1. English for Lawyers 4 Lecturer: Miljen Matijašević Session 6
Session 6

2. Today’s session Revision of the last session Case study – contract law
Forms of Business Organisation

3. Revision of the last session
Contract

4. Revision of the previous session
What is the definition of contract?
What are the necessary elements of a contract?
What is a counter-offer? Can it make part of a contract?
Does acceptance need to be communicated?
What is consideration and what is important about it?
What types of terms can a contract have?
Explain the terms: indemnity, assignment, and governing law.
How can a contract be discharged?
What possible remedies for a breach of contract are there?

5. Pickfords Ltd v Celestica Ltd [2003], CA
Case study
CONTRACT LAW

6. The defendant company (Celestica) was located in Stoke-on-Trent, and engaged the claimant (Pickfords), a removals and transportation provider, to move part of its operations to a site in Shropshire. Throughout a series of correspondence three documents became of particular importance. The first was a fax sent by Pickfords to Celestica on 13 September 2001, the first offer. The document included an offer to undertake the required work at a price per unit moved, plus additional costs such as insurance. Pickfords sent Celestica a 'second offer' on 27 September 2001 providing a fixed price for the whole work, inclusive of such provisions as insurance. On 15 October 2001 Celestica sent a fax to Pickfords entitled 'confirmation', which stated that the price of the work should be capped at £10,000. Subsequently the relocation was performed.

7. Pickfords v Celestica First communication, 13 Sep 2001
Fax: claimant to defendant
PRICE: per unit moved, plus additional costs (e.g. insurance)
Second communication, 27 Sep 2001
PRICE: fixed price for whole work, inclusive of additional costs (insurance)
Third communication, 15 Oct 2001
Fax: defendant to claimant – “CONFIRMATION”
PRICE: should be capped at ₤10,000

8. The defendant paid claimant on the basis of the first offer (per unit moved).
The claimant commenced proceedings contending that the defendant accepted the second offer, and as a result were entitled to the fixed sum.
FIRST INSTANCE: The recorder found that the first offer was capable of acceptance and was accepted by the defendant's fax.

9. APPEAL
The claimant appealed against the decision.The claimant argued that the recorder was wrong in finding that the first offer provided the basis of the contract.
The claimant contended that
(i) even if the first offer was valid, the communication of the second offer with terms and conditions attached clearly acted to revoke the first offer,
(ii) therefore the recorder should not have held the first offer to be capable of acceptance, and
(iii) the recorder should have found that that the express use of the word "confirmation" confirmed the second offer, as distinct from the first offer which did not require confirmation. It fell to be determined in which document the contract was evidenced.

10. The appeal would be dismissed
The appeal would be dismissed. The first offer had been revoked by the second offer, as the latter was materially inconsistent with the former. The defendant's response constituted a counter-offer which was objectively accepted by the claimant's conduct. An offer could be revoked at any time before it was accepted. That might either be done by express words, or if the offeror acted inconsistently with the offer, with the knowledge of the offeree. In the instant case the second offer was inconsistent with the first, which had thus been superseded. On analysis of the defendant's fax it was clear that the defendant was accepting the first offer. The fact that the defendant had referred to a ceiling price for the work logically meant that it could not possibly have intended to accept the second offer, set at a fixed price. The defendant in purporting to accept the revoked first offer had in fact made a counter-offer on the same terms as the first offer supplemented by the additional term capping the price top £10,000. The claimant had accepted the counter-offer by completing the relocation program.

11. Forms of Business Organisation
Company/corporate law

12. Forms of Business Organisation
COMPANY LAW (UK) / CORPORATE LAW (US)
deals with the creation and regulation of business entities
a business entity - poslovni subjekt

13. Forms of Business Organisation
Three main types:
sole proprietor (a.k.a. sole trader)
partnership
limited company
What do you think the main differences are and what kinds of businesses are they suitable for?

14. Sole Proprietorship
The simplest and most common type of business organisation
Owned by one person, who:
has unlimited control over the business
enjoys all the profits
has unlimited liability for debts and losses

15. Sole Proprietorship
Suitable for businesses such as self- employed hairdressers, plumbers, retail shopkeepers, barristers, translators, etc.
A sole proprietor has UNLIMITED LIABILITY for debts, losses and business activities
Think of the advantages and disadvantages of being a sole proprietor!

16. Sole Proprietorship one person – owner and manager: simple to set up
independent decision- making
keeps all the profits
simple to set up
few formalities
unlimited liability for debt and losses
risks increase if the business becomes very successful
hard to raise substantial capital
Advantages
Disadvantages

17. Partnership association of two more more persons (usually up to 20)
subject to a partnership agreement
common among accountants, solicitors, architects, etc.
a simple partnership – not a legal person

18. Partnership Agreement
May regulate the following:
duration of the partnership
its name and business
the manner of sharing profits, losses and costs
capital contribution
joining and leaving the partnership
restrictions imposed on the partners
etc.

19. Partnership Partners have JOINT AND SEVERAL LIABILITY
This means they can be held liable for debts, losses or other misconduct individually, or as a partnership

20. Partnership Types of partners:
equity partner (receives a share of the profits and takes part in the management of the partnership)
silent (or sleeping) partner (has invested funds and gets a share of the profit, no participation in management)
salaried partner (receives a salary, no participation in management)

21. Partnership capable to raise and utilize more capital
brings together people with different skills
profits distributed
limited freedom and decision-making power
certain disadvantages in comparison with a limited company
Advantages
Disadvantages

22. Limited liability partneship (LLP)
partnership – a legal entity, separate from its owners
GENERAL PARTNERS – unlimited liability
LIMITED PARTNERS – liable to the extent of their investment
subject to registration with Companies House

23. Limited Company / Corporation
Limited company (UK) / Corporation (US)
An artificial person created under law and empowered to achieve a specific purpose
A legal entity (pravni subjekt) which can own property, enter into contracts, sue and be sued – an identity separate from its shareholders

24. Limited Company / Corporation
Some characteristics:
perpetual life (perpetual succession)
limited liability
transferability of shares
access to capital
professional management

25. Limited Company / Corporation
usually starts out as a Private Limited Company (Ltd.)
Needs to be registered – gets a registered number (reg.no.) and Certificate of Incorporation (UK)
This is called: company registration (UK) or incorporation (US)

26. Limited Company / Corporation
PRIVATE LIMITED COMPANY (Ltd.)
may have only one owner (shareholder): single- member company
no minimum share capital requirement
PUBLIC LIMITED COMPANY (PLC)
sells shares on the stock market

27. Limited Company / Corporation
Constitutional documents:
Memorandum of association
states the principal objects (purposes) of the company
Articles of association (statut društva)
sets out the relationship between the company and its shareholders
limited liability
issue of new shares

28. Limited Company / Corporation
A company has:
shareholders
a Board of Directors (managers of the company’s operations)
creditors (those to whom the company owes money)

29. Limited Company / Corporation
if a private limited company needs to raise capital in order to expand its business, enter into a major project, it can decide to either:
borrow money from an investment bank
subject to payment of interest, whose rate depends on the risks involved
raise capital by selling its shares on the stock market

30. Limited Company / Corporation
if a company issues shares and puts them on the stock market, we say that it is a publicly listed company and is referred to as a public limited company (PLC)
it issues a prospectus*, offering a public sale of its shares, listing them at a stock exchange** (e.g. FTSE – the London Stock Exchange)
*prospekt, javni poziv na kupnju dionica
**burza dionica, vrijednosnih papira; stock market – tržište vrijednosnih papira

31. Public Limited Company (plc)
the company is run by the Board of Directors
the Board is accountable to the shareholders, although the Board decides how to distribute profits
they can decide to pay a dividend to the shareholders, or re-invest the profits into the business
a dividend is a proportion of the profits paid to the shareholders

32. Public Limited Company (plc)
PLCs hold Annual General Meetings (AGM) where the performance of the company in the previous year is presented, as well as plans and strategies for the future
an Annual Report is produced and submitted to the shareholders
members of the Board of Directors may submit themselves for re-election by the shareholders

33. Limited Company / Corporation
limited liability, i.e. no personal liability of the shareholders
perpetual life
can sell shares, easier to raise capital
ease of transfer
more complicated and expensive to set up
lots of formalities
Advantages
Disadvantages

34. Key terms 1
sole proprietor/trader
partnership
limited company
corporation
legal entity
unlimited liability
partnership agreement
joint and several liability equity partner silent partner salaried partner transferability of shares perpetual life

35. Key terms 2
private limited company company registration registered number articles of association public limited company listed company
prospectus
shareholder
Board of Directors
stock market
stock exchange
accountability
AGM
annual report
dividend

36. Thank you for your attention!