CORE
Certificate of Professional
Competence
CONTENTS
page
introduction......
Explanation of Symbols
How to use This book
ACOMMERCIAL LAW
A1 Contracts in road transport
A3 Principals and sub-contractors
BCOMMERCIAL LAW
B1 Running a business:conditions and formalities
B2 Organisational forms
CSOCIAL LAW
C1 Social Institutions
C2 Social security legislation
C3 Work contracts
D FISCAL LAW
D4 Income tax
EBUSINESS AND FINANCIAL MANAGEMENT OF THE UNDERTAKING
E1 Methods of payment
E2 Forms of credit
E3 Balance sheet
E4 Profit and loss account
E5 Financial ratios......
E6 Budgeting
E7 Cost calculation
E8 Organisation chart
E9 Marketing
E11 Fleet management systems
introduction
This part of the training course that will prepare you for the Certificate of Professional Competence (CPC) will lead you through the subjects that are part of both the freight and passenger course. Although a freight company distinguishes itself in many ways from a passenger company, both also have a lot in common. Basic principles of marketing for instance do not differ when they are being practised in a coach or in a freight company. The contents may differ, but not the techniques being used to approach the client, to create market segmentation or the ways to handle the “six p’s”.
All the topics, applicable to both freight and passenger, have been developed and concentrated in one book: the core subjects. Once finished, you will proceed with the topics, belonging to the course of your choice: the (inter)national part of the CPC passenger or the (inter)national part of the CPC freight.
The core modules will tell you about how to set up a business, ways of financial management and what kind of laws are applicable for companies active in the field of transport independent of the fact of whether it is a passenger or a freight company.
Explanation of Symbols
Throughout the book you will find three symbols, a clock, a bulls’ eye and a thumbtack.
Behind the clock you will find the recommended amount of time that you should spend on learning that particular module.
After the bull’s eye you will find a short explanation of the goals of that particular module. What you should know at the end of studying the module.
The thumbtack precedes the summary. All in all this is a brief review of the main points of the module that you are reading.
For more detailed guidelines on how to study the material we recommend that you read the Study Guide.
How to use This book
This book has specially been designed for self-study. With the help of this book, you should be capable of preparing for the examination yourself without regular visits to a training institute to receive classical instruction.
For a lot of people it is impossible to visit courses in a training institute, simply because they lack the time or transport facilities for travelling to and from the institute or they can’t afford to leave their work to be present during the lessons. A course, suitable for distance learning, can solve these problems. This means that this book differs in some points from a conventional study-book.
Before you will start reading a chapter you should have a close look at the objectives, mentioned at the start of each chapter. They will tell you exactly what you should be capable of after reading this part. The objectives are your guide during reading.
The text has been split in small blocks of text to avoid distraction and difficulties during reading. In front of each block of text is a key-word, telling you in one word the contents of this block of text.
After finishing a chapter you can easily review this while preparing for the examination, by looking at the key words and by telling, in a few (your own) words what is meant by the key word or what it refers to.
To help you to study, each chapter also ends with a summary and some questions to practice.
ACOMMERCIAL LAW
A1 Contracts in road transport
Time
The time allotted to this subject is 2 hours.
Objectives
In this lesson you will learn:
a.The legality of contracts.
b.Types of contract identified and applied.
IntroductionRoad haulage activities are not possible without contracts between hauliers and their customers, who require them to carry and sometimes also store goods on their behalf. These contracts are not always constituted in writing, sometimes it is a simple telephone call in which the customer asks the haulier to pick up and deliver a load of goods. However, no matter how casual the arrangement, a contract does exist when an offer has been made and accepted.
ContractsLegally enforceable contracts
Enforceable contracts must contain the following essential points:
- Details of payment
- Offer and acceptance
- Intention for the parties to be legally bound by the contract.
Capacity to contract
Minors (someone aged up to 18 years) and those of unsound mind (mental patients and those affected by drunkenness or drugs) do not have capacity of contract. Therefore, a contract with one of the above mentioned is null and void.
Discharge of contract
This may be done lawfully: by agreement or frustration or unlawfully: by breach of contract. When there is a breach of contract damages may be claimed by the party who suffered the loss. These damages can be divided into two categories:
- Ordinary damages: as a result of the breach of contract and negligence (proper care when dealing with other peoples properties was not exercised) but that cannot be positively proved.
- Special damages: These do not arise naturally from the breach of contract and negligence and can be positively proved.
LiabilityCarriers’ liability for goods – private/common carriers
As mentioned before an operator enters into a contract every time he picks up and delivers a load of goods from a customer. In most cases he accepts these goods as a private carrier whereby his liability is limited to the terms specified in his conditions of carriage. If he has no conditions of carriage he undertakes the role of common carrier and his liability for loss of or damage to the goods, irrespective of the degree of negligence, is unlimited.
Employers’ liability
An employer is liable for the wrongful or negligent acts of his employees when they are committed within the scope of their employment. However, if the employee commits a wrongful act outside the terms of his contract (for example a salesman trying to repair something) the employer cannot be held liable. Where an employee fails to meet specific legal requirements the employer can also be held liable.
Principals and
Agents
Contractors,
etc.Principals and agents contractors, etc.
An agent is not an employee of the principal but is authorised to act on his behalf. However, an employee may be an agent of the principal.
There are two types of agents: special agents who have authority to act for a special purpose only and general agents who have general authority to act for their principals. An agency arrangement may be created by a deed, in writing or orally.
The extent of an agent’s authority to act on behalf of his principle depends on the authority given to him by his principal. Agents cannot delegate their authority to another person without permission from the principal.
A contract established by the agent is a contract between the principal and the customer. An agent is only a link between the two and not a party to the contract.
Contractors
SubcontractorsContractors and subcontractors
A subcontractor is a vehicle operator who accepts instructions to deliver goods that a principal contractor has agreed to deliver. He is not an employee of the contractor.
The principal contractor is fully liable to the customer for loss or damage to the goods even when the damage happened while in the possession of the subcontractor. He can of course seek claim with the subcontractor.
The subcontractor has to ensure that instructions regarding collection and delivery given by the principal contractor are met.
SummaryIn this chapter the reader has learned about the different types of contracts in the road transport business and about the rights and duties of the parties who made these contracts.
Questions
- Mention two groups of people that have no legal capacity to contract.
a.people under the influence of drugs and people under the age of 21
b.children up to 12 years old and people over the age of 80
c.minors and those of unsound mind.
- Explain the liability of a common carrier.
a.His liability is limited to the terms specified in his conditions of carriage.
b.His liability for loss of or damage to the goods, irrespective of the degree of negligence is unlimited.
A3 Principals and sub-contractors
Time
The time allotted to this subject is 1 hour.
Objectives
In this section you will learn: The definitions of principals, and sub-contractors and their legal responsibilities toward each other and the customer and when sub-contracting is used to transport goods.
IntroductionWhen carrying out transportation a number of actors play a role. In the following paragraphs their roles and relationships toward one another will be explained.
PrincipalThe principal contractor is the transport company that has been contracted by the customer to carry out the transport of the goods or who will contract the sub-contractor (be it through an agent) to carry out the transport of the goods in a proper manner in a suitable vehicle with a reliable driver if his own fleet capacity is not far reaching enough or if the destination of the goods falls outside his usual working area. For example if the transport destination is overseas.
SubcontractorThe sub-contractor is the transport company that will carry out the transport for the customer on behalf of the principal with or without intervention of an agent.
The sub-contractor must deal with the transport properly in accordance with all rules and regulations.
When to
Sub-contractIf the principal’s own fleet of trucks is fully occupied with transports or when the destination of the goods is outside the usual scope of the principal’s working area then the principal can sub-contract the transport of the goods for the customer.
The principal remains responsible for the goods that are to be transported. If anything happens to the goods, i.e. damage or loss, the customer will approach the principal, who in turn will approach the sub-contractor for reimbursement.
SummaryRegardless of whether the goods to be transported are transported by the principal or the sub-contractor the rights of the customer remain the same, according to the contract he has signed with the principal. The goods will be transported in such a manner as has been agreed between the customer and the principal.
Questions
- When is sub-contracting used?
- Who is responsible for loss or damage of goods that are transported by the sub-contractor?
BCOMMERCIAL LAW
B1 Running a business:
conditions and formalities
Time
The time allotted to this subject is 2 hours.
Objectives
In this lesson you will learn:
a)The various organisational structures.
b)The advantages and disadvantages of these organisational structures.
IntroductionThere are many forms in which business can be conducted varying from one person working on his own account to large companies formed into public limited companies.
They differ in the legal obligations to be met and they all have their advantages and disadvantages depending on size, the nature of the trade, their financial needs and the wishes of the owners.
Sole tradersThe simplest form of business is the sole trader. The owner is only responsible to himself and his customers.
The advantages of operating as a sole trader are that it is relatively easy to start a business. Set-up costs are low and legal requirements are minimal. Also the owner can make decisions by himself and there are no arguments with partners about decisions to be made.
The disadvantages are that the sole trader has no protection against his personal liabilities for meeting creditors’ demands for payments should his business fail. In case of illness there is no one the replace him.
All profits made by the business become the owner's income from which he derives his livelihood and builds up capital resources. He must of course declare his profits for taxation and any due tax must be paid.
Partnerships Partnerships are usually called a firm and are an expansion of the sole trader. Instead of one person owning the business two or more people own it, sharing the ownership, the work and the profits in either equal or unequal portions. The partners are personally liable for any debts incurred by the business. Examples are accountants, lawyers or estate agents working in a partnership.
The advantages are that there are more people to share the work, the decision-making and the worries and also there are more people to contribute toward the initial financing of such a firm.
One of the disadvantages is that people do not always agree and arguments and distrust can eventually lead to failure of the business. Another disadvantage can be that profits have to be shared in proportion to ownership instead of in proportion to the work and effort put into making the firm a success.
Limited liability
CompanyWhen one or more persons wish to remove the risk of personal liability if a business fails, they can form a private limited liability company.
All parties to the business hold shares. The owners are therefore shareholders. Normally there are a limited amount of shareholders.
Public limited
CompanyWhen a company becomes very large and needs to raise more capital for expansion by investment instead of by borrowing, it seeks to be quoted on the stock market so that its shares can be sold on the market and it can become “public”. The money that the new shareholders pay for their shares provides the needed capital for the business and the shareholders become part owners of the business. Normally shares carry the right to vote and usually the right is for one vote per share. In comparison to the limited liability company the amount of capital to set up a business is larger.
Co-operativesCo-operatives are a type of organisation formed and run by a group of people each of whom has a financial interest in its success and a say in its management. Management is usually by the elected committee of the members and profits must be declared for taxation and any tax due must be paid.
SummaryIn this chapter the reader has been made familiar with the different organisational forms of a company, their differences and their comparisons.
Questions
- Name one of the advantages of being a sole trader?
a.set up costs are low
b.he has protection against his personal liabilities
c.there are just a limited amount of share holders
- What is the name of an organisation in which a group of people has a financial interest and a say in its management.
- a partnership
- a co-operative
- a limited liability company
This chapter is a general example: Please be so kind to adapt these paragraphs to the national situation
B2 Organisational forms
TimeThe amount of time allotted to this module is 2 hours.
ObjectivesIn this lesson you will learn:
The factors needed to form and register companies. Usually a lawyer or accountant is employed to deal with a company formation. The reader will also learn about the duties of the directors and the liquidation of a business.
IntroductionCompanies can be set up in a number of ways with various types of legal structures. In this module the most important forms will be described.
Forming a
limited
companyWhen forming a limited company the following factors have to be established:
- The wish to start a company
- The name of the company
- The location where the company is situated
- The objectives of the company
- The amount of the share capital divided into a number of shares of a certain value each
- The name of the first director
When the company is registered with the Registrar of Companies, it is given an official seal, which is used on legal documents and share certificates.
Duties and
liabilities etc.Duties and liabilities of company directors
Directors are appointed during and by the shareholder's meeting, held at least once a year. They are to act in accordance with legal requirements. They act as trustees of the company’s assets.
They have duties to:
- keep proper accounts
- prepare annual accounts
- exercise skill and care in the operation and management of the company
- not mislead shareholder as to the activities or profits of the company
Liquidation
etc.Liquidation of a business
A business must cease trading when it is no longer solvent. The shareholders can also, for whatever reason decide to stop trading. Usually, when trading is stopped due to insolvency, a receiver is appointed to take charge of the affairs of the business and pay off the creditors as far as realisation of the assets permits and finally wind up the business.
SummaryThe candidate will have the basic skills to set up a company in their own country.
QuestionsTo be developed per country.
CSOCIAL LAW
This chapter is a general example: Please be so kind to adapt these paragraphs to the national situation