Task 1: Legal provisions for Sole Proprietorship
The emphasis of this assignment is to focus on various provisions of law with respect to business transactions. Task 1 of this assignment relates to the various types of business organization and the laws related to them, which have to be considered before choosing a business organization. The focus of task 2 is on the aspects of offer and acceptance with respect to a contract. Task 3 discusses the conditions in which a contract maybe breached. The final task is related to the tort of negligence and how it may be established.
A sole proprietorship, a partnership or an incorporated limited liability company can be used to set up a business by a group all individual in the United Kingdom. Each business organization have been imposed with different legal provisions which have to be avoided by strictly in order to ensure that the business Run smoothly. If these provisions are not abided by then the business might be subjected to legal actions which may result in various legal penalties.
If an individual wants to start a business the best possible structure to be selected by him would be a sole proprietorship. This kind of business structure is best suited for married couples and individuals. This type of business organization is very simple to operate as the owners have a great degree of control over its management sole proprietorship has the minimum legal obligations to be followed as compared to the other kind of business organization. There is no separate tax imposed on the business as compared to other kind of business organization. However the most important shortcoming of a sole proprietorship is that its owner can be held personally liable for anything with goes wrong in the business.
Therefore the author has chosen sole proprietorship to start a restaurant in Strafford. For the purpose of choosing this business structure the following legal requirements have to be fulfilled.
The legal provisions in the United Kingdom require a sole trader to register itself for self-assessment and also to file and annual tax return. This is significant as the Inland Revenue would be able to figure out Income tax and National Insurance contribution in order to determine the amount to be paid by the owner. This is calculated with the help of self-assessment tax return.
Any citizen can initiate a sole proprietorship anytime they want to hire were they must obtain a special license and permission for doing so from a local authority. For example cab drivers, Street trader, child-minders and restaurants all have to get permission from the local authority in form of a license. In addition to this business premises along with business owner qualification can be inspected initially to make sure that they are in accordance with specific regulations before a business can be commenced by a person. The compliance and being familiar with the Food Standard Act 1999 along with other regulatory with respect to the food standard agency is required by a sole trader for the purpose of starting a restaurant business.
Task 2: The Sale of Goods Act 1979 with respect to a contract
Restaurant business implies that various people would be associated with the business premises on a daily basis. For the purpose of ensuring that the owner is not held liable personally for any defect or problems with relation to the business there must be an insurance in place. In the same way the financial impact resulted out of injury and sickness can be mitigated with the help of incapacity insurance. Moreover it is very significant to ensure that such insurance is taken where an owner is self-employed as the employees of the company are often provided with sickness policies and thus they know that there is very little chance that there income might be reduced overnight.
The legal provisions in the United Kingdom provide that a sole trader has to register for value added tax if they have a knowledge that their turnover may be more than £85000. In case the turnover is not more than the specified amount the owners can voluntarily register for VAT if it suits their business as the business has to deal with other businesses associated with VAT (Allen and Kraakman 2016)
The Sale of Goods Act 1979 deals with contract for the sale of goods in the UK. The legislation repeals the Sale of Goods Act 18
- Section 14 of the SOGA deals with the provisions related to the implied terms in relation to fitness and quality of goods. The section subpart (2) states that when goods are sold by the seller in the course of business there is an implied term in the contract that the goods are of merchantable quality if the defects are not brought to the attention of the buyer or the goods have been examined by the buyer before the purchase. Subpart (6) of the section states that the goods in relation to subpart (2) are of merchantable quality if they are appropriate for the purpose they are brought commonly. Thus in this case as the Mercedes brought by Naseem is not fit for the purpose which is also found through the examination of the engine the implied term of the sale of good contract is violated by Rashid.
- Section 13 of the SOGA deals with the sale of goods through a description. According to the section when a sale of goods by description is initiated there is an implied term to the contract that the goods would be in accordance to the description. Therefore in the given circumstances as the watches had been purchased by Naseem by description which stated Casio Digital Watches but as the watches were not digital Rashid have breached the implied terms of the contract.
- Section 12 of the SOGA deals with the implied terms in relation to the title of the goods. The section states that there is an implied term in relation to the sale of goods contract that the seller has the title of goods sold by him. There is also an implied warranty that the seller has informed the buyer about any encumbrances or rights in relation to the goods. Therefore in this case Rashid have breached section 12 of the Act and Naseem is entitled to make a claim against him for his losses.
- Section 11 of the SOGA deals with the situation when the conditions of the contract are to be treated as warrantees. The payment of installment term was a condition as it was an important part of the contract. A condition may be regarded as a warranty in the contract as per subsection 3 of the section in accordance to the construction of the contract. In this case as the condition would be regarded as a warranty as upon the construction of contract it can be made out that all other installments have been paid on time.
In the case of Hogg v Dover College [1990] ICR 39 EAT the question before the court was to determine whether unfair dismissal was caused due to the change in contract. The plaintiff in this case was ill and therefore his working hours had been reduced. The change was accepted in writing by the plaintiff. It was provided by the plaintiff that there was a fundamental change in his contract of employment. The court in this case provided that the change in relation to the contract was a fundamental change for the purpose of repudiation of a contract and therefore resulted in unfair dismissal. Dismissal is defined as the process of terminating the employment contract and not the relationship between the employee and the employer. If an employee accepts a new contract of employment it would not restrict his right to claim that he has been dismissed unfairly under the previous contract. a dismissal and re-engagement can be treated legitimately by the court where it is apparent that the employer only wants variation in terms of the contract. However if the purpose of termination is to provide a wholly new contract to the employee and reducing most of his entitlements the contract cannot be regarded as a re-engagement contract. The course of employment in trite law originates from an employment contract and not the relation between employee and employer. The plaintiff was treated in a very sympathetic manner by the employer. The plaintiff was suddenly told that he can no longer occupy his position as a head of history and he cannot work as a full time employee in the organization, he was only supposed to come for eight periods of a week and help with religious education and general studies. His salary was also reduced by 50% of what he received as a head of history. Thus in the given case slashing the salary of the plaintiff by 50% and giving him a reduced role in the organization by forcefully imposing a contract on would account to an unfair dismissal of contract.
Task 3: Conditions for contract breach with case illustration
In the given circumstances it has been provided that there is a tussle between the doctors and the government in relation to imposing a contract. in the contract the normal working week of the doctors have been included with Saturday and in addition, no work was allowed on Sundays and work could only be continued till 10pm at night. It is argued by the doctors that they will suffer financial losses in relation to the new contract as they were paid at a higher rate on evenings and Saturdays than the normal rate. The contract also planned to exclude automatic annual pay rises. In this case the fundamental of the contract of employment are being changed just as in the above discussed Hogg case. The minister is trying to be compassionate with the doctors just as the head of the department was with the plaintiff in the Hogg case as an 11% rise to basic pay had been offered by the ministers to the doctor. As provided by the Hogg case, it is not the relationship between employee and employer but the employment contract which determines the course of employment. Thus as decided in the Hogg case this new contract would also be a fundamental change to the previous contract and may account to unfair dismissal.
The issue in this case is to find out the legal position of Charles and Shanice in relation to East London Tours (or their insurers)
In the case of Donoghue v Stevenson 1932 AC 522 it was ruled by the court that a person owes duty of care to others if they could be injured because of the action of the former person.
In the case of Vaughan v Menlove (1837) 3 Bing N.C. 467 the court ruled that a person who has a duty of care under the above discussed principles has to act in a way a reasonable person would have in same situation otherwise the duty is said to be violated by them.
In case of Barnett v Chelsea & Kensington Hospital [1969] 1 QB 428 it was ruled by the judge that a person has to be injured because of the duty being violated in order to make a claim for negligence. The case also gave the “But for test” which states that if the non violation of the duty would have also caused the injury the person would not be liable for the negligence. The principle behind this is that the injury has to result out of the violation of the duty.
Task 4: Tort of Negligence involving East London Tours
According to the principles of vicarious liability the employer is bound to the actions committed by the employees during the course of business.
In the case of Nettleship v Weston [1971] 3 WLR 370 the court used the principles of contributory negligence. As provided by the court in this case if an individual himself is one of the cause of injury suffered by him, even if there was negligence on part of the another person the claim for negligence may be defeated or proportionate based on the situation of the case.
Whether a person has himself contributed to the caused injury is determined through the application of the same principles which is required to find out a claim of negligence.
In the given circumstances it has been provided that Ade was the driver of East London Tours and thus as per the principles of vicarious liability the tour company or their insurers would be liable for his actions in case negligence is established.
As a driver it is evident through the application of the Donoghue v Stevenson case that he has a duty of care towards the passengers and they may be harmed because of his actions. The scenario provides that he was driving recklessly which a reasonable person would have not and thus the duty is violated under the principles of Vaughn case. The injury would not have been caused if there was no reckless driving thus causation is also found as per the principles of Barnett. Thus negligence is established.
However the driver had warned Charles and other passengers to fasten the seat belts which Charles did not. A reasonable person would have not ignored the instruction from the driver and fasten the seat belt. The injury would have been minor if the seat belt was used. Thus Charles has committed contributory negligence and his claim would be proportionate accordingly as per the Nettleship case.
In the same way Shanice who was not at all injured in the accident and thus could not have claimed negligence in relation to any injury was also warned not to go out of the bus. A reasonable person would have abided by such advice which Shanice did not. Thus she was herself negligent in her injury and cannot claim for negligence.
Conclusions
Charles can make a partial claim and Shanice has no claim at all against East London Tours (or their insurers).
References
Allen, W.T. and Kraakman, R., 2016. Commentaries and cases on the law of business organization. Wolters Kluwer law & business.
Barnett v Chelsea & Kensington Hospital [1969] 1 QB 428
Companies Act 2006
Donoghue v Stevenson 1932 AC 522
Hogg v Dover College [1990] ICR 39 EAT
Nettleship v Weston [1971] 3 WLR 370
Sale of Goods Act 1979
Vaughan v Menlove (1837) 3 Bing N.C. 467
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