Law for Business Manager
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The laws are not only crucial to humans but also to the business entity. It is required from the business owner, employees, and managers to have a basic knowledge of business law in order to have sound decision-making. There is a large number of laws applicable to business entities. Business laws help the business to give stability and certainty to the organization and help them to resolve the disputes in a better way. In the following report, a case study will be discussed, wherein four different scenarios will be discussed. Each case will apply a different section of law. The first case will talk about the basic difference between representation and contractual term. The next case will elaborate unfair dismissal of an employee from an organisation. The third case elucidates the main duties of a member of a board of director, and the last section highlights the tort law and the principles that decide the compensation in the case of tort.
1. Explain the meaning of a ‘representation’ and how a mere representation can be distinguished from a term of a contract.
One of the biggest confusion faced by the lawyers dealing with the contractual laws is to differentiate between two closely related terms, namely ‘representation’ and ‘term’. The word ‘Representation’ in English law is a clear statement or depiction of fact done while making someone a part of a contract or transaction. The statement can be made verbally or in written or by conduct and it should instigate an individual to act accordingly and come in the contract. On the other hand, the contractual term is the statement given at the time of negotiation. If the statement given as a term in the contract is not fulfilled or accomplished, then the innocent party can sue the other party for breaching the contract. If the statement is given as a representation which turns out to be false, then the innocent party can take an action against the other party for misrepresentation.
According to Whish and Bailey (2015), a single-sided statement is usually a representation. It is placed in the contract so as to unequivocally exhibit a few assumptions that form a part of a deal.If the whole deal does not work out and the representation made is untrue, then the resulting case is quite streamlined as compared to the case where the term turns out to be false. Whishcand Bailey (2015) gave four factors that can be very useful in differentiating between the representation and a term. These have been discussed below:-
Relative Knowledge: According to the English Legal System, if a representator is more knowledge, then this would result in a contractual term. On the other hand, if the representee has more information and knowledge, then this would result in representation. For better understanding, one should refer to the case of the Oscar Chess v Williams, wherein Mr. William had little knowledge of his cars and believed on whatever was told to him by the Oscar Chess Ltd. at the time of car purchase. The case became a mere contractual breach as the car dealer knew more about the cars than Mr. Williams.
Reliance: If the buyer is relying completely on the statement given by the dealer, then this would be considered a term of a contract instead of representation. In simple words, if a customer makes it clear that he/she is buying a product or service based on the information provided by the seller, then this would be considered as a term of the contract. This happened in the case of Schawel v Reade, wherein the claimant relied on the statement given by the defendant but that turned out to be a contractual term.
Timing: The more time it takes between the event of making a statement and the event of signing a contract, the higher the chances of the statement to become a representation. This happened in the case of Routledge v Mckay, wherein the court declared the statement as the representation instead of a contract term.
Strength: If the statement given by the seller in order to persuade the buyer to purchase a particular product is strong and the buyer purchased it believing on his words, then this would be considered as a contractual term instead of a representation.
In the given case study, Monica relied on the statement of the salesman that the car is the best in the whole world while purchasing the car. This ultimately makes the statement a contractual term rather than a representation as his expertise is better than Monica’s. However, the case is quite different than the normal breach of contract case as the term in the contract was made through words. The car sellers have to face certain consequences if Monica files a lawsuit in the court. The general rule in such cases in the English Legal System is that the defendant has to either replace the product or has to pay for the damages (economical and non-economical) to the claimant.
2. What are the grounds in which dismissal from employment would be unfair at law, which Monica should explain to the board of directors?
Unfair dismissal is the word that has been widely used in the English Law System and its subsystems. It is important to understand the term prior to discussing it. The unfair dismissal is the termination of the employment contract without giving any fair warning or reason for doing so by the employer (Ewing and Hendy, 2012). In addition to this, even if the employer has a valid reason for firing an employee but did not follow the right procedure for cancelling the contract, the dismissal will be termed as unethical and unfair. Being one of the effective legal systems in the world, the English Law System constitutes many laws and regulations regarding the unfair dismissal of the employees in order to protect them from such illegitimate actions of the organisations and employers. In the following case, the board of directors has a problem with an employee and they want to fire that personnel. Being a Human Resource Manager at Young & Ernst LLP, it is important for Monica to first determine the reasons that can be the basis for the fair dismissal of the employee. There is a variety of factors based on which the company can fire an employee. The same factors should be conveyed or explained to the board of directors. As per the “Section 98 of Employment Rights Act of 1996", dismissal should be considered fair on the following grounds:-
Capability: If the employee lies about his/her skills or education level, health or any other competency that is quintessential for the job, then this would be considered as a fair reason for the dismissal of the employee.
Conduct: The right professional attitude and conduct while working in the organisation have been given high significance. The professional misconduct consists of misdemeanours, theft of confidential data and information or organisation’s property, being abusive towards others, racist behaviours, coming late or going early from work persistently, and much more. If an employee is found guilty of any of the aforementioned activity, then the organisation has the right to fire him.
Redundancy: Employers can fire an employee in case there is a large number of redundancies within the organisation. However, the Redundancy Payments Act 1965 provides employees the right to severance pay in case of firing in case of redundancy. The organisations have to pay for the redundancy to the employee as this forms one of the 3 pillars of rightful dismissal.
Breaking the law: It is the most serious ground on which organisations fire the majority of their employees. Breaches of any law or regulations in the organisation or outside of it during or outside the working hours can result in the dismissal of the employment contract. These are usually the clauses that form the employment contract of a firm. This helps in saving the company from getting disrepute.
Miscellaneous Reasons: These comprise reasons, such as refusing to work with a client or a colleague, refusing to work on a particular machine or equipment, or not following the orders of the chief. In such cases, the organisation has the right to fire an employee and this would be considered a fair dismissal.
Even if Monica finds that employee guilty in any aforementioned criteria, the company has to follow a fair dismissal procedure. Monica should explain to the board of directors that as an employer the company has to follow certain dismissal process and to deal with the redundancy situation (Kruppe, et.al, 2013). The reason for dismissal should be provided to the employee based on the ACAS Code of Practices. This code obligates the employers to provide sufficient evidence and warning to the employees prior to dismissing his/her employment contract.
In addition to this, Part X of the Employment Act 2002 automatically declares a dismissal unfair in the following cases:-
- If the dismissal of an employee is done based on the grounds of poor health and safety. For instance, if an employee wants paternity or maternity leave, then this comes under the statutory employment right of the employee and company cannot fire him or her.
- If the employee is involved in or a part of a trade union and is indulged in activities that are lawfully right.
- If the employee becomes a whistle-blower and has highlighted an illicit activity within the organisation, then the company cannot fire him otherwise, it would be considered an unfair dismissal.
- If an employee is dismissed because of the business transfer, then this would be considered unfair. For such cases, the employee is protected by the TUPE regulations.
The Employment Right Act provides a right to the employees a right to seek compensation for the losses occurred to them due to the unfair dismissal by the organisation. All these factors should be considered by the organisation before zeroing down on firing employees as sometimes the organisation faces serious ramifications of their actions. They need to find a solid reason for firing the employee.
3. What are the main duties governing company directors that Monica should explain to the new members of the board?
Being an HR manager, it is the duty of Monica to carry out the induction process of a newly elected member of the board of directors. This includes an in-depth introduction of the organization, various functioning and departments, the people, rules and regulations, and other aspects of the business. This would help the person to become an effective member of the business. A thorough induction should be carried out to a longer duration instead of a single day (Adams, et.al, 2012). Monica should convey a wide range of standard information to the newly elected board of directors that should comprise a brief knowledge of business objectives, organizational structure, standards, and job roles and responsibilities, organizational policies, and procedures. In addition to this, the basic information regarding health and safety at work, employment law, contractual information, and office environment need to be provided to the newly elected board member.
Most importantly, Monica has to explain some duties of the members of the board of directors to the member. It is important for Monica to explain him/her the importance of the job that one has been chosen for (Adams, et.al, 2012). The good organizational governance completely relies on them. The main duties of a member of the board of directors include the following:-
- To bring a wide range of knowledge and expertise in the boardroom and respect all the realms that include age, sex, gender, experience, race, religion, ethnicity, skills, and experience.
- To articulate long-term plans to stakeholders and shareholders. It is the duty of the member to formulate goals and strategize objectives to achieve them for the long-term and short-term benefits of the company. In addition to this, the member is responsible for putting a mechanism to monitor the organisational progress as per the objectives set down by the board for the company.
- The member is required toreview and discuss the organisational goals as the board completely relies on particular members to challenge the perspective of the board in order to make sure sound decision-making.
- The member is required to address the uncertainties and how they capture the opportunities for growth in the future. They should determine and manage the real risks organisation might face while operating. In addition to this, they are required to bring confidence to the investors in order to persuade them to invest in the organisation's business plan.
- The member is required to act as a steward of the organisation that provides guidance and govern the functioning of the organisation. They are required to continuously govern and assess the wide range of risks associated with the organisation. These risks are associated with financial, litigation, reputation, ethics, technology, environment, health and safety, etc.
- To develop a good and healthy relationship with management and managers. They should understand that corporation runs well when all the members have a common perspective on priorities, strategy, and risk management. It is important for the board of directors to have a continuous touch with the employees and manager in order to take necessary measure against possible risks and prepare a mitigation strategy. Communication is the key tool the board of directors should make use in order to develop a sense of confidence among the employees and managers.
- The member is required to determine, understand, and assess the risks associated with the company. The risks involved are related to market, economic risks, operational and dispositional risks, technological and infrastructure risks, compliance, disclosure, and acquisition.
- The member of the board should support the development of the corporate governance. It is required from the board member to respond and adapt quickly to a variety of risks and business opportunities. The member should promote an “enterprise governance management system.”
- Monica should provide the knowledge of various important legislation, such as the Equality Act 2010, the Employment Act, Health and Safety at Workplace Act of 1974, and many more.
It is required from Monica to tell the new member about the aforementioned duties that are quintessential for the post of the board members.
4. Explain the principles governing the award of damages in the Law of Tort. In what ways may damages be limited?
Before moving on to the Tort law principles, it is important to understand the meaning of tort. The tort is considered as a wrongful deed or civil inaction that is usually committed against a company or a person instead of the state. The basic of tort law is that an individual has some interests and rights that are being protected by the legal system. These rights and interest are protected by giving money as an award for damages incurred. People are very concerned about their personal security and this is protected in various ways. For instance, if one individual intimidates other, then this action is considered in the tort of assault. If the freedom of movement is restricted illicitly, then this comes under false imprisonment. If a person got injured negligently, then the award should be given to the claimant in the tort of negligence. There are various principles that govern the award of damages in cases of tort. These include
The principle of Remoteness:It is usually considered as the pleading stage. The principle of remoteness is valid in both contract and tort law and it limits the award of damages to be given for a wrong action. In the context of tort, the remoteness test of damage is important as it is important to note whether the type of damage undergone was foreseeable by the defendant while the breach takes place as it happened in the case of Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd.
The principle of Causation:In order to determine the causation in the law of tort, the claimant should prove that the loss he/she has suffered happened due to the defendant only. This is done by making use of "but for" test that will solve the point of causation in the law of tort. However, in most of the cases that involve two or more possible cause.
The principle of Mitigation:This principle needs claimant to takes measure to minimise the effect of loss and avoid doing mistakes that cause the loss.Usually, the injured party cannot recover damages or loss incurred by him/her which could have been avoided in the first place by taking some reasonable steps. It is the duty of the claimant to mitigate the loss.
The given case study clearly reflects the negligence of the Ross that caused the injury to Joey while he was walking on the road. Even if Joey has admitted that he did not choose to walk on the footpath as it was under construction, this does not mean that Ross can hit him or any pedestrian walking on the road. He should be aware of the fact while driving the car that a second of negligence or distraction can cause a severe accident to the third party. Under the law of tort, Ross has to pay the compensation to Joey in monetary terms for the loss that will be incurred to Joey. The compensation needs to be paid for both economic and non-economic losses occurred to Joey and the amount will be decided by the court.
The above-discussed case study highlighted four different sides of business law. Each case applied a different section of law. The first case talked about the basic difference between representation and contractual term. The next case elaborated unfair dismissal of an employee from an organisation. The third case elucidated the main duties of a member of the board of director, and the last section highlighted the tort law and the principles that decide the compensation in the case of tort.
- Adams, R.B., Hermalin, B.E. and Weisbach, M.S., 2012. The role of boards of directors in corporate governance: A conceptual framework and survey. Journal of economic literature, 48(1), pp.58-107.
- Bonnington Castings Ltd v Wardlaw  AC 613
- Deakin, S.F., Johnston, A. and Markesinis, B., 2012. Markesinis and Deakin's Tort Law. Oxford University Press.
- Ecay v Godfrey 80 Lloyds Rep 286
- Ewing, K.D. and Hendy Qc, J., 2012. Unfair dismissal law changes—unfair?. Industrial Law Journal, 41(1), pp.115-121.
- Kruppe, T., Rogowski, R. and Schömann, K., 2013. Labour market efficiency in the European Union: Employment protection and fixed term contracts. Routledge.
- Oscar Chess v Williams  1 WLR 370
- Pino‐Emhart, A., 2016. The Old and New Philosophical Foundations of Tort Law: John Oberdiek (ed), Philosophical Foundations of the Law of Torts, Oxford: Oxford University Press, 2014, 464 pp, hb,£ 75.00. The Modern Law Review, 79(3), pp.504-518.
- Routledge v Mckay  1 WLR 615
- Schawel v Reade  2 IR 81
- Stainback, K. and Tomaskovic-Devey, D., 2012. Documenting desegregation: Racial and gender segregation in private sector employment since the Civil Rights Act. Russell Sage Foundation.
- Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd (The Wagon Mound No 1)  AC 388).
- Whish, R. and Bailey, D., 2015. Competition law. Oxford University Press, USA.