business law

1500 words

the case you need to read page48-87. The important page is 58,which case may be used in this page.

Lawfirst coursework notes:

Law each paragraph:

1. Explain legal issue- how to identify the issue

2. Use the related law – can look at which seminar questions are related to coursework

3. Application- explain that why I will use this law, where take the law & the apply to the fact

4. Conclusion

5. Use the referencing is required to give intellectual credit to your source, helps the marker recover your source easily and avoids you being accused of plagiarism. Students must reference sources using the Oxford Standard for the Citation of Legal Authorities (OSCOLA). Details of this can be found on pages 23 – 25 Students should ensure all sources are fully cited in footnotes and in their bibliography in accordance with OSCOLA and that indentation or quotation marks (as appropriate) are used when quoting.

6.
Approaching legal problem questions

What is a problem question?

A legal problem question/case study describes a fictitious scenario then asks you to advise one or more of the parties in it about their legal rights, or possible liabilities. This is what a solicitor does when advising a client in their office. You are the legal advisor and the party/parties you are asked to advise in the question are your clients.

How should you structure your answer to such a question?

Only think about this once you have read the problem question carefully (several times) and identified the key facts (e.g. key characters, events, and dates).

When you are ready to think about your answer the marker will be expecting you to structure it following the ILAC method.

This should result in it having a clear and logical structure enabling the

marker to see where you are heading.

What does ILAC stand for?

Introduction

Law

Application

Conclusion

What to put in an Introduction

Begin your answer with an introduction. It should tell the marker:-

About each legal issue you have identified in the question which your client faces;

What area (or areas) of law relate to each issue,

Why the issue(s) are significant to your client; and

The order in which you plan to deal with each of them in turn.

This helps the marker to understand what you are trying to do and they can then follow the structure of your answer more easily.

For example, in a problem question on contract formation involving an advertisement made by a shop offering a free gift to anyone who spends over £50 in the store on a particular day, the first issue might be to determine the legal status of the advertisement (is it an offer or an invitation to treat?).

Once you have identified each issue, it is useful to explain its significance

to the outcome of the problem. Why does it matter? How and why will it

affect the ultimate advice/outcome for your client?

If there are several issues, you should deal with each one in turn

What to put in the Law section

Following the introduction comes an explanation of the legal principles relating to each issue mentioned in the introduction. This will include cases and if appropriate sections from relevant statutes, as they after all are the law and your client wants legal advice not simply your opinion!

Try to resist the temptation to jump to a conclusion straight away – you will gain credit for explaining the reasoning behind your conclusion, not for getting to the right answer without referring to any supporting

authority.

For example, if we are still dealing with the example given above, the relevant

legal principle would be that Partridge v Crittenden held that generally

speaking advertisements are invitations to treat but that it is clear from the

Court of Appeal decision in Carlill v Carbolic Smoke Ball Co that if they

satisfy certain requirements, advertisements can be classed as unilateral

offers – then explain what a unilateral offer is and set out the defining

qualities of a unilateral offer (in other words the requirements that would

have to be satisfied to bring an advertisement within the definition of a

unilateral offer).

At this stage, you are simply setting out the law rather than worrying about

the specific facts of the problem question.

What to put in the Application section

Having explained the legal principles, you must now explain how they will impact on your client’s issue. Again cases, and if relevant, sections from statutes will be needed here. Your client will want to know about the impact as that will determine their legal rights, or possible liabilities.

Taking the example used above, you would need to apply the various qualities/requirements of a unilateral offer and see whether they are satisfied by the wording of the advertisement in the problem question.

What we will be looking for in a Conclusion

In it you will predict the outcome for your client – what legal rights/remedies they have or what liabilities they face based on the application of the legal principles you have just explained.

For example, your conclusion might be that the wording of the

advertisement in the question satisfies the requirements of a unilateral offer and therefore the shop has made an offer to the world as was the case in Carlill.

What to do if you are asked to advise more than one person in the question?

If you are asked to advise several characters in a question have one Introduction covering all of them but then have separate Law and Application parts for each one followed by a mini Conclusion and then at the very end of your answer have an overall Conclusion which draws every mini conclusion together and provides the final advice to your clients.

What if the question involves numerous issues?

In a nutshell work through them one by one following ILAC. Firstly explain all the issues in an Introduction, then move on to explain the law which relates to each individual issue, apply it to that issue and draw a mini conclusion before going on to the next issue and repeating this process. The final part of your answer will be a paragraph pulling all the mini conclusions together.

For example using the issue already mentioned of unilateral offers, having established a unilateral offer has been made by the shop the next issue is to consider how and when a unilateral offer can be accepted and revoked and whether the offer was revoked before acceptance in the question that you are working on.

First questions:

1.1 in issue part, identify two parties first, who is claimant, who is defendant. Explain that what is contract for two parties? Does it disagree or agree the contract for their two parts?

1.2 No spend long time to explain each issue

1.3 The coursework questions focus on week 5 to week 11 (contract, misrepresentation, discharging a contract & remedies for breach of contract, tort and negligence)

Second questions:

· Identify the claimant & defendant

· Do they agree or disagree the contract law?

· LOOK AT THE CONTRACT LAW

· Focus on week 5 to week 11

UNIVERSITY OF PORTSMOUTH BUSINESS SCHOOL

BUSINESS & EMPLOYMENT LAW

(U21764 & U24401)

Unit co-ordinator – HELEN BURTON

helen.burton@port.ac.uk

Anglesea 1.60

Lecture Notes

2017

Week

Week
beginning

Lecture Seminar

September

Introduction to the unit

Classification & sources of law

What is law?

2 2 October Domestic legislation and
European law

Classification and sources of law

3 9 October Case law and judicial
precedent

How to read and understand
cases

Legislation and statutory
interpretation

4 16 October Introduction to contract law

Contract formation

Case law and judicial precedent

How to read and understand
cases

5 23 October Contractual terms Contract formation

6 30 October Controls on exemption
clauses and unfair terms

Contractual terms

7 6 November Misrepresentation Controls on exemption clauses
and unfair terms

8 13 November Discharging a contract

Remedies for breach of
contr

act

Misrepresentation

9 20 November Introduction to the law of tort Discharging a contract

Remedies for breach of contract

10 27 November Negligence

Introduction to the law of tort

11 4 December Vicarious liability, defences
and remedies in tort

Negligence

12 11 December No lecture Work on Moodle to help with
coursework due 12th January

Business Law

Autumn Teaching Block 2017

CONTENT OF THIS LECTURE

· Introduction to the unit

· What is law?

· Classification of law

· Sources of law

· Overview of the Courts System

Introduction to this unit

To help you throughout the year don’t forget these resources:

1 Two printed handouts:-

i. Lecture notes (you need to supplement these with your own notes, spaces have been

left for you to do so).

ii. Seminar questions.

2 University Library

3 Moodle

4 Lecturer and seminar tutors

5 Core text

6 Unit handbook, this is on Moodle and has lots of useful info about the unit, you will need to

refer to it throughout the year

Lectures only give an overview of a topic

You need to read beyond your lecture notes!

LECTURE ONE

Introduction to the Unit

Classification and Sources of Law

Preparation for seminars

Seminars are most important and you should prepare for them properly and attend each week.

Evidence shows a clear link between those students who do not attend seminars and those who do

badly and fail coursework and exams

To ensure this does not happen to you make sure you:

Read the pages of the core text indicated on the seminar sheet before the seminar.

· Identify what words you will need to understand in order to answer the questions on the seminar

sheet.

· Prepare answers to the questions on the seminar sheets.

· After the class, engage in some further reading as listed on your seminar sheets.

· Ask your seminar tutor to go over any points you are not certain about, they

are paid to help you learn!

WHY STUDY LAW?

It affects everyone – we should all know a little about the legal system of the country in which we live

and work. How are laws made? What is the role of judges? Brexit, what is likely to happen to our laws

once we leave Europe?

Consumer protection – understand your rights when you enter into contracts and what you can do if

you are not happy with the service or goods you have purchased.

Identify problem situations when you get into the business world – depending on where you end up

working, you will come across legal problems in a variety of situations

What is Law?

A set of rules recognised by society as being binding on all its citizens.

Classification of Law

Our laws can be divided into 2 groups:

Public laws and Civil laws

Public Law – concerns laws that relate to powers possessed by State bodies and

governs the relationship between these bodies. Here are some examples:

▪ Human Rights – concerns rights that individuals can hold against the State. eg
the right to life right to liberty, right to a fair trial .

▪ Administrative Law – laws that permit individual citizens to hold the State to
account for its public duties. eg limits the powers of public authorities e.g.

Scottish parliament, Portsmouth City Council.

▪ Criminal Law – laws which govern behaviour of citizens which the State
wishes to prohibit or regulate eg murder, stealing, consumption of illegal drugs

Civil Law – concerns relationships between individuals. Here are some examples:

▪ Family Law – law governing relationships between husband & wife, adopting
children etc.

▪ Company Law – deals with relationships between companies or between
companies and individuals eg Marks & Spencers altering the rights its

shareholders have to decide its directors pay.

▪ Contract law – this includes buying goods, employment law, having your car
repaired

Why bother with the public law/civil law distinction?

There is an important practical distinction between public law and civil law.

Civil Law – seen as matters for individuals themselves to regulate without interference from the State

(the State simply provides the mechanism for deciding the issues and enforcing the decision eg a court

room and a judge). This means the parties are encouraged to come to their own solution.

The primary purpose of the civil law is provide rules by which individual can govern their own

relationships. For example in a contact the parties reach their own agreement.

Civil cases are brought to assert the claimant’s right (e.g. a purchaser’s right to compensation if sold

faulty goods by a seller) to obtain compensation (money) from the defendant seller.

How to talk the talk

Civil cases are written in the form Black v White (pronounced Black and White).

Today Black would be called the claimant; White the defendant.

Black is bring a case to court complaining about something White has /has not done which has caused

Black some kind of harm eg Black bought faulty goods from White which have injured Black

Public Law – seen as issues relating to the interest of the State and general public, and as such are to

be protected and prosecuted by the State. This means that if a crime is committed the State can prosecute

regardless of the feelings of the victim.

Take criminal law for example. Criminal law’s primary purpose is to punish those who break laws

designed to protect society. The state brings the prosecution and is called the prosecutor. The

prosecution is brought against a defendant (the alleged criminal).

A criminal is prosecuted by the State at a trial in a criminal court.

In law books criminal prosecutions (called ‘cases’ in legal speak) are identified like this:

R v Burton

R represents the head of State (the monarch, the Crown) using the Latin R (Rex/Regina)

V signifies against

Burton is the alleged criminal who is being prosecuted

How to talk the talk

For example if I was prosecuted, the case would be referred to as R v Burton

This is pronounced in one of the following ways:

· the Crown against Burton; or

· the Queen (King) against Burton, or

· Regina (Rex) against Burton

Criminal prosecutions (trials) take place in either the Magistrates’ Court or the Crown Court.

Comparison between civil law and criminal law

Civil Law

Criminal Law

Disputes between persons

Offences committed by alleged criminal

Action taken by the claimant

Action taken by the State

The action is first heard either in the County Court

or the

High Court

The trial of the defendant is heard in either the

Magistrates Court or the

Crown Court

Case cited by the names of the parties in the dispute

Claimant’s name v Defendant’s name

Black v White

Case is usually cited R v Defendant’s name

R V Terry

A claimant sues a defendant

The State prosecutes a defendant

The claimant must prove his case on the balance of

probabilities

The State must prove the defendant is guilty

beyond all reasonable doubt

Judgment will be entered for the claimant where the

defendant is found to be liable

A defendant must be convicted if he is found

guilty and acquitted if found not guilty

The commonest remedy for a successful claimant is

damages (financial compensation)

A guilty defendant is sentenced to the

prescribed punishment

In an appeal the person bringing the appeal is called

the appellant and the other party is called the

respondent

In an appeal the person bringing the appeal is

called the appellant and the other party is called

the respondent

The purpose of a civil action is to provide a remedy

for the civil wrong and is not to punish the person

who loses the case

The purpose of a criminal case is to punish the

defendant if found guilty such as imprisonment

and fines

SOURCES OF LAW

· Legislation

· Case law

· European Union Law

· European Convention of Human Rights

Legislation and case law are created within the UK and are sometimes referred to as domestic law

1. Legislation

Primary legislation = Acts of Parliament/ statutes made by Parliament

e.g. The Sale of Goods Act 1979 Misuse of Drugs Act 1970 Consumer Protections Act 2015

Secondary legislation (or delegated legislation) can take the form of regulations, rules or orders, or

bye-laws.

e.g.Working Time Regulations 1998 (SI 1998/1833) Agency Workers Regulations 2010(SI 2010/93)

We will look at how both types of legislation are made next week.

2. Case law

Today most of the law in England and Wales derives from legislation. However, another very important

source of law is made by some of our judges. This is called case-law or common law. Judges make

law in two ways:

(i) Interpreting statutes

Legislation may not be particularly clear and precise so judges have the role of

interpreting legislation to give effect to the intention of Parliament.

(ii) Developing common law

Some areas of law e.g. the law of contract and negligence, which we will be studying

on this unit, have been left alone by Parliament so judges are able to develop the law

in these areas through their decisions

3. European Union Law

The UK joined the European Union (formerly known as the European Economic Community) in 1973.

In order to join, the UK had to pass the European Communities Act 1972 under which the UK agreed

to apply EU law in UK

courts.

The 1972 Act stated that in the event of any conflict between EU law and UK law, the EU law would

take precedence.

The main impact of European Union law is in the areas of trade, industry, employment and the provision

of financial services.

Until the UK formally leaves, EU law remains a major source of law upheld in our courts

4. European Convention on Human Rights

Its full tile is:

European Convention for the Protection of Human Rights and Fundamental Freedoms 1950

It was incorporated into UK law by Human Rights Act 1998.

It has nothing to do with the European Union.

It is an agreement between those 47 countries who have signed up to it that they will uphold and respect

certain human rights such as the right to liberty, freedom of expression, the right to family life and the

right to a fair trial.

All UK laws must be interpreted to give effect to it.

THE COURT SYSTEM IN ENGLAND & WALES

There are many courts in England and Wales. They were divided in to two types:

criminal courts;

and

civil courts.

A criminal case will take place in a criminal court whereas a civil case will be heard in a civil court.

Both criminal and civil courts have their own hierarchy and decisions made by judges in higher
courts can overrule decisions made by judges in lower courts.

Decisions made by judges in higher courts are BINDING on judges in lower courts

It is vital to understand the position of courts in their hierarchies. Take time to study the diagrams and

explanation of the hierarchies in the core text.

The court in which a case starts (where the trial occurs) is called a court of first instance or

inferior court. They are found at the bottom of the hierarchies.

If there is an appeal after a trial in the court of first instance the appeal is heard by the appropriate

criminal / civil appeal court higher up in the hierarchy. In both the criminal and civil court hierarchy

these appeal courts are called appellate courts or superior courts.

Criminal Courts

Which court of first instance (magistrates or crown court) is used for the trial venue depends upon the

seriousness of the alleged crime.

The trial is known as the prosecution of the alleged criminal. You will hear the phrase “this is a criminal

case”, this is referring to the prosecution and any subsequent appeal.

Minor crimes/offences (such as driving without insurance, petty shop lifting) are called summary

offences. More serious offences (such as murder) are called indictable offences. There is a

third type of crime/ offence known as an offence triable either way e.g. burglary assault
dangerous driving. It can be tried in either the magistrates court or the crown court

Magistrates’ Courts – this is a court of first instance or inferior court and is at the bottom of the
criminal court hierarchy

· Exclusive jurisdiction over summary only cases (e.g. minor motoring offences).

· Cases heard either by a district judge or by a panel of three lay magistrates (they are from all

walks of life hairdressers, shop workers, engineers with no legal backgrounds) aided by legally

trained clerk, or a District Judge of the Magistrates’ Court.

· Limited powers of sentence but can send cases to Crown Court for sentencing.

Crown Court this can be both a court of first instance and also an appellate court

· Exclusive jurisdiction over indictable offences (serious crimes e.g. murder or rape).

· These cases are heard by a jury (12 persons). They deliver a verdict (guilty, or not guilty).

· Judge directs jury on legal issues and passes sentence if the jury find the defendant guilty.

· Hears appeals from Magistrates’ Court on verdict and sentence.

They are found in large towns and cities

Civil Courts

These are arranged in their own hierarchy and consist of inferior courts and superior courts

Magistrates’ Courts – this is a court of first instance or inferior court and is at the bottom of the
civil court hierarchy

It has very limited civil jurisdiction (e.g. non-payment of council tax), and hears family matters (when

it’s known as Family Proceedings Court) such as maintenance disputes.

They are found in every large town

County Courts – this is a court of first instance or inferior court and is at the bottom of the civil
court hierarchy

It deals only with civil cases where the claim is generally for less than £100,000. The judges who sit

(preside) in the trial are either circuit judges or district

judges.

They are found in every large town.

High Court -this is a court of first instance or inferior court and is towards the bottom of the civil
court hierarchy

It hears all other civil cases. It is very expensive to hold a trial here so it usually only hears the most

complex or costly or specialist cases.

It is divided into three divisions:

Family – divorce, adoption, wills

Chancery – finance and property, tax, bankruptcy

Queen’s Bench – contract and tort matters which cannot be heard in the County Courts.

They are found only in large cities and the biggest is in London

Appeal Courts or superior courts

(i) Court of Appeal

The Court of Appeal has 2 divisions (Criminal Division and Civil Division).

Generally, the Court of Appeal has three judges deciding on an appeal but five may sit on very

important cases.

Decisions only need to be by majority

Criminal Division hears appeals from the Crown Court

Civil Division hears appeals from the High Court and the County Court

It is only in London

(ii)

Supreme Court

· Highest court in the UK

· Came into operation on 1st October 2009

· Same function and method of as old

House of Lords

· Currently has 11 Justices (only 1 female and none from any ethnic minority)

· It is the final court of appeal in the country for all civil and criminal matters from the Court of

Appeal or occasionally from the High Court.

· Permission must be obtained from either this court of the Court of Appeal to have the appeal heard

here.

· Justices usually sit in fives and decisions only need to be by a majority.

· All courts must follow the decisions of the Supreme Court

· Only found in London

NOTE House of Lords UP TO 1ST OCTOBER 2009 was the highest court in the UK before the
creation of the Supreme Court.

Other Courts beyond the borders of the UK

The Court of Justice of the European Union – the court of the European Union.

The European Court of Human Rights – the judicial body that decides cases relating to the

European Convention on Human Rights.

CONTENT OF THIS LECTURE
1. Legislation

2. How it’s made

3. How it’s used : Statutory interpretation

4. Impact of European law

5. European Convention on Human Rights & the Human Rights Act 1998

LEGISLATION

“Legislation” is the term used to describe law made by Parliament. It is divided into primary legislation

and secondary legislation. These two types of legislation are created in different ways.

Doctrine of Parliamentary Sovereignty – Parliament is the supreme law making organisation in the UK.

It can make any law it chooses and no court can question its validity.

PRIMARY LEGISLATION

· Primary legislation consists of Acts of Parliament e.g. The Sale of Goods Act 1979.

· Acts of Parliament begin life as a ‘Bill’.

· Most Bills are government sponsored (public bills) but Bills can be proposed by individual

back bench MPs (private members’ bills) or by certain groups of people e.g. public corporations

(private bills).

· The Bill must go to Parliament for approval.

For more information about the structure of Parliament and how a bill

becomes law check out the ‘Resources’ section on Moodle.

LECTURE TWO

Domestic Legislation and European Law

How a Bill becomes a Law

Parliamentary Counsel draft the Bill, which is a proposal for a piece of legislation.

First Reading – title of the Bill is read to the House of Commons.

Second Reading – the general principles of the Bill are debated in the House of Commons. The Bill

might be amended and members vote on whether the legislation should proceed.

Committee Stage – detailed examination by a committee of the House of Commons – further

amendments might be made.

Report Stage – the committee reports back to the House and proposed amendments are debated and

voted on.

Third Reading – the Bill is presented to the House of Commons for the last time. There might be a

short debate and the House votes on whether to accept or reject the legislation.

House of Lords – first reading, second reading, committee stage, third reading.

The Bill then goes back to the House of Commons for the MPs to consider the Lord’s amendments.

The Bill is then put forward for Royal Assent.

NB – Bills can be started in either the House of Commons or the House of Lords but must travel through

both Houses.

What if the House of Lords refuse to pass a Bill that has passed the Commons?

At one time legislation could not be passed without the agreement of both Houses of Parliament.

However, following the Parliament Acts of 1911 and 1949, special procedures are available to allow

legislative proposals which were introduced in the House of Commons to be put forward for Royal

Assent without the approval of the House of Lords after a one year delay (or one month for “money

Bills”).

In recent years these procedures have been used to pass a number of high profile statutes e.g. the

Hunting Act 2004 and the Sexual Offences (Amendment) Act 2000.

Can you think of some arguments for and against the Parliament Acts procedures?

SECONDARY LEGISLATION

What is delegated legislation?

Parliament does not have time to pass all the necessary law and so delegates law making powers to

government ministers and other public bodies to make legislation known as delegated legislation or

secondary legislation.

Acts of Parliament lay down a basic framework of the law in a particular area. Delegated legislation is

legislation which sets out the detailed rules relating to that law (i.e. it puts the flesh on the bones).

There are 4 main types of delegated legislation.

 Statutory instruments – made by Government Ministers and their departments.

 Bye-laws – made by local authorities, public and nationalised bodies (although they must be

approved by Central Government).

 Orders in Council – made by the Government in times of emergency and then signed by the

Monarch.

 Regulations – made by government departments to implement EU law

What are the benefits of delegated legislation?

What are the problems associated with the use of delegated legislation?

STATUTORY INTERPRETATION

In a trial evidence from both sides of the dispute/prosecution is heard and then a decision is made on

whether the law has/has not been broken. If the trial involves a dispute over a statutory law, to reach a

decision the judge must interrupt the words in that statute with the evidence that has put before the

court. This is how statutes are used by judges. The process by which judges assign meanings to

ambiguous / vague words or phrases in a statute is called the interpretation of statutes.

Judges can use certain aids rules and presumptions to help them come up with a meaning of a particular

word or phrase in the statute

The Literal rule

This rule states that words in legislation should be given their natural, ordinary everyday meaning.

The problem is that this rule can give rise to some absurd decisions.

Fisher v Bell (1960)

The Golden Rule

When the literal rule gives more than one meaning or provides an absurd result the golden rule is at

hand. This allows the judges to avoid ridiculous consequences of the Literal Rule. This rule allows

judges to give the words in the statute their ordinary, literal meaning except where that would lead to

absurdity (in that case they can give words a more unusual/modified/ less common meaning which

would lead to a more sensible conclusion). The golden rule is used to ensure that preference is given to

the meaning that does not result in ab absurdity.

R v National Insurance Commissioner ex parte Connor.

The Mischief Rule

This rule allows the court to take into account the “mischief” that the particular statute was enacted to

prevent and allows for an interpretation to provide the intended remedy for that mischief.

Four questions need to be asked to apply this rule.

· What was the common law before the Act?
· What was the ‘defect or mischief’ for which the common law did not provide?
· What remedy did Parliament intend to provide?
· What was the true reason for that remedy?

Royal College of Nursing v DHSS.

In Gorris v Scott (1874) the Contagious Diseases (Animals) Act 1869 provided that any ship carrying

animals must ensure during the voyage they are kept in pens. The captain neglected his duty and

some of the claimant’s sheep were washed over boarding lost. Held – since the purpose of the statute

was to prevent the spread of contagious diseases (the mischief Parliament was trying to remedy by

passing this statute) not to guard against the danger of animals being washed overboard the captain

has not breached his duty under this statute.

Human Rights Act 1998

This is an extremely important statute which came into force in October 2000. It makes the

European Convention For The protection Of Human Rights and Fundamental

Freedoms 1950 binding in the UK. Courts today are required to interpret Acts of Parliament so far

as possible in a way which is compatible with it.

For more information about the Human Rights Act 1998 check out the ‘Resources’ section on Moodle.

Judges are not be bound by a previous interpretation of legislation which does not take into account the

Convention

More on the Convention

It was signed in 1950 before the EU was even created and came into force in 1953 under the auspices

of the Council of Europe. There are now 47 signatories to the Convention and such states are required

to uphold certain fundamental civil rights.

Before the implementation of the Human Rights Act 1998 (in October 2000), the Convention could not

be directly enforced in UK courts. This meant that anyone who wanted to challenge a breach of their

human rights had to take their case to the European Court of Human Rights in Strasbourg.

Now, there is a specific obligation on UK public authorities to act in a way that is compatible with the

Convention (section 6 of the Human Rights Act 1998) and any breach of this obligation can be

challenged in UK courts.

NB – public authorities include central government departments, the NHS, local authorities, courts, and

police forces.

The two key provisions of the Human Rights Act 1998 are section 2 and section 3.

Section 2 – when considering any issue which is connected with human rights, the courts must take

into account case law of the European Court of Human Rights.

Section 3 – domestic courts must, “as far as it is possible to do so”, interpret domestic legislation so

that it is compatible with the rights set out in the Convention. If the court finds that this is not the case,

it may issue a declaration of incompatibility (section 4) to the relevant Government Minister who may

(but is not obliged to) ask Parliament to amend the legislation.

Section 3 of the Human Rights Act requires judges to read all legislation ‘so far as possible’ so it is

compatible with the European Convention on Human Rights.

Ghaidan v Godin-Mendoza

If this is not possible, courts can issue a declaration of incompatibility (section 4 of the Human Rights

Act). Such a declaration indicates the need to ensure compatibility, but the legislation remains in force.

Think about the effect this has had on the balance of power between the judiciary and the legislature

and the impact on Parliamentary sovereignty.

EU LAW

Historically UK law was not influenced by any external legal rules or legal forces. However, this

changed following the UK’s entry to the European Economic Community (now the European Union)

in 1973. Post Brexit the situation will change but how it will change has yet to be decided by Parliament.

Until then understand that:

The European Community was created in the 1950s by a series of treaties most importantly the

Treaty of Rome, which created the European Economic Community. Its goal was to create a

Common Market in Europe. The first members were Belgium, France, Germany, Italy,

Luxembourg and the Netherlands. The UK joined the EEC in 1974.

In order to join the EEC, the UK had to pass the European Communities Act 1972 under which

the UK agreed to apply EU law in UK courts. But, the 1972 Act went further stating in the

event of any conflict between EU law and UK law, EU law would take precedence. Until the

UK leaves the EU and this 1972 statute is repealed this is still the position. The great Repeal

Bill is the instrument which will pass through Parliament and ultimately repeal this 1972 statute

and so bring back sovereignty to Parliament and dispense with our courts having to follow

European law.

For more information about the structure of the EC and Brexit check out on Moodle resources for week

European Legislation

There are a number of different sources of EU law. Treaties are the primary source of law. These are

agreements between counties and the UK is a party to many eg Treaty of Rome, Maastricht Treaty,

Treaty of Lisbon (this contains the famous Article 50 which was in the news earlier this year). When

looking at a treaty you will see they are written in paragraphs like a book. These paragraphs are known

as ARTICLES (remember paragraphs in a piece of primary legislation created by Parliament are called

sections)

The Treaty of Rome was signed in 1957 and contains over 300 Articles. They contain prohibitions on,

for example, sex discrimination, free movement of goods, and competition rules.

The secondary legislation of the EU is contained in regulations, directives and decisions.

Regulations These create uniformity of law throughout all 28

member states. They become part of each member

state’s body of law without the need for a member

state’s own parliament to pass their own law to

bring the regulation in to force.

Directives These differ from regulations as they require each

member state to pass their own law to bring the directive

in to force so each member state has the flexibility on

how to achieve the goal stated in the directive.

Decisions These are decisions of the Luxembourg based The Court

of Justice of the European Union.

The Current Impact of European Law on our Domestic Law

By virtue of Section 3 of the European Communities Act 1972, courts must take account of the

provisions of the EC Treaty and decisions of the European Court of Justice, (now called the Court of

Justice of the European Union) and it is clear that the impact of EC law has reduced Parliamentary

sovereignty.

Factortame Ltd v Secretary of State for Transport (No 2) (1991)

CONTENT OF THIS LECTURE

· Doctrine of judicial precedent

· Reading and understanding cases

· Identifying the ratio of a case

· Other relevant terminology

Case law is the name given to the creation and refinement of law through judicial decisions and

is often called common law not case law

Doctrine of Judicial Precedent

This is tied in to the court hierarchy system to look back at lecture 1

This is the system adopted by judges of following decisions made in previous cases.

• Some precedents are BINDING (meaning they MUST be followed in later cases

involving similar facts)

• Others are merely PERSUASIVE (meaning that a judges in a later case involving

similar facts may choose to follow it but he/she is not bound to do so)

LECTURE THREE

Case Law and Judicial Precedent (Stare Decisis)

Reading and Understanding Cases

There are 3 factors to be considered in deciding whether a precedent is binding or persuasive:

(i) the hierarchy of the courts

(ii) ratio decidendi and obiter dicta

(iii) the material facts of the case

(i) The hierarchy of the courts

See lecture 1

As a general rule, the precedents of higher courts bind lower courts, but not vice versa.

Higher courts may follow decisions of lower courts but, if they do not the higher court is said

to overrule the decision of the lower court.

Supreme Court

All courts beneath the Supreme Court in the hierarchy must follow its decisions when hearing future

cases involving similar material facts.

It came in to being on 1st October 2009. It is housed in Middlesex Guildhall opposite the Houses of

Parliament. It replaces the House of Lords as the highest appeal court in the UK. The judges are

known as Justices of the Supreme Court and are appointed by the Queen on the recommendation of

the Prime Minister. There are currently 11Justices of the Supreme Court.

It operates as the House of Lords did previously.

House of Lords

Until 1966 the House of Lords was bound by its own decisions, but in 1966 a Practice Statement was

issued by the House of Lords which stated:

“Their Lordships regard the use of precedent as an indispensable foundation upon which to

decide what is the law and its application to individual cases. It provides at least some degree

of certainty upon which individuals can rely in the conduct of their affairs, as well as a basis

for orderly development of legal rules.

Their Lordships nevertheless recognise that too rigid adherence to precedent may lead to

injustice in a particular case and also unduly restrict the proper development of the law.

They propose therefore to modify their present practice and, while treating former decisions of

this House as normally binding, to depart from a previous decision when it appears right to do

so.

In this connection they will bear in mind the danger of disturbing retrospectively the basis on

which contracts, settlements of property and fiscal arrangements have been entered into and

also the especial need for certainty as to the criminal law.

This announcement is not intended to affect the use of precedent elsewhere than in this House.”

The effect of this statement is that unlike other courts the Supreme Court is not bound to follow its own

previous decisions or those of the House of Lords

Example of use of the 1966 Practice Statement

R v G (2003) where the House overruled its previous decision in R v Caldwell (1981). In Caldwell, it

was held that in determining the meaning of recklessness in a criminal damage case, it did not matter

whether or not the accused knew that what he or she was doing was dangerous.

The decision was heavily criticised so the House of Lords accepted this criticism in R v G and held that

a person would only be guilty of criminal damage if he or she had the capacity to appreciate the risks

of harm that their actions may cause.

Court of Appeal Civil Division

The Court of Appeal Civil Division is bound by:-

1. its own previous decisions;

2. House of Lords’/ Supreme Court decisions; and

3. Court of Justice of the European Union decisions.

It is not bound to follow its own previous decisions:

· if there are 2 conflicting CA decisions it is free to follow either of the earlier decisions;

· if since the previous CA decision it has been overruled by the HL/ Supreme Court;

· the previous CA decision was made per incuriam (with lack of care – without considering a

relevant case or statute);

· if since the previous decision the Court of Justice of the EU has given an interpretation of EC

law which is contrary to this CA decision; or

· if since the previous CA decision a statute has changed the law.

· the previous CA decision is in conflict with a later Privy Council decision; or

· the previous CA decision is in conflict with a decision of the European Court of Human Right

or a European Convention right.

· Decisions of the Court of Appeal are binding on all lower courts in the hierarchy.

Divisional Courts

Divisional Courts’ decisions are binding upon later Divisional Courts (subject to same Court of Appeal

exceptions set out above).

They are bound by the decisions of the House of Lords/ Supreme Court and the Court of Appeal.

Their decisions are binding on the courts from which they hear appeals.

High Court

They are bound by decisions of the House of Lords/ Supreme Court and the Court of Appeal.

High Courts are not bound to follow its own previous decisions but they do have strong persuasive

authority.

Their decisions are binding on all courts beneath them in the hierarchy.

Crown Court

They are bound by House of Lords/ Supreme Court, the Court of Appeal (Criminal Division) and

Divisional Court

Magistrates’ and County Courts

The decisions of the County Courts and Magistrates’ Court are not binding on any court.

They are bound by decisions of courts higher in the hierarchy.

(ii) Ratio Decidendi and Obiter Dicta

The ratio decidendi is the legal reason given by a judge for their decision. It is capable of forming the

binding precedent. It is a statement of law which is carried down to later decisions.

Warning – judges never say ‘This is the ratio of the case’ – ratios are only distilled by later

judges.

Obiter dicta are statements made by a judge which are NOT part of the ratio.

They are other statements, (words in passing) made by a judge such as hypothetical situations e.g. ‘If

the facts were different then my decision would not be the one I have made’ or wide legal principles

for example the judge might say what he would do if her was not bound by stare decisis or the judge

was dissenting on a point.

Such statement are persuasive rather than binding. This means that in a later case a judge can take the

statement into account (and usually will) when reaching his/her decision in the current case but there

is NO obligation to follow the statement.

Obiter dicta statements might be used by barristers in a later case to try to persuade the judge on a

particular point, or they might be referred to by the judge themselves.

Examples

· Where the judge makes a hypothetical pronouncement (e.g. “If the facts were different then

my decision would be …”).

· The judge might say what he would do if he was not bound by stare decisis.

· Because the judge was dissenting on this point.

· The judge is making a general comment on the area of law

(iii) Facts of the case

In order for precedent to be binding on a judge in a later case the material facts of the two cases must

be the same . if they are significantly different, the precedent will only be persuasive .

Examples when a precedent will not be binding:

• it has been overruled by a higher court

• has been overruled by a subsequent statute

• was made without proper care (per incuriam)

• today’s case can be distinguished from the earlier case i.e. the material facts differ

What are the advantages of our system of binding judicial precedent?

What are the disadvantages of binding judicial precedent?

Demonstrating how to find a ratio

In case 1 a man driving a Ford Escort ran over an old lady who was lawfully using

the zebra crossing. The car was speeding, and the man was not looking where he

was going. The old lady was injured. The weather conditions were excellent. The

man was found guilty of reckless driving.

In case 2 a woman driving a BMW ran over an old man who was crossing the road.

The car was speeding, and the driver was not looking where she was going. The

old man is injured. The weather conditions were excellent.

To find out whether case 2 has to follow the decision in case 1, we need to determine what the ratio of

case 1 is. To do this we need to find the MATERIAL FACTS.

MATERIAL FACTS are those facts which are crucial to the determination of the case

Look at the facts from case 1, cross out those facts which are not MATERIAL FACTS

· A Ford Escort is being driven.

· By a man.

· The car was speeding.

· The driver was not looking where he was going.

· The car runs over a pedestrian.

· The pedestrian was an old lady.

· The pedestrian was on a zebra crossing when she was hit.

· The pedestrian was injured.

· The weather conditions were excellent.

Once you have identified the material facts you should be able to identify the ratio for case 1.

Identify the material facts in case 2:

Is there any difference in material facts between the two cases? If yes, then case 2 may be distinguished.

If you are the judge in case 2 and wish to follow case 1 then you will have to reframe the ratio from

case 1. Further refinement may be possible in later cases.

READING AND UNDERSTANDING CASES

Throughout these lecture notes and in text books you will find examples of cases which have

come before the courts. They create legal principles and as such will need to be applied in your

answers to seminar questions, your January coursework and answers to the May exam. They

are the law and to vital to showing what you have to say is legally correct.

Law Reports and Citation

We know that judges have to follow a system of binding precedents but how do they get their hands

on them?

Cases are recorded and published in law reports. Historically these were large voluminous books but

today they are readily available on line. Anyone practising in the law including judges have access to

these law reports and will refer to them to ensure the law if upheld.

To make it easier law reports may be categorised e.g. Environmental Law Reports, Family Law

Reports or general reports listing cases simply in date order.

To help navigate through law reports all cases have the same two features:

· are known by a name (e.g. Donoghue v Stevenson); and

· have a citation – e.g. (2000) 2 ALL ER 456 or [2000] 2 ALL ER 456.

Where () are used, the year inside the brackets indicates the year the case was decided. Where [] are

used, the year inside the brackets indicates the year in which the case was reported.

How do you find a case by reference to its citation?

[2000] 2 ALL ER 456

This citation tells you to look at the All England Law Reports from the year 2000 ([2000] 2 ALL ER

456).

This series is obviously divided into more than one volume because there is a number before the name

of the law reports (2 ALL ER). This means that you should look for volume 2 in the series of All

England Law Reports from 2000.

The particular case that you are looking for will be at page 456 (the last number in the citation – [2000]

2 ALL ER 456) of the 2nd volume of the series of All England Law Reports from 2000.

Neutral citation system – Campbell v Mirror Group Newspaper [2002] EWCA Civ 1373 (indicates

court where the case was heard. The number relates not to page number but docket number). The

citation is neutral because it does not refer to a specific series of law reports.

The main features of a case report

· Indication of the Court which heard the case.

· Indication of the judges who heard the case.

· Hearing and judgment dates.

· Keywords.

· Headnote – written by the court reporter, not part of the case.

· Summary of key facts.

· Summary of decision (appears under HELD): if something of importance said in

judgment will be indicated by Per, or per curiam. Also notes any dissenting

judgments.

a) List of cases referred to judgment (and in the case of ICLR reports in arguments).

b) ICLR (except WLR) summary of counsel’s argument.

c) Judges opinions.

d) At end of case – summary of who won case

CONTENT OF THIS LECTURE

· What is a contract?

· How is it formed

· Offer v invitation to treat.

· Consideration.

WHAT IS A CONTRACT?

It is not uncommon for those without any knowledge of law to think that it is only businesses which

make contracts or that if we make them ourselves then they have to be about something important such

as buying or renting property or employment and that they must be in writing. In fact we are all making

contracts all of the time and, with a few exceptions the contract does not have to be in writing. It may

be written (and this will often be helpful in the event of a dispute), but contracts may also be made

verbally or even by conduct.

LECTURE FOUR

Introduction to Contract Law

Contract Formation

Some examples of everyday contracts:

Buying a jar of coffee

Using a taxi

Going to the cinema

Opening a bank account

Travelling by bus

Buying petrol

Signing up to a mobile phone contract

Signing up to a university course

Getting your hair cut

Using the internet in a café or library

Buying a sandwich

As well as making contracts regularly we also make agreements which are not contracts such as

arranging to meet a friend for lunch or agreeing to buy a relative a particular book for his birthday.

These agreements are not contracts because they do not contain all the essential elements needed to

create a

contract.

So what do lawyers mean by a contract? Simply, they mean a legally binding agreement.

To make a contract it has to contain all these essential elements:

 Offer + Acceptance which combine to make an AGREEMENT

 Consideration (i.e. exchange of something of value)

 Intention to create legal relations

 Capacity to form a contract

 Legality

If all these elements are present a contract is made and will be LEGALLY BINDING on those who

made it.

If one or more of these essential elements is missing no contract can be made and the courts will not

uphold what was agreed.

In this lecture we will concentrate on the first three requirements- offer, acceptance and consideration.

Bilateral Contracts

Bilateral contracts occur when all the essential elements are present and each party takes on some sort

of obligation usually promising to do something in return for a promise to do something by the other

party

Example: I promise to give you £20 and you promise to wash my car (two promises).

Most contracts are bilateral BUT they are not the only type of contract

HAS THERE BEEN AN AGREEMENT?

For a contract to come into existence one person, the offeror, must make an offer that is accepted by

the other person, the offeree.

Offer + Acceptance = Agreement.

The Offer

What is an offer?

An offer is a promise made by the offeror to be bound by that promise if accepted by the offeree–

therefore it must be capable of being accepted.

An offer may take the form of a statement (either oral or written), or it could be made by conduct that

is capable of acceptance.

An offer can be made to one particular person, a group of people, or to the world at large (see unilateral

contracts above).

Statements that are not offers

Offers should not be confused with statements that are simply made in order to supply information in

response to a query.

Harvey v Facey [1893]

Offers also need to be distinguished from statements/conduct that are incapable of being accepted, but

which might induce a person to make an offer.

These are known as invitations to treat.

What does this phrase mean? To treat = to enter in to business negotiations

An invitation to open negotiations about the price for example haggling

Invitations to treat are statements made to others by way of an invitation to them to make an offer.

Such statements are not offers and cannot be accepted as such.

There are some everyday situations which generally give rise to invitations to treat.

(i) Advertisements in magazines/ newspapers

Partridge v Crittenden [1968]

(ii) Display of goods in a shop

Fisher v Bell [1961]

Boots v Pharmaceutical Society of Great Britain [1953]

BUT – BE WARNED – some advertisements can be a unilateral offer not an invitation to treat – see

later note on UNILATERAL CONTRACTS

Do offers have an expiry date?

Yes!

An offer can be terminated, or brought to an end, in various ways.

(i) Rejecting an offer and making a counter offer

An offer is terminated if it is rejected. It is also terminated if the offeree tries to vary the terms of the

original offer e.g. by offering less money of trying to change the subject matter of the contract (this is

known as a counter offer).

Hyde v Wrench (1840)

But a statement requesting further information will not constitute a counter-offer.

Stevenson v McLean (1880)

(ii) Expiry of specified time period

An offer is terminated if the offeror set a specified period during which the offer would remain open

and it is not accepted within that period.

(iii) Expiry of reasonable time period

Even if a particular time period is not stated, an offer will not remain open indefinitely; it will lapse

after a reasonable time.

Ramsgate Victoria Hotel v Montefiore (1866)

(iv) Withdrawal of offer, provided it was communicated by offeror

The offeror may withdraw or revoke his offer at any time before acceptance by the offeree. However,

to be effective this must be brought to the attention of the offeree before acceptance.

An offer cannot continue indefinitely – once withdrawn it cannot be accepted

Routledge v Grant (1828)

Revocation of an offer by the offeror is not effective until the revocation is received by the offeree

Bryne v Van Tiehoven (1880)

(v) Death of offeror (relevant only in contracts for personal services)

If the offeror dies and the offer involved personal services, the offer terminates on his death. If the offer

involved non-personal services, it might survive if it can be performed by the offeror’s personal

representatives.

Acceptance

What is acceptance?

“… a final and unqualified expression of assent to the terms of an offer.” Treitel 2003

It is up to the person making the offer to stipulate how it should be accepted.

An acceptance must be the ‘mirror image’ of the offer (otherwise it will be a counter-offer). It is the

unconditional agreement by the offeree to all the terms of the offer.

The acceptance must also be firm (i.e. unconditional) and must be communicated to the offeror

(otherwise how will he know that an agreement has been formed?)

The general rule of acceptance is that it must be communicated in writing, verbally, or by conduct to

the offeror and received by him before it is effective

Entores v Miles Far East Corp (1955) and reaffirmed

by the House of Lords in Brinkibon v Stahag Stahl (1983)

As a general rule, communication means that the offeror has received the acceptance and is aware of it.

“Suppose, for instance, that I shout an offer to a man across a river or a courtyard but I do not

hear his reply because it is drowned out by an aircraft flying overhead. There is no contract at

that moment. If he wishes to make a contract he must wait until the aircraft is gone and then

shout back his acceptance so that I can hear what he says. Not until I have his answer am I

bound….”

Per Denning LJ in Entores v Miles Far East Corp [1955] 2 QB 327

There is then an agreement and if the other elements of the contract are present the parties are bound –

they may no longer pull out or change their minds.

Silence will therefore not be acceptance

Felthouse v Bindley (1862) 11 CB (NS) 869

THE EXCEPTION TO THIS RULE OF ACCEPTANCE

The Postal Rule

Acceptance of an offer by post is valid as soon as it is posted

Note that this only applies to acceptance – the general rule of communication applies to offers and

revocations of offers.

It must be reasonable to use the post and the letter must be validly stamped and correctly addressed.

Adams v Lindsell (1818) 1 B & Ald 681

The acceptance sent by post will create a valid and binding agreement even if the letter is never received.

Household Fire Insurance v Grant (1879) 4 Ex D 216

The offeror can avoid this risk by stating in the offer that some other method of acceptance must be

used.

‘Instantaneous’ means of communication

Immediate means of communication: speaking face to face, by telephone, fax or telex.

The general rules applies, acceptance is valid when received.

Entores v Miles Far East Corporation [1955] 2 QB 327

Brinkibon v Stahag Stahl [1983] 2 AC 34

Emails – does the general rule in Entores apply or does the postal rule apply?

Difficult question – instantaneous like the telephone, or more akin to letters?

If the latter, then there is an argument that the postal rule should apply.

See the Deveral Capps article on Moodle and in the library find

Thomas v BPE Solicitors [2010] EWHC 306 Ch

– emails should be treated as instantaneous and not subject to the postal rule.

The Other Type of Contract – The Unilateral Contract

Unilateral contracts occur when only one party promises to do something in return for the completion

of a specified act by the other party BUT that other party DOES NOT promise to perform that specified

act

Example I promise to pay you £20 if you find my pet dog; or

I promise to pay £50 to anyone who finds my lost dog (there is only one

promise).

Carlill v Carbolic Smoke Ball Co [1893]

Unilateral = an offer made by one person to ‘the whole world’

The Carbolic Smoke Ball Co placed ads in newspapers offering a reward of £100 to any person who

used the smoke ball three times per day as directed but still contracted influenza, colds, or any other

disease. To prove they were serious, a substantial sum of money was deposited in an account. Held:

this ad was not an invitation to treat, but a unilateral offer. Mrs Carlill, who caught flu, was entitled

to damages as the Smoke Ball Company were in a legally binding agreement with Mrs Carlill made

when she bought the smoke ball.

To decide if an advert is or is not an invitation to treat the courts will look at what the advertiser’s

intentions were. How would a reasonable person interpret what was said in the advert.

Withdrawal of unilateral offers

There are special rules regarding the withdrawal of unilateral offers.

The offeror cannot withdraw his offer if a person has begun to do something on the strength of that

offer.

Errington v Errington & Woods (1952)

Also, since the nature of a unilateral offer means that the offeror cannot guarantee that he’s

communicated notice of the withdrawal to everyone who saw the offer, he must simply take reasonable

steps to give such notice and should ensure that he communicates notice of the revocation in the same

form as he communicated the original offer.

Acceptance of a unilateral offer

Unilateral offers, which are made to the world at large and accepted by conduct – no communication of

acceptance by the offeree to the offeror is necessary

What about making a contract through web sites?

The Electronic Commerce (EC Directive) Regulations 2002 state that electronic

orders/acknowledgements of orders “are deemed to be received when the parties to whom they are

addressed are able to access them”

❖ Websites are usually considered to be shop windows = invitations to treat. The offer is made

by the purchaser and the seller has the option to reject.

❖ Where an agreement is made on the internet the service provider must electronically

acknowledge receipt.

❖ Acceptance depends upon the wording on the electronic communication sent back to the

purchaser. It may be when the seller accepts the order or when he dispatches the goods.

❖ Contract made on-line is considered to be in writing

❖ An electronic signature is acceptable

Intention to create legal relations

Contract law exists to enforce the parties’ bargains – if the parties never intended the agreement to have

legal force, there cannot be a contract.

However, consider the difficulties in proving what a party actually intended when he made an agreement

– and how easy it might be to claim no legal intention if a contract becomes inconvenient at a later

stage.

For this reason, the courts have developed some presumptions about where legal intention is likely to

be present.

Social and domestic arrangements

The presumption here is that there is no legal intention – but it can be rebutted. Courts will look at the

context, the content and the certainty of the agreement.

Balfour v Balfour [1919] 2 KB 571

Merritt v Merritt [1970] 1 WLR 1211

Commercial agreements

Here the presumption is the opposite – that the parties did have legal intention. There must be clear

evidence to rebut this presumption.

Jones v Vernon’s Pools Ltd [1938] 2 All ER 626

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

Esso Petroleum v Commissioners of Customs & Excise [1976] 1 ALL ER 117

Capacity

Persons under the age of 18 are only capable of entering legally binding contracts for necessaries (Sales

of Goods Act 1979, s3(2)). This has been held to include food, shelter, ordinary (and not fancy clothing),

and even the cost of a funeral for a spouse.

Mentally disabled persons of full age are able to enter any legal contract even if they did not understand

it, although the courts will treat the contract as void and of no effect if the other party to the contract

was aware of their mental condition.

Formalities

Most contracts can be agreed in any form (written, oral, or inferred from conduct). However, there are

a limited number of contracts that need to take a certain form in order for them to be enforceable by the

courts.

Consideration

What is consideration?

English law does not enforce gratuitous promises. A promise must be backed up by consideration if

there is to be a contract.

In Currie v Misa (1875), consideration was defined as something that constitutes a benefit to one

party or a detriment to another and this was affirmed by the House of Lords in Dunlop v Selfridge

(1915) where it was described as.

“An act of forbearance or the promise thereof is the price for which the promise of the other is

bought, and the promise thus given for value is enforceable.”

There are two types of consideration:

· Executory – a promise to perform an act at some future date.

Example I will clean your windows next week if you pay me five pounds

· Executed – a promise which only becomes enforceable when the offeree actually performs the

required act – see unilateral contracts and Carlill v Carbolic Smokeball Co (1891)

NB – The promisor is the person who makes the promise, the promisee is the person to whom the

promise is made.

A number of rules should help you remember how courts determine whether consideration is present in

particular scenarios.

1. Past consideration is not good consideration

If valuable benefit has already been given, before the contract is entered into, then this is not valid

consideration and there will be no contract.

Re McArdle (1951)

2. Performance must be legal

A promise to pay for an illegal act is not enforceable.

3. Performance must be possible

A promise to perform an impossible act is clearly unenforceable.

4. Consideration must be sufficient (but need not be adequate)

Courts will not intervene to ensure that the parties make a good bargain, but the consideration must

have some value (sufficiency).

Thomas v Thomas (1842)

Chappell v Nestle (1959)

5. Performing an existing duty

Performance of an existing duty does not constitute valid consideration for a new contract.

Collins v Godefroy (1831)

If you are already in a contract you cannot use the promise you made in that to make a fresh contract

Stilk v Myrick (1809)

Hartley v Ponsonby (1857)

But what if the promisor does more than his duty?

Harris v Sheffield United FC (1987)

Williams v Roffey Bros (1990)

6 Part payment of a debt

Rule in Pinnel’s case (1602)

Payment of a lesser sum than that owed on the due date in satisfaction of a greater sum cannot be

satisfaction for the whole

But note – payment of a lesser sum at the creditor’s request before the due date IS GOOD

consideration for a promise from the creditor to forgo the balance.

CONTENT OF THIS LECTURE

o Puffs, Terms and Representations

o Types of terms

o Implied terms

When a contract is being formed many statements are made by the parties to one another. Some of these

statements become part of a legally binding contract as terms of the contract. Others are not considered

to be part of the contract and are mere representations or puffs.

PUFFS

These are neither representations nor terms. For the purposes of attracting custom, tradesmen may

make vague exaggerated claims in adverts. Such statements are essentially statements of opinion or

“mere puff” and are not intended to form the basis of a binding contract eg “our butter is the

creamiest”

REPRESENTATIONS

Some pre-contractual statements which are made as part of the negotiation process, and which might

have encouraged the other party to enter into the contract, may have legal status as representations.

Terms are part of a contract and may be enforced; they are promises that the parties have contracted to

undertake. Representations are not part of a contract but legal remedies may be available if they turn

out to be untrue.

If a term is untrue then innocent party has an action for breach of contract. If a representation is

untrue then innocent party has an action for misrepresentation.

TERMS

Terms have been described as the duties and obligations that each party assumes under the agreement.

There are 2 main types of terms: express (those agreed by the parties) and implied (those which form

part of the contract even if they were not agreed by the parties!).

LECTURE FIVE

Contents of a Contract

HOW TO DIFFERENTIATE BETWEEN A TERM AND REPRESENTATION

It can be difficult to differentiate between a term and a representation. However, the courts have

developed certain tests to guide them when making the decision.

· Importance of the statement – where one party has indicated that the statement is of such

major importance they would not have entered into the agreement without it; it will constitute

a term.

Bannerman v White (1861)

· Strength of statement – the more definitive the statement, the more likely it is to be a term,

see Schawel v Reade [1913] 2 IR 81 where it was held that the seller’s statement “…the

horse is perfectly sound. If there was anything the matter wrong I would tell you” was a term.

· Ability of statement maker to verify truth of statement and/or ability of person to whom the

statement is made to verify the truth (i.e. relative knowledge and skill of the parties).

Dick Bentley v Harold Smith (1965)

compared with Oscar Chess v Williams (1957)

· Timing – statements made just before the conclusion of a contract are more likely to be terms;

statements made some time before completion are likely to be representations.

Routledge v McKay (1954)

· Agreements reduced to writing – if a statement is not included in the final contractual

document, then it is likely to be representation.

Routledge v McKay (1954)

TYPES OF TERMS

There are 2 main types of terms: express and implied.

EXPRESS TERMS

Express Terms are the terms actually referred to explicitly by the parties, either verbally or in writing.

IMPLIED TERMS

These are terms which are deemed to form part of the contract even though they may not have been

specifically stated or agreed (or even thought of) by the parties. They can be implied by statute or

common law (the courts) or very rarely by local custom.

Terms implied by statute

E.g. the Sale of Goods Act 1979 implies certain terms into contracts for the sale of goods ( ‘goods’

includes items a business might buy e.g. computers, printers, vehicles and uniforms etc).

· section 12(1) implied term that the seller owns the property he is selling .

· section 13 implied term that the goods sold correspond to any description given.

· section 14 implied terms that the goods sold are of satisfactory quality and will be fit for

purpose.

Terms implied by the courts

❖ Where the term is necessary to give business efficacy to the contract

Sometimes the courts will imply terms into a contract in order to give business efficacy to the contract.

To do this, the courts rely on the ‘officious bystander’ test – if the term is so obvious that when asked

if it was included the parties would have said, “Oh, of course” (Mackinnon LJ in Shirlaw v Southern

Foundaries (1939)) it will be implied.

The Moorcock (1889)

Note, however, that the courts will not rewrite contracts.

❖ Where the term is necessary in contracts of a certain type

These are terms implied by the court where they believe it is necessary in a certain type of contract.

Irwin v Liverpool City Council [1977] AC 239.

Terms implied by custom

Certain terms are implied into contracts by custom but such terms will not be implied where they

conflict with an express term of the contract.

Smith v Wilson (1832) ‘1000 rabbit skins meant 1200’

CLASSIFICATION OF TERMS ACCORDING TO THEIR SERIOUSNESS/IMPORTANCE

This distinction is sometimes made by statute, sometimes by case law and sometimes by the parties

themselves – although this is not always conclusive.

The significance of these distinctions is in the available remedies if they are breached.

Not all terms whether express or implied are of equal importance. There are 3 classifications of terms.

· Conditions

· Warranties

· Innominate terms

Conditions are the important obligations which go to root of contract.

Breach of a condition entitles the innocent party to a variety of remedies:-

(i) terminate the contract,

(ii) refuse to perform their part of the contract,

(iii) carry on with the contract and ignore the breach and claim damages.

Poussard v Spiers & Pond (1876) 1 QBD 410

The terms implied by Sections 13 and 14 of the Sale of Goods Act 1979 are 99% of the time treated as

conditions. See S.15A for when they will be treated as warranties.

Warranties are the minor obligations which are not vital to the overall contract. Breach of a warranty

only entitles the innocent party to the remedy of claiming damages. There is no right to terminate the

contract, the contract must continue.

NB: not to be confused with guarantees which are also called warranties – such as you may get with a

toaster or a car.

Bettine v Gye (1876)

Innominate terms

The difficulties of such a rigid system of labelling terms as either conditions or warranties led the Court

of Appeal to develop this third type of term.

If there is nothing to indicate whether a particular term in a contract is a condition or a warranty, if that

term is breached and very serious losses are suffered as a result of the breach the court will award the

same remedies as are available for a breach of condition. If only minor losses are sustained then the

court will award the remedy available for a breach of warranty.

Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26

If the claimant has been substantially deprived of the whole benefit of the contract then he may be

allowed to treat the contract as at an end and/or claim damages – ie same as a breach of condition.

If not, then he may claim only damages ie same as a breach of warranty.

The addition of this third type of term allows for greater flexibility and fairness, but can bring

uncertainty.

To put it another way……..

Some terms are incapable of being classified either as a condition or as a warranty because there can be

serious and trivial breaches of the particular term. The remedy for these innominate terms depends

upon the seriousness of the breach. Serious breach permits termination of the contract; minor breach

only gives rise to

damages.

To determine whether the breach is sufficiently serious, the courts consider whether the “innocent”

party has been deprived of substantially the whole benefit of the contract. If so, he will be entitled

to terminate the contract; if not, he will only be entitled to damages.

Cehave NV v Bremer (The Hansa Nord) (1976)

In a dispute the court decides whether a term is a condition or a warranty or an innominate

term

NOTE

S.15A Sale of Goods Act 1979 provides a buyer will have to treat a breach of condition as a breach of

warranty if the breach is so slight that it would be unreasonable to allow the buyer to reject the goods

What do the words ‘so slight’ mean in practice? Minor scratch which is hardly visible or a microscopic

deviation from the contract.

CONTENT OF THIS LECTURE

· Exclusion clauses and limitation clauses

· Judicial (or common law) controls on exclusion clauses

· Statutory controls on exclusion clauses

EXCLUSION AND LIMITATION CLAUSES

An exclusion clause seeks to prevent a party from claiming compensation for any loss or damage

caused by the other party.

Portsmouth Garment Makers does not accept liability for any loss or injury suffered by any

customer as a result of the supply of defective goods by Portsmouth Garment Makers or for any

failure by them to perform their contractual or other legal duties.

A limitation clause seeks to restrict or limit the extent to which one party can seek compensation for

loss or damage caused by the other party.

Portsmouth Garment Makers‘s total liability arising out of this contract shall be limited to a

maximum of £1,000

A party’s liability may be limited financially or by reference to certain types of loss/damage.

The term exemption clause is sometimes used as a global term incorporating both exclusion and

limitation clauses.

LECTURE SIX

Statutory Controls on Exemption Clauses and Unfair Terms

Why are exemption clauses useful tools for businesses?

Why is it necessary to control the use of exemption clauses?

CONTROLS ON EXEMPTION CLAUSES

The courts and Parliament are aware that these clauses are often used as standard terms by big business

and smaller businesses with less bargaining power may end up at a disadvantage as negotiations are not

on a ‘level playing field’.

Both the courts and Parliament have created controls on these clauses:-

· Judicial controls

o Incorporation

o Construction

· Statutory controls

o Unfair Contract Terms Act 1977 (UCTA)

Therefore today a party wishing to rely on an exemption clause will have to pass three main hurdles if

they wish to rely on it:

(i) Has the exclusion clause been incorporated in to the contract?

(ii) Is it written in such a way as to actually cover what happened (construction)?

(iii) Is there legislation against this type of clause?

Has the exclusion clause been incorporated in to the contract?

All terms must be successfully incorporated in order to become part of a contract and have legal effect.

There are three main ways in which a term may be incorporated into a contract:

1.By signature

There is a general rule that a term is incorporated if it is contained in a written contract signed by the

other party.

L’Estrange v Graucob [1934] 2 KB 394

2.Reasonable Notice

Is the document contractual in nature?

Chapelton v Barry UDC [1940] 1 KB 532 at 538

Has enough been done to bring it to the attention of the other party? The party wanting to add the

exemption clause to the contract must do all that is reasonably necessary to bring it to the attention of

the other party before the contract is made – ie not bury it in the small print.

Parker v South Eastern Railway [1877] 2 CPD 416

Thompson v L M & S Railway [1930] 1 KB 41

Timing is crucial – notice must have been given before or at the time of making the contract. The more

onerous the exemption clause the greater the degree of notice required.

Olley v Marlborough Court [1949] 1 KB 532

Thornton v Shoe Lane Parking [1971] 2 QB 163

3. Previous consistent course of dealing

If parties have dealt regularly and consistently (namely on the same terms and conditions) with each

other over a sufficient period of time, then a term may be incorporated in this way.

Spurling v Bradshaw [1956] 1 WLR 461

McCutcheon v David MacBrayne [1964] 1 WLR 125

Is it written in such a way as to actually cover what happened (construction)?

a) The next question to ask is whether the clause actually covers the loss/damage that the party

is trying to exclude/limit? The main rule used by the courts to help them determine this issue

is the Contra Proferentem Rule ie do the words in the exemption clause cover the fault

that has occurred?

b) This rule states that the courts should interpret any ambiguity in an exclusion clause against

the party seeking to rely upon it.

Andrews v Singer (1934)

Hollier v Rambler Motors [1972] 2 QB

Is there legislation against this type of clause?

Even if a clause satisfies the various judicial tests (i.e. it has been incorporated into the contract and the

wording of the clause covers the particular loss/damage), it might still be rendered unenforceable by

virtue of the Unfair Contract Terms Act 1977

Unfair Contract Terms Act 1977 (UCTA)

The effect of UCTA is to render some exemption clauses entirely void (without effect) and some others

only valid if a court believes them to be reasonable.

UCTA’s title is misleading – the Act covers both exemption clauses, limitation clauses and warning

notices in non contractual situations i.e. negligence (see lecture 8).

Some important sections of the Act

Section 2(1) A party cannot, by use of a contractual term or notice, exclude

his liability for negligently causing death or personal injury. This
term or notice will be void.

Section 2(2) A party cannot, by use of a contractual term or notice, exclude

his liability for negligently causing any other type of loss or
damage (i.e. other than death or personal injury) unless that term
or notice satisfies the reasonableness test.

Section 6 (1A) A seller cannot by use of a contractual term exclude his liability

under the statutory implied terms (ie S.s 13 -14 Sale of Goods
Act 1979) unless that term satisfies the reasonableness test.

Under Section 11(5) UCTA the burden of proving that a clause is reasonable falls on
the party who seeks to rely on it – the seller

How can we tell if a court would say an exemption clause or notice is reasonable?

Section 11 Provides that the inclusion of the term or notice must have been ‘fair and reasonable’ in light of

all of the circumstances at the time.

Schedule 2 If the term is one relating to S.6 (1A) the court will also take into account Schedule 2, which lists:

I. The strength of the bargaining positions of the parties
II. Availability of an alternative contract without the clause
III. Any inducements given to agree to the clause
IV. Other party’s awareness and understanding of the term

V. Whether the goods were being provided as a special order

CONTENT OF THIS LECTURE

a) Misrepresentation

b) Remedies available

INTRODUCTION

As you know from your study of contract law, the courts will uphold bargains which satisfy

the various requirements of contract formation on the basis that they are an expression of the

parties’ own free will. However, here we are concerned with situations where certain factors

have “vitiated” (or invalidated) consent i.e. there is no genuine consent or free will.

The vitiating factors recognised under English law are listed below.

 Misrepresentation

 Mistake

 Duress

 Undue Influence

 Illegality

We are only going to look at one,

MISREPRESENTATION

If misrepresentation has occurred the contract will not have been made with a free will and so

the contract is said to be VOIDABLE

Before we look in detail at misrepresentation we need to understand two key legal terms.

Void = there was never a contract in the first place which
means that neither party can enforce the agreement
(it is unenforceable).

Voidable = a contract came into existence in the first place but,
as a result of the vitiating factor, the innocent party
can decide whether or not to end the contract.

LECTURE SEVEN

Misrepresentation

Yes Yes

Is the statement simply a puff? If so, it is of no legal effect

If it is not mere puff

Is it a term? Is it a

representation?

Remedies for

breach if the

‘promise’ is

broken

Is it an actionable

misrepresentation?

Is it an untrue statement of fact which misleads

the other party and is one of the factors that

induces the making of the contract?

Yes?

Is it innocent,

negligent or

fraudulent

misrepresentation?

What are the appropriate remedies?

Are they available? Remember that the right to rescission

can be lost and/or there might be a valid exclusion clause

Misrepresentation Flow Chart

Misrepresentation affects the validity of a contract. If misrepresentation has occurred it makes

the contract VOIDABLE

Look back at lecture 5 to refresh your knowledge of contractual terms, representations and

puffs.

If a representation turns out to be untrue then the innocent party should consider making a

claim for misrepresentation and if successful the contract is VOIDABLE

MISREPRESENTATION

What is it?

It is a false statement of fact, not opinion made by one party to the contract, which is not part

of the contract but which induced the other party upon hearing it to go ahead and make the

contract.

The statement must have been false, be one of fact, have been made with the intention to be

acted upon and has actually induced the other party to make the contract

To put it another way:-

A misrepresentation is a false statement of fact, made in the course

of negotiations, which induces (or causes) the person who hears or

reads it to enter into the contract.

1. What is a statement of fact?

A statement that can be proved (objectively) to be either true or false.

What is not a statement of fact?

(a) Fact, not opinion

The general rule is that a statement of opinion cannot give rise to a misrepresentation.

Bisset v Wilkinson (1927)

But a statement of opinion may imply a statement of fact.

Smith v Land and House Property Corporation (1884)

Also, where the statement maker is an expert, or where it is intended that the statement will be

relied on, it may constitute a statement of fact.

Esso v Mardon (1976)

(b) Fact, not intention

A statement of future intention, and not of fact, will not be a misrepresentation.

However, a person’s present state of mind, or intention, constitutes a fact. If a person says that

they intend to use money for a particular purpose when in actual fact they intend to use it for

something different, this will constitute a misrepresentation.

Edgington v Fitzmaurice (1885)

Compare Inntrepreneur Pub Co v Sweeney (2002)

In this case, a statement made by the landlord of a pub predicting that the tenant would be

released from a beer tie ( a contract restricting what makes + types of beers the tenant could

sell) by the end of March 1998 was held not to be a statement of fact. It was a statement of

future intention (honestly held) and was based on good grounds in line with the defendant’s

current policy.

Dimmock v Hallett (1866)

A piece of land was described by the vendor as ‘fertile and improvable’. This was held to be

mere sales talk (or marketing puff); it was not a representation of fact.

The statement must be false factually and this includes half truths and statement which

become false after they are made

Can silence constitute a misrepresentation?

What if a party doesn’t actually make a statement, but simply keeps quiet about a fact which

would (if known) dissuade the other party from entering into the contract?

The general rule is that mere silence or non-disclosure does not give rise to an actionable

misrepresentation, even if the silent party knows that the other party has misunderstood.
Silence will not usually amount to misrepresentation. See Fletcher v Krell (1873).
However there are some exceptions

 Contracts of utmost good faith such as insurance contracts.

 Change of circumstances where a statement becomes inaccurate.

With v O’Flanagan (1936)

Spice Girls Ltd v Aprilia World Service (2002)

 Partial truth – where you only tell someone part of the story but the part that you keep

from them would influence their decision as to whether they should enter into the

contract

Dimmock v Hallett (1866-67)

 Where there is a fiduciary ( good faith/ trustworthy/honourable) relationship

The statement must induce the party to enter into the contract

However, the statement doesn’t have to be the sole reason for the other party’s decision

to enter into the contract.

If he checks the truth of the statement, he cannot say later that the statement induced

him to make the contract – the fact that he checked the statement proved that he did not

rely on it.

Attwood v Small (1862)

Museprime Properties Ltd v Adhill Properties Ltd (1990)

Types of Misrepresentation

There are three types of misrepresentation.
o Fraudulent Misrepresentation

o Negligent Misrepresentation

o Innocent Misrepresentation

Fraudulent misrepresentation – a statement made:
2. knowing that it was false;

3. without believing it to be true; or

4. being reckless as to whether or not it was true.

Note the element of dishonesty.

Fraudulent misrepresentation enables the misled party to rescind (see below) the contract and

claim damages in the tort of deceit.

Negligent misrepresentation (Discussed in more detail in later lecture) – where the statement

maker believes the statement to be true, but has no reasonable grounds to support this belief.

Negligent misrepresentation gives the misled party the right to rescind the contract, and claim

damages under S 2(1) Misrepresentation Act 1967.

Innocent misrepresentation – where the statement maker honestly believes the statement to

be true, and has reasonable grounds to do so. Innocent misrepresentation enables the innocent

party to rescind the contract (damages are not available as of right).

Further details on the remedies for misrepresentation

There are two principal remedies for misrepresentation.

Damages – these are not always available depending upon the type of misrepresentation (see

above). The amount of damages the innocent party is entitled to receive is the sum which will

put him in the position he would have been in had the misrepresentation not been made.

Rescission – all three types of misrepresentation give the innocent party the right to rescind

the contract. Rescission gives the innocent party the right to set the contract aside within a

reasonable time and the parties will be restored to their pre-contractual position I.E. give the

goods back and get your money back in full with no discount for use of goods prior to

discovering the misrepresentation.

(Alternatively, the innocent party might decide to affirm the contract, which means that the

contract will carry on and just claim damages)

There are occasions when rescission will not be permitted:-

 The contract is affirmed – a party could affirm a contract expressly or impliedly by

conduct.

 Lapse of time – the contract could be affirmed through lapse of time.

 Restitution impossible (restitutio in integrum) – if it is impossible to return the

parties to their original positions, rescission will not be granted.

 Third party gains rights – if a third party gains rights to the subject matter of the

contract before the contract is rescinded, the right to rescission will be lost.

NOTE

If there is an exclusion clause in the contract protecting one party from any misrepresentations

they may have made see S.3 UCTA’77 which states such a clause will be valid if reasonable

CONTENT OF THIS LECTURE

1. How a contract comes to an end

2. Remedies for breach of contract

DISCHARGE OF CONTRACT

When a contract is discharged, the parties are relieved of their contractual obligations. A contract may

be discharged in four main ways.

1. Agreement.

2. Performance.

3. Frustration.

4. Breach.

1. Agreement

Since a contract is formed by agreement it makes sense that it may be ended by agreement. In the

original agreement there may be a term that sets out the circumstances in which the agreement will

come to an end.

3. Contract for fixed term.

4. Term allowing notice.

5. Term which brings contract to end if certain events happen.

If there is no such term in the contract, the parties may agree to bring the contract to an end provided

that the agreement is supported by consideration.

LECTURE EIGHT

Discharge of Contract

Remedies for Breach of Contract

2. Performance

This is the most common method of discharging obligations under a contract and takes place when both

parties have performed their contractual obligations. Generally, complete and exact performance is

required before the contract will be discharged.

Cutter v Powell (1756)

However, part performance may be permissible in certain circumstances.

· Divisible contract (e.g. building contract).

· Partial performance has been accepted by the other party.

· Performance has been prevented by the other party.

· The contract is capable of being fulfilled by substantial performance.

Hoenig v Isaacs (1952)

3. Frustration

Frustration is something which occurs after the contract was made, but which makes the contract

impossible to perform or makes performance fundamentally different to that contemplated by the parties

at the time the contract was concluded.

Frustration discharges both parties from their liabilities under the contract.

Circumstances giving rise to frustration

 Destruction of subject matter of the contract

Taylor v Caldwell (1863)

 Government interference or supervening illegality prevents performance

Morgan v Manser (1947)

 A particular event, which was the sole reason for the contract does not actually ever take place.

Krell v Henry (1903)

 The death or illness of one of the parties.

Condor v The Barron Knights (1966)

Limitations to the doctrine of frustration

I. An alternative method of performance is still possible.

II. The supervening event must not be self-induced. If it is, then it is a breach of contract NOT a

frustrating event.

Maritime National Fish Ltd v Ocean Trawlers Ltd (1935)

III. If the supervening event is provided for in the contract, the court will accept the provisions

made and will not apply the doctrine of frustration – note the effect of force majeure clauses

which are agreed “up front” by the parties and provide for what should happen if a particular

event takes place or certain circumstances arise.

IV. If the event was, or should have been, foreseen by one party, that party cannot rely on

frustration.

V. Performance simply becoming more difficult or costly is not frustration.

Davis Contractors Ltd v Fareham UDC (1956)

Effects of frustration

The effects of frustration are governed by the Law Reform (Frustrated Contracts) Act 1943.

· Any money paid is recoverable (Section 1(2)).

· Any money payable ceases to be payable (Section 1(2)).

· A court may allow the parties to recover any expenses that have been paid (Section 1(2)).

· A party who has gained a valuable benefit from the contract before the frustrating event may

be required to pay for the benefit on a quantum meruit basis (Section 1(3)).

4. Breach of Contract

Breach of contract occurs when one party fails to comply with its contractual obligations.

· Fails to perform its contractual obligations.

· Performs its contractual obligations defectively.

· States that it will not perform its obligations.

Any breach of contract entitles the innocent party to sue for damages, regardless of the severity of the

breach.

Furthermore, one party may be discharged from his obligations under the contract because of breach

by the other. However, this is not an automatic right and only arises where there has been a breach of a

condition (also known as a primary obligation i.e. a major term going to the heart of the contract – see

lecture 5 on this topic) or where the other party has repudiated (ended) the contract before performance

is due or fully compete.

Note that there are two different kinds of breach: actual and anticipatory.

Actual breach

The breach might occur by reason of:

· non-performance; or

· defective performance

Anticipatory breach

The breach occurs when one party indicates in advance (i.e. before the performance date) that they will

not be able to perform the obligation. The breach might be express or implied.

Remedies for breach of contract

The main remedies for breach of contract are.

· Damages.

· Specific Performance.

· Injunction.

Damages (compensation)

They aim to put the innocent party in the position he would have been had the contract been fully

performed (‘expectation damages’).

Not all losses are recoverable, only those that satisfy the remoteness of damages test created in

Hadley v Baxendale (1854)

Victoria Laundry Ltd v Newham Industries Ltd (1949)

Koufos v Czarnikow Ltd (The Heron II) (1969)

Today damages are only payable for:-

· Loss/damage arising as a natural consequence of the breach OR

· Loss/damage which both parties would reasonably have contemplated when the contract was

made as a probable result of any breach.

But note the party in breach maybe liable for consequences which although were a type in the

contemplation of the parties turned out to be far more serious than expected

H Parsons (Livestock Ltd) v Uttley Ingham (1978)

The claimant is under a duty to mitigate his loss i.e. to take reasonable steps to reduce it. He must take

reasonable steps to minimise his losses, and not deliberately increase the loss unreasonably.

However, the claimant is only required to take reasonable steps to mitigate his loss; he need not go

beyond what a reasonable person in business would be expected to do.

Liquidated damages

The parties may agree in the contract itself what is to be paid in the event of a breach. This type of term

will stand if it is a genuine pre-estimate of likely loss. If not, it may be regarded as a penalty. The court

will then assess compensation itself in the usual way.

What is a penalty?

Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd (1915)

If the sum payable is “extravagant and unconscionable” by comparison with the greatest loss which

might be caused by the breach, it is likely to be viewed as a penalty.

If the breach consists of non-payment of money and the amount payable under the clause exceeds the

amount recoverable for the breach then the clause will be a penalty.

There is a presumption of penalty if the contract provides for the same amount to be payable as damages

in the event of several different types of breach regardless of the severity of the breach.

NB – just because the parties themselves have called the clause a penalty does not make it so.

Cellulose Acetate Silk Co Ltd v Widnes Foundry (1925) Ltd (1933, AC)

Specific Performance

The court may order the defendant to perform his part of the contract in accordance with its terms. This

is known as specific performance. The order is subject to the court’s discretion and is subject to the

restrictions listed below.

a) It will only be awarded where damages would be an inadequate remedy.

b) It will not be granted if the courts cannot supervise enforcement.

c) It will not be granted where the claimant acted improperly (because it is an equitable remedy).

Injunction

An injunction is a court order. It may take two forms – a court order that stops a person doing something

is called a ‘prohibitory injunction’ and an order that requires him to do something is called a ‘mandatory

injunction’.

Warner Bros Inc v Nelson (1937)

Page One Records Ltd v Britton (1968)

LIMITATION OF ACTIONS

The Limitation Act 1980 imposes limitation periods in respect of certain contracts. Claims cannot be

brought after the relevant limitation period has expired.

Section 5 – the action must be started within 6 years from the date of the breach if it relates to a simple

contract (i.e. one not made by Deed).

Section 8 – the action must be started within 12 years from the date of the breach if it relates to a contract

made by Deed.

CONTENT OF THIS LECTURE
 Introduction to tort law

 Torts v other wrongs

 Specific torts

Definition

A tort is often defined as a civil wrong which is not a breach of contract.

“The province of tort is to allocate responsibility for injurious conduct”.

Lord Denning

A tort is a breach of duty fixed by law (either common law or statutory law), committed against

an individual (including companies), which gives rise to an action for damages.

Generally, a tort involves the defendant doing something (act), or not doing something

(omission), which causes harm or loss or damage to the claimant. A tort also involves an

element of fault on the part of the defendant.

Tort law gives rights to individuals (either natural people like us or legal entities like

companies).

We enforce these rights using the civil, rather than criminal, court system and we do not need

to point to a contract in order to enforce our rights. This can be useful when there is no direct

contract link between us (the claimant) and the person who actually caused the liability. We

cannot sue them for breach of contract (there is no contract) but we still want to hold someone

liable for the loss/injury that we have suffered.

Example

A manufacturing company purchases some equipment for its machinery from a wholesaler.

The company’s contract is with the wholesaler.

Imagine that the equipment is defective and the defect is caused by the manufacturer’s

negligence. The defective equipment causes the company’s equipment to set fire and its

warehouse burns down.

Imagine that the wholesaler subsequently becomes insolvent so there is no point in the

company bringing an action against it even if it has breached the contract by supplying

defective goods. What can the company do?

The company did not contract directly with the manufacturer so can’t sue for breach of contract.

The company cannot take advantage of the contract between the manufacturer and the

LECTURE NINE

Introduction to the law of tort

LECTURE NINE
Introduction to the law of tort

wholesaler either because the rules of privity of contract say that only those who are a party to

the contract can sue on it. However, since the damage was caused by the manufacturer’s

negligence, the company can sue the manufacturer in tort and, if it is successful, it can recover

damages.

How and why does tort liability arise?

Tortious liability arises when one party breaches a legal duty that is owed to another party.

That legal duty might arise under the common law i.e. a duty created by the judges in case law

or under statute i.e. a duty set down in legislation. If the duty has been breached and loss has

been suffered, there will be a claim for damages.

How is tort different to other wrongs?

(a) Tort and Crime

CRIME TORT

Assault & battery

Trespass to the person

Theft Trespass to Goods
Conversion
Unlawful interference with goods

 The consequences of committing a tort are civil, not criminal.

 The purpose of tortious liability is to compensate the innocent party, not punish the

wrongdoer. Whereas the purpose of criminal liability is to punish the guilty party

rather than compensate the innocent party or victim.

 In criminal matters, the law protects the wider public interest whereas tort law seeks

redress for particular individuals who have suffered loss as a result of a wrong caused

by another individual.

 If you commit a tort, the action brought against you will be civil and will fall within

the category of private law i.e. individual against individual. If the individual makes a

successful claim you will have to pay damages to compensate them for the

loss/damage they have suffered.

 However, if you commit a crime, the action against you will be brought by the State

and the consequences of liability are criminal so you will be punished if convicted.

There is little focus on compensating the victim in criminal law. The aim is to protect

the wider public interest rather than protecting individual interests.

Sometimes one act can result in several different types of liability. The classification of liability

is not so much concerned with the nature of the act but rather with the consequences of carrying

out that act.

(b) Tort and Contract

1. Both contract and tort law fall under the umbrella of private law.

2. Both contract and tort law also seek to compensate the innocent party, rather than

punish the wrongdoer. However, the way that they do that is different.

3. In tort law, the aim is to compensate the innocent party for wrongful interference with

his rights i.e. damages aim to put him in the position he was in before his rights were

interfered with.

4. However, damages in contract law aim to compensate the innocent party for the fact

that his expectations have not been fulfilled i.e. the other party has not performed in

accordance with their agreement. Therefore, damages in contract law aim to put the

innocent party in the position he would have been in had the contract been performed

correctly i.e. as if his expectations had been fulfilled.

5. In tort, duties are fixed by law rather than by agreement as they are in contract law.

6. In contract law, the only people who are entitled to sue in the event of a breach of

contract are the people who were actually a party to the agreement. It doesn’t matter

if someone else has suffered loss, only the parties can sue under a contract. This is not

the case in tort law where rights are fixed by law and any person can sue any other

person for wrongful interference of those rights.

It is also worth noting that a party might well breach its contractual obligations and cause

liability under tort law at the same time. For example, this would be the case where a party

breached his contractual promise to take reasonable care in manufacturing goods and also

incurred liability in negligence for breaching the general duty of care owed to anyone who used

those goods.

SPECIFIC TORTS
The definition of tort is very wide and many different torts are recognised by the courts, usually

on the basis of different patterns of fact. The following are some of the most important.

(i) Trespass

This is the oldest recognised right of action. It involves a direct and intentional

infringement of someone’s rights. It is actionable ‘per se’ i.e. ‘of itself’ and there

is no need to prove damage/injury. There are many different types of trespass,

each protecting different interests.

Trespass to the person

 assault e.g. threatening words, shaking a fist or pointing a gun.

 battery e.g. hitting someone, spitting at someone, operating without consent.

 false imprisonment i.e. deprivation of liberty.

Trespass to land

an unjustifiable interference with the possession of land e.g. throwing rubbish onto

someone’s land, leaving parcels on the wrong doorstep.

Trespass to goods

damaging, moving or otherwise interfering with goods e.g. snatching someone’s bag, kicking

someone’s dog.

(ii) Nuisance

The unlawful interference with a person’s use or enjoyment of land or of some

right over it or in connection with it. Nuisance involves the balancing of one

person’s right to use land as he wishes and a neighbour’s right not to suffer

interference. Examples include:
o excessive noise;

o offensive smells;

o pollution like grit or dust, etc.; and

o smoke;

Miller v Jackson

There are three types of nuisance – public, private and statutory.

A statutory nuisance is committed where someone does something which is

prohibited by a piece of legislation. Such prohibitions might arise in relation to

noise creation, dilapidated premises, creating air pollution, etc.

When someone commits a public nuisance, they have also committed a crime.

A public nuisance is something which materially affects a group of citizens.

The case of Castle v St Augustine’s Links is a good example of a public

nuisance. A person was driving their car along a public road and was hit by a

golf ball from the thirteenth tee of the golf course. It was held that since balls

frequently went over the public road, the tee was a public nuisance since it

affected users of that public road. The claimant has to demonstrate that they

have suffered special damage in order to make a successful claim for public

nuisance. Here the damage/injury suffered by the claimant satisfied this

requirement.

Private nuisance is an unlawful interference with a person’s use or enjoyment

of land or some right over or in connection with it.

(iii) Defamation

This involves the publication of a statement which tends to lower a person in

the estimation of right thinking members of society generally or which tends to

make them shun or avoid the person.

Libel (permanent – e.g. newspapers, books, waxwork figures).

Slander (transitory, e.g. spoken words).

Grobbelaar v News Group Newspapers Ltd

Liability for Defective Products

Most torts require the claimant to prove some level of fault on behalf of the defendant in

order to for the claim to be successful. However, in the case of defective products, no fault

needs to be proved. This is a statutory tort covered by Part I of the Consumer Protection

Act 1987.

What is a product?

A v National Blood Authority

What does ‘defective’ mean?

A product is not defective unless it causes damage to the consumer or the consumer’s

property.

The consumer claimant must also prove that the defendant was responsible for the defect.

Piper v JRI Manufacturing Ltd

Under the Consumer Protection Act 1987 the claimant can sue the producer, supplier or

importer of the product.

For a supplier to be liable for a defective product, four requirements must be satisfied:
1. The consumer must have asked the supplier to identify the producer.

2. The request must have occurred within a reasonable time of the occurrence of

damage.

3. It must have been impracticable for the consumer to identify the producer.

4. The supplier must have failed to identify the person who supplied him the product.

This can be very useful especially if the consumer does not know who the producer is.eg:

Jane buys an unbranded DVD recorder from Tesco to give to her mother as a birthday

present. The video player gets very hot with use and burns Jane’s mother on the hand. Jane’s

mother cannot identify the manufacturer of the video recorder. She asks Tesco who cannot

identify the manufacturer either. Jane’s mother can sue Tesco for damages in tort.

A seller can also be contractually liable to a consumer buyer for a defective product under the

Consumer Rights Act 2015 but cannot receive double damages.

CONTENTS OF THIS LECTURE

 How a claim for negligence is put together

What needs to be proved by a claimant to succeed in a claim for negligence?

It is not simply that the defendant has been careless. A successful claim will need to prove all

3 essential elements below:

ESSENTIALS OF NEGLIGENCE

1. The Defendant owes the claimant a duty to take reasonable care; and

2. The Defendant is in breach of this duty by being negligent; and

3. Due to the defendant’s breach the claimant has suffered loss or injury

which is not too remote from the defendant’s actions.

LECTURE TEN

Tort of Negligence

1. Defendant owes the claimant a duty to take reasonable care

How do you establish a duty of care?

The fundamental test is that of reasonable foresight according to the ‘neighbour

principle’ of Lord Atkin in

Donoghue v Stevenson (1932)

If the claimant is not a foreseeable victim/beyond the area of reasonable foreseeability there is

no duty of care.

Due to the volume of case law following Donoghue v Stevenson establishing a duty of care in

most areas of domestic and commercial life have been tested in the courts.

For a situation which has not been before the courts today the courts apply a three part test

(see Caparo Industries v Dickman [1990] 1 All ER 568) to see if a duty of care is owed to the

claimant by the defendant:-

· Foreseeability of harm.

· Sufficient proximity between defendant and claimant.

· Just, fair and reasonable to impose such a duty.

2. Defendant is in breach of this duty of care by being negligent

In order for a claim to be successful a claimant must not only prove that a duty of care existed

but also that the duty was breached by the defendant failing to take reasonable care.

The test for establishing a breach of duty is an objective one set out in

Blyth v Birmingham Waterworks Co (1856) which stated a breach of duty occurs if the

defendant

‘..fails to do something which a reasonable man, guided upon those

considerations which ordinarily regulate the conduct of human affairs,

would do; or does something which a prudent and reasonable man would

not do.’

The reasonable man is not expected to be skilled in any particular trade or profession but if the

defendant does possess such skills or qualifications he will be expected to act as a reasonable

person would do with that same expertise (Wiltshire v Essex Area Health Authority).

If the defendant is disabled he will be expected to have acted as a reasonable person would do

with the same disability

The following principles have been established by case law:

1. Likelihood of injury – Bolton v Stone [1951], the higher the probability the higher the

standard of care Miller v Jackson (1977);

2. Seriousness of injury – Paris v Stepney BC [1951], if the potential injury is serious then the

more the defendant must do to protect the claimant;

3. Importance of object to be attained or the usefulness of wrongdoer’s actions – Watt v

Hertfordshire CC [1954]. Was a greater good served by the defendant’s actions which

would effectively provide a defence for his otherwise negligent act?

4. Practicality of precautions, cost of making sure no harm would be caused – Latimer v AEC

[1952] if the cost of eliminating the risk entirely is disproportionate to the threatened injury

and probability of injury the defendant does not have to eliminate the risk entirely

5. State of medical or scientific knowledge at the time of the incident – Roe v Minister of Health

[1954]

6. Common practices – see Bolam v Friern Barnet HMC [1957], will be ignored if in the

opinion of the court the common practice itself is negligent, see Bolitho v Hackney HA

[1998]

7. lack of training or the peculiarities of the defendant are NOT relevant Therefore the standard

of skill expected from a trainee accountant is the same as that of any reasonable accountant –

Nettleship v Weston (1971)

3. Due to the defendant’s breach the claimant has suffered loss or

injury which is not too remote from the defendant’s actions

Taking the first part of this element ‘ due to the defendant’s breach the claimant has

suffered’

This is about causation – the cause of the claimant’s loss or injury is due to the defendant

breaching his duty

The defendant is only liable if the claimant can prove on the balance of probabilities that ‘but

for’ the BREACH there would have been no injuries.

Barnett v Chelsea & Kensington HMB [1969]

Taking the remainder of this element ‘loss or injury which is not too remote from the defendant’s

actions’

There will be no liability if the damage/ loss caused to the claimant is too remote from the

actions of the defendant (damage not reasonably foreseeable).

Wagon Mound (No1) (1961)

Note the “thin skull rule” in Smith v Leech Brain (1962) which provides an exception to the

principle established in Wagon Mound.

If the particular type of injury/loss was a foreseeable consequence of the defendant’s breach of

duty the defendant will be liable for all the damage/injuries of that type no matter what the

extent Hughes v Lord Advocate [1963]

Remember what the Unfair Contract Terms Act 1977 has to say about notices which

try to exclude liability for negligent acts and ommissions:

Section 2(1) A party cannot, by use of a contractual term or notice, exclude
his liability for negligently causing death or personal injury. This
term or notice will be void.

Section 2(2) A party cannot, by use of a contractual term or notice, exclude
his liability for negligently causing any other type of loss or
damage (i.e. other than death or personal injury) unless that term
or notice satisfies the reasonableness test.

The Tort of Negligent Misstatement

The tort of negligent misstatement is part of the wider tort of negligence.

A person might suffer loss or damage by relying and/or acting upon negligently prepared

advice or information. The tort of negligent misstatement operates to provide a right of action

for such people so that they can be compensated for the losses they have incurred by relying

on the advice or information.

For a claimant to succeed in an action for negligent misstatement, it must be established that

the defendant:

· owed a duty to take reasonable care;

AND

· acted in breach of that duty;

AND

· this resulted in the loss suffered by the claimant.

In Hedley Byrne v Heller [1963] an advertising agency was given a reference from a client’s

bank which said that the client was credit worthy.

The House of Lords held that there was a duty of care not to make a statement carelessly (the

reference) which causes economic loss to another.

To prevent unlimited claims, in order for a duty of care to be established it is not enough that

an adviser can reasonably foresee that negligence could result in a claimant suffering financial

loss. It is necessary for the adviser and recipient to be in a ‘special relationship’. This is to

prevent someone being liable for an acceptably large group of potential claimants for an

indeterminate period eg potential investors in a privatisation.

The criteria for deciding whether a duty of care arises were tightened by the case of Caparo

Industries v Dickman.

Did the defendant……….

• reasonably anticipate how advice would be used?

• know the destination of the advice?

• could D have reasonably anticipated that claimant would act upon the advice without

seeking further clarification/independent advice?

Caparo Industries plc v Dickman [1990]

The claimant was a company which owned shares in another company called Fidelity plc.

The defendant was a firm of accountants.

The accountants prepared accounts for Fidelity plc. The accountants negligently stated in the

accounts that Fidelity plc had profits of £1.3 Million when in fact it had made a loss.

Claimant relied on accounts and increased its shareholding in Fidelity plc. In fact, it later took

over the company completely before discovering that the company was in fact worth far less

than it had been led to believe.

The House of Lords held: no duty of care existed between the accountants and the claimant.

House of Lords was influenced by the fact that the purpose of the accounts was to help

shareholders decide how to vote at the AGM, not to aid their decision as to whether or not to

increase their investment in the company.

What can you claim in damages if you are the victim of a negligent misstatement?

Economic loss – “loss independent of physical injury to person or property”

Pure economic loss not recoverable

Weller & Co v Foot and Mouth Disease Research Institute [1965]

Consequential economic loss is recoverable

Spartan Steel and Alloys v Martin [1972]

CONTENT OF THIS LECTURE

· Vicarious liability.

· Defences in tort.

· Remedies in tort.

VICARIOUS LIABILTY

Vicarious liability is where one person is made liable for a tort committed by another person.

An employer is vicariously liable for the tortious acts of his employees committed during the

employees’ course of employment – doing the job

However, a company is not usually vicariously liable for the acts of independent contractors.

Who is an employee?

Historically, any person who was under the control of another was found to be a servant

(employee).

However, this test was found to be inadequate and today the courts look at all the circumstances

surrounding a particular case to ascertain whether or not a person is an employee. Giving

someone the label of employee is not sufficient. Equally, calling someone a contractor does

not avoid vicarious liability; the courts look at the reality of the situation.

Ready Mixed Concrete v Minister of Pensions (1968)

Essentially, provided that the activity which led to the tort was sufficiently closely connected

with the employee’s contractual employment duties, the employer will be vicariously liable. It

does not matter that the employee was disobeying orders or acting negligently.

LECTURE ELEVEN

Vicarious liability, defences and remedies in the tort of negligence

Century Insurance v The NIRTB (1949)

Note that there must be some connection between the actions of the employee and his job.

Beard v London Omnibus Co (1900)

Note the impact of public policy in determining the extent of proximity when assessing

vicarious liability.

Lister v Hesley Hall (2001)

The Catholic Child Welfare Society and others v Various Claimants and The Institute of

the Brothers of the Christian Schools [2012]

DEFENCES

Volenti non fit injuria

This is also known as consent. The defence is available if:

· the claimant knew of the risk; and

· he freely consented to it.

ICI v Shatwell (1964)

This defence is rarely available to employers, as employees are often under pressure to do

dangerous work

Smith v Baker (1891)

The defence is not available if the claimant was injured while rescuing someone from a

situation that was created by the negligence of the defendant. In such circumstances, the

claimant is not deemed to have consented to the risk because ‘danger invites rescue’.

Sylvester v Chapman (1935)

Contributory negligence

The law is in the Law Reform (Contributory Negligence) Act 1945

This is only a partial defence, which reduces the amount of compensation that is payable to

the claimant on the basis that the claimant failed to take reasonable care with respect to his or

her own safety, i.e. the claimant contributed to their own injuries/ loss

Sayers v Harlow UDC (1958)

Stone v Taffe (1974)

Illegality

When a person is injured while he is participating in an unlawful activity, and the injury is

directly related to that illegality, this provides an absolute defence Ashton v Turner [1980] –

2 burglars A + B having committed a robbery got in to their get away car driven by C. Due to

C’s negligent driving B was injured. B attempted to sue C for negligence. Held B could not

sue C as NO duty of care arises in the commission of a crime.

REMEDIES IN TORT

The remedies for tortious claims are damages and/or injunction – see earlier notes with rules on

remoteness of damage set out in the Wagon Mound (No 1) (1960

Note – The claimant is under a duty to mitigate his losses.

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