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  • ACCAPaperF4ENGCORPORATEANDBUSINESSLAW(CLENG)2008/09EssentialText

  • British library cataloguinginpublication data

    AcataloguerecordforthisbookisavailablefromtheBritishLibrary.

    Publishedby:KaplanPublishingUKUnit2TheBusinessCentreMollyMillarsLaneWokinghamBerkshireRG412QZ

    ISBN9781847105387

    KaplanFinancialLimited,2008

    PrintedandboundinGreatBritain.

    Acknowledgements

    WearegratefultotheAssociationofCharteredCertifiedAccountantsandtheCharteredInstituteofManagementAccountantsforpermisssiontoreproducepastexaminationquestions.TheanswershavebeenpreparedbyKaplanPublishing.

    Allrightsreserved.Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,ortransmitted,inanyformorbyanymeans,electronic,mechanical,photocopying,recordingorotherwise,withoutthepriorwrittenpermissionofKaplanPublishing.

    ii KAPLAN PUBLISHING

  • Contents

    Page

    Chapter 1 Englishlegalsystem 1

    Chapter 2 Contractlaw 21

    Chapter 3 Thelawoftorts 65

    Chapter 4 Employmentlaw 85

    Chapter 5 Agencylaw 111

    Chapter 6 Partnerships 123

    Chapter 7 Corporationsandlegalpersonality 137

    Chapter 8 Capitalandfinancing 175

    Chapter 9 Directors 197

    Chapter 10 Corporateadministration 211

    Chapter 11 Insolvency 225

    Chapter 12 Corporategovernance 237

    Chapter 13 Fraudulentbehaviour 249

    Chapter 14 Questions&Answers 261

    KAPLAN PUBLISHING iii

  • iv KAPLAN PUBLISHING

  • v

    chapterIntroduction

  • How to Use the Materials TheseKaplanPublishinglearningmaterialshavebeen

    carefullydesignedtomakeyourlearningexperienceaseasyaspossibleandtogiveyouthebestchancesofsuccessinyourexaminations.

    Theproductrangecontainsanumberoffeaturestohelpyouinthestudyprocess.Theyinclude:

    Thesectionsonthestudyguide,thesyllabusobjectives,theexaminationandstudyskillsshouldallbereadbeforeyoucommenceyourstudies.Theyaredesignedtofamiliariseyouwiththenatureandcontentoftheexaminationandgiveyoutipsonhowtobesttoapproachyourlearning.

    Thecomplete text or essential textcomprisesthemainlearningmaterialsandgivesguidanceastotheimportanceoftopicsandwhereotherrelatedresourcescanbefound.Eachchapterincludes:

    (1) Detailedstudyguideandsyllabusobjectives(2) Descriptionoftheexamination(3) Studyskillsandrevisionguidance(4) Completetextoressentialtext(5) Questionpractice

    Thelearning objectivescontainedineachchapter,whichhavebeencarefullymappedtotheexaminingbody'sownsyllabuslearningobjectivesoroutcomes.Youshouldusethesetocheckyouhaveaclearunderstandingofallthetopicsonwhichyoumightbeassessedintheexamination.

    Thechapter diagramprovidesavisualreferenceforthecontentinthechapter,givinganoverviewofthetopicsandhowtheylinktogether.

    Thecontentforeachtopicareacommenceswithabriefexplanationordefinitiontoputthetopicintocontextbeforecoveringthetopicindetail.Youshouldfollowyourstudyingofthecontentwithareviewoftheillustration/s.Theseareworkedexampleswhichwillhelpyoutounderstandbetterhowtoapplythecontentforthetopic.

    Introduction

    vi KAPLAN PUBLISHINGvi KAPLAN PUBLISHING

  • Test your understandingsectionsprovideanopportunitytoassessyourunderstandingofthekeytopicsbyapplyingwhatyouhavelearnedtoshortquestions.Answerscanbefoundatthebackofeachchapter.

    Summary diagramscompleteeachchaptertoshowtheimportantlinksbetweentopicsandtheoverallcontentofthepaper.Thesediagramsshouldbeusedtocheckthatyouhavecoveredandunderstoodthecoretopicsbeforemovingon.

    Question practiceisprovidedatthebackofeachtext.

    Icon Explanations

    Definition Keydefinitionsthatyouwillneedtolearnfromthecorecontent.

    Key Point Identifiestopicsthatarekeytosuccessandareoftenexamined.

    Expandable Text Expandabletextprovidesyouwithadditionalinformationaboutatopicareaandmayhelpyougainabetterunderstandingofthecorecontent.Essentialtextuserscanaccessthisadditionalcontentonline(readitwhereyouneedfurtherguidanceorskipoverwhenyouarehappywiththetopic)

    Illustration Workedexampleshelpyouunderstandthecorecontentbetter.

    Test Your Understanding Exercisesforyoutocompletetoensurethatyouhaveunderstoodthetopicsjustlearned.

    Tricky topic Whenreviewingtheseareascareshouldbetakenandallillustrationsandtestyourunderstandingexercisesshouldbecompletedtoensurethatthetopicisunderstood.

    FormoredetailsaboutthesyllabusandtheformatofyourexampleaseseeyourCompleteTextorgoonline.

    Online subscribers

    Paper introduction

    Syllabus objectives

    KAPLAN PUBLISHING vii

  • Paperbased examination tips

    Study skills and revision guidancePreparing to study Effective studying

    Further reading

    YoucanfindfurtherreadingandtechnicalarticlesunderthestudentsectionofACCA'swebsite.

    Introduction

    viii KAPLAN PUBLISHING

  • EnglishlegalsystemChapter learning objectives

    Uponcompletionofthischapteryouwillbeableto:

    explainthedifferencebetweencivilandcriminallaw explainthestructureandoperationofthecivilcourtsandtribunal

    systems explainthemeaningofjudicialprecedent,ratiodecidendiand

    obiterdicta illustratehowthedoctrineofjudicialprecedentworksinrelation

    tothecivilcourts explainhowlegislationismadeandthedoctrineofsovereignty setouttherulesandpresumptionsusedbythecourtsin

    interpretingstatutes identifytheconceptofhumanrightsasexpressedintheHuman

    RightsAct1998(HRA1998) explaintheimpactofhumanrightslawonstatutoryinterpretation explaintheimpactofhumanrightslawonthecommonlaw.

    1

    chapter

    1

  • 1Criminal law versus civil law

    Criminal law Civil lawAcrimeisanoffenceagainstthestate.Thestateprosecutesapersonwhoisaccusedofacrime.Theobjectistoproveguilt.

    Civillawsetsouttherightsanddutiesofpersonsasbetweenthemselves.Anactionisbroughtbyoneperson(theclaimant)againstanother(thedefendant).Theobjectistoshowliability.

    Burden of proof guiltmustbeshownbeyond reasonable doubt.

    Burden of proof liabilitymustbeshownonthebalance of probabilities.

    Object toregulatesocietybythethreatofpunishment.

    Object usuallyfinancialcompensationtoputtheclaimantinthepositionhewouldhavebeeninhadthewrongnotoccurred.

    Thecriminalcourtwillsentencethedefendantanditmayfinehimorimposeaperiodofimprisonment.

    Thecivilcourtwillorderthedefendanttopaydamagesoritmayordersomeotherremedy,e.g.specificperformanceorinjunction.

    English legal system

    2 KAPLAN PUBLISHING2 KAPLAN PUBLISHING

  • Which one of the following statements is correct?

    A Theaimofthecriminallawistoregulatebehaviourwithinsocietybythethreatofpunishment.

    B Theaimofthecriminallawistopunishoffenders.C Theaimofthecriminallawistoprovideameanswherebyinjured

    personsmayobtaincompensation.D Theaimofthecriminallawistoensurethatthewillofthemajorityis

    imposedupontheminority.

    2The court systemThe main English civil courts

    Thefollowingdiagramshowsthemaincivilcourts.Thetermfirstinstancereferstothecourtinwhichthecaseisfirstheard.Appealsareheardinadifferentcourt.Thearrowsshowthewayacasewillprogressthroughthecourtsystem.

    chapter 1

    KAPLAN PUBLISHING 3

    Test your understanding 1

  • The threetrack system

    Whenaclaimisreceived,itwillbeallocatedtooneofthreetracksforthehearing.

    Note:theCountyCourtdealswithallcasesallocatedtothesmallclaimstrack,themajorityoffasttrackandsomemultitrackcases.AllotherclaimsaredealtwithbytheHighCourt.

    (1) Thesmallclaimstrackdealswithsimpleclaimsvaluedatnomorethan5,000.

    (2) Thefasttrackdealswithmoderatelyvaluedclaimsofbetween5,000and15,000.

    (3) Themultitrackdealswithclaimsofover15,000and/orcomplexclaims.

    Other courts

    Magistrates' Court European Court of Justice (ECJ)

    European Court of Human Rights (ECtHR)

    Jurisdictionismainlycriminal,butdoeshaveciviljurisdictioninfamilymatterssuchascontactorders,adoption,andmaintenance.Therearealsopowersofrecoveryofcounciltaxarrearsandchargesforwater,gasandelectricity.

    ECJdealswithactionsbetweentheEUinstitutionsandthememberstates.

    ItistheultimateauthorityontheinterpretationofEuropeanlaw.

    ECJisthereforesuperiortotheHouseofLords.

    CasesarereferredtotheECJbynationalcourts.

    ThefinalcourtofappealinrelationtomattersconcerningHRA1998.

    ProceedingsintheEnglishcourtsmusthavebeenexhaustedbeforeECtHRwillhearacase.

    AppealstoCrownCourtorHighCourt.

    Noappeal. Noappeal.

    English legal system

    4 KAPLAN PUBLISHING

  • Tribunals

    Therearetwotypesoftribunal:

    Yourexaminationconcentratesonadministrativetribunalsandofthosethemostimportantistheemploymenttribunal.

    Administrativetribunalsaresetupbystatutetodealwithspecialistdisputesasanalternativetothecourtsystem.

    Domestictribunalsaresocalledbecausetheyaresetupbyaparticularbodyorclubtoregulatetheconductoftheirmembers.

    Employment tribunals

    Employmenttribunalsarelocaltribunalsestablishedtoheardisputesbetweenanemployeeandtheiremployeroncertainstatutoryemploymentmatters,suchasunfairdismissal.

    Employmenttribunalsarecomposedofonelegallyqualifiedchairman,plustwoexpertlaymenwhoaredrawnfrompanelsrepresentingbothsidesoftheindustry.

    Appealsaretotheemploymentappealtribunal(EAT)andcanonlybemadeonapointoflaw.

    TheEATiscomposedofoneHighCourtjudge,plustwoorfourexpertlaymen.

    Advantages and disadvantages of tribunals

    Tribunalshavethefollowingadvantages:

    Expertise:thecasewillusuallybeheardbysomeonewhohasexpertiseinthatareaandcanformhisconclusioninlinewithacceptedpractice.Thismayquickentheprocessandreducethenecessityofemployingexpensiveexpertevidence.

    Speed:tribunalsaremuchquickerthantakingthematterthroughthecourts.

    Cost:tribunalsareamuchcheaperprocedurethantakingthematterthroughthecourts.Ascomplainantsdonothavetorelyonlegalrepresentation,therearenocourtfeesandcostsarenotnormallyaward

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