ATSWA Accounting Technicians Scheme West Africa Business Law PDF

ATSWA ACCOUNTING TECHNICIANS SCHEME WEST AFRICA STUDY TEXT PART I BUSINESS LAW PUBLICATION OF ASSOCIATION OF ACCOUNTANCY BODIES IN WEST AFRICA (ABWA)  ASSOCI...

ATSWA ACCOUNTING TECHNICIANS SCHEME WEST AFRICA STUDY TEXT PART I BUSINESS LAW PUBLICATION OF ASSOCIATION OF ACCOUNTANCY BODIES IN WEST AFRICA (ABWA)  ASSOCIATION OF ACCOUNTANCY BODIES IN WEST AFRICA (ABWA) ACCOUNTING TECHNICIANS SCHEME WEST AFRICA (ATSWA) STUDY TEXT FOR BUSINESS LAW FOURTH EDITION Copyright (c) 2022 by Association of Accountancy Bodies in West Africa (ABWA). All rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of the copyright owner. Including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Published by ABWA PUBLISHERS DISCLAIMER This book is published by ABWA; however, the views are entirely those of the writers. BUSINESS LAW i  PREFACE INTRODUCTION The Council of the Association of Accountancy Bodies in West Africa (ABWA) recognised the difficulty of students when preparing for the Accounting Technicians Scheme West Africa examinations. One of the major difficulties has been the non-availability of study materials purposely written for the scheme. Consequently, students relied on text books written in economic and socio- cultural environments quite different from the West African environment. AIM OF THE STUDY TEXT In view of the above, the quest for good study materials for the subjects of the examinations and the commitment of the ABWA Council to bridge the gap in technical accounting training in West Africa, led to the production of this Study Text. The Study Text assumes a minimum prior knowledge and every chapter reappraises basic methods and ideas in line with the syllabus. READERSHIP The Study Text is primarily intended to provide comprehensive study materials for students preparing to write the ATSWA examinations. Other beneficiaries of the Study Text include candidates of other Professional Institutes, students of Universities and Polytechnics pursuing undergraduate and post graduate studies in Accounting, advanced degrees in Accounting as well as Professional Accountants who may use the Study Text as reference material. APPROACH The Study Text has been designed for independent study by students and as such concepts have been developed methodically or as a text to be used in conjunction with tuition at schools and colleges. The Study Text can be effectively used as a course text and for revision. It is recommended that readers have their own copies. BUSINESS LAW ii  FOREWORD The ABWA Council, in order to actualize its desire and ensure the success of students at the examinations of the Accounting Technicians Scheme West Africa (ATSWA), put in place a Harmonisation Committee, to among other things, facilitate the production of Study Texts for students. Hitherto, the major obstacle faced by students was the dearth of Study Texts which they needed to prepare for the examinations. The Committee took up the challenge and commenced the task in earnest. To start off the process, the existing syllabus in use by some member Institutes were harmonized and reviewed. Renowned professionals in private and public sectors, the academia, as well as eminent scholars who had previously written books on the relevant subjects and distinguished themselves in the profession, were commissioned to produce Study Texts for the twelve subjects of the examination. A minimum of two Writers and a Reviewer were tasked with the preparation of Study Text for each subject. Their output was subjected to a comprehensive review by experienced imprimaturs. The Study Texts cover the following subjects: PART I 1 Basic Accounting 2 Economics 3 Business Law 4 Communication Skills PART II 1 Financial Accounting 2 Public Sector Accounting 3 Quantitative Analysis 4 Information Technology PART III 1 Principles of Auditing & Assurance 2 Cost Accounting 3 Taxation 4 Management BUSINESS LAW iii Although, these Study Texts have been specially designed to assist candidates preparing for the technicians examinations of ABWA, they should be used in conjunction with other materials listed in the bibliography and recommended text. PRESIDENT, ABWA STRUCTURE OF THE STUDY TEXT The layout of the chapters has been standardized so as to present information in a simple form that is easy to assimilate. The Study Text is organised into chapters. Each chapter deals with a particular area of the subject, starting with a summary of sections and learning objectives contained therein. The introduction also gives specific guidance to the reader based on the contents of the current syllabus and the current trends in examinations. The main body of the chapter is subdivided into sections to make for easy and coherent reading. However, in some chapters, the emphasis is on the principles or applications while others emphasise method and procedures. At the end of each chapter is found the following: Summary; Points to note (these are used for purposes of emphasis or clarification); Examination type questions; and Suggested answers. HOW TO USE THE STUDY TEXT Students are advised to read the Study Text, attempt the questions before checking the suggested answers. BUSINESS LAW iv  ACKNOWLEDGMENTS The ATSWA Harmonisation and Implementation Committee, on the occasion of the publication of the first edition of the ATSWA Study Texts acknowledges the contributions of the following groups of people. The ABWA Council, for their inspiration, which gave birth to the whole idea of having a West African Technicians Programme. Their support and encouragement as well as financial support cannot be overemphasized. We are eternally grateful. To The Councils of the Institute of Chartered Accountants of Nigeria (ICAN), and the Institute of Chartered Accountants, Ghana (ICAG), Institute of Chartered Accountants Sierra Leone (ICASL), Gambia Institute of Chartered Accountants (GICA) and the Liberia Institute of Certified Public Accountants (LICPA) for their financial commitment and the release of staff at various points to work on the programme and for hosting the several meetings of the Committee, we say kudos. We are grateful to the following copyright holders for permission to use their intellectual properties: ▪ The Institute of Chartered Accountants of Nigeria (ICAN) for the use of the Institute’s examination materials; ▪ International Federation of Accountants (IFAC) for the use of her various publications; ▪ International Accounting Standards Board (IASB) for the use of International Accounting Standards and International Financial Reporting Standards; ▪ Owners of Trademarks and Trade names referred to or mentioned in this Study Text. We have made every effort to obtain permission for use of intellectual materials in this Study Texts from the appropriate sources. We wish to acknowledge the immense contributions of the writers and reviewers of this manual. Our sincere appreciation also goes to various imprimaturs and workshop facilitators. Without their input, we would not have had these Study Texts. We salute them. Chairman ATSWA Harmonization & Implementation Committee BUSINESS LAW v A new syllabus for the ATSWA Examinations has been approved by ABWA Council and the various PAOs. Following the approval of the new syllabus, which becomes effective from the September 2022 diet a team was constitutes to undertake a comprehensive review of the Study Texts in line with the syllabus under the supervision of an editorial board. The Reviewers and Editorial board members are: REVIEWER AND WRITERS This Study text was written and reviewed by: - Professor O.O. Oladele (Writer/Reviewer) Bowen University, Iwo - Dr. Leigh Oluwaseyi Augustine (Writer) Olabisi Onabanjo University, Ago Iwoye EDITORIAL BOARD The Editorial Board Members are: - Chief Mrs. Hilda Ozoh, FCA Chairman, ATSWA Examinations Committee - Prof. Ahmed Kumshe, FCA ICAN, Registrar/Chief Executive - Dr. Ijeoma Anaso, FCA ICAN, Deputy Registrar, Technical Services - Mr. Ikhiegbia Braimoh Momoh, FCA ICAN, Director, Examinations - Mr. Akeem Ishola Adeniyi Principal Manager & HOD, ATSWA Examinations Department BUSINESS LAW vi  TABLE OF CONTENTS TITLE PAGE.................................................................................................................. COPYRIGHT AND DISCLAIMERS............................................................................ ii PREFACE....................................................................................................................... iii FORWARD.................................................................................................................... iv STRUCTURE OF THE STUDYPACK........................................................................ v ACKNOWLEDGEMENT............................................................................................ vi TABLE OF CONTENTS............................................................................................. vii SYLLABUS AND EXAMINATION QUESTIONS OUTLINE...................... xiv CHAPTER ONE Sources of law 1.0 Learning Objectives……………………………………................... 1 1.1 Introduction……………………………………….......…................ 1 1.2.1 Meaning of law………………………………………..................... 1 1.3 Sources of law................................................................................... 2 1.3.1 Constitution....................................................................................... 3 1.3.2 The Common Law …………………………………….................. 5 1.3.2.1 Meaning of Common Law……………………………................... 5 1.3.2.2 Doctrines of Equity........................................................................... 6 1.3.3 Statutes of General Application....................................................... 7 1.3.4 Judicial precedents......................................……............................... 7 1.3.5 Legislation...............................................……….............................. 8 1.3.6 Customary law…………………………………….......................... 8 1.3.6.1 The meaning and development of customary law…........................ 8 1.3.6.2 The characteristics of customary law………………....................... 8 1.3.6.3 Establishing customary law…………………………...................... 9 1.3.7 Treaties.......................…………………………………................... 9 1.4 Summary……………….…………………………......................... 9 1.5 Revision Questions……………………………………........................ 9 BUSINESS LAW vii CHAPTER TWO The Courts system 2.0 Learning objectives………………………………........................................................ 16 2.1 Role of Courts in the administration of justice.......................................... 16 2.2 Classification into Superior and Inferior Courts........................................ 17 2.3 Hierarchy of Courts.……………………………........…............................................... 18 2.3.1 Superior Courts.................................................….......................................... 18 2.3.2 Inferior Court................................................................................................ 22 2.3.3 Special Courts.............................................................................................. 22 2.4 Distinction between criminal and civil liability........................................... 24 2.5 Professional ethics………………………………............................................................. 25 2.5.1 Meaning of Tort………………………………….............................................................. 25 2.5.2 Vicarious Liability…………………………………..................................................... 25 2.5.3 Liability for Negligent Mis-statements………………..................................... 26 2.6 Summary...........................……………………………............................................. 27 2.7 Revision Questions…………………………………......................................................... 27 CHAPTER THREE Law of contract I 3.0 Learning objectives…………………………………...................................................32 3.1 Introduction……………………………………………...................................................32 3.2 Definition and elements of contract…………………...................................... 34 3.2.1 Definition of Contract……………………………...................................................... 34 3.2.2 The essential elements of contract………………………................................... 34 3.3 Offer and acceptance……………………………………............................................ 34 3.3.1 Offer………………………………………………………................................................34 3.3.2 Invitation to treat………………………………………................................................35 3.3.3 Acceptance……………………………………………...................................................36 3.4 Consideration……………………………………………...............................................37 3.4.1 Definition…………………………………………………..............................................37 3.4.2 Types of consideration……………………………………........................................ 38 3.4.3 General rules………………………………………………............................................39 3.4.4 Modifications……………………………………………...............................................40 3.5 Intention to create legal relations……………………........................................ 40 BUSINESS LAW viii 3.5.1 Domestic and social agreements…………………………....................................41 3.5.2 Commercial agreements…………………………………...................................... 42 3.6 Capacity to enter into contract………………………..........................................43 3.7 Pivity of contract......………………………………................................................46 3.8 Summary ……………………………………..........................................................47 FOUR Law of contract II 4.0 Learning objectives…………………………..........………........................................... 48 4.1 Introduction.....................…………………........................................................... 48 4.1.1 Conditions and warranties…………………………….............................................. 48 4.2 Exemption and limiting terms........…………................................................... 50 4.3 Illegal contracts................................................................................................. 51 4.3.1 Consequences of Illegality…………………........................................................ 53 4.3.2 Void contracts……………………………………….......................................................54 4.3.3 Consequences of void contract ………………………........................................... 57 4.4 Vitiating elements of a contract……………………………...................................... 57 4.4.1 Mistake……………………………………………………..................................................... 58 4.4.2 Misrepresentation...................……………………................................................ 61 14.4.3 Duress............................................................................................................ 62 4.4.4 Undue Influence........................................................................................... 63 4.5 Termination or discharge of contract....................................................... 63 4.6 Summary ……………………………...................................................................... 68 4.7 Revision questions ………………………………………............................................69 CHAPTER FIVE Agency 5.1 Introduction……………………………………........……...........................................72 5.2 Definition, creation and types……………………........................................... 72 5.2.1 Definition of agency…………………………………............................................. 72 5.3 Creation of agency... ………………………......................................................... 74 Express agency……………………………………….............................................. 74 BUSINESS LAW ix  Implied agency…………………………………....................................................74 5.4 General agents and special agents……………........................................ 77 5.5 Authority of agents………………………………….............................................. 78 5.5.1 Actual of express authority………………………........................................... 78 5.5.2 Implied authority......……………................................................................. 78 5.5.3 Apparent authority................................................................................ 78 5.5.4 Ostensible authority................................................................................ 5.5.5 Usual authority....................................................................................... 78 5.6 Rights and obligations of principal and agent……………....................... 79 5.6.1 Rights of an agent.................................................................................. 79 5.6.2 Duties of an agent………………………………..................................................79 5.6.3 Duties of the principal........................................................................... 80 5.7 Termination of agency……………………………………....................................... 80 5.8 Summary……………………………….............................................................. 81 5.9 Revision questions……………………………………….......................................... 81 CHAPTER SIX Sales of goods 6.0 Learning objectives............…………………….................................................. 85 6.1 Introduction.............................................................................................. 85 6.2 Classification of goods……………………………………..................................... 87 6.3 Sale of goods distinguished from other forms of contract............... 87 6.4 Form of the contract.....…………………………...................................................... 88 6.5 Implied terms of contract of sale of goods…………................................ 88 6.6 The caveat emptor doctrine......………………............................................. 90 6.7 Transfer of property between seller and buyer..................................... 91 6.8 Passing of Risk……………………………………….............................................. 94 6.8.1 Tranefer of title by a non-owner……………………….................................... 96 6.8.2 The Exceptions………………………................................................................. 97 6.9 Breach of contract and the remedies of the parties.......................... 101 6.9.1 Buyers' rights…………………………………………........................................... 101 6.9.2 Sellers' rights………………………………………............................................... 102 6.10 Summary …………………………….............................................................. 103 6.11 Revision questions………………………………………......................................... 104 CHAPTER SEVEN BUSINESS LAW x Hire purchase and equipment leasing 7.0 Learning objectives............................................................................ 108 7.1 Introduction……………………………………….................................................108 7.2 Definition of hire purchase………………………….................................... 108 7.3 Distinction between hire purchase and similar transactions....... 110 7.4 Parties to hire purchase agreement……………………........................... 111 7.5 Duties of parties to hire purchase contract……………....................... 111 7.5.1 Duties of Owner................................................……............................ 111 7.5.2 Rights of the owner................……………………….................................... 111 7.5.3 Duties of the hirer.............………………………………................................. 112 7.5.4 Rights of the hirer…………………………………............................................ 112 7.6 Termination of hire purchase agreement…………............................ 112 7.7 Operating and finance leasing………….............................................. 113 7.7.1 Operating lease……………………………………….......................................... 113 7.7.2 Finance lease..................................................................................... 113 7.7.3 Features of operating lease....................……………............................ 114 7.7.4 Finance Leasing...............................………………................................. 114 7.7.5 Features of finance leasing ……………………...................................... 115 7.8 Summary ………………………................................................................... 115 7.9 Revision questions………………...……............…………............................. 116 CHAPTER EIGHT Contract of employment 8.0 Learning objectives……………………………....………............................ 121 8.1 Introduction…………………………………………....…......... 8.2 The nature and formation of the contract of employment.... 121 8.2.1 Nature of contract of employment.......................................... 123 8.2.2 Formation of contract of employment……………........................ 123 8.3 The rights of the employer and the worker……........124 8.3.1 The rights of the employer…………………………………....................... 124 8.3.2 The rights of the worker……………………………………........................ 124 8.4 Duties of the employer and the worker…............. 124 8.4.1 Duties of the employer……………………………………...........................124 8.4.2 Duties of the employee………………………………................................126 BUSINESS LAW xi  8.5 Termination of cntract of employment…….................126 8.6 Remedies ………………………………………………...................................... 127 8.7 Redundancy................................................................................. 127 8.9 Summary………………........…............................................................ 128 8.10 Revision questions ……………………………………................................ 128 CHAPTER NINE Law of insurance 9.0 Learning objectives……………………………………........................................ 132 9.1 Introduction……………………………………………….......................................132 9.2 Meaning and classification of insurance....................................... 133 9.2.1 Meaning of insurance...............……………………….................................. 134 9.2.2 Classification of insurance………………………........................................ 134 9.3 Share capital of insurer………………………………...................................... 134 9.4 Meaning and features of concepts and principles of insurance. 135 9.4.1 Insurable Interest…………………………………………....................................135 9.4.2 Premium...........................………………………………................................... 136 9.4.3 Indemnity…………………………………………………......................................136 9.4.4 Utmost good faith…………………………................................................... 137 9.4.5 Materiality of information............................................................... 137 9.4.6 Conditions and warranties…………………………………............................ 138 9.4.7 Subrogation…………………………………………………................................... 138 9.4.8 Contribution....................................................................................... 139 9.5 Summary……………………………….............................................................. 139 9.6 Revision questions ……………………………………….....................................139 CHAPTER 10 Law of business associations - Partnership 10.0 Learning Objectives……………………………………..................................... 143 10.1 Introduction…………………………………………….......................................... 143 10.2 Partnership and its elements.............................................................. 144 10.3 The essential elements of a partnership.......................................... 144 10.4 Relationships that are similar to a partnership but which are not.. 146 10.5 Types of Partnership......……………………............................................. 149 BUSINESS LAW xii  10.6 General Partnership ………………………………........................................ 149 10.6.1 Rights and duties of partners inter se……………………………………………. 149 10.6.2 Relations of the partners and third parties………………………………….... 151 10.6.3 Extent of power…………………………………………………………................... 151 10.7 Limited partnership………………………………………………………................ 152 10.7.1 Nature and attributes of a limited partnership…………………………. 153 10.7.2 Procedure for registration and running of limited partnership. 154 10.8 Limited liability partnership…………………………………………….............. 157 10.8.1 Designated partners…………………………………………………….................. 158 10.8.2 Incorporation of limited partnership……………………………………....... 159 10.8.3 Effect of registration of limited liability partnership…………………. 160 10.8.4 Registered office of limited liability partnership……………………….. 161 10.8.5 Limited liability partners and their relations inter se…………………. 161 10.8.6 Cessation of partnership interest………………………………………........... 163 10.8.7 Registration of change in particulars of partners……………………….164 10.8.8 Extent and limitation of liability of limited liability partnership… 165 10.8.9 Accounts, audit, annual returns and assignability of interest….. 167 10.8.10 Assignment and transfer of partnership rights.......................... 168 10.8.11 Investigations and litigation in limited liability partnership... 169 10.8.12 Statutory requirements for operation of foreign LLP............. 171 10.8.13 Winding up and dissolution of partnerships........................... 172 10.8.14 Winding up and dissolution of general partnership............... 172 10.8.15 Winding up dissolution of limited partnership....................... 174 10.8.16 Winding up and dissolution of limited liability partnership... 175 10.9 Summary.................................................................................. 175 10.10 Revision questions.................................................................. 176 CHAPTER ELEVEN Law of business associations: Companies 11.0 - Learning objectives……………................................................... 180 11.1 Introduction……………………………................................................ 181 11.2 Establishment, Nature and Functions of Corporate Affairs Commission............................................................... 182 11.3 Functions of the Corporate Affairs Commission............. 182 11.3.1 Administrative Committee................................................. 183 11.3.2 Functions of the Administrative Committee.................... 183 BUSINESS LAW xiii 11.4 Types of Company………………………......................................... 184 11.5 Private company.................................................................... 185 11.6 Public company..................................................................... 186 11.7 Single shareholder and small company.............................. 186 11.8 Procedure for incorporation of a company.......................... 187 11.9 Documents of incorporation.................................................. 189 11.10 Statement of compliance with requirements for incorporation......................................................................... 190 11.11 Grounds upon which CAC may refuse to register documents of proposed company...................................... 191 11.12 Effect of the registered documents...................................... 192 11.13 Promoters............................................................................ 192 11.14 Pre-incorporation contracts....................................................... 193 11.15 Contents of Memorandum of Association……………………….. 194 11.16 Articles of Association............................................................... 195 11.16.1 Model articles of association..................................................... 195 11.16.2 Application of model articles..................................................... 195 11.16.3 Amendment of memorandum and articles of association... 196 11.17 Procedure for issue, transfer, and transmission of shares... 198 11.18 Debentures.................................................................................... 203 11.19 Maintenance or preservation of shares, acquisition of own share by company, and profit distribution.............................. 206 11.20 Appointment, powers, duties, and removal of directors........ 210 11.21 Appointment, qualifications, status, duties, and removal of Company Secretary.................................................................... 214 11.22 Company meetings.................................................................. 218 11.23 Company audit – Appointment, qualifications, rights, duties, and removal of auditors............................................. 224 11.24 Administration of companies and appointment and functions of administrator..................................................... 229 11.25 Arrangement, compromise, netting, and winding up of companies............................................................................... 233 11.26 Winding up of a company...................................................... 237 11.27 Mergers and its types............................................................. 239 11.28 Requirements for registration of business names and incorporated trustees............................................................ 241 11.29 Registration of business names.......................................... 241 11.30 Incorporated trustees............................................................ 245 11.31 Collective investment scheme and its types...................... 253 BUSINESS LAW xiv 11.32 Summary................................................................................. 255 11.33 Revision questions................................................................. 256 CHAPTER TWELVE Banking and negotiable instruments 12.0 Learning objectives............................................................................................ 260 12.1 Meaning of Bank.............................................................................................. 260 12.2 Functions of Banks................................................................................ 260 12.3 Banker and Customer Relationship……………....................................... 262 12.4 Duties of a Banker…………………............................................................. 262 12.5 Duties of Customer to the Banker........…......................................... 266 12.5.1 Termination of Banker’s Duty to Pay……....................................... 266 12.6 Negotiable Instruments…………………………........................................ 266 12.7 Meaning, Types and Characteristics of Negotiable Instruments...... 267 12.7.1 Negotiable Instruments……………………............................... 267 12.8 Bills of Exchange……………………………................................. 267 12.9 Promissory Notes............................................................................. 269 12.10 Negotiability……………………………………….................................. 271 12.11 Endorsement…………………………………………..................... 271 12.12 Parties to a Bill of Exchange……………………………................. 273 12.13 Holder of a Bill of Exchange…………..................................... 274 12.14 Noting and Protesting……………………………................................... 274 12.15 Types of Bills of Exchange………………..................................... 274 12.16 Rights and Duties of Parties to a Bill………………………........... 276 12.17 Discharge........................................................................................... 278 12.18 Revision Questions………………………………........................... 280 CHAPTER THIRTEEN Law of trusts 13.0 Learning Objectives………………………………........................................... 288 13.1 Concept of Trust............................................................................... 288 13.2 Meaning of and Parties to a Trust..................................................... 288 13.3 Essential Elements of Trust............................................................ 289 BUSINESS LAW xv 13.4 Uses of Trusts.................................................................................. 290 13.5 Classification of Trusts................................................................... 291 13.5.1 Private Trust..................................................................................... 292 13.5.2 Public Trust....................................................................................... 292 13.5.3 Judicial Trust.................................................................................... 294 13.5.4 Trust Corporation.............................................................................. 294 13.5.5 Custodian Trust......................................................................................... 294 13.6 Duties and Powers of Trustees........................................................... 296 13.7 Rights of Beneficiaries under a Trust...................................................................297 13.8 Termination of Trusts....................................................................... 299 13.9 Revision Question............................................................................................... 300 CHAPTER FOURTEEN Alternative dispute resolution 14.0 Learning objectives……………………………………………………………............. 304 14.1 Introduction………………………………………………………………………. 14.2 Alternative Dispute Resolution (ADR) mechanism…………………... 304 14.3 Types of ADR…………………………………………………………………................. 305 14.4 Advantages of ADR over litigation……………………………………………... 308 REFERENCES............................................................................................... 309 BUSINESS LAW xvi  SYLLABUS AND EXAMINATION QUESTIONS OUTLINE PAPER 3: BUSINESS LAW Aim To examine candidates’ knowledge and understanding of the legal environment in which organisations in general and the accountancy profession in particular operate as well as the laws on different business relationships. Objectives On completion of this paper, candidates should: a. Know the structure, jurisdiction and functions of the legal systems and the rules applicable to them; b. Have a working knowledge of the general principles of contract to aid their daily accounting activities; c. Be familiar with the legal rules governing specific contracts; d. Be able to distinguish between the various forms of business associations and be conversant with the main rules governing their operations; e. Be able to identify and appreciate the respective duties of bankers and customers as well as recognise the nature of negotiable instruments; and f. Be able to apply the principles of law to simple case studies. Structure of paper The paper will be a three-hour paper divided into two sections: Section A (50 Marks): This shall consist of 5 0 compulsory questions made up o f 3 0 multiple- choice questions and 20 short answer questions covering the entire syllabus. Section B (50 Marks): Six questions, out of which, candidates are expected to answer any four, at 121/2 marks each. Contents 1. The legal system and court system 15% a. Sources of law i. Explain the constitution and its characteristics ii. Explain Received English Law - Common Law, Doctrines of Equity (emphasis on maxims) and Statutes of General Application. iii. Explain judicial precedent, statutes and their enactment, customary law, and international law such as treaties, conventions, protocols. b. The legal and court system i. Outline the structure and hierarchy of courts. ii. State the composition and jurisdiction of the various courts. iii. Explain special courts and tribunals. iv. Distinguish between law and ethics. BUSINESS LAW xvii  c. Forms of legal liability i. Distinguish between criminal and civil liability. ii. Explain torts and their types iii. Explain vicarious liability. iv. Explain negligence and its consequences. 2. Law of contract 20% a. Explain contract and its essential elements: offer, acceptance, consideration, intention to create legal relations, capacity and consent. b. Explain privity of contract and its exceptions. c. Explain terms of a contract (conditions, warranties) and exemption clauses. d. Explain illegal and void contracts. e. Explain factors that vitiate contracts. f. Explain termination or discharge of contracts and remedies for breach of contract. g. Explain e-contract. 3. Special contracts 25% a. Agency i. Explain creation and types of agency. ii. Explain authority of agents iii. Explain the rights and duties of principal and agent. iv. Explain termination of agency. b. Sales of goods i. Define and classify goods. ii. Differentiate between sale of goods and other contracts. iii. Explain implied terms. iv. Explain the caveat emptor doctrine. v. Explain transfer of title, passing of risk, and the nemo dat quod non habet rule. vi. Explain breach of sale of goods contract and remedies of the parties. vii. Explain the rights and duties of buyers and sellers. c. Hire purchase and equipment leasing i. Define hire purchase and explain the formalities under the Common Law and the Hire Purchase Act. ii. Explain implied and void terms. iii. S t a t e t h e rights and obligations of the parties. iv. Explain termination of hire purchase contract. v. Explain operating and finance leasing. d. Contract of employment i. Explain the nature and formation of employment contract. ii. State the rights and duties of the parties. BUSINESS LAW xviii  iii. Explain termination of employment and dismissal. iv. Explain the remedies for breach of contract. v. Explain redundancy. 21 e. Insurance i. Define and classify insurance contract. ii. State the minimum share capital requirements of insurers. iii. Explain the following concepts and principles: insurable interest, premium, indemnity, materiality of information, utmost good faith, conditions and warranties, subrogation and contribution. 4. Law of business associations 25% a. Partnership i. Explain partnership and its elements. ii. Explain types and attributes of partnership (general partnership, limited partnership, and limited liability partnership). iii. Explain the procedure for management of a partnership including the rights and duties of partners, their relationship inter se and with third parties. iv. Explain the attributes of a limited partnership and a limited liability partnership. v. Explain limited partnership and limited liability partnership accounts and audit, annual returns, as well as assignability of partners‟ interest. vi. Explain investigation and litigation in limited liability partnership as well as criminal proceedings by the Attorney-General of the Federation. vii. State the statutory requirements for operation of a foreign limited liability partnership. viii. Explain winding up and dissolution of partnership. b. Companies i. State the composition and functions of the Corporate Affairs Commission. ii. Explain the Administrative Committee of the Corporate Affair Commission and state its functions as well as procedures. iii. Explain the types of company, including single shareholder and small company as well as their implications. iv. Explain the procedure for incorporation of a company, documents of incorporation, and replacement of statutory declaration with statement of compliance with requirements of incorporation. v. Explain pre-incorporation contracts as well as promoters and their duties. vi. State the contents of memorandum and articles of association and how they can be amended. vii. Explain the procedures for issue of and transmission of shares and debentures (corporate bonds). viii. Explain the ways in which the capital of a company is maintained or preserved including the laws relating to acquisition of own share by company as well as distribution of profits. ix. Explain the appointment, powers, duties, and removal of directors. x. State the minimum number of non-executive and executive directors (in applicable situations). x. State the law on company secretary’s appointment, qualifications, status, and removal. BUSINESS LAW xix  xi. State briefly the law on company meetings (statutory meeting annual general meeting, and extraordinary general meeting)to include: ∙ Notices and resolutions; ∙ Right to receive notice, attend, and requisition meeting ∙ Voting, companies that need not hold annual general meeting; and ∙ Authority of private company and small company to hold virtual meeting. xii. State the law on the appointment, qualifications, rights, duties and removal of company auditors. xiii. Explain the rationale for administration of companies as well as appointment and functions of the administrator. xiv. Explain arrangement, compromise, netting and winding-up (in outline). xv. Define mergers and its types under the Federal Competition and Consumer Protection Act, 2018. c. Others i. State the conditions and requirements for registration of business names as well as incorporated trustees. ii. Define collective investment scheme and its types. iii. Explain Alternative Dispute Resolution (ADR) mechanisms and state their advantages. 5. Banking and negotiable instruments 10% i. Explain the legal relationship between a banker and customer and state their respective duties and rights. ii. State the meaning and characteristics of negotiable instruments. iii. Explain bills of exchange, cheques and promissory notes. iii. Explain crossing of cheques. iv. Explain holder, holder for value and holder-in- due-course. v. State the rights and duties of the parties to a negotiable instrument. 6. Law of trusts 5% i. Explain trusts and the parties thereto. ii. Distinguish between private trust and public trust. iii. Explain the types and uses of public trust. iv. State the duties, powers and rights of trustees (including investment powers under Trustee Investment Act). BUSINESS LAW xx  Recommended texts 1. ATSWA Study Pack on Business Law 2. Companies and Allied Matters Act, 2020 3. Federal Competition and Consumer Protection Act, 2018 4. Etomi, George (2014) -An Introduction to commercial Law in Nigeris: Texts cases and materials, MIJ Professional Publishers, Lagos 5. Obilade, A.O. - The Nigerian Legal System, Spectrum books, Ibadan. BUSINESS LAW xxi TABLE OF CASES A Angu v Atta (1916) PC' 24-28 Ashbury Railway Carriage Co v Riche (1875) L R 7 HL 653 B Buama v Oppong, 2 GLR 213 C Carlillv Carbolic Smoke Ball Company 1QB 256 Curie v Misa (1875) LR 10 Ex153 D De Francesco v Barnum 45 Ch.D. 430 Diab v Quansah 1GLR 101 Doyle v White City Stadium Ltd 1 KB 110 CA Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd A C 847, HL E Edwards v Skyways Ltd 1WLR 349 G Gordon v Essien, 1 GLR 232 H Hughes v Metropolitan Railway Co. (1877) 2App Cas 439 H.L Hyde v Wrench (1840) 3 Beav 334 I In Cohen (WA) Ltd v Comet Construction Co Ltd; Ghana Commercial Bank (Claimants) GLR 777 In Re Mc Ardle Ch 669 In Republic v James Town Circuit Judge ex parte anor. GLR 453 J Jones v Padavatton 1WLR 328 K Kessie v Charmant 2 GLR 194 M Merritt v Merritt 1 WLR 1121, CA N Nash v Inman 2 KB 1 BUSINESS LAW xxii O Orthodox School of Peki v Tawlma Abels GLR 421 P Partridge v Crittenden WLR 204 Payne v Cave (1789) 3 Term Rep. 148 Pharmaceutical Society v Boots Cash Chemists Ltd QB 40 Pinnel's case (1602) 5 Co Rep 117 Pioneer Construction Products Ltd v Faddool 1 GLR 76 R Rose and Frank Co. v Crompton Brothers AC 445 HL S Salomon v Salomon AC 22 Spencer v Harding (1870) L.R. 5.C.P. 561 BUSINESS LAW xxiii  CHAPTER ONE Sources of law 1.0 Chapter contents ▪ Learning objectives ▪ Introduction ▪ Law and its sources ▪ Meaning of law ▪ Sources of law ▪ Summary ▪ Revision questions 1.0.1 Learning objectives Upon completion of this chapter, readers should be able to: ▪ define law ▪ explain the purpose of law ▪ identify the laws of Nigeria as Nigerian candidates and the laws of Ghana as Ghanaian candidates ▪ discuss the ambit of the laws of Nigeria ▪ state and explain the forms of legislation in Nigeria; and ▪ differentiate the approaches to law interpretation 1.1 Introduction Legal issues confront us all the time. Some legal knowledge is therefore important for everyday living. Laws ensure orderliness in society, and every human activity is regulated by law. In order to become functional persons in the community, we need to appreciate the laws that regulate the various activities we are engaged in. The purpose of this chapter is to explain law and its role in society. The chapter is also to identify the major classification of the laws of Nigeria and their sources. To avoid chaos and ensure orderliness, every human grouping must have rules and regulations that guide behaviour. The development of the law and how the laws are applied discussed in this chapter. Finally, the chapter examines the various ways by which laws are interpreted to give meaning to them. BUSINESS LAW 1 1.2 Law and its sources 1.2.1 Meaning of law Law basically consists of a body of rules and regulations. These rules and regulations are usually designed to regulate human conduct in the society. All human behaviour is shaped in one way or the other by various laws. Law, once made is meant to be obeyed, but it is discovered that people may not voluntarily want to meet the expectations of the law. As a result, there may be the need to introduce some elements of sanctions against acts of BUSINESS LAW 2  violation or defiance so as to ensure compliance with the law. (T. O. Dada, General Principles of Law 3rd ed. 2008 Lagos, p. 1). 1.3 Sources of law The term “source of law” is used in various senses but we shall restrict ourselves to just three senses: the formal, the literary and the legal sources of law. The formal source means the origin of the whole body of legal system – the source from which the system derives its validity, be it the electorate, a special body, the general will or the will of a dictator. The literary source of law refers to materials containing the rules of law. Statute books, law reports and textbooks are sources of law in this sense. The legal source of law means the fountain of authority of a rule of law, that is, the origin from which a legal rule derives its authority. It is the means through which through which a rule forms part of the body of law. Examples of legal sources are legislation and judicial precedents. It is in this third sense that the term is used both in Nigeria. The sources of Nigerian law are: (a) Nigerian Constitution; (b) Nigerian legislation; (c) the Received English law which consists of: (i) the common law; the doctrines of equity; statutes of general application in force in England on January 1, 1900 and (ii) English law made before October 1, 1960 and extending into Nigeria; (d) Customary law and (e) Judicial precedents. The application of the sources involves, in varying degrees, interpretation of statutes. Therefore, it could be helpful to study the principles and rules applied by court in interpreting statutes, in order to understand the sources clearly. (Obilade, A. O. The Nigerian Legal System (2005) Spectrum Books (Ibadan) pp. 55-56). BUSINESS LAW 3 1.3.1 Constitution A Constitution is a document containing the rules and regulations including the norms and ethics concerning the ways and manner in which a country is to be governed. The Constitution regulates the activity of the government as well as safeguards and protects the interests of the governed. (T. O. Dada, General Principles of Law 3rd ed. 2008 Lagos, p. 466). According to Wade and Bradley: A Constitution is a document having a special legal sanctity, which sets out the framework and the principal functions of the organs of government of state and declares the principles governing the operation of these organs. The Constitution of the Federal Republic of Nigeria 1999 has the following features or characteristics: (a) Supremacy of the Constitution The provisions of the Constitution are binding on all authorities and persons throughout Nigeria. Being the basic law of the land, its provisions are supreme over all other laws and any law inconsistent with its provisions shall be null and void. In addition, no part of the country shall be governed except in accordance with the Constitution. See Obaba v. Governor of Kwara State (1994) 4 NWLR (Pt. 294); Olu of Warri v. Kperegbeyi (1994) 4 NWLR (Pt. 294) p. 416; Anoh v. Hirnyam (1997) 2 NWLR (Pt. 486) p. 174, 187. (b) Written form The Constitution of the Federal Republic of Nigeria is a written Constitution. It is written not merely in the sense that it is a document, but essentially because it is one in which fundamental principles concerning the organisation of government, the powers of its various agencies and the rights of the subjects are written in one document. (A. Toriola Oyewo, Constitutional Law and Procedure in Nigeria 2009 Ibadan p. 4. (c) Rigidity The Constitution of Nigeria is rigid. A rigid constitution cannot be changed or amended easily because it requires special process which is not only difficult but is also complicated and the special process is actually laid down in the Constitutions themselves. It should be noted that a rigid constitution is necessarily written, but we should also note that not all written constitutions are rigid, that is, a constitution may be written and still remain flexible, BUSINESS LAW 4  as in the case of Ghana in her first Republic Constitution and that of New Zealand (A. Toriola Oyewo, Constitutional Law and Procedure in Nigeria 2009 Ibadan p. 5).The basic objective of the makers of the Nigerian Constitution being its supremacy and overriding authority over all persons or authorities, it has been made rigid and unalterable by the ordinary law. (d) Federal system The Constitution creates a federal system of government. This is true not only in Nigeria but Ghana. In a federal system of governance, the powers of government have been distributed between one level of government and another. Each state is autonomous to the extent of the powers and duties conferred on it by the constitution. Under the 1999 Federal Constitution, Nigeria remains a federation consisting of thirty-six States and the Federal Capital Territory. See sections 2(2) and 3 of the CFRN, 1999. The Federal structure recognises three tiers of government namely: The Federal, State and Local government In addition to the federal system, Ghana has a unitary system. Unitarismis the national or the central government that is supreme over other levels (tiers) of government that might exist in the state and in this context, other levels of government referred to the Local Authorities. In short, the powers of the Local Authorities have not been derived from the Constitution but as a result of the wishes of the national government. (e) Separation of powers The Constitution separates the powers of government into Executive, Legislative and Judicial branches. Separation of powers implies that the various organs of government should function separately and independently of one another. That way, they constitute checks and balances. Under the Constitution of the Federal Republic of Nigeria 1999, the various functions to be performed by each organ of government are clearly stated in such a way and manner that each organ was made to know the extent and limits of its functions and jurisdictions. No arm of government is entitled to infringe on the functions of the other. BUSINESS LAW 5  (f) Fundamental rights These are basic rights to which every citizen is entitled within the polity as entrenched in the Constitution of the Federal Republic of Nigeria, 1999. They are often referred to as inalienable rights. Any attempt by any person, group or the government to tamper with the rights may be subject of court action. (T. O. Dada, General Principles of Law 3rd ed. 2008 Lagos, p. 481). Fundamental rights are preserved and protected under the Constitution. The fundamental rights are as follows: i. rights are right to life; ii. right to dignity of human person; iii. right to personal liberty; iv. right to fair hearing; v. right to private and family life; vi. right to freedom of thoughts, conscience and religion; vii. right to freedom of expression and the press; viii. right to peaceful assembly and association; ix. right to freedom of movement; x. right to freedom from discrimination; xi. right to acquire immovable property anywhere in Nigeria; and xii. right to compensation upon compulsory acquisition. 1.3.2 The Common Law 1.3.2.1 Meaning of Common Law The term “Common Law” as a part of the Received English Law in Nigeria means the law developed by the old common law courts of England, namely, the King’s Bench, the Court of Common Pleas and the Court of Exchequer. There were originally several systems of local customs in England. But under the guise of enforcing the customs of the realm, the common law judges developed a system of law known as the common law of England. Rules of the common law are, therefore, found in judicial decisions. The rules cover criminal law and civil law. But with the exception of the law on contempt of court the common law of crime is not part of Nigerian law. (Obilade, A. O. The Nigerian Legal System (2005) Spectrum Books (Ibadan) p. 10). BUSINESS LAW 6 1.3.2.2 Doctrines of equity Equity is the law developed by the old English Court of Chancery as a result of the rigidity of the common law. Whenever the rules of the common law worked hardship or injustice, the litigant sent a petition to the sovereign as the fountain of justice and the Royal Council. The Lord Chancellor granted relief on behalf of the sovereign and the Council as the thought fit. He followed no established principles in dealing with such matters. Accordingly, whenever there was a conflict between a rule of equity and a rule of common law on the same matter, the rule of equity was to prevail. Finally, it should be mentioned that because equity was developed by a court, its rules are found only in judicial decisions, except that there are many equitable rules that have been incorporated into statutes. (Obilade, A. O. The Nigerian Legal System (2005) Spectrum Books (Ibadan) pp. 10-11). Maxims of equity Maxims of equity are legal maxims that serve as a set of general principles which are govern the way in which equity operates. The twelve equitable maxims are: 1. Equity will not suffer a wrong without a remedy; 2. Equity follows the law; 3. Where there is equal equity, the law shall prevail; 4. Where the equities are equal, the first in time shall prevail; 5. He who seeks equity must do equity; 6. He who comes into equity must come with clean hands; 7. Delay defeats equity; BUSINESS LAW 7  8. Equality is equity; 9. Equity looks to the intent rather than the form; 10. Equity looks on that as done which ought to be done; 11. Equity imputes an intention to fulfil an obligation; and, 12. Equity acts in personam. 1.3.3 Statutes of General Application Statutes of general application that were in force in England on the 1st day of January, 1900, form the third group of Received English Law in Nigeria. The courts are entrusted with the responsibility of ascertaining and applying those statutes that meet the laid down criteria for application under the general provision. Statutes of General Application do not apply in States of the Federation of Nigeria that have their local laws or statutes. As a matter of fact, they have never applied in the States of the defunct Western Region. (Asein, J.O. Introduction to Nigerian Legal System 2 ed. 2005, (Lagos) pp. 107-108.) 1.3.4 Judicial precedents Judicial precedent or case law consists of laws found in judicial decisions. A judicial precedent is the principle of law on which a judicial decision is based. It is the ratio decidendi (literally, the reason for the decision). It follows that it is not everything said by a judge in the course of his judgment that constitutes a precedent. Only the pronouncement on law in relation to the material facts before the judge constitutes a precedent. Any other pronouncement on law made in the course of a judgment is an obiter dictum (a statement by the way) and it does not form part of the ratio decidendi. (Obilade, A. O. The Nigerian Legal System (2005) Spectrum Books (Ibadan) pp. 111). 1.3.5 Legislation Legislation comprises laws passed by Parliament or the legislative branch of government, that is the State House of Assembly or the National Assembly. They are called Acts at the federal level and Laws at the state level. Legislation may also be exemplified by the Constitution and Subsidiary legislation. Since the coming into force of the 1992 Constitution in Ghana, many Acts of Parliament have been passed. These are the enactments made by or under the authority of the BUSINESS LAW 8  Parliament established by the Constitution. Their numbers are growing by the day and it is expected that the dire need for law reforms in many areas will continue to increase their scope. The situation in Ghana is almost the same with that of Nigeria. However, while both countries have federal constitutions, Ghana has a unitary constitution. 1.3.6 Customary law 1.3.6.1 The meaning and development of customary law Customary law means the rules of law which by custom are applicable to particular communities in Ghana and Nigeria. They are therefore the customs accepted by members of a particular community as binding upon them. In Nigeria, customary law consists of two classes, namely, ethnic customary law and Islamic customary law (Sharia’h). Ethnic customary law in Nigeria is indigenous. Each system of such customary law applies to members of a particular ethnic group. Moslem law is religious law based on the Moslem faith and applicable to members of the faith. In Nigeria, it is not indigenous law; it is received customary law introduced into the country as part of Islam. Ethnic customary law is unwritten. There are several systems of customary law in the country, each ethnic group having its own separate system. Unlike ethnic customary law, Islamic customary law is principally in written form. The sources of Moslem law are the Holy Koran, the practice of the Prophet (the sunna), the consensus of scholars, and analogical deductions from the Holy Koran and from the practice of the prophet. (Obilade, A. O. The Nigerian Legal System (2005) Spectrum Books (Ibadan) p. 83). 1.3.6.2 Characteristics of customary law Ethnic customary law has the following characteristics: (a) It is largely unwritten; (b) Members of the community or group to which it relates generally consider it as binding. As such, it is often described as “a mirror of accepted usage”; (c) It is established by proof through assessors or authoritative books if it has not been so used by the courts to be judicially noticed. In the Gold Coast case of Angu v Atta (1916) PC thus: “As is the case of all customary law, it has to be proved in the first instance by calling witnesses acquainted with the native customs until the particular BUSINESS LAW 9  customs have, by frequent proof in the Courts, become so notorious that the Courts take judicial notice of them; and (d) It is largely flexible. 1.3.6.3 Establishing customary law Before a custom becomes law and is recognised by the court, the custom must passed the following validity tests: (a) The repugnancy test: It must not be repugnant to natural justice, equity (fairness) and good conscience. In Edet v. Essien the court held that a rule of customary law which gives the custody of a child fathered by a husband to another, merely because the bride price paid by that other had not been returned, was repugnant to natural justice, equity and good conscience; (b) It must not be incompatible with any existing law; and (c) It must not be contrary to public policy. 1.3.7 Treaties A treaty is a formally concluded and ratified agreement between sovereign states. It is an agreement under international law entered into by actors in international law, namely sovereign states and international organisations. A treaty may also be known as an international agreement, protocol, covenant, convention, pact, or exchange of letters, among other terms. 1.4 Summary and conclusion The chapter surveyed legal systems, particularly, law and its role in society. It also explains the sources of law. BUSINESS LAW 10 1.5 REVISION QUESTIONS MULTIPLE CHOICE QUESTIONS 1. In a country with a written constitution, the doctrine of “supremacy of the constitution” means one of the following: (a) The constitution is flexible. (b) The constitution contains rules and regulations by which the country is administered. (c) The constitution is rigid. *(d) The provisions of the constitution are binding on all authorities and persons throughout the country where the constitution applies (e) The appointments of public officers by head of government of the country, requires the approval of Senate. 2. Which of the following is not a characteristic of a constitution? (a) Separation of powers (b) Supremacy (c) Fundamental Human Rights (d) Federalism *(e) Informality 3. ‘Judicial precedent’ is also known as (a) President of the judiciary in Ghana *(b) Case law (c) Statute law (d) Statute of General Application BUSINESS LAW 11  (e) Laws of the Federation of Nigeria SHORT ANSWER QUESTIONS 1. Basic rights to which every citizen is entitled within a polity is referred to as *****Fundamental rights. 2. The third part of Received English Law in addition to Doctrines of Equity and Statutes of General Application is the ***** Common Law 3. The repugnancy test of validity of customary law requires that for customary law to be valid, it must not be repugnant to natural justice, , and *****equity and good conscience ESSAY QUESTIONS Question 1 State ten (10) maxims of equity. BUSINESS LAW 12  Solution Maxims of equity are legal maxims that serve as a set of general principles which are govern the way in which equity operates. The twelve equitable maxims are: 13. Equity will not suffer a wrong without a remedy; 14. Equity follows the law; 15. Where there is equal equity, the law shall prevail; 16. Where the equities are equal, the first in time shall prevail; 17. He who seeks equity must do equity; 18. He who comes into equity must come with clean hands; 19. Delay defeats equity; BUSINESS LAW 13  20. Equality is equity; 21. Equity looks to the intent rather than the form; 22. Equity looks on that as done which ought to be done; 23. Equity imputes an intention to fulfill an obligation; and, 24. Equity acts in personam. Question 2 Enumerate the sources of Nigerian Law Solution The sources of Nigerian law are as follows: (a) Nigerian Constitution; (b) Nigerian Legislation; (c) English law which consists of The Received English law comprising the common law, the doctrines of equity and statute of general application in force in England on Jan. 1, 1900 English law made before October 1, 1960, extending into Nigeria (d) Customary law; and (e) Judicial precedent Question 3 Define Constitution and differentiate between a rigid and a flexible constitution. Solution (b) A Constitution is a document containing the rules and regulations including the norms and ethics concerning the ways and manner in which a country is to be administered. BUSINESS LAW 14  (c) The difference between a rigid and a flexible constitution is based on the terms of the procedure for their amendments. A rigid constitution cannot be changed or amended easily because it requires special process which is not only difficult but is also complicated and the special process is actually laid down in the Constitutions themselves. An example of a rigid constitution is that of the U.S. and that of the Federal Republic of Nigeria. It should be noted that a rigid constitution is necessarily written, but we should also note that not all written constitutions are rigid, that is, a constitution may be written and still remain flexible, as in the case of Ghana in her first Republic Constitution and that of New Zealand. On the other hand, a flexible constitution is one that can be easily amended as the procedure for its amendment is not cumbersome. Example of a flexible constitution is that of Ghana. BUSINESS LAW 15  CHAPTER TWO The court system 2.0 Chapter contents ▪ Learning objectives ▪ Role of Courts in administration of justice ▪ Classification into superior and inferior Courts ▪ Hierarchy of Courts ▪ Distinction between criminal and civil liability ▪ Professional ethics ▪ Meaning of torts ▪ Summary ▪ Revision questions 2.0.1 Learning objectives Upon completion of this chapter, readers should be able to: ▪ explain the role of courts in the administration of justice ▪ identify the two broad groups of Courts – Superior and Inferior ▪ state the hierarchy and composition of the courts ▪ discuss the scope of the jurisdiction of each of the courts ▪ distinguish between criminal and civil liabilities ▪ explain the torts of vicarious liability and negligent misstatements 2.1 Role of Courts in the administration of justice The administration of justice is usually the function of the judiciary or the judicature comprising the court system and the judicial personnel that administer justice in these courts. The courts are often viewed as the last resort of the citizen. According to Muntaka- Coomassie, JCA in Zekeri v. Alhassan 52 W.R.N. 119 (CA) at 141, “The court plays an important role in the interpretation of the constitution, protects the right of citizens from encroachment by any organ of the government, and generally has the inherent jurisdiction to determine cases between persons and persons and government.” (Asein, J.O. Introduction to Nigerian Legal System 2 ed. 2005, (Lagos) p. 169.) The courts are major fora for conflict resolution and the interpretation of laws. Courts are institutions designed for settling disputes. They are concerned with the administration of justice. The processes within these courts and the ease or difficulty with which justice may be obtained have a strong impact on business. BUSINESS LAW 16 2.2 Classification into Superior and Inferior Courts Courts may be classified in several ways. But the most important forms of classification are, first, classification into superior courts and inferior courts, and, second, classification into courts of record and courts other than courts of record. The Courts for a long time have been divided into two main groups namely the superior and inferior/lower courts. The superior Courts consist of the Supreme Court, Court of Appeal, Sharia Court of Appeal, Customary Court of Appeal, Federal High Court, and High Courts of the Federal Capital Territory and the States of the Federation. The inferior Courts are made up of the Magistrate Courts (Nigeria), the District Court, the Juvenile Court, Customary/Area Courts (Nigeria), and such other lower courts as legislature may by law establish. BUSINESS LAW 17 2.3 Hierarchy of Courts 2.3.1 Superior Courts (a) The Supreme Court The Supreme Court is the highest or apex Court in Nigeria. It consists of the Chief Justice as the head not more than 21 Justices of the Supreme Court (S.230,of the Constitution of the Federal Republic of Nigeria. The Supreme Court is duly constituted for its business by not less than five Justices of the Supreme Court, and for the purpose of reviewing its own decision, by not less than seven Justices of the Court. The qualification for appointment as a Justice of the Supreme Court is high moral character, proven integrity and not less than fifteen years standing as a qualified legal practitioner. The Supreme Court in Nigeria has the same status with the Supreme Court of Ghana in terms of composition, powers and requirement for appointment. The Supreme Court in Nigeria is created under S.230 of the 1999 Constitution of the Federal Republic, as amended. The Supreme Court has original jurisdiction in i. Any matter between the Federal Government and the States, or between any two or more States, or the National Assembly and the Federation, or State Houses of Assembly and the Federation; ii. All matters relating to the enforcement or interpretation of the Constitution and all matters arising as to whether an enactment was made in excess of the powers conferred on Parliament or any other authority or person bylaw or under the Constitution. However, by S.233 of the Constitution, the Supreme Court shall not have original jurisdiction in criminal matters. BUSINESS LAW 18  The Supreme Court is the final appellate court. It has supervisory jurisdiction over all courts and over any adjudicating authority and may in the exercise of that supervisory jurisdiction, issue orders and directions including orders in the nature of habeas corpus, certiorari, mandamus, prohibition and quo warrant of or the purpose of enforcing or securing the enforcement of its supervisory power. The Supreme Court may also review any previous decision made or given by it. (b) Court of Appeal The Court of Appeal is the next in hierarchy to the Supreme Court. Appeals from the High Court, Federal High Court, Sharia Court of Appeal, Customary Court of Appeal, National Industrial Court, Investments and Securities Tribunal, and other tribunals on the same level go the Court of Appeal. The Court of Appeal is duly constituted by any three of its Judges and when so constituted the most senior of the Judges presides. The Court of Appeal is presided over by the President of the Court of Appeal. Its jurisdiction is as follows: i. It is an appellate Court, by virtue of section 239 of the 1999 Constitution; and ii. It has original jurisdiction to hear and determine any question as to whether any BUSINESS LAW 19  person has been validly elected into the office of the President or Vice President; or whether their terms of office have ceased, or their offices have become vacant. The qualification for appointment to the Court of Appeal is high moral character, proven integrity and not less than twelve years standing as a lawyer. A single Judge of the Court of Appeal is empowered to sit alone to hear applications to the Court, which do not involve the decision of a cause or matter before the Court of Appeal. (c) Federal High Court The Constitution of the Federal Republic of Nigeria provides for the creation of the Federal High Court. The court has the following criminal and civil jurisdiction by virtue of section 250: i. The revenue of the government of the federation; ii. The taxation of companies and other persons subject to federal taxation; iii. Customs, excise, and export duties; iv. Banking, banks and other financial institutions, including any action between one bank and another; v. Any action by or against the Central Bank of Nigeria; vi. Admiralty matters; vii. Diplomatic, consular and trade representations matters; viii. Citizenship, naturalisation, extradition, passport and visa matters; ix. Bankruptcy and insolvency issues; x. Aviation and safety of aircrafts; xi. Arms, ammunitions and explosives; xii. Drugs and poisons; xiii. Weights and measures; xiv. Administration, management and control of the Federal Government and any of its agencies; and xv. Treason (d) The High Court Section 225 of the Constitution establishes a High Court for the Federal Capital Territory, and section 270 provides for each State of the Federation a High Court. The High Court has unlimited original jurisdiction in both civil and criminal matters, and may exercise appellate BUSINESS LAW 20  jurisdiction on decisions of inferior courts such as Magistrates Court, District Court, etc. A High C o u r t is constituted basically by one judge, and for a legal practitioner to be a judge of the Court, he must be at least ten years at the Bar. (d) Sharia Court of Appeal The Nigerian constitution provided that a State may have a Sharia Court of Appeal if it so desires. The court exercises appellate and supervisory jurisdiction in civil proceeding touching on Islamic person law coming on appeal from the Area Court. (e) Customary Court of Appeal The Nigerian Constitution provides that “there shall be for any State that requires it, a Customary Court of Appeal for that State”. The court has appellate and supervisory jurisdiction over proceedings coming on appeal from customary courts on question of customary law. (f) National Industrial Court The Constitution of Nigerian establishes the National Industrial Court. The Court comprises the President and 4 ordinary members. All the members must be persons of good standing and who are well acquainted with employment matters in Nigeria, at least one of them being a person who shall have competent knowledge of economics, industry or trade. Jurisdiction The court has original jurisdiction to the exclusion of any other court in civil causes or matters relating to or connected with any labour, employment, trade union, industrial relations and matters arising from workplace, the conditions of service including health, safety, welfare of labour, employee, worker and matters incidental thereto. BUSINESS LAW 21  2.3.2 Inferior Courts The establishment, jurisdiction and composition of inferior courts are generally at the discretion of the individual States that so desire them. For example, each of the 36 states in Nigeria and the Federal Capital Territory, Abuja has its own hierarchy of inferior courts made up of different grades as the appropriate state legislature may deem necessary to create. (a) Magistrate Courts/District Courts In Nigeria, Magistrates Courts are the creation of various States and governed by the various States Magistrates Courts ‟Laws. Magistrates Courts, like the High Courts, have jurisdiction in civil and criminal matters in most southern states. They also administer both common law and equity, with powers to grant virtually all legal and equitable remedies, up to certain prescribed limits specified by the law setting them up in each instance. District Courts are on the same level with Magistrates Courts. However, they sit on civil cases only. Both the Magistrate and District Courts act as Juvenile Court by hearing and determining matters affecting juveniles and also function as family tribunal. (b) Other Lower Courts In Nigeria, the lower courts include Customary Courts, Sharia Court, Area Courts in the Northern States. The Customary Court is presided over by a President, while the Alkali presides over Area Court. 2.3.3 Special Courts (a) Juvenile Court Juvenile courts are special courts established for the trial of young offenders and for the welfare of the young. The courts exist in different states by virtue of their respective but similar Children and Young Persons Laws. The courts are in fact Magistrates’ or District courts specially designated and constituted for the purpose of trying juveniles. A child is defined as any person under the age of 14 years, while a young person is any person who gas attained the age of 14 years but is less than 17 years (in the southern states) or 18 years (in the northern states). Unless a juvenile is BUSINESS LAW 22  charged jointly with a non-juvenile, the court generally sits either in a different building or room from that in which it ordinarily sits, or on different days or at different times from those at which it ordinary sittings are held. This is intended to protect the interest of the juvenile and guarantee the requisite special treatment. (b) Coroners Court A coroner is a person empowered to hold inquest on the body of a deceased person who appears to have died a violent or an unnatural death, or on the body of a deceased person belonging to any other class specified by the appropriate Coroners Law. There is provision in the law of each State of the federation for coroners’ inquests. Every Magistrate is a coroner. In addition, other fit persons may be appointed coroners. A coroner’s inquest must normally be held where it appears that a deceased person has died a violent or unnatural death, where the deceased has died a sudden death of which the cause is unknown, where the deceased has died while confined in a lunatic asylum or in any place or circumstances which in the coroner’s opinion makes the holding of an inquest necessary or desirable, and where a prisoner or any person in police custody has died. (c) Military Courts There are military courts in the country. Normally, only members of the Armed Forces – the Nigerian Army, the Nigerian Navy and the Nigerian Air Force – are subject to the jurisdiction of the military courts. The Armed Forces Act provides for various offences, the punishment thereof and the mode of trial for erring members of the armed forces. One of the special courts for the trial of persons for more serious offences in the armed forces is the court martial. The system of courts martial was introduced along with military law in Nigeria. The composition, jurisdiction and powers of Court Martials in the three armed forces are provided for jointly in the Armed Forces Act. A court martial is duly constituted if it consists of the President of the court martial, not less than two other officers and a waiting member. BUSINESS LAW 23  (d) Tribunals Tribunals are an integral part of the entire adjudicatory system. Created by states, they serve to complement the traditional court system by exercising judicial or quasi- judicial functions. They are often referred to as administrative tribunals although in truth, many of them are better described as judicial since they handle more than mere administrative matters. Statutory or special tribunals may be a more generic description. There is a subtle difference between judicial tribunals and mere administrative inquiries. The latter are fact finding bodies whose assignment may either precede a policy decision by government of be subsequent to a local dispute or disturbance, for instance, a public inquiry to ascertain the immediate and remote causes of a religious disturbance in a particular locality. Unlike a tribunal, such administrative inquiry does not usually extend to the determination of guilt or the imposition of sanctions. 2.4 Distinction between criminal and civil liability The distinctions between criminal law and civil law are as follows: (a) Criminal law creates offences, that is, acts and omissions that are punishable. Civil law, on the other hand, protects the rights and interests of citizens in their interpersonal relationships; (b) The aim of criminal law is to punish offenders by way of imprisonment, fine or both. Conversely, civil law aims at compensating an injured or aggrieved person; (c) The standard of proof in criminal law is proof beyond reasonable doubt, but the standard of proof in civil law is preponderance of evidence or balance of probabilities; (d) In criminal cases, there is no limitation of time to prosecute the offender, but in civil cases, the limitation time to institute an action ranges from six to twelve years, otherwise, the case is statute-barred; (e) Prosecution in criminal matters in by the State or government, whereas it is a decision for the aggrieved person to sue the defendant in a civil case; (f) In criminal law, once the case against the accused person is proved, the court pronounces him guilty and convicts him. Conversely, in civil cases, once a plaintiff proves his case against the defendant, the court pronounces the defendant liable and BUSINESS LAW 24  makes him to pay damages/compensation to the plaintiff or subjects him to equitable orders such as injunction or specific performance; and (g) The parties to a criminal case are the State and the Accused, but the parties to a civil case are the Plaintiff and the Defendant. 2.5 Professional ethics Meaning of tort A tort is a civil wrong. It is an offence without criminal consequences. It is a breach of personal duties fixed by law and. Such duty is owed to persons generally and when it is breached, an action lies in damages