Elements of Business Law

Business Law




1a. Doctrine of binding precedent

Under the English legal system, the doctrine of binding precedent means that a court’s decision in regard to a previous case controls the future decision in adjudicating over a case with similar or related facts or issues. Therefore, the doctrine of binding precedent is applicable if the facts relating to a particular case a materially the same in comparison to a previous case.

1b. How the system of judicial precedent operates  

The doctrine of binding judicial precedent or stare decisis   requires all inferior courts within a particular jurisdiction to comply with the decision made by a superior court in regard to a related case (McLeod 2014).  Under the UK system, decision by the Supreme Courts binds all the other lower cases. Therefore, this doctrine operates on the basis of complying with the decision of previous higher courts in accordance with the hierarchy of the court system.  Therefore, in dealing with a particular case, judges of a lower court have a duty to evaluate whether a superior court has previously adjudicated over a particular matter within the same jurisdiction. In the event that such an issue had been previously dealt with, the judge of a lower court is subsequently bound to make a ruling on the basis of the previous decision. However, decisions by lower courts do not bind the ruling by higher courts (Stranhope & Hutchinson 2014).  

1c. Advantages and disadvantages of doctrine of binding precedent

            One of the fundamental advantages of the doctrine of binding precedent is that it improves the efficiency with which judges make ruling on cases on the basis of previous rulings depending on the material facts presented. Subsequently, it saves on the amount of time required by clients, lawyers and judiciary in delivering and accessing justice.

Secondly, the precedent is very essential in ensuring that cases are adjudicated with a high degree of certainty. Thus, lawyers and clients can effectively predetermine the outcome of the issue under consideration with a high degree of certainty by evaluating previous judicial decisions.

The doctrine is also valuable in that it aid in that it contributes to promotion and preservation of justice. Subsequently, the doctrine acts as a measure of formal justice by ensuring that similar cases are determined and ruled alike. In addition to the above aspects, the doctrine of binding precedent  provide judges with an opportunity to promote growth of common law with reference to a particular area without having to wait for Parliament to formulate and enact a legislation applicable to a particular aspect.

In spite of the above advantages, the doctrine of binding precedent is characterised by a number of limitations. First, the doctrine may make the law to be inflexible if an unjust precedent was relied upon in determining a case. Thus, the risk of perpetuating injustices under the precedent is increased substantially. Another limitation associated with the precedent is that it may lead to the judiciary being accused of violating its constitutional function by making law as opposed to interpreting and applying the law.  

2. Contract

The scenario presented is characterised by existence of a valid contract because the essential requirements of a valid contract were met as examined herein.

a.     Offer; in the scenario, there are two parties involved, viz. William and Harry. According to Bellairs et al. (2002), an offer must involve two parties for it to be legally capable of constituting a contract. In making the offer, the other party must be knowledgeable of the offer. In this case, Harry was made aware of the offer to sell the watch to him at £ 1000 through William’s personal assistant, Stella, who delivered the note to him in person.

b.     Acceptance; despite the fact that Harry did not reply through Stella as required, Harry accepted the offer in writing by mailing a letter to William. Kelly, Hammer and Hendy (2014) asserts that a valid contract must be accepted either orally or in writing.

c.     Consideration; the scenario is further characterised by existence of the element of consideration, which arises when the other party in the contract consents to give something in return. In this case, Harry agreed to pay £ 1,000 for the watch, which is the consideration.

d.     Capacity; in addition to the above elements, a valid contract exists because the two parties are over the legal age, 18 years, require to constitute a contract.

3.  Overworking employees

 In this case, the manager refused to pay Ahmed for the additional work done over the course of the week hence violating his agreement with Ahmed. In this case, Ahmed has a right to sue for the manager for failure to comply with the promise previously made in relation to the additional work. By refusing to pay Ahmed his additional earnings, the manager was in contravention of the Employment Act. This arises from the fact that the manager used his capacity/power to increase Ahmed pay to influence Ahmed into agreeing to undertake Johnny’s duties which constituted additional work. Thus, the manager applied undue pressure which is illegal. Moreover, the manager was in contravention with the employment law by affirming that Ahmed’s duties were part of his job description. On the basis of this aspect, Ahmed can sue the manager for violating the content of his job description. The fact that Ahmed agreed to perform some additional duties constitute indicate that he was overworked because his job description did not include the tasks that the manager required him to perform during Johnny’s absence. Therefore, by arguing that the tasks performed by Ahmed constituted part of his job description, the manager was in contravention of the Employment Act because this aspect was not cited Ahmed’s employment contract.

4a: Law of contract; Conditions, warranties and innominate

Contractual terms can either be innominate, warranties and conditions as explained herein.

Condition; a condition refers to a major term of a contract which forms the foundation of a contract. Breaching the condition may lead to the innocent party terminating the contract and sue for damages (Stranhope & Hutchinson 2014). 

Warranties; these refers to minor terms that are not essential to subsistence of a contract. Breaching the warranty may lead to legal costs but the innocent party cannot terminate the contract.

Innominate terms; these terms are also referred to intermediary terms which form the middle ground between warranties and conditions. If an innominate term is breached, the impact is of the breach on the contract is dependent on the seriousness of the breach. In the event that the breach is serious, the innocent party has the right to terminate the contract and claim for damages. Conversely, if the extent of the breach is not serious, the innocent party can only claim for damages (Stranhope & Hutchinson 2014).  

4b: When terms may be implied into a contract 

These include the terms in a contract that are not expressly stated because they are obvious to the respective involved in a contract. The implied terms are classified into two main categories that include implied terms of law and fact. According to Martson (2016), the implied terms of fact originate from the circumstances within which the contract was entered. A classic example of implied terms of fact relate to the facts that are associated with booking hotel accommodation. In such as situation, the hotel manager ensures that the requisite skills and care are exercised in delivering the service. Conversely, implied terms of law are based on legal statutes.

Q5; Exclusion clause

a.     In this scenario, the exclusion clause was not effectively incorporated in to the contract. This arises from the fact no notice was effectively given to Rambo on the fact that Swift Motors will not be liable for any damage caused to the customer or his goods. This notice was indicated at the back of the invoice, which does not constitute effective communication. Additionally, the client was not notified of the vehicle’s condition at the time of the contract. This aspect is highlighted in the case of Chapelton v Barry UDC (1940), a customer hired a deck chair and was issued a ticket with the exclusion clause stated at the back. The client was subsequently injured as a result of the chair collapsing. The client successfully sued Barry UDC (Kellly, Harmer & Hendy 2014). Similarly, Rambo can sue Swift Motors for damages due to lack of effective notice on the exclusion clause.

b.     The exemption clause passes the construction test as illustrate here in. First, the clause is stated in clear wordings that the company will not be liable to any injury incurred by the client. The wordings are easily understandable to all the parties intending to enter into a contract with Swift Motors. However, the fundamental issue is that the clause was located at the reverse of the invoice hence affecting its effectiveness in notifying the client.  Additionally, the exemption clause passes the construction test because it complies with the contra-proferentem rule, which states that the exemption clause must be explicitly stated. In this case, the clause stated that the company would not be liable for any injury suffered by the client.    

c.     Validity of the Act under the Consumer Rights Act 2015; under the Consumer Rights Act 2015, the exclusion clause is not valid. This arises from the fact that the Act has considered the clause to support unfair terms of contract. Thus, the Act has invalidated the clause on the foundation that it contributes to provision to little protection towards the customer, who is treated less favourably.  

6 Employment law

a. Control test; in this test, the court focuses on determining whether an individual is self-employed/independent contractor or is formally employed. In applying this test, the court assesses the extent to which the individual is controlled by the employer in his or her work activities. Moreover, the court examines the individual’s decision making capacity in relation to the job. Some of the issues evaluated relate to decision on what is to be done, the approach to be used, the place and time within which the activity must be completed (Martson 2016).

b. Dismissal: Betty’s dismissal on the basis of her religious belief constitutes an unfair dismissal. The Employment Equality (Region or Belief) Regulation 2003 makes it unlawful to discriminate employees because of their religious beliefs.  Similarly, Betty’s dismissal because of engaging in union activities is unfair.  This arises from the fact that the law provides employees the right to associate, establish and become members of a trade union. Similarly, Betty’s dismissal because she is pregnant further constitutes unfair dismissal because it discriminates her on the basis of her gender. Conversely, her dismissal because the company is shutting down does not constitute unfair dismissal. This arises from the fact that the company’s decision to close down was based on a substantial reason. Similarly, her dismissal because she was caught swearing at customers do not amount to unfair dismissal.  Her employer’s decision to dismiss her was informed by her gross misconduct at the workplace which is legal under the Employment Rights Act 1996 (Upex, Benny & Hardy 2015).  

7. Negligence

In this case, Peter has a right to sue Sarah for damages incurred.  In this case Peter has qualified rights over Sarah. This arises from the fact that Sarah’s action, which arose from failure to take adequate duty of care resulted in actual and special damage. As the owner of the salon, Sarah had a responsibility to provide her clients with competent hair cut services.  By visiting Sarah’s salon, Peter was adequately informed of Sarah’s knowledge in administering the hair cut service.  In suing for compensation, Peter should ensure that he is able to prove that Sarah’s actions were the actual cause of his head injury and subsequent hospitalisation. In suing for damages, Peter should not only consider the health impact of Sarah’s negligent action by failing to take due care in her duty. On the contrary, Peter has a right to sue Sarah for the financial loss incurred by missing work for several days.





Bellairs, T, Helsel, J, Goldsmith, J, Skindzier, J & Bellairs, H 2002, Modern real estate practice in Pennyslavania, Dearborn Real Estate Education, Chicago, IL.

McLeod, I 2014, Legal method, Palgrave McMillan, New York.

Stranhope, A & Hutchinson, O 2014, Optimise English legal system, Routledge, New York.

Kelly, D, Hammer, R & Hendy, J 2014, Business law, Routledge, New York.

Martson, J 2016, Beginning employment law, Routledge, New York.

Upex, R, Benny, R & Hardy, S 2015, Employment law, Oxford University Press, Oxford.



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