Corporate Law - The Judicial System in the UK - Essay Example

? Corporate Law Corporate law is a branch of the judicial system in the UK that deals with litigation matters they involve business enterprises and entrepreneurship. It governs the relationships that exist between corporations and helps sort out differences that arise between them. Corporate law serves to regulate the activities of businesses that were formed under the Companies Act of 2006, and other previous enactments that remain relevant, in today’s corporate world. This paper aims to discuss the nature of corporate law in UK by highlighting two cases that are going to focus on obligation law and terms of dismissal. Sarah, who bought a hotel from Nigel, later realized that the physical condition of the building, housing the hotel, was not in perfect condition as she had been led to believe, by her architect friend, is putting Nigel the proprietor of Colchester Suppliers through litigation. The financial performance of the hotel was also not, in accordance with what the hotel’s accountant had projected to her. Upon the revelation of these discrepancies, Sarah suffered a nervous breakdown, which she squarely blames on Nigel and is suing for responsibility. Sarah’s case against Nigel is a typical case of obligatory law, which integrates personal duty into the law governing such transactions between individuals and corporations. Nigel is not responsible for any wrongdoing, on his part because on the part of the financial performance of the hotel, the accountant made it clear to Sarah that the information presented was without responsibility, on his part, as the accountant. The fact that the accountant provided this information, when giving Sarah financial information pertaining to the hotel, shows that Sarah had an obligation to seek an alternative and independent opinion about the hotel’s accounts. This would have helped her make a better judgement of the hotel’s financial position and decide if it was worth her attention. She should not lay blame on Nigel, as the owner of the hotel, because it should have been that the account’s opinion would be bias, in favour of the hotel he or she has been catering for. The accountant’s actions could be partly due to the desire to portray the hotel in a positive light for retaining their position as employees in the event of a transfer of ownership. This transfers part of the blame to the accountant who should be held liable for their actions because the law under the obligations rule subjects them to the duty of telling the truth on facts and knowledge they are privy to (Golding & Edmundson, 2008 p148). Under corporate law, obligation to conform to social rules like telling the truth requires that a sanction be carried out against the accountant because of his/her actions. Obligations of this nature, under the law, make it a duty for someone to conform to some social rules that govern practices in businesses. These obligations are subject to a sovereign authority to obey where the command requires the conveyance of a will and awareness of the attached risk involved in suffering a sanction for non-compliance (Dimond, 2009 p180). Nigel, on his part, did not refuse to divulge information concerning the financial position of the hotel or opinion because Sarah never asked for it. If he had given his opinion, it can be held that he lied about the financial state of the hotel so He should be exonerated of any blame in matters relating to the finances of the hotel. However, at the same, it makes it his duty to ensure that his employee observed the appropriate moral conduct of conforming to social rules because the accountant was in his employ. His failure to make it his duty and obligation casts some responsibility to him for his accountant’s actions. The obligation law casts more negligence on the buyer and the accountant because they did not do what was meant to be their duty under the law (Davies, 2011 p 318). Sarah consulted her architect friend, Liz, to assess the building the hotel was housed in, and this shows that she attempted to realize the fulfilment of obligatory duties under the law, but failed. This is because her friend the architect could have been an unqualified assessor even though she was in the profession of designing houses (Hoffman, 2011 p88). Assessing the integrity of houses is a different skill set, which is a speciality, related more to engineering than architecture. Sarah should have enquired from Liz if she had the required skill set to give an experts opinion adequately. Most of the blame lies with Nigel because it was his duty to know the condition of the timber in the hotel. This leads to the eventual closure of the hotel, for six months, to repair the damage caused by the dry rot and subsequently results to Sarah incurring expenses, which he should have been responsible for. In this instance, Nigel is supposed to cater for damages, which Sarah is suing for so that he can take up the responsibility he had neglected in the past. For instance, under the Tort law, Sarah could have presented the negligence clause into action if she had proven that Nigel’s actions were in breach of a duty of care. This would have put Nigel on the spot for acting in a manner that placed Sarah in a position of loss or damage in the near future. According to the extract provided, there is no evidence to show that Nigel did not perform his duty of care as demanded by the tort provision under the corporate law of UK (Hoffman, 2011 p 163). This means that Nigel cannot be held liable under the negligence clause. Social relationships do not normally give rise to a duty but can be considered where advice was sought from an individual with some expertise. An example is the case of Caparo versus Dickman 1990 AII ER 868 where the claimants were shareholders in Fidelity plc and after accounts were published and audited by the defendants, they purchased further shares ultimately making a takeover bid, which succeeded. They alleged that the accounts for 1984 should have shown a profit of ?465,000 instead of ?1.3. In this case, Nigel cited the clause as “Not responsible” when giving the information to Sarah and the fact that there was no relationship of proximity, the defendant’s auditors owe no duty of care to the claimants. Nigel is facing a second legal action by two of his employees Mohammed and Jonathan who are citing unfair dismissal. According to UK’s corporate law, unfair dismissal amounts to an individual(s) being terminated from his place of work before the term agreed upon by the employee and the employer has come to term due to various reasons. A notice of termination should always be issued to the employee in advance as stated in the employment contract whose time varies depending on the type of contract signed. In other instances, a notice of termination is not always necessary if the employer establishes a valid justifiable reason and shows that they have acted accordingly in the underlying circumstances (Upex et al, 2012 p 283). The employers must also be consistent meaning that they should not show bias against some employees; reasons qualifying someone for termination should be the same for all employees. It is also necessary to note that, upon termination, the employer should issue a written statement explaining the grounds for ending the employment contract especially if the employee has worked for that particular employer for at least a period of one year (Wachter & Estlund, 2012 p 401). The reasons under which a person is unfairly dismissed establish the validity of the action taken against them. In light of Mohammed and Jonathan’s dismissal, their employer did not establish beyond a reasonable doubt that they were indeed responsible for the shortages in stock, which he based his reasons for dismissal on. The shortages in stock were proved by the employee’s legal team because of errors in accounting and not due to pilferage. The complainants should have considered their eligibility as workers and their performance history at the workplace. According to the facts established, in the extract, the grounds for dismissal relied on word of mouth from the security officer, who did not see the two employees steal anything. His only justification is based on the assumption that they bought new expensive cars from the proceeds gained after selling items stolen from the factory. The other reason that the security officer holds against them is that they had been left in the factory for long hours unsupervised making it a precedent for them to steal from the factory. Nigel should have sought to ascertain whether the allegations, by the security officer, had any basis by gathering some evidence to prove and give his reasons, for dismissing the two some credibility and substance. In this type of case, the law requires that the employer illustrate the reasonableness of the dismissal, by showing that there was no alternative action he could have taken to remedy the situation presented, by circumstances. Upon appeal of termination, by the employees, Nigel should have strived to review the reasons underlying their dismissal. In doing this, he would have realized that there was not enough evidence to prove they stole from him. Under the law, Nigel is liable for unfair dismissal against his two employees. Bibliography Golding M. P and Edmundson W. A. The Blackwell Guide to the Philosophy of Law and Legal Theory. New York: John Wiley & Sons, 2008. Dimond B. Legal Aspects of Physiotherapy. 2nd Illustrated Edition. New York: John Wiley & Sons, 2009. Davies A. Workplace Law Handbook 2011: Employment Law and Human Resources. Illustrated Edition. Workplace Law Group, 2011. Hoffman D. The Impact of the UK Human Rights Act on Private Law. Cambridge University Press, 2011. Upex R, Upex R. V, Hardy S. The Law of Termination of Employment. 8Th Revised Edition. London: Jordan’s Publishing Limited, 2012. Wachter M. L and Estlund C. L. Research Handbook on the Economics of Labor and Employment Law: Research Handbooks in Law and Economics Series. Edward Elgar Publishing, 2012. Read More