Acca F4 – Corporate and Business Law (Eng) Flashcard

essay A
  • Words: 10400
  • Category: Business

  • Pages: 38

Get Full Essay

Get access to this section to get all the help you need with your essay and educational goals.

Get Access

S T U D Y PAPER F4 CORPORATE AND BUSINESS LAW (ENGLISH) T E X T BPP Learning Media is the sole ACCA Platinum Approved Learning Partner – content for the ACCA qualification.

In this, the only Paper F4 (ENG) study text to be reviewed by the examiner: • • • • • • • • We discuss the best strategies for studying for ACCA exams We highlight the most important elements in the syllabus and the key skills you will need We signpost how each chapter links to the syllabus and the study guide We provide lots of exam focus points demonstrating what the examiner will want you to do We emphasise key points in regular fast forward summaries We test your knowledge of what you’ve studied in quick quizzes We examine your understanding in our exam question bank We reference all the important topics in our full index

BPP’s i-Pass product also supports this paper. FOR EXAMS IN 2011 First edition 2007 Fourth edition December 2010 ISBN 9780 7517 8918 8 (Previous ISBN 9870 7517 6364 5) British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Published by BPP Learning Media Ltd BPP House, Aldine Place London W12 8AA www. bpp. com/learningmedia Printed in the United Kingdom We are grateful to the Association of Chartered Certified Accountants for permission to reproduce past examination questions.

The suggested solutions in the exam answer bank have been prepared by BPP Learning Media Ltd, unless otherwise stated. All our rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of BPP Learning Media Ltd. Your learning materials, published by BPP Learning Media Ltd, are printed on paper sourced from sustainable, managed forests. © BPP Learning Media Ltd 2010 i Contents Page Introduction Helping you to pass – the ONLY F4 (ENG) Study Text reviewed by the examiner! Studying F4 The exam paper v vii x Part A Essential elements of the legal system 1 2 3 The English legal system Sources of English law Human rights 3 17 35 Part B The law of obligations 4 5 6 7 8 9 Formation of contracts I Formation of contracts II Terms of contract Breach of contract The law of torts Professional negligence 47 67 87 105 121 135 Part C Employment law 10 11 Employment contract Dismissal and redundancy 145 163

Part D The formation and constitution of business organisations 12 13 14 15 Agency law Organisations and legal personality Company formation Constitution of a company 183 193 221 237 Part E Capital and the financing of companies 16 17 18 Share capital Borrowing and loan capital Capital maintenance and dividend law 255 269 283 Part F Management, administration and regulation of companies 19 20 Company directors and other company officers Company meetings and resolutions 299 333 Part G Legal implications of companies in difficulty or in crisis 21 Insolvency and administration 351

Part H Governance and ethical issues relating to business 22 23 Corporate governance Fraudulent behaviour 371 387 403 409 441 Exam question bank Exam answer bank List of cases and index Review form and free prize draw Contents iii A note about copyright Dear Customer What does the little © mean and why does it matter? Your market-leading BPP books, course materials and elearning materials do not write and update themselves. People write them: on their own behalf or as employees of an organisation that invests in this activity. Copyright law protects their livelihoods. It does so by creating rights over the use of the content.

Breach of copyright is a form of theft – as well being a criminal offence in some jurisdictions, it is potentially a serious breach of professional ethics. With current technology, things might seem a bit hazy but, basically, without the express permission of BPP Learning Media: • Photocopying our materials is a breach of copyright • Scanning, ripcasting or conversion of our digital materials into different file formats, uploading them to facebook or emailing them to your friends is a breach of copyright You can, of course, sell your books, in the form in which you have bought them – once you have finished with them. Is this fair to your fellow students? We update for a reason. ) But the e-products are sold on a single user licence basis: we do not supply ‘unlock’ codes to people who have bought them second hand. And what about outside the UK? BPP Learning Media strives to make our materials available at prices students can afford by local printing arrangements, pricing policies and partnerships which are clearly listed on our website. A tiny minority ignore this and indulge in criminal activity by illegally photocopying our material or supporting organisations that do.

If they act illegally and unethically in one area, can you really trust them? iv Helping you to pass – the ONLY F4 (ENG) Study Text reviewed by the examiner! BPP Learning Media – the sole Platinum Approved Learning Partner – content As ACCA’s sole Platinum Approved Learning Partner – content, BPP Learning Media gives you the unique opportunity to use examiner-reviewed study materials for the 2011 exams. By incorporating the examiner’s comments and suggestions regarding the depth and breadth of syllabus coverage, the BPP Learning Media Study Text provides excellent, ACCA-approved support for your studies. The PER alert

Before you can qualify as an ACCA member, you do not only have to pass all your exams but also fulfil a three year practical experience requirement (PER). To help you to recognise areas of the syllabus that you might be able to apply in the workplace to achieve different performance objectives, we have introduced the ‘PER alert’ feature. You will find this feature throughout the Study Text to remind you that what you are learning to pass your ACCA exams is equally useful to the fulfilment of the PER requirement. Tackling studying Studying can be a daunting prospect, particularly when you have lots of other commitments.

The different features of the text, the purposes of which are explained fully on the Chapter features page, will help you whilst studying and improve your chances of exam success. Developing exam awareness Our Texts are completely focused on helping you pass your exam. Our advice on Studying F4 outlines the content of the paper, the necessary skills the examiner expects you to demonstrate and any brought forward knowledge you are expected to have. Exam focus points are included within the chapters to highlight when and how specific topics were examined, or how they might be examined in the future.

Using the Syllabus and Study Guide You can find the syllabus and Study Guide on page (xi) of this Study Text Testing what you can do Testing yourself helps you develop the skills you need to pass the exam and also confirms that you can recall what you have learnt. We include Questions – lots of them – both within chapters and in the Exam Question Bank, as well as Quick Quizzes at the end of each chapter to test your knowledge of the chapter content. Introduction v Chapter features Each chapter contains a number of helpful features to guide you through each topic. Topic list Topic list Syllabus reference

What you will be studying in this chapter and the relevant section numbers, together the ACCA syllabus references. Introduction Study Guide Exam Guide Knowledge brought forward from earlier studies Puts the chapter content in the context of the syllabus as a whole. Links the chapter content with ACCA guidance. Highlights how examinable the chapter content is likely to be and the ways in which it could be examined. What you are assumed to know from previous studies/exams. Summarises the content of main chapter headings, allowing you to preview and review each section easily.

Demonstrate how to apply key knowledge and techniques. Definitions of important concepts that can often earn you easy marks in exams. When and how specific topics were examined, or how they may be examined in the future. Formulae that are not given in the exam but which have to be learnt. Gives you a useful indication of syllabus areas that closely relate to performance objectives in your Practical Experience Requirement (PER). FAST FORWARD Examples Key terms Exam focus points Formula to learn Question Case Study Gives you essential practice of techniques covered in the chapter.

Real world examples of theories and techniques. Chapter Roundup Quick Quiz Exam Question Bank A full list of the Fast Forwards included in the chapter, providing an easy source of review. A quick test of your knowledge of the main topics in the chapter. Found at the back of the Study Text with more comprehensive chapter questions. Cross referenced for easy navigation. vi Introduction Studying F4 This paper examines a basic understanding of legal principles and their application. You may find the material a little different from what you are used to because there are virtually no numbers involved.

Therefore it is important to develop a concise style of writing in order to get your points across quickly and clearly. The F4 examiner The examiner for this paper is David Kelly and he has been in the role for some time. Therefore there should be no surprises when it comes to your exam – each of his papers is similar in style and content. 1 What F4 is about The main aims of the F4 exam are: • • To develop knowledge and skills in the understanding of the general legal framework and of specific legal areas relating to business, but To recognise the need to seek further specialist legal advice where necessary

The exam is not designed to turn you into a legal expert. Instead you will be a well-informed professional accountant who appreciates the legal issues of doing business but who recognises the boundaries of their legal knowledge and therefore the point at which professional legal expertise must be sought. The sequence of the syllabus and study guide takes you through the main areas of what you need to know. Essential elements of the legal system In this part of the syllabus you are covering areas that underlie all the other areas, namely: what is law and how the UK legal system creates and administers it.

The distinctions between criminal law and civil law, between common law and civil law and between public law and private law, are very important. Most of the paper is concerned with civil law, namely the law that sets out the rights and duties of persons in relation to each other. There are elements of criminal law in relation to companies, insolvency, insider dealing and money laundering, in addition to the topical area of human rights legislation. Law of obligations The syllabus clearly distinguishes two important types of obligation that individuals and businesses have.

Contract When individuals or businesses make agreements, a legally binding contract may be formed. This paper focuses on the requirements that must be met for a contract to be binding on the parties, what valid contracts must contain, under which circumstances the contractual terms are breached and what remedies are available for the affected party. Tort All members of society have a duty not to harm others and this principle forms the basis of tort. The tort of negligence is highly topical and has an impact on individuals, businesses and professionals (such as accountants).

It is important for you to understand how such a duty is formed, the circumstances that will cause a breach of that duty and if there are any defences to a breach that the perpetrator can call on. Employment law Employees and employers are bound to each other by an employment contact. It is important that you have a good understanding of the contents of such a contract. Both employers and their employees owe duties to each other and breach of these duties can result in legal action being taken. Termination of employment can be fraught with danger for employers if it is not handled correctly.

The terms of ‘wrongful’ and ‘unfair’ dismissal are used commonly in the media, but the causes and remedies are distinct and it is important for you to understand the difference. Introduction vii Formation and constitution of business organisations The syllabus is very concerned with the various legal forms through which business transactions may be conducted. It is important to distinguish initially between natural persons (human beings) and legal persons (including natural persons, but extending to some forms of partnership and, most significantly, companies).

The law of agency underlies a substantial part of our study of business forms, since partners and directors can and sometimes do act as agents. Capital and the financing of companies Most trading companies are financed by a mix of share capital (provided by their owners) and loan capital (provided by third party lenders). Share capital may take a variety of forms, with each class of share having different rights within the company. However, the primary responsibility of the shareholder is to contribute funds to the company in accordance with the terms of the company’s constitution and the shares which they own.

The return of these funds to shareholders is restricted since they are seen as the ‘creditors’ buffer’, that is the funds which are available to settle creditors’ outstanding debts in preference to amounts due to shareholders. Hence there are detailed laws on ‘capital maintenance’. These extend to how far companies may distribute accumulated retained earnings to their shareholders in the form of dividends or buyback of shares. Loan capital is usually provided by lenders only if they can be assured of its repayment to them.

If lenders supply funds in return for debentures in the company, they usually require security for their loan: the debenture is secured by means of a registered charge on particular or general assets of the company, which can (within limitations) be realised so that the loan is repaid. Management, administration and regulation of companies As an artificial legal person a company cannot manage itself. This is the role primarily of the company’s directors, who owe duties to the company to manage it for the benefit of the company and thereby for the benefit of its owners, the shareholders.

There are a great many legal rules which regulate the appointment, remuneration, disqualification, powers and duties of directors. These have grown up largely because of problems that frequently occur. Most of these can be said to arise from conflicts between directors’ personal interests and their duties to act in the company’s interest. Directors are termed officers of the company along with the company secretary. Many companies also have to have an auditor. Directors come into immediate contact with shareholders via company meetings, and the resolutions that are passed at these meetings.

There are therefore a plethora of legal rules on meetings and resolutions, designed to ensure that the company is taking decisions properly and in accordance with the legitimate interests of shareholders as a body. Legal implications of companies in difficulty or in crisis Not everything goes according to plan and frequently companies will encounter financial or other difficulties, or will even reach crisis point and find themselves insolvent. At this point all parties – shareholders, directors, lenders, customers, suppliers and employees – are in danger of losing out.

There are procedures designed to protect struggling companies to give them a ‘breathing space’ while they resolve their issues. There are also rules for how a company which cannot be saved should be ‘wound up’, depending on whether or not the company has any funds left. Corporate governance Corporate governance means trying to ensure that companies are well-managed and controlled. While there are plenty of legal rules designed to ensure good corporate governance, there are also voluntary codes of practice which apply to some but not all companies.

The UK Corporate Governance Code applies to all companies listed on the London Stock Exchange, but is also recommended to other companies. It seeks to protect shareholders and addresses the problems of conflicts of interest in part by implementing the principle of separation of duties between executive and non-executive directors. It also covers directors’ remuneration, external audit, nominations to the board of directors and other issues. viii Introduction Fraudulent behaviour Finally the syllabus covers the situations where activities of directors and others have strayed into criminal behaviour.

This often arises in the context of companies running out of money, but the law is also concerned with company insiders with superior knowledge benefiting from insider dealing, and crime in the form of money laundering. 2 What skills are required? To pass the F4 exam you will need to bring a number of different professional attributes to bear. First you need technical knowledge. There is a huge amount of technical content in the syllabus: case law, conventions, codes of practice, and legislation. You need to learn this and be able to identify hich parts of the knowledge you have are being called for in a particular question. Secondly you need to be able to apply knowledge to the scenarios that are presented in the last three questions on the paper. You are aiming to solve practical problems here. Generally in scenario questions there will be marks available for stating the law, identifying the issues in the scenario in relation to the law, applying the law and reaching a conclusion. Thirdly you need written skills in order to be able to explain, and advise on the basis of, your technical knowledge.

Explaining means providing simple definitions and covering why and how these approaches have been developed. You’ll gain higher marks if your explanations are clearly focused on the question and you can supplement your explanations with examples. 3 How to improve your chances of passing To pass the exam you need to cover the syllabus thoroughly. The exam requires you to answer all TEN questions on the paper. Each topic that you fail to cover represents 10% fewer marks in the exam.

You should practise answering questions as much as possible, making sure that your answers are focused, specific and completely relevant to the question. Ten questions is a lot to answer in three hours so your exam technique is very important, especially: • • Strict time management: only 18 minutes per answer Deciding on the order in which you attempt questions carefully: use your 15 minutes reading and planning time carefully to make sure that you attempt your best topics first when you start to write.

This will bolster your confidence and help to ensure that you manage your time properly, so long as you don’t overrun your time allocation on the early, ‘better’ questions Reading the question carefully: make sure you identify precisely the key issues requiring your attention • Only answering the question set: do not stray into irrelevant areas of, say, contract law. You will gain no marks and you will lose time. Introduction ix The exam paper Format of the paper The examination is a three hour paper consisting of seven, ten-mark questions testing knowledge and three, ten-mark application (scenario) questions.

Guidance As all questions are compulsory it is vital to attempt all of them. Even if you are not confident about an area of law, it is often easier to earn marks by starting a question and putting something down, than by adding material to an already developed answer. When answering scenario questions follow the ISAC approach Identify the legal issues State the relevant law Apply the law Conclude This structure will maximise your marks as you identify what the problem is, state what the law says about the problem, apply the law and come to a reasonable conclusion – exactly what the examiner wants.

You should quote case names in your answers. Do your best to learn as many as you can (at least a handful in each topic area), but don’t worry if in the exam you forget the case name – as long as you correctly state the principle of law you will earn most of the marks. Negligence The December 2007 exam saw the first tort question under the new syllabus. It required candidates to explain the concept of ‘remoteness of damage’. According to examiner’s report on the sitting, the vast majority of candidates ignored the reference to tort and answered the question on the basis of contract law.

They consequently scored very low marks. When studying please remember that ‘remoteness of damage’ under tort and contract are completely unrelated concepts. Do not mix them up in an exam question. Company law Many students have failed this exam because they refer to out-of-date company law. This text is based on the latest (Companies Act 2006) so you are assured the material you are about to study is up-to-date. Syllabus and Study Guide The F4 syllabus and study guide can be found below. Introduction Introduction xi xii Introduction Introduction xiii xiv Introduction Introduction xv xvi Introduction Analysis of past papers The table below provides details of when each element of the syllabus has been examined and the question number and section in which each element appeared. Further details can be found in the Exam Focus Points in the relevant chapters. Covered in Text chapter June 2010 Dec 2009 June 2009 Dec 2008 June 2008 Dec 2007 Pilot Pape r

ESSENTIAL ELEMENTS OF THE LEGAL SYSTEM 1 2 3 The English legal system Sources of English law Human rights THE LAW OF OBLIGATIONS 4, 5 6 7 8 9 10 11 Formation of contracts Terms of contract Breach of contract Torts Professional negligence EMPLOYMENT LAW Employment contract Dismissal and redundancy THE FORMATION AND CONSTITUTION OF BUSINESS ORGANISATIONS 12 13 14 15 16 17 18 Agency law Organisations and legal personality Company formation Constitution of a company CAPITAL AND THE FINANCING OF COMPANIES Share capital Borrowing and loan capital Capital maintenance and dividend law MANAGEMENT, ADMINISTRATION AND REGULATION OF COMPANIES 19 20 Company directors and other company officers Company meetings and resolutions LEGAL IMPLICATIONS OF COMPANIES IN DIFFICULTY OR IN CRISIS 21 Insolvency and administration GOVERNANCE AND ETHICAL ISSUES RELATING TO BUSINESS 22 23 Corporate governance Fraudulent behaviour 10 10 10 6 10 6 6, 10 9 6, 9 6 5 6 7, 10 5 10 5 5 4 5 5 9 9 5 9 9 4 4 9 4 5 4,10 4, 9, 10 4 10 7 7 7 7 7 6 7 3 4 2, 8 2 8 3 2 3 8 2 3 8 3 3 3 8 2 2, 8 8 2 1 1 1 1 1 1 1 Introduction xvii xviii Introduction P A R T A Essential elements of the legal system 1 2 The English legal system Topic list 1 What is law? 2 Types of law 3 The system of courts 4 Tribunals Syllabus reference A1(a) A1(a) A1(b) A1(b) Introduction Welcome to your study of Corporate and Business law. In this chapter we set the scene and framework of the English Legal System.

We start by defining what law is and why it is important to society. Our study continues by considering the different types of law that we have in the UK and how they have developed over time. The chapter concludes with an analysis of the Criminal and Civil court systems. Tribunals are also discussed as an alternative method of dispute resolution. Yes, this is F4 paper if you want to get free study material of CAT, ACCA, CIMA, CFA, CIA visit : freefor911. wordpress. com 3 Study guide Intellectual level A 1 (a) (b) Essential elements of the legal system Court structure Define law and distinguish types of law Explain the structure and operation of the courts and tribunals system 1 1 Exam guide

The nature of law and the operation of the legal system form a basis for your later studies but could also be examined as a topic all by itself. 1 What is law? FAST FORWARD ‘Law is a formal mechanism of social control’, Business Law 5th Edition, David Kelly, Ann Holmes and Ruth Hayward Human society has developed over thousands of years from a primitive culture where the very survival of the species was at stake to the complex, diverse and dominating species that humans are today. Much of the success of this development can be attributable to rules and regulations laid down by society. With a little further study the need for such rules becomes clear. In the early days of human existence, survival was achieved by working as a group.

There was a fine line between life and death, for example the stealing of food from another group member could eventually result in starvation or death of the victim. Social order, created by rules is at the foundation of the society that we see today. The framework that was created influences how individuals interact and how businesses operate. In other words, it provides social control. The framework of social control can be viewed as having two aspects: • • Formal control mechanisms Informal control mechanisms Law is a formal control mechanism. It provides a structure for dealing with and resolving disputes that may arise, as well as providing some deterrent to those wishing to disrupt social order. Informal mechanisms include ethical and moral guidance.

These are ‘norms’ or behavioural expectations that society has developed over time through its culture. Such mechanisms have little formal structure to organise, control or to punish – such matters are dealt with informally by pressure from other individuals or groups. PER 2 requires you to ensure compliance with legal, regulatory and social requirements in your area of responsibility. The contents of this Study Text should help you identify common legal and regulatory requirements. 2 Types of law The English legal system distinguishes several different types of law. • • • • Common law and equity Statute law Private law and public law Criminal law and civil law 4 1: The English legal system ?

Part A Essential elements of the legal system 2. 1 Common law and equity The earliest element of the English legal system is common law, a system of rigid rules laid down by royal courts following the Norman conquest. Application of law was by judges who travelled around the country to keep the King’s peace and judgements often resulted in harsh consequences. The judges actually made the law by amalgamating local customary laws into one ‘law of the land’. Remedies under common law are monetary, and are known as damages. However, there are times when money is not a suitable remedy. For example, you have agreed to buy a unique painting from an art dealer.

Should the dealer at the last minute sell the painting to someone else, damages are unlikely to be acceptable, after all you wanted that painting. Equity was developed two or three hundred years after common law as a system to resolve disputes where damages are not a suitable remedy and to introduce fairness into the legal system. 2. 2 Statute law Whilst the judiciary is responsible for the creation of common law, Parliament is responsible for statute law. Statute law is usually made in areas so complicated or unique that suitable common law alternatives are unlikely, or would take an unacceptable length of time, to develop – company law is one example of this. 2. 3 Private law and public law Most of the law that you will be studying is private law.

That is law which deals with relationships and interactions between businesses, and private individuals, groups or organisations. The state provides a framework for dealing with disputes and for enforcing decisions, but it is for individuals to handle matters between themselves. For example, the Sale of Goods Act 1979 regulates the sale of goods. It provides rules that must be adhered to when making a sale. Should any dispute arise that is covered by the act, it is up to the parties to resolve the matter themselves using rules laid down by the legislation, the state does not get involved. Public law is mainly concerned with government and the operation and functions of public organisations such as councils and local authorities.

It will not be of great interest to you in your studies of corporate law, however examples of public law can be found in planning rules that must be adhered to when building or expanding offices. A key distinction between public and private law is who takes up the case when a wrong is committed. The state prosecutes the alleged perpetrator under public law, whereas we have already seen, under private law it is for the individual concerned to take action. Criminal law is a part of public law and deals with behaviour that the state considers unwelcome and wishes to prevent. Criminal law also decides how those guilty of committing unlawful behaviour should be punished. You will notice the names of criminal cases are reported as R v Jones or Regina v Jones.

This indicates that the state takes action on behalf of the crown (Regina is Latin for Queen). 2. 4 Criminal and civil law FAST FORWARD 12/07 The distinction between criminal liability and civil liability is central to the English legal system. It is often the criminal law about which the general public has a clearer perception and keener interest. Some of the high profile criminal cases at London’s Old Bailey are deemed extremely newsworthy. Civil law, on the other hand, receives less overt media coverage. However, every time you buy or sell goods, or start or finish an employment contract, your actions, and those of the other party, are governed by civil law.

The distinction between criminal and civil liability is central to the English legal system and to the way the court system is structured. Part A Essential elements of the legal system ? 1: The English legal system 5 2. 4. 1 Criminal law FAST FORWARD In criminal cases, the state prosecutes the wrongdoer. Key term A crime is conduct prohibited by the law. In a criminal case the State is the prosecutor because it is the community as a whole which suffers as a result of the law being broken. Persons guilty of crime may be punished by fines payable to the State, imprisonment, or a community-based punishment. Generally, the police take the initial decision to prosecute, but this is then reviewed by the Crown Prosecution Service.

Some prosecutions are started by the Director of Public Prosecutions, who is the head of the Crown Prosecution Service. In a criminal trial, the burden of proof to convict the accused rests with the prosecution, which must prove its case beyond reasonable doubt. 2. 4. 2 Civil law FAST FORWARD Civil law exists to regulate disputes over the rights and obligations of persons dealing with each other and seeks to compensate injured parties. Civil law is a form of private law. In civil proceedings, the case must be proved on the balance of probability. The claimant must convince the court that it is more probable than not that their assertions are true.

There is no concept of punishment, and compensation is paid to the wronged person. Both parties may choose to settle the dispute out of court should they wish. Terminology in civil cases is different to that of criminal cases. A claimant sues a defendant. A civil case would therefore be referred to as, for example, Smith v Megacorp plc. One of the most important areas of civil liability for business, and accountants in particular, is the law of contract. The law of contract is looked at in detail in Part B of this text. 2. 4. 3 Distinction between criminal and civil cases It is not an act or event which creates the distinction, but the legal consequences.

A single event might give rise to criminal and civil proceedings. Illustration A broken leg caused to a pedestrian by a drunken driver is a single event which may give rise to: • • Criminal case (prosecution by the State for the offence of driving with excess alcohol), and Civil case (the pedestrian sues for compensation for pain and suffering). The two types of proceedings can be easily distinguished because three vital factors are different: • • • The courts where the case is heard The procedures The terminology 6 1: The English legal system ? Part A Essential elements of the legal system Illustration In criminal cases the rules of evidence are very strict.

For example, a confession will be carefully examined to see if any pressure was brought to bear upon the accused, but an admission in a civil case will not be subjected to such scrutiny. Question Criminal and civil law While on a sales trip, one of your employees is involved in a car accident. The other vehicle involved is damaged and it is alleged that your employee is to blame. What legal proceedings may arise as a result of this incident? Answer Your employee may be guilty of a driving offence such as careless driving. The police, to whom the incident should be reported, will investigate, and if the facts indicate a driving offence, they will prosecute him. The owner of the damaged vehicle (or his insurers) may sue the driver at fault in civil proceedings to recover damages. 3 The system of courts (a) (b) (c) (d) 12/07

The courts have to be organised to facilitate the working of the legal system. There are four main functional aspects of the court system which underlie its structure. Civil and criminal law differ so much in substance and procedure that they are best administered in separate courts. Local courts allow the vast bulk of small legal proceedings to be decentralised. But important civil cases begin in the High Court in London. Although the courts form a single system and many courts have a general civil jurisdiction, there is some specialisation both within the High Court and in other courts with separate functions. There is a system of review by appeals to higher courts. 3. 1 The civil court structure FAST FORWARD 6/10

The civil court structure comprises the following. • • • • • • Magistrates’ Courts mostly deal with small domestic matters. County Courts hear claims in contract and tort, equitable matters and land and probate disputes among others. The Crown Court hears appeals from Magistrates’ Courts. The High Court is divided into three specialist divisions; Queen’s Bench, Family and Chancery The Court of Appeal hears appeals from the County Court, the High Court, the Restrictive Practices Court, and the Employment Appeal Tribunal. The Supreme Court for the United Kingdom hears appeals from the Court of Appeal and the High Court. Part A Essential elements of the legal system ? : The English legal system 7 The diagram below sets out the English civil court structure. SUPREME COURT FOR THE UNITED KINGDOM EUROPEAN COURT OF HUMAN RIGHTS In appropriate cases it is possible to refer a case to either the European Court of Human Rights or the European Court of Justice, although they are not strictly within the English court structure. 3. 2 The criminal court structure FAST FORWARD The criminal court structure comprises the following. • • • • • Magistrates’ Courts hear summary offences and committal proceedings for indictable offences. The Crown Court tries serious criminal (indictable) offences and hears appeals from Magistrates’ Courts.

The Divisional Court of QBD hears appeals by way of case stated from Magistrates’ Courts and the Crown Court. The Court of Appeal hears appeals from the Crown Court. The Supreme Court for the United Kingdom hears appeals from the Court of Appeal or a Divisional Court of QBD. The diagram below sets out the English criminal court structure. SUPREME COURT FOR THE UNITED KINGDOM 8 1: The English legal system ? Part A Essential elements of the legal system A limited number of Commonwealth countries allow appeal to the Privy Council in London, which is mostly staffed by Supreme Court judges. 3. 3 Magistrates’ Courts Magistrates’ Courts are the lowest ranked criminal courts. • • They try summarily (without a jury) all minor offences. 6/10

They conduct committal proceedings, which are preliminary investigations of the prosecution case, when the offence is triable only on indictment (by a Crown Court). Key terms Indictable offences are more serious offences that can only be heard in a Crown Court. Summary offences are minor crimes, only triable summarily in Magistrates’ Courts. Some offences are ‘triable either way’, meaning the accused has the choice of court that is used. Magistrates also have some civil jurisdiction which includes the following: • • Family proceedings (financial provision for parties to a marriage and children, the custody or supervision of children and guardianship, and adoption orders).

Enforcement of local authority charges and rates 3. 3. 1 Appeals A defendant convicted on a criminal charge in a Magistrates’ Court has a general right to a rehearing by a Crown Court. A ‘case stated’ appeal is based on the idea that Magistrates or the Crown Court have wrongly interpreted the law. If not, then the case may be sent back to the lower court with instructions as to how it should be decided. On family matters, appeals are to the Crown Court with a further (or alternative) appeal on a point of law to a divisional court of the Family Division of the High Court. 3. 3. 2 Personnel The key personnel in the Magistrates’ Court are the magistrates who hear the cases.

These fall into two categories: • • Magistrates, who are lay persons selected by the Lord Chancellor (Justices of the Peace) District Judges (professional paid magistrates) The Magistrates’ Courts are also staffed by clerks, who can provide legal advice for lay Magistrates. 3. 4 The County Court 6/10 County Courts have civil jurisdiction only but deal with almost every kind of civil case. The practical importance of the County Courts is that they deal with the majority of the UK’s civil litigation. The County Court is involved in the following matters. • • • • • • • Contract and tort (except defamation of character) claims. Equitable matters concerning trusts, mortgages and partnership dissolution.

Disputes concerning land. Undefended matrimonial cases. Probate matters. Miscellaneous matters conferred by various statutes, for example the Consumer Credit Act 1974. Some bankruptcy, company winding-up and admiralty cases. 3. 4. 1 Appeals From the County Court there is a right of appeal direct to the Civil Division of the Court of Appeal for some cases. In most other cases an appeal goes to the relevant Division of the High Court. Part A Essential elements of the legal system ? 1: The English legal system 9 3. 4. 2 Personnel The personnel in the County Court consists of: • • Circuit judges, assisted by District judges 3. 5 Civil Procedure Rules

Civil procedures encourage parties to consider alternative methods of dispute resolution and to avoid expensive litigation, resolving cases quickly and without unnecessary confrontation. Early settlement of disputes is encouraged during proceedings. The court has the power to control every aspect of the litigation process, shifting responsibility away from the litigants and their advisers. The court is intended to be a place of last, rather than first, resort. There are two principal areas in which the civil procedure rules are relevant: (a) (b) Tracking Case management 3. 5. 1 Tracking After a defence has been filed, the case will be allocated to one of three tracks. (a) In the small claims track, claims of no more than ? ,000 will be heard. These are cases that are to be dealt with quickly and informally, often without the need for legal representation or for a full hearing. The fast track is for claims of between ? 5,000 and ? 25,000 where the trial is to last no longer than one day. These are subject to a simplified court procedure and a fixed timetable designed to enable the claim to be determined within 30 weeks. Under the multi-track, claims of over ? 25,000 which are to be managed by the courts will be heard. (b) (c) Broadly speaking, small and fast track claims are heard by the County Courts, the more complex multitrack cases are heard by the High Court. 3. 5. Case management After allocation, the court will give directions setting out the procedures to be followed in bringing multitrack cases to trial. These will be an initial ‘case management conference’ to encourage parties to settle the dispute or to consider alternative dispute resolutions (such as mediation or arbitration). Features of the procedures include the following. (a) Published pre-action protocols for particular types of claim, such as personal injury and professional negligence claims, which entail setting out the claim to the defendant in an attempt to negotiate a settlement. The emphasis is placed on co-operation to identify the main issues.

Failure to co-operate may lead to cost penalties, regardless of the eventual outcome of the case. A strict timetable for exchange of evidence is set by the court, including witness statements and relevant documents. Cost penalties for failing to meet any deadline or date set by the court. (b) (c) 3. 6 The Crown Court The Crown Court is a single court, but it sits in 92 different towns and cities and also at the Central Criminal Court (the Old Bailey) in London. It deals with the following matters: • • • Indictable offences with a jury. Appeals from Magistrates’ Courts. Committals for sentencing from Magistrates’ Courts. 10 1: The English legal system ? Part A Essential elements of the legal system

The Crown Court deals with a few types of civil case, for example appeals from the Magistrates’ Court on matters of affiliation, betting, gaming and licensing. 3. 6. 1 Appeals From the Crown Court there is a right of appeal on criminal matters to the Criminal Division of the Court of Appeal. An appeal by way of ‘case stated’ on a point of law may also be made to a Divisional Court of the Queen’s Bench Division, in the High Court. 3. 6. 2 Personnel The Crown Court has the following personnel: • • • High Court judges (for serious offences) Circuit judges Recorders 3. 7 The High Court The High Court is organised into three divisions: • • • Queen’s Bench Division Chancery Division Family Division 6/10 3. 7. Queen’s Bench Division The Queen’s Bench Division (QBD) deals mainly with common law matters, such as: • • • • Actions based on contract or tort. Some appeals from the County Court. Appeals by way of case stated from Magistrates’ Courts. Some appeals from the Crown Court. It also has a supervisory role over inferior courts. It is the largest of the three divisions, having 73 judges of which the Principal Judge is the Lord Chief Justice. It includes a separate Admiralty Court to deal with shipping matters, and a Commercial Court which specialises in commercial cases. The QBD sits in London and a small number of large cities in England and Wales.

It may issue a writ of habeas corpus, which is an order for the release of a person wrongfully detained, and also prerogative orders against inferior courts, tribunals and other bodies such as local authorities. There are three types of prerogative order. • • • A mandatory order requiring the court or other body to carry out a public duty. A prohibitory order preventing a court or tribunal from exceeding its jurisdiction. A quashing order ordering a court or tribunal which has taken action to submit the record of its proceedings to the High Court for review. 3. 7. 2 Chancery Division This division headed by the Lord Chancellor, deals with traditional equity matters. • • • • Trusts and mortgages Revenue matters Bankruptcy (though outside London this is a County Court subject) Disputed wills and administration of estates of deceased persons Partnership and company matters There is a separate Companies Court within the division which deals with liquidations and other company proceedings, and a Patents Court established under the Patents Act 1977. Part A Essential elements of the legal system ? 1: The English legal system 11 3. 7. 3 Family Division This division deals with: • • • • • Matrimonial cases Family property cases Proceedings relating to children (wardship, guardianship, adoption, legitimacy) Appeals from Magistrates’ Courts on family matters. Appeals from County Courts on family matters 3. 7. 4 Appeals

Civil appeals from the High Court may be made to the Court of Appeal (Civil Division) or to the Supreme Court for the United Kingdom, under what is known as the ‘leapfrog’ procedure. This procedure is rarely used. Criminal appeals are made direct to the Supreme Court for the United Kingdom where the case has reached the High Court on appeal from a Magistrates’ Court or from the Crown Court. 3. 7. 5 Personnel The High Court is staffed by High Court (puisne) judges. The chief judges in each division are as follows: • • • Queen’s Bench Division: Family Division: Chancery Division: Lord Chief Justice President Lord Chancellor (nominally), in practice the Vice Chancellor 3. 8 The Court of Appeal Key terms 6/10

A court of first instance is the court where the case is originally heard in full. The appeal court is the court to which an appeal is made against the ruling or the sentence. If the appeal court finds in favour of the appellant the original decision is reversed ie the result is changed, but the law is not. This is different from overruling which happens when a higher court finds a lower court’s decision to be wrong in law and in future the law is changed. 3. 8. 1 Civil Division The Civil Division of the Court of Appeal can hear appeals from the High Court, county courts, and from certain other courts and special tribunals. It may uphold or reverse the earlier decision or order a new trial. 3. . 2 Criminal Division The Criminal Division of the Court of Appeal hears appeals from the Crown Court. It may also be invited to review a criminal case by the government or to consider a point of law at the request of the Attorney General. 3. 8. 3 Appeals Appeals lie to the Supreme Court for the United Kingdom. 3. 8. 4 Personnel The Court of Appeal is staffed by the Lord Justices of Appeal. The chief judges in each division are as follows: • • Civil division: Criminal division: Master of the Rolls Lord Chief Justice 12 1: The English legal system ? Part A Essential elements of the legal system 3. 9 The Supreme Court for the United Kingdom 6/10

The Supreme Court for the United Kingdom was established by the Constitutional Reform Act 2005 and opened for business in October 2009 when it replaced the judicial function of the House of Lords. Its personnel consists of 12 judges known as ‘Justices of the Supreme Court’ and include a President and a Deputy President. The role of the Supreme Court is to act as the final appeal court in civil cases in the UK, hearing appeals on points of law that have public or constitutional importance. It is also the highest court of appeal in criminal cases for England, Wales and Northern Ireland (the highest criminal appeal court for Scotland is the Scottish High Court of Justiciary). The Supreme Court may in some instances be called to interpret EU law and the European Convention on Human Rights as they relate to UK law.

Cases are typically heard by panels of five, seven or nine Justices who give their verdicts collectively rather than as individual decisions. This is to encourage discussion among those at the top of the legal profession, which should result in robust, clear decisions that the rest of the judicial system can rely. Exam focus point The examiner wrote an article on the Supreme Court for the United Kingdom in the January 2010 edition of Student Accountant. 3. 10 The European Court of Human Rights The European Court of Human Rights is the supreme court of those European states who have signed up to the European Convention of Human Rights. Any individual who alleges that their human rights have been violated can bring an action against those responsible.

Since the Human Rights Act 1998 the UK has incorporated the European Convention of Human Rights into UK law, enabling enforcement to be exercised by UK courts. 3. 11 The European Court of Justice The European Court of Justice has the role of interpreting European Treaty law and ensuring it is observed. European laws are enacted in the UK and are therefore directly applicable to individuals and businesses within the UK. Cases are usually between nation states or European institutions, however, individuals can appeal to the ECJ if they are affected personally. 3. 12 The Privy Council The Judicial Committee of the Privy Council is the final Court of Appeal for certain Commonwealth countries.

Their decisions are also important to cases heard in the UK as they have persuasive influence over hearings concerning points of law applicable under the UK’s jurisdiction. Question List the court (or courts) to which an appeal may be made from each of the following: (a) The County Court (b) The High Court (criminal cases) Appeals Answer (a) (b) The Civil Division of the Court of Appeal or the High Court. The Supreme Court for the United Kingdom. Part A Essential elements of the legal system ? 1: The English legal system 13 4 Tribunals FAST FORWARD The court system is not the only way to settle disputes. There is also the alternative system of tribunals. Tribunals deal with large numbers of cases which are usually too small to be considered as needing court action.

They give individuals the chance to exercise their rights, in particular against government decisions and between employee and employer. 4. 1 The tribunal system The Tribunals, Courts and Enforcement Act 2007 introduced changes which created a unified tribunals structure. A two-tier system now exists. The First-tier hears tribunals and makes decisions. The Upper Tribunal reviews cases and hears appeals. Both tiers are split into chambers which deal with particular types of case – for example, land and taxation – and are staffed by experts in that field. Decisions of the Upper-tier Tribunal are made by judges or experts supervised by a judge. Their decisions are binding on tribunals and public authorities.

Appeals from the Upper Tribunal are to the Courts. Tribunals also have powers of enforcement of unpaid awards. 4. 2 Employment tribunals Employment tribunals are governed by a number of regulations (including the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 and the Employment Act 2008). 4. 2. 1 Composition Each full Tribunal is staffed by an employment judge and two non-legal members selected from a panel. One person represents the interests of employers and one represents the interests of employees. However, in some circumstances, and with the consent of the parties, a tribunal may be convened with a chairman and one other person. 4. 2. 2 Jurisdiction

Tribunals have a wide jurisdiction over most disputes between UK employees and employers such as: • • • • • • Disputes about redundancy pay and trade union membership Complaints of unfair dismissal Complaints about equality issues and discrimination Questions as to terms of contracts of employment Equal pay claims or disputes over issues such as maternity pay Appeals against health and safety notices 4. 2. 3 Appeal There is a right of appeal, usually on points of law, not facts, to the Employment Appeal Tribunal (EAT). This is a court of equal status with the High Court. It hears appeals from tribunals mainly on employment matters. A judge (usually a High Court or circuit judge) and two lay members from a panel appointed on the Lord Chancellor’s recommendation sit.

The lay members have practical experience in employment relations, one from the employers’ side and one from the employees’. From the EAT there is a right of appeal to the Court of Appeal. It will only hear appeals on points of law, it will not re-examine facts. 4. 2. 4 Advantages and disadvantages of tribunals Advantages include: speed of proceedings, cheaper costs, informality in comparison to courts, flexibility (not bound by rules of precedent) accessibility to individuals and lack of publicity. Disadvantages include: lack of legal aid for most parties and presentation of arguments by people who are not qualified lawyers. 14 1: The English legal system ? Part A Essential elements of the legal system Chapter Roundup • • • • ‘Law is a formal mechanism of social control’, Business Law 5th Edition, David Kelly, Ann Holmes and Ruth Hayward The distinction between criminal liability and civil liability is central to the English legal system. In criminal cases, the state prosecutes the wrongdoer. Civil law exists to regulate disputes over the rights and obligations of persons dealing with each other and seeks to compensate injured parties. The civil court structure comprises the following. – – – – – – • Magistrates’ Courts mostly deal with small domestic matters. County Courts hear claims in contract and tort, equitable matters and land and probate disputes among others. The Crown Court hears appeals from Magistrates’ Courts.

The High Court is divided into three specialist divisions; Queen’s Bench, Family and Chancery. The Court of Appeal hears appeals from the County Court, the High Court, the Restrictive Practices Court, and the Employment Appeal Tribunal. The Supreme Court for the United Kingdom hears appeals from the Court of Appeal and the High Court. The criminal court structure comprises the following. – – – – – Magistrates’ Courts hear summary offences and committal proceedings for indictable offences. The Crown Court tries serious criminal (indictable) offences and hears appeals from Magistrates’ Courts. The Divisional Court of QBD hears appeals by way of case stated from Magistrates’ Courts and the Crown Court.

The Court of Appeal hears appeals from the Crown Court. The Supreme Court for the United Kingdom hears appeals from the Court of Appeal or a Divisional Court of QBD. • The court system is not the only way to settle disputes. There is also the alternative system of tribunals. Part A Essential elements of the legal system ? 1: The English legal system 15 Quick Quiz 1 Fill in the blanks in the statements below. The distinction between (1) ……………….. and (2) ……………….. liability is central to the English legal system. 2 3 What is the standard of proof in civil proceedings? The Employment Appeal Tribunal is a court of equal status with the High Court.

True False 4 All the following statements relate to criminal and civil law. Which one of the statements is correct? A B C D 5 6 A criminal case may subsequently give rise to a civil case, but a civil case cannot subsequently give rise to a criminal case The main purpose of civil law is to compensate the injured party and to punish the injuring party A custodial sentence can be passed on the defendant in a civil case, providing the defendant is a natural person and not an incorporated body The main purpose of civil law is to enforce the claimant’s rights rather than to punish the defendant. What are the three tracks in the tracking system that allocates civil court cases?

Which court or courts might hear an appeal from the High Court in a civil case? Answers to Quick Quiz 1 2 3 4 5 6 (1) criminal (2) civil The case must be proved on the balance of probability True. The EAT is of equal status with the High Court. D. Punishment is not an objective of civil law. A civil case may subsequently give rise to a criminal case. (1) Small claims track (2) fast track (3) multi-track (1) The Court of Appeal (Civil Division) (2) The Supreme Court for the United Kingdom under the leapfrog procedure. Now try the question below from the Exam Question Bank Number Q1 Level Examination Marks 10 Time 18 mins 16 1: The English legal system ? Part A Essential elements of the legal system Sources of English law

Topic list 1 Case law and precedent 2 Legislation 3 Statutory interpretation Syllabus reference A2(a) A2(b) A2(c) Introduction Continuing with our study of the English Legal system, we now look at sources of law and how law is interpreted by the courts. You will discover that the main law making bodies are the Courts (who develop the ‘common law’) and Parliament which produces statutes and delegated legislation. EU law is another source of law for the UK. Its detail is outside the scope of your syllabus but you must be aware of it as a source of law. The rules on statutory interpretation are used by Judges when deciding cases that involve statutes which are open to several different meanings.

If you want to get free study material of CAT, ACCA, CIMA, CFA, CIA visit : freefor911. wordpress. com 17 Study guide Intellectual level A 2 (a) (b) (c) Essential elements of the legal system Sources of law Explain what is meant by case law and precedent within the context of the hierarchy of the courts Explain legislation and evaluate delegated legislation Illustrate the rules and presumptions used by the courts in interpreting statutes 2 2 1 Exam guide You could be asked to describe the operation of case law and precedent or how legislation is passed by government and interpreted by the courts. 1 Case law and precedent FAST FORWARD 6/08, 12/08

The first legal source of law, consisting of decisions made in the courts, is case law, which is judge-made law based on the underlying principle of consistency. Once a legal principle is decided by an appropriate court it is a judicial precedent. 1. 1 Common law and equity The earliest element of the legal system to develop was the common law, a system incorporating rigid rules applied by royal courts, often with harsh consequences. Equity was developed, two or three hundred years later, as a system of law applied by the Lord Chancellor in situations where justice did not appear to be done under common law principles. Key terms Common law is the body of legal rules common to the whole country which is embodied in judicial decisions.

Equity is a term which applies to a specific set of legal principles which were developed by the Court of Chancery to supplement (but not replace) the common law. It is based on fair dealings between the parties. It added to and improved on the common law by introducing the concept of fairness. The interaction of equity and common law produced three major changes. (a) (b) (c) New rights. Equity recognised and protected rights for which the common law gave no safeguards. Better procedure. Equity may be more effective than common law in resolving a disputed matter. Better remedies. The standard common law remedy for the successful claimant was the award of damages for his loss.

The Chancellor developed remedies not available in other courts. Equity was able to make the following orders. (i) (ii) (iii) (iv) That the defendant must do what he had agreed to do (specific performance) That the defendant must abstain from wrongdoing (injunction) Alteration of a document to reflect the parties’ true intentions (rectification) Restoration of the pre-contract status quo (rescission) Where equitable rules conflict with common law rules then equitable rules will prevail: Earl of Oxford’s case 1615. Case law incorporates decisions made by judges under both historic legal systems and the expression ‘common law’ is often used to describe all case law whatever its historic origin.

A court’s decision is expected to be consistent with previous decisions and to provide an opinion which can be used to direct future relationships. This is the basis of the system of judicial precedent. 18 2: Sources of English law ? Part A Essential elements of the legal system 1. 2 Doctrine of judicial precedent 6/09 The system of judicial precedent is based on a fundamental feature of English law which is that principles of English law do not become inoperative through the lapse of time. Key terms The doctrine of consistency, following precedent, is expressed in the maxim stare decisis which means ‘to stand by a decision’. In any later case to which a legal principle is relevant the same principle should (subject to certain exceptions) be applied.

A precedent is a previous court decision which another court is bound to follow by deciding a subsequent case in the same way. The doctrine of judicial precedent means that a judge is bound to apply a decision from an earlier case to the facts of the case before him, provided, among other conditions, that there is no material difference between the cases and the previous case created a ‘binding’ precedent. Judicial precedent is based on three elements. • • • Reports. There must be adequate and reliable reports of earlier decisions. Rules. There must be rules for extracting a legal principle from a previous set of facts and applying it to current facts. Classification.

Precedents must be classified into those that are binding and those which are merely persuasive. 1. 3 Law reports There are several major series of law reports bound as annual volumes. In addition, there are several electronic databases which include cases reported in the paper reports and other cases. Every case has a title, usually (in a civil case) in the form Carlill v Carbolic Smoke Ball Co. This denotes Carlill (claimant) versus Carbolic Smoke Ball Co (defendant). In the event of an appeal, the claimant’s name is still shown first, whether he is the appellant or the respondent. All judgements of the superior courts are given a ‘uniform citation’ to facilitate publication on the Internet.

Some cases are cited by reference to the subject matter. Thus case names have included Re Barrow Haematite Steel Co (a company case), Re Adams and Kensington Vestry (a trust case) and in shipping cases the name of the ship, for example, The Wagon Mound. Some older cases may be referred to by a single name, for example Pinnel’s case. In a full citation the title of the case is followed by abbreviated particulars of the volume of the law reports in which the case is reported, for example, Best v Samuel Fox & Co Ltd 1952 2 All ER 394 (the report is at p 394 of Vol. 2 of the All England Reports for 1952). As regards content a full law report includes details of the following. • • • • • • Names of the parties Court in which the case was decided Judge or judges Date of the hearing Points of law established Earlier cases cited Previous history of the litigation • • • • • • • Facts Names of counsel and their arguments Verbatim text of the judgement Order of the court Whether leave to appeal was granted Solicitors Reporting barrister It is only decisions of the higher courts in important cases (the High Court, the Court of Appeal and the Supreme Court for the United Kingdom) which are included in the general law reports. Part A Essential elements of the legal system ? 2: Sources of English law 19 Exam focus point Students are often perplexed as to how much they are expected to memorise of cases referred to in textbooks. By far the most important aspect of a case for examination purposes is what it was about; that is, the point of law which it illustrates or establishes.

This is the knowledge that you must apply when answering exam questions. It is not generally necessary to recite the exact details of the events behind a case. However, knowing the facts of cases is helpful, not least because exam questions may well include scenarios in which the facts are based on a well-known case. The doctrine of judicial precedent is designed to provide consistency in the law. Four things must be considered when examining a precedent before it can be applied to a case. (a) (b) (c) (d) A decision must be based on a proposition of law before it can be considered as a precedent. It may not be a decision on a question of fact. It must form part of the ratio decidendi of the case.

The material facts of each case must be the same or comparable. The preceding court must have had a superior (or in some cases, equal) status to the later court, such that its decisions are binding on the later court. 1. 4 Ratio decidendi FAST FORWARD 6/09 Statements made by judges can be classified as ratio decidendi or obiter dicta. A judgement will start with a description of the facts of the case and probably a review of earlier precedents. The judge will then make statements of law applicable to the legal problems raised by the material facts which, if used as the basis for the decision, are known as the ratio decidendi of the case. This is the vital element that binds future judges. Key term The ratio decidendi of a case is any rule of law expressly or impliedly treated by the judge as a necessary step in reaching his conclusion, having regard to the line of reasoning adopted by him, or a necessary part of his direction to the

Get instant access to
all materials

Become a Member