Company Law

The Law of Contract

A contract is an agreement between two or more parties, which is enforceable in law. A valid business contract, for instance, must involve an offer to supply goods or services, consideration

(the price to be paid) and acceptance by the purchaser. The offer may be revoked at any time before acceptance but this must be communicated to the purchaser. Acceptance of an offer must mean agreement entirely with the terms of the offer, and the terms must be sufficiently detailed. In addition, the object of the contract must not be illegal; it is against the law for two people to make a deal between themselves if this involves committing a criminal offence.

It can happen that in an apparently valid contract, consent to the agreement does not express the true intention of the consenting party, and he or she may therefore not be bound by it. This may arise from mistake, misrepresentation, fraud, duress or undue influence.

There are few rules about the form of contracts, although some contracts have to be written - for example, the sale of land or a house. The seller and purchaser exchange a written contract and, once the exchange takes place, the seller is obliged to sell to the purchaser and vice versa.

An increasing amount of statute law is designed to protect consumers. Legislation, for example, covers the sale and supply of goods and services and the way that goods and services are described. It also regulates the marking and accuracy of quantities.

An example of a contract is the purchase of goods in a shop. If the goods purchased turn out to be shoddy, the purchaser can sue the seller in the civil courts usually for damages. Conversely, if the ownership of the goods passes to the purchaser and they are not paid for, the seller can sue for the price of the goods. Similarly, an employer is bound to pay an employee for work done; if he or she fails to do so, a breach of contract action can take place.

There are differences between contract law in England and Wales and that in Scotland.

All British companies have to be registered. Companies may be either public or private. A company must satisfy three conditions before it can be a public limited company. It must:

· be limited by shares and have a share capital;

· state in its memorandum of association that it is to be a public limited company; and

· meet specified minimum capital requirements.

All other British companies are private companies and are generally prohibited from offering their shares to the public.

Laws relating to companies are designed to meet the need for proper regulation of business, secure open markets and create greater safeguards

for those wishing to invest in companies or do business with them.

In England and Wales and in Scotland there is a licensing procedure to secure the professional competence, integrity and independence of people who act as trustees of bankrupt individuals or as liquidators, receivers or administrators of insolvent companies.

Дата добавления: 2014-12-17