Law Exam

Civil law

A category of law dealing with disputes between individuals and/or organisations where a claimant sues a defendant for a wrong.

Criminal law

A category of law where a prosecutor accuses an individual of committing acts prohibited by law, resulting in a verdict of guilty or not guilty.

Balance of probabilities

The standard of proof required in civil law cases where the claimant must prove their case.

Beyond reasonable doubt

The standard of proof required in criminal law cases where the prosecution must prove their case.

Small claims track

The civil court track for straightforward cases valued below $£10,000$.

Fast track

The civil court track for cases valued between $£10,000$ and $£25,000$ that can be heard within one day.

Multi-track

The civil court track for complex or high value cases above $£25,000$ heard in the High Court.

Primary legislation

The most authoritative source of law in the UK, consisting of Acts of Parliament such as the Equality Act 2010.

Secondary legislation

Laws created by Ministers or government bodies used to 'fill in the gaps' to make primary legislation work in practice.

Case law

Also known as common law, this source of law is based on judicial precedent where a judge's decision may be followed by other judges in similar cases.

Human Rights Act 1998

The legislation that made the European Convention on Human Rights part of UK Law.

Alternative Dispute Resolution (ADR)

Processes such as arbitration, mediation, and conciliation through which parties may reach an agreement as an alternative to court proceedings.

Arbitration

A procedure where an independent person, often a technical expert, considers the facts of a case and makes a determination that is not final and legally binding.

UNCISG

The UN Convention on Contracts for the International Sale of Goods, which applies to the commercial sale of goods between businesses in different states.

Riba

The Sharia law term for usury or interest, which is considered an unlawful gain in Islamic finance.

Vitiating factors

Factors such as lack of capacity, absence of free will (duress), illegality, or misrepresentation that affect the validity of a contract.

Void contract

An agreement that is not a contract at all, meaning the parties are not bound and property can generally be recovered.

Voidable contract

A contract that one party may choose to set aside, though property transferred before avoidance is usually irrecoverable from third parties.

Invitation to Treat (ITT)

An inducement to encourage another person to make an offer, such as goods on a shop shelf or advertisements, which is not capable of acceptance.

Executory consideration

A valid type of consideration consisting of a promise given in exchange for a promise.

Executed consideration

A valid type of consideration consisting of an act already performed in return for a promise.

Past consideration

An invalid form of consideration where the act or service was provided before the agreement was formed.

Doctrine of Privity

The general rule that only those who are party to a contract may enforce or sue on that contract.

Express terms

Provisions that have been clearly agreed by the parties, either verbally or in writing, during the formation of a contract.

Implied terms

Terms incorporated into a contract by custom, statute, or the courts to ensure the contract makes commercial sense.

Exclusion clause

Any clause that attempts to restrict or exclude the liability of one party for breach of contract or negligence.

Olley v Marlborough Court (1)

A case ruling that any exclusion clause must be given at the time that the contract is made to be properly incorporated.

Photo Productions v Securicor transport (2)

A case establishing that any ambiguity in an exclusion clause will be interpreted against the party relying on the clause.

The Unfair Contract Terms Act 1977 (UCTA 1977)

Legislation that regulates exclusion clauses in business contracts by requiring they pass a 'reasonableness' test, though it does not cover insurance contracts.

The Consumer Rights Act 2015 (CRA 2015)

Legislation that introduces a requirement for 'fairness' in consumer contracts and notices; a term is unfair if it causes a significant imbalance to the detriment of the consumer contrary to good faith.

Discharge by performance

The usual way a contract ends, occurring when both parties perform their contractual obligations completely and exactly.

Substantial performance

An exception to the exact performance rule where work is mostly completed, allowing for payment while the other party seeks redress for the incomplete portion.

Quantum meruit

Meaning 'the amount merited for the work completed', this is a remedy available where complete performance is prevented by the other party, as seen in Planche v Colborn (3).

Frustration

A method of discharging a contract when it becomes impossible or illegal to perform after it has been entered into, provided the event is not the fault of the parties.

Taylor v Caldwell (4)

A case illustrating frustration of contract due to the accidental destruction of the subject matter, such as a hall destroyed by fire.

Condor v Baron Knights (5)

A case illustrating frustration of contract due to personal incapacity, such as the ill-health of a drummer in a pop group.

Krell v Henry (6)

A case illustrating frustration of contract due to the non-occurrence of an event that was the main reason for the contract.

Law Reform (Frustrated Contracts) Act 1943

Legislation that regulates the rights and liabilities of parties when a contract is discharged by frustration.

Repudiatory breach

A serious breach, such as breaching a fundamentally important term or depriving a party of the whole benefit, that gives the innocent party the right to treat the contract as discharged.

Anticipatory breach

Occurs when one party gives notice of their intention not to comply with a contractual term before the performance is due.

Hadley v Baxendale (7)

A case establishing that damages for breach must arise naturally from the breach or be reasonably foreseeable by both parties at the time the contract was formed.

Victoria Laundry v Newman Industries (8)

A case where normal loss of income of $£16$ per week was recoverable, but a lucrative contract worth $£262$ was not as it was not foreseeable to the defendant.

Doctrine of restitution

The compensatory principle that the awarding of damages should put the parties in the position they would have been in had the breach not happened.

Reliance interest

A measure of damages where the innocent party sues for costs incurred, as seen in Anglia Television v Reed (9).

Jarvis v Swan Tours (10)

A case where non-financial losses, specifically disappointment, were recovered because the contract was for the provision of enjoyment.

Payzu v Saunders (11)

A case establishing that an injured party must take all reasonable steps to mitigate their losses.

Liquidated damages

An agreed compensation for breach of contract set in advance that the court will uphold if it is a genuine pre-estimate of loss.

Penalty clause

An arbitrary or excessive pre-agreed sum for breach of contract that does not protect a legitimate interest and is considered void, as in Ford Motor Co (England) Ltd v Armstrong (12).

Specific performance

An equitable remedy where the court directs a party to complete their contractual obligations, often used in land disputes.

Injunction

An equitable remedy where the court directs a party to stop breaching their contractual obligations, such as mandatory, prohibitory, or asset-freezing injunctions.

Principal

The person who has legally empowered the agent to enter into contractual relations with a third party.

Commercial agent

An independent self-employed agent (individual or company) who has a continuing authority in connection with the principal's business of the sale or purchase of goods.

Agency by estoppel

A relationship created where the principal's conduct gives the third party the impression that the agent has authority, also known as the agent being 'held out'.

Agency by necessity

A relationship created in an emergency (per Sachs v Miklos) where an agent with a pre-existing contractual relationship acts in good faith for the principal when contact is impossible.

Agency by ratification

The creation of a principal-agent relationship with retrospective effect, provided the principal was in existence and had legal capacity at the time of the act.

Lien

The right of an agent to retain property belonging to the principal until outstanding payments (remuneration or indemnity) are settled.

Actual express authority

Power to act for a principal that has been agreed verbally or in writing, the extent of which depends on the construction of the words used on appointment.

Actual implied authority

The agent's power to bind a principal as implied by the position held, such as a managing director's power to bind a company in commercial contracts.

Apparent or ostensible authority

Authority arising when a principal represents to a third party that an agent has the power to bind them, and the third party relies on that representation (Freeman and Lockyear v Buckhurst Park Properties).

Tort

An act or omission by a defendant responsible for causing injury or damage to a claimant, occurring without the need for a previous contractual relationship.

Neighbourhood principle

Defined in Donoghue v Stevenson as the duty of care owed to persons so closely and directly affected by an act that they ought reasonably to be in contemplation.

The Nicholas H (1995) factors

Four tests for assessing a duty of care: reasonable foreseeability, proximity, fair just and reasonable, and public policy.

Standard of care

Defined in Blyth v Birmingham Waterworks Co as that of 'a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs'.

Res ipsa loquitur

Latin for 'the facts speak for themselves'; it allows a court to infer a breach of duty when the cause of damage is unknown but was under the defendant's control.

But for test

The test for causation established in Barnett v Chelsea, where the claimant must prove that the damage would not have occurred but for the defendant's actions.

Novus actus interveniens

A new act that intervenes to break the chain of causation, causing the defendant's liability to cease at that point.

The Wagon Mound principle

The rule that loss is only recoverable in negligence if the harm suffered was a foreseeable result of the breach.

Special relationship

A relationship (per Hedley Byrne v Heller) that arises when professional advice is requested and given in a professional capacity, resulting in reasonable reliance and economic loss.

Caparo Industries plc v Dickman

A case clarifying that auditors do not owe a duty of care to individual shareholders or potential bidders who rely on statutory accounts for general circulation.

Liability limitation agreement

An agreement between a company and an auditor limiting the auditor's liability for negligence to a fair and reasonable amount, subject to annual approval by ordinary resolution.

Contributory negligence

A partial defence used to reduce liability by showing the damage or loss suffered was partly due to the claimant's own fault.

Volenti non fit injuria

A complete defence applying when a claimant voluntarily agrees to undertake the legal risk of loss or damage at their own expense.

Vicarious liability

A legal doctrine where one person (such as an employer or principal) is held legally responsible for the tortious acts of another (employee or agent).

Limitation Act

A statute setting time limits for claims: six years from a breach or tortious act, or three years for personal injury claims.

Natural Person

An individual human being as recognized in law.

Artificial Person

Entities including companies that possess legal rights and are subject to legal obligations.

Salomon v Salomon & Co

The legal case that established that a company is a separate legal person from its members, separated by a 'veil of incorporation'.

Perpetual Succession

A consequence of separate legal personality where a company continues to exist until it is formally wound up, regardless of changes in membership.

Macaura v Northern Assurance Co Ltd

A case illustrating that a company must own its insurance policy in its own name; an individual member has no insurable interest in the company's property.

Lifting the Corporate Veil

A legal process where courts identify members or directors and make them liable for the company's acts to prevent fraud or illegality.

Daimler Co Ltd v Continental Tyre and Rubber Co (GB) Ltd

A case where the court lifted the veil to reveal the members' true national identity to expose illegality during wartime.

Fraudulent Trading

Continuing to trade an insolvent company with the intent to defraud creditors, allowing for the lifting of the corporate veil.

Wrongful Trading

Continuing to trade an insolvent company without taking all reasonable steps to minimize potential losses to creditors.

Unlimited Company

A private company where there is no limit on the members' liability for debts incurred by the company.

Company Limited by Guarantee

A private company where liability is limited to an amount members agree to contribute to assets if the company is wound up; it cannot be registered with a share capital.

Limited by Shares

A company where members' liability is limited to any unpaid amount on the nominal value of shares held by them.

Public Limited Company (plc)

A company that requires at least two directors, a qualified secretary, and a minimum share capital of $\pounds 50,000$.

Trading Certificate

A document a public company must apply for, providing evidence of allotted share capital not less than the authorized minimum, before it can commence trading.

Memorandum of Association

A historic record of the initial subscribers who wish to form the company and agree to take at least one share each.

Articles of Association

The rules that govern how the company is run and form part of the company's constitution.

Certificate of Incorporation

Proof issued by the Registrar that a company exists and noting its effective birth date.

Promoter

A person who takes steps to incorporate a company and makes business preparations, excluding those acting merely in a professional capacity.

Pre-Incorporation Contract

A contract signed on behalf of a company before it is incorporated; the company cannot ratify it, and liability falls upon the promoter.

Provisions for Entrenchment

Provisions in the articles of association that can only be altered if a specified condition is met, a certain procedure is followed, or by unanimous agreement.

Bushell v Faith

The case illustrating that weighted voting rights can be used to make specific articles practically unalterable by a majority.

Off the Shelf Company

A company that has already been incorporated and is purchased to save time and avoid liability from pre-incorporation contracts.

Register of People with Significant Control (PSC)

A mandatory record of individuals with more than $25\%$ of shares or voting rights, or the right to appoint the majority of the board.

Confirmation Statement

A document submitted by all companies at least every $12$ months detailing the registered office, members, and share particulars.

Micro-entity

A company meeting two of three criteria: turnover $\le \pounds 1m$, balance sheet $\le \pounds 500k$, or $\le 10$ employees.

Small Company

A company meeting two of three criteria: turnover $\le \pounds 15m$, balance sheet $\le \pounds 7.5m$, or $\le 50$ employees.