring a successful negligence claim, the claimant must prove all three elements:
  • Duty of Care, where the defendant owed a legal duty to act with reasonable care. Breach of Duty, where the defendant failed to meet that standard.
  • Causation & Loss, as in the claimant suffered harm directly due to the defendant's breach.

Duty of Care

• Duty of Care represents a legal obligation to avoid acts or omissions that could foreseeably harm others, based on the Neighbour Principle (Donoghue v Stevenson). A person owes a duty to those who are closely and directly affected by their actions. Only foreseeable victims can claim as the law limits who can sue to prevent endless liability. Mrs Donoghue found a snail in a bottle of ginger beer and became ill in Donoghue v Stevenson (1932), with decision that the manufacturer owed her a duty of care, even though there was no contract.
• A pregnant woman heard a crash, saw the aftermath, and miscarried in Bourhill v Young (1943) and was not considered a foreseeable victim, so no duty was owed.

Breach of Duty

• Breach of Duty is defined as when the defendant failed to meet the required standard of care based on the Objective Test, where one asks what a reasonable person would have done. There is no excuse for inexperience, and everyone is judged by the same standard.
• Nettleship v Weston (1971) consisted of a learner driver who caused an accident who was held to the same standard as a qualified driver. There is a higher standard that applies where vulnerable people are at risk (e.g. children, disabled) and when the defendant has special skills or qualifications (e.g. doctor, architect).
• Hayley v London Electricity Board (1965) determined that a blind man falling into an unguarded hole resulted in the company charged to have considered vulnerable pedestrians where the breach occurred.

Causation

• Causation requires that the claimant must show that the breach caused the harm. This is the "but for" test, requiring one to ask, "Would the injury have occurred but for the defendant's actions?"
• Barnett v Chelsea & Kensington Hospital (1969) presented the situation where a man poisoned by arsenic sent home untreated was found to have died anyway, so the hospital was not liable as there was no causation.
• Remoteness of Damage requires that the type of damage must be reasonably foreseeable at the time of the act.
• The Wagon Mound (1961) presented the situation where an oil spill caused a fire, which was determined not to be foreseeable from an oil spill, so the defendant held no liability for that type of damage.
• The Egg Shell Skull Rule means to take your victim as you find them where if the type of injury is foreseeable, the defendant is liable even if the extent is unusual.

Defences to Negligence

• Contributory Negligence means that if the claimant partly caused their injury, damages are reduced.
• Sayers v Harlow DC (1958) resulted in a woman injured climbing out of a locked toilet receiving a 25% reduction in damages.
• Volenti Non Fit Injuria means "To a willing person, no harm is done", as in, if the claimant knowingly accepts a risk, they cannot claim damages. ICI v Shatwell (1964) determined that two brothers testing explosives without safety procedures means they accepted the risk, so the company had no liability.
• Exclusion Clauses
• If a valid contract clause limits liability, it may be used as a defence but it must be reasonable under the Unfair Contract Terms Act 1977 and cannot exclude liability for death or personal injury.
• Hedley Byrne v Heller & Partners resulted when a Bank avoided liability due to a “without responsibility” disclaimer.

Professional Negligence

• Professional Negligence applies to professionals giving advice or services that others rely on and an Additional Requirement occurs when to recover pure economic loss, the claimant must prove a special relationship.
• Special Relationship” Test (Hedley Byrne Principle) determines that a duty of care arises when:
• Advice is given by a professional
• Given to a known person or business
• For a known purpose
• The advisor knows it will be relied on. Hedley Byrne v Heller (1964) led to the Claim failed due to a disclaimer, despite the court creating the principle when a Bank gave a bad credit reference. Caparo v Dickman (1990) led to the decision that auditors were not liable to investors because there was no special relationship, as auditors didn't know Caparo would rely on accounts as it's not fair or reasonable to owe a duty to the public at large.
• Bannerman v RBS (2003) led to the decision that auditors were liable to a bank that lent money based on audited accounts, because Bannerman knew RBS would rely on their audit where the disclaimer was not used and all elements of the special relationship were present.
• To prove negligence (professional or general), one must always show: Duty of care
• Breach of duty
• Loss caused by breach For pure economic loss, a special relationship is necessary.

Contract

• Contract criteria include:
  • Offer is a clear statement of willingness to be bound on specific terms. -Acceptance is an unqualified acceptance of all terms of the offer.
  • Consideration is a benefit exchanged between the parties.
  • Intention to Create Legal Relations means the intention to be legally bound by the contract. -Capacity and Legality demands that parties must have the legal capacity to contract and the contract must be legal. - Termination of Offers: Can be terminated by:
  • Revocation in which the offeror withdraws the offer, communicated to the offeree.
  • Rejection of the offeree the offer, or a counteroffer is made.
  • Death or Lapse of Time where the offer expires due to a fixed time limit or the death of the offeror.

Key Case Examples:

• Harvey v Facey: A mere statement of a price is not an offer. Hyde v Wrench: A counteroffer rejects the original offer. - Acceptance: It can be oral, written, or by conduct. It is not valid until communicated to the offeror. - Scenario 1: Hillary and Eleanor
• No Contract with Eleanor: Hillary's advertisement is an invitation to treat (Partridge v Crittenden) as Eleanor's offer was rejected by Hillary's counteroffer of £13,000, and Hillary's later attempt to accept Eleanor's £10,000 offer is a new offer.
• Contract with Amy: Amy's acceptance of Hillary's offer is valid under the postal rule, creating a binding contract where Amy later tries to withdraw which constitutes a breach of contract.
• Scenario 2: Alice, Brian, Charlie, and Diane -Facts: Alice advertises a vase for sale as Brian agrees to buy it for £500, but it's considered an offer, not acceptance. Then, Charlie makes a counteroffer, but eventually agrees to Alice's £450 price. Additionally, Diane agrees to pay £400 and takes the vase.
  • No contract with Brian occurs (his offer was never accepted).
  • No contract is formed with Charlie (his counteroffer invalidates the original offer).
  • A contract is formed with Diane when Alice accepts her offer of £400.
• Consideration is the value exchanged in a contract where it can be:
• Executed when completed at the time of agreement.
• Executory when to be completed in the future.
• Past Consideration is not valid (Re McArdle), however, if the act was performed with an expectation of payment, it might be valid.

Valid Consideration

• Valid Consideration must be sufficient, but not necessarily adequate, and the value doesn't need to be equal, just recognizable.
• The Chappell v Nestle case shows that Even insignificant value can be sufficient consideration. There are cases where existing legal duties are not valid consideration unless exceeded (Hartley v Ponsonby), such as Collins v Godefroy.
• Performing an existing duty with extra benefits can be valid consideration, as in Williams v Roffey Bros.

Legal Relations Criteria

• Commercial Agreements are Presumed to be legally binding.
• Social/Domestic Agreements are Presumed not to be legally binding unless evidence proves otherwise (Balfour v Balfour, Merritt v Merritt).
• Adrian promises to pay Charles an additional £2,000 for early completion of work in Charles and Adrian's Contract. Under normal circumstances (Stilk v Myrick), no extra payment is due unless Charles exceeded his original duties, which he did not. The extra payment was not supported by valid consideration, which led to Charles not being entitled to the additional £2,000.

Contract Terms vs. Representations

• Contract Terms are legally binding and form part of the contract (express or implied terms). Representations are statements made outside the contract that are not legally binding (can lead to misrepresentation if false).
• Types of Misrepresentation that can occur: Fraudulent when made knowingly false or recklessly.
• Negligent when made without a reasonable basis.
• Innocent when made with reasonable belief in truth. Types of Contract Terms:
• Conditions represent essential terms that go to the root of the contract with breach allowing for contract repudiation.
• Warranties represent lesser terms not crucial to the contract's core with breach allowing for damages but not repudiation.
• Innominate Terms represent terms whose effect depends on the severity of the breach.

Exclusion Clauses (Limiting Liability in Contracts)

• An exclusion clause is a term in a contract that tries to remove or limit one party's liability if something goes wrong with its inclusion in the contract which can occur through: Signature when the clause must be part of the contract.
• L'Estrange v Graucob case states that once you sign a contract, you're bound by all terms in it, even if you haven't read them. Key idea: Signature leads to Acceptance.
• Reasonable Notice demands that terms must be communicated before or at the time of making the contract as you can't add extra terms after the contract is formed (e.g., after inserting a parking ticket), as stated in Thornton v Shoe Lane Parking.
• Previous Dealings- If two parties have consistently dealt on the same terms before, a clause can be included automatically even if it wasn't explicitly mentioned this time.
• The Clause Must Cover the Type of Loss, where the wording must clearly apply to the specific kind of damage or loss being excluded. For instance, a clause saying “no liability for personal injury” won't cover property damage unless it's clearly written.
• The Conventional Status of the Clause The clause must not contradict the main purpose of the contract and must be considered a natural part of a commercial agreement, not something unusual or unfair.
• Interfoto v Stiletto held that if a term is extremely harsh or unusual, the party relying on it must clearly bring it to the other party's attention, otherwise, it may not be enforceable. Penalty Clauses are contrasted from Liquidated Damages:
• Liquidated Damages are a genuine pre-estimate of what the loss will be if the contract is breached.
• Liquidated damages are a fixed or pre-agreed amount of money written into a contract, to be paid if one party breaches the contract with the court allowing these because they help avoid disputes over damages. Penalty Clauses are clauses that punish the breaching party rather than compensating for real loss, which are Usually unenforceable if the amount is excessive compared to the actual loss. Damages are about compensation, not punishment. Liability Exemption
• Even with an exclusion clause, liability can't always be removed.
• The corporation must take responsibility for the liability exempted.
• If the clause contradicts core duties, is not clear, or violates public policy, it won't be enforceable.
• It must follow the conventional status of a fair contract.

Employment Law

• Employees are entitled to:
  • Maternity / Paternity Leave
  • Sick Leave
  • Remuneration (Pay)
  • Safe Working System -To be treated fairly and lawfully
  • To be given reasonable instructions
• Mutual cooperation from the employer
• Employees must:
  • Follow lawful and reasonable orders from the employer
  • Stick to working hours
  • Exercise skill and care Work cooperatively with others
• There's a distinction between employee vs self-employed with the employee being the Aspect and Supervisions occurs under employer's control, where the Working Hours are fixed hours set by employer, and the Legal Status Covered by employment law as well as them being automatically Entitled to leave/pay rights. Representation is of the company. Self-employed Aspects involves working independently where own hours are decided and they are not covered by employment laws with no automatic benefits or rights, and the represent themselves or their own business.
• Case Studies that can inform one's actions and reasoning:
• L'Estrange v Graucob – Signature binds, even if unread.
• Thornton v Shoe Lane Parking – Must give notice of terms before the contract is formed. Interfoto v Stiletto – Harsh terms must be clearly shown, or they won't be enforced.

Wrongful Dismissal

• Wrongful Dismissal indicates that an employer terminates the employment contract without giving required notice, or breaches contract terms. Remedies include Compensation (wages & benefits the employee would have earned during the notice period) through Contract Law with no need for 2 years' service. An Example includes :Employee fired on the spot with no disciplinary process or notice.

Unfair Dismissal

• Unfair Dismissal occurs based on definition as dismissal without a fair reason or without following a fair process, with eligibility based on: Must be an employee
  • Two years' continuous service (unless automatically unfair)
  • Must file a claim within 3 months of dismissal
  • Must attempt to resolve the issue internally (grievance procedure) under the Employment Rights Act (ERA) 1996. Fair Reasons for Dismissal (s.98 ERA 1996) consist of:
  • Capability or qualifications (poor performance, failing training/tests).
• Conduct – misbehaviour, theft, repeated lateness. Redundancy where the job is no longer needed. Statutory restriction where a driver loses license, or Some other interest, such as business restructuring or conflicts of interest.
• Employers must act reasonably, where Reasonableness is judgeed by asking If the reason was serious enough or if the employer follow a fair procedure (ACAS Code) There are Several steps that are required: Investigation, Warnings, Hearings, that provides the Right to appeal

Automatically Unfair Dismissal

• Automatically Unfair Dismissal indicates that some reasons for dismissal are so serioys they always be consdiered unfair, those include:

• Health & Safety complaints / Whistleblowing

• Pregnancy and family leave

• Trade union involvement

• Asserting statutory rights (e.g. pay, sick leave)

• Unfair redundancy selection (e.g. based on age, gender) No minimum service is needed and it leads to higher compensation Remedies for Unfair Dismissal: Reinstatement to same job or Re-engagement with a Different but suitable role Compensation including: Basic Award (like redundancy pay) Compensatory Award (loss of income, emotional distress), and Additional Award (for automatic unfair dismissal or failure to comply)

• Regarding Constructive Dismissal An employee resignation is due to employer's serious breach of contract (e.g. unsafe work, abuse, forced demotion) where the legal basis will be ERA 1996, s.95(1)(c): The contract ends because the employee feels they have no choice but to resign.

• There are several tests to confirm this: Employee Resigned Promptly with the the Resignation Directly Linked to the Breach

• Western Excavating v Sharp (1978) specifies that there must be a serious breach of contract. Isle of Wight Tourist Board v Coombes (1976) specifies that verbal abuse constitutes a breach of mutual respect. Donovan v Invicta Airways Indicates that Forced unsafe flying constitutes a breach. Keegan v Newcastle United explains that Clubs Undermined manager leads to breach while Simmonds and Dowty Seals notes that Work schedules without consent leads to a Breach.

Redundancy

• In Redundancy, An employee is dismissed due to closure of a business or closure of place of work or Reduction in work force
• A requirement for fairness includes Must consult with employees properly (especially if 20+ redundancies) and Follow fair selection criteria (not discriminatory) when one is able to claim Redundancy Pay and has 2+ years of service. This typically follows the standard as 18-21 years gets a 1/2 week's pay per a year, 22-40 gets 1 week's pay per a year, and 41+ Years getting 1.2 Week's pay and capped weekly pay usually at £700 No Redundancy is paid if an employee unreasonably Refuses a Suitable Alternative, if they have < 2 Years of Service or if they are Dismissed for Misconduct
• Taylor v Kent CC (1969) decided Loss of status and worse conditions are deemed to be a valid Refusal of Job which is in turn is deemed to warrant redundancy pay where Vaux v Ward (1968) explains that a Change in Client base did not justify Redundancy with the 4th law stating Acas Code of Practice Applies to dismissals.

Data Criteria

• Investigation into misconduct/performance demands there to be a Notification Of A Disciplanary Meeting with an Opportunity to explaing/defend and therefore the Right to be Accompanied with an Appeal Process.
• There are Multipl Choice Highlights on Data inlcuding: That one must apply to Employees that Requires 2+ Service, claims need to be filed within 3 months, Employment is to act reasonable and Contractive Dimmisial are to be triggered by Employer Conduct!

Data refers to information that businesses collect through various operations of which would be:

• Customer Data like personal details and purchase history
• Employee Data like payrol and performnace reviews
• Supplier Data like contact details and contractual terms -Production Data like inten