Contents
Law of tort.............................................................................................................................................2
Business associations.............................................................................................................................7
The nature of a company and formation of a company.......................................................................10
Promoters and pre-incorporation contracts........................................................................................13
Corporate crimes.................................................................................................................................15
The company’s constitution.................................................................................................................16
Corporate transactions........................................................................................................................18
Company Management.......................................................................................................................25
Directors..............................................................................................................................................27
Protection of minority shareholders....................................................................................................33
Company securities..............................................................................................................................36
, Law of tort
1. Tort
a) It is not a breach of contract
b) It is not a crime
A tort is a civil wrong and the person wronged sues in a civil court for compensation or an
injunction.
1.1 Types of tort
Passing-off
- Is the use of a name, mark or description by one business that misleads
consumer to believe that their business is that of another.
- E.g., expensive ‘designer’ products are sold as ‘originals’
- Stringfellow v McCain Foods GB 1984
- HFC Bank v Midland Bank 2000
Negligence
- Carelessness of an individual or company which causes damage (physical or
financial) to the claimant.
- Carelessly carrying out an act and breaking a legal duty of care owed to another
causing them loss or damage.
2. The tort of negligence
To succeed in an action for negligence the claimant must prove that:
The defendant had a duty of care to avoid causing injury, damage or loss
There was a breach of that duty by the defendant
In consequence that claimant suffered injury, damage or loss
3. Duty of care
- A person might owe a duty of care to another with whom they had no contractual
relationship at all.
3.1 The basic rule
- Whether or not a duty of care exists in any situation, the courts decide on a case by case
basis.
-
, 3.2 Development of the doctrine
- For any duty of care to exist, two stages must be tested: (Anns v Merton London Borough
Council 1977)
1) Is there sufficient proximity between the parties, such that the harm suffered was
reasonably foreseeable?
2) Should the duty be restricted or limited for reasons of economic, social or public
policy?
- Latest stages in the development: (Caparo Industries plc v Dickman 1990)
1) Was the harm reasonably foreseeable?
2) Was there a relationship of proximity between the parties?
3) Considering the circumstances, is it fair, just and reasonable to impose a duty of care?
4. Breach of duty of care
4.1 The basic rule
These factors should be considered when deciding if a duty of care has been breached:
a) Probability of injury
- It is presumed that a reasonable man takes greater precautions when the risk of
injury is high: Bolton v Stone 1951.
- In Glasgow Corporation v Taylor 1922 a local authority was held to be negligent
when children are poisonous berries in a park. A warning notice was not
considered to be sufficient to protect children.
b) Seriousness of the risk
- The young, old or disabled may be prone to more serious injury than a fit able-
bodied person.
- The ‘egg-shell skull’ rule means that you must take your victim as they are.
- Smith v Leech Brain & Co 1962
c) Issues of practicality and cost
- It is not always reasonable to ensure all possible precautions are taken.
, d) Common practice
- Where an individual can prove their actions were in line with common practice
or custom it is likely that they would have met their duty of care.
e) Social benefit
- Where an action is of some benefit to society, defendants may be protected
from liability even if their actions create risk.
f) Professions and skills
- Persons who hold themselves out to possess a particular skill should be judged
on what a reasonable person possessing the same skill would do in the
situation rather than that of a reasonable man.
4.2 Res ipsa loquitur
The claimant must demonstrate:
a) The thing which caused the injury was under the management and control of the
defendant.
b) The accident was such that it would not occur if those in control used proper care.
5. Causality and remoteness of damage
5.1 Damage or loss
Personal injury
Damage to property
Financial loss which is directly connected to personal injury (loss of earnings)
Pure financial loss is rarely recoverable
5.2 The ‘But for’ test
- The claimant must prove that if it was not ‘but for’ the other’s actions they would not
have suffered damage.
Law of tort.............................................................................................................................................2
Business associations.............................................................................................................................7
The nature of a company and formation of a company.......................................................................10
Promoters and pre-incorporation contracts........................................................................................13
Corporate crimes.................................................................................................................................15
The company’s constitution.................................................................................................................16
Corporate transactions........................................................................................................................18
Company Management.......................................................................................................................25
Directors..............................................................................................................................................27
Protection of minority shareholders....................................................................................................33
Company securities..............................................................................................................................36
, Law of tort
1. Tort
a) It is not a breach of contract
b) It is not a crime
A tort is a civil wrong and the person wronged sues in a civil court for compensation or an
injunction.
1.1 Types of tort
Passing-off
- Is the use of a name, mark or description by one business that misleads
consumer to believe that their business is that of another.
- E.g., expensive ‘designer’ products are sold as ‘originals’
- Stringfellow v McCain Foods GB 1984
- HFC Bank v Midland Bank 2000
Negligence
- Carelessness of an individual or company which causes damage (physical or
financial) to the claimant.
- Carelessly carrying out an act and breaking a legal duty of care owed to another
causing them loss or damage.
2. The tort of negligence
To succeed in an action for negligence the claimant must prove that:
The defendant had a duty of care to avoid causing injury, damage or loss
There was a breach of that duty by the defendant
In consequence that claimant suffered injury, damage or loss
3. Duty of care
- A person might owe a duty of care to another with whom they had no contractual
relationship at all.
3.1 The basic rule
- Whether or not a duty of care exists in any situation, the courts decide on a case by case
basis.
-
, 3.2 Development of the doctrine
- For any duty of care to exist, two stages must be tested: (Anns v Merton London Borough
Council 1977)
1) Is there sufficient proximity between the parties, such that the harm suffered was
reasonably foreseeable?
2) Should the duty be restricted or limited for reasons of economic, social or public
policy?
- Latest stages in the development: (Caparo Industries plc v Dickman 1990)
1) Was the harm reasonably foreseeable?
2) Was there a relationship of proximity between the parties?
3) Considering the circumstances, is it fair, just and reasonable to impose a duty of care?
4. Breach of duty of care
4.1 The basic rule
These factors should be considered when deciding if a duty of care has been breached:
a) Probability of injury
- It is presumed that a reasonable man takes greater precautions when the risk of
injury is high: Bolton v Stone 1951.
- In Glasgow Corporation v Taylor 1922 a local authority was held to be negligent
when children are poisonous berries in a park. A warning notice was not
considered to be sufficient to protect children.
b) Seriousness of the risk
- The young, old or disabled may be prone to more serious injury than a fit able-
bodied person.
- The ‘egg-shell skull’ rule means that you must take your victim as they are.
- Smith v Leech Brain & Co 1962
c) Issues of practicality and cost
- It is not always reasonable to ensure all possible precautions are taken.
, d) Common practice
- Where an individual can prove their actions were in line with common practice
or custom it is likely that they would have met their duty of care.
e) Social benefit
- Where an action is of some benefit to society, defendants may be protected
from liability even if their actions create risk.
f) Professions and skills
- Persons who hold themselves out to possess a particular skill should be judged
on what a reasonable person possessing the same skill would do in the
situation rather than that of a reasonable man.
4.2 Res ipsa loquitur
The claimant must demonstrate:
a) The thing which caused the injury was under the management and control of the
defendant.
b) The accident was such that it would not occur if those in control used proper care.
5. Causality and remoteness of damage
5.1 Damage or loss
Personal injury
Damage to property
Financial loss which is directly connected to personal injury (loss of earnings)
Pure financial loss is rarely recoverable
5.2 The ‘But for’ test
- The claimant must prove that if it was not ‘but for’ the other’s actions they would not
have suffered damage.
