LO1 Explain the basic nature of the legal system
You have joined a law firm as a trainee solicitor specialising in company and corporate law. As part of your traineeship, you have been asked to write some legal articles (essay type) in the firm’s newsletter, designed for start up companies and existing companies. The legal areas that you need to cover are detailed below:
P1. You are required to explain different sources of law and laws that organisations must comply with The student must include the following sections :
- An explanation of the legal system.
- An overview of the sources of law.
P2. Explain the role of government in law-making and how statutory and common law is applied in the justice courts.
LO2 Illustrate the potential impact of the law on a business
P3. Using specific examples, illustrate how company, employment and contract law has a potential impact on business.
LO3 Suggest appropriate legal solutions to business problems
John and Tom are owners of two companies Devernam Ltd and Bashful Ltd, which is a car rental company. The following issues have arisen in both companies:
Juliet hires a car from Bashful Ltd. On arrival at the office, she is given a form, which includes terms and conditions in small print on the back, and she was asked to sign it. She does so and pays the hire charge. When she gets into the car, she happens to look into the glove box and sees a document entitled “Limitation of Liability”. This states that the hire company will not be liable for any injury caused by the defect in the car unless this is as a result of the company’s negligence. While Juliet is driving on the motorway, the airbag inflates and causes her to have an accident. She was injured. Is the company, i.e. Bashful limited liable for the injury?
Franck started employment with Bashful Ltd on 1 September 2013. On 7 November 2015, his line manager stated that he is incompetent and he was dismissed without any notice. Discuss about the legality of the dismissal by the company.
Devernam Ltd was incorporated by Tom and John in January 2001, a company which sell ladies hand bags. John and Tom each owned £200 £1 shares in the company and they are the only directors and members of Devernam Ltd. Unfortunately, the company has been experiencing financial difficulties since February 2013. The company’s overdraft with Bark House Plc. had reached £200,000. In March 2013, the directors requested an additional £100,000 from Bark House Plc. The bank accepted and requested a security and the bank took a floating charge against the assets of Devernam Ltd. The business was suffering dramatically therefore the company’s auditor informed John and Tom that an insolvency liquidation is inevitable but John and Tom disagreed and they strongly believed that the company’s financial heath would improve. They had a huge sale to get rid of their old stock of handbags but the sale did not work out as expected. Two months later Devernam Ltd was wound up. By this time, Devernam’s overdraft with Devernam amounted to £350,000.
Florence was appointed as liquidator and the following facts were unveiled: In March 2012, John and Tom caused the company to repay an unsecured loan of £10,000, which Tom has made to the company two months ago. In addition, to the money owed to Bark House Plc., the company owes £15,000 to the HRMC, £20,000 to employees in salaries and £150,000 unsecured creditors.
Florence estimates that the total remaining assets of Devernam Ltd amount to £200,000. Florence’s fee for conducting the liquidation process is £3,000.
P4. Using the scenario above, or any other scenario(s) of your choice, suggest appropriate legal solutions for a range of business problems, e.g. termination of contract, rescue from insolvency and liquidation. In the event that you are using your own scenario(s), please ensure that you include an overview of the scenario(s) prior to answering P4.
P5. Provide justifications for use of appropriate legal solutions.