Business Law Assignment - Trade Ship

Task 1

In United Kingdom, there are three different forms in which business can be commenced.

First is Sole Trade ship, wherein, the business is commenced by an individual alone. If a sole trader ship is established then the same must be registered with HM Revenue and Customs (HMRC). Once registered there are various responsibilities that are imposed on a sole trader by law, such as, he must maintain the records of the expenses and sales incurred by business, he must prepare a self-assessment tax return every year and send it annually, income tax must be paid and tax on class 2 and class 4 on National Insurance must be paid, if the turnover of the business meets VAT threshold then VAT must be registered. (GovUK 2016)

Apart from a sole trader, Mr Wong can also operate by way of a partnership firm. But, a partnership can be operated by two or more persons. Thus, if Mr Wong wishes to operate by way of a partnership, then, the same can be done by bringing some other person along with him. A partnership can be created by entering into a partnership agreement and registering the same with HM Revenue and Customs (HMRC). Once created there are few legal obligations which must be followed, such as: (Antoniou 2015)

• Partners must be paid by way of drawings. By doing so tax gains can be achieved.
• There is no legal obligation to file any kind of annual tax returns.
• Income Tax must be paid by individual partners. National Insurance must also be paid.
• If the partnerships VAT turnover exceed £83,000 than VAT registration is required.

But, if a partnership is established then shares are not transferable, chances of conflicts arises, liability is unlimited, (Startupdonut 2015)

Mr Wong can also commence his business by way of a company. Once a company is registered there are various features that are acquired by such company, such as, once registered a company is formulated as an artificial legal person and has a separate legal existence in the eyes of law. A company is a separate legal entity and has perpetual succession (Salomon v Salomon (1897) (Academia 2015). Once a company is registered there are legal obligations which must be followed by Mr Wong: (Hughes 2014).

• A company has limited liability thus the members of the company are liable only to limit extend.
• The company has to pay personal tax which is comparatively less from other business strategy forms.  Also, corporate tax @ 20-21% is to be paid.
• Dividends must be paid which are also taxed.
• Shares can be used by using proper procedure which is not allowed in partnership.
• Employees Executive Pensions can also be made by a company. by doing so tax advantage can be attained.
• Once a company is registered it is very easy to secure finance and is safe. Professional people can be hired for expertise.

On comparing, it is advice that Mr Wong should commence by way of a company in order to secure best tax advantages, financial position and limiting his liability which is not present in sole trader ship and a partnership.

Task 2

Naseem bought items from Rashid and facing issues:

1. Rashid sold Mercedes van @ £2000 but is not worthy and when the van was taken for repair then the engine was of Mitsubishi.
   In such scenario, Rashid has violated section 14 (2), 14 (3) of SOGA 1979.
   As per section 14 (2), the goods so supplied must be of satisfactory quality. An implied condition is imposed that the goods are of satisfactory quality when sold in the course of employment. The goods are of satisfactory quality when the goods are fit for the purpose for which is acquired, it is free from defects and is equivalent to the standard of a reasonably prudent man (Rogers v Parish (Scarborough) Ltd (1987).  Also, as per section 14 (3), the goods must be for the purpose which is submitted by the buyer (Grant v Australian Knitting Mills (1936). As per section 13, the goods also must correspond to the description of the goods so sold and is an implied condition. (NADR 2016)
   Thus, the good which is sol by Rashid is not of acceptable quality and does not match with the description. Thus, there is clear volition of section 13 14 (2) and 14 (3) of the Act.
2. Naseem brought a box labelled Casio Digital Watches. However, the watches were not digital watches
   As per section 13, the goods must always match with the description which is established by the seller while selling goods. There is an implied condition that the goods must always correspond with the description and if the same deviates then there are volition of such implied condition and is rightly held in Beale v Taylor (1967). (The Law Teacher 2016)
   Thus, Rashid has sold the watches describing them as digital which in reality was not, thus, he has violated section 13 of the Act.
3. Rashid sold a stolen tarpaulin (unknown to him) to Naseem. Naseem has asked Rashid for a refund.
   The general rule is no person can give what he does not have and is based on the maxim Nemo dat quod non-habet. Section 21 (1) of the Act submit when a person who is not the owner of the goods sells the goods then the buyer does have no a better title than the seller. Also, section 12 submits that when a person is selling the goods then there is an implied promise that he has a title in such goods. In Rowland v Divall (1923), it was held that a stolen car, even when sold in good faith, cannot pass a better title to the buyer and the buyer can seek refund from the seller. (The Law Teacher 2016)
   Thus, Naseem has full right to seek a refund from Rashid.
4. Naseem paid all instalments except the last one. The contract for sale submits that all instalments must be paid by the due date. Rashid now wants to terminate the agreement.
   As per SGSA, 1982, a hire contracts are one in which possession is transferred and not the ownership. In such situation under section 38 of the Act, an unpaid seller has little right, such as, right of lien; right to stoppage the goods in transit and right to resale. (Ontario 2016)
   Thus, Rashid was still the owner has right to terminate the contract and may sue Naseem for breach.

Task 3

In the case of Hogg v Dover College, the claimant filed for an unfair dismissal when the change in contract was introduced regarding the post of the head of the history department being part time. As he was ill, he scaled down the teaching periods for the teaching purposes. The change was merely accepted to mitigate the losses so incurred from the protest. Accordingly, the change was categorised as fundamental by him. The court held in the present case that the changes so introduced are fundamental and repudiate the contract and classified as a dismissal. According to the definition of dismissal, the contract of employment has to come to an end and not the employer-employee relationship. If the contract is repudiated and accepted by the employee then the new contract does not prevent him from objecting that the old contract was terminated in an unfair manner. Such a situation would be regarded as a dismissal and re-engagement case. At the time of dismissal it is required to look at the contract of employment and not the employer-employee relationship. The employee was a reputed and cherished teacher with the institution as a head of history, full time with salary. Although, on a certain day it was told that he would no longer be the same for full-time purposes. The number of periods so discussed between the parties was eight plus religious education and general studies. The pay scale was also halved the new scale.

In common sense, it can be said that the employer was informing about the dismissal fairly and that it gave no doubt of any other situation taking place. The variation so taking place is about elementary elements that can be varied from consent terms on agreeing to the same. It was also held that the changes to be made has to come with agreement and not merely stating that the employment terms have to be changed and the remuneration has to be halved under the given circumstances. Thereby a dismissal did take place. (Swarb.co.uk, 2015)

According, to the scenario, provided the existing contract of the junior doctor’s have to modify the employment terms regarding the working hours and the working days. The Saturdays are made working and the working hours are to extend up to 10 pm every night. The same comes as a loss to the doctors as the rate for the extended hours is standard and not increased. The restoration action undertaken by the Health Secretary was to offer the eleven percent increase in the basic pay to meet the needs. This was not considered to be sufficient by the junior doctors. The new contract drafted by the Government is considered as fundamentally unfair by the junior doctors. It may be stated that just as in the case of Hogg v Dover College, the junior doctors have the right to protest for the previous contract as the same would be stood as the dismissal for being not given a chance to agree to the changing terms. It would be a dismissal according to the section 55. The fact that the dispute arose over the contractual terms of employment and not the relationship between employer and employee makes is an unfair dismissal for which the junior doctors may seek redress.

Task 4

In law of negligence, every defendant should perform in such a manner so that no loss is caused to any plaintiff who is his neighbour. If this duty is violated then the defendant is negligent. Thus, the main essentials are (Donoghue v Stevenson (1932).

• That the defendant has a duty to conduct his actions in manner which does not injure any person who is closely associated with him and is considered to be his neighbour. The defendant has a duty of acre only for such damagers which are not remote but are reasonably foreseeable (Home Office v Dorset Yacht (1970) & Caparo Industries v Dickman (1990).
• When the deferment is imposed with the duty of care then if there is any violation in such duty then there is breach of duty. The duty is violated when the level of care that is required is not achieved by the defendant (Nettleship v Weston (1971)
• However, when the duty is breached then it is necessary that because of such breach some kind of loss is caused to the plaintiff. The presence if loss is very important to make the defendant liable under the law of negligence.

But, a defendant once considered as negligent can protect himself under two defences:

• When the defendant is not negligent but it is because of the negligence of plaintiff alone which has causes his loss. This defence is called volenti non fit injuria. In this no liability is imposed on the defendant.
• When both defendant and plaintiff has acted in negligent manner which has cause  to the loss of plaintiff then the loss is proportionally distributed amid the two. Such defence is called contributory negligence and not entire liability is imposed on the defendant (Barrett v Ministry of Defence (1995),

Now, by applying the law, it is submitted that,

The coach of East London Tours was driven by Ade was crashed on its way to Oxford. The crash was because of recklessness and dangerous driving of the driver. Thus, as per the law of negligence, Ade has a duty to drive in such a manner so that no loss is caused because of his negligence. But, by riving dangerously and recklessly Ade was negligent in his actions which has caused loss to Charles. Thus, Ade was negligent in his actions but can be held liable under the law of negligence.

But, the tour can take the defence of contributory negligence. This is because the passengers were instructed to fasten their seat belts before they set off. But, Charles had unfastened his seat belt because of which loss is caused to him which can be mitigated if he has fastened the belt. Thus, it was the acts of Charles himself which has also contributed to his loss. Thus, the defence of contributed negligence can be taken as a defence by tour and can reduce their liability proportionately.

However, the loss caused to Shanice was not because of the negligence of Ade, rather, the loss was because of her own acts (she was unhurt in the accident), thus, she has no right to sue the tour under the law of negligence.

Reference List

Antoniou N, 2015, Limited Company or Partnership: which is best?’.
Academia, 2015, Separate Legal personality and Limited Liability are cornerstones of UK Company Law.’ Discuss with reference to advantages and disadvantages of separate legal personality