Introduction to Business Law: Exam Paper and Solutions

This page contains an exam paper and solutions for BSc (Hons) Business Management with Foundation's Introduction to Business Law module. It includes multiple-choice, short answer, and longer answer questions covering topics such as the English Legal System, tort law, and company incorporation. The page also provides advice on possible claims in nuisance and contract law.

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BSc (HONS) BUSINESS MANAGEMENT WITH
FOUNDATION
SEMESTER TWO EXAMINATION 2021/2022
INTRODUCTION TO BUSINESS LAW
MODULE NO: BAM4011
INSTRUCTIONS TO CANDIDATES: There are THREE sections in this paper,
answer ALL THREE sections

Section A: Multiple-choice questions – There are FIVE questions. Answer all
questions. There is one correct answer per question. Suggested time 10
minutes. (5 x 2 = 10 Marks)
1. The English Legal System refers to the law in which of the following
countries? (2 Marks)
a. England only
b. England and Wales
c. England, Scotland, and Wales
d. England, Scotland, Wales, and Northern Ireland
Ans. England and Wales
2. Which of the following is NOT a source of English law? (2 Marks)
a. Statute
b. Caselaw
c. Orders in Council
d. Orders of the European Commission
Ans. Orders in Council
3. Which of the following correctly describes the elements for a legally
enforceable contract: (2 Marks)
a. Offer and acceptance
b. Offer, acceptance, and consideration
c. Offer, acceptance, consideration, and intention to form legal relations
d. Offer, acceptance, and intention to form legal relations
Ans. Offer, acceptance and consideration
4. What is the minimum age permitted for a person to be appointed as a
director? (2 Marks)
a. 16
b. 18
c. 21
d. No minimum age
Ans. 16
5. How many persons are needed to form a UK company? (2 Marks)
a. Two
b. One
c. Three

d. Four
Ans. One
Section B: Short answer questions - There are FIVE questions. Answer all
questions. Suggested time 50 minutes. (5 x 6 = 30 Marks)
1. Describe the principal characteristics of the legal system of England and Wales,
inclusive of court Structure, the judiciary, lawyers, and lay participation in the
system (magistrates, juries and tribunal members). (6 Marks)
Ans The legal system of UK has monarchical regulation in which individual person has the
leadership of sole authority. In this this type of individual is the head of state and have many
types of rights, roles, responsibilities which is established by law and prescribed through
treaties. The parliament has major powers for passing various laws which is established
mainly for categorizing two houses which is known house of lords and house of commons.
The hierarchy structure of court is prescribed as supreme court which is apex position and is
regarded as last resort to file appeal for grievances and dealing with the scenario which is
covered in UK case law of Jurisdiction. The second division of appeal is classified into
criminal and civil court and third category is appellate tribunal, which includes family
division, queen bench.
2. What is a Tort? Narrate in detail Tort of negligence and breach of duty of care . (6
Marks)
Ans Tort is one type of law area which covers mostly civil suits. In general, the claims which
is raised in civil court with an expectation of contractual disputes converted into tort law. The
law of tort is for redress a wrong done to individual and facilitating from any misconduct act
of others usually through awarding monetary damage as compensation.
In regular use the word negligence means no care. In a legal manner this denotes
failure in exercise care of standard which a doer in form of reasonable man exercises in these
situations. It is one type of legal duty care when this is reasonably foreseeable the failure for
conducting so was likely to cause injury. Negligence is one type of mode where many type of
harm are occurred through not taking these adequate precautions.
It is not enough for plaintiff for proving that defendant owe him duty of care but he does
also have to establish that defendant breaches his duty to the plaintiff. The breach of duty of
care is refer to individual who already have the duty of care acts wisely and did not omit or
commit any type of act.

3. ‘What is law?’ and `why does the law exist?’ Discuss and explain some of the
main theories relating to ‘Sources of Law’. (6 Marks)
Ans. A law is one type of system of regulations and rules where society or government are
developed to deal with various business crimes, agreements and social relations. The law in
society is not just something which are coming from outside society. Law is representing
society norms, and what is fair, good and equal according to society. The main reason for
existing laws in society are –
 For keeping balance in the damage which is made by the victims against the person or
society.
 To collect and extracting the profit with help of message by utilizing taxation law.
The various types of legal theories which is made by society are –
 Positive law theory – This theory is also known as the imperative and analyst law.
This refer to law where actually mention through separating arating “is” from the law,
which is “ought' to be. This have trust that law is regulation enforced and developed
with help of sovereign body of state.
 Natural law theory – According to this theory there are basically two types of law
which is essential for governing social relations. From these one is developed by
person and to manage relations within society and other one is also created by person
but controlling all human beings in world.
4. What are the three elements which a Claimant must establish in a negligence
claim? (6 Marks)
Ans Negligence is one type of tort which is raised when single person has the duty of caring
in latter which is violated in performance resulted in non-predicted damage and loss omits
interest of such individual in reasonable situations. For constituting such type of tortious act
mainly three elements are used which is described below –
In first it is duty of care for making alleged liable for negligent act in parts which is
important and complex in nature. This defines as each individual must have duty for giving
effective attention during the time of carrying various activities.
Secondly, condition is violating the duty of taking care which alleged did not able to
comply with the needs criteria which a single person owe.

In third this is real causation of omission in which the claimant sure defended for act of
negligent explains the liability for facilitating violate activity as a part of alleged causing
breach of actual damage in part of aggrieved.
5. Illustrate and explain the rules that apply to judicial precedent and statutory
interpretation; by citing prominent legal principal based on, ‘Ratio Decidendi’
‘Obiter Dicta’. (6 Marks)
Ans The precedent is defined as act or ruling where they lay down with help of tribunal
which is undertaking previous prior laid judgement heard and decide as example have similar
problems and factors to refer in form of subsequent in form of subsequent behaviour for
parties in journal. The precedence of judicial is divided into many categories which in first
complied and authorised according to courts direction is implemented. In second it is
persuasive in aspect of ruling for tribunal which did not comply any type of accountabilities
which holds ingratiate measures.
The basic rule of Obiter Dicta has been interpreted in different types of judgement and
ruling are laid down from court explaining judicial authority command did not have
significant value in court. It holds various values for concluding any some concern but
utilized as element for dealing with different scenarios in case of arising disputes and
disagreement.
But ratio decidendi is defined as reasoning for decision laid in tribunal in which
legislations are not utilized in contemporary’s case scenery but utilized for concluding
decisions laid down by the court in general.
Section C: Longer answer questions – There are THREE questions. Answer all
questions. Suggested time 60 minutes. (20 x 3 = 60 Marks)
Question 1 (20 Marks):
‘Bits and Bobs’ is a scrapyard owned by Fred Dust. The scrapyard sits on a sizeable
plot of land, extending to over 5 acres. Some of the scrapyard lands share a
boundary with neighbouring houses. A number of homeowners have complained and
threatened legal action in relation to various aspects of Fred’s business.
Consider the following complaints and advise the property owners whether or
not they will have a claim in nuisance against Fred for the issues complained of.
Complaint 1: Mrs Khan

Mrs Khan’s bungalow lies close to the west boundary fence of the scrapyard.
That edge of the scrapyard is overgrown with trees and weeds. Mrs Khan has
complained that some of the tree roots are affecting her patio and causing the
patio slabs to crack. She has also noticed some cracks appearing on the rear
wall of her property and has been advised by a local builder that the
foundations are being affected by the tree roots.
Complaint 2: Dave and Molly
Dave and Molly rent a house to the south side of the scrapyard. They have
complained about two issues. One is the smell, and the other is the noise.
Dave works night shifts as a paramedic. He is home by day and often
sleeping. He has complained that the noise from the scrapyard keeps him
awake as the workers play loud music and the machinery which sorts the
scrap makes constant loud noise. No one else has complained about the
noise. Molly has complained about the smells from the scrapyard. There is a
large pile of landfill waste which creates a foul odour and an
incinerator that smells. She cannot enjoy her garden at the weekends and
cannot open the windows, even in summer.
Complaint 3: Novel Orchids Ltd
Jenny owns a plant nursery, ‘Novel Orchids Ltd’. Her nursery shares a
western boundary with ‘Bits and Bobs’. Jenny has complained that her rarest
Peruvian Orchids have died as a result of the smoke and toxic fumes from the
incinerator.
Advise Mrs Khan, Dave and Molly and Novel Orchids Ltd of possible claims in
nuisance against Fred.
Ans In case first Mrs Khan have right and authority to register complaint for nuisance as one
of the important of this tortious liability which is raising as it is causing interference and
annoyance to other person land. Requisite of this kind of tort lays down that where any
damage or injury is occurred during the time of infringing their powers in legal manner due to
wrong committed by their activities, violating and distributing their rights
In second scenario both, both essentials are violated where various complaint for
smells and noise of plant which laying down that any wrong conducted with intent to cause

violation of their legal right or causing annoyance and damages are incurred on enjoyment
over other person property shall not be intervene.
Question 2 (20 Marks):
Magic Mug Ltd designs and manufacture mugs. They have recently produced 2,000
mugs bearing a slogan saying ‘We support the NHS’ and a rainbow logo. On 15 July
at 2.00 pm, Magic Mug Ltd posted on their social media account that the NHS mugs
are for sale at 75p per mug.
Betty sees the social media post while using her phone, travelling on a train. She e-
mails Magic Mug Ltd at 3.00 pm on 1st July asking if she could buy 500 mugs at 50p
each. Magic Mug Ltd see that e-mail but do not reply.
A national café chain, Tasty Treats, wants to buy all 2,000 mugs to use in their cafes
to show their support for NHS workers. They send one of their drivers that afternoon
as soon as they see the social media post. The van driver arrives at Magic Mug
depot at 4.30 pm and they pay for the 2,000 mugs and the driver takes them away.
At 5.00 pm Betty visits the Magic Mug Ltd depot and tries to pay £250 for the 500
mugs. Magic Mug’s sales manager explains that they have just been sold and they
have none left. Betty claims she had a contract with them made before they sold
them to Tasty Treats.
Advise Magic Mug on whether an enforceable contract was made with Betty.
Ans. In this situation no kind of contractual obligation of Magic Mug to compensate damages
with regards of Betty interest as there was invitation to treat on Betty part but acceptance has
not been delivered from the side of organization only the other party has offered its interest
which is the first step of contract. For obligating person to perform action in contract arises
where there is proper offer from offerer and acceptance from the side of offeree expressly or
impliedly. The Carbolic Smoke ball Co. v. Carlill, which stated that mere offer for inviting to
treat is not contract. Then there must be consideration holding certain value in economic
terms.
Question 3 (20 Marks):
Shreena and Gita wish to run a business buying and selling organic vegetables.
They have decided to set up a private company limited by shares and are thinking of
calling their company ‘VegRus’. They will be the subscribers and the first directors of
the company. They have already found premises, but the owner is insisting that a
contract to lease the premises is signed immediately, despite the fact the company
will not be registered for about four weeks.

Advise Shreena and Gita what documents will have to be delivered to the Registrar
of Companies before a certificate of incorporation of the company is issued, any
restrictions on choice of the name of the company, and any liabilities they may
personally incur if the lease is signed before the company is incorporated.
Ans. In such scenario the sole owners signing lease before incorporation of company shall be
completely liable which makes Shreena and Gita to hold loss and damages personally as they
signed lease deed before becoming directors and owners of organisation. The title of
organization must represent nature and uniqueness of organization it is involved. Further it
comprises constitution of organization where Article of Association is one which includes
rules and regulation including legislative provisions under it. The incorporation of firm with
hold different types of components for constituting organization which involved registration
of entity having legal identification, In this type of situation the agreement of partnership
shall be signed sharing their shares and stock for having obligation and powers equivalent
form for the losses and profit.
END OF QUESTIONS