2022-08-19
ACCA F4 Corporate and Business Law(UK)
By Julius
精品基础课
For exam
Sept 2022 --- Aug 2023
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考试形式
The exam lasts two hours and is divided into two sections.
Section A consists of 45 MCQs, a mixture of one or two marks each.
25 x 2 mark objective test questions
20 x 1 mark objective test questions
Section B consists of 5 MTQs containing a total of 6 marks each.
Total time allowed: 2 hours
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Content
1. Law and the legal system
2. Sources of law
3. Formation of contract: agreement
4. Formation of contract: consideration and intention
5. Content of contracts
6. Breach of contract and remedies
7. The law of torts and professional negligence
8. Contract of employment
9. Dismissal and redundancy
10. Agency law
11. Partnerships
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Content
12. Corporations and legal personality
13. Company formation
14. Constitution of a company
15. Share capital
16. Loan capital
17. Capital maintenance and dividend law
18. Company directors
19. Other company officers
20. Company meetings and resolutions
21. Insolvency and administration
22. Fraudulent and criminal behaviour
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01
02
Law and the legal system
Sources of law
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Framework-Guide your mind
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1.1.1 Defination of Law and Types of Law
Define law and distinguish types of law
 The framework of social control can be viewed as having two aspects:
• Law is a formal mechanism of social control. It provides a structure for dealing with
and resolving disputes that may arise, as well as providing some deterrent to those
wishing to disrupt social order.
• Informal mechanisms include ethical and moral guidance
 Types of law
• Common law and equity
• Statute law
• Private law and public law
• Criminal law and civil law
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Define law and distinguish types of law
 Common law（普通法） and equity（衡平法）
• Common law is the earliest element of the English legal system, laid down by royal
courts
 Whilst the judiciary 司法机构 is responsible for the creation of common law
 Remedies under common law are monetary, and are known as damages (赔偿金)
• Equity was developed after common law as a system to resolve disputes where
damages are not a suitable remedy and to introduce fairness into the legal system
 衡平法目的是为了公平，譬如颁布禁令，取消合同
 Statute law
• 议会 Parliament 对成文法负责
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Define law and distinguish types of law
 Private law私法 and public law 公法
• Private law is law which deals with relationships and interactions between businesses,
and private individuals, groups or organisations.
• Private law it is for the individual concerned to take action
• Public law is mainly concerned with government and the operation and functions of
public organisations
• Public law: The state prosecutes 检举 the alleged perpetrator被指控的肇事者.
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Define law and distinguish types of law
Feature
Criminal law (刑法)
Civil law (民法)
类别
It is a form of public law. Criminal law Civil law is a form of private law and
relates to conduct of which the State
involves the relationships between
disapproves
individual citizens
目的
针对国家不允许/赞成的行为，
punish offenders 惩罚犯罪分子
To settle disputes between individuals
and to provide remedies
起诉形式
In criminal law the case is brought by
the State in the name of the Crown.
Such as Regina(Queen) v Brown or R
v Brown
In civil law the case is brought by the
claimant, who is seeking a remedy.
Such as Brown v Smith.
区分(举例)
重伤
轻微伤
who take up the case 谁提 国家提起 Prosecution 检察官
起诉讼
个人提起 Claimant 原告
Burden of proof 举证责
任
Claimant 原告
Prosecution 检察官
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Define law and distinguish types of law
Feature
Criminal law (刑法)
Civil law (民法)
Standard of proof 证据的
标准
Beyond reasonable doubt 排除合理
怀疑，疑罪从无
Balance of probabilities 概率的平衡，
谁的证据更占优
Decision 判决结果
Jury陪审团: guilty or not guilty
Judge 法官：Liable/Not liable 有责任/
无责任
Remedies 法律救济
Prison/Fines (收监/罚金)
Damages/Compensation(损害赔偿金/补
偿)
Distinct courts of instance Magistrates 治安官法院、
court 初审法院
Crown court 皇冠法院
Magistrates 治安官法院、
County court 郡法院
以下成员不可以成为陪审团：小于18 周岁，没有在英国工作过，有健康和精神问题的 以及 曾经犯过
罪的不能担任
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1.1.3 Hierarchy, Structure and Operation of the Courts
Civil courts
Supreme court
Court of appeal
High court
County court
Restrictive Practices Court限制贸易实施法庭
Employment Appeal Tribunal劳工上诉法庭
Crown court
Magistrates
Only deal with civil law matters
• The county court
• The Chancery Division of the High Court
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Civil court
 Civil Procedure Rules 1988: alternative methods of dispute resolution and to avoid
expensive litigation (此规则运用在民事诉讼 e.g. breach of contract)
 When a claim is received, it will be allocated to one of three tracks for the hearing.
• (1) The small claims track-deals with simple claims valued at no more than £10,000, an informal
court.
• (2) The fast-track - deals with moderately valued claims of between £10,000 and £25,000, expected
to last no more than one day.一审在案件受理 30 weeks 内开庭
• (3) The multi-track- deals with claims of over £25,000 and/or complex claims.
No standard procedure 无标准程序 一系列案件管理工具根据案件需求‘mix and match’
 Note: the County court deals with all cases allocated to the small claims track, the
majority of fast track and some multi track cases. All other claims are dealt with by the
High Court.
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Civil court
 Magistrates 治安官法院
• a) Family proceeding 家庭纠纷
• b) Recovery in relation to council tax and domestic bills 房产税、家庭票据
 County court 郡法院
• a) Cases of small claims and fast track basis 小的索赔、快速审理
• b) Contract and tort, land matters and probate disputes among others.合同和侵权，
土地纠纷，遗嘱纠纷，
• c) 需要去高院审理：fatal accidents and professional negligence 致命事故，专业
疏忽
• In most other cases an appeal goes to the relevant Division of the High Court
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Civil court
 Crown Courts 皇冠法院
• Limited civil cases, such as appeals offences from the Magistrates' Court on matters
of affiliation, betting, gaming and licensing
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Civil court
 High court 高院 (multi‐track cases) hear cases anywhere in England and Wales
• a) The Queens Bench Division 王座庭：contract and tort（>25000）, judges
are specialists in commercial law 法官是商法方面的专家。
• b) The Chancery Division 大法官庭：Trusts and mortgages, Revenue matters ，
Bankruptcy (outside London ‐ County Court subject), Disputed wills and administration
of estates of deceased persons, Partnership and company matters 信托和抵押、收入、破产
（London 外去郡法院）、遗嘱纠纷、死者遗产管理、合伙和公司事宜
• c) The Family Division 家事庭 Matrimonial, Family property, Proceedings relating
to children(wardship, guardianship, adoption, legitimacy), Appeals from Magistrates’
Courts on family matters，Appeals from County Courts on family matters 婚姻、家庭财
产、有关孩子的诉讼（监护、监管、收养、合法性）, 治安官法院关于家庭事宜的上
诉、郡法院关于家庭事宜的上诉
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Civil court
 Court of appeal 上诉法院
• a) 高院 3 个庭的上诉案件
• b) 郡法院上诉
• c) Employment Appeal Tribunal 仲裁庭的上诉
• 上诉的程序：rehearing 重新审理
• 使用材料：transcript of the case 案件副本和 judge’s notes 法官记录
• 注意：不重新开庭，Witnesses not re‐examined & new evidence not permitted，
只是案卷重审
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Civil court
 Supreme Court 最高法院
• a) 上诉法院的上诉
• b) 非常偶然：高院的上诉
• c) 使用材料：transcript of the case 案件副本和 judge’s notes 法官记录
• 注意：不重新开庭，Witnesses not re‐examined & new evidence not permitted，只是
案卷重审
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Civil court
 European Court of Human Rights (ECtHR) 欧洲人权法院
• a) 欧盟内任何个人 human rights 人权受损，都可 sign up 起诉
• b) 自从 Human Rights Act 1998，UK 法律涵盖了欧洲人权法内容，致使 UK 法
院强制实施该人权法
 The Privy Council 枢密院
• a) UK 枢密院是相关英联邦国家上诉案件的终上诉法院
• b) 它的判决对 UK's jurisdiction 管辖的判例起 persuasive influence 有说服力的影
响
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Criminal court
Supreme court
一审法院： 治安官法院、皇冠法院
Court of appeal
High court
Crown court
Magistrates
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Criminal court
 刑事诉讼：
• Summary offences 轻微罪行
 Imprisonment 刑期<6 个月 Fines<￡5,000
• Indictable offences 可提起公诉的罪行
 Imprisonment 刑期>6 个月 Fines>￡5,000
• Either‐way offences 上述两种皆可能
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Criminal court
 Magistrates 治安官法院
• a) Summary offences （without a jury） 轻微罪行（没有陪审团）
• b) Commit defendants charged with an indictable offence to the Crown Court. 处理过程中
发现刑期超过 6 个月，提交去皇冠法院
• Most appeals are heard by the Crown Court
 Crown court 皇冠法院
• a) Indictable offence 可提起公诉的罪行
• b) confirm, reverse, or vary any part of the judgment of the Magistrates Court 维持、推翻、
改变治安官法院判决
 High court 高院
• High Court’s Queen’s Bench Division 王座庭: 受理来自Magistrates and Crown court相关
案件
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Criminal court
 Court of appeal 上诉法院
• Crown court 皇冠法院的上诉案件，如果不服 convictions 定罪或 sentences 判决
 Supreme Court 最高法院
• a) 处理Court of appeal 上诉法院的上诉
• b) 处理High court 高院的上诉
• 在英国法律体系中（排除欧盟）supreme court是最高级别的。
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Other courts
 Tribunals 特别法庭 are also an important part of the English legal system and are an
alternative to using the court system to settle a dispute.
• Employment tribunals are established to hear disputes between an employee and their employer on
certain statutory employment matters, such as unfair dismissal
• Appeals are to the employment appeal tribunal (EAT)
Court
Tribunal
Case may not be heard by a specialist in that
particular area of law.
Case will be heard by someone who has expertise in
that area.
A slower process.
A much quicker process
Legal aid maybe available, but if not can be an
expensive process
Legal aid is not available (except for land tribunals
and EAT's) but can be a much cheaper procedure
Strict rules relating to evidence, pleading and
procedure
Much less formal and can be less intimidating.
Are bound by the doctrine of judicial precedent
Not bound by the doctrine of judicial precedent
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Framework-Guide your mind
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1.2.2 Meaning of Case Law and Precedent
Case law
 The first legal source of law is case law, which is judge-made law based on the
underlying principle of consistency. Once a legal principle is decided by an appropriate
court it is a judicial precedent司法判例
• Stare decisis 遵循先例：let decision stand
 Case law incorporates decisions made by judges under Common law and equity legal
systems (衡平法优先级高于普通法)
 Court hierarchy 法院等级:
• Supreme court ‐ binds all lower courts, but not itself.
• Court of Appeal ‐ binds all lower courts, and itself.
• High Court (judge sitting alone) ‐ binds all lower courts, and usually itself.
• Crown/Magistrates/County courts cannot create precedent
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Case law
 The system, adopted by the judges, of following the decisions in previous cases is
called the doctrine of judicial precedent 司法先例原则.
 Statements made by judges can be classified as ratio decidendi or obiter dicta.
• ratio decidendi 判决理由 is vital element that binds future judges
 basis for the decision
 principle that a judge followed when coming to their decision
• obiter dicta 附带意见 this is not binding, but persuasive authority in later cases
 legal principle that do not form the basis of the decision.
 not based on the material facts, but on hypothetical facts
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Case law
 The doctrine of judicial precedent is designed to provide consistency in the law. Four
things must be considered when examining a precedent before it can be applied to a case.
• (a) A decision must be based on a proposition of law before it can be considered as a
precedent.
• (b) It must form part of the ratio decidendi of the case.
• (c) The material facts of each case must be the same or comparable.
• (d) The preceding court must have had a superior (or in some cases, equal) status to
the later court, such that its decisions are binding on the later court.
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Case law
 A precedent may be not binding where it:
• Overrule by higher court
• Overrule by statute law
• Distinguish the facts
• Previous decision made per incuriam 疏忽
• Conflict with a fundamental principle of law
• Earlier precedent to be too wide
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Case law
 The advantages
• Certainty: The law is decided fairly and predictably
• Clarity: Following the reasoning of ratio decidendi
• Flexibility: The system is able to change with changing circumstances.
• Practicality: Case law is based on experience of actual cases
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Case law
 Disadvantages
• Certainty: Judges may sometimes be forced to make illogical
• Clarity: The law is very complex because there is a vast number of cases, and
inconsistencies can arise.
• Flexibility: The law can become rigid, leading to inflexibility and loss of
development. Case law is reactive rather than proactive
• Practicality: Unfair precedents may be created that allow wrongdoing to be
perpetrated
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1.2.3 Legislation and Delegated Legistion
Legislation
 The second major source of law is legislation立法. This is also known as statute law成
文法 and may take the form of Acts of Parliament or delegated legislation under the
Acts
 Parliament consists of:
• the House of Commons 众议院
• the House of Lords上议院
• the Monarch. 国王
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Legislation
 议会立法归档为下列条目
• Public acts 涉及政府或者公众的法案
• Private acts 涉及个人和机构，例如：公司与个人的财产案件
• Enabling acts 给予被授权主体立法的能力，跟议会立法具有同等效用
 Parliamentary sovereignty 议会主权
• Repeal earlier statutes
• Overrule or modify case law developed in the courts
• Make new law on subjects which have not been regulated by law before
 Doctrine of sovereignty of parliament
• No Parliament can legislate so as to prevent a future Parliament changing the law
• Judges have to interpret statute law
• The validity of an Act of Parliament cannot be questioned. 但是法官可以指出兼容性问题
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Legislation
 In order to become an Act of Parliament, a Bill议案 must go through the following
stages in both Houses: (3读2阶段)
• First reading. Publication and introduction into the agenda. No debate
• Second reading - debate takes place on the principles of the Bill and it is then voted upon (No
amendments at this stage)
• Committee stage- a smaller number of MP’s (members of parliament) consider the wording
of the Bill.
• Report stage -the Bill as amended by the Committee is reported back to the full House for
approval
• Third reading. This is the final approval stage
 以上程序结束后，Royal Assent grant 御准表示法案通过 （一般由女王签署）
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Legislation
 Advantages of Statute law :
• responsive to public opinion.
• Statute law can, in theory, deal with any problem
• Statutes are carefully constructed
• Deal with new problem in society and unwelcome development in case law
 Disadvantages of Statute law:
• Statutes are bulky
• Parliament often lacks time
• Statute law is a statement of general rules. Those who draft it cannot anticipate every
individual case which may arise
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Legislation
 Delegated legislation 授权立法：
• Orders In Council 枢密院命令 （由枢密院出台）
• Statutory Instruments (SI’s) 法定文书（由政府内阁出台） the most common form
of delegated legislation
• Bye-laws 地方法规 (地方政府出台)
• Professional regulations 专业组织规则 （会计协会 , 律师协会出台）
• Rules of Court 法院规则 （法院出台）
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Legislation
 Delegated legislation has a number of advantages:
• It saves Parliamentary time .
• It may benefit from access to technical expertise, thus leaving Parliament free to
consider and debate the underlying principles.
• The system allows the law to be enacted quickly.
 However, it also has a number of disadvantages:
• Unrepresentative: not democratically elected
• Accountability of Parliament 问责
• Large volumes
• Confuse users: different sorts of delegated legislation
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Legislation
 Controlling delegated legislation
• (a) Parliament 议会 (Create primary legislation 一级立法)
 Some statutory instruments do not take effect until approved by affirmative resolution of
Parliament.
 Other statutory instruments must be laid before Parliament for 40 days before they take
effect.
 Parliament may revoke an enabling act议会可以撤回他的授权立法权
• (b) Courts 法院 (Interpret the statute, thereby giving it legal effect)
 法院可以废除任何与人权法案不兼容的delegated legislation（second legislation），
但是对primary legislation不能废除但是可以issue a declaration of incompatible
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1.2.4 Rules and presumptions used by the court
Rules of statutory interpretation
 Presumptions 推定:
• Does not alter the common law 不能改变普通法
• There is no retrospective effect 没有追溯效力.例如：2014 法律不能对 2013 年的案子有
效
• An individual will not be denied liberty, property, or rights 个人不能被否定其自由、财产、
人权
• The Crown is not bound 不约束王权
• A statute generally has effect only in the UK 成文法只在英国有效
• International laws will be not be broken 所有的国际法都不能被打破
• Strict liability will not be imposed 严格的责任不能被强加
• A statute does not repeal other statutes 解释一个成文法时，不能把其他成文法废除
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Rules of statutory interpretation
 Assistance tools in interpretation
• Intrinsic Aids 内在辅助
 The title ‐ 从题目看法律内容
 The preamble 序言
 Interpretation sections to Acts
 Side notes. Statutes often have summary notes in the margin.
• Extrinsic Aids 外在辅助
 Hansard 议事录
 Reports of commissions 委员会报告
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Rules of statutory interpretation
 The courts can use the following rules to help them interpret a statute:
• Literal rule文义规则-Words must be given their ordinary dictionary meaning, even if this produces an
undesirable outcome.
 案例：投票权活着的人才有，控告被告冒名投票 (Impersonate any person entitled to vote)，
冒充的死人，所以罪名不成立，被告胜诉。
• Golden rule黄金规则-the golden rule is used to ensure that preference is given to the meaning that
does not result in the provision being an absurdity荒谬. 使用字面意思除非特别荒谬
 案例：儿子杀妈妈，想获得继承权，判定有罪，剥夺继承权
• Mischief rule除弊规则- a judge considers what mischief the Act was intended to prevent.在除弊法则
下，法官要考虑的是该法条想去避免的是哪些弊端。这条规则在字面意思无法解释情况下使用。
 案例：（目的：规避危害公共安全）骑自行车上高速公路有罪
 案例： （目的：打击妓女）男妓不是妓女（不包括男性），治安官的控诉败诉，男妓无罪
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Rules of statutory interpretation
 The courts can use the following rules to help them interpret a statute:
• The purposive rule 目的导向规则 Not only their ordinary, literal and grammatical
sense, but also with reference to the context and purpose of the legislation 法官需要基于他的理解来
解释该法条，且解释的内容还要与议会当时设立该法条的初衷一样
• Ejusdem generis同类原则- General words mean the same kind of thing as the specific words they
follow. ‘house, office, room or other place’ other place 这样other 里面不包括跑马场因为是露天。
• Expressio unius est exclusio alterius 明示其一排除其他- Where a statute seeks to establish a list of
what is covered by its provisions, then anything not expressly included in that list is specifically
excluded. 比如，一部法律禁止民族，种族歧视，那该法律不该被推定为暗含禁止性别歧视。
• Noscitur a sociis 文理解释 – 你使用的文字必须跟后文解释一致。如前后文说的都是孩子的衣
物，则其他省略处也可解释为孩子的 XX
• In pari materia 类似事件‐ 此法案出台前的类似事件是如何解释的，法院可参照这些事件
• The contextual rule 上下文规则 – 类似于阅读理解，看全文来理解文字意思
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1.2.5 Concept and Impact of Human Rights Law
Human right law
 Human right law 人权法 保证民事权利和个人自由，HRA 98 只对公共权力机关有
约束。举例：国家政府机构办的养老院受约束，私人养老院不受约束
• The right to life 生命权
• Prohibition of torture 禁止酷刑
• Prohibition of slavery and forced labour 禁止奴役和强迫劳动
• The right to a fair trial 得到公正审判的权利
• Freedom of thought, conscience and religion 思想、良心、宗教自由
• Freedom of expression 言论自由
• The right to marry 婚姻自由（包括同性婚姻）
• Prohibition of discrimination 禁止歧视
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Human right law
 Impact on new legislation
• The person responsible for a Bill to make a statement of compatibility with the
Convention before the Bill's second reading.
• Where a Bill is incompatible with the Convention, a statement to that effect can be
made should the Government wish to continue with the Bill anyway.
• Courts may strike out secondary legislation that is contrary to the act.
• Courts NOT strike out primary legislation that is contrary to the Act, but they can
issue a declaration of incompatibility should they desire.
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Human right law
 Impact on statutory interpretation
• Courts are required to interpret UK law in a way compatible with the Convention
• Existing legislation must therefore be interpreted in a way which is compatible with
Convention Rights. This means that courts must take into account decisions and
judgements of the European Court of Human Rights when hearing a case.
• Where legislation can be interpreted in two ways, one compatible with the
Convention and one that is incompatible, courts must follow the interpretation that is
compatible.
• If a court feels that legislation is incompatible with the Convention and that it cannot
interpret it in such a way to make it compatible, it may make a declaration of
incompatibility
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Human right law
 对 Common law 的影响
• 基本上和成文法的情况相似，任何运用遵守先例的原则，同样法院也要按照 HRA98 的规定，
如果任何判例与 HRA98 冲突，那么优先尊重 HRA98.
• 因此，下级法院会忽视高级别法院的判例，如果它违反 HRA98
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03
04
Formation of contract: Agreement
Formation of contract: Consideration and intention
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Framework-Guide your mind
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2.1.1 Nature of a simple contract
Essential elements of a valid contract
 A contract may be defined as an agreement which legally binds the parties
 The following elements are needed to form a valid contract:
• Agreement, i.e. offer and acceptance.
• Consideration. 对价
• Privity of contract
• Intention to create legal relations.
• Capacity
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Essential elements of a valid contract
 A contract which does not satisfy the relevant tests may be either void, voidable or
unenforceable
• A void contract is not a contract at all.
• A voidable contract可撤销的合同 is a contract which one party may set aside取消.
在撤销前具有法律效应
• An unenforceable contract非强制性合同is a valid contract and property transferred
under it cannot be recovered. But if either party refuses to perform or to complete
their part of the performance of the contract, the other party cannot compel them to
do so
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Form of the contract
 Form of the contract
• General rule. A contract can be in any form. It may be written, or oral, or inferred
from the conduct of the parties.
• Except in the following circumstances:
 Some contracts must be by deed (契约)
 Some contracts must be in writing
 Some contracts must be evidenced in writing
 A contract by deed is sometimes referred to as a specialty contract. Any other type of
contract may be referred to as a simple contract
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Form of the contract
 A contract by deed must be in writing and it must be signed. Delivery must take place.
• Leases for three years or more
• A conveyance or transfer of a legal estate in land (including a mortgage)
• A promise not supported by consideration (for example a promise to pay a regular
sum to a charity)
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Form of the contract
 Some contracts must be in writing: contracts must be in writing and signed by at least
one of the parties.
• A transfer of shares in a limited company
• The sale or disposition of an interest in land
• Bills of exchange and cheques
• Consumer credit contracts
 Some contracts must be evidenced in writing: contracts may be made orally, but are not
enforceable in a court of law unless there is written evidence of their terms. （担保类
合同口头在法律上没有约束力，需要有书面证据才被）
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Form of the contract
 A standard form contract 标准合同
• pre‐printed (预先打印)
• be no scope for negotiation (一般不接受协商，大客户偶尔可协商)
• automatically be in writing
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2.1.2 Rules governing an offer and the distinction between an offer and an invitation to treat
Offer
 An offer要约 is a definite and unequivocal准确无误 statement of willingness to be
bound on specified terms without further negotiations.
• An offer can be in any form- oral, written or by conduct.
• Offer is not effective until it has been communicated to the offeree
• A statement which is vague cannot be an offer 模糊的陈述不是offer
• 可以向特定的人发出，也可以向全球发出
• 举例：这辆车卖你20万？
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特殊offer
 Unilateral offer 单方要约An offer cannot be revoked out once the offeree has started
their performance (撤回不被允许，一旦受要约人已经开始履行义务。单方要约的
内容是为自己设定某种义务，使相对人取得某种权利。单方要约一般向社会上
不特定的人发出)
• 悬赏类广告：只要对方完成相应任务，合同默认成立，一般不需要进行沟通，
除非广告有特殊说明
• 功能承诺性广告：只要对方使用，合同默认成立，不需要沟通
 广告：吃了咽丸不会得感冒，如果得了公司承诺赔偿100英镑，老太太服用后得了
感冒，并起诉公司
 判词：老太太服用咽丸案件为要约，且属于单方要约，老太太胜诉
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特殊offer
 Cross offers交错要约: Sometime two parties make identical or similar offers to each
other without knowing that the other has made an offer.
• For example, if A offers to sell their car to B for £1,000 and B offers to buy A's car
for £1,000, there is no contract, because there is no acceptance
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What Is not an offer
 An invitation to treat 要约邀请 is not an offer: An invitation to treat means an
invitation to the other party to make an offer引诱他人向自己发出要约
• Advertisements (大部分的广告)
• Exhibition of goods for sale
• An invitation for tenders
• Auction sales
 询价，和回答询价所涉及的数字，只是提供信息，不是要约或要约邀请
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What Is not an offer
 Examples of invitations to treat:
• Most advertisements. General rule - an advertisement is an invitation to treat, not an offer.
(案例：A登广告售价100，B前往购买，发现是120，B告A毁约。法官认为是要约邀
请)。Exception: it would be an offer if no further negotiations were intended or expected.
 An advertisement promising free theatre tickets in return for buying a newspaper 是offer
• Shop window displays. A window display was not an offer of sale, but only an invitation to
treat. （案例： 商店橱窗展示的折叠刀，展示不构成买卖关系）
• Goods on shop shelves. The display of goods in a shop was not an offer, but an invitation to
treat. （案例：超市货架上的商品是要约邀请）
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What Is not an offer
 Examples of invitations to treat:
• Auction: When the auctioneer拍卖师asks for bids that constitutes an invitation to
treat. When a bid is made that is deemed to be an offer
• Invitation for tenders(邀标---站消费者角度)
 A tender(投标) is an offer to supply specified goods or services at a stated cost or
rate. The effect of an invitation to tender depends on the wording used:
‣ If the invitation states that the purchaser will require the successful supplier to supply
them, usually for a large one-off supply, then acceptance of the tender by the
purchaser will form a binding contract (投标方发出offer)
‣ If the invitation states that the purchaser may require the successful supplier to supply
them, then acceptance by the purchaser of the supplier's offer creates a standing offer
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What Is not an offer
 Examples of invitations to treat:
• Standing offers(长期要约)
 A standing offer means that, under the tender, the purchaser does not have to buy
any goods from the supplier, but also may not purchase goods from another
supplier.
 Any purchase orders that the purchaser makes are separate acceptances that form
separate contracts, and delivery must be made within the time stated in the
standing offer.
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Termination of an offer
 Once an offer has been terminated, it cannot be accepted. An offer can be terminated by:
• Rejection
• Revocation by the offeror
• Counter-offer
• Failure of a condition to which the offer was subject
• Lapse of time
• Death of one of the parties
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Termination of an offer
 Rejection: Rejection by the offeree may be outright完全地
 Revocation撤回: Revocation by the offeror can be made at any time before acceptance,
even if the offeror has agreed to keep the offer open.
• The revocation must be communicated to the offeree (案例: 撤回要约的通知，在
送达受要约人时生效)
• The revocation can be communicated by the offeror or a reliable third party (举例：
offeree 已从 offeror 的弟弟处得知房产卖出，则视作撤回要约)
 Counter-offer: A counter-offer is an offer to terminates the original offer
• 反要约‐讨价还价，改变条款 (案例：买农场，600对方不同意，要求修改价格
900（反要约))
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Termination of an offer
 Failure of a condition: An offer may be conditional in that it is dependent on some
event occurring or there being a change of circumstances. If the condition is not
satisfied, the offer is not capable of acceptance
 Lapse of time(时间流逝): An offer may be expressed to last for a specified time. If,
however, there is no express time limit set, it expires after a reasonable time
 Termination by death: 一般情况死亡视为终止, 除非offer in ignorance of the death, and
the offer is not of a personal nature (无需当事人来执行) (案例：虽然offeror死亡，但可以由
遗产继承人可以用遗产来履行）
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2.1.3 Rules governing acceptance
Acceptance
 Acceptance is the unqualified and unconditional assent to all the terms of the offer. It
can be oral, written or by conduct
• The offeror can stipulate规定 a particular mode of acceptance. However, if he merely
requests a mode, the offeree is not limited to that mode
• Acceptance is a positive act (案例：叔叔向侄子买马，侄子没有回复（沉默不是积极行
为）。因此， 叔叔不具备马的所有权，起诉败诉)
• This is the point of no return: After acceptance, the offer cannot withdraw their offer
• Accepted subject to contract (按正式合同为准) is not valid acceptance
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特殊的Acceptance
 Silence as acceptance (implied acceptance):
• General rule is that silence by an offeree does not constitute as an acceptance of an
offer even if the offer states that offeree's silence is acceptance.
 bilateral contract双边合同: two way communication is necessary because the
acceptance is in the form of a promise
• Exception rule:
 Unilateral contract: two way communication is not necessary because
performance of an act is called for呼吁。一般不需要专门沟通，除非offeror专
门要求
 Letters of intent 意向信 are an indication by one party to another that they may place
a contract with them (not to create any legal obligation)
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Rules of acceptance
 As a general rule, acceptance is not effective until it is communicated to the offeror.
• If a fax, telex or telephone message is received during normal business hours, that is when
it is communicated even though it might not be read until later.
• If a fax, telex or telephone message is received outside normal business hours, it is deemed
to be communicated when the business next opens.
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Rules of acceptance
 The postal rule states that acceptance is complete as soon as the letter is posted.如双方
同意以邮递方式作acceptance，则在信件付邮, 盖邮戳那一刻，受约已经完成，即
使邮件受延误、毁坏、或遗失致令要约人收不到。（它只适合于acceptance，不
适合于撤回要约，撤回要看具体有没有通知到对方）
 The postal rule not applies if:
• (a) 受约信件没有正确的投寄，如只将信件交与邮差；
• (b) 邮件错寄给另一个人；
• (c) 要约条款明确否定用邮递方式；
• (d) 不合理使用邮件，譬如投寄在邮差罢工前夕
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2.1.4 Consideration and the exceptions
Consideration
 Consideration is what each party brings to the contract (e.g. one party provides goods
and the other provides payment for them, 甚至痛苦, 喜悦等都可以是对价)
 Every simple contract must be supported by consideration from each party. However,
contracts made by deed (specialty contracts) do not require consideration
 对价存在的意义：有对价才能强制实施，无对价不能强制实施
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Consideration
 Types of valid consideration:
• Executory consideration待履行的对价is given where there is an exchange of
promises to do something in the future
 For example, when a person agrees to pay for some goods 'cash on delivery'.
Both the payment and the delivery are 'executory', i.e. to be completed at a later
date
• Executed consideration已履行的对价means that the consideration is in the form of
an act carried out at the time the contract is made.
 For example, handing over 60p and receiving a newspaper. Both the payment and
the handing over of the paper are executed at the time of the contract.
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Consideration
 Addition rules for valid consideration
• Performance must be legal. The courts will not enforce payment for illegal acts
• Performance must be possible.
• Consideration must pass from the promisee (接受承诺的人)
• Consideration must be sufficient but not necessarily adequate
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2.1.5 Adequacy and Sufficiency of consideration
Consideration
 The long-established rule is that consideration need not be adequate but it must be
sufficient.对价需要具有价值，但法庭不会审视它是否合适
• Consideration need not be adequate: There is no remedy at law for someone who
simply makes a poor bargain (1元租一个房子一个月)
• Sufficient means that
 it has some identifiable value
 it must be capable in law of being regarded as consideration
• 一便士+3个糖果纸换一个唱片。一便士有价值但是不对等，所以sufficient but
not adequate。
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Consideration
 Invalid consideration may:
• Past consideration
• Performance of an existing duty
• Illegal acts
• The part-payment problems
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Consideration
 Past consideration is insufficient and therefore is not valid
• Consideration is past if the consideration is an act which has been wholly performed before the other
party gives his promise
•
对价一定是协议达成以后才形成。如果对价是达成协议前已经给了，这个对价表示已经过去
的对价，是无效的
•
案例：某妇人与其他家庭成员共同拥有一间屋子。她替该屋作了一些维修工作。后来其中某
位家庭成员签署了一份文件，承诺对她的施工给予酬劳，后来没有给。法庭裁决认为她的对
价是过去的，对价无效
 偶尔情况past consideration会有效：
• When a request is made for a service ，即因人之请。 案例：老板要求员工加班，未承诺给任何
对价，次日允诺支付加班费，最后老板以 past consideration 为由拒绝支付，此案败诉
• Past consideration is sufficient to create liability on a bill of exchange. 票据是对过去债务允诺付款，
所以过去的对价仍然有效。
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Consideration
 Performance of an existing duty
• Performance of an existing statutory duty is not sufficient consideration. (例如: 出
庭所有报酬，出庭是义务不是对价)
• Performance of an existing contractual duty is not consideration (例如: 让船员正常
把船开回岸边，雇主给予额外报酬，开回岸边不是对价而是现有的劳动义务)
 There are some exceptions:
• More than perform an existing contractual duty (例如：加班)
• Confers some additional benefit
• Performance of existing contractual duty to a third party (承诺来自第三方，譬如
A答应嫁给B了，B的舅舅承诺给钱)
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Consideration
 The part-payment problem
• General rule – the payment of a smaller sum does not discharge a debt.部份还债
（债主同意）并不能阻止债主日后追讨
 There are four exceptions to the general rule :
• Pay the debt early 同意于欠款到期日前支付可以少付一部分
• Pay by goods instead of cash 以物抵债（例如：一半还款，一半实物）
• Pay at a different location 在不同地方支付（例如：美国欠债，英国还部分债，
债权人先放弃后追索）
• Payment is made by a third party（例如：女儿欠债，爸爸还部分款项）
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Consideration
 Special case of part-payment: The doctrine of promissory estoppel允诺后不得否认的
原则is based on the principles of fairness and justice.
• It prevents a person denying his promise, if defendant cannot be restored to their
original position. 被告无法回到原来状态则不能毁约
 The doctrine has a number of limitations:
• It is a shield not a sword, i.e. it is a defence not a cause of action (不能用此原则去
诉讼别人，只能被人诉讼时适用)
• Promise of waiver which is entirely voluntary 放弃的承诺完全时自愿的 （例如：
当初自愿同意降价）
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2.1.6 Doctrine of privity and its application in Malaysia
Privity of contract合同相对性
 Privity of contract:
• Only the parties to a contract acquire rights and obligations under it and can sue and be sued on it
 Common Law exceptions：
•
•
•
•
•
以另一种资质起诉(another capacity) 案例：叔叔遗嘱要求侄子每年给婶婶一定金额年金，叔叔
去世后侄子不支付。婶婶以自己名义起诉侄子被法院驳回，后用“遗产执行人”起诉成功。
附属合同存在 collateral contract exists 案例：原告 A 使用被告 B 的油漆，油漆非常糟糕，但双
方无直接合同。A 和 C 签合同中约定使用 B 的产品，B也告知他们的油漆时合适A的，这相当
于 A 和 B 存在附属合同。A 可以起诉 B。
合同被有效转让给第三方: Benefit from a contract can be re-assigned from the original beneficiary
to a third party
Implied trusts: 合同中明确建立了受托人关系，受托人可以进行起诉
Agency 代理合同关系的存在: A 卖方‐B 代理人‐C 买方。A 可以介入 BC 的合约
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Privity of contract合同相对性
 Statutory exceptions: Contracts (Rights of Third Parties) Act 1999
• There is a two-limbed test for third party has a right to enforce a contract term
 Whether the contract itself expressly so provides明文规定：The third party must
be expressly identified in the contract by name, class or description, 但第三方
need not be in existence when the contract is made-例如未出生的孩子可以是受
益人
 Whether the term confers a benefit on the third party
• The Act does not confer third-party rights in relation to a company's constitution公
司章程, or employment contracts
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2.1.7 Intention to create legal relations and the relevant presumptions
Intention to create legal relations
 In order to create a contract, both parties must intend to enter into a legal relationship
• Domestic or social agreement: It is presumed that there is no intention to be legally bound, unless it
can be shown otherwise.
 譬如夫妻之间普通承诺不认为具有法律效用，但如果离婚了或者分居了则其承诺一般具有
法律效用，或者夫妻之间有具体的正式财务合约
 所有朋友间的约定是没有合同意图的。Other friendly agreements –no intention。除非
‘Mutuality of Intention’ (案例：房东及其孙女与房客之间达成协议，共同出资参加比赛，
共同分享奖金，但法院却判定当事人之间存在合同关系)
• Commercial agreement: It is presumed that there is an intention to be legally bound, only be rebutted
by clear evidence to the contrary (譬如说明binding in honour only)
• Letter of comfort安慰函: Letter of comfort is used to assure a contracting party that a parent
company will provide its subsidiary with the necessary resources to fulfill the contract. However,
legally a letter of comfort does not require the parent company to fulfill the obligations 母公司和子
公司的合同方没有关系
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2.1.8 Capacity to contract and the effect of such contracts
Capacity
 Capacity
• 1) Minors 未成年人签订的合同有 3 种情况:
 Valid 有效的：跟年龄相仿的
 Voidable 被撤销的：引文误解的，父母行事撤销权
 Void 无效的：大多数都是无效的
• 2) Persons who either lack mental capacity or are intoxicated 精神失常，醉酒的
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The electronic contract
 For electronic contract, the contract are often electronic, digitally signed, accepted by
email and consideration is often provided by credit card:
• Websites should be constructed as shop windows, that is, invitations to treat rather
than offers. Seller is then free to accept or reject
• Terms and conditions governing electronic transactions should be made explicit and
clear
• The seller should make sure that any web pages do not contravene local laws
• Sellers can continue to use disclaimers of liability, clearly displayed on the website,
subject to the usual consumer protection laws on unfair terms
• A time limit should be set for all offers made on the website
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05
06
Content of contracts
Breach of contract and remedies
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Framework-Guide your mind
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2.2.2 Contractual terms and their effect
Contractual terms
 Statement
• A statement, written or oral, made during the negotiations leading to a contract, may
be a term of the contract or merely a representation inducing the contract
 Different remedies for:
• term is broken-Breach of contract (情节严重)
• representation turns out to be untrue-Misrepresentation (情节较轻)
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Contractual terms
 Representations 陈述 is something that is said by the offeror in order to induce the
offeree to enter into the contract. It does not become a term of the contract.
• The court will consider when the representation was made, to assess whether it was
designed as a contract term or merely as an incidental statement.
• The court will also look at the importance the recipient of the information attached
to it.
• If the statement is made by a person with special knowledge it is more likely to be
treated as a contract term.
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Contractual terms
 Terms can be express terms (明示条款) and implied terms(暗示条款)
• An express term is a term expressly agreed by the parties to a contract to be a term of that
contract. In examining a contract, the courts will look first at the terms expressly agreed by
the parties
• Implied term is a term deemed to form part of a contract even though not expressly
mentioned
 Terms implied by custom (例如：农民租地，地主承租期间要求收回土地，合同没有涉及附
着在土地上的秧苗和劳动力的赔偿。当地习俗是地主提前收回土地，应该赔偿农作物和劳
动力。 法官认可当地习惯)
 Terms implied by statute (例如：卖方有权卖，买方就有不受争议的所有权)
 Terms implied by the courts (例如：码头方应有合理谨慎之义务保证码头旁的河床达到足够
使得船舶安全停靠的程度)
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Contractual terms
 Contract terms may be further categorised as conditions or warranties
• Conditions: A condition is a vital term, going to the root of the contract, breach of which
entitles the injured party to decide to treat the contract as discharged and to claim
damages. (如果一方违反, 另外一方可以拒绝履行其义务)
• Warranties: A warranty is a term subsidiary to the main purpose of the contract, breach of
which only entitles the injured party to claim damage (不能废弃合同)
• Innominate 无名的 terms: An innominate or indeterminate term is neither a condition nor
a warranty. The remedy depends on the effects of the breach:
 if trivial琐碎的-damages only i.e. term is treated as if it were a warranty .
 if serious- damages, discharge or both i.e. term is treated as if it were a condition
 一旦违反conditions和warranties，在合同形成的时候就知道该如何救济； Innominate 违
反是事后才知道如何救济
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2.2.3 Exclusion clauses, their nature, effect and control
Exclusion clauses
 An exclusion clause (or exemption clause) is a term that seeks to exclude or limit a
party's liability for breach of contract.
 免责条款生效需要 pass 3 tests:
• clause correctly incorporated into the contract 条款正确写入合同中
• clause properly constructed, in such a way that it is worded clearly 条款用文字非常
清晰的表明违反合同的责任
• clause is reasonable per statute 该条款遵从成文法
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Exclusion clauses –Common law test
 1) Incorporation 进入合同的条款
• By signature – 一旦文件签署，合同双方受约束，不管他们是否认真阅读条
款。 案例： 自动售卖机采购合同里写明“不保修”，买主签署时未仔细看到
这条条款，但该免责一经签字，已经进入合同，条款生效。
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Exclusion clauses –Common law test
 1) Incorporation 进入合同的条款
• By notice – 免责条款是合同一部分，应该合同拟定时清楚通知，告知或者提示：
 Notice boards 提示板 案例：房内有“贵重物品妥善保管，如有遗失概不负责” ，夫妻在房
内遭窃，起诉宾馆，胜诉。因为前台办手续为签订合同时间点，当时没有提示板；待入住房
间后的提示板并不是合同的一部分，无法免责。（如果提示板在前台柜面，或者房卡背面，
或者服务生明确提示，则内容可以生效。）
 Tickets and receipts 票据和收据。如果是初次做生意或从不知道票据背后有免责条款，该免
责条款不进入合同；但如果明知背后有免责条款或之前做过生意，则免责条款有效，进入合
同。 案例： 原告买 2 手家具，摔跤受伤，告 2 手家具店。采购收据背后有免责条款。因为
此人第一次买，合同没有写明，虽然收据背面有免责条款，但条款不生效
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Exclusion clauses –Common law test
 1) Incorporation 进入合同的条款
• By notice：
 Any verbal assurances given will overwrite a written clause。口头免责范围<书面范围，以口头
为准。 案例：婚纱洗衣房把衣服弄脏，员工收衣服时只说了部分免责条款，虽然合同写明
了全部免责条款，但因为员工有口头免责担保，所以以口头叙述为准。书面合同的免责条款
部分失效
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Exclusion clauses –Common law test
 1) Incorporation 进入合同的条款
• By custom： if it can be proved that through the ordinary course of dealings both parties were aware
of the clause 如果在平时交易过程中，双方当事人都知道免责条款存在，免责条款仍然生效。
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Exclusion clauses –Common law test
 2) Proper Construction 合理的构建
• 任何写入合同条款必须清晰和精确，任何 ambiguous clause 含混不清的条款（有歧义）遵从
Contra Proferentum rule “不利解释规则”。谁拟定条款，不利解释归谁。案例：汽车在修理厂的
火灾中损坏，火灾由员工过失引起。修理厂免责条款有火灾免责，但汽车主解释他认为仅仅指
天灾免责，现在人祸的火灾应该不属于免责条款。因为合同是修理厂拟定，根据“不利解释规
则”，火灾范围未解释清楚，免责条款无效。汽车主胜诉
• 任何条款的解释如果 defeat the fundamental purpose 有悖于签订合同的根本目的，也会失效. 案
例：胶片公司告安保公司。双方合同目的就是保护工厂的安全。保安火柴取暖，造成火灾。虽
然合同有非常明确的条款：不管因为什么原因导致的火灾，安保公司概不负责。该免责条款和
请保安公司的根本目的有背离，所以无效。 胶片公司胜诉。
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Exclusion clauses –Statutory rules
 UCTA77 （Unfair Contract Term Act 1977）Generally, only applies to business-to-business contracts
(insurance contracts and transfer land are beyond its scope 保险合同和土地转让不在此范围内)
 Any attempt to exclude liability for death or personal injury caused by negligence will fail.只要是疏忽
引起的人员伤亡和伤害，免责条款无效。 案例：停车场门口霓虹灯“人财受伤，概不负责”，
但因为停车场机器故障，人和车都有损。 该案中，停车场机器故障，属于疏忽，所以免责条款
无效。
 Any terms attempt to exclude the title provisions of the SOGA 79 (Sale of Goods Act 1979) will fail 免
除货物买卖法中关于产品一般所有权的条款，视为无效。
 法院认定的 overriding consideration 举例：合同里有免责条款：因本合同造成的任何损失，赔偿
限额 10 万英镑。现软件失误导致税务算错，地方财政所得大额减少。法院知道被告公司有保险
保额 5000 万英镑，所以判决由保险公司赔付 5000 万英镑优于增加地方税务
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Exclusion clauses –Statutory rules
 The Consumer Rights Act 2015 provides protection for consumers in contracts with businesses.
• Act firstly considers whether it can be deemed automatically unenforceable. For example, a consumer
contract or notice, cannot limit liability for death or personal injury resulting from negligence.
• If the clause is not deemed automatically unenforceable then the Act provides guidance as to whether or
not it is fair.
 Only be binding on the consumer if contracts are ‘fair’.
 Where a contractual term is open to different meanings, the meaning given to it will be the one
which is most favourable to the consumer
 Unfair terms do not invalidate the whole contract
 Consumer Rights Act may apply to business if it is acting as a consumer
 Two types of term are exempt from the rule on fairness. These are price and subject matter of the
contract (合同的标的事项). However, these terms must be sufficiently transparent and prominent
in the contract
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Framework-Guide your mind
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2.3.1 Ways in which a contract may be discharged
Discharge of contract
 A contract can be brought to an end in several ways:
• By agreement: both parties agree to end the agreement and it is supported by
consideration. 双方协定解除合同，但有相应对价的支持。
• By Performance: This is the way in which most contracts are discharged: both parties
perform their obligations under the contract.
 Substantial performance 实质的履行（举例：房屋装修基本完工，存在一些瑕
疵，房主不能拒绝支付合同价格因为这些瑕疵，而施工队只要赔偿部分瑕疵
的对应价格）
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Discharge of contract
 A contract can be brought to an end in several ways:
• By frustration 因合同受挫而终 (如果合同受挫一般不予赔偿)，以下几种情况：
 1) Change of law 法律变化
 2) Impossibility of performance of obligations due to destruction of subject matter 由于标的物的
毁损，而使履行义务变得不可能。 案例: 被告的音乐厅租给原告举办演唱会，但音乐厅于演
唱会前几天烧毁。合同标的是音乐厅，现在天灾损毁，所以合同自动解除。
 3) Contract for providing personal services 合同是提供个人服务：个人出状况，合同无法履行
 4) Fundamental and radical change or circumstances 基本和实质情况发生变化。举例：建水库
的供应商因为其他事件而被取消了资质，虽然现在建到一半，只能终止原合同找其他人来建
造。
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Discharge of contract
 A contract can be brought to an end in several ways:
• By breach of contract: Where one party fails to meet its contractual obligations
without lawful excuse. Lawful excuse:
 Performance is impossible
 They have tendered performance but this has been rejected
 The contract has been discharged through frustration
 The parties have by agreement permitted non-performance
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2.3.2 Meaning and effect of breach of contract
Breach of contract
 Types of breach
• Straightforward breach 直接违约 (Repudiatory breach 废弃性的违约) 当一方用
文字或行为表示不再遵守合同义务。时间节点at the time of performance
 Refusal to perform (renunciation) 拒绝履行，申明放弃
 Failure to perform an entire obligation 完整合同义务没有达成
 Incapacitation丧失能力 举例：A 本对 B 有承诺卖货，后来 A 卖给 C，则同时，A 对 B 丧失
执行合同 能力
 Breach of condition （a fundamental term of the contract）
 Breach of an innominate term (重要的无名条款)
 Injured party can either accept the repudiation or affirm the contract and claim damage
(It does not automatically discharge the contract)
• A decision has to be made, clearly communicated ，但不必personally notify
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Breach of contract
 Types of breach
• Anticipatory breach 预期性的违约 Before the due date for performance 在履行合
同期限到期前，一方当事人不想履行。
 Injured party can sue immediately 立即起诉 举例：船公司 A 帮货公司 B 运货，船公司在码头
等了 2 月为了等 B 公司货，然后运货，期中 B 公司需要终止合同。A 公司立即起诉，要求
B 公司履行合同。
 Injured party can sue afterwards for the full amount due from the party in breach 继续履行，事后
要求支付合同款。举例：A 公司要广告公司 B 公司在垃圾桶做广告。A 公司要求终止合同，
B 公司依然履行义务。履行后，B 公司要求 A 公司付款，法院判定 A 公司付款。
 拒绝接受悔约并非毫无风险，因为合约仍然有效，但合约可能因某种原因而受挫，无辜的一方可
能丧失起诉权利。案例：被告应允在45天内载货。但在这45天内，被告不断向原告说：我不可能
有货卸载。但原告仍将船停留在港内，盼望被告会有货卸载。在45天完结前，英国与俄国爆发克
里米亚战争，合约因而受挫，丧失起诉权
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2.3.3 Rules relating to the award of damages
Damages
 Damages are a common law remedy.
• Damages are intended to be compensatory not punitive
• The aim is to put the innocent party in the position they would have been in had the
breach not occurred
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Damages
 Where a contract provides for the payment of a fixed sum on breach, it may either be a
liquidated damages clause or a penalty clause.
• Liquidated damages clause (明确的清算赔偿金条款) are a genuine pre-estimate of
the expected loss. The amount stated is the amount of damages claimable. The clause
is enforceable by the court.
• A penalty clause (惩罚性条款) threatens large damages for breach. The amount is
often very large in relation to the expected loss. It is unenforceable.
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Damages
 Where the contract does not make any provision for damages, the court will determine
the damages payable. These are known as unliquidated damages (不明确的清算赔偿金)
• Remoteness of damages 损失的遥远性: 受害人不可以讨回蒙受的所有损失，因为
法庭会裁定某些损失因太遥远而被告人无须负担。可赔偿的损失需要满足：
 First rule: The loss must arise naturally from the breach由于毁约正常营运产生的
损失，or
 Second rule: The loss must arise in a manner which the parties may reasonably be
supposed to have contemplated 双方对于这个损失是事先考虑过的。 举例：洗
衣房获得了国防部订单，洗衣房因为大锅炉晚到丢失了订单。因为锅炉制造
商不知道大订单，也不知道预期利润。所以锅炉制造商不用赔预期利润, 但
需要赔付正常的经营性损失。如事先告知订单的预期利润，则对方需要赔付
预期利润。
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Damages
 Unliquidated damages: 损害赔偿的计算原则：
• Expectation interest (Doctrine of Restitution恢复原状原则): put the claimant in the
position they would have achieved if the contract had been performed
• Reliance interest: put the claimant in the position they would have been in had they
not relied on the contract
 案例：影视公司告男演员违约，要求赔付已经发生的量身定做的费用 854 英
镑和进剧组之前的 1896 英镑。影视公司说，如果你不进剧组，那么之前的
费用自然而然也不存在。法院支持。
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Damages
 Unliquidated damages 可能发生的情况：
• If there is no actual loss, the claimant can recover only nominal damages (例如一元)
• The claimant must take reasonable steps to mitigate (i.e. reduce) their loss.被损害方
必须采取合理步骤以减轻损失。如果不采取，那损失过大，是得不到赔偿的
• If goods are not delivered, the buyer may seek similar replacements and sue
for the difference in cost 可要求违约方赔付差价
• Action for the price: If the breach of contract arises out of one party’s failure to pay
the contractually agreed price, then the creditor should bring an action to recover that
sum. 交付货物后，买方违约拒绝支付，应该要求买方支付已给货物的货款
• Quantum meruit (what one has earned) 合理报酬: 违反合同受损害的一方，要求
对方支付合理报酬。他们提供了多少价值，那么就应该得到多少报酬。 It is a
restitutory award
• Non‐financial losses may be claimed where the contract is one for the provision of
enjoyment. 案例:豪宅游泳池不符合装修计划，但符合安全标准。恢复成装修计
划的泳池，成本 18000 过高，法院判 2500 精神损害，泳池维持原状。
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2.3.4 Equitable remedies for breach of contract
Equitable remedies
 Equitable remedies (衡平法中的救济) :
• Specific performance 依约履行: is a court order for a party to perform an obligation
(一般是出让土地，股票和债券). It enforces positive covenants within the contract
(应该要做的事情)。以下情况法庭不会给出“依约履行”
 where the courts cannot supervise enforcement 当法院不能强制监督
 where courts of employment or personal service and any other contracts require
performance over a period of time
 where minors are involved 涉及到未成年人
• Injunction 禁令: It enforces negative covenants within the contract (不应该做的事情)
• Rescission 废除合同: Restores the parties to their exact pre-contractual position.让当
事人回到合同签订前的状态。
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Equitable remedies
 Equitable remedies are only available at the discretion of the court法院的自由裁量权.
They are not granted if:
• damages are an adequate remedy
• the claimant has acted unfairly
• the order would cause undue hardship过度重负
• the order would require the constant supervision of the court
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07
2.4
The law of torts and professional negligence
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Framework-Guide your mind
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2.4.1 Meaning of tort
Explain the meaning of tort
 A tort is a type of civil wrong. It is a breach of a legal duty or an infringement of a legal
right which gives rise to a claim for damages.侵权是对他人的不当行为，引起民事
诉讼
 In order to be successful in an action for tort, the following conditions must be satisfied:
• There must be an act or omission by the defendant.
• The act or omission must have directly caused loss to the claimant (not too remote)
• The courts must be able to establish a legal liability
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Explain the meaning of tort
 Differences between breach of contracts and torts
• Under a valid contract, the amount of damages awarded is intended to put the
claimant back in the position that contract been properly performed.
• In tort, the amount of damages awarded is intended to put the claimant in the
position he would have been in had the tortious act never taken place
 In torts, A contractual relationship does not have to be established, and often the
parties have never even met before
 If a contract does exist and a tort has been committed
• Limitation periods:
 In contract the limitation period is six years from the breach of contract
 In tort limitation period the is generally six years, but three years for personal
injury
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Tort of 'passing off'
 Types of torts: Passing off and negligence
 The tort of passing off arises (包括name and logo):
• where one business uses a name which is similar to that of an existing business, and
• it misleads persons into believing that they are the same business (sufficient chance
of public confusion), and
• it causes actual damage to that business or will probably do so
 To claim passing off protects the goodwill, reputation and profits of a business
• 案例：夜总会诉薯片公司商标类似，法院不支持，不同类。
• 案例：HFC 告 HSBC 过于相近，法院不支持，因为名字明显差异。
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Tort of 'passing off'
 Remedy is a successful claim under the tort of passing off
• An injunction(禁令) ordering the defendant to stop the conduct
• An order to change the misleading name
• Damages to cover the claimant’ s losses
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2.4.3 Tort of negligence duty of care and its breach
Tort of negligence
 Negligence is the breach of a legal duty to take care, which results in damage to another.
违反法定注意的职责，使别人遭受损失。(例如：汽车在斑马线上撞到人)
 In order for an action in negligence to succeed, the claimant must prove the following:
• That a duty of care注意义务was owed to him by the defendant被告有注意的责任
• The defendant breached that duty 违反了注意义务
• As a consequence of that breach, damage or loss has been suffered and
the losses were not too remote 发生损失或者伤害，并且被告的责任是直接的
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Tort of negligence
 Duty of care: There is a duty to take reasonable care not to cause foreseeable harm to
others. Four tests were laid down to determine whether a duty of care exists
• Was the damage reasonably foreseeable by the defendant at the time of the act or
omission?损害是否合理预见？
• Is there a neighborhoods principle or sufficient proximity (closeness) between the
parties?
• Should the law impose a duty of care between the parties i.e. is it fair and reasonable
to do so?强加责任是否公平正义合理？
• Is there a matter of public policy which exists or requires that no duty of care should
exist?
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Tort of negligence
 Breach of duty of care
• In order for a claim to be successful, a claimant must not only prove that a duty of care existed, but
also that the duty was breached by the defendant.
• Standard of care (法官是需要评估的)：
 Probability of injury/vulnerability of claimant (根据原告的受伤的几率) 案例：原告在板球场
旁边走过，板球场内的运动员恰好把球击中原告。板球场的篮网设置 17 英尺，设置是合
理的，法院判定板球场无责
 Particular skill (根据被告的特殊技能，ACCAer比一般的出纳更加要care)
 Seriousness of the risk (根据风险的严重性，风险越严重越要care)
 Cost and practicability (根据成本和可行性)
 Common practice (根据通常做法：如果能证明大家通常是这么做的，也算是满足了注意义
务)
 Social benefit (救火车去救火，闯红灯危害其他车辆) 如果能证明行为对社会有利，被告仍
然受保护免责.
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Tort of negligence
 Causality因果关系
• A claimant must demonstrate that he has suffered loss or damage as a direct
consequence of the breach
• But for test要不是…就…测试：but for the actions of the defendant the claimant
would not have suffered the damage
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Tort of negligence
 Rule of causality
• The court will not allow recovery of that loss if it is considered to be too remote
 ‘reasonably foreseeable’的判断 案例：大量燃油从油轮漏入悉尼海港，一边在焊接，火星飘
到油面，于是码头着火。但这个行为是无法合理预见火灾的，所以不构成侵权
 The ‘thin skull principle‘/ ‘egg shell skull’蛋壳脑袋规则。如果伤害的种类可预见，但由于
受害人一些早已存在的特殊情况，伤害严重性因而不能预知，被告人仍须负责全部损失。
案例：由于雇主的疏忽，一些溶化的金属泼在受害人的嘴唇上，使之烧伤。灼伤引致的癌
夺去受害人的生命。在意外发生时，受害人已有恶性肿瘤，肿瘤遇到外来因素而急速恶化。
虽然因癌致死的后果不可测，雇主仍要为他的疏忽负全部责任。
• If the claimant would have suffered the loss regardless of the defendant‘s conduct
then he has not caused the loss and the defendant is not liable for the actions
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Tort of negligence
 Rule of causality
• Novus actus interveniens新行为的介入: Where there is a new intervening act this
may break the chain of causation removing liability from the defendant
 Act of the claimant: If the claimant's actions are unreasonable in the circumstances the
chain of causation is broken and the defendant is not liable for the actions of the claimant
 Act of a third party: If the act of the third party is not foreseeable this will break the
chain of causation and the defendant is not liable for the actions
 Something happened after the defendant's breach that caused or contributed to the
damage then the defendant's liability will cease at that point
 Natural events (Only unforeseeble natural events): An intervening natural event will
normally break the chain of causation unless it can be shown that the defendant's breach
has increased the likelihood of further damage
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Tort of negligence
 As a general rule it is for the claimant to prove that the defendant was in breach of the
duty of care
 Res ipsa loquitur事实自证原则, the thing that speaks for itself. Negligence is
established from proof of the facts
• 在缺乏充分证明的情况下让事实自己说话
• The defendant will have to prove that he was not negligent (burden of a proof
should be revised) (过失推定). This will only occur if claimant demonstrate
following:
 The thing which caused the injury was under the management and control of the
defendant.
 The accident was such that it would not occur if those in control used proper care.
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2.4.6 Concept of professional negligence
Special: Professional advice and negligent misstatement
 Professional individuals and organisations have a special relationship with their clients
and those who rely on their work. This is because they act in an expert capacity
• A special relationship exists where a professional person advises a known person
who relies on the statement for a known purpose
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Special: Professional advice and negligent misstatement
 A party can suffer damage by reliance on incorrect advice. To claim negligent
misstatement, Claimants need to prove:
• The accounts had been prepared negligently
• They had relied on those accounts
• They would not have invested had they been aware of the company's true position.
• Defendants owed a duty of care to persons whom they could reasonably foresee
would rely on the accounts (a special relationship exists)
 Negligent misstatements can cause pure financial loss
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Special: Professional advice and negligent misstatement
 Lord Justice Neill set out the matters to be taken into account for duty of care
• The purpose for which the statement was made
• The purpose for which the statement was communicated
• The relationship between the maker of the statement, the recipient and any third
party
• The size of any class to which the recipient belonged
• The state of knowledge of the maker
• Any reliance by the recipient
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2.4.7 Duty of care of accountants and auditors
Special: Professional advice and negligent misstatement
 The Caparo case
• (a) Preparing information in the knowledge that a particular person was
contemplating思考 a transaction and would rely on the information in deciding
whether or not to proceed with the transaction (the 'special relationship').
• (b) Preparing a statement for general circulation, which could forseeably be relied
upon by persons unknown to the professional for a variety of different purposes.
 Impact of Caparo on auditor liability
• Public company's auditors owe no general duty of care to the public at large
• Auditors do, however, owe a duty of care to their client (company itself)
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Special: Professional advice and negligent misstatement
 Further developments since Caparo case
• Advisory roles: The duty of care of accountants is to be held to be higher when
advising on takeovers than when auditing
• Statements made about auditor's reports: The court decided that an auditor was liable
to a potential buyer of a company for statements made concerning an auditor's report
that the firm produced.
• Parent and subsidiary companies: A duty of care is owed by the auditor of a
subsidiary company to the parent company. However, no duty of care is owed to the
subsidiary company by the auditor of the parent company
• Regulatory bodies: solicitor's client accounts owed a duty to the solicitor's regulator
as well as to the solicitor
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Special: Professional advice and negligent misstatement
 Further developments since Caparo case
• Third parties: can be owed a duty of care where auditors know their identity, the use
to which the information would be put and that the third party intends to rely on it.
• Disclaimers: it is not unreasonable for auditors to include a disclaimer stating that
they do not accept responsibility to anyone other than the addressees of the audit
report.
• Limited Liability Partnerships (LLPs): financial consequences of negligent actions
as their liability to third parties (previously unlimited) can now be limited.
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2.4.5 Defences to an action in negligence
Remedies and defences in negligence
 The main remedy against negligence loss is compensation in damages.
 Main defences to a charge of negligence:
• Contributory negligence共同过失
 If the claimant is partly responsible for his own injuries, the defendant can plead the defence of
contributory negligence. The court may then reduce any damages it awards to the claimant
depending on the degree to which he is judged responsible for his loss (partial defence)
 The onus责任 is on the defendant to show the claimant was at fault and therefore contributed to
their own injury.
• Volenti non fit injuria自愿承担风险
 This applies where the claimant has freely consented to the tort. It amounts to an agreement by the
claimant to exempt the defendant from a duty of care. Consent can be given expressly where the
claimant agrees to the risk of injury e.g. by signing a consent form, or may be implied from the
claimant's conduct
 Consent acts as a complete defence and no damages would be awarded if it is shown to apply
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Remedies and defences in negligence
 Main defences to a charge of negligence:
• Exclusion clauses
 An exclusion clause is one which seeks to exclude or limit liability for negligence. An exclusion
clause may fall within the provisions of the Unfair Contract Terms Act 1977
• Act of God (something beyond human foresight)
• vicarious liability取代责任，员工责任由雇主承担
 案例： 公交车司机超车过程中，把行人撞到，司机 是工作时间工作路线工
作职责，责任由雇主承担。
 案例： 公交车司机绕道接朋友，偏离工作路线上撞到人，在非职务范围内，
责任由自己承担。
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08
Contract of employment
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Framework-Guide your mind
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Employed versus self-employed
 There are two types of working relationship:
• Employed: works under a contract of service 劳务合同
• Self-employed: works under a contract for services 为了某服务所签的合同
 A number of tests can be used to determine if someone is employed or self-employed
• The control test- employees are subject to control by their employer as to how, where and when they
do their work. 如何操作和具体做什么完全由雇主决定，受控于雇主，属于雇员
• The integration test - someone is regarded as an employee if their work is an integral part of the
business and not merely an accessory to it. The courts consider whether the employee is so skilled
that they cannot be controlled in the performance of their duties
• The economic reality test (or multiple test) - under this test the court takes all the surrounding
factors into account. 例如: Wearing of uniforms 是否穿着制服？ Provision of tools 工具是谁提
供？ Holiday/sick pay entitlements 是否有福利？ Free to provide a substitute 自由找人代替，
Can delegate all their obligations, and whether there is restriction as to place of work. Courts
consider whether the employee was working on their own account
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Employed versus self-employed
 Significance of the distinction:
Employed
Self-employed
Social security
Employees make primary Class 1
National Insurance contributions
Employers must pay secondary Class 1
National Insurance contributions for
employee
Independent contractors pay Class 2 and 4
contributions
Taxation
Deductions must be made for income tax
by an employer
The self-employed are taxed under selfassessment for income tax and are directly
responsible to HM
Employment
protection
There is legislation which confers
protection and benefits upon employees
• Minimum periods of notice
• Remedies for unfair dismissal
Employment protection is not available for
contractors
Tortious acts
Employers are generally vicariously liable Severely limited unless there is strict
for tortious acts of employees
liability
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Employed versus self-employed
 Significance of the distinction:
Employed
Self-employed
Implied terms
There are rights and duties implied by
statute for employers and employees
These implied rights and duties do not apply
to such an extent to a contract for services.
VAT
Employees do not have to register for, or
charge, VAT
An independent contractor may have to
register for, and charge, VAT
Bankruptcy
In an employer's liquidation, an employee
has preferential rights as a creditor for
payment of outstanding salary
Contractors are treated as nonpreferential
creditors if their employer is liquidated
Health and
safety
There is significant common law and
legislation governing employers' duties to
employees with regard to health and
safety
The common law provisions and much of
the legislation relating to employees also
relates to independent contractors
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Employed versus self-employed
 Continuous employment:
• Employees are only granted the right to some types of employment protection once
they have a certain period of continuous service (The basic rule is that a year is 12
consecutive calendar months)
• Some cases do not break the period of continuous service such as employee takes
part in a strike, service in the armed forces
 Transfer of undertakings
• Where the business is transferred, so that an employee works for a new employer,
this change represents no break in the continuous service of the employee
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The contract of employment
 A contract of employment will consist of:
• express terms
• terms implied by the courts
• terms implied by statute
 Express terms
• Express terms are those agreed by the parties themselves. The agreement may be
written or oral.
• The Employment Rights Act 1996 (ERA 1996) requires an employer to provide an
employee with a written statement of prescribed particulars of their employment
within two months of the commencement of employment
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The contract of employment
 Written statement include a principal statement which must include details of:
• the business's name
• the employee's name, job title or a description of work and start date
• if a previous job counts towards a period of continuous employment, the date the
period started
• how much and how often an employee will get paid
• hours of work (and if employees will have to work Sundays, nights or overtime)
• holiday entitlement (and if that includes public holidays)
• where an employee will be working and whether they might have to relocate
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The contract of employment
 Written statement must also contain information about:
• how long a temporary job is expected to last
• the end date of a fixed-term contract
• notice periods
• collective agreements
• pensions
• how to complain about a disciplinary or dismissal decision
 Any change must be notified by written statement within one month. The statement is
not a contract unless both parties agree and it is called a contract.
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The contract of employment
 Terms implied by the courts (common law)
• Duties of employee
 Duty to obey lawful and reasonable orders
 Duty of mutual co-operation (or the duty to perform the work in a reasonable
manner)
 Duty to exercise reasonable care and skill
 Duty of good faith - a duty to give honest and faithful service:
I. The employee cannot use the employer's property as his own
II. The employee may do other work in his own time. However, the law imposes
a duty not to do spare time work which competes with that of his employer
and may cause his employer damage
III.An employee must not disclose trade secrets to a third party nor misuse
confidential information he has acquired in the course of his employment
IV.An employee may always use skills he has learnt in his employment
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The contract of employment
 Terms implied by the courts (common law)
• Duties of the employee
 Duty to render personal service: Employees may not delegate the performance of their
work to someone else unless they have their employer's express or implied permission to
do so
• Duties of the employer
 Duty to pay reasonable remuneration
 Duty to Indemnify补偿 the employee against expenses and losses incurred in the course
of employment
 Duty to provide a safe system of work: Breach of this duty exposes the employer to
liability in negligence to his employees.
 Duty to give reasonable notice of termination of employment
 Duty of mutual co-operation (To exercise mutual trust and confidence)
 Provision of work: Failure to provide work would deprive the employee of a benefit
contemplated by the contract合同规定. There may be an obligation to provide a
reasonable amount of work
 There is no duty to provide a reference but, if one is provided, it must be truthful
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The contract of employment
 Terms implied by statute
• Pay and equality (涵盖了pay, sick pay, holiday pay, work time)
 National Minimum Wage Act 1998
 The Equality Act 2010 seeks to ensure equal treatment in employment and access to employment
for employees. (applied to Age, Disability, Sex等)
 Employers are obliged to provide an itemised pay statement 分项工资表
• Time off work
 Trade union officials are entitled to time off on full pay at the employer's expense
 An employee who has been given notice for redundancy may have time off to look for work
 A member of a recognised independent trade union may have time off work for trade union
activities, for example, attending a branch meeting
 Employers also have a duty to allow an employee to have reasonable time off to carry out certain
public duties, for example performing their duties as a magistrate (地方法官)
 But, There is no statutory provision entitling an employee to time off for jury service
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The contract of employment
 Terms implied by statute
• Maternity rights and the 'work/life balance‘ : A woman who is pregnant is given
substantial rights under statute
 The right to time off work for ante-natal care 出生前的照顾
 The right to ordinary maternity leave (up to 52 weeks)
 The right to maternity pay (Statutory maternity pay is paid for 39 weeks)
 The right to return to work after maternity leave
 Flexible working: Employees have the right to apply for a change in terms and conditions of
employment in respect of hours, time and place of work and not to be unreasonably refused
 If dismissed, a claim for unfair dismissal
• Health and safety: duty to their employees with regard to health and safety such as Health and Safety
at Work Act 1974, Enterprise and Regulatory Reform Act 2013
• Working time: Working Time Regulations 1998 provide broadly that a worker’s average working
time in a 17-week period shall not exceed 48 hours for each 7-day period 除非员工书面同意
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09
Dismissal and redundancy
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Framework-Guide your mind
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Rule of dismissal
 Rule of dismissal
• The period of notice given must not be less than the statutory minimum合同通知期
不得低于法定短时间
• If the contract states that notice may only be given in specific circumstances then
generally it may not be given for any other reason. 如果合同说明了，解除合同通
知在特定环境才成立，那么其他情况下不应发解雇通知。
• The employee may be entitled to compensation for unfair dismissal. 不公平解雇有
权得到补偿
• Statute imposes a minimum period of notice of termination to be given on either side.
通知期适用于雇员和雇主。
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Rule of dismissal
 Rule of dismissal
• Either party may waive their entitlement to notice or accept a sum in lieu of notice.任一方都
可以用金钱代替通知期或者放弃通知期
• The statutory rules on length of notice merely prescribe a minimum. If the contract provides
for a longer period, notice must be given in accordance with the contract.合同通知期>法定，
按合同来
• During the period of notice an employee is entitled to pay at a rate not less than the average of
their earnings over the previous 12 weeks. 补偿不少于过去 12 周的平均工资
• If the employee is dismissed in any way they may request their employer gives them a written
statement of the reasons for their dismissal and the employer must provide it within 14 days.
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Rule of dismissal
 Rule of dismissal
• If a period of notice is not expressly agreed, the ERA 1996 imposes the following
minimum notice periods
 Notice by employer：解约前最短通知期
Continuous employment （已经工作时间）
Period of notice
1 month-2 years
1 week
2-12 years
1 week per complete year
12years+
12 weeks
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Types of dismissal
 Types of dismissal
• Contract terminated by employer with or without notice
 Wrongful dismissal
 Summary dismissal
 Unfair dismissal
 Redundancy
• Fixed-term contract expired and not renewed .
• Constructive dismissal.
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Wrongful and summary dismissal
 Wrongful dismissal:
• A claim for wrongful dismissal is a common law action for breach of contract. The
claim is available to both employees and independent contractors
 Wrongful dismissal occurs where the employer terminates the contract
• Without giving proper notice or during the fixed term (在合同期被解约), or
• Lack of grounds 没有给出理由
 Summary dismissal is where the employer dismisses the employee without notice. They
may do this if the employee has committed a serious breach of contract. Summary
dismissal also can be wrongful dismissal
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Wrongful and unfair dismissal
 Remedies for wrongful dismissal:
• 不当解雇的赔偿就是通知期对应的收入损失
 Complain for wrongful dismissal
• An individual who believes he has been wrongfully dismissed may sue in the
County court or High Court for damages. The limitation period for such a claim is
six years.
• Alternatively, if he is an employee, he can bring a claim to the employment tribunal
劳动法庭 provided he does so within three months of his dismissal and the claim is
for £25,000 or less
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Constructive dismissal
 Constructive dismissal 推定解雇
• where the employer commits a breach of contract, thereby causing the employee to
resign. By implication, this is also dismissal without notice. (例如：通过降薪，改
变工作内容等逼迫员工辞职）
 If the employee does not resign in the event of the breach, he is deemed to have
accepted the breach and waived any rights. However, he need not resign immediately
and may legitimately wait until he has found another job. 辞职之后可以诉讼wrongful
dismissal or unfair dismissal
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Unfair dismissal
 Claim unfair Dismissal: This is a statutory right under the Employment Rights Act 1996.
Only employees can bring an action for unfair dismissal
 Statutory claim: Anyone employee with at least one year’s (two years for those employed
after April 2012) continuous service has the right to claim unfair dismissal
 There are some exceptions to the continuous service qualification. These are:
• Where the matter concerns a safety representative being penalised for carrying out
legitimate health and safety activities
• Where an employee is being denied a statutory right (for example an unlawful
deduction from wages)
• Where the employee is pregnant
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Unfair dismissal
 There are steps to making a claim for compensation for unfair dismissal
• The employee must apply to a tribunal within three months of dismissal
• The employee must show that they are a qualifying employee and that they have in fact been
dismissed.
• Then the employer must demonstrate:
 Employer must prove reason for dismissal
 Employer must prove that it is within one or more of five statutory fair reasons
‣
Capabilities/qualifications of employee
‣
Conduct of employee
‣
Redundancy
‣
Continued employment would contravene statute违反规约
‣
Some other substantial reason (犯罪行为等)
• The tribunal must be satisfied that the employer has acted reasonably
• If found unfair, entitlement to remedies to employee
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Unfair dismissal
 Inadmissible不能允许的 reasons for dismissal (reasons is automatically unfair)
• Victimisation迫害 of health and safety complainants or whistleblowers. A
whistleblower is a person who disclose the wrongdoing occurring in an organisation.
(for example, a violation of a law, rule, regulation and/or a direct threat to public
interest)
• Pregnancy or the exercise of maternity leave产假 rights
• Trade union activities
• Assertion of a statutory right e.g. the exercise of paternity leave rights, unlawful
deduction from wages
• Unfair selection for redundancy
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Unfair dismissal
 The tribunal has the power to award the following types of remedies:
• 1) Reinstatement–being restored to your old position 恢复到原来的位置 (优先考
虑)
• 2) Re‐engagement –re‐engaged in a different & comparable position 重新聘用，相
当的职位
• 3) Compensation – 赔偿 (法院最后考虑)
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Remedies for unfair dismissal
 Compensation
Basic award
Compensatory award
•
Discretionary award of up
to £78000+ . Based on
employee’s losses and
expense.
•
•
18-21 years of age- 0.5weeks pay
for each year of service
22-40 years of age - 1 week's pay
for each year of service
41 plus -1.5 weeks' pay for each
year of service
Maximum- 20 years’ service at
£400+ a week (这个数字根据题意)
Additional award
If the employer does not
comply with an order for
reinstatement or re-engagement,
and does not show that it was
impracticable to do so, a
Reduced if the
punitive additional award is
complainant contributed to made of between 26 and 52
his dismissal.
weeks' pay
 Under the Small Business, Enterprise and Employment Act 2015 nonpayment of an
award by the Employment Tribunal can lead to a fine between £100-£5000, payable to
the Treasury.
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Special dismissal: Redundancy
 An employee is redundant if his dismissal is wholly or mainly attributable to the fact
that:
• the employer has ceased, or intends to cease, business for the purposes for which the
employee has been employed
• the employer has ceased, or intends to cease to carry on the business in the place
where the employee was employed, or
• the employer has ceased or intends to cease to carry on the a particular kind of work
or the place where they carry out the work
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Special dismissal: Redundancy
 To make a redundancy compensation claim there are two qualification criteria that the
employee must prove:
• 1) That they were an employee 是否是雇员
• 2) Two years continuous employment have been served 连续工作 2 年以上 (产假
视为正常出勤)
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Special dismissal: Redundancy
 Redundancy consultation process
• If you fail to consult employees - and their representatives if applicable - in a
redundancy situation, the redundancy dismissals will almost certainly be unfair.
• If you plan to make 20 or more employees redundant in one place of work within a
90-day period, known as a collective redundancy situation, you must:
 Notify the Department for Business, Innovation & Skills (Business, Energy and
Industrial Strategy); and
 Consult with workplace representatives. These may be either trade union
representatives or, where no union is recognised, elected employee
representatives instead. If your employees choose not to elect employee
representatives, you must give the relevant information directly to each individual.
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Special dismissal: Redundancy
 A person is excluded from having a right to redundancy payment where:
• They do not fit the definition of 'employee' given in statute
• They have not been continuously employed for two years
• They have been or could be dismissed for misconduct
• An offer to renew the contract is unreasonably refused
• Claim is made out of time (after six months)
• The employee leaves before being made redundant
• They are on strike when the notice is served they will not be eligible for the payment. However,
Employees involved in strike action after redundancy notice is served will be entitled to redundancy
payments
 When an employee is laid off or kept on short time(少于正常一半时间以上) for 4 or more consecutive
weeks, or 6 weeks in a period of 13 weeks, they may claim redundancy pay，同时告知雇主终止合同
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Varying the terms of an employment contract
 A contract of employment can only be varied if:
• Express term in the contract which itself gives rights of variation
• The existing contract can be changed by consent of both parties. Consent might be
demonstrated by oral agreement to new terms
 If an employee’s contract is varied without consent, the employee may have a
claim for constructive dismissal.
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10
Agency law
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Framework-Guide your mind
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Definition of an agent
 An agent (A) is a person who is authorised to act for another (the principal (P)) in the
making of legal relations with third parties.
• A director acts as an agent for his company
• A partner acts as an agent for his partnership
• An estate agent is appointed by a seller of a house to find a buyer.
• A travel agent is appointed by a holiday company to make bookings with customers
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How the agency relationship arises
 An agency relationship can be established in one of five ways:
• express agreement协议明示
• implied agreement 协议暗示
• by necessity 必要情况下产生的代理
• by ratification 批准授权
• by estoppel.禁止违反诺言
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How the agency relationship arises
 Express agreement: This is where P actually appoints A as his agent. The agreement
can be made orally or in writing. 委托人和代理间建立
 Implied agreement: This is where P has not expressly agreed that A should be his agent.
However, the agreement can be implied from the parties’ conduct or relationship (譬如:
合伙人默认是合伙关系组织的代理人)
 By necessity: This requires four conditions to be satisfied:
• P’s property is entrusted委托 to A
• An emergency arises making it necessary for A to act
• It is not possible to communicate with P
• A acts in the interest of P善意的代理
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How the agency relationship arises
 By ratification: If a properly appointed agent exceeds his authority, or a person having
no authority purports to act as an agent, the principal has no liability on that contract
unless the principal 'ratifies' the contract. To ratifies the contact, P should:
• have the contractual capacity to make the contract
• have been in existence both when the contract was made and at the date of ratification
• be identified when the contract is made
• be aware of all the material facts
• clearly signify his intention to ratify the whole contract within a reasonable time
 Note that a void or illegal contract cannot be ratified
 举例：老板授权采购代理购买电视，但发现更好商机的产品，从公司牟利角度，
老板认可授权其买其他产品
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How the agency relationship arises
 By estoppel (禁止反言): This arises where P implies that A is his agent even though he
is not. He is then prevented or ‘stopped’ from denying A’s authority
 举例：ABC是个公司的3个董事，业务不怎么样；D不是董事，并无代理权，但
是D 一直代表公司跟他人做生意并为公司赚钱。这次 D 和原告公司签协议买地
造房，卖房赚钱，但这次房子滞销，原告诉 D，公司不愿意负责。法官认为，原
告并不知道 D 非公司代理人，而且 ABC 长期默认行为构成了 D 的表见代理，所
以原告胜诉，公司承担责任
 Apparent/ostensible agent 表见代理条件：1.代理人没有代理权，但形成代理关系；
2 由于委托人的行为，使得第三人相信代理人有代理权；3.代理人是善意的。4.
委托人也默认代理人的之前言行
 表见代理构成，由委托人承担责任，代理人不承担责任
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How the agency relationship Ends
 The agency arrangement may be terminated in the following ways:
• (1) Expiry of agreement 协议到期
• (2) Mutual agreement 双方达成共识
• (3) Death, insanity, or bankruptcy of either party 任何一方死亡，疯了，破产
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Authority
 The authority of an agent is a central issue in the concept of agency. It determines:
• the powers that the agent has on behalf of the principal, and
• for which acts the principal is liable
 Breach of warranty of authority 越权行为
• If an agent has no authority or exceeds it the principal may ratify the contract and
become liable. However, if the principal does not ratify, then the agent will be liable
to the third party for breach of warranty of authority
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Authority
Express actual
authority (actual)
Implied actual
authority (actual)
This is authority that P has explicitly given to A.
An agent has implied authority to do things which:
• an agent occupying that position would usually have authority
to do
• have not been expressly prohibited by P .
Apparent/ostensible Where the principal has represented the agent as having authority
authority表见代理 even though they have not actually been appointed
权 (不是真正的代 Where the principal has revoked the agent's authority but the third
理)
party has not had notice of this
However, a third party cannot rely on apparent authority when he
knows of the lack of actual authority.
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Liability
 For disclosed principal (principal has been made known to the third party):
• As a general rule, the contract is between the principal and the third party. The agent
is neither liable nor entitled under the contract. However, the agent will be
personally liable in the following exceptional circumstances:
 where the agent showed an intention to undertake personal liability, e.g . by
signing a written contract in his own name
 trade usage or custom贸易惯例: 由代理人代收，货物出现问题了， 则由代理
人承担责任
 where the agent refuses to identify the principal
 where the agent is acting on behalf of a fictitious principal 举例：公司筹备过程
中，公司还没有成立，那么代理人代表未成立的新公司签订合同，则要承
担责任。
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Liability
 For an undisclosed principal:
• An undisclosed principal is where the principal's existence has not been made
known to the third party. When the third party discovers the existence of P, he can
elect to treat P or A as bound by the transaction.
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Liability
 Agent’s fiduciary duty: It has the following consequences:
• A must always to perform their duties in line with the instructions of the principal
• A must not allow his personal interests to conflict with those of P .
• A must always act in the best interests of P.
• A must not make a secret profit.
• A has a duty to account to P for all money and property received
 Where an agent is in breach of his fiduciary duty, the following remedies are available:
• P can repudiate the contract with the third party .
• A can be dismissed without notice .
• P can refuse to pay any money owed to A or recover any money already paid.
• P can recover any secret profit made or any bribe
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Right
 The agent has the right:
• To claim remuneration or commission for services performed. Usually the amount of
remuneration or commission to be paid is stated in the agency agreement. Where it is not
specified and it is a commercial agreement, the court will imply a term into the agreement
requiring a reasonable amount to be paid.
• To claim an indemnity报销 against P for all expenses reasonably incurred in carrying out
his obligations.
• To exercise a lien留置权 over P’s property. The lien allows the agent to retain possession of
P’s property that is lawfully in A’s possession until any debts due to A. 举例：家具3W, 买
家5K预付， 结果买家不去拿家具，卖家行使留置权，可以把家具变卖，所得 2W5，
那么 5K不还给买家； 如果卖得 3W，那退还 5K 给买家
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Right
 The agent has the right:
• The Principal must provide the agent with all the necessary documentation required
to perform their duties
• The agent is entitled to notice of termination of the agreement 代理有权可以终止
协议
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11
Partnerships
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Framework-Guide your mind
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Definition of partnership
 A partnership is a relationship which subsists between two or more persons carrying on a
business in common with a view to profit (Partnership Act 1890)
 A partnership can be a small operation or as with some large firms of solicitors and
accountants partnerships with several hundred partners.
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Types of partners
 Types of partners
• General partner: Actively involved in the day-to-day business
• Sleeping partner隐名合伙人: Takes no active part in the running of the business.
However, is jointly and severally liable for the debts and contracts of the business
• Limited partner in a limited partnership: Contributes a specific amount of capital.
 Liability limited to that amount.
 Cannot take part in the management of the firm (参与就变成无限责任)
• Salaried partner薪水合伙人: Will received a fixed amount in income. Not a real
partner unless he also receives a share of the profits.
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Types of partnership
 Types of partnership
• General or ordinary partnership: Governed by Partnership Act 1890 - this is the default position if a
partnership is not formed under either of the two Acts below.
 口头和书面约定都可以
• Limited partnership: Governed by Limited Partnership Act 1907 (只出资金或者实物)
 There must be at least one partner with unlimited liability
 The partnership must be registered with the Registrar of Companies as a limited partnership
 Limited partners may not participate in the management of the business. If they do, they forfeit
their limited liability
 A limited partner has no power to bind the firm to contracts, i.e. unlike the unlimited partners, he is
not an agent of the firm
• Limited liability partnership (LLP): Governed by Limited Liability Partnerships Act 2000. Legally
separate from its members
 可以参加公司管理
 除了实物和资金，也能也可以用劳务和信用出资
 需要专门申请LLP (类似与注册有限责任公司)
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Characteristics of a partnership
 Characteristics of a partnership
• The persons involved in the partnership intend the business to yield a profit and they are all entitled to
share in that profit. The following do not necessarily create a partnership:
 joint ownership of property
 the sharing of gross returns
 the sharing of expenses
• A partnership begins as soon as the partners start their business activity. The actual agreement may be
made earlier or later than that date.
• No formalities are required to form general partnerships, no documentation and no registration.
• The PA 1890 provides that partners shall share profits equally, but in cases where partners contribute
different amounts of capital this may not be appropriate and partners will need to agree specific profit
sharing arrangements
 The partners are contractually bound by the terms they have agreed, even if they conflict with PA
1890
 The partnership agreement is a contract can be express (e.g. oral, in writing or by deed) or implied .
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Characteristics of a partnership
 The PA 1890
• 1) To share equally in the capital and profits of the business 平均分享资本和收益
（不是自动按照投资比例来）
• 2) To be indemnified by the firm for any liabilities 由合伙关系来承担的任何责任
• 3) To take part in the management of the business 参与公司管理
• 4) To have access to the firm’s books 可以查看公司账薄
• 5) To prevent admission of a new partner or a change in partnership nature 可以不让
新人入伙， 也可以防止改变合伙性质
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Characteristics of a partnership
 Partnership Property can either be the property of an individual partner, or owned by the
partnership as a whole. 合伙关系的资产既属于个人合伙人，也属于合伙关系。举个
例子，A2B3C5=10，可以说 A 拥有 10，合伙关系拥有 10.
• 1) Partnership property must be used exclusively for partnership business
• 2) Partnership property is used to pay partners debts upon dissolution
• 3) The increase in value of property passes to the owner, either the partnership or the
individual depending on the nature of its ownership 资产增值部分分配给合伙组织，
也可以分配给单个合伙人。
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Authority of partners
 Each partner is acting as the agent of all the partners:
• The express authority（明示授权） of a partner is set out in the partnership
agreement.
• The implied authority is set out in PA 1890
• Apparent authority
 Every partner is presumed to have the implied authority to:
• sell the firm's goods
• buy goods necessary for, or usually employed in, the business
• receive payments of debts due to the firm
• engage employees聘用员工
• employ a solicitor to act for the firm in defence of a claim or in the pursuance of a
debt
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Liability
 The relationship between the partners is a fiduciary one of ‘utmost good faith’. In addition
to these general fiduciary duties信托责任 there are specific statutory duties:
• Disclose: all partners must render true accounts and full information in matters relating
to the partnership
• Account: partners must account for all benefits obtained from any transaction related
to the partnership
• Not to compete: a partner who competes against the partnership without consent will
be liable for all such profits made
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Liability
 Liabilities if tort is committed
• The partners are jointly and severally liable to the person who has suffered loss
 Liabilities if misapplication of third party’s money or property
• The partnership is liable to make good the loss(赔偿损失)
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Liability for partnership debts
 Which partners are liable
General rule •
•
Every partner is jointly and severally liable for the debts and contracts of the
business
Outsiders can sue one partner alone or the firm.
New
partners
•
A new partner is not personally liable for debts incurred before they became a
partner unless they agree to become liable
Retiring
partners
•
A partner who retires is still liable for any outstanding debts incurred while they
were a partner, unless the creditor has agreed to release them from liability
They are also liable for debts of the firm incurred after their retirement if the
creditor knew them to be a partner (before retirement) and has not had notice of
their retirement.
•
Change in
partners
•
•
Where a third party deals with a partnership after a change in partners, all of the
partners of the old firm are still treated as partners, until the third party receives
notice of the change:
Notification must take place prior to retirement if the retiring partner is to avoid
liability for contracts entered into after his retirement.
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Liability for partnership debts
 Which partners are liable
Novation
•
•
Indemnity
•
A creditor agrees with the outgoing, continuing and/or incoming partners that
liability for an existing debt will be that of the continuing and incoming partners.
Thus the liability of the outgoing partner is removed and the incoming partner
becomes liable for the debt even though it was incurred before he became a partner
The continuing and incoming partners may agree to indemnify the outgoing partner
against debts incurred pre and/or post-retirement
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Dissolution
 Without court order: The partnership will automatically end in the following situations:
• The expiry of a fixed term or the completion of a specific enterprise .
• One of the partners gives notice unless the partnership agreement excludes this right
• Death or bankruptcy of a partner but the partnership agreement can make provision
for the partnership to continue if a partner should die
• Where continuation of the partnership would be illegal.
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Dissolution
 By court order: the court can bring a partnership to an end in any of the following
situations:
• Partner has mental disorder or permanent incapacity
• Partner engages in activity prejudicial to the business
• Partner wilfully or persistently breaches the partnership agreement.
• Partner conducts himself in a way that it is no longer reasonably practicable for the
others to carry on in business with him.
• Business can only be carried on at a loss .
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Dissolution
 Distribution of assets
• As a general partnership does not have the advantage of limited liability status, if the
proceeds on the sale of the assets does not cover the debts then the partners' personal
wealth will be called upon to make up the shortfall
• The proceeds from the sale of the assets will be applied in the following order:
 (i) paying debts to outsiders:
 (ii) paying the partners any advance if they loan to partnership
 (iii) paying the capital contribution of the partners
 (iv) If there is a residual remaining this will be divided between the partners in the
same proportion in which they share the profits of the partnership.
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Dissolution
 Insufficient to meet the debts
• First, Profits held back from previous years or partners' capital will be used to make
good the shortfall.
• Then, If these are also insufficient then the partners will individually contribute in the
proportion to which they shared in the profits
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LLPs
 LLPs (Limited Liability Partnerships) have similar features to private limited
companies
Incorporation
•
•
•
Incorporation document must be delivered to registrar stating name of LLP
Registrar issues a certificate of incorporation
Must send a declaration of compliance that LLP
Membership
•
•
•
First members sign incorporation document
Membership ceases on death, dissolution or in accordance with agreement with
other members
Rights and duties are set out in membership agreement
Designated members
•
•
•
Every partner has the right to take part in the management of the business
Must be at least two designated members
Incorporation document specifies who they are
Name
•
•
Must end with Limited Liability Partnership, llp or LLP.
Rules on choice are the same as for companies
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LLPs
 LLPs (Limited Liability Partnerships) have similar features to private limited
companies
Taxation
•
Members are treated as if they are partners carrying on business in a
partnership, i.e. they pay income tax, not corporation tax
Liability for debts
•
The liability of the members of an LLP is limited to the amount of capital they
have agreed to contribute
However, there is no requirement for a capital contribution, and any
contribution made can be withdrawn at any time.
•
Differences between
LLP and partnership
•
•
•
•
The liability of the members of an LLP is limited to the amount of capital they
have agreed to contribute
The LLP must file annual accounts and an annual report
LLP is an artificial legal entity with perpetual succession
It can hold property in its own right, enter into contracts
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12
Corporations and legal personality
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Framework-Guide your mind
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Explain the meaning and effect of limited liability
 The company is separate legal entity. 独立的法定实体
 Effect of being a separate legal entity:
• Limited liability for shareholders. A company is fully liable for its own debts. If a company
fails, the liability of the shareholders is limited to any amount still unpaid on their share
capital.
• A company enters into contracts in its own name and can sue and be sued in its own name.
• A company owns its own property
• A company has perpetual succession, irrespective of the fate of shareholders.
• The management of a company is separated from its ownership .
• A company is subject to the requirements of the Companies Act
• Where a company suffers an injury, it is the company itself that must take the appropriate
remedial action (以公司名义去获得赔偿)
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Veil of incorporation
 Lifting the veil of incorporation (公司的面纱是把公司和股东、董事分开) means that
in certain circumstances the courts can look through the company to the identity of the
members/directors
 The usual result of lifting the veil is that the members or directors become personally
liable for the company‘s debts. (separate personality will be ignored)
• Statutory example:
 Fraudulent and wrongful trading: Members and/or directors liable for wrongful
or fraudulent trading may be personally liable for losses arising as a result.
 Trading without trading certificate: If a public company starts to trade without
first obtaining a trading certificate, the directors can be made personally liable for
any loss or damage
 Abuse of company names: Directors of companies which went into insolvent
liquidation formed another company with an identical or similar name. This new
company bought the original company's business and assets from its liquidator.
 Disqualified directors: Directors who participate in the management of a company
in contravention of an order under the Company Directors Disqualification Act
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Veil of incorporation
 The usual result of lifting the veil
• Case law example:
 Evasion of obligations
 Evasion of taxation
 In times of war it is illegal to trade with the enemy. (危害public interest)
 Inter-group transaction in order to benefit the group by higher compensation
payment and making other companies within the group liable for its debts
 The corporate structure is being used as a facade to conceal the truth
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Distinguish between sole traders, partnerships and companies
 Sole trader and partnership, there is no legal distinction between the individual and the
business
Company
General Partnership and sole trader
Created by registration -with a written constitution
No special formality required for creation.
Separate legal person. It is possible for companies to Not a separate legal person- individuals jointly liable
be convicted of crimes
on contracts and are liable if sued.
Shares are transferable for public company, but
restrict to private company
Limits on transfer
Managed by directors, who may or may not also be
shareholders
Managed by individual, who are also the owners of
the business
The company cannot usually return capital to its
members
Individual may withdraw their capital
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Distinguish between sole traders, partnerships and companies
Company
General Partnership and sole trader
The company is liable for its debts
The partners and sole trader are personally liable for
the debts
The business is run by the directors. Members have
no right to participate.
Every partner has the right to take part in the
management of the business
Must comply with Companies Act requirements
concerning meetings 等
No administrative requirements regarding meetings
Formal dissolution procedure
May dissolve by agreement.
Companies pay corporation tax.
Partners and sole trader pay income tax
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Types of companies
 Public
• Listed companies (Quoted companies) are those which trade their shares or other
securities on stock exchanges.
• Not all public companies sell their shares on stock exchanges, although, in law, they
are entitled to sell their shares to the public
 Private
• Private companies are not entitled to sell shares to the public in this way.
• Private companies may be broadly classified into two groups:
 independent (also called free-standing) private companies
 subsidiaries of other companies
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Types of companies
 Public Vs Private
Public companies
Private (limited) companies
Definition
Registered as a public company
Any company that is not a public company.
Name
Ends with plc or public limited company.
Ends with Ltd or limited
or their Welsh equivalent, 'ccc', for a Welsh
company
Capital
In order to trade, must have allotted shares
of at least £50,000 (实缴至少25%)
No minimum
Raising
capital
May raise capital by advertising its
securities as available for public
subscription
Prohibited from offering its securities to the
public
Start of
trading
Must obtain trading certificate from
registrar before commencing trading
Can begin from date of incorporation
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Types of companies
 Public Vs Private
Public companies
Private (limited) companies
Directors
Minimum two.
Minimum one.
Secretary
Must have one. Must be qualified
Need not have one.
Accounts
Must file accounts within 6 months
Need not lay accounts不必记账 before general
meeting. Must file within 9 months
Audit
Accounts must be audited
Audit not required if it is small
AGM (Annual
Must be held each year
General Meeting)
Resolutions
Need not hold an AGM
Can’t pass written resolutions.不能直 Can pass written resolutions.可以直接通过书
接通过书面决议，需开股东大会
面决议解
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Types of companies
 An unlimited liability company is a company in which members do not have limited
liability. In the event of business failure, the liquidator can require members to
contribute as much as may be required to pay the company's debts in full. .
• It provides a corporate body (a separate legal entity), it can holds the assets
• The advantage that they need not have their accounts audited, need not deliver
annual copies to the Registrar of Companies (不用公示财务信息)
• An unlimited company can only be a private company; by definition, a public
company is always limited
• Community Interest Company for those wishing to establish social enterprises. The
company's object must be considered by a reasonable person to be of benefit to the
community and any surpluses made by the company should be reinvested for the
purposes of the company.
• Such a company must first be registered as a company limited by guarantee or as a
company limited by shares and then apply to the Regulator of Community Interest
Companies
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Types of companies
 An unlimited liability company is a company in which members do not have limited
liability. In the event of business failure, the liquidator can require members to
contribute as much as may be required to pay the company's debts in full. .
• It provides a corporate body (a separate legal entity), it can holds the assets
• The advantage that they need not have their accounts audited, need not deliver
annual copies to the Registrar of Companies (不用公示财务信息)
• An unlimited company can only be a private company; by definition, a public
company is always limited
• Community Interest Company for those wishing to establish social enterprises. The
company's object must be considered by a reasonable person to be of benefit to the
community and any surpluses made by the company should be reinvested for the
purposes of the company.
• Such a company must first be registered as a company limited by guarantee or as a
company limited by shares and then apply to the Regulator of Community Interest
Companies
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13
14
Company formation
Constitution of a company
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Framework-Guide your mind
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Promoters
 A promoter forms a company. They must act with reasonable skill and care, and if
shares are to be allotted they are the agent of the prospective shareholders, with an
agent’s fiduciary duties. 如果发起人是就是唯一股东则不会有利益冲突，如果是多
人持股则需要对其他股东有信托责任
 A promoter is under a fiduciary duty to:
• Disclose any interest in transactions to the company and not to make a 'secret profit'
• Disclose any benefit acquired to an independent board and/or to the shareholders
• Avoid a conflict of interest
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Promoters
 A promoter may make a profit as a result of their position.
• A legitimate profit is made by a promoter who acquires interest in property before
promoting a company and then makes a profit when they sell the property to the
promoted company, provided they disclose it.
• A wrongful profit is made by a promoter who enters into and makes a profit
personally in a contract as a promoter. They are in breach of fiduciary duty
 If a promoter does make a secret profit, the company may:
• Rescind撤销 the contract - but this is not always possible, e.g. if a third party has
acquired rights under the contract.
• Obtain damages - but this requires the company to prove loss
• Recover the profit - the company must prove that the promoter has failed to disclose
his profit from a transaction (only wrong profit should be recover)
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Promoters
 A promoter has no automatic right to be reimbursed pre-incorporation expenses by
the company, though this can be expressly agreed.
 A pre-incorporation contract is where a person enters into a contract before a company
has been registered
 Company, prior to its incorporation, does not have contractual capacity and after its
formation it cannot ratify or formally adopt a pre-incorporation contract. The promoter
is therefore personally liable under any such contract.公司成立前签署的合同，公司
不承担责任，由创办者承担责任。
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Promoters
 If A pre-incorporation contract exists, the promoter can protect his position by:
• postponing finalizing contracts until the company is formed
• entering into an agreement of novation (废除之前，重新签新的)
• agreeing with the company that there is no personal liability for the promoter
• buying an ‘off-the-shelf company 买个现成的公司
 cheap and simple
 can trade immediately
 no problem of pre-incorporation contracts
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Registration
Memorandum of
association 公司大纲
•
•
•
•
Used to be a more important document under previous company legislation
Signed by all subscribers and stating that they wish to form a company
In relation to a company limited by shares, the memorandum provides
evidence of the members' agreement to take at least one share each in the
company.
Is not possible to amend or update the memorandum of a company formed
under CA06
Application for
registration申请注册文
件
•
In all cases, the application form must include:
 the proposed name of the company
 whether the members will have limited liability (by shares or guarantee)
 whether the company is to be private or public
 details of the registered office .
Statement of proposed
officers
•
The statement gives the particulars of the proposed director(s) and
company secretary if applicable
Statement of compliance •
The requirements of the Companies Act in respect of registration
Articles of association (only required if the company does not adopt model articles)
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Registration
Statement of capital and
initial shareholdings
•
•
Essentially is a 'snapshot' of a company's share capital at the point of
registration
This must state:
 the total number of shares to be taken by the subscribers to the
memorandum
 their aggregate nominal value
 the class of shares and the rights which attach to them
 the aggregate amount unpaid on the total number of shares.
Or
Statement of guarantee
•
This states the maximum amount each member guarantees to contribute
and contact address for each subscriber
Registration fee
•
Currently £20 approximately.
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Registration
 On receipt of the above documents the registrar must:
• Inspect the documents and ensure that Companies Act requirements are fulfilled.
• Issue certificate of incorporation which is conclusive evidence that Companies Act
requirements have been fulfilled
• The company exists from the date on the certificate of incorporation
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Registration for guarantee
 Liability limited by guarantee
• Primarily for non-profit organisations that require legal personality.
• They do not have share capital or shareholders
• The company’s members are guarantors rather than shareholders
• It is less likely to be used by a normal trading business, as profits cannot be
distributed to members by way of a dividend.
• The guarantors give an undertaking to contribute a nominal amount in the event of
the winding up of the company
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Registration for public company
 A public company cannot commence trading or borrowing until the registrar has issued
a trading certificate.
 In order to obtain a trading certificate, an application must be made to the registrar
which states:
• The nominal value of allotted share capital >= £50,000 .
• That at least a quarter of the nominal value and all of any premium have been paid
up (i.e. at least £12,500 of nominal capital).
• The amount of preliminary expenses 准备期的费用 and who has paid or is to pay
them.
• Any benefits given or to be given to promoters
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Registration for public company
 If it trades before the certificate is issued:
• The company and any officers in default are liable to a fine .
• It is a criminal offence to carry on business, but any contracts are still binding on the
company.
• Any transactions are valid. However, if the company fails to comply with its
obligations 21 days after being called upon to do so, the directors become jointly
and severally liable for those obligations.
• It is a ground for winding up结业 if not obtained within one year
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Registration for private company
 A private company may do business and exercise its borrowing powers from the date of
its incorporation(不需要trading certificate). After registration the following procedures
are important
• A first meeting of the directors should be held at which the chairman, secretary and
sometimes the auditors are appointed, shares are allotted to raise capital
• A return of allotments股权分配表 should be made to the Registrar
• The company may give notice to the Registrar of the accounting reference date会计
参照日期
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Name of company
 The name of the company must comply with the following rules:
• It must have limited (Ltd) or public limited company (plc) at the end as applicable.
• It cannot be the same as another in the index of names 名字引索
• It cannot use certain words which are illegal or offensive
• It must have the Secretary of State's consent to use certain words (e.g . England,
Chartered, Royal, National, University, Insurance, etc.) or any name suggesting a
connection with the government or any local authority.
• It must avoid the tort of passing off 冒充
• The company's name must appear legibly and conspicuously清晰明了
 Outside the registered office and all places of business (网站，支票，发票等等)
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Name of company
 The name of the company must comply with the following rules:
• A private company which is a charity or a company limited by shares or guarantee
and licensed to do so before 25 February 1982 may omit the word 'limited' from its
name if the following conditions are satisfied
 The objects of the company must be the promotion of either commerce, art,
science, education, religion, charity or any profession
 The memorandum or articles must require that the profits or other income of the
company are to be applied to promoting its objects and no dividends or return of
capital may be paid to its members.
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Name of company
 The Secretary of State can force a company to change its name in the following
circumstances:
• The name is the same as, or too like, an existing registered name
• The name gives so misleading an indication of the nature of the company's activities
as to be likely to cause harm to the public
• Misleading information or undertakings were given when applying for a name that
required approval
 A company may decide to change its name by:
• (a) Passing a special resolution
• (b) Any other means其他手段 provided for in the articles
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Name of company
 For similar names
• The Companies Name Adjudicator will hear appeals from individuals and companies
over similar names.
• His findings will be published within 90 days and he has the power to order the
change of name.
• The Companies Name Adjudicator presume the name has been legitimately
registered. Otherwise, an action may be brought under the common law per the tort
of passing off.
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Name of company
 Business names: This is a name used by a company which is different from the
company's corporate name
• To state its name, registered number and registered address on all business letters
(including emails), invoices, receipts, written orders for goods or services and written
demands for payment of debts
• To display its name and address in a prominent position in any business premises to
which its customers and suppliers have access
• On request from any person with whom it does business to give notice of its name
and address
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Statutory books, returns and records
Register
Contents
Members
•
•
Names, addresses, date became/ceased, number of shares, class of share, amount paid up.
Any member of the company can inspect the register without charge.
Directors
and
company
secretary
•
Names (present and former), address, date of birth occupation, residency, nationality,
other directorships within the last five years
The register does not include shadow directors
The register must be open to inspection by a member without charge or by any other
person for a fee
Charges
•
•
•
•
•
The register will have details of the name of chargee, type of charge, brief description of
property charged, amount and date created.
The company must also keep copies of every instrument法定文书 creating a charge at its
registered office.
Any member or creditor may inspect the register free of charge, any other person can
inspect for a fee.
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Statutory books, returns and records
Register
Persons with
significant
control
Contents
•
•
Other documents •
Resolutions and
meetings
•
A person with significant control (PSC) is anyone in the company who:
 owns more than 25% of the company's shares
 owns more than 25% of the company's voting rights
 has the right to appoint or remove a majority of the board of directors
 has significant influence or control over the company
 has significant influence or control over a trust or firm
The register should have details of name, service address, residential address, country
and state of residence, nationality, date of birth, date they became a PSC and the
nature of company control.
Minutes of general meetings (股东大会会议纪要)
Records must be kept for a minimum period of 10 years
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Statutory books, returns and records
 Registered Office
• The actual address must fall within the domicile永久住处 of the company (England
or Wales)
• The registered office address can be changed upon notice to the registrar. The new
address must fall within the company domicile and is only effective upon receipt of
notice by the registrar. The old address remains a valid postal address for 14days
after receipt of notice.
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Statutory books, returns and records
 Registered Office:
• The registers must normally be kept at the company’s registered office公司注册办
公处 and must be available for public inspection
• Requests for inspection must provide details about the person seeking the
information, the purpose of the request and whether the information will be
disclosed to others
• The register of directors' addresses should now contain service addresses rather than
details of the directors' residential addresses. The service address can be simply 'the
company's registered office'.
• The company must also keep a separate register of the directors' residential
addresses
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Statutory books, returns and records
 Every twelve months a company must send a confirmation statement to the Registrar
within14 days
 The confirmation statement must include changes to any of the following:
• the address of the company's registered office
• the type of company
• the company's principal business activities
• details of directors and company secretary where applicable
• a statement of capital
• details of the members of the company as at the return date
• details of members who have cease to be members since the last return was made
• details of the number of shares of each class held by members at the return date.
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Statutory books, returns and records
 The company must keep accounting records containing sufficient information to show
and explain the company's transactions and its financial position.
 At any time it should be possible:
• to disclose with reasonable accuracy the company's financial position at intervals of not
more than six months
• for the directors to ensure that any accounts that needs to be prepared comply with
Companies Act 2006 and International Accounting Standards.
 Accounting records must be kept for three years in the case of a private company and
six years in that of a public one. They should be kept at the company's registered office
or at some other place thought fit by the directors.
 Failure to keep sufficient accounting records is an offence by the officers in default
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Statutory books, returns and records
 Companies are required to produce annual financial statements for each accounting
reference period. This includes a:
• balance sheet/statement of financial position and profit and loss account/statement of
comprehensive income showing true and fair view
• directors' report stating the amount of any dividend and likely future developments.
 The annual financial statements must be approved and signed on behalf of the board of
directors and a copy filed with Registrar.
 Accounting records should be open to inspection by the company's officers. 公司的董事
可以查账。
 Shareholders have no statutory rights to inspect the records, although they may be granted the
right by the articles. 股东是没有法定权利来检查这些记录。
 A company must file its annual accounts and its report with the Registrar (six months for a
public and nine months for a private company)
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Statutory books, returns and records
 Large companies must prepare a strategic report as part of Annual financial statements
• The purpose of the strategic report is to inform members of the company and help
them assess how the directors have performed their duty to promote the success of
the company.
• The strategic report must contain a fair review of the company's business, and a
description of the principal risks and uncertainties facing the company.
• The review required is a balanced and comprehensive analysis of the development
and performance of the company's business
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Framework-Guide your mind
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Company’s constitutional documents 公司章程
 Company’s constitutional documents 公司章程
• Memorandum of association (MoA):is a largely historic document that once submitted to the registrar
is unalterable. It records the initial shareholders upon formation of the company. MoA 提交给注册
官，内容是不可改变的，是初的股东在公司成立时的记录
• Articles of association (AoA) consist of the internal rules that relate to the management and
administration of the company. AoA是公司章程实施细则，部分吸收了 MoA 的内容。
 a) Directors’ powers and responsibilities 董事的权利和责任
 b) Decision making by directors 董事的决定
 c) Appointment of directors 董事的委派
 d) Organisation and conduct of general meetings 股东大会的组织和召开
 e) Issue and transference of shares 股份发行和转让，包括限制条款
 f) Payment of dividends 分红的支付
 g) Members’ rights 成员的权利
 h) Communication with members
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Company’s constitutional documents 公司章程
 Rather than each company having to draft their own articles, and to allow companies to
be set up quickly and easily, the Act allows the Secretary of State to provide model (or
standard) articles that companies can adopt
 There are three model articles which cover the following companies:
• private companies limited by shares; or
• private companies limited by guarantee; or
• public companies.
 A company:
• may adopt the model articles in full or in part;
• is deemed to have adopted the model articles if there is no express or implied
provision to exclude them; or
• may draft its own unique articles
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Company’s constitutional documents 公司章程
 Company’s constitution章程 bind the company and its members. The articles form a
statutory contract between the company and its members, and between the members
themselves, even if they do not sign them. （章程只对公司和其成员有效）
• The articles are enforceable by the company against the members.
• The articles are enforceable by the members against the company
• The articles also operate as a contract between individual members in their capacity
as members
• The articles do not bind the company to non-members nor do they bind the members
in any other capacity
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Alteration of articles
 General rule：
• The articles can usually be altered by a special resolution (75% majority).
• Copies of the amended articles must be sent to the Registrar within 15 days
 Making the company's constitution unalterable
• The articles may give a member additional votes so that they can block a resolution
to alter articles on particular points
• The articles may provide that when a meeting is held to vote on a proposed
alteration of the articles the quorum present must include the member concerned.
They can then deny the meeting a quorum by absenting themselves.
• The Act permits companies to ‘entrench provisions’ in their articles. This means
specific provisions may only be amended or removed if certain conditions are met
which are more restrictive than a special resolution such as agreement of all the
members ('entrenched provisions' cannot be drafted so that the articles can never be
amended or removed.)
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Alteration of articles
 Restrictions on alteration
• The alteration is void if it conflicts with the Companies Act or with general law
• An existing member may not be compelled by alteration of the articles to subscribe
for additional shares or to accept increased liability for the shares (除非得到同意)
• To varies the rights attached to a class of shares may only be made if the correct
rights variation procedure has been followed to obtain the consent of the class. A
>=15% minority may apply to the court to cancel the variation.
• The alteration made to the articles to secure an advantage to themselves by their
voting control of the company will be invalid
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Alteration of articles
 Restrictions on alteration
• A person whose contract is contained in the articles cannot obtain an injunction to
prevent the articles being altered, but they may be entitled to damages for breach of
contract.
• An alteration may be void if the majority who approve it are not acting bona fide in
what they deem to be the interests of the company as a whole
 Expulsion of minorities: Majority intend that the power to acquire the shares of a
minority is to be restricted to specific circumstances(例如:小股东是敌对公司的)
for the benefit of the company (Valid). 如果是任意强制收购小股东(Invalid)
 Expulsion of minorities: Alteration of the articles for the purpose of removing a
director from office. Generally be treated as valid even though it is discriminatory.
An alteration is not invalid merely because it causes a breach of contract
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15
16
17
Share capital
Loan capital
Capital maintenance and dividend law
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Framework-Guide your mind
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Share capital
 A share is the interest of a shareholder in the company measured by a sum of money
• Interest in the company the member is entitled to a share of the profits generated by
the assets owned by the company 分享公司的利益
• Limited liability the liability of the member is limited to the amount they have agreed
to pay for their shares 以其出资额为限，承担有限责任
• Mutual covenants as defined in the previous chapter on the AoA, members are bound
together 共同的契约
 A share's nominal value is its face value. So a £1 ordinary share for instance, has a
nominal value of £1. No share can be issued at a value below its nominal value.
• A member who holds one or more shares is a shareholder
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Share capital
 Special rights attached to shares is obtainable from one of the following documents
• The articles公司章程
• A resolution or agreement incidental to the creation of a new class of shares (copies
must be delivered to the Registrar)
• A statement of capital given to the Registrar within one month of allotment
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Types of shares
Preference shares
Ordinary shares
Voting rights
None, or restricted by the articles of
association
Full
Dividend rights
Fixed dividend paid in priority to
other dividends, usually cumulative
(不一定每年支付)
Paid after preference dividend.
Not fixed.
Surplus on winding up
Prior return of capital, but cannot
participate in surplus
Entitled to share surplus assets
after repayment of preference
shares 清偿排在后，只能拿到
剩余
General meetings
Restricted 严格限制，除非跟自身
利 益有关
May attend and vote 参与并投
票
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Types of shares
 Redeemable shares 可赎回的股份 being shares that the company may repurchase.
A company must have some irredeemable shares in issue at all time。UK 规定公司必
须发行一些不可赎回的股票，以确保公司的公共性。
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Class rights
 Varying改变 class rights (such as dividend rights, voting rights) depends on:
• Procedure set out in articles must be followed if the procedure specified
• The standard procedure is by special resolution passed by at least three-quarters of
the votes cast at a separate class meeting or by written consent
 Minority protection:
• Hold not less than 15% of the issued shares of the class in question
• Not themselves have consented to or voted in favour of the variation
• Apply to the court within 21 days of the consent being given by the class
• The court can either approve the variation as made or cancel it as 'unfairly
prejudicial'
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Share and share related terminology
 Share related terminology
• Issued share capital : Issued share capital comprises share capital that has actually
been issued, released or sold by the company
• Paid up share capital 实缴: The amount which shareholders have actually paid on
the shares issued.
• Called up share capital 认缴: The amount of unpaid share capital which has been
called for from shareholders but not yet paid.
• Uncalled share capital: The amount of unpaid share capital that has not yet been
called for from shareholders and therefore also remains unpaid.
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Share and share related terminology
 Pre-emption rights 优先认购权 are the rights of existing ordinary shareholders to be
offered new shares issued by the company pro rata to their existing holding of that class
of shares
 Rights issues: is a right given to a shareholder to subscribe for further shares in the
company, usually pro rata to their existing holding in the company's shares
• Rights issue must be made in writing (hard copy or electronic).
• Offer is open for 21 days during which it cannot be withdrawn.
• Shares usually offered at discount to current market value (but not at discount to nominal value).
• Shareholders who do not want to buy the new shares themselves may sell the rights to a third party.
• Any shares which are not accepted may then be allotted on the same (or less favourable) terms to
non-members
• A private company may by its articles permanently exclude these rules so that there is no statutory
right of first refusal.
• Any company may, by special resolution, that the statutory right of first refusal shall not apply
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Share and share related terminology
 Bonus issues红利发行: Also referred to as scrip issue or capitalisation issue
• A bonus issue is the capitalisation of the reserves of a company by the issue of
additional shares to existing shareholders, in proportion to their holdings
• Do not raise any new funds.
• Carried out by using some of the company's non-distributable reserves to issue
shares to existing shareholders in proportion to their shareholdings. For example, a
company may issue two free preference shares for every ordinary share held.
• Share premium account股份溢价账户 and the capital redemption reserve 资本偿
债保留金 may be used to fund the bonus issue
• Must never be funded from a company's ordinary capital
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Issuing shares
 Allotment of shares分配股份is the issue and allocation to a person of a certain number
of shares under a contract of allotment. Once the shares are allotted and the holder is
entered in the register of members. The terms ‘allotment’ and ‘issue’ 略有不同：
•
A share is allotted when the person to whom it is allotted acquires an unconditional right to be entered
in the register of members as the holder of that share
•
Issue of shares is usually taken to be a later stage at which the allottee receives a letter of allotment
 The directors need authority in order to allot shares. This may be given:
• by the articles, or
• by passing an ordinary resolution .
 The authority must state:
• the maximum number of shares to be allotted
• the expiry date for the authority (maximum five years)
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Issuing shares
 Public company allotment of shares
• Directors of public companies may not allot shares
• Any director who allots shares without authority commits an offence
• Methods of selling shares
 Public offer: where members of the public subscribe for shares directly to the company.
 Offer for sale: an offer to members of the public to apply for shares
 Placing配售: a method of raising share capital where shares are offered in a small
number of large ‘blocks’ to persons or institutions at a predetermined price
 Private company allotment of shares
• Directors of private companies with one class of share have the authority to allot shares
unless restricted by the articles.
• An application must be made to the directors directly
 Directors of public companies, or private companies with more than one class of share, may not
allot shares without authority
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Issuing shares
 Every share has a nominal value which is fixed at the time of incorporation of the
company in the statement of capital and initial shareholding. The nominal value of the
share represents the extent of a shareholders potential liability
• 如果原股东有未实缴股份，当他转让股份时，新股东需对未缴付的认缴额承
担责任
 Issue at discount (less than nominal value)
• Every company is required to obtain in money or money's worth, consideration of a value at
least equal to the nominal value (common law)
 If this rule is breached the issue is still valid, but the allottee must pay up the discount
plus interest.
 The company and any officers in default are liable to a fine
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Issuing shares
 Issue at premium
• Share premium is the excess received, either in cash or other consideration, over the
nominal value of the shares issued
• A company cannot distribute any part of its share premium account as cash dividend
• Under the Companies Act, the permitted uses of share premium are to pay:
 Fully paid shares under a bonus issue
 Issue expenses and commission in respect of a new share issue
 Redemption of redeemable shares
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Issuing shares
 Paying for shares-private company
• Private companies may issue shares for non-cash consideration (goods and serivces). The court will
interfere with the valuation only if there is fraud
 Paying for shares-public company
• Payment for shares must not be in the form of work or services.
• Shares cannot be allotted until at least one-quarter of their nominal value and the whole of any
premium have been paid.
• Non-cash consideration must be received within five years.
• Non-cash consideration must be independently valued and reported on by a qualified person. The
valuation must be carried out in the six months prior to the allotment.
• Within two years of receiving its trading certificate, a public company may not receive a transfer of
non-cash assets from a subscriber to the memorandum. This is unless its value is less than 10% of the
issued nominal share capital and it has been independently valued and agreed by an ordinary
resolution
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Capital maintenance
 The share capital of a limited company is regarded as a buffer fund for creditors.
Capital maintenance is a fundamental principle of company law:
• That limited companies should not be allowed to make payments out of capital to
the detriment of company creditors.
• Companies Act contains many examples of control upon capital payments. These
include provisions restricting dividend payments, and capital reduction schemes
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Capital maintenance
 There are three basic methods of reducing share capital
• Extinguish or reduce liability on partly paid shares
 Eg Company has nominal value £1 shares 75p paid up. Either (a) reduce nominal
value to 75p; or (b) reduce nominal value to a figure between 75p and £1
• Pay off part of paid-up share capital out of surplus assets
 Eg Company reduces nominal value of fully paid shares from £1 to 70p and
repays this amount to shareholders
• Cancel paid-up share capital which has been lost or which is no longer represented
by available assets
 Eg Company has £1 nominal fully paid shares but net assets only worth 50p per
share. Company reduces nominal value to 50p, and applies amount to write off
debit balance
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Capital maintenance
 Procedure for public companies reduce the capital:
• Step one Pass a special resolution and not been restricted by the company's articles
• Step two Apply to the court to confirm the special resolution
 To reduce the confusion or misleading people who may deal with the company in future.
It may insist that the company add 'and reduced' to its name
• Step three If reduction involves one of the first two methods above, court must require
company to settle a list of creditors entitled to object. For third method, the court may
require an invitation to creditors
• Step four The court must not confirm the reduction until it is satisfied that all creditors have
either consented to the reduction or had their debts discharged or secured.
• Step five The company must file documents with the Registrar. If the share capital of a
public company falls below £50,000, it must re-register as a private company.
When the court receives an application for reduction of capital, its first concern is the effect of the
reduction on the company's ability to pay its debts, that is, that the creditors are protected
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Capital maintenance
 Procedure for private companies reduce the capital:
• Pass a special resolution supported by a solvency statement not been restricted by
the company's articles
 The solvency statement is a statement by each of the directors that the company
will be able to meet its debts within the following year. Solvency statement
provided 15 days in advance of the meeting
• A solvency statement made without reasonable grounds is an offence punishable by
fine and/or imprisonment.
• Copies of the resolution, solvency statement and a statement of capital must be filed
with the Registrar
A company’s share premium account and capital redemption reserve are treated as share capital and can
therefore be reduced using the above procedure
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Treasury shares
 General rule: Shares which are purchased by a company must be cancelled and the
amount of the company's share capital account reduced by the nominal value of the
cancelled shares
 Treasury shares are created when a company purchases its own shares and do not have
to be cancelled. Up to 10% of the shares can be held 'in treasury' which means they can
be re-issued without the usual formalities.
• Previously treasury shares could only be created by public companies but since 30
April 2013 they can be created by private companies as well
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Treasury shares
 Treasury shares
• No voting rights and dividend rights.
• When treasury shares are sold or transferred for the purposes of an employees' share
scheme, the company must deliver a return to the Registrar not later than 28 days
after the shares are disposed of.
• Where treasury shares are cancelled, the company must deliver a return to the
Registrar not later than 28 days after the shares are cancelled
• Treasury shares can also be created when a company initially issues shares to the
public but keeps a portion in its treasury to be sold at a later date
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Distributions
 A company can only make a distribution (e.g. pay a dividend) out of distributable
profits
• Distributable profits are the accumulated realised profits
 Profit and loss can be from trading activities and capital transactions
 A profit or loss is deemed to be realised if it is treated as realised in accordance with generally
accepted accounting principles (depreciation are deemed realised)
 A public limited company can only declare a dividend if both before and after
distribution its net assets are not less than the aggregate of its called up share capital
and undistributable reserves. Undistributable reserves are:
• share premium account
• capital redemption reserve
• unrealised profits (i.e. revaluation reserve)
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Distributions
 Under the Companies Act 2006: The power to declare a dividend is given by the articles
• No dividend may exceed the amount recommended by the directors (not shareholders)
• The company in general meeting may declare dividends if pass the resolution
• A dividend may be paid otherwise than in cash
 Unlawful dividend
• If a dividend is not paid in accordance with the rules on distributions then the
company can recover the distribution from:
 shareholders who knew or had reasonable grounds to know the dividend was unlawful
 any director unless he can show he exercised reasonable care in relying on properly
prepared accounts
 the auditors if the dividend was paid in reliance on erroneous accounts which were due to
negligence on their part
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Framework-Guide your mind
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Loan capital
 All companies have the implied power to borrow for the purpose of business.
 Loan capital comprises all the longer term borrowing of a company such as:
• permanent overdrafts at the bank
• unsecured loans either from a bank or other party
• loans secured on assets either from a bank or other party .
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Loan capital
 A debenture is a document issued by a company containing an acknowledgment of its
indebtedness whether charged on the company's assets or not. There are three main
types of debentures:
• A single debenture e.g. a company obtains a secured loan or overdraft facility.
• Debentures issued as a series and usually registered 系列发债面对多人，每个人
享有同样等级 (pari passu 按相同比例)
• Debenture stock subscribed to by a large number of lenders向社会发债, 跟股票形
式比较像, 上市债券
 Debenture stock must be created using a debenture trust deed, though single and series
debentures may also use a debenture trust deed.
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Loan capital
 Advantages of debentures for company
• The board does not (usually) need the authority of a general meeting to issue debentures.
• As debentures carry no votes they do not dilute or affect the control of the company.
• Interest is chargeable against the profit before tax .
• Debentures may be cheaper to service than shares .
• There are no restrictions on issuing debentures at a discount or on redemption.
• They are freely transferable
 Disadvantages of debentures
• Interest must be paid out of pre-tax profits, irrespective of the profits of the company. If necessary
must be paid out of capital.
• Default may precipitate liquidation and/or administration if the debentures are secured.
• High gearing will affect the share price
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Fixed versus floating charges
 A charge is an encumbrance upon real or personal property granting the holder certain
rights over that property.
 A fixed charge is a form of protection given to secured creditors relating to specific
assets of a company
 A fixed charge has three main characteristics:
• They attach to specific assets upon creation (subject to registration) 与特定资产相
连，需要登记。
• The charged asset may not be disposed of by the company without the consent of the
creditor
• Default on the loan by the company enables the charge holder to sell the asset and
recover monies owed
 用来做固定抵押的资产: 固定资产，债券等
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Fixed versus floating charges
 Floating charge has three main characteristics:
• A charge on a class of assets(inventory, receivable, shares) of a company, present
and future
• The assets within the class will change from time to time
• The company has freedom to deal with the charged assets in the ordinary course of
its business.
 A floating charge cannot be created by a partnership.
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Fixed versus floating charges
 A floating charge does not attach to any particular asset until crystallization 冻结
 Crystallisation means the company can no longer deal freely with the assets. It occurs
in the following cases:
• liquidation
• the company ceases to carry on business
• any event specified (e.g. the company is unable to pay its debts; the company fails to
look after its property; the company fails to keep stock levels sufficiently high).
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Fixed versus floating charges
 A floating charge has the following advantages for the company:
• The company can deal freely with the assets .
• A wider class of assets can be charged
 A floating charge has a number of disadvantages for the chargee:
• The value of the security is uncertain until it crystallises .
• It has a lower priority in order of repayment than a fixed charge.
• A floating charge may become invalid automatically if the company creates the
charge to secure an existing debt and goes into liquidation within a year thereafter.
The period is only six months with a fixed charge.
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Priority and registration of charges
 To be valid and enforceable, charges must be registered within 21 days of creation with
the Registrar. (生效日是创建日，但是没有即时注册会使无效)
 Registration can be undertaken by:
• the company
• the chargeholder 受押人-资金提供方
 Failure to register:
• renders the charge void against the liquidator清算人
• results in a fine on the company and every officer
• renders the money secured immediately repayable on demand应要求立即还款
 If the charge relates to land it must also be registered with the Land Registry.
 The company must include all charges in its own register of charges. However, failure
to include the charge in the company's own register does not invalidate the charge.
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Priority and registration of charges
 The priority of a charge depends on the type of charge and whether or not it has been
registered:
• Equal charges first created has priority
• Fixed charge has priority over a floating charge
• 如果浮动抵押冻结了（Crystallisation），之后用来固定抵押，则冻结的浮动抵
押优先于固定抵押
• An unregistered charge (or later registered charge超过21天登记抵押) has no
priority over a registered charge
 同一个资产可以多次抵押
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Priority and registration of charges
 If a company sells a charged asset to a third party the following rules apply.
• A chargee with a fixed charge still has recourse to the property in the hands of the
third party - the charge is automatically transferred with the property.
• Property only remains charged by a floating charge if the third party had notice of it
when they acquired the property.
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Loan capital versus share capital
loan capital
Share capital
Definition
A debenture is a document issued by a
company containing an acknowledgment
of its indebtedness
A share is the interest of a shareholder in a
company measured by a sum of money. It
is a bundle of rights and obligations
Voting rights
A debenture is a creditor of the company
and therefore has no voting rights
A shareholder is a member (owner) of the
company. and therefore has voting rights,
depending on the class of shares held.
Income
A debenture has a contractual right to
interest, irrespective of the availability of
profits
Dividends depend on the availability of
profits
liquidation
A debenture has priority with respect to
repayment.
Depending on the type of share,
shareholders receive repayment after
creditors, but can participate in surplus
assets.
Maintenance
of capital
Does not need to be maintained
Must be maintained
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18
Company directors
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Framework-Guide your mind
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Directors
 The term 'director' includes 'any person occupying the position of director. The decision
as to whether someone is a director is therefore based on their function, not their title. A
director must normally be aged at least 16.
• De Jure Director法律上的董事: A person who is formally and legally appointed or
elected as director in accordance with the articles of association of the company and
gives written consent to hold the office of a director.
• De Facto Director事实上的董事: A person who is not a de jure director but
performs the acts or duties of a director. A de facto director owes the same duties to
the company as a de jure director, i.e. he is subject to both statutory duties and
prohibitions
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Types of director
Managing Director
/Chief executive
officer (MD/CEO)
•
•
•
•
Shadow director 影
子董事
•
•
•
•
Executive director
•
•
•
A director appointed to carry out overall day-to direct or day management
functions.
The model articles allow the board to delegate to the MD/CEO any powers
they see fit.
The MD/CEO has a dual role - member of board and also executive officer.
MD/CEO has the apparent authority to enter into all contracts of a
commercial nature.
Person's function rather than their title that defines them as a director
Used to regulate activity by those who exercise control over a company but
try to evade their responsibilities and potential liabilities as a director.
All the rules of company law are equally applicable to shadow directors.
Not a shadow director if advice is given only in a professional capacity e.g.
accountants and lawyers.
Likely to be a full-time employee involved in management.
Performs a specific role under a service contract.
May be distinguished by a special title such as 'Sales Director' or 'Finance
Director'
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Types of director
Non-executive
director (NED)
•
•
•
•
•
•
Part-time
Not an employee
Brings outside expertise to board
Contributes an independent view
Exerts control over executive directors
Subject to the same duties, controls and potential liabilities as executive
directors.
Chairman of board
•
•
•
•
Chairs meetings of board
Acts as spokesman for the company
Has a casting vote
并不负责日常管理公司
Alternate director
•
Appointed by a director to attend and vote for them at board meetings which
they are unable to attend.
Without specific provisions, an alternate may be another director or an
outsider
•
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Appointment
First Directors
•
•
Public companies need a minimum of two; private companies need one.
There is no statutory maximum, but the articles may specify a maximum
number.
Appointment
procedure
•
The application for registration delivered to the Registrar to form a company
includes particulars of the first directors
Usually appointed by the existing directors or by ordinary resolution.
Directors of public companies should generally be voted on individually
•
•
Model articles public •
companies
•
•
Publicity
•
At the first annual general meeting (AGM) all the directors retire and offer
themselves for reelection by ordinary resolution.
At each AGM one-third retire (those most senior). They can be re-elected.
Casual vacancies are filled by the board until the next AGM when the new
directors must stand for election
The company must notify Companies House within 14 days of new
appointments and any changes in particulars. It must also enter details in the
register of directors.
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Appointment
Service contracts
•
•
•
Compensation for
loss of office 离职
•
Cannot exceed two years unless they have been approved by the shareholders
by ordinary resolution. If breached the service contract deemed to state that
the company can terminate the contract at any time
The service contract must be kept open for inspection at the company's
registered office.
The directors of a quoted company must prepare a directors' remuneration
report for each financial year of the company
Gratuitous无理由的 payments must be disclosed to all members and
approved by ordinary resolution. If not approved, director holds payment on
trust for the company
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Disqualification:
 Directors may be required to vacate office because they have been disqualified on
grounds dictated by the articles
• Disqualified director cannot be concerned in the management of a company directly
or indirectly or act as a liquidator, receiver or promoter
 Model articles include a number of grounds for disqualification. These include where:
• A person ceases to be a director by virtue of any provision of the Companies Act
2006
• A bankruptcy order is made against that person
• Physically or mentally incapable of acting as a director
• Director is resigning from office
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Disqualification:
 Disqualification under statute:
• General misconduct in connection with companies. This includes:
 Conviction of a serious offence in connection with the management of a company either in the
UK or abroad (maximum fifteen years disqualification).
 Persistent breaches of CA06, e.g. failure to file returns (maximum five years disqualification).
• Disqualification for unfitness. This includes:
 Where an investigation by the Department for Business, Innovation and Skills (Business, Energy
and Industrial Strategy) finds the director unfit to be concerned in the management of the
company.
 Where a liquidator's report finds the director unfit to be concerned in the management of a
company (minimum two years, and maximum fifteen years, disqualification)
• Other cases for disqualification.
 Participation in fraudulent or wrongful trading (maximum 15 years disqualification).
 where an undischarged bankrupt债务未偿清的破产者 has been acting as a director.
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Disqualification:
 Breach of a disqualification order:
• This is a criminal offence, which could result in a fine and imprisonment.
• The disqualified director (or any person who acts on his instructions) is personally
liable for the debts of the company while so acting.
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Removal
 A director may be removed from office by ordinary resolution at a meeting
• It is valid but she can sue for damages for any breach of her service contract
 To remove a director:
• Special notice (28 days) is required of the resolution by persons wishing to remove a
director. The company must forward a copy of the resolution to the director concerned.
• Notice of the meeting goes to the director and all members entitled to attend and vote.
• The director in question can require the company to circulate written representations to
members
• At the meeting, the director can read out representations if there was no time for prior
circulation. The director must be allowed to attend the meeting and to speak.
 The articles and the service contract of the director cannot override the statutory power.
However, the articles can permit dismissal without the statutory formalities being observed
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Removal
 Restrictions on power to remove directors
• Shareholding qualification to call a meeting: To do this they must hold:
 Either, 10% of the paid up share capital
 Or, 10% of the voting rights where the company does not have shares
• Weighted voting rights: A director who is also a member may have weighted voting rights
given to them under the constitution, so that they can automatically defeat any motion to
remove them as a director
• Class right agreement: It is possible to draft a shareholder agreement stating that a member
holding each class of share must be present at a general meeting to constitute quorum法定
人数
• Shareholding to request a resolution: Where a meeting is already convened, 100 members
holding an average £100 of share capital each may request a resolution to remove a director
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Duties
 1. Duty to act within powers:
• A director must act in accordance with the company's constitution and only use his
powers for the purpose which they were given.
• The directors have a duty to exercise their powers in what they honestly believe to
be the best interests of the company
• The powers are restricted to the purposes for which they were given. If this rule is
not adhered to the transaction will be invalid, unless the company in general meeting
authorises it, or subsequently ratifies it.
 例如: 董事一般没有权利去发行新股防止预期收购。但如果得到股东大会批
准，则即使发行目的不合适仍然是有效的。
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Duties
 2. Duty to promote the success of the company:
• A director must act in good faith, in a way which promotes the success of the
company and for the benefit of the members as a whole.
• Introduced the concept of ‘enlightened shareholder value开发股东价值' and
requires the directors to have regard to:
 the likely consequences of any decision in the long term
 the interests of the company's employees
 the need to foster the company's business relationships with suppliers, customers and
others
 the impact of the company's operations on the community and the environment
 the desirability of the company maintaining a reputation for high standards of business
conduct and
 the need to act fairly as between members of the company .
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Duties
 3. Duty to exercise independent judgment:
• A director of a company must exercise independent judgment.
• This duty is not infringed by a director acting 这项义务没有违反如果:
 in accordance with an agreement that restricts the future exercise of discretion按
照协议，其限制了未来去执行自由裁量
 or in a way authorised by the company’s constitution 或者是按照公司章程授权
的行为
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Duties
 4. Duty to exercise reasonable care, skill and diligence
• The standard expected of a director is that of a reasonably diligent person with:
 the general knowledge, skill and experience that could reasonably be expected of
a director, and
 the general knowledge, skill and experience that the director has.
• The reasonableness test therefore consists of two elements:
 (1) An objective test: A director must show such care as could reasonably be
expected from a competent person in that role
 (2) A subjective test: A director is expected to show the degree of skill which may
reasonably be expected
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Duties
 5. Duty to avoid conflicts of interest:
• A director must avoid any situation which places him in direct conflict with the
interests of the company or the performance of any other duty.
 6. Duty not to accept benefits from third parties:
• A director must not accept any benefit from a third party, unless acceptance cannot
reasonably be regarded as likely to give rise to a conflict of interest
 7. Duty to declare interest in proposed transaction or arrangement:
• A director is required to declare the nature and extent of any interest, either direct or
indirect through a connected person, that they have in relation to a proposed
transaction or arrangement with the company.
• This declaration can be made in writing or verbally, at a board meeting or by a
general notice that he has an interest in a third party
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Duties
 8. Declaration of an interest in an existing transaction or arrangement
• Directors have a statutory obligation to declare any direct or indirect interest in an
existing transaction entered into by the company
• The directors might have kept their profit if the company had agreed by ordinary
resolution passed in general meeting
• 可以不披露，如果之前已经披露或者利益冲突可能很小或者没有
 Breach of duty comes under the civil law rather than criminal law and
• Damages payable to the company where it has suffered loss
• Restoration of company property
• Repayment of any profits made by the director
• Rescission of contract (where the director did not disclose an interest)
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Powers
 Directors are required to exercise their powers in accordance with the company's
constitution
 Where a company's articles delegate the management of the company's business to the
board, the members have no right to interfere in decisions made by the board. Directors
are not agents of the members and are not subject to their instruction as to how to act.
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Powers
 Control of directors
• A company is ultimately controlled by its members. Most decisions require a majority of
over 50% (although some require 75%)
 Members can exercise their votes in their own interests. They are not required to act for
the benefit of the company.
• A director can be removed at any time by an ordinary resolution of the members
• The members can alter the articles by passing a special resolution. This power could
therefore be used to restrict the directors' powers
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Powers
 Statutory control over directors: matters require the approval of the members
• Directors' service contracts lasting more than two years must be approved by the members
• Any loans given to directors, or guarantees provided as security for loans provided to directors, must
be approved by members if over £10,000 in value
• Any non-contractual payments to directors for loss of office must be approved by the members
• Credit transactions by the company for the benefit of a director of over £15,000 in value must be
approved by the members (PLCs only).
• Directors or any person connected to them may not acquire a non-cash asset from the company
without approval of the members if non-cash assets with a value exceeding £100,000, or the asset's
value is more than £5,000 and more than 10%
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19
20
Other company officers
Company meetings and resolutions
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Framework-Guide your mind
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Company secretary
 Every public company must have a qualified company secretary. Private companies
may choose to appoint a secretary, but are not obliged to do so.
• A sole director of a private company cannot also be the company secretary, but a company can have
two or more joint secretaries.
• The secretary is usually appointed and removed by the directors.
 Qualifications: The secretary of a public company must be qualified under one of the
following conditions:
• Employment as a plc's secretary for three out of the five years preceding appointment
• Membership of one of a list of qualifying bodies: the ACCA, CIMA, ICAEW, ICAS, ICAI or CIPFA
• Qualification as a solicitor, barrister
• Employment in a position or membership of a professional body that, in the opinion of the directors,
appears to qualify that person to act as company secretary
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Company secretary
 Duties
• There are no statutory duties, therefore the duties will be whatever the board decides.
The company secretary will typically undertake the following:
 Check that documentation is in order
 Make returns to the registrar
 Keep registers
 Give notice and keep minutes of meetings
 Signing company documents as may be required by law
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Company secretary
 Powers
• The company secretary has the authority to bind the company in contract. There are
two types of authority:
 express authority- this is the authority delegated by the board
 implied authority- regarding contracts of an administrative nature (Lease of a
photocopier for the office)
• Generally
 It does not usually carry the authority to borrow money
 It does not extend to making commercial contract (例如: 私自签订商业合同)
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The auditor
 The auditor must be either:
• a member of recognised supervisory body (ICAEW, ICAS or ACCA) and eligible
under their rules, or
• qualified by a similar overseas body and authorised by the Department for Business,
Innovation and Skills (Business, Energy and Industrial Strategy)
 The auditor must not be:
• an officer or employee of the company
• the partner of an officer or employee of the company
 Public companies, banking or insurance companies or those subject to a statute-based
regulatory regime need to be audited (小公司可以被豁免)
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The auditor
 Appointment
• The auditors should generally be appointed by the shareholders by ordinary
resolution.
• However, the directors can appoint the company's first auditor and fill casual
vacancies.
• A company must inform the Secretary of State if it has failed to appoint an auditor
within 28 days of circulating its accounts 报表发布之后28天. The Secretary of
State has power to appoint an auditor in those circumstances.
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The auditor
 Resignation
• An auditor can resign at any time by giving written notice to the company
• The resignation is effective from the date it is delivered to the company's registered
office
• A company whose auditor resigns is required to inform the registrar. Failure to do so
is an offence
• An auditor who resigns can require the directors to convene招集 a general meeting
to consider his explanation of the circumstances that led to his resignation. The
directors have 21 days to send out a notice convening a meeting and it must be held
within 28 days of the notice
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The auditor
 Removal
• An auditor can be removed by ordinary resolution
• The resolution must be passed at a general meeting; a written resolution cannot be
used to remove an auditor
• Special notice of the resolution is needed (i.e. 28 days). The company must send a
copy of the resolution to the auditor and he has the right to make a statement of his
case. The company then has to circulate his statement to the shareholders. However,
if time does not allow for circulation, the statement can be read out at the meeting.
• Notice of the resolution removing the auditor must be sent to the Registrar within 14
days
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The auditor
 The auditor has a statutory duty to：
• report to the members on whether the accounts:
 give a true and fair view and
 have been properly prepared in accordance with the Companies Act and the relevant financial
reporting framework.
• state whether or not the directors' report is consistent with the accounts.
• for quoted companies, report to the members on the auditable part of the directors' remuneration
report including whether or not it has been properly prepared in accordance with the Act.
• prepare and sign the audit report
 To fulfil their statutory duties, auditor should investigate and form an opinion as to whether:
• Proper accounting records have been kept and proper returns adequate for the audit have been
received from branches.
• The accounts are in agreement with the accounting records.
• The information in the directors' remuneration report is consistent with the accounts.
 Breach the statutory duty
• It is a criminal offence to knowingly or recklessly cause an audit report to include anything that is
misleading. The offence carries an unlimited fine.
• There could also be a civil offence under the tort of negligence for including misleading accounts
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Framework-Guide your mind
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Meetings
 Annual general meeting 年度（股东）大会
Timing
•
Public companies must hold an AGM within the six months following their
financial year end
Failure to hold
•
The company and every officer in default can be fined if an AGM is not held.
Private company
•
Private companies are not required to hold an AGM.
Notice
•
At least 21 days' notice
Business
•
Usual business includes: consider accounts, appoint auditors, elect directors,
declare dividends .
Resolutions
•
Members holding at least 5% of the voting have the right to propose a resolution
for the AGM agenda and to require the company to circulate details of the
resolution to all members.
If the members' request is received before the financial year end, the members
are not required to cover the costs of circulation. Otherwise member need to pay
•
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Meetings
 General meeting
Timing
•
•
Held whenever required.
Must be held by a plc if a serious loss of capital has occurred
Purpose
•
Meeting of a class of shareholders
Quorum 法定人
数
•
Two persons holding or representing by proxy at least one third in nominal value
of the issued shares of the class
Notice
•
At least 14 days
Business
•
The person who requisitions the meeting sets the agenda.
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Resolutions
 Resolutions are the way in which companies take decisions. They are voted on by the
members in person or by proxy. There are three types of resolution:
Type
% required to
pass
To registrar
Purpose of resolution
Special
大于75%
14 days' notice
Yes-within 15 days
•
•
•
•
Alter name
Wind up company
Alter articles
Reduce share capital.
Ordinary
大于50%
14 days' notice
Only if required
Used whenever the
law or the by statute
•
Used whenever the law or the by statute
articles do not require a special resolution.
Written
Special-75%
(for private) Ordinary-50%
Yes if a 75%
majority is required
•
A private company can pass any decision
needed by a written resolution, except for
removing a director or auditor before their
term of office has expired
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Calling a meeting
 Who can call a meeting
Directors
•
The articles usually delegate the power to the directors
Members
•
Members may require the directors to call a GM if they hold at least 5% of the
paid up voting capital.
A notice conveying the meeting must be sent out within 21 days of the
requisition.
The meeting must take place within 28 days of the notice convening the meeting.
If the directors do not call a meeting, the members who requested the meeting
may themselves call a meeting to take place within three months of the initial
request
•
•
•
Resigning
auditor
•
A resigning auditor may require the directors to convene a meeting so he can
explain the reasons for his resignation.
Court
•
A court can call a meeting on the application of a director or member where it
would otherwise be impracticable e.g. to break a deadlock 僵局
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Calling a meeting
 Notice
Who must
receive notice?
•
Every member and every director
Failure to give
notice
•
Accidental failure to give notice to one or more persons does not invalidate the
meeting
Contents of
notice
•
•
•
Date, time and place of the meeting.
The general nature of the business to be transacted.
The text of any special resolutions
Length of notice
period
•
•
AGM- 21 days, Less if every member entitled to attend and vote agrees.
GM – 14 days, Less if members holding at least 95% of shares agree. (Where
company is private, can be reduced to 90% )
Special notice
•
A notice of 28 days which must be given to a company of the intention to put
certain types of resolution at a company meeting
 To remove an auditor or to appoint an auditor other than the auditor who was
appointed at the previous year's meeting
 To remove a director from office or to appoint a substitute in their place after
removal
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Voting and polls
 Decisions are taken regarding resolutions by voting on a show of hands or a poll
• Show of hands
 On putting a resolution to the vote the chairman calls for a show of hands.
 One vote may be given by each member present in person, including proxies.
 Unless a poll is then demanded, the chairman's declaration of the result is conclusive
• Poll
 Not less than five members
 Member(s) representing not less than one-tenth of the total voting rights
 Member(s) holding shares which represent not less than one-tenth of the paid-up
capital
 The result of the previous show of hands is then disregarded
 一股一票表决
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Voting and polls
 Results of quoted company polls must be made available on a website.
 The following information should be made available as soon as reasonably practicable, and
should remain on the website for at least two years.
• Meeting date
• Text of the resolution or description of the poll's subject matter
• Number of votes for and against the resolution
 The assent principle(同意原则): A unanimous decision of the members is often treated as a
substitute for a formal decision in general meeting properly convened and held, and is
equally binding.
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Class meetings and single member companies
 Class meetings are held where the interests of different groups of shareholders maybe
affected in different way. Class meetings are of two kinds
• (a) If the company has more than one class of share, for example if it has 'preference'
and 'ordinary' shares, it may be necessary to call a meeting of the holders of one class,
to approve a proposed variation of the rights attached to their shares.
• (b) Under a compromise or arrangements with creditors the holders of shares of the
same class may nonetheless be divided into separate classes if the scheme proposed will
affect each group differently
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Class meetings and single member companies
 Quorum法定人数 for a class meeting
• The quorum require minimum of two individuals(member or proxies) present is
required
 One member who is also the proxy appointed by another member cannot by
themself be a meeting
 If no quorum is present, the meeting is adjourned休会
• The quorum for a class meeting is at least one-third in nominal value of the issued
shares of the class.
 Exception rule be a meeting attended by one person only, if:
• It is a class meeting and all the shares of that class are held by one member.
• The court fixes the quorum at one.
• The company is a single member private company
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Class meetings and single member companies
 Single member private companies
• Sole member takes any decision that could have been taken in general meeting, that
member shall (unless it is a written resolution) provide the company with a written
record of it.
• This allows the sole member to conduct members' business informally without notice or
minutes.
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21
Insolvency and administration
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Framework-Guide your mind
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Liquidation
 If a company finds itself in financial difficulty, the two main options available to it are:
• Liquidation. This winds up the company, thus bringing its life to an end .
• Administration. This aims to rescue the company so that it may continue trading as a going
concern.
 A voluntary liquidation occurs where the members pass a resolution to go into
liquidation. The type of resolution needed depends on the circumstances:
• Ordinary: This is rare, but if the articles specify liquidation at a certain point, only an
ordinary resolution is required
• A special resolution must be passed if the company is being wound up
 There are two types of voluntary liquidation:
• A members' voluntary liquidation is used where the company is solvent.
• A creditors' voluntary liquidation is used where the company is insolvent.
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Voluntary liquidation
 Member’s voluntary winding up
• Winding up commences from the passing of the special resolution
• The directors make a declaration of solvency stating that they are of the opinion that
the company will be able to pay its debts within 12months. It is a criminal offence to
make a false declaration
• The members appoint a named insolvency practitioner as liquidator
• The liquidator is responsible for realizing the assets and distributing the proceeds
• The liquidator presents his report to final meeting of the members
• The liquidator informs the registrar of the final meeting and submit a copy of his
report
• The registrar registers the report and the company is dissolved 3 month later.
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Voluntary liquidation
 Creditor’s voluntary winding up
• Winding up commences from the passing of the appropriate resolution
• There is no declaration of solvency as the company is insolvent. A meeting of creditors must
be held within 14 days of the resolution to liquidate. The directors must submit a statement
of the company’s affairs.
• Both the members and the creditors have the right to appoint a named insolvency
practitioner as liquidator. The creditors nominee prevails占多数 unless they have not made
their appointment. The members and creditors may appoint up to five persons to serve on a
liquidation committee
• The liquidator is responsible for realizing the assets and distributing the proceeds
• The liquidator represents this report to the final meetings of members and creditors
• The liquidator informs the registrar of the final meeting and submits a copy of his report
• The registrar registers the report and the company is dissolved
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Voluntary liquidation
 Converting a members' voluntary liquidation into a creditors' voluntary liquidation, if
the liquidator discovers that the company's debts will not be paid in full within the time
specified in the declaration of solvency.
 At the meeting the liquidator must:
• Lay搁置 before the creditors a statement of affairs
• invite the creditors to appoint a different insolvency practitioner as liquidator
• invite the creditors to appoint a liquidation committee
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Voluntary liquidation
 Once insolvency procedures have commenced
• No share dealings or changes in members are allowed
• All company documents (eg invoices, letters, emails) and the website must state the
company is in liquidation
• The directors' power to manage ceases
 For creditor’s voluntary winding up, during the period between the members' and
creditors' meetings. The powers of the members' nominee as liquidator are restricted to:
• Taking control of the company's property
• Disposing of perishable or other goods which might diminish in value if not
disposed of immediately; and
• Doing all other things necessary for the protection of the company's assets.
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Compulsory liquidation
 Grounds for winding up
• A compulsory winding up commences when a petition for a winding up order is
presented to the court. The possible grounds for the petition are set out:
 The company has passed a special resolution to be wound up by the court.
 A public company has not been issued with a trading certificate within a year of
incorporation.
 The company has not commenced business within a year of being incorporated or
has suspended its business for over a year.
 The company is unable to pay its debts. Creditor who is owed at least £750 and
the company has failed to pay the sum due within three weeks.
 A dissatisfied member may petition the court for the company to be wound up on
the just and equitable ground
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Compulsory liquidation
 Petitioners 请求人
• The persons may petition the court for a compulsory liquidation
 The company itself
 The official receiver from the Insolvency Service and Court 法院委派的官员
 The Department for business, innovation and skills (Business, Energy and
Industrial Strategy)
 The secretary of State
 A creditor who is owed at least 750
 A contributory (a member of company). Members may have to make payments to
the company in respect of any unpaid share capital or guarantees
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Compulsory liquidation
 The effects of an order for compulsory liquidation are:
• The liquidation is deemed to have started when the petition was first presented
• Any disposition of the company's property and any transfer of its shares subsequent
to the commencement of liquidation is void unless the court orders otherwise.
• Any floating charges crystallize 冻结
• Any legal proceedings against the company are halted, and none may start unless
heave is granted from the court
• The employees of the company are automatically dismissed. The liquidator assumes
the powers of management previously held by the directors.
• The official receiver becomes liquidator
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Compulsory liquidation
 Subsequent procedures
• On the marking of the winding up order, the official receiver becomes liquidator
• With 12 weeks, the official receiver will summon meetings of the creditors and
contributories in order to appoint a licensed in solvency practitioner to take over the
job of liquidator and to appoint a liquidation committee
• The liquidator is responsible for realizing the assets and distributing the proceeds
• The liquidator presents his report to final meetings of the members and creditors
• The liquidator informs the registrar of the final meeting and submits a copy of his
report
• The registrar registers the report and the company is dissolved 3 months later.
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Compulsory liquidation
 Application of assets, the liquidator must repay debts in the following order:
• Fixed charge-holders
• Expenses of liquidation
• Preferential creditors
 Wages or salaries due in the four months preceding the commencement of
winding up (maximum £800 per employee)
 All accrued holiday pay.
• Floating charge-holders
• Unsecured creditors
• Members- declared but unpaid dividends
• Any surplus to be distributed to members
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Administration
 Administration行政监管 involves the appointment of an insolvency practitioner,
known as an administrator监管人, to manage the affairs, business and property of a
company.
 Administration orders and liquidations are mutually exclusive. Once an administration
order has been passed by the court, it is no longer possible to petition the court for a
winding up
 Administration is often used as an alternative to putting a company into liquidation:
• rescue a company in financial difficulty with the aim of allowing it to continue as a going
concern
• achieve a better result for the creditors than would be likely if the company were to be
wound up
• realise property to pay one or more secured or preferential creditors .
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Administration
 The administrator can only use the third option where:
• he thinks it is not reasonably practicable to rescue the company as a going concern,
and
• where he thinks that he cannot achieve a better result for the creditors as a whole
than would be likely if the company were to be wound up, and
• he does not unnecessarily harm the interests of the creditors of the company as a
whole
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Administration
 Administration can be initiated with or without a court order
• Without reference to the court. There are three sets of people who might be able to
appoint an administrator:
 Floating chargeholders
 Directors
 Company
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Administration
 With reference to the court. There are four sets of parties that may apply to the court for
an administration order:
 The company
 The directors of the company
 One or more creditors of the company
 Another court following non-payment of a fine (like a creditor)
 The court will only agree to appoint an administrator if it is satisfied that:
• the company is or is likely to become unable to pay its debts, and
• the administration order is likely to achieve its objectives
 The application will name the person whom the applicants want to be the administrator.
Unless certain interested parties object, this person is appointed as administrator.
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Administration
 The appointment of an administrator has the following effects:
• the rights of creditors to enforce any security over the company's assets are
suspended
• there can be no enforcement of charges, retention of title clauses or hire-purchase
agreements against the company
• any outstanding petition for winding up is dismissed
• no resolution may be passed to wind up the company
• the directors still continue in office, but their powers are suspended
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Administration
 The administrator also has a number of legal duties
• He must send notice of appointment to the company and publish notice of appointment.
• He must obtain a list of company creditors and send notice of appointment to each.
• Within 7 days if appointment, he must send notice of appointment to the Registrar.
• He will arrange for certain relevant people to provide a statement of affairs of the company.
• He must ensure that every business document of the company bears his identity as administrator and
a statement that the company affairs and property are being managed by him.
• Based on the statement of affairs, he must draw up a statement of his proposals, which must be
approved at a meeting of creditors within eight weeks of the commencement of administration.
• If the meeting does not approve the proposals, the court may dismiss the administrator or make such
provisions as it sees fit.
• If the meeting approves the proposals, the administrator can carry them out.
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Administration
 The administrator takes on the powers of the directors
• Remove or appoint a director
• Call a meeting of members or creditors
• Apply to court for directions regarding the carrying out of their functions
• Make payments to secured or preferential creditors
• With the permission of the court, make payments to unsecured creditors
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Administration
 The administration will end when it is completed or when the administrator is
discharged by the court:
• The administration has been successful
• Twelve months have elapsed from the date of the appointment of administrator
• The administrator or a creditor applies to the court to end the appointment
• An improper motive of the applicant for applying for the administration is
discovered
 If administrator feel that the purposes of administration have been achieved, they must
file a notice with the court and the Registrar
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22
Fraudulent and criminal behaviour
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Framework-Guide your mind
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Insider dealing
 Insider dealing: dealing in securities while in possession of inside information as an
insider, the securities being price-affected by the information
 It can be criminal and civil offense if they have information as an insider and:
• they deal in price-affected securities on the basis of that information
 Securities include shares and associated derivatives, debt securities and warranties
• they encourage another person to deal. They must know or have reasonable cause to believe
that dealing would take place. It is irrelevant whether:
 The person encouraged realises that the securities are price-affected securities
 The inside information is given to that person. For example, a simple recommendation to
the effect that 'I cannot tell you why but now would be a good time to buy shares in
Bloggs plc' would infringe the law
 Any dealing takes place, the offence being committed at the time of encouragement
• they disclose the information to anyone other than in the proper performance of their
employment, office or profession
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Insider dealing
 Inside information as information which:
• relates to particular securities or to a particular issuer of securities
• is specific or precise
• has not been made public
• if made public would be likely to have a significant effect on the price
 A person has information as an insider if:
• he has information through being a director, employee or shareholder of an issuer of
securities
• he has information through having access to information by virtue of his
employment, office or profession
• the direct or indirect source of the information is a person within either of these
categories.
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Insider dealing
 Defenses: A person will not be guilty of insider dealing
• where the individual is able to show that he did not, at the time, expect the dealing to
result in a profit or in the avoidance of a loss in relation to the inside information
which he knew.
 如果想要获利，但是实际亏损了仍然有罪
• where the insider believed on reasonable grounds that the information had been
disclosed widely enough
 在少数人的会议或者年会中公布并不算disclosed widely
 如果付费就能获得的信息不是inside information
• where he would have dealt with the securities in the same way or encouraged
another to deal with the securities in the same way, even if he had not possessed the
inside information, he will have a defence .
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Insider dealing
 Consequences
• On indictment诉状 the penalty is an unlimited fine and/or a maximum of seven
years imprisonment.
• If the individual concerned is a director, he is in breach of his fiduciary duty and
may be liable to account to the company for any profit made
 Scope
• The offender or any professional intermediary must be in the UK at the time of the
offence or the market must be a UK regulated market.
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Market abuse
 Market abuse市场滥用 is defined as:
• behaviour in relation to any qualifying investments;
• likely to be regarded by regular users of the market; and
• that falls within at least one of three categories:
 (1) based on information not generally available to users of the market
 (2) is likely to give a regular user a false or misleading impression as to the market value
of such investments.
 (3) is regarded by a regular user as likely to distort the market in such investments.
 Qualifying investments are those which are traded on the UK's 'prescribed markets', as
well as those traded on other European regulated markets
 Regulates has statutory civil powers to impose unlimited fines for the offence of market
abuse
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Market abuse
 There are seven types of behaviour which can amount to market abuse
• Insider dealing
• Improperly discloses
• Misuse of Information
• Manipulating transactions: is trading, or placing orders to trade, that gives a false or
misleading impression of the supply of, or demand for, one or more investments
• Manipulating devices is trading, or placing orders to trade, which employs fictitious
devices or any other form of deception.
• Dissemination is giving out of information that conveys a false or misleading
impression about an investment or the issuer of an investment
• Distortion and misleading behavior
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Money laundering
 Money laundering is the process by which the proceeds of crime are converted into
assets which appear to have a legal rather than an illegal source. The aim of disguising
the source of the property is to allow the holder to enjoy it free from suspicion as to its
source
 Money laundering is primarily regulated by the Proceeds of Crime Act 2002.
• The legislation imposes some important obligations upon professionals, such as
accountants, auditors and legal advisers. These obligations require such
professionals to report money laundering to the authorities and to have systems in
place to train staff and keep records.
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Money laundering
 Money laundering usually comprises three distinct phases:
• placement- the initial disposal of the proceeds of criminal activity into an apparently
legitimate business activity or property
• layering - the transfer of money from business to business, or place to place, in order
to conceal its initial source
• integration - the culmination of the previous procedures through which the money
takes on the appearance of coming from a legitimate source
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Money laundering
 The offences
• Laundering: It is an offence to conceal, disguise, convert, transfer, or remove
criminal property from England, Wales, Scotland or Northern Ireland
• Failure to report: individuals carrying on a 'relevant business' may be guilty of an
offence of failing to disclose knowledge or suspicion of money laundering where
they know or suspect, or have reasonable grounds for knowing or suspecting, that
another person is engaged in laundering the proceeds of crime.
• Tipping off通风报信: Make a disclosure likely to prejudice a money laundering
investigation
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Money laundering
 Penalties
• The maximum penalty for the offence of money laundering is 14 years'
imprisonment.
• Failure to report and tipping off are punishable on conviction by a maximum of five
years' imprisonment and/or a fine.
 Secondary regulation is provided by the Money Laundering Regulations 2007.
• The Regulations require firms to put preventative measures in place. They require
firms to ensure that they know their customers and to train their staff on the
requirements of the Regulations.
• The Regulations cover most financial firms
• There are various regulators and professional bodies who have been given
supervisory authority
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Bribery
 Bribery is an act implying money or gift given that alters the behaviour of the recipient.
It is the offering, giving, receiving, or soliciting of any item of value to influence the
actions of an official or other person in charge of a public or legal duty.
 The Act creates four offences:
• bribing a person to induce or reward them to perform a relevant function improperly
direct or indirect (第三方责任会被雇主取代)
• requesting, accepting or receiving a bribe as a reward for performing a relevant
function improperly
• using a bribe to influence a foreign official to gain a business advantage
• a new form of corporate liability for failing to prevent bribery on behalf of a
commercial organization
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Bribery
 Individual has a defence
• Prove that their conduct was necessary for the proper exercise of any function of an intelligence
service 情报工作
• The proper exercise of any function of the armed forces when engaged on active service.
 An organisation has a defence to offence using adequate procedures (anti-bribery)
• Proportionate procedures – organisations should have procedures in place aimed at preventing bribery
• Top-level commitment – an organisation's senior management should be committed to preventing
bribery and should foster a culture
• Risk assessment – organisations should assess the nature and extent of their exposure to bribery
• Due diligence – organisations should perform due diligence procedures
• Communication – anti-bribery policies and procedures should be embedded in the fabric of the
organisation and communicated both internally and externally (通过培训)
• Monitoring and review – the anti-bribery policies and procedures should be regularly monitored and
reviewed.
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Bribery
 Penalty
• The penalty for individuals is a maximum sentence of 10 years.
• For commercial organisations there maybe an unlimited fine
• Deferred prosecution agreement
• Deferred prosecution agreements (DPA) allows commercial organisations to settle
allegations of criminal economic activity without being prosecuted and without any
formal admission of guilt. (一般直接用钱解决)
• An agreement is made between the prosecutor and the commercial organisation,
under which the prosecutor will bring criminal charges but then immediately
suspend the process based on the agreement
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Transactions at an undervalue and preference
 Undervalue:
• A company enters into a transaction at an undervalue if the company makes a gift当作一个
礼物 or otherwise enters into a transaction on terms that the company receives no
consideration or insufficient consideration
• The transaction would not be set aside if it was entered into in good faith on the reasonable
belief that it would benefit the company.
• A liquidator may also apply to the court to set aside取消 company transactions at an
undervalue
 Preferences
• A company gives a preference if it does anything to put a creditor in a better position in the
event of the company‘s insolvent liquidation. The court will not make an order unless the
company was influenced by a desire(举例: connect person) to prefer the creditor.
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Fraudulent and wrongful trading
 Fraudulent trading occurs where the company's business is carried on with intent to
defraud creditors or for any fraudulent purpose.
 Fraudulent trading can give rise to:
• civil liability liquidator considers that there has been fraudulent trading (当公司 liquidation
or administration)
 Only persons who take the decision to carry on the company's business in this way or
play some active part are liable.
 'Carrying on business' can include a single transaction and also the mere payment of
debts as distinct from making trading contracts.
 It relates not only to defrauding creditors, but also to carrying on a business for the
purpose of any kind of fraud.
• criminal liability: Companies Act 2006 (TSO, 2006) where a company has traded with
intent to defraud creditors or for any fraudulent purpose
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Fraudulent and wrongful trading
 Fraudulent trading can give rise to the following consequences:
• The court can order the individual to contribute to the company's assets .
• If a director, they may be disqualified for 15 years
• If found guilty of the criminal offence, the individual can be fined and/or imprisoned
for up to 10 years.
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Fraudulent and wrongful trading
 Wrongful trading (civil liability) occurs where on a winding-up it appears to the court
 Directors will be liable if the liquidator or administrator proves the following.
• (a) The director(s) of the insolvent company knew, or should have known, that there was no
reasonable prospect that the company could have avoided insolvency.有责任但达不到欺诈
• (b) The director(s) did not take sufficient steps to minimise the potential loss to the creditors.
 Wrongful trading can give rise to the following consequences:
• A liquidator may apply to the court for an order that the director should make such
contribution to the company's assets
• They may be disqualified for 15 years.
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Potential criminal activity
 There are a number of criminal offences that could be undertaken by individuals
concerned in the operation, management or winding up of a company.
• Failure to file accounts or annual returns
• Providing misleading information to an auditor
• Business Name: It is a criminal offence to use a business name that requires prior
approval, if that approval has not been obtained. It is also a criminal offence to fail
to disclose the business details
• Company directors disqualification: A person acts as a director whilst disqualified
personally liable for the company's debts
• Phoenix companies: are created by directors of insolvent companies as a method of
continuing their business. Very often they have similar names as the insolvent
company. It is a criminal offence where a director creates such a company within
five years of the original company being liquidated. The person is liable to a fine or
imprisonment.
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The Fraud Act 2006
 The Fraud Act 2006 radically changed the law of criminal fraud.
• The defendant must have been dishonest, and have intended to make a gain or to cause a
loss to another; and
• The defendant must carry out one of these acts:
 fraud by making a false or misleading representation
 fraud by failing to disclose information whereby a person fails to disclose any
information to a third party when they are under a legal duty to disclose such
information.
 fraud by abuse of position 滥用职权
 The new offence of fraud is intended to be wide and also flexible. There is no reliance
on the concept of "deception"
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The Criminal Finances Act 2017
 The Criminal Finances Act 2017: 'relevant bodies' criminally liable if 'associated
persons' are involved in tax evasion.
• A relevant body is defined by the Act as a company or partnership whether formed
in the UK or elsewhere.
• An associated person is anyone acting in the capacity of an employee, an agent, or
any other person who performs services on behalf of the relevant body.
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The Criminal Finances Act 2017
 The Criminal Finances Act 2017, an offence will be committed by a relevant body if
the following three stages occur:
• (a) There is criminal tax evasion by a taxpayer or business under existing UK or foreign tax
evasion law.
• (b) An associated person of the relevant body facilitated the tax evasion under existing
aiding and abetting law.
• (c) The relevant body failed to prevent the associated person from committing the aiding
and abetting offence.
 Defence: It had reasonable prevention procedures in place, or in the circumstances it
was unreasonable or unrealistic to have such procedures in place. It applies even if the
business was not involved in the act or had no knowledge of it.
 The maximum penalty under the Act is unlimited fine
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苟有恒，何必三更眠五更起
最无益，只怕一日曝十日寒
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