Commercial Law Fundamentals for TC Interviews Interview Questions & Walkthrough

A contract is a legally binding agreement formed by: (1) Offer — a clear intention to be bound, (2) Acceptance — unqualified agreement to all terms, (3) Consideration — something of value exchanged (money, goods, services), and (4) Intent to Create Legal Relations. All four must be present. Without any one, there's no contract.

Express terms are the explicit terms (price, quantity, delivery date). Implied terms are inserted by law or custom (merchantable quality, fitness for purpose under Sale of Goods Act 1979). Conditions are major terms (breach allows termination). Warranties are minor terms (breach allows damages only). Understanding this distinction is crucial — breaching a condition is much more serious.

Breach occurs when a party fails to perform. Remedies include: (1) Damages — compensation for loss (awarded in most cases, capped at foreseeable loss), (2) Specific Performance — court orders the party to perform the contract (rare, usually not awarded for personal service or where damages are adequate), and (3) Injunction — court orders a party to refrain from something. In TC interviews, explain which remedy applies and why.

In an M&A transaction, the seller makes Representations & Warranties (R&Ws) — statements about the business being accurate (e.g., "the company has no undisclosed liabilities," "all employees have signed employment contracts," "the company owns all IP"). If an R&W is false, the buyer has recourse: indemnity (seller pays damages), earn-out adjustment (lower purchase price), or rescission (unwind the deal).

Representations must be true at signing. Warranties must be true at both signing and closing (post-signing changes are the seller's problem if they breach a warranty). This distinction matters for liability allocation. If a customer leaves post-closing, that's usually the buyer's issue. If a customer had already left pre-closing but the seller didn't disclose it, that's a breach of warranty.

Indemnities are contractual promises to cover losses. Example: "Seller indemnifies Buyer for any breaches of R&Ws, up to £5m aggregate, with a £500k basket (no claim under £500k) and a £1m cap per claim." These caps protect the seller from open-ended liability. In interviews, explain how indemnities allocate risk.

Employment contracts must comply with the Employment Rights Act 1996 and Equality Act 2010. Key elements: (1) Job title, duties, location, (2) Salary, benefits, notice period, (3) Confidentiality, IP ownership (critical in tech), (4) Non-compete and non-solicitation clauses (must be reasonable in scope and duration to be enforceable).

Termination: employees can be dismissed if there's a fair reason (misconduct, poor performance, redundancy, breach of statutory restriction like loss of driving licence for a driver). The process must be fair (investigation, opportunity to respond, appeal). Unfair dismissal claims can result in £100k+ awards. Redundancy requires consultation and statutory payments.

Discrimination law (Equality Act 2010) prohibits discrimination on protected grounds (sex, race, disability, age, religion, sexual orientation). Direct discrimination (treating someone worse because of a protected characteristic) is almost always unlawful. Indirect discrimination (a facially neutral policy that disproportionately affects a protected group) is unlawful unless objectively justified.