Business Law and Ethics
Core concepts
Business law content centers on contract, agency, company law, and liability. For a valid contract you need offer, acceptance, consideration, intention to create legal relations, and capacity, with legality of purpose. Understand invitation to treat versus offer, counter-offer (which destroys the original offer), acceptance by conduct, and the postal versus instantaneous communication rules. Know remedies: damages, specific performance, injunction, and rescission, plus the duty to mitigate loss.
Company law topics include separate legal personality, limited liability, directors' duties (act within powers, promote success of the company, exercise independent judgment, exercise reasonable care and skill, avoid conflicts, not accept benefits, declare interests), and the rules on distributions and capital maintenance.
Ethics questions test integrity, objectivity, professional competence and due care, confidentiality, and professional behavior. Candidates must apply a framework: identify the facts, identify the ethical issue, consider stakeholders and alternatives, and decide on a course of action with safeguards. Pressure from a superior never justifies breaching confidentiality or integrity.
Traps
- Treating an advertisement or price display as an offer rather than an invitation to treat.
- Assuming a counter-offer leaves the original offer open.
- Confusing directors' duty to the company with a duty to individual shareholders.
- Believing confidentiality ends when employment ends; it generally survives.
- Choosing a remedy without checking whether damages are adequate.
Worked example / rule of thumb
Rule of thumb: offer, acceptance, consideration, intention, capacity, legality - check all six. Example: a supplier emails a quotation marked "subject to contract"; the buyer replies accepting. Because the quotation invited negotiation and was expressly subject to contract, no binding agreement arises until formal execution. If instead the supplier had stated firm terms and the buyer accepted unconditionally, a contract would form on acceptance, and the supplier's later refusal would be a breach remediable in damages.