Main Principles that Underpin the English Contract Law
The English law of contract is a product of common law. It started as a tradition by the English people and was later codified into laws. The law of contract has basic traits that distinguish it from any other law in other jurisdictions. Any discussion on the English contract law is based on identifying the key contractual attributes that shape the entire body of law. It is based on a myriad of traits that suggest the existence of general rules and exceptions. The English contract law is based on several basic principles that define a contract, as well as offer explanations about the prerequisites required to be met to form a valid contract (Whincup 2006).The English contract law requires the following elements should be met before a contract is made.
Firstly, there should be an offer made by the offeror, but not necessary to the offeree. An offer is an expression of readiness to be bound once the other party accepts. Secondly, the party or parties being offered must accept the offer. The element of acceptance entails one showing that they are ready to abide by the terms given in an offer. The general rule on acceptance dictates that upon acceptance, the party accepting the offer should communicate to the offeror (Richard & Damian 2013). The mode of communication should be according to the instructions of the party giving the offer. Thirdly, the law provides that the parties should be engaged in a legal contract because an illegal contract is not enforceable. Fourthly, the contract should be entered with mutual agreement of the parties and consideration should have been paid. Consideration should not be in monetary terms, but something of economic value. These are among other warranties that form part of the contract making (Austen-Baker 2011, p. 36).
How the Law Made in the EU Impacts on UK Law
The applicability of the United Kingdom law in the realms of the European Union law suggests some precursors. The United Kingdom law is designed in such a way that it avoids any form of inconsistencies where the European law is concerned. The aim is to ensure that the laws are applied in a complimentary manner (Hartley 2005, p. 83). The two laws are designed to give rights to individuals without any inconsistency. In understanding the place of the United Kingdom law, it is imperative to note that the European Union law plays a critical role in ensuring that there is universality in the law. For the European Union law to apply and have the desired efficacy, the United Kingdom law should ensure that it is domesticated.
The process of domesticating the European law to be part of the United Kingdom law follows the process that a treaty would take (Rickford & Leiden University Unilever Programme 2003, p. 76). The process of domestication takes stringent measures to ascertain that the law is not inconsistent with other laws. The European Union law influences the laws that are enacted in the United Kingdom. This means that the laws that are enacted in the United Kingdom are designed to convey some of the key elements of the European Union law to ensure that any United Kingdom citizen who seeks to enforce the European Union law is empowered without necessarily going to the European Union institutions. The European Union law directly impacts on the United Kingdom law because the country is under the confines of the European Union law; the United Kingdom is a member state, thus it is impacted to a larger extent. The law ensures that there is uniform application among the member states of the European Union (Marco 2011, p. 90).
Areas of the UK Law that Offer Protection to Minority Shareholders
The minority shareholder protection is based on the notion that the majority shareholder’s supremacy can, in some cases, act to the detriment of the company. Under the English law, the protection is guaranteed by having a functional board of directors in the company (Turpin & Tomkins 2007). The company’s directors act as the managers of the corporate body and make sure that majority shareholders do not misuse their power. The shareholders are given a chance to change the directors if the directors are not exercising the required neutrality. Though the changing of the shareholders may not be the best alternative for the company, it is a way of checking on the actions of the majority shareholders to protect the minority shareholders (Gugler & Yurtoglu 2008). The directors who are not motivated to act to the best interest of the majority shareholders should be changed.
Secondly, the courts are allowed to intervene if there are allegations of the majority shareholders being favoured. The courts of laws have the powers to alter any decision that is reached by a company if it is to the detriment of the company. If the court intervenes, then the decision taken by the court supersedes any previous decision on the same issue. The courts are the perfect way of ensuring that there is a reliable balance between the minority and majority shareholders. The introduction of instruments that ensures protection of the minority shareholders is one of the options that the corporate law in the United Kingdom has invoked to offer protection to minority shareholders. The law provides specific provisions that ensure minority shareholders are protected from acts of majority shareholders (Tully 2005, p. 53).
How the UK Law Shapes the Duties Owed by Company Directors
The Companies Act, 2006 provides for specific duties of the directors to the company. The directors are not supposed to use the powers given under the articles of associations excessively. The directors should always ensure that they act within their mandate by making decisions that are sound and promote the interests of the company. The fiduciary relationship owed by the directors of the company to the company dictates that the directors should always act to the best interest of the company (Kershaw 2012, p. 45). The English law shapes the directors’ duties to the company by drawing the line between the directors’ duties and the possibilities of exercising their powers excessively. The law is a guiding tool during the process of incorporating the company. The Act requires that the articles and the memorandum of association should be structured in such a way that they entail the duties of the company as provided under the Act. The Act is a guiding tool when the company starts operating its business. The operations are supposed to be according to the Companies Act. The law has provided a uniform way of holding the directors to account. The directors are supposed to follow the provisions of the Act when they are exercising their powers. The Act is bedrock that is designed to provide a working mechanism where the articles and the memorandum of association differ with the law. Any conflict between the Act and the articles and the memorandum of association should be addressed according to the provisions of the law. The Companies Act, 2006 and other regulating laws offer an oversight supervisory role to directors.
Reference List
Austen-Baker, R 2011 Implied terms in English contract law, Edward Elgar Publishers, Cheltenham.
Gugler, K & Yurtoglu, BB 2008, The economics of corporate governance and mergers, Edward Elgar, Cheltenham.
Hartley, TC 2005,European union law in a global context: Text, cases and materials, Cambridge University Press, Cambridge.
Kershaw, D 2012, Company law in context: Text and materials, Oxford University Press, Oxford.
Marco, CS 2011, Competition law of the EU and UK, Oxford University Press, Oxford.
Richard, T, & Damian, T 2013, Contract law directions, Oxford University Press, Oxford.
Rickford, J, & Leiden University Unilever Programme 2003, The European company: Developing a community law of corporations: collected papers from the Leiden University Unilever programme 2002, Antwerp: Intersentia.
Tully, S 2005, Research handbook on corporate legal responsibility, Elgar, Cheltenham.
Turpin, C & Tomkins, A 2007, British government and the constitution: Text, cases and materials, Cambridge University Press, Cambridge.
Whincup, MH 2006, Contract law and practice: The English system with Scottish, Commonwealth, and Continental comparisons, Kluwer Law International, Alphen aan den Rijn.