Lecture Notes ACF270 PDF

Preview

Summary

ACF 270 Business Law Lecture 1: What is Law? Law: The body of rules and regulations that govern the activities of persons within a country. Characteristics of English Law: Law can come from: Common Law & Equity:  Judge made law that is found in cases coming before the courts  Befor...

Description

ACF 270 Business Law

Lecture 1: What is Law?

Law: The body of rules and regulations that govern the activities of persons within a country. Characteristics of English Law:

Law can come from: Common Law & Equity:  Judge made law that is found in cases coming before the courts  Before 1873 there were two court systems in England- the Common Law Courts (common law used, cases including money compensation) and Chancery Courts (equity principles used, cases where money compensation was not used)  Today one court system where judges use both principles of common law and equity. OR Parliament. (Statute comes from parliament, law can also be made by judges) Doctrine of Precedent: Judges of lower courts must apply the legal rules set down by higher courts (or courts of the same status) in earlier cases where the facts are similar. It is the legal principles of a case that lower courts are bound by as opposed to the facts of the case.

Classification of law into Public and Private law:

2

Business law mainly deals with civil issues although there may be some criminal elements involved in Company Law such as insider dealing and fraudulent trading Criminal cases:  R v Smith = Regina against Smith  Regina is the state and Smith is the accused  A prosecutor must prove the defendant is guilty beyond reasonable doubt. The defendant does not have to prove his innocence. The defendant can give evidence at his own trial, but it is not required by law to do so. Civil Cases:  Smith v Adams = Claimant v Defendant  The claimant must prove his case on the balance of probabilities, ie, he must show that he has a greater right than the defendant. Alternatives to the English Court System (Other methods of civil dispute resolution):  Arbitration  Mediation  Conciliation  Tribunals In criminal matters, the court system is used by the majority of disputed issues arise In civil matters and there is a range of methods that can be used to resolve disputes without going to court.

3

Outline of the English Court System and where judges sit within it:

 

The English Court System is complex partly because some courts hear both civil and criminal issues and other have both original and appellant jurisdiction. This demonstrates that there is a system of hierarchy of judges. It is useful to know that the judicial committee of the House of Lords was replaced as the highest court of appeal by the Supreme Court and the former Law Lords that sat in that court became the first Justices of the Supreme Court.

Criminal trials take place in either: Magistrates’ Court  Usually heard by 3 magistrates (or one District Judge).  Magistrates (or District Judge (Magistrates’ Court) determine guilt of defendant and sentence.  Heard before judge and jury.  Jury determine guilt of defendant and judge determines sentence.  Summary offences must be prosecuted in Magistrates’ court Crown Court  Heard before judge and jury. (12 members of jury)  Jury determine guilt of defendant and judge determines sentence  Indictable offences must be prosecuted in Crown court (murder, manslaughter, robbery)

4

Appeals in Criminal Cases: Trials in Magistrates’ Courts  By defendant against conviction and/or sentence to Crown Court.  By defendant or prosecution on points of law to High Court and Supreme Court. Trials in Crown Court  By defendant against conviction and/or sentence to Court of Appeal.  Further appeal on point of law (if victim feels the judges have applied law incorrectly) to Supreme Court by defendant or prosecution. The civil court system:

 

Civil claims usually commence in either the County Court or High Court. The Court of Human Rights and the European Court of Justice are not part of the English Court System, but English Courts ask the ECJ for interpretations of EU law. A victim who is claiming a breach the European Convention of Human Rights by the State and has been unable to get a remedy in the English Courts may take a claim to Court of Human Rights.

Civil Claims: Court the claim is commenced in:  County court  High court 5

Court procedure:  Claim form and particulars of claim  Defence  Trial  Enforcing judgement Courts where civil appeals are usually heard:  High court, court of appeals, supreme court  An appeal from the High court may go straight to the Supreme Court if it contains matters of general public importance. AcF270 Week 11 and 12 Supporting notes The English Legal System 1. What is Law? The most fundamental legal distinction is between the criminal law and the civil law. The legal consequences of a crime will be a prosecution and punishment, whereas if a person is seeking compensation, the case is likely to be a civil case. A civil case will be about a claim (from the person who initiates the action the CLAIMANT), and the claim is made against the DEFENDANT. If successful and the action succeeds, then the court in a civil case will make an order that aims to compensate the claimant, and may also make an order to protect the civil rights of the claimant. We will discuss this further in due course. It should be noted that the two are not mutually exclusive, e.g. an assault can be a crime, and prosecuted and punished under the criminal law, and can also be the subject of a civil action in tort in which the victim is seeking compensation for the tort (the wrong) committed against him. 2. Common Law and Civil Law The starting point is to remember that the UK has a COMMON LAW LEGAL SYSTEM, compared to other countries, for example China, that have a CIVIL LAW LEGAL SYSTEM. The civil law legal system is however the most widespread legal system – it is dominant in Continental Europe and Asia, and is characterised by a codified written body of law, that covers all areas of law, usually in the form of Codes. The judiciary in a civil law legal system is to interpret the various Codes, whereas the judge in a common law legal system both interprets written codified law (known as statutes) AND creates law by deciding cases using the doctrine of precedence. This we will address below. This distinction is complicated by the fact that each word, common and civil law, has several meanings. The term ‘common law’ has 3 meanings: (i) At its broadest level, the term refers to those countries around the world that have based their legal system on that of England e.g. Commonwealth countries and the US. (ii) Common law is also the body of law created by the judiciary and applied by way of the doctrine of precedent. Common law is also sometimes referred to as case law

6

(iii)

The third meaning of ‘common law’ relates to the system of law that developed following the Norman Conquest in 1066. Prior to this, England lacked a unified system of law; it was mainly based on local custom. Gradually, in conjunction with the development of a system of law that was common to all men, a supplementary system of law developed for situations where the common law was considered inappropriate. So for example, damages were the usual remedy in common law, but sometimes, monetary compensation was not what was needed. Sometimes the remedy might be an order to stop someone from doing something – e.g. trespassing upon your land. This equitable remedy is known as an injunction. Or the innocent party might want the law to compel someone to do something they are legally obliged to do e.g. perform a contractual obligation. This is known as an order for specific performance.

3. The Courts A basic understanding of the court system is vital to understanding the ‘common law’ character of the English legal system, and in particular the doctrine of precedence, through which judges actually create law, ‘common law’ or ‘case law’. There are different court systems for criminal and civil law, but we are mainly concerned with the civil law, and we will focus on this therefore. We must distinguish between courts of first instance, where matters are first brought to court, and appellate courts, which hear appeals from the decisions of courts of first instance. COUNTY COURT: In the civil law system, the lowest court of first instance is the county court. The majority of cases involving business will be heard in the county court, most actions in the law of contract and tort. As a broad indication, claims for less than £10,000 will usually be commenced as small claims in the county court, and claims between £10,000 and £25,000 will be allocated to the fast track system within the county court. A case which does not fit into either track will proceed by way of the multi-track in the High Court. There are exceptions however. Cases that are more complex and of higher value will normally be heard in the High Court. HIGH COURT: This court has 3 divisions: the Chancery Division; the Queen’s Bench Division; and, the family Division. Chancery deals with matters e.g. pertaining to land, mortgages, trusts, estates and partnerships. The QBD hears a large number of first instance claims under the law of contract and tort, and some appeals from the decisions of the County Court. There are also a number of specialist courts in the High Court, most importantly for our studies the Commercial Court. The Family Division hears first instance cases in matrimonial matters, custody and adoption matters etc. and will hear some appeals from family law decisions of the magistrate’s court. THE COURT OF APPEAL: The CA has 2 divisions – the Civil Division and the Criminal Division. The Civil Division hears appeals from the High Court and in some cases can hear appeals directly from the County Court, if the case raises important principles or issues of law. This is known as the Leapfrog procedure.

7

(The Criminal Division of the Court of Appeal hears appeals from decisions of the Crown Court). THE SUPREME COURT OF THE UNITED KINGDOM: For over 600 years the House of Lords was the highest court in the UK, but in 2009, the HL was replaced by the Supreme Court. You will still see references to decisions of the HL in your reading of case law therefore. The SC hears both civil and criminal cases and is predominantly an appellate court, mainly hearing appeals from the decisions of the CA and the HC. THE JUDICIAL COMMITTEE OF THE PRIVY COUNCIL: historically heard appeals from cases in the British colonies and crown dependencies. Today these are limited to Crown dependencies such as the Isle of Man and Jersey, and UK overseas territories such as Gibraltar and Bermuda. TRIBUNALS: The resolution of matters in the tribunal system has become increasingly important over the last hundred years and more people bring a case before a tribunal than to court – the main reasons being: it is less costly; it is faster; the tribunal members have specific expertise; relationships stand a better chance of being saved; and, there is less publicity (particularly important for business matters where reputation is at risk e.g. most employment matters will commence almost exclusively in the tribunal system. Tribunals usually consist of a panel of 3: a legally trained chairperson and 2 lay persons with expertise in the area under consideration. A huge majority of cases are resolved in this way ‘out of court’ by ‘alternative dispute resolution’ ADR. Going to court should be a last resort – it is prohibitively expensive. ADR and the use of tribunals are less formal, quicker, and cheaper. There are 3 types of ADR. These are: (i) Arbitration – instead of commencing legal proceedings, the parties will let their case be heard by an independent third party known as an ‘arbitrator’. This person need not be legally trained but will have an expertise in the area in question. Arbitration is most commonly used in commercial cases. Arbitration is similar to litigation (legal proceedings in court) – the rules of procedure are similar, lawyers act as they would in court, the decision of the arbitrator is legally binding and the decision may be appealed to the courts.

8

(ii)

Mediation – where a third party the mediator helps the parties reach a mutually acceptable agreement. The job of the mediator is to facilitate negotiation so the parties can resolve the matter themselves. It is less confrontational than arbitration or litigation, so is useful where the parties have to maintain a relationship in the future, e.g. a divorcing couple with children to raise.

(iii)

Conciliation – is similar to mediation but the conciliator will take a more proactive role and will actually make suggestions as to a solution before the matter goes to arbitration or court. An example would be in employment matters where ACAS (Advisory Conciliation and Arbitration Service) will attempt to resolve the case first. In 93% of cases in 2012/13, litigation was avoided.

4. Domestic Sources of Law - (Chapter 3) There are 3 domestic sources of law: legislation; case law (or common law); and, custom. (i) Legislation This comes in the form of Acts of Parliament or statute. It is made by the elected Parliament and cannot be overruled. Where there is a conflict with other sources of law, statute prevails. An Act will consist of sections and sub-sections and technical details will come in the form of Schedules to the Act at the end. Acts can be small, containing only a few sections, or huge, such as the Companies Act 2006 which has 1,300 sections, 16 Schedules, and runs to 305,000 words. We will refer to this source of law when we study company law later in the semester. A piece of legislation (an Act or a statute) may come into being for a number of reasons – it may be needed to remedy the decision of a judge, it may be needed to implement or give effect to a piece of EU law, and it is the way in which the political party with the most number of seats in the House of Commons, i.e. the government, will implement its particular policies. To become an Act of Parliament, a Bill must pass through both houses of Parliament – the House of Commons and the House of Lords, and then be assented to by the monarch, currently Queen Elizabeth 11. There is some good legislation and some not so good – some is very comprehensive, clear and easy to apply effectively. Other pieces of legislation may be vague, complicated and unclear. In these instances a lot will depend on the judge’s interpretation of the legislation, so even in this way, as well as creating law through cases, judges in the UK also have an important role to play in the interpretation and application of statute law. Judges do not however have the power to strike down legislation, unlike countries with written constitutions, most notably the US. The judge has a number of interpretive aids and these are: presumptions; intrinsic aids; and, extrinsic aids. An example of a presumption is that parliament will be presumed to know the common law (case law), and will be presumed not to intend to change it. Intrinsic aids are contained in the statute (Act of Parliament) itself, e.g. a definition section, so e.g. in the Sale of Goods Act 1979, there are 27 definitions of words and phrases that are used throughout the Act. But also, English courts can use a number of extrinsic aids – material outside of the Act. The court can refer to official reports, and notes of the Parliamentary debate recorded in the official record of Parliaments proceedings, Hansard: see Pepper v Hart. In addition to this, the courts have developed certain interpretative rules. (a) The Literal Rule - the words of a statute are given their literal, normal and everyday meaning, irrespective of the result: see Whiteley v Chappell, where the person was found not guilty of impersonating a voter because the person he was pretending to be was dead. This rule focusses on the actual words used in the statute and is the most

9

acceptable of the rules. See also R v Maginnis – where the defendant was found guilty of possession of drugs with intent to supply. (b) The Golden Rule - where the ordinary grammatical meaning can be modified so as to avoid an absurd result: see R v Allen – Allen was charged and convicted of the offence of bigamy. He pleaded a defence on the wording of the statute, saying he could not marry another as he was already married, so the second marriage was not legal. Literally he was right – the court said this was an absurd result so applied the Golden Rule to uphold the conviction. (c) The Mischief Rule and the Purposive Approach - This rule was laid down in the very old case, Heydon’s Case (1584), and states that where a statute was enacted to remedy a problem (a mischief), then it should be interpreted so as to correct that mischief: see Royal College of Nursing v DHSS – the Abortion Act 1967 was passed to stop the unlawful practices of back street abortions, that was the mischief it sought to put right. Technically under the Act only doctors, ‘medical practitioners’ would be allowed to carry out an abortion - not nurses. The HL held it was lawful for a nurse to be involved in the procedure. Sometimes there is no one really specific mischief or problem, rather the purpose of the legislation was more general, in which case the court will interpret the statute to give effect to that purpose. This is the ‘purposive approach’ to interpretation: see R (Quintavalle) v Secretary of State for Health, which concerned the regulation of the creation of human embryos outside of the body. The HL was not going to apply a literal interpretation which would take a particular process of embryo creation research outside of the remit of the safety regulation. (ii)

Case Law

The bulk of English law is still case law, despite the increasing amount of statute law passed by Parliament. This case law is central to our legal system and is applied through the doctrine of precedence. The dictionary definition of a precedent is ‘a previous instance taken as an example or rule by which to be guided in similar cases or circumstances’, but in legal terms it means quite simply that cases will be decided based upon previous judicial decisions. So we can see how judges ‘create’ law in the English legal system, by setting precedents. There are three levels of precedent: those which have no binding value; those which are a persuasive precedent; and, those which are binding precedents. Only the binding precedent must be followed by the later court, depending on the hierarchy of the courts in which the decisions have been made, and as long as the present case is not distinguished on its facts from the previous case (see below). The extent to which the decision of one court binds the later court by its decisions depends on where it sits within the court hierarchy we have already briefly discussed. In general terms, the higher courts bind the lower courts, but there are exceptions. 10

At the top of the hierarchy is the Supreme Court (formerly the House of Lords) and its decisions are binding on all other courts. It used to be that the HL was bound by its own previous decisions, but that was thought to be too rigid a rule that could lead to injustice, and so a practice direction introduced in 1966 now states that the SC (formerly the HL) can depart from its own previous decisions ‘when it appears right to do so’. The circumstances in which it will do so cannot be categorised: see the case The Hannah Blumenthal. The Court of Appeal (Civil Division) will bind all lower civil courts i.e. the High Court, county courts and the Magistrates (where they have civil jurisdiction). The CA Civil Division is bound by its own previous decisions, as well as those of the SC. But its ability to bind itself is subject to some exceptions: see Young v Bristol Aeroplane Co, notably if it was made per incuriam, that is ‘through want of care’. The decisions of the High Court are binding on all lower courts (namely the county courts and magistrates courts), and generally the HC is not bound by its own previous decisions, but again there are some exceptions. The HC is bound by the decisions of the Court of Appeal and the Supreme Court. The inferior courts, that is the county c...