Law for Business Managers: Duties of Directors and Damages

This report provides a comprehensive overview of business law, addressing key areas relevant to business managers. It begins by examining the concept of representation in contract law, differentiating between mere representation and contractual terms, and analyzing a case of misrepresentation. The report then delves into the areas of unfair dismissal, outlining the legal framework and specific circumstances that constitute unfair dismissal under UK employment law. Furthermore, it explores the duties and responsibilities of company directors, as defined by the Companies Act 2006. Finally, the report examines the principles governing the award of damages in the Law of Tort and the measures by which damages can be limited. The report uses cases and legal provisions to explain the concepts.

Law
for Business
Managers

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Examining the knowledge about 'representation' and differentiation between mere
“representation” and “contract”...................................................................................................1
TASK 2............................................................................................................................................1
Examining the areas which consists the dismissal from the employment would be unfair at
law, which Monica should define to the board of directors.........................................................1
TASK 3............................................................................................................................................1
Examining the duties or responsibilities of directors of specified company that Monica should
define to the new members of the board......................................................................................1
TASK 4............................................................................................................................................1
Examining the principles regulating the award of damages in the Law of Tort and the
measures by which the damages be limited ...............................................................................1
CONCLUSION................................................................................................................................2
REFERENCES................................................................................................................................2

INTRODUCTION
Laws of trading are crucial part of economy from the ancient times, in order to ensure the
fair and non-fraudulent trade practices within the economy. All of them dictates how to form and
operates the business practices fairly are known as the “Business law”. It pertain several rules
and regulations that governs or regulate the processes of starting, managing and dissolving or
selling any kind of business. Moreover, the business law sometimes considers as the “Mercantile
legal requirements” or the “Commercial Aggregation”. Basically the it is categorized in two
distinct areas of rules and regulations. first is, the governance of the commercial entities through
laws of partnership, company, bankruptcy and agency and the second is, governance of
commercial transactions with the help of contract law.
Besides this, the report comprises with the knowledge of representation, differentiation
between representation and contract on the ground of facts, the areas of unfair dismissal,
responsibilities of the director, principles of award of damages in the Law of Tort and the
measures by which damages can be minimises.
TASK 1
Examining the knowledge about 'representation' and differentiation between mere
“representation” and “contract”
The presented case scenario tells that, there is the Human Resources Manager (HR)
named Monica, at Young & Ernst LLP. She wants to purchase a second hand car, so she visits a
local used car dealer's showroom namely Cars R Us. She choose a used Ford Mondeo, model of
2006 which was in impressive condition, then she meets car salesman named Chandler, and told
him that she doesn't have enough awareness regarding cars and wants a decent car which can
ease her travel to workplace and back every day. The car dealer suggests Minica that “Ford
Mondeo is absolutely the best car in the whole world. If you do not buy it you will be missing
out!”. She trusts on the savvy of dealer and decides to acquire Ford Mondeo, 2006 model.
A party appeals regarding the misrepresentation or false representation or hiding of true
facts has been made in representation of the contract. The party may have the right to cancel or
repeal the contract and the party may also be entitled to appeal for the compensating the
damages, only if the party committed the contract by trusting on false representation. It is not
similar to the contractual context (Sisk, 2017).

A contractual term refers to a provision of a contact. It is concerned as the integral part of
contract and examines the contractual obligation to the party committing the contract. A breach
of a contractual term or privilege may be a reason behind the rising of litigation (Camilleri,
Paganelli and Schneider, 2014).
Representation can be defined as the statement of fact made with the purpose of getting
someone to become a part of a contract. It can be made by words of by conduct. It is not a term
of a contract but it is made during contractual negotiations. The contractual term classified into
implied or expressed. There are four aspects that distinguishes between two contexts that are
representation and contractual term. Following are the points that differentiate it from a contract:
 The parole evidence rule
 Relative expertise of the parties
 Importance of the statement
 Time
A recently case appears in the Court of Appeal in 2015 named, Salt v Stratstone
Specialist Limited T/A Stratstone Cadillac Newcastle. The party enters into a contract was Mr
Salt and he purchased a car in September 2007, the Cadillac dealer’s representation clarified that
car was “brand new” and the car had yet not registered, but within two years old, the car had
several repairs prior to acquire and had also been damaged in a collision.
The car had several of defects which came to knowledge of Mr. salt after the acquisition.
Some of the defects were repaired, but in September 2008 Mr Salt decided to reject the vehicle
and asked for his money back. The defendant refused, so in March 2009 Mr Salt issued court
proceedings. Mr Salt pleaded misrepresentation and sought rescission of the
contract(Representation, 2017).
By taking reference from the case of “Salt v Stratstone Specialist Limited T/A Stratstone
Cadillac Newcastle”. it is true fact that Chandler the car dealer had more relevant information
regarding the cars than Monica, as she earlier told to dealer that she doesn't have enough
awareness regarding cars and and wants a decent car which can ease her travel to her workplace
and back every day after that due to expert suggestion of Chandler she trust on his savvy. The
conclusion of the Mr Salt can be enforced in relatively similar case of Monica and she has the
right to sue or accuse the company as Chandler had professional knowledge about cars in
comparison of Monica. Monica can accuse the dealer(chandler) as he hide the relevant

information about the car and make fraud representation of facts(Burrows, 2018). Besides this,
the Monica is able to claim for the damages as well as for the false representation, which leads
to arises the problems for Monica as it is a case of misrepresentation and Chandler and Cars R
Us are at default position and liable to compensate Monica.
TASK 2
Examining the areas which consists the dismissal from the employment would be unfair at law,
which Monica should define to the board of directors
In presented case scenario, the directors of company Young & Ernst decides to perform a
meeting with Monica for discussing the relevant issues and to attain exceptional understanding
of the relevant law regulating the company and their trade practices. Besides this, the meeting
was schedule because the case is not good for the image or goodwill of the organisation as well
as the directors were not happy with the performance of their own employee and determining the
roles of the new directors would be, who have been elected for the board.
There are various laws that regulates the organisational trade practices and are applicable
on Young & Ernst. Besides other laws, the most effective as well as the pertinent laws to this
case are namely, Employment Rights Act, 1996, Equality Act, 2010 and other relevant labour
laws. The dismissal or dissolution in context of employment is governed by labour law of UK.
The law needs the prominent reason behind the termination of employee and that reason must be
fair and relevant. Accordance with the Employment Rights Act, 1996, employees at the
workplace must be treated equally without any kind of discrimination and every employee is
entitled to know the true as well as effective reason behind the dismissal or
termination(Konstantopoulos, 2014). Moreover, Equality Act, 2010, renders the effective and
favourable protection to the employees for being terminated on the ground of any discrimination,
bigotry or unfairness in any context of employment as comes under the Act. An employee can
sue against unfair termination to the employment, entitled for a fair judgement. A dismissal or
termination may be lawful or wrongful, actual or constructive, fair or unfair etc. depending upon
the terms and situational context. Accordance with the Employment Rights Act, 1996 there are
several areas of unfair dismissal can be examined by Monica to the directors which are as
follows.
 Termination due to pregnancy.

 Termination of an employee due to taking excessive maternal leaves, paternity leaves,
time off for dependents or adoption leave, etc.
 An employee may be terminated due to false representation.
 Because of being an active member of trade union or labour union and actively
participates in trade or labour union's activities.
 If employee demands for part-time or fixed -time.
 If employee demands for making adjustments in working hours, annual leave, minimum
salary etc. and also unfairly influences the minds of other employees.
 There may be more other relevant and fair reasons behind the termination of an
employee. But each and every reason must be judged on the basis of the facts.
UK law states that it is compulsory for an employee to be in the employment with the
similar employer for at 23 months and 3 weeks without a break before appealing a claim against
wrongful termination and the employee have to appeal for the claim within the era of 3 months
of the dismissal or . In such a claim, the burden of proof lies on the employer. The employer
must provide a valid and sufficient reason for the dismissal(Robins, 2014). He must also follow a
fair procedure of dismissal or deportation. In case if reason defines by employer is not suitable or
reasonable or not in above mentioned list of reason then accordance with the legislative body,
the employer has practised an unfair or wrongful employment practices and the termination will
considers as wrong and unethical.
Any termination of employee made by the employer because of reasonable fact or other
than the reasons mentioned above but due to fair reason then only the dismissal will be treated
as fair dismissal(Thomsen, 2014). Not only this, It is also mandatory for the employers to follow
the proper procedure and all formalities of termination and no employee can be terminated
without giving a prior notice of termination. A termination generally fair, if an employer defines
one of the following reasons:
 Reason associated with employee's conducts like gross misconduct, dishonesty etc.
 If an employee had presented fake qualifications or not able to perform the work
allotted(Moore, 2015).
 In case if any employee has made random repetitiveness or comes to light while signing
anyone out of repetition, even he is also not permitted to perform such repetition and
must stick to the policy.

 In case if continuance of employment leads to breach of law.
 Due to any other reason or reasons which are not listed above and are on fair ground. But
how much the reason is fair must be judged on the ground of the facts pertained in act of
the employment(Njoya, 2016).
TASK 3
Examining the duties or responsibilities of directors of specified company that Monica should
define to the new members of the board
A director refers to the person belongs to the administrative body, who is responsible for
managing the internal as well as the external affairs of the organisation. It is not compulsory that
only the shareholders or an employee of the company has to hold the office as director. The
directors are elected by voting or by passing resolutions in the general meetings of existing
board of directors and equity holders of the company(Laster and Zeberkiewicz, 2014). Besides
this, Accordance with the Company Law Act of UK, 2006, there must be at least one director is
necessary to be elected by the private company and minimum two directors are inevitable to be
appoint for public company. There is guideline that dictates about the statutory maximum
number of directors and at least one director must be appointed for the both private and public
company.
There are some duties and responsibilities of a company directors which are pertained in
structure of Companies Act of UK, 2006.
 A director is liable to act within the framed functional body described in Articles of
Association.
 The director is liable to act in utmost good faith and responsible for the growth and
victory and also liable to do what is in the favour of the organisation.
 The director have to perform with their full potential and favourable judgement in
decisioning.
 Director have to use sensible care, advance skill and diligence at all times.
 Director is also responsible for solving the conflicts between company and stakeholders.
 Director is not eligible to enjoy any unjustified advantages or accept or enter into a
contract in order to make secret, wrongful or private profits. As a director in a fiduciary
relationship, so that is why the directors knows the secret information regarding the

company which are not to be disclose even within the organisation(Aier, Chen and
Pevzner, 2014). Even the director is not entitled to make the advantage from that secret
information or have no right to disclose that crucial hidden information.
An articles of company renders additional relevant knowledge regarding the rights, duties
and powers of the directors in according to the Companies Act 2006 of UK and also sanctioned
by shareholders, some of them are as follows.
 A director is responsible for maintaining relevant statutory records of organization and
make them available for inspection or auditing to the person, who has requested for
inspection or audit.
 To maintain accurate accounting records of the organisation.
 To maintain the sound financial performance of the organisation and always try to attain
more betterment of it.
 A director have to perform the analysis and takes favourable action in order to mitigate
the losses, in case when organisation suffers from the financial distress or crisis.
 To disclose true annual accounts, tax returns of the company etc. within the specified
time period demonstrated regulative laws(Moudud-Ul-Huq, 2014).
 A director have to pay corporation tax and also pay any other tax liabilities before the
deadline honestly.
 To schedule general and board meetings as the mandatory requirement of regulative law
body .
 To maintain and presents the formal copies of the resolutions passed in general and board
meetings or meetings with Companies House.
 To acquire or recruit the prominent solicitors, accountants, auditors etc. if any necessity
of law occurs.
 To render the copies of final accounts to the internal members of organisation like
shareholders or guarantors, employees and management.
 For issuance and transfers of shares.
 To appoint a Company Secretary, for maintaining the internal as well as external affairs
of the organisation.

TASK 4
Examining the principles regulating the award of damages in the Law of Tort and the measures
by which the damages be limited
In presented case scenario, Monica 's brother Ross was driving her car at the same time ,
he was talking on his cellphone and looked down to change the radio channel. At the same, he
loose the control over car and collided with Joey, a pedestrian. Joey endure from a broken leg
due to the fatal accident. Joey confess, that time he was walking on the road at the time of the
accident as the pavement was under repairing. He could have crossed over the road to the
pavement but decided to walk on the road. Joey wanted to sue Ross for damages or the injuries
he had suffered because of the fatal accident.
A tort refers to deed that harms other people or their property. Moreover, when someone
perform the wrongdoing against other because of that person injures and can proceed a civil
action against the other person(Cornford, 2016). Torts pertain under the context of civil law. The
tort law comprise categories of power, obligations and remedies that are applicable by the courts
of law in case of civil proceedings. Besides this, Law of Tort comprise a several of persons and
other parties, in UK against whom a suit is filed under Law of Tort. some individual persons or
other parties are such as :
 Individuals
 Companies
 Employers
 Employees
 The Crown
 Dangerous drivers
 Individuals in the medical profession
 Occupiers of premises
 Independent contractors, etc.
The common reliefs that are awarded by the civil courts under Law of Tort are damages.
The damages are classified into two kinds:
 Compensatory: This award is of monetary kind and it is rendered to a plaintiff for the
compensating the damages, injury, losses etc. It is rendered in the cases of civil court .
while the plaintiff had incurred losses due to neglectfulness or wrongful act of the other

party. For appealing the claim and attaining the compensation for the damages, whole
burden of accumulating evidences lies on the plaintiff(Posner, 2014). Not only this, he
has to show his damages connection with the defendant.
 Punitive: This kind of awards presenting additionally for compensating or actual
damages in definite conditions. These are concerns as the retribution and are rendered as
per the discreetness of the court while the strength of defendant is adverse act and it is at
high level and where the intentional tort is committed.
Different kinds of damages are as follows.
Nominal Damages: this is rewarded to personal in an action, in case if the plaintiff has
not incurred massive injury or loss. This is rewarded only in such cases, where the plaintiff failed
to render the sufficient proofs in order to prove the level of the injury.
Contemptuous Damages: It is rewarded in case, the level of injury from which the
plaintiff is suffering is relatively low and court regards that plaintiff was wrong attain a claim.
Aggravated Damages: This are rewarded by court in case of massive injury to a plaintiff
and only when the injury to the plaintiff has been proved.
Both the persons are responsible for the accident and both are the culprits. The judge will
listen the case of them and will decide the appropriate amount for the compensation which is
going to be paid.
CONCLUSION
On the basis of above report, it has been concluded that business law is crucial for
ensuring the trade practices fairly as well as without any hindrance. An organisation must follow
the relevant business laws. Furthermore, each organisation should render the true and fair
representation about the facts to their customers and also considers the results of
misrepresentation. Besides this, directors respects their fiduciary relation with the organisation
and must act in according to their limits described in the articles and law. Not only this, the
organisation must know regarding the termination and reasons by which it may be termed as
unfair or wrongful termination. so the organisation will suffers from any lawsuit by its own
employees. At last, the meaning, laws and principles regulating the law of tort should be best-
known for not to harm or cause loss to any individual or property.