Business, Society and Law (MN12005) - Law Introduction & Essentials

A comprehensive set of vocabulary-style flashcards covering the key concepts from the lecture notes on business law, the English legal system, contract formation, and remedies.

Separation of Powers

A governance principle dividing power among legislative, executive, and judiciary to prevent concentration and abuse.

Legislative

The branch that makes laws (Parliament), composed of the house of commons and the House of Lords.

Executive

The branch that implements and enforces laws (Prime Minister, Cabinet ministers, government departments)

Judiciary

The branch that interprets laws and ensures justice; independent from the other branches, consists of judges who interpret laws and ensure their consistent application.

The Supreme Court is the highest court, ensuring that laws comply with constitutional principles

Fusion of Powers

Overlap between branches in England; not as rigid as systems like the U.S.

There is overlap between the executive and legislative branches - the prime minster and government ministers (executive branch) are often members of Parliament (legislative branch).

Parliament

The legislative body, comprising the House of Commons and House of Lords.

House of Commons

Lower house of Parliament; MPs who debate and vote on laws.

House of Lords

Upper house of Parliament; Lords who review and amend legislation.

Supreme Court of the UK

The highest court; ensures laws comply with constitutional principles and sets binding precedent.

Statute Law

Written laws passed by Parliament (primary legislation).

Statutes must go through the full process of debate, be approved by both houses of parliament, finally receiving royal assent.

Where a statute and common law rule conflict, the statute law must take superiority.

Interpretation of statutes

Judges interpret statutes where they are ambiguous or questions arise regarding their application.

Various methods of interpretation (literal rule, golden rule and mischief rule etc) are used.

The interpretation act of 1978 provides guidelines on how terms in statutes should be interpreted.

Common Law

Law developed by judges through court decisions and precedents (case law).

Doctrine of Precedent (stare decisis)

Stare decisis - To stand by things decided

Principle that decisions in higher courts bind lower courts in future similar cases; ratio decidendi binds.

Precedent ensures consistency, predicability and fairness within the legal system - particularly common within contract, tort and property law.

Ratio Decidendi vs obiter dicta

Ratio decidendi is the legal principle or rule that forms the basis for a court decision in a case, this legal reasoning is legally binding as precedent for future cases.

Obiter dicta are other comments (made by the judge) within court.

Unlike ratio decidendi, obiter dicta are informal comments and not legally binding as precedent for future cases.

Hierarchy of Courts

Structured order of courts where higher courts' decisions bind lower ones (e.g., Supreme Court > Court of Appeal > High Court > Crown Court > Magistrates' Court).

Law Reporting

Publication of court decisions and the legal principles they establish (e.g., All England Law Reports).

This is crucial in enabling that precedent is enforced and ensuring a consistent legal system - allows legal personnel to refer back to past case outcomes.

Primary Legislation

Laws enacted directly by Parliament (statutes).

Secondary Legislation

Laws made by ministers or agencies under powers given by Acts of Parliament (delegated).

Criminal Law

Law dealing with conduct harmful to society; offences prosecuted by the state and punished by penalties.

Parties involved:

• Prosecutor (State) represents the public and brings charges against the defendant

• Defendant is the individual or entity accused of committing the crime

Standard of proof:

• Within a criminal court, a high standard of proof - beyond reasonable doubt - is required from the prosecution

• The burden of proving the defendants guilt falls entirely upon the prosecution (the state)

The goal of criminal prosecution is punishment and deterrence.

Criminal trials always start at the magistrates courts and may proceed to the crown court for heavier crimes.

Civil Law

Law dealing with private disputes between individuals or organizations (contracts, torts, etc.).

• Aimed to provide resolution vis-a-vis disputes between private individuals and entities, to find compensation or remedy for the harmed party

• The party which has been wronged (the plaintiff) could receive resolution in the form of compensation (damages), injunctions or other forms of relief from the party being sued or accused of wrongdoing (the defendant)

Standard of proof:

• On the balance of probabilities: claimant must show that their version of event is more likely than not to be true

• The burden of proof lies upon the plaintiff but is a lower standard than within criminal cases

Appeals:

• If either party believes that there has been a legal or factual error, they can appeal a decision

• Appeals are typically handled by higher civil courts

Criminal vs civil law - key differences

• Criminal law involves public offences and seeks to punish the wrongdoer for the harm caused to society, whereas civil law deals with private disputes and seeks to remedy harm done to individuals or entities

• Criminal law is generally about protecting society from harmful behaviour, while civil law focusing on resolving and ensuring fairness between individuals or businesses

Criminal court system

Supreme Court of the United Kingdom

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Court of appeal (Criminal Division)

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High court (Divisional Court of the Kings Bench Division), to a limited extent.

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Crown Court

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Magistrates Court (including youth courts)

Civil court system

Supreme Court of the United Kingdom

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Court of Appeal (Civil Division)

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High Court (King'‘s Division/Chancery Division/Family Division)

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County Court (Including small claims court)

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Tribunals - hear cases and appeals on: immigration, social security, child support, pensions, tax and land.

Tribunals and Alternate dispute resolutions (ADRs)

Tribunals and ADRs are methods for resolving disputes outside of the traditional court systems.

• These processes can be faster, more cost-effective and more flexible than going through the courts

• The main forms of ADR are arbitration, conciliation, mediation and the use of ombudsmen

Arbitration

Arbitration is a formal process in which parties agree to submit their dispute to an independent third party, arbitrator, who makes a legally binding decision regarding the case.

Method:

• The arbitrator hears arguments, reviews evidence and then issues a decision.

• The only form of ADR that provides a legally-binding resolution (an award).

Characteristics:

• Binding - the decision is legally enforceable, similar to court judgements

• Private - arbitration proceeding are confidential

• Generally faster than going through court

• Arbitrators are generally chosen for their expertise in the area relevant to the dispute (eg business or construction)

• Example use case: two businesses may use arbitrator rather than going through court, saving time and legal fees

Conciliation

ADR method in which an impartial third party helps those in dispute to come to resolution.

Method:

• The conciliator meets with both parties, understands their concerns and attempts to facilitate communication to find an acceptable solution for both parties

• A conciliator may suggest a solution, but it is not legally binding and cannot be enforced upon parties

Characteristics:

• The process is informal and the conciliator has a more proactive role compared to an arbitrator

• The process is strictly voluntary for both parties

Mediation

Mediation is an informal ADR process in which a mediator helps parties involved in a dispute to communicate and negotiate to find a mutually acceptable solution.

• Unlike arbitration or conciliation, a mediator will not suggest a solution or make decisions for the parties.

Method:

• The mediator helps to facilitate dialogue between parties and may guide the conversation, helping them to express their concerns and understand the opposing party’s position, but will not impose a solution

Ombudsmen

An ombudsman is an independent official who investigates complaints made by an individual against a public authority or private organisation, particularly where their is concern of maladministration or unfair treatment.

• Although an ombudsman may suggest a solution to the institution accused of wrongdoing, they are not obliged to accept it as it is not legally binding

• Ombudsman are investigative, and can be found within large corporations or government agencies

Lay personnel - Jury

A jury is a group of ordinary citizens (typically 12, in criminal cases) selected to decide the outcome of a criminal trial (and sometimes civil cases) based on the facts presented in the case.

Role of the jury:

• The role of the jury is to listen to the evidence, assess the credibility of the witnesses and subsequently decide on the guilt or innocence of the defendant (criminal cases), or their liability or lack of (civil cases)

• In many jurisdictions, criminal verdicts must be unanimous - but a majority vote is sufficient in some

• Tasked with impartiality, jurors are independent and not influenced by the legal system or the professions involved in the case

Where is a jury used?

• Criminal trial: In serious criminal cases such as murder or assault, the jury listens to evidence and determines whether the accused is guilty or not

• Civil trial: In some jurisdictions, a jury may be involved in civil cases, such as personal injury claims or defamation

Lay personnel - magistrates:

Magistrates are ordinary people who are appointed to serve as judges in magistrates courts, they receive basic training but are not legally trained and are guided by a legal aid (trained barrister or solicitor).

• Typically work in panels of 3

Types of magistrates

• Lay magistrates: ordinary citizens, often volunteers who work on a part-time basis. Not legally qualified and work with legal advisors.

• District judges: full-time professional judges who have legal qualifications and often sit alone in cases where the complexity of the matter requires a trained judge

Magistrates use cases

• Criminal Cases: magistrates would typically handle cases like theft, driving offences, or public order offences in magistrates’ courts. Serious offences like murder or rape would be sent to a higher court, such as the Crown Court.

• Preliminary Hearings: for more serious crimes, magistrates may conduct the initial hearing to decide whether the defendant should be remanded in custody or granted bail.

• Civil Cases: magistrates can also deal with some family matters, such as child protection issues, and some civil cases, such as small claims (depending on jurisdiction).

Responsibility of magistrates within criminal court:

In criminal courts, magistrates may decide:

• Whether to charge the defendant or send the defendant to crown court for trial

• Whether to grant bail

• Whether to convict or acquit the defendant in summary offences (less serious crimes)

• The sentence for less serious offences (ie fines, community orders or short prison sentences)a

General role of judges

• Judges play a crucial role in overseeing legal proceedings and ensuring that justice is administered fairly

• Judges are classified as inferior and superior judges

Superior judges

High-ranking judges that hold positions of significant authority, overseeing higher court cases (High courts, Supreme Courts or Courts of Appeal).

• Typically handling more serious or complex cases, with broader powers, than inferior judges

Types of superior judges

Supreme Court justices - the highest legal courts in the land, dealing with constitutional matters, interpretation of laws and landmark legal decisions.

• These rulings are typically final and set precedent for all other courts

High Court judges - judges dealing with more complex civil and criminal cases, the high court is split into specialised divisions.

• King’s bench division (civil cases)

• Chancery division (business law and trusts)

• Family division (family law matters)

Court of appeals judges - hear appeals of cases from lower courts

superior judges - powers & responsibilities

Judicial review - superior judges have the power to review decisions made by judges in lower courts

Complex cases - Superior judges typically hear the most complex, high-value or high-profile cases

Precedent setting - judges in higher courts set precedents which lower courts are obliged to follow

Appeals - Superior judges often hear appeals from inferior courts and decide whether to uphold or overturn the lower courts decision

How are superior judges typically appointed?

Typically appointed based on extensive legal experience and often hold their positions for long durations, with some holding them for life.

Typically appointed by the monarch or government.

Inferior judges

Judges that serve in the lower courts and deal with less complex / lower-level cases, often handling more routine matters.

• Lay magistrates

• County court judges

• Family court judges

• Tribunal judges

Solicitors

• Solicitors act as intermediaries between their client and the legal system

• They draft documents, provide legal advice and represent clients in lower level courts (eg magistrates courts and county courts)

• Solicitors must complete a law degree or a conversion course, followed by a 2 year training contract

Barristers

Unlike solicitors, barristers focus on advocacy for their clients in court, rather than the day-to-day legal paperwork handled by solicitors.

• Barristers must complete a law degree or conversion course, followed by the bar professional training course (BPTC).

• After completing their pupillage, barristers can practice independently or join a chambers.

Barristers have the right of audience in all courts, unlike solicitors, they can represent clients in higher courts (crown court, high court and court of appeal).

Contract

A contract is a legally binding agreement between two or more parties that creates legally enforceable obligations.

Guenter Treitel: It is an agreement that gives rise to enforceable legal obligations.

Simple contracts

Contracts that do not require a specific form (eg can be verbal agreements or informal written ones).

However certain types of contracts are the exception to the general rule, and do need to be in writing.

Types of contracts that must be in writing

• Bills of exchange (Bills of Exchange Act 1882), a written document that instructs one person (the drawee) to pay a specific sum of money to another person (the payee).

• Contracts for sale/disposal of Land or Property, must be in writing to ensure clarity and prevent disputes about ownership or terms

• Consumer Credit Agreements (Consumer Credit Act 1974)

What are the requirements for a bill of exchange to be valid?

Unconditional order in writing

• Bill must be a clear, written order directing the drawee to pay, not a mere request

• The order must be unconditional, the payment shouldn’t depend on any uncertain future event or condition

Bill of exchange must address the Drawer, Drawee, and Payee

• Drawer: The person who writes and signs the bill, instructing the drawee to pay. 

• Drawee: The person the bill is addressed to, who is ordered to make the payment. 

• Payee: The person to whom the payment is to be made. 

• Specifies payment on demand or at a fixed/determined future date
  

• Amount must be a sum certain in money

Consumer Credit Agreements

Consumer Credit Agreements (Consumer Credit Act 1974): a consumer credit agreement is when a lender provides credit (e.g., loans, credit card balances, hire-purchase agreements) to an individual borrower.

Signing contracts

Generally you are bound by the terms you sign.

Reference case: L’Estrange v Graucob (1934) - Established an important principle in contract law: when you sign a contract, you are bound by its terms, even if you did not read or fully understand them, provided their is no misrepresentation or fraud involved.

Key legal principles of contracts

• Binding nature of signed contracts - When you sign a contract, it signifies agreement to all its terms, regardless of whether you read or understood them. This is known as the signature rule.

• Exclusion clauses - these clauses limit or exclude liability for certain breaches of conditions. Courts will enforce them if they are clear and brought to the other parties attention, unless deemed unfair or unreasonable (eg under the unfair contract terms act 1977 for modern contracts)

Contract formation - key elements

Offer and acceptance

Intention to create legal relations

Certainty of terms

Consideration

Contract formation - Agreement of Offer and Acceptance

• Offer: One party (the offeror) makes a clear and definite proposal to another party (offeree). The offer must be specific and be capable of being accepted without further negotiation,

• Acceptance: The offeree must unconditionally agree to the terms of the offer. Acceptance can be communicated verbally, in writing, or by conduct.

Rules for acceptance:

• Must mirror the offer without changes (the ‘mirror image rule’)

• Must be communicated to the offeror unless waived (eg acceptance by conduct)

• Silence is generally not acceptance unless explicitly agreed otherwise

Contract formation - intention to be legally bound

• The parties must intend for their agreement to have legal consequences

Courts look at context to determine intention:

• Business/commercial agreements: presumed to have legal intent. EG a contract between a supplier and retailer

• Social/domestic agreements: Presumed not to have legal intent unless proven otherwise. Example: an agreement between friends to share car fuel costs is unlikely to be enforceable unless clearly intended as a formal agreement (eg written contract)

Contract formation - certainly of terms

A contract must have clear and definite terms to be enforceable. If the terms are too vague or incomplete, the contract may fail.

Key elements that should be certain include:

• Price

• Subject matter

• Duration

Example: "I will sell you my car for £5,000" = Clear / “I might sell you my car if I feel like it" = Too uncertain.

Courts may refuse to enforce an agreement if there are:

• Ambiguous terms: Unclear obligations or rights.

• Incomplete terms: Missing essential details.

Contract formation - Consideration

Consideration refers to the value exchanged between the two parties, each party must provide something of value (eg money, goods or a promise) for the contract to be valid.

Types of consideration:

• Executed: already provided (e.g., payment upon delivery).

• Executory: to be provided in the future (e.g., promise to pay later).

• Example: buyer pays £5,000 (consideration) for the seller’s car (consideration).

Rules of Consideration:

• Must be sufficient but need not be adequate: the value provided does not have to be equal, but it must have some value in the eyes of the law.

• Cannot be past consideration: You cannot rely on something already done as consideration for a new promise.

Elements working together in contract formation

For a valid contract, these elements must combine:

• A clear offer and acceptance to form an agreement.

• A shared intention to be legally bound.

• Clear, definite terms that leave no ambiguity.

• An exchange of consideration between the parties.

Offer vs Invitation

Offer

An offer is a definite proposal made by one party (the offeror) to another (the offeree), indicating a willingness to enter into a contract on specific terms. It is intended to become binding as soon as it is accepted by the offeree.

Characteristics of an Offer:

• Made by the Offeror: the person making the offer proposes specific terms.

• Proposal of Terms: the offer lays out clear and definite terms, leaving no room for ambiguity.

• Intention to Create Legal Relations: the offeror must intend for the agreement to be legally binding once accepted.

• Capable of Acceptance: the offer can be accepted by the offeree, creating a binding contract.

• The terms are clear and specific, and if the offeree accepts, a contract is formed.

Invitation to Treat

An invitation to treat is not an offer, but rather an invitation for others to make offers or negotiate. It is a preliminary communication that signals an openness to discuss terms but lacks the intention to create a binding contract at this stage.

Characteristics of an Invitation to Treat:

• No Intention to Create Legal Relations: the party making the invitation does not intend to be bound at this stage.

• Encourages Offers: it invites others to make offers, which the inviter can then accept or reject.

• Preliminary Nature: it is a precursor to the actual offer.