There are important changes to this content depending on when you plan to sit your exam.

If you plan to sit your exam prior to 31 August 2018, please study this content.

If you plan to sit your exam after 1 September 2018, please study Fundamentals of Business Law: Eighth edition 2018.

This exam covers general legal knowledge relating to the business environment, a basic knowledge of the law of contracts, and an understanding of the responsibilities and risks that arise in business, with particular regard to the law relating to corporate entities.


1. Sources of law
Identify the sources of different types of law
1.2 Identify the features of the different legal systems

1.2.1 Common law
1.2.2 Civil law
1.2.3 Sharia law

2. Common law and legislation: precedent and stare decisis and statutory interpretation
2.1 Identify how common law and relevant legislation are applied
2.2 Analyse and explain legal cases and principles in setting precedents
2.3 Specify how legal cases and principles set precedents
2.4 Identify how to deal with the doctrine of stare decisis (legal precedent)
2.5 Specify the rules and models for statutory interpretation

3. Legal framework
3.1 Describe the legal framework of statute law (legislation) and common law
3.2 Explain the heirarchy of the court system
3.3 Explain how different types of disputes are handled by the court system
3.4 Identify and explain different methods of alternative dispute resolution

4. Fundamental aspects of contracts and contract law
4.1 Describe the fundamental  features and essential requirements (terms) of contracts.
4.2 Describe the law of contract
4.3 Describe the necessary elements in the formulation of a contract
4.4 Explain the importance of conditions and essential terms of contracts
4.5 Identify the nature and status of pre-contract representations
4.6 Explain the effect of valid exclusion clauses

5. Breaches of contract law
5.1 Recognise the different types of breach of contract and their effects
5.2 Specify relevant and available remedies for breach of contract

5.2.1 Damages
5.2.2 Specific performance 

6. Specialised commercial contracts
6.1 Identify the characteristics of commercial contracts used in international trade

6.1.1 International sales of goods
6.1.2 International transportation of goods

7. Torts
7.1 Explain that the law of torts concerns a civil wrong which may mean a civil action for compensation arises
7.2 Explain the tort of negligence
7.3 Explain that tort law provides legal remedies for losses damages caused by negligence
7.4 Explain that negligence means failure to exercise reasonable care
7.5 Explain consumer protection law and negligence

8. Trusts
Define a trust and identify common purposes for the establishment of a trust
8.2 Identify the parties to a trust and describe their role
8.3 Describe the legal requirements in relation to trust

9. The law of agency theory
Explain that agency is the relationship between principal and agent
9.2 Explain how agency theory underlies the principles of corporate governance
9.3 Explain that partnership is an agency relationship
9.4 Explain the application of agency theory to companies

10. Incorporation and its effects
10.1 Recognise that nature and effect of a company having a separate legal personality
10.2 Explain the effects on incorporation

10.2.1 Limited liability
10.2.2 Perpetual succession

10.3 Distinguish the differences between public and proprietary companies
10.4 Identify the processes necessary in forming a company
10.5 Specify the elements of the constitution of a company
10.6 Describe the role of promoters in forming a company
10.7 Explain the implications under common law in relation to pre-registration contracts
10.8 Recognise the difficulties and implications of pre-incorporation contracts

11. Management of companies
11.1 Identify the key legal issues that arise in the management and governance of companies

11.1.1 Identify the impact of key business decisions on shareholders interests
11.1.2 Identify the impact of key business decisions on the public

11.2 Specify the nature and role of company directors and other officers as agents of the company
11.3 Specify the nature, role and powers of the board of directors

11.3.1 Specify the relationship between the board and the company in a general meeting

11.4 Identify the rules on directors’ remuneration and financial benefits to directors and other related parties
11.5 Identify the rules on appointment and removal of directors from office
11.6 Specify the extent of directors duties and powers
11.7 Recognise the issue that arises when there are related party transactions
11.8 Specify the rules on transfer of shares and refusal to register a transfer of shares
11.9 Identify the role and powers of the company secretary
11.10 Identify the role and powers of the registered company auditor

12. Membership and dividends
Identify the significance of the register of members
12.2 Identify the significance of the requirement for disclosure of interests in shares
12.3 Recognise the role of the general meeting of shareholders, including voting and resolutions
12.4 Distinguish the rights and remedies of members of companies including:

12.4.1 Appointing a registered company auditor
12.4.2 Inspection of the books of the company
12.4.3 Protection of the minority and the treatment for unfair or oppressive company practices

12.5 Specify the procedure for payment of dividends
12.6 Specify the rights of shareholders regarding dividends
12.7 Specify the company formalities in determining when dividends are payable to shareholders
12.8 Identify the rules governing the maximum amount for dividend distribution

13. Corporate insolvency
13.1 Specify the grounds relating to the dissolution and winding up of companies and partnerships
13.2 Specify the procedures for dissolution and winding up of companies and partnerships
13.3 Specify the procedures for addressing corporate insolvency, including stakeholders and the rights of claimants
13.4 Identify the powers and duties of receivers and liquidators
13.5 Recognise administration as an appropriate alternative to winding up when a company is in financial difficulties

Exam topic weightings
Sources of law 5%
Common law and legislation 5%
Legal framework 5%
Fundamental aspects of contracts and contract law 10%
Breaches of contract law 6%
Specialised commercial contracts 5%
Torts 10%
Trust 5%
Agency theory 5%
Incorporation and its effects 10%
Management of companies 12%
Membership and dividends 10%
Corporate insolvency 12%
Total 100%