Exam 2018, questions and answers PDF

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Examiners’ reports 2018

Examiners’ reports 2018 LA2017 Commercial law – Zone A Introduction This document sets out the Chief Examiner’s report for the examination paper in Commercial law Zone A and begins some general observations on the examination scripts as a whole before considering each examination question in turn. Many candidates answered the questions well. However, across a number of scripts, two common difficulties were exhibited. One was a very fundamental one: an inability to recognise that certain areas of law were involved in resolving the hypothetical problem. For example, in relation to Questions 4 and 5, many candidates failed to recognise that these questions concerned the Unfair Contract Terms Act 1977 and retention of clauses respectively, despite both questions clearly flagging these issues and, in the case of Question 5, raising no other issues. A second difficulty was presented by those candidates who did not carefully consider the facts given in a problem question or contention set out in an essay question. As a result, their answers often comprised a general discussion of a particular area of law without any attempt to apply this law towards the resolution of the problem or an analysis of the essay question. An answer that offers little more than an exposition of potentially relevant law will invariably be rewarded with a relatively low mark because the candidate is demonstrating only knowledge of the law and not the ability to utilise that knowledge. It is extremely important that candidates apply the law to the issues presented in a problem. Candidates should consider the principles developed within the relevant cases and the reasons behind these particular principles. These must then be applied to the problem to resolve it. In many cases, answers to problem questions amounted to little more than an outline of some relevant case law, dutifully recorded in the answer booklet. The reason for this is probably two-fold: first, it is often hard for intermediate candidates to discern the relevant from the irrelevant and caution encourages a complete list of cases to ensure that none is omitted; secondly, it is tempting to produce a lengthy answer in the hope that the examiner will be impressed by the breadth of knowledge acquired by the candidate. A successful answer identifies the issues and applies the relevant law to them. Such an answer displays not only knowledge but also understanding of the subject being examined. The recitation and discussion of cases that are irrelevant to the question serve to highlight a candidate’s uncertainty as to which issues are involved in the question. In other instances, some answers appeared chaotic, as if the candidate had hurried into an issue without full consideration of the question as a whole. Candidates who prepare a careful plan of their answer before writing it in full will find that the time spent in making such a plan is repaid by the clarity of the final answer. Among other things, it allows candidates to see the interaction of issues before they have committed themselves to one course or another. It should also prevent candidates from omitting points they had intended to discuss.

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Many candidates struggled to answer essay questions thoroughly. Their attempts were often, and unfortunately, confined to the recitation of everything they knew about a particular subject. In so doing, such candidates often presented a great deal of material; this presentation was marred by an apparent inability to discern the relevant from the irrelevant and a lack of analysis as to the underlying nature of the question. In attempting to answer essay questions, candidates needed to consider the exact nature of the question asked. At times, this can be very broad, allowing candidates to draw upon particular areas covered in this course. The information drawn up, needs to be employed as support for the arguments made in attempting to answer the question. Candidates should resist the temptation to write everything they know about a particular area of law and focus on what is relevant to answering the question set. Candidates must consider whether or not they are addressing their answer to the question asked. A part of this answer will, necessarily, involve legal analysis. In other instances, candidates were unable to answer the question asked in an essay question. They chose, instead, to adapt the question to a topic that they did know something about. Such an attempt is not, however, an answer to the question asked. It also leaves the examiners with the impression that the students are unable to answer four questions from the examination paper. A trend even move evident this year than in previous years were students reciting pre-prepared answers to questions, invariably with very poor results. It is imperative that all answers given are not only the work of the individual student but also, once again, a response to question set. Finally, many candidates suffered from an inability to budget their time. In these instances two or three good answers would be followed by a weak (and in some cases non-existent) effort to answer the balance of the paper. It goes without saying that it is difficult to succeed where all of a candidate’s efforts are concentrated on two or three answers when the examination paper requires four questions to be answered. A number of candidates did not appear to have sufficient knowledge of commercial law to attempt four questions. Lastly, the examiners in commercial law wish to emphasise the importance of writing the answers clearly. It is difficult, and sometimes impossible, to assess the illegible.

Comments on specific questions Question 1 ‘A theme that runs through our law of contract is that the reasonable expectations of honest men must be protected.’ Per Steyn J First Energy Ltd v Hungarian International Bank [1993] BCC 533. Assess the extent to which English commercial law embodies this theme. General remarks The purpose of this question is to allow candidates to construct a wide range of answers, using almost any aspect of the law that they have studied to consider whether there is an underlying ‘ethos’ of commercial law and whether it accurately identified by the quotation used in this question. It is also an opportunity to demonstrate an understanding of material beyond the bounds of the syllabus. However, with this freedom in terms of content comes the requirement that students must use the material they offer up to address the question, not merely to describe a range of potentially relevant material. In general, answers to this question scored relatively low marks because they tended to reprise the description of law used in another question without providing any explanation as to its relevance to this

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Examiners’ reports 2018

question. Alternatively, they offered a discussion that was to varying degrees nonlegal offering generalised remarks with few clear references to support them. Law cases, reports and other references the examiners would expect you to use Candidates could have legitimately referred to almost any area of the syllabus providing they were able to explain how it served to prove or disprove the contention raised by this question. However, cases and commentary that explicitly consider the over-arching function of commercial law would be particularly useful here. Common errors Failing to engage with the contention and instead describing without any analysis a particular area of law was a common error. A good answer to this question would… have a clear and purposeful structure, feature an increasingly prominent critical narrative drawing in (instead of describing) an ever wider range of evidence but evidence that is used sparingly and effectively, showing an increasing degree of discernment and command. An answer in this range would be very much addressed to the question. At the higher end of the range, drawing evidence from beyond the syllabus, including recently decided cases and extensive extra-judicial writing on this topic. Credit would be given for drawing on less obvious (but credible) examples that support a candidate’s argument. The very best answers would demonstrate real command of the material and the ability to pinpoint a range of examples and bring them together into a compelling critical account, which demonstrates a strong ability to structure and craft a response in a short period of time. Poor answers to this question… tended to talk in general terms with few or no references to law, or about the general purpose or history of commercial law or describe a particular area of law making no effort to relate it to the question, let alone offer an analysis of the contention itself. Student extract The protection of the reasonable expectations of honest men is a theme that runs through commercial law. It can be seen in the tension between protecting the rights of property owners and buyer who buys in good faith for value without notice of another person’s interest in the goods. And perhaps it only makes sense that where transfers for value are concerned, the law will necessarily have to walk a tight rope to ensure that the interests of both parties are well served. One area of law where this can be analysed is where passing of property and risk is concerned. Observing the mechanics of these aspects of commercial law allows us to see that there is in fact a seemingly constant threat that operators may find themselves in difficulty, precisely because the law is seeking to serve both masters at the same time. Comments on extract This is the introduction to an essay which was ultimately awarded a mid-2:2 mark. The latter part of the essay managed to sustain greater focus and depth than that seen here. However, this passage is illustrative of a common problem seen when answering this and other essay questions: an inability to be clear and direct. The introduction here introduces two possible topics, both of which would provide ample illustrations to help construct a good answer to this question but rather than focus on one, a second is introduced and there is no discussion of how an argument will be developed. Instead, what we see is a lot of writing that sounds good but when we read it more closely does not tell us a great deal about the argument that the

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candidate intends to construct and what this will tell us. An introduction is an opportunity to set out the argument you are going to write. It is an opportunity to set out in brief your thought process and show that you ‘get’ the question and how to respond to it. Do not feel that you cannot be clear and direct if you are also being accurate and detailed at the same time. Simply throwing more potentially relevant material in often gives a sense that a candidate is not confident or cannot discern between what is and is not relevant. Question 2 Paulina owns a garage business which services, repairs and occasionally sells cars and vans. Due to other commitments, Paulina is unable to run the business full-time and appoints Aaron, who has worked for her for five years as one of three mechanics, to the role of ‘garage manager’. Aaron is given a badge stating his new title and a new uniform to distinguish him from other staff. Paulina tells him only to ‘keep things ticking over for me’. Aaron has entered into the following agreements: a) A contract for a new fault diagnosis system at a cost of £2,500; and b) A contract to refurbish the customer waiting area for a cost of £5,000; and c) A contract with a tyre manufacturer under which their usual price is discounted by 20% subject to a minimum order of £5,000. Paulina has now learned of these agreements. She feels that the first two contracts are unaffordable and does not wish to be bound by them. Advise Paulina. General remarks This question was attempted by a substantial number of candidates, some of whom produced very effective and well-informed answers centred around a capable analysis of the problem. A majority of answers, however, tended towards providing a description of the law of agency that was by degrees more or less relevant to the question, often failing to provide anything that could really be regarded as analysis of the problem or a solution to it. As always with any problem question, the purpose of the exercise is not to simply identify some potentially relevant law but demonstrate an ability to use the law to solve a problem. Access to better marks is only possible where there is a clear attempt to at least apply the maw. Law cases, reports and other references the examiners would expect you to use Ireland v Livingston Freeman & Lockyer v Buckhurst Park Properties Waugh v Clifford First Energy v Hungarian International Bank RCJ v Lanstar Sino Channel Asia Ltd v Dana Shipping & Trading Pte Singapore Bolton Partners v Lambert Suncorp Insurance v Milano Assicurazioni Common errors Most candidates identified that this question required a consideration in each instance of the whether or not there was authority for particular action and what

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Examiners’ reports 2018

form that authority took. There were few errors, therefore, in one sense but too often candidates sought to argue agency of necessity and agency on the basis of Watteau v Fenwick when that was clearly not present. Some candidates misinterpreted this as a SGA implied terms problem, which it is not, and if it were, would require, in some cases the authority of the agent to be established in any case. A good answer to this question would… identify that the challenge in this question was not just about the presence and type of authority but the exact scope of A’s authority and at what point any actual authority gives way to apparent authority. A good answer would have been centred around the latter issue in particular. A good answer would have identified that as a general manager, A’s actual implied authority could reasonably extend to the purchase of goods for the carrying on of the core business but would try to temper this with the express instructions given to A, offering some meaningful analysis of the words used but appreciating that this may give rise to some potentially insoluble uncertainty as to A’s actual authority. However, this uncertainty can be resolved with reference to apparent authority (considering both actual and implied but contemplating whether the latter may be impossible) and ratification. A good answer would sequence their argument in this way, discussing actual authority before setting and applying the rules of apparent authority (in respect of the fault diagnosis system and refurbishment works) and ratification respectively. A very good answer would engage actively with the issue as to what exactly was being represented about A’s authority with reference to recent cases such as RCJ v Lanstar and Sino Channel Asia Ltd v Dana Shipping & Trading Pte Singapore, all of which deal with agents with very wide ranging apparent authority. Poor answers to this question… tended to provide a vague outline of the concept of authority and could not describe or differentiate between the different instances of authority, or identify which instance would be most relevant in each scenario. Poor answers tended to fall back on Watteau v Fenwick and agency of necessity, demonstrating a poor grasp of both. Question 3 In Watteau v Fenwick [1893] 1 QB 346, Wills J said: ‘once it is established that the defendant was the real principal, the ordinary doctrine as to principal and agent applies — that the principal is liable for all the acts of the agent which are within the authority usually confided to an agent of that character.’ Wills J’s decision is often criticised, but the law has nevertheless effectively reached this position. Discuss. General remarks At one level, this was a relatively straightforward question, inviting students to demonstrate knowledge of Watteau v Fenwick. At another, it was an opportunity for students to consider whether the concept of ‘usual authority’ seemingly articulated in Watteau coincides with that of ‘usual authority’ of an agent with apparent authority and whether the mere appearance of an agent that might be argued to be the basis of the decisions in First Energy is really distinguishable. Law cases, reports and other references the examiners would expect you to use Candidates should have discussed Watteau in detail and case law that has questioned its value as an authority, particularly Sign-o-Lite and The Rhodian River.

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For the second strand of the question, discussion of Freeman v Lockyer, The Rafaella, The Ocean Frost and First Energy could all be relevant. Common errors There were few common errors per se but most candidates used this question an opportunity to reprise the well-rehearsed discussions on Watteau and did not consider any other issues. A good answer to this question would… introduce Watteau and try to pin down what exactly the ratio is, noting it has been questioned if there is one, before continuing to offer some critique of it. The candidate would then move to consider whether or not the law in relation to apparent authority had moved to a point where it could be argued that even the slightest appearance of authority, could be regarded as being sufficient to hold the principal to the agent’s bargain. Poor answers to this question… offered little more than a discussion of the facts of Watteau. Question 4 Solent Ltd is a manufacturer of screws and agreed to sell to Brunswick Ltd 50,000 M5 precision machine screws, tolerance (length) not more than 0.5 mm for £100,000 (including a 20 % discount). The screws were despatched from Solent’s warehouse in Manchester for delivery to Brunswick in London. The contract was made on Solent’s written standard terms which include the following clauses: a) The Seller excludes liability for any and all implied terms or warranties as to the quality, fitness, durability or suitability of the goods supplied. b) The Buyer will inspect the goods and notify any defects to the Seller within two working days. c) The Seller will replace any defective goods on a like-for-like basis without charge (Buyer liable for all carriage costs). No replacement goods will be offered where defects are notified more than five working days after delivery. Solent’s standard terms contain no other express terms as to quality and fitness. The parties have not previously contracted with each other. Solent did not draw any particular terms to the attention of Brunswick. Both are sizeable, specialist businesses dealing regularly in goods of this type. Brunswick inspected the screws eight working days after receiving them from Solent. Half of the screws are longer than specified by more than 1 mm and Brunswick wish to reject the entire order. Advise Brunswick. General remarks This was a question superficially concerning the implied terms of the SGA, however, a closer reading should have revealed that that was a secondary issue sitting behind the first issue of whether those terms were effectively excluded by the exclusion clause noted in the question. Were it held reasonable, the implied terms would be of no consequence. A majority of candidates did appreciate the significance of the exclusion clause and structured their answers accordingly.

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Examiners’ reports 2018

Law cases, reports and other references the examiners would expect you to use Candidates attempting this question should have made reference initially to the Unfair Contract Terms Act 1977. Attempts to exclude the SGA implied terms are addressed by s.6, from which a discussion of s.11 and Sch. 2 are absolutely indispensable. The application of s.11/Sch.2 should have been informed by at least some case law. If it were found that on balance the exclusion clause would not hold, candidates could then turn to ss.13 and 14(2) of the SGA and a range of case law on the implied terms. In this case, s.13 would be sufficient. In relation to s.13, Ashington Piggeries and Harlingdon Leinster are especially important as they provide guidance on the meaning of the implied term. In relation to s.14(2), Stevenson v Rogers and a range of case law elaborating on the meaning of the criteria in s....