This report will look at the legal issues facing

This study will look at the legal issues confronting Sue Brown and the Scissors Salon in the scenario given. It will travel through the inquiries contained in the assignment utilizing the enumeration contained in this.

  1. Principles of Law
  1. The contract of employment is the understanding between Sue and her employee. It may be in composing or agreed orally. While Sue and her employee will be mostly free to hold on the footings of the contract, there are many limitations imposed by the authorities on the freedom of parties to negociate employment contracts. These are designed to protect the employee and Sue will hold to take history of these when she hires any employees. These rights are known as statutory employment rights. Besides, under subdivision 1 of the Employment Rights Act 1996, Sue is required to supply her employee with a written statement of employment specifics within two months of engaging. The precise demands of this statement are set out in the legislative act and these can hence be regarded as the chief elements of the employment contract. They include inside informations of the work required, the employer’s name and reference, wage rate, hours of work, ill wage, holiday entitlement, pensions scheme, notice for ending the contract and grudge and disciplinary processs.
  2. I.Citations and Estimates

The first portion of this clause states that the monetary value payable is the monetary value on the bill and non any other monetary value given at any clip. The job with this portion of the clause is that the bill normally comes after the contract has been concluded and the goods have been provided. By this clip, the contract will hold been performed and it will non be for one party to change it merely by claiming to chang the monetary value on the bill. The remainder of the clause will besides run into serious troubles, as it seems to disregard some basic rules of contract jurisprudence. A contract is an understanding that can be enforced in the tribunals. The critical point to observe nevertheless, is that it is an understanding. Therefore, the monetary value of any contract will ever be the monetary value agreed between the parties, and if this monetary value is agreed over the telephone prior to bringing, or in any other manner, it will organize portion of the understanding. The marketer can non one-sidedly vary this in his bill. It should besides be noted that consideration, or monetary value, is an indispensable component of a contract of sale. Under subdivision 8 of the Sale of Goods Act 1979 ( the 1979 Act ) in order for a contract of sale to be enforceable, a monetary value must be agreed. While this monetary value can mention to assorted methods of computation, such as “the current monetary value as published on our web site, ” the clause here merely says the monetary value is whatever the provider wants. This monetary value is unsure and hence unenforceable.

two.Footings of Payment

The job with this clause is that it violates another basic rule of contract jurisprudence, that of common public presentation. In order for the duties of one party to be enforced, the duties of the other party must be performed. The marketer can non demand payment without doing bringing.

c. While Sue is contractually bound to utilize the merchandise supplied, there are a figure of ways in which a party can avoid their duties under a contract of sale. Under subdivision 14 of the 1979 Act, goods sold must be of satisfactory quality. Section 14 ( 2A ) defines this criterion as that which ‘a sensible individual would see as satisfactory, taking history of any description of the goods, the monetary value ( if relevant ) and all the other relevant factors.’ In the instance ofLambert V Lewis[ 1982 ] AC 255 the tribunals found that goods were of unsatisfactory quality as they were unsafe. Therefore, Sue could claim that the provider was in breach of their implied responsibility to supply goods of satisfactory quality because the pick is unsafe.

  1. The Sale of Goods Act 1979 and the Consumer Credit Act 1974
  1. Sue stands a good opportunity of building a instance against the marketer of the faulty hairdryers. As we have seen above, subdivision 14 of the 1979 Act inserts an implied term into all contracts of sale that the goods shall be of satisfactory quality. It is clear that these goods are lacking. However, subdivision 14 ( 2B ) provinces that in order to be of satisfactory quality, goods must be fit for all of their common intents. It is arguable that utilizing hairdryers designed for the place, in a salon would non be a common intent. Thankfully, subdivision 14 ( 3 ) provinces that where the purchaser lets the marketer know the intent that the goods are traveling to be used for, it will be implied that the goods sold will be for that intent. If Sue seeks to construct a instance against the marketer of these hairdryers, it will be important that she can turn out that the helper director knew how the goods were traveling to be used. If this is disputed, and Sue does non hold any grounds of the treatment, so it would be a instance of her word against theirs and this could go hard.
  2. With mention to the Consumer Credit Act 1974 ( the 1974 Act ) Sue will necessitate to take a figure of factors into consideration before she decides to come in into a recognition understanding with her providers. First it is necessary to look at the range of application of the Act. While it is called the ‘Consumer’ Credit Act, subdivision 189 ( 1 ) provides an drawn-out definition of the ‘individuals’ who are protected. This will therefore include partnerships, nines, societies and charities. However, private limited companies are non protected under the statute law. Therefore, it will merely be worthwhile for Sue to see these commissariats if she is moving as a exclusive bargainer or partnership, for they are irrelevant for companies.

If the commissariats do use nevertheless, Sue can be confident that the recognition supplier can non avoid them, as any effort to contract out of the commissariats is null under subdivision 173. Besides, if Sue feels she has a job with a recognition supplier, she can reach the Director General of Fair Trading which oversees the operation of the act.

The first point to observe in the commissariats is that merely those concerns that are licensed to supply recognition to consumers may make so. Under subdivision 25 ( 1 ) , licenses will merely be granted to those considered to be ‘fit persons.’ Guidance on licensing determinations is available from the DTI ( DTI, 2003 ) . Any advertizements are controlled so that the monetary value they show is an accurate word picture of the true cost of the recognition to the borrower. To transgress the advertisement regulations is a condemnable offense under subdivision 47. Sue should besides observe that these advertizement regulations apply merely to recognition understandings of less than ?15,000 under subdivision 43. Furthermore, if Sue were to happen herself in a recognition agreement that she truly felt was extortionate or grossly unjust, so she could use under subdivision 137 ( 1 ) of the act to hold the understanding reopened and the footings thereof varied ‘so as to make justness between the parties.’

However, the most of import note sing the Consumer Credit Act 1974 that Sue must see is that she will non be protected by these commissariats if she is moving as a limited company. In that instance she would hold to size up the footings of a recognition understanding really closely to guarantee that she is acquiring a good trade.

  1. The Formation and Dissolution of a Business Unit of measurement
  1. There are a figure of of import differences between a exclusive bargainer, a partnership and a limited company and Sue should look into each of these when make up one’s minding which concern construction to follow.

Harmonizing to the Government’s Business Link web site, the exclusive bargainer theoretical account is the easiest and cheapest manner to run a concern. There are no fees or enrollment formalities and all you need to make to get down trading is start making concern. However, you are besides non protected by the rule of limited liability. This means that while you get to maintain all of the net incomes, you are besides apt for all of the debts of the concern. This can be a really hazardous personal state of affairs and one that many people would instead avoid. A individual who is wishing to move as a exclusive bargainer will be responsible for registering themselves as freelance for the intents of income revenue enhancement and national insurance parts. The signifier used to make this is the CWF1 signifier and is available from the HMRC web site.

Under the exclusive bargainer construction, there is no differentiation between the concern and the bargainer, so you get to do all of the determinations sing the concern yourself, and you must besides raise all of the capital personally. This can take the signifier of personal assets, or loans. The records maintaining demands are straightforward with an one-year ego assessment revenue enhancement return being made to HMRC. Records must besides be kept demoing concern income and outgo. All net incomes go to the bargainer and must be declared as income. The net incomes will hence be apt to full income revenue enhancement and Class 2 and 4 National Insurance Contributions. Due to the revenue enhancement state of affairs, and besides because of the dangers of limitless liability, it is ever advisable to look at the alternate concern constructions when get downing a new concern.

Partnerships are created when two or more people wish to travel into concern together. In this manner they can portion the costs, hazards and duties of the concern. However, control, ownership and net incomes must besides be shared. The spouses are besides jointly apt for all of the debts that are run up by the partnership. This means that you have to swear your spouses wholly, as each spouse is personally apt for his portion of the debts of the other spouses.

The formalities for puting up the partnership are rather straightforward. First, the spouses should register themselves as self employed in the same manner as is done for a exclusive bargainer. Then the spouses can pull up a written partnership understanding saying the regulations that are to regulate the partnership. It is extremely advisable that a partnership understanding is drawn up to province precisely what is to go on if things become hard. However, this is non mandatory and is up to the persons themselves to make up one’s mind. If a partnership understanding is to be drawn up, it is besides advisable to talk to a canvasser before making so.

Management of the concern and control is shared between the spouses, and the funding for the concern comes from the spouses personal assets or loans. As with the exclusive bargainer, self assessment revenue enhancement returns are required by each spouse and by the partnership itself. Records must besides be kept of partnership income and disbursals. The net incomes are shared out among the spouses and revenue enhancement will be paid on these net incomes as income. Class 2 and 4 national insurance parts besides fall to be made. A recent betterment to the signifier of partnership has been the debut of the limited liability partnership which, while necessitating greater enrollment formalities, means that the spouses are protected by limited liability and will therefore non be personally apt for the debts of the house.

The concluding type of concern signifier to be examined is the limited liability company. The company, under jurisprudence, is a wholly separate legal entity that exists in its ain right. The company can have its ain assets and owe its ain debts and the proprietors of the company will hold no direct duty for these assets and liabilities. Ownership of the company is operated by manner of portions, with investors buying portions in the company. While the stockholders can potentially lose the money they put into the company, they can non lose any of their personal financess unless they have given personal warrants. One point that may be relevant to Sue is that as a little new concern, if she is seeking to borrow money from a bank or other loaner, it is extremely likely that she will be required to give a personal warrant for the money owed, and this will in portion detract from the benefit of limited liability.

The regulations sing public and private limited companies are somewhat different but I shall concentrate here on private limited companies as this is the most relevant option for Sue. A private limited company must hold at least one stockholder. Sue will besides hold to register the company at Companies House. This is rather a straightforward process and a canvasser can make it quite stingily but it will still necessitate to be planned for. The company will besides necessitate at least one manager and one secretary. The differentiation between stockholders and managers is that while the stockholders are the proprietors of the company, the managers are given the undertaking of running the company on a twenty-four hours to twenty-four hours footing. There is nil to halt a stockholder from being a manager, and it is likely that Sue would be both if she were to choose for the company path.

While the managers run the company, the finance comes from the stockholders in the signifier of the portions they purchase. The company can besides raise financess in its ain right by borrowing. Proper histories will hold to be returned to Companies House each twelvemonth, and the company will besides hold to register certain one-year signifiers. While these are comparatively straightforward, there are fees to be paid, and failure to follow with all of the demands can intend rigorous punishments. The company can take to either retain its net incomes for reinvestment, or administer them to its stockholders. Any money paid to employees of the company, including managers will be apt to income revenue enhancement and category 1 National Insurance Contributions. The net incomes of the company are capable to corporation revenue enhancement.

  1. Before choosing the name Scissors Salon, Sue will hold to take some factors into consideration. These will change depending on the signifier of concern she chooses. For exclusive bargainers and partnerships, it is rather straightforward. Offensive names, or names including the words ‘limited’ or ‘plc’ are non allowed as they would give the feeling that the concern was a company. There are besides certain words for which permission is required. These include words that imply the concern is of national or international importance, words that suggest a particular legal position such as ‘chartered’ , words that suggest a specific intent such as ‘charity, ’ words that suggest a specialized activity such as ‘chemist, ’ and words that suggest a connexion to the authorities or royalty.

Care should besides be taken that the name is non likely to do confusion and a practical attack should be used. For Sue, if there is already a Scissorss Salon in her local country, or if there is a big national or international concatenation with that name she should non utilize it, otherwise it is likely all right.

On a practical note, Sue should besides see whether the name suits her concern and will be attractive to clients.

If Sue is get downing a private limited company, so she will hold to guarantee that the name complies with the regulations set out by Companies House, and the name is non already taken in the registry. Each company is required to hold a alone name so one time a name is used, no other company may utilize it.

  1. There are a figure of demands to shutting or fade outing a concern. First of all, HMRC must be informed. There are particular revenue enhancement signifiers that require to be filled and a statutory process that must be followed which varies depending on whether the concern is a company or a exclusive bargainer or partnership. If it is a company at that place will be Companies House procedures to be complied with besides. If there are employees, so they will necessitate to be issued with P45s and their wage finalised. There are besides of import employee rights which must be complied with and it may be possible or necessary to offer aid to employees to happen alternate employment.

Then the creditors and providers to the concern should be informed. If there are non plenty financess to pay creditors, so insolvency processs will hold to be complied with. Customers and other affected people should besides be informed in an appropriate mode. You will besides hold to fix concluding histories and an comptroller may be needed for this.

  1. The Rights of Employees
    1. There are a figure of employee rights which Sue will hold to be cognizant of. These include the right to a elaborate payslip and wage of at least the national lower limit pay ; a right to at least four hebdomads of paid vacations per twelvemonth ; a right to paid pregnancy leave of at least 26 hebdomads and a right to return to work after birth, male parents holding a right to paid paternity leave ; a right to a maximal work hebdomad of 48 hours ; a right non to be discriminated against on the evidences of sex, race, disablement, sexual orientation, age, faith or belief ; and a right non to be below the belt dismissed ( Citizens Advice Bureau, Advice Guide ) . The chief beginnings of employment protection in the UK are the Equal Pay Act 1970 ; Sex Discrimination Act 1975 ; Race Relations Act 1976 ; Disability Discrimination Act 1995 ; Protection from Harassment Act 1997 ; Public Interest Disclosure Act 1998 ; Part-time Workers ( Prevention of Less Favourable Treatment Regulations 2000, SI 2000/1551 ; Fixed-term Employees ( Prevention of Less Favourable Treatment ) Regulations 2002, SI 2002/2034 ; Employment Equality ( Religion or Belief ) Regulations 2003, SI 2003/1661 ; Employment Equality ( Age ) Regulations 2006, SI 2006/1031 ; Employment Rights Act 1996 ; and the Employment Act 2002.
    2. The Employment Act 2002, subdivisions 29 to 40, create a statutory disciplinary process which must be followed before an employee can be removed. Importantly for Sue, subdivision 36 removes the freedom from these commissariats that had applied to employers of less than 20 people. The notice period that Sue would hold to give the employee is one hebdomad if she has been employed for over one month but less than two old ages.

Sue will be able to disregard any employee if she has a just and sensible ground for making so and acts moderately. Reasonable evidences for dismissal in this instance could be the behavior of the employee or her capableness. Her behavior in go forthing early and declining to assist with the cleansing, and the fact that she can non execute a Perm and is unwilling to larn, could represent valid evidences. However, Sue will besides hold to demo that she followed a just process prior to the dismissal. This would include explicating the grounds to the employee and giving her a opportunity to better. These precise inside informations are contained in the statutory disciplinary process. If the employee is to be dismissed, Sue will besides hold to supply a written statement of the grounds for dismissal within 14 yearss.

This concludes the study. Mentions


Needham, D. , Dransfiled, R. , Coles, M. , Harris, R. , & A ; Rawlinson M. , ( 2001 ) Business for Higher Awards, 2neodymiumed. , Heinemann, Oxford

Web sites

Citizens Advice Bureau, Advice Guide, accessed online at hypertext transfer protocol: // on 28/12/06

DTI, 2003, Guide to Entreaties from Licensing Decisions of the Office of Fair Trading, available online at hypertext transfer protocol: // accessed on 29/12/06

Business Link Website, available online at hypertext transfer protocol: // type=RESOURCES & A ; itemId=1073789606, accessed on 29/12/06

HMRC Forms Downloand Website, available online at hypertext transfer protocol: //, accessed on 29/12/06

Roydens UK Employment jurisprudence, available online at hypertext transfer protocol: //, accessed on 28/12/06

Emplaw British Employment Law, available online at hypertext transfer protocol: // StartPage=data % 2FzSWER.htm & A ; PageTitle=Guidance % 20from % 20eminent % 20lawyers, accessed on 29/12/06

Legislation referred to

Companies Act 2006

United kingdoms are the Equal Pay Act 1970

Sex Discrimination Act 1975

Race Relations Act 1976

Disability Discrimination Act 1995

Protection from Harassment Act 1997

Public Interest Disclosure Act 1998

Part-time Workers ( Prevention of Less Favourable Treatment Regulations 2000, SI 2000/1551

Fixed-term Employees ( Prevention of Less Favourable Treatment ) Regulations 2002, SI 2002/2034

Employment Equality ( Religion or Belief ) Regulations 2003, SI 2003/1661

Employment Equality ( Age ) Regulations 2006, SI 2006/1031

Employment Rights Act 1996

Employment Act 2002

Employment Rights Act 1996

Sale of Goods Act 1979

Consumer Credit Act 1974

Leave a Reply

Your email address will not be published. Required fields are marked *