24. Intellectual Property

The final chapter in the book examines matters relating to the intellectual property created and/or owned by a business. Given the value of the outputs from the intellectual creativity of persons (software programs, books, music recordings etc.), this chapter outlines the rights available to protect them and the consequences for infringement. It first identifies the law surrounding creative ideas and work (copyright) before a product’s appearance (design rights) is considered. The chapter continues by assessing the protection of a brand name and image (trademarks) and finishes the substantive issues through examination of inventive ideas and works (patents). Confusion of the public through the unlawful use of an existing business’ name or product can result in the tortious liability of ‘passing-off.’ The chapter concludes with an assessment of the intellectual property produced by employees and the consequences of employment status for the rights to exploit the property.

16. Maintenance of Finance and Capital

This chapter discusses the details of the various obligations on companies that wish to issue and allot shares, provide debentures and charges over the company’s assets, and provide guidance on the maintenance of the company’s finances. It continues from the discussion of the administration of the company to consider the broad issue of corporate governance and identifies how a company may raise capital, while also considering the obligations placed on the directors to protect and maintain the capital of the company for its members. To appreciate the effects of the Companies Act (CA) 2006 on companies, it is important to understand the rules regarding the issuing of shares and granting of debentures to protect the company and the creditors from abuse, and how dividends are to be agreed upon and provided to shareholders.

12. Economic Loss, the Liability of Professional Advisors, and Psychiatric Injury

This chapter continues on from the previous chapter in discussing liability in negligence for physical damage and considers the potential liability that businesses and individuals may face when they provide advice in the nature of their business, when they cause economic losses not associated with physical damage, and where the claimant suffers a psychiatric injury or nervous shock due to the acts of the tortfeasor. Recently, there has been an increase in instances of imposing liability on employers for the stress and associated health problems suffered by their employees. In the absence of physical damage, restrictions are placed on the imposition of liability for pure economic loss, although such loss has been widened to include damages for negligent misstatements. Of crucial importance is that businesses are aware of the implications of providing information in the course of their professional activities that may cause an investor or client loss through negligence.

8. Contractual Terms

This chapter focuses on the terms or details of a contractual agreement, and considers the implications of what the parties intend to include in the agreement, what they did not mean to be included in the contract, and what significance different terms may have in the contract. It distinguishes between the terms of a contract and representations, and considers whether, when a term has been identified as such, it is a ‘condition’ or a ‘warranty’. The chapter then studies how terms are implied into the contract and how this affects terms that have been expressed. It concludes by examining how parties may seek to exclude or limit a legal responsibility through the incorporation of an exclusion clause.

4. The Court Structure and Alternative Forms of Dispute Resolution

This chapter identifies courts and tribunals as the place where the laws discussed in the previous chapters are interpreted and utilized in the legal system. The jurisdiction of the courts and the personnel within them are described and a comparison is drawn between these forums for the administration of justice. It is important for those in business to be aware of the work of at least one tribunal—the Employment Tribunal, as many employment-related disputes ultimately end up here. Also, the courts in the English legal system, and the increasing use of Alternative Dispute Resolution mechanisms, are relevant to businesses as they are used either to settle disputes or to avoid them altogether. Because the term ‘court’ is difficult to define in any practical sense, the chapter uses a description of what a court does.

2. Law, the Constitution, EU Membership, and Human Rights

This chapter, in discussing the English legal system and its features, begins by outlining what the law is and some important constitutional principles. The discussion is primarily based on the institutions and personnel involved in the practice and administration of justice. It therefore involves a description and evaluation of the courts, tribunals, and the judiciary, including their powers and the rationale for such authority, as well as the mechanisms of control and accountability. The aim of this chapter is to demonstrate how the mechanisms of the justice system work. The English legal system exists to determine the institutions and bodies that create and administer a just system of law. It should be noted here that the UK does, in fact, possess a written constitution, it is merely uncodified.

11. Negligence and Nuisance

This chapter first discusses one of the most important torts—negligence—which may be commonly seen in instances of personal injury. This is followed by a discussion on acts of private and public nuisance. Torts law is particularly relevant to businesses as they need to be aware of the extent of their potential liabilities to workers, visitors to business premises, other businesses, and to the general public. This extends to ensuring that safe systems of work exist and appropriate insurance is maintained. Contrary to civil law, torts law imposes obligations on parties who wish to undertake duties freely and agree to be legally bound via contracts without, necessarily, prior agreement. The duty is to take reasonable care and not intentionally or negligently cause harm or damage.

7. Contracts, Contractual Capacity, Mistake, Misrepresentation, and Duress

This chapter discusses how the manner in which a contract is concluded can potentially affect its validity. Before discussing the terms and details of a contract, it is important to note that a contract may fail due to one or both parties not possessing the capacity to establish a contract. Some of the common reasons includes a mistake by one or both parties, a provision that has been misrepresented in the negotiations, or the use of undue influence or placing the other party under duress in the process of concluding the contract. Some of the reasons listed in this chapter may be common, but the emphasis here is to identify where problems may occur that could prevent the successful operation of the contract despite fulfilling the essential features discussed in the previous chapters.

6. Essential Features of a Valid Contract 2: Consideration, Intention to Create Legal Relations, and Certainty of Terms

This chapter is a continuation of the previous one, and further discusses the essential features of a legally binding, or valid, contract. It puts particular importance on the meaning of ‘consideration’, which is what makes a promise or agreement a ‘bargain’ and, therefore, enforceable. The courts are not bound to, and will not, consider a ‘bare promise’. Parties to a contract must intend it to be legally binding, and not just be social or domestic agreement, and such contracts must contain certain terms that identify the rights and obligations of both parties. Without an understanding of these crucial elements, agreements may be concluded but they will not create an enforceable contract. Also, although a contract is enforceable by those parties to it, this right can be extended to third parties if the contract has been made for the benefit of these parties.

1. Studying Law

This chapter begins by identifying the reasons that make the study of business law an important aspect in the wider context of business. It identifies strategies and good practice that will help a student with their studies, a sample problem-type question and how to prepare a law-based answer. Business law is a distinct topic from other modules on accountancy, business, and management courses. A knowledge of the law cannot be bluffed—it is necessary to be aware of the relevant laws and think about business problems from a legal standpoint. This approach will ensure that legal questions are answered with reference to the law, which is crucial to being successful in the business law module.