Law for Business Managers Assignment

This assignment provides a comprehensive analysis of key legal concepts relevant to business managers, including vicarious liability, business structures, financing options, and the doctrine of frustration. It examines each concept in detail, supported by relevant case law and legal principles. The assignment is designed to help students and professionals understand the legal framework governing business operations.

Law for
Business Managers

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
QUESTION 1...................................................................................................................................1
Doctrine of vicarious liability....................................................................................................1
QUESTION 2...................................................................................................................................3
Main forms of business mediums and their advantages and disadvantages...............................3
QUESTION 3...................................................................................................................................5
Main forms of finance available to companies and advantages and disadvantage of each of
these form....................................................................................................................................5
QUESTION 4...................................................................................................................................7
Applicability of Doctrine of Frustration on the contract between Ken and Mike's company and
Liz...............................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Managers are the essential part of business organisation. In this regard, it is important for
managers to control and monitor the activities of the managers as to prevent the business from
any fraud or misconduct of managers and maintaining smooth management system in the overall
business organisation. Present project shows appropriate solution for some business problems on
the basis of relevant laws and previous judgements. It provides information about vicarious
liability and doctrine of frustration under contract law. Further, the study also shows various
types of business mediums along with their advantages and disadvantages. Moreover, the study
provides a brief description of numerous forms of finance that are available for companies in
order to meet their financial requirement along with their advantages and disadvantages.
MAIN BODY
QUESTION 1
Doctrine of vicarious liability
Issue:
Criminal and civil proceedings available for Ken against Grant or the bus company.
Rules:
Contract law: Contract law in UK deals with monitoring and controlling various
activities in context with the any agreement made between two or more parties to the contract.
Contract Act 1999 contains various rules that prevents the individuals or corporate or any other
party from any fraud or misconduct from the agreement.
Relation between employer and employee: As per the rules of contract law, employer
and employee have a relation of agents and principles. Employers act as a principle and
employees are agents of them (McLellan and Frederick, 2017). Due to this relation, employers
are held liable for each activity performed by the employees during their employment.
Breach of duty: It refers to not performing the action as per the legal duty or legal
responsibility. As per the rules mentioned n contract law of UK, each person have duty towards
another person. Further, there are some situations in which third party can be held for the breach
of duty of a person. For example, if employee breaches any duty during employment, the
employer can held liable for it. Further, any person acting as an agent breaches any law or duty,
the principle can be held liable for the breach.
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Doctrine of Vicarious liability: Vicarious liability is a civil liability of employers
against the actions of their employees (Stevenson, Rowbotham and Lowther, 2015). Contract Act
1999 contains clause relating to the vicarious liability. It refers to liability of the employer
towards the employee's negligence or improper performance of employees at the time of their
employment. As per this rule, employer is liable for each commitments and actions of the
employees.
Doctrine of vicarious liability says that employers are strictly liable for each breach of contract,
breach of duty or any other breach conducted in the course of action relating to their
employment.
Law:
In the Majrowski v Guy's and St Thomas's NHS Trust case, an employee of the trust
was harassed by the manager. Employee filled a suite in the court for helding the employer liable
for unlawful action of manager. The court held the employer liable on the ground that both
employer and employee i.e. manager are closely related to each other. Further, as the wrong and
unlawful act was being performed during the course of employment (MAJROWSKI V GUY’S
AND ST THOMAS’ NHS TRUST: HL 12 JUL 2006, 2018). The decision was held om the basis
of vicarious liability in context to the breach of negligence and breach of duty.
Applicability:
The above rules of contract law, and the previous judgment are applicable over the
present case scenario. Grant Mitchell is an employee of a bus company. Therefore, it can be
analysed that there is a principal agent relation between them. Grant knocked down Ken in the
hurry of reaching the bus company. As the law provides duty of each person to protect the
interest and provide safeguard to another person, it can be analysed that there is breach of duty
by Grant Mitchell towards Ken.
Further, due to the employer employee relation between Grant and the bus company, law
relating to the vicarious liability can be applicable over the present case scenario. Further, by
applying the present case scenario, it can be analysed that employer are liable for any unlawful
action or commitments or any breach or duty or contract made by the employee during
employment.
Conclusion:
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From the analysis above mentioned rules and regulations relating to the contract law,
previous judgement of the similar case and their application over the present case scenario, it can
be concluded that the Grant Mitchell has breached the duty of providing safeguard to Ken.
Further, the action of knocking down the Ken even after the red signal of traffic light can attract
the criminal law towards the Grant. Further, as there is a employer employee relation between
Grant and the bus company, by applying the law relating to vicarious liability it can be
concluded that can have also right to claim for civil duty of the bus company for the unlawful
action of Grant Mitchell.
In this regard, it can be concluded that the Ken have right to sue against Grant on the
basis of criminal proceedings for the knocked down. Further, the another right is to claim the
bus company for civil proceedings on the ground of doctrine of vicarious liability.
QUESTION 2
Main forms of business mediums and their advantages and disadvantages
Forms of business mediums refers to various types of business structures in which a
business can be formed for performing business activities and gaining profit from them as well.
Main forms of a business medium are as under:
Limited company: Limited company is a form of business that is formed as per the legal
formation procedure mentioned in the company law. Further, its ownership is being spread into
various parts as the company issues its shares to the general public. These are also listed in the
stock market of the company (Hamoud and et.al., 2016). It results in diversification of the
ownership of company. The law has provided various rules and regulations that are needed to
followed by each limited company.
Advantages
The major advantage of limited company is limited liability of its owners towards its
debts. The shareholders are liable upto the amount of shares hold by them in the company.
Further, the company law has provided a separate legal entity to the company. Due to this clause,
the company is a distinct personality from its owners i.e. shareholders (Moravec and Valenta,
2015). It provides an advantage to the company of not being influenced with the change in its
ownership. Further, due to this cause, the company remains in existence even after the death of
all the owners.
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Disadvantages
Due to the diversified ownership, it suffers a huge amount of interference in its decision
making process. Further, it also caused in reducing the ability of the company in keeping the
future business plans secret. In addition, a limited company needs to fulfill a range of legal
obligations it enhances the cost and working of the business.
Limited liability partnership: Limited liability partnership is a form of partnership that
is formed as per the legal structure set by the companies house. Partners of a limited liability
partnership are its owners. Further, each of them contains limited liability towards the
partnership.
Advantages
Its members or the owners contains limited amount of liability towards the company.
Further, this type of partnership also have a set legal structure that helps the members in having a
proper organisation of their business. Further, due to application of various legal obligations,
they also gain the faith of general public. Further, Members of the limited liability partnership
gets several tax benefits.
Disadvantages
This type of partnership needs to comply with various legal obligations it enhances the
cost and procedure of the business activities (Goffee and Scase, 2015). Same as the limited
company, its members like managers, partners, etc. are personally liable for any legal dispute
over the partnership business. Further, the key disadvantage of limited liability partnership is its
constraint ownership. Due to this clause, its ownership can not be transferred easily. In addition,
due to its distinct image, it becomes unable to gain the command in the competitive market.
Partnership: Partnership is that form of business that are formed by creating an
agreement between two or more individuals for performing various business activities and
generating profit as well.
Advantages
Its does not contain a huge formation procedure. If each partner are perfect in their own
field, its efficiency of doing business can be enhanced. The partnership agreement contains each
rule that are needed to be comply while performing business activity. It removes the cahnces of
dispute among partners.
Disadvantages
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Due to lack of legal obligation, it is difficult to gain trust and faith of public. It may also
result in committing fraud with one partner by another. Further, unlimited liability of the partners
towards its debts is the major disadvantage of this form of business.
In this regard, it can be analysed that there are various forms of businesses. Each form
have their own advantages and disadvantage. Therefore, one needs to form their business after
having a complete analysis of each type of business organisation.
QUESTION 3
Main forms of finance available to companies and advantages and disadvantage of each of these
form
To raise finance a for running and conducting the business operation of a company there
are different options available. This includes:
Equity finance:
In the equity financing basically a small portion of ownership of the business is
exchanged. The ownership stake is a result from an equity finance which allows the investors to
share the profits of the company. The equity involvement of the investors is of permanent nature
of investment where the company is not required to repay the amount invested at a later date.
The equity finance in the company can be in the form of membership unit or as preferred to
common stock (Meier, 2017). The different forms to raise equity finance of a company includes,
personal saving, venture capital, friends and family, angle inverters, crowd funding and
government grants. The owners bring in their personal savings and borrow funds from family
and friends in exchanges of small stock or ownership in the company. The funding through
venture capital is done by influencing other business and companies to invest in young and
privately held businesses. The angle investors are individual businesses who are interested in
helping small business to survive and grow. The crowd funding is through raising capital from
issuing share to the public in return of proportionate ownership in the company. The government
grant is given to various start up and innovative business to give them a financial push.
Advantages:
The advantages of equity finance can be outlined as this is permanent investment in the
company and there is no requirement to repay the same till the company is a going concern.
Moreover, there is no requirement to pay any kind of interest or instalment on the invested
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amount. In this type of financing there is a lesser risk as there is no requirement of pay monthly
loan repayments. There is no requirement to give immediate returns to the equity investors.
Disadvantages:
The disadvantages related with raising capital through equity finance are there is burden
to pat return to investors on their investments. The owners have to give up some control of their
company and give them to the investors. All those who hold stake in the company take certain
decisions jointly and here the chances of arising dispute are high.
Debt finance:
This is another source from which a company can raise funds. In this type the business
barrows funds from financial institutions to finance the operations and growth of the business. In
this the funds are borrowed from creditors and stipulations are there to repay the funds on
borrowed and in addition to this interest on the principle amount as well (Types and Sources of
Financing for Start-up Businesses, 2018). This may be secured or unsecured. The secure one are
one where the loan is taken after attaching a valuable asset to the lender to ensure the loan
repayment. Rather, in unsecured one there is no collateral security is deposited. This can be
raised from taking loans from family and friends, mortgage from banks and other financial
institutions, government programs and bonds. For all these sources a repayment of principle
amount is required along with interest.
Advantages:
The pros of debt financing is that it is a temporary investment in the company and there is
no requisite to give share in the ownership of business (The Advantages and Disadvantages of
Debt and Equity Financing, 2018). The payment of interest on the loan reduces tax liability as it
is tax deductible. The company can forecast the payment in advance so it is easier for business to
predict the payment and make arrangement accordingly.
Disadvantages:
The cons of this type of finance is that the is a requirement of the company to get a credit
rating to be eligible to borrow funds. The company is required to make monthly payments
without a fail. This can be difficult in the situation of insufficient cash and funds with the
company (Lattanzio, Megginson and Sanati, 2019). The lender typically demand certain asset of
the company to be held as security and this required the owner to guarantee the loan personally.
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QUESTION 4
Applicability of Doctrine of Frustration on the contract between Ken and Mike's company and
Liz
Issues:
The payment of the GBP 100 to the company of Mike and Ken by Liz for the ticket of the
concert where Elvis was to perform, does make a valid contract between the parties. Also, death
of Elvis, who was the lead performed at the concert, does make the contract frustrated.
Rules:
Ticket purchase and contract formation:
As per the provision of the contract (Applicable law) Act 1990 a sell of ticket for a
specific performance is an invitation to treat and the other party make an offer to enter in to a
contract. With purchase of the ticket a contract is entered as the party selling the ticket is bound
to perform the act so promise and the party buying it is liable to pay the money for the purchase
of ticket. This type of contract have a direct present of legal intention of the parties entering the
contract.
Law Reform (Frustrated contract) Act, 1943:
Frustrated contract: A contract can be discharged through frustration. This condition to
a contract occurs when there is existence of change in the circumstances after the contract was
made which is not the fault of either of the parties. This conditions render the contract
performance impossible and deprives the contract of its commercial purpose. In case a contract
stands to be frustrated each party is discharged from future obligations under the contract and no
party have a right to sue each other. As it was held in the case of Taylor v Caldwell (1863) 3 B &
S 826, that the actions of the claimed for breach of contract failed and it was held to be frustrated
as the fire in the hall held the contract was impossible to perform (Taylor v Caldwell (1863) 3 B
& S 826 , 2018). In this case a contract was made and a hall was rented for performance of a
concern but before the concert a fire broke out and damaged the hall. The claimant brought an
action of breach of contract but it was rejected and the contract was declared to be frustrated due
to fire.
Applicability:
As per the above rule and provision of the contract act it can be stated that the company
of Mike and Ken have a legally binding contract with Liz. As the company promoted the pop
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concert and to sell the ticket of the concert where Elvis is the lead performer (Gaskell, 2017).
The offer was made by Liz to purchase the ticker for GBP 100 and this made a legal binding
contract between the company and Liz.
The death of Elvis was unpredictable and it was not in the hand and control of the
company to stop such a contingency. Elvis died due to drug overdose and this was not a fault of
either of the party that is Liz and the company. Moreover, with duplicability of facts and rules of
the case Taylor v Caldwell (1863) 3 B & S 826, it can be stated that the contract is frustrated as
it become impossible to continue the pop concert without the lead performers and both the
parties are not under the breach of the contract (Frustrated contracts, 2018). Moreover, death of
Elvis render the rendered the contract performance impossible and deprives the contract of its
commercial purpose of performance of pop concert.
Conclusion:
With application of the rules and provision of the relevant acts to the given case scenario,
it can be concluded that the contract stands out to be frustrated. The death of the lead artist of the
concert made the continuation of the concert impossible. With the contract being frustrated both
parties are discharged form their performance obligations under contract. This means Mike and
Ken's company can not be held liable for non performance by Elvis in concert. With this Liz
have no legal right to sue the company for non performance and to claim back her money spent
to buy the ticket.
CONCLUSION
From the above report it can be concluded that the act of Mitch of hitting Ken has been
identified as tort of negligence. As Mitch was under the employment of bus company and
working for the company as the time he injured Ken. There has been an applicability of
Vicarious liability where the bus company was held liable or the accident done by Mitch.
Moreover, the different type of business organisation available as option to start a new business
to Ken and Mike has been presented as general partnership, limited liability partnership and
limited company. They have been advised to start a limited company. The various type of
sources to raise capital for a company are equity finance debt finance Furthermore, for the
contract between Ken and Mike's company and Liz has been declared to be frustrated as it is
impossible e to held the concern when the performer has died.
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REFERENCES
Books and Journal
Gaskell, N., 2017. Bills of Lading 2e: Law and Contracts. Routledge.
Goffee, R. and Scase, R., 2015. Corporate Realities (Routledge Revivals): The Dynamics of
Large and Small Organisations. Routledge.
Hamoud, M. and et.al., 2016. Developing the main knowledge management process via social
media in the IT organisations: a conceptual perspective. International Journal of Business
Administration. 7(5). pp.49-64.
Lattanzio, G., Megginson, W. L. and Sanati, A., 2019. Listing Gaps, Merger Waves, and the New
American Model of Equity Finance. Merger Waves, and the New American Model of
Equity Finance (February 5, 2019).
McLellan, D. and Frederick, M., 2017. Innocence Compensation: Vicarious Liability and
Indemnification by the State for the Harms Caused by Wrongful Convictions. Available at
SSRN 3086607.
Meier, S., 2017. Unwinding Failed Contracts: New European Developments. Edinburgh Law
Review. 21(1). pp.1-29.
Moravec, T. and Valenta, P., 2015. The Comparison of Efficiency of Disqualification of
Directors in New Czech Business Corporation Act and in the Legal System of
England. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis. 63(5).
pp.1711-1717.
Stevenson, K., Rowbotham, J. and Lowther, J., 2015. Reparation for betrayal of trust in child
sexual abuse cases: the christian duty of care, vicarious liability and the Church of
England. Australian feminist law journal. 41(2). pp.253-270.
Online
MAJROWSKI V GUY’S AND ST THOMAS’ NHS TRUST: HL 12 JUL 2006. 2018. [Online]
Available through : <https://swarb.co.uk/majrowski-v-guys-and-st-thomas-nhs-trust-hl-12-
jul-2006/>
Frustrated contracts. 2018. [Online]. Available through
:<http://www.e-lawresources.co.uk/Frustrated-contracts.php>.
Taylor v Caldwell (1863) 3 B & S 826 . 2018. [Online]. Available through :<http://www.e-
lawresources.co.uk/Taylor-v-Caldwell.php>.
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The Advantages and Disadvantages of Debt and Equity Financing. 2018. [Online]. Available
through :<https://smallbusiness.chron.com/advantages-disadvantages-debt-equity-
financing-55504.html>.
Types and Sources of Financing for Start-up Businesses. 2018. [Online]. Available
through :<https://www.extension.iastate.edu/agdm/wholefarm/html/c5-92.html>.
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