ICAEW ACA Business Law cheat sheet

Precedent: ratio decidendi binds lower courts in the same hierarchy; obiter dicta are persuasive only. A higher court may overrule; a later court may distinguish on the facts.

Civil standard of proof is the balance of probabilities; criminal standard is beyond reasonable doubt. Civil appeals: High Court to Court of Appeal to Supreme Court; permission to appeal is normally required.

Primary legislation = Act of Parliament (Bill passes Commons, Lords, Royal Assent). Delegated legislation = statutory instruments made under a parent Act; ultra vires if beyond the enabling power.

A company is a separate legal person (Salomon v Salomon): it owns assets, contracts in its own name, and shareholders have limited liability.

Partnership: Partnership Act 1890. Absent contrary agreement, profits and losses are shared equally and partners have unlimited joint (contract) and joint and several (tort) liability.

LLP: separate legal personality, members have limited liability; at least two designated members; governed by the LLP Act 2000 and regulations, with mutual agency between members.

Agency: agent binds principal where actual authority (express or implied) or apparent/ostensible authority exists. Undisclosed principal may sue and be sued on the contract.

Sole trader: unlimited personal liability, no separate legal personality, but full control and simple taxation. Incorporation transfers risk but imposes filing and disclosure duties.

Offer: clear intention to be bound plus specified terms; lapses on rejection, counter-offer, death or reasonable time. Invitation to treat: adverts, displays, auctions, tenders (Fisher v Bell; Partridge v Crittenden).

Acceptance must be unqualified and communicated; postal acceptance takes effect on posting where post is contemplated; instantaneous communications (email) take effect on receipt.

Consideration must be sufficient but need not be adequate; past consideration is no consideration. Performance of an existing duty owed to a third party can be good consideration (Pao On).

Intention to create legal relations: presumed in commercial agreements, rebuttable; presumed absent in social/domestic arrangements, rebuttable on the facts.

Terms: representations vs terms by timing, importance and reduction to writing. Conditions are essential; warranties are minor and breach gives damages only; innominate terms are classified by effect of breach.

Exclusion clauses must be incorporated (signature, notice, course of dealing) and construed contra proferentem; UCTA 1976 and CRA 2015 restrict liability for death/personal injury and unreasonable terms.

Misrepresentation: false statement of fact inducing the contract. Types: fraudulent, negligent (s.2(1) Misrepresentation Act 1967), innocent. Remedies: rescission and/or damages; bars to rescission include affirmation, lapse of time and third-party rights.

Frustration discharges the contract automatically on an unforeseen event destroying the purpose; Law Reform (Frustrated Contracts) Act 1943 allows recovery of money paid and just allowance for work done.

Damages: expectation measure (put claimant in position as if performed), remoteness under Hadley v Baxendale (arising naturally or in contemplation), and mitigation duty. Penalty clauses unenforceable; liquidated damages genuine pre-estimate enforceable.

Formation: registration at Companies House requires memorandum, articles, statement of capital and initial shareholdings, and statement of compliance. Certificate of incorporation is conclusive evidence.

Directors' general duties (CA 2006 ss.171-177): act within powers; promote success of the company; exercise independent judgment; reasonable care, skill and diligence; avoid conflicts; no benefits from third parties; declare interest in proposed transactions.

Shareholder remedies: derivative claim (s.260), unfair prejudice petition (s.994), just and equitable winding up (s.122(1)(g) Insolvency Act 1986).

Capital maintenance: dividends only from distributable profits; reduction of capital requires special resolution and court or solvency statement procedure; financial assistance rules apply to private companies subject to solvency statement.

Share issues: directors need authority (s.551) and pre-emption rights apply to equity securities (s.561) unless disapplied by special resolution or articles.

Company decision-making: members' ordinary resolution = simple majority; special resolution = 75%. Written resolutions available to private companies; public companies require meetings.

Directors' conflicts: s.175 duty not to have conflicts unless authorised by independent directors or members; s.177 declaration of interest in existing transaction to the board.

Audit and filing: small companies may be exempt from audit; annual accounts and confirmation statement filed at Companies House; late filing penalties apply.

Insolvency tests: cash-flow (unable to pay debts as they fall due) and balance-sheet (liabilities exceed assets). Statutory demand £750 unpaid for 21 days can ground a winding-up petition.

Administration: moratorium, statutory purpose (rescue company, achieve better result than winding up, realise property), administrator must act in interests of creditors as a whole; 8-week pre-pack rules.

CVA: company voluntary arrangement, requires 75% by value of creditors voting (excluding connected persons) and simple majority in number; binds unsecured creditors.

Liquidation: members' voluntary (solvency declaration), creditors' voluntary (insolvent), compulsory (court order). Order of distribution: fixed charge creditors, expenses, preferential creditors, floating charge, unsecured, members.

Wrongful trading (s.214): director liable where, before winding up, they knew or ought to have known insolvency and failed to take every step to minimise loss. Fraudulent trading (s.213) requires intent to defraud.

Employment status: employee (mutual obligation, personal service, control) vs worker (personal service, no mutual obligation) vs self-employed. Only employees get unfair dismissal and redundancy rights.

Unfair dismissal: qualifying period normally 2 years; reason must be one of the statutory fair reasons; procedural fairness (ACAS Code); remedy: reinstatement, re-engagement or compensation.

Redundancy: genuine redundancy (closure or diminished need for work), fair selection, consultation (20+ employees: 30/45 days), statutory redundancy pay based on age, weekly pay cap and length of service.

Discrimination: Equality Act 2010 protected characteristics; direct, indirect, harassment and victimisation; objective justification for indirect discrimination and age; burden shifts to employer to prove no discrimination.

Precedent: ratio decidendi binds lower courts in the same hierarchy; obiter dicta are persuasive only. A higher court may overrule; a later court may distinguish on the facts.

Civil standard of proof is the balance of probabilities; criminal standard is beyond reasonable doubt. Civil appeals: High Court to Court of Appeal to Supreme Court; permission to appeal is normally required.

Primary legislation = Act of Parliament (Bill passes Commons, Lords, Royal Assent). Delegated legislation = statutory instruments made under a parent Act; ultra vires if beyond the enabling power.

A company is a separate legal person (Salomon v Salomon): it owns assets, contracts in its own name, and shareholders have limited liability.

Partnership: Partnership Act 1890. Absent contrary agreement, profits and losses are shared equally and partners have unlimited joint (contract) and joint and several (tort) liability.

LLP: separate legal personality, members have limited liability; at least two designated members; governed by the LLP Act 2000 and regulations, with mutual agency between members.

Agency: agent binds principal where actual authority (express or implied) or apparent/ostensible authority exists. Undisclosed principal may sue and be sued on the contract.

Sole trader: unlimited personal liability, no separate legal personality, but full control and simple taxation. Incorporation transfers risk but imposes filing and disclosure duties.

Offer: clear intention to be bound plus specified terms; lapses on rejection, counter-offer, death or reasonable time. Invitation to treat: adverts, displays, auctions, tenders (Fisher v Bell; Partridge v Crittenden).

Acceptance must be unqualified and communicated; postal acceptance takes effect on posting where post is contemplated; instantaneous communications (email) take effect on receipt.

Consideration must be sufficient but need not be adequate; past consideration is no consideration. Performance of an existing duty owed to a third party can be good consideration (Pao On).

Intention to create legal relations: presumed in commercial agreements, rebuttable; presumed absent in social/domestic arrangements, rebuttable on the facts.

Terms: representations vs terms by timing, importance and reduction to writing. Conditions are essential; warranties are minor and breach gives damages only; innominate terms are classified by effect of breach.

Exclusion clauses must be incorporated (signature, notice, course of dealing) and construed contra proferentem; UCTA 1976 and CRA 2015 restrict liability for death/personal injury and unreasonable terms.

Misrepresentation: false statement of fact inducing the contract. Types: fraudulent, negligent (s.2(1) Misrepresentation Act 1967), innocent. Remedies: rescission and/or damages; bars to rescission include affirmation, lapse of time and third-party rights.

Frustration discharges the contract automatically on an unforeseen event destroying the purpose; Law Reform (Frustrated Contracts) Act 1943 allows recovery of money paid and just allowance for work done.

Damages: expectation measure (put claimant in position as if performed), remoteness under Hadley v Baxendale (arising naturally or in contemplation), and mitigation duty. Penalty clauses unenforceable; liquidated damages genuine pre-estimate enforceable.

Formation: registration at Companies House requires memorandum, articles, statement of capital and initial shareholdings, and statement of compliance. Certificate of incorporation is conclusive evidence.

Directors' general duties (CA 2006 ss.171-177): act within powers; promote success of the company; exercise independent judgment; reasonable care, skill and diligence; avoid conflicts; no benefits from third parties; declare interest in proposed transactions.

Shareholder remedies: derivative claim (s.260), unfair prejudice petition (s.994), just and equitable winding up (s.122(1)(g) Insolvency Act 1986).

Capital maintenance: dividends only from distributable profits; reduction of capital requires special resolution and court or solvency statement procedure; financial assistance rules apply to private companies subject to solvency statement.

Share issues: directors need authority (s.551) and pre-emption rights apply to equity securities (s.561) unless disapplied by special resolution or articles.

Company decision-making: members' ordinary resolution = simple majority; special resolution = 75%. Written resolutions available to private companies; public companies require meetings.

Directors' conflicts: s.175 duty not to have conflicts unless authorised by independent directors or members; s.177 declaration of interest in existing transaction to the board.

Audit and filing: small companies may be exempt from audit; annual accounts and confirmation statement filed at Companies House; late filing penalties apply.

Insolvency tests: cash-flow (unable to pay debts as they fall due) and balance-sheet (liabilities exceed assets). Statutory demand £750 unpaid for 21 days can ground a winding-up petition.

Administration: moratorium, statutory purpose (rescue company, achieve better result than winding up, realise property), administrator must act in interests of creditors as a whole; 8-week pre-pack rules.

CVA: company voluntary arrangement, requires 75% by value of creditors voting (excluding connected persons) and simple majority in number; binds unsecured creditors.

Liquidation: members' voluntary (solvency declaration), creditors' voluntary (insolvent), compulsory (court order). Order of distribution: fixed charge creditors, expenses, preferential creditors, floating charge, unsecured, members.

Wrongful trading (s.214): director liable where, before winding up, they knew or ought to have known insolvency and failed to take every step to minimise loss. Fraudulent trading (s.213) requires intent to defraud.

Employment status: employee (mutual obligation, personal service, control) vs worker (personal service, no mutual obligation) vs self-employed. Only employees get unfair dismissal and redundancy rights.

Unfair dismissal: qualifying period normally 2 years; reason must be one of the statutory fair reasons; procedural fairness (ACAS Code); remedy: reinstatement, re-engagement or compensation.

Redundancy: genuine redundancy (closure or diminished need for work), fair selection, consultation (20+ employees: 30/45 days), statutory redundancy pay based on age, weekly pay cap and length of service.

Discrimination: Equality Act 2010 protected characteristics; direct, indirect, harassment and victimisation; objective justification for indirect discrimination and age; burden shifts to employer to prove no discrimination.