Author: Andre Coleman

Title: “The remedial constructive trust has taken root in the United States and Canada: it is unlikely to do so in England” Millett LJ in Restitution and Constructive Trusts 1998 114 LQR p399.

Explain the differences between remedial and institutional constructive trusts and the advantages and disadvantages of each approach. Discuss whether judges in England and Wales are likely to adopt the remedial system.

INTRODUCTION

A definition of a trust, reflected in case law, suggests that a person with responsibility for property has an obligation in accordance with principles of equity to exhibit beneficence^[1] towards any beneficiaries, any of whom might enforce this obligation^[2]. The concept of the constructive trust is not overwhelmingly supported, with Hayton categorising it ““a fiction which provides a useful remedy when no remedy is available in contract or in tort”^[3]. A constructive trust may be either institutional or remedial, although only institutional constructive trusts are acceptable practice in the UK at the present time. According to Halsbury “the remedial constructive trust…is not in reality a trust at all, but merely a remedial mechanism by which equity gives relief for fraud’^[4].

The distinction between constructive trusts raise a number of issues that are of particular relevance when considering whether the law in England and Wales is likely to adopt the remedial system. It must be noted, however, that, whilst the importance of both proprietary estoppel^[5] and Pallant v Morgan^[6] equity are acknowledged as relevant to a discussion on constructive trusts, their applications are specific. Accordingly, due to constraints on space, their inclusion in this particular essay have been omitted^[7].

DISCUSSION

Whilst law in other jurisdictions needs to resort to such measures as the remedial system, law in the UK currently relies on the Statutes of Limitation^[8], within which remedial constructive trusts may be considered to be related to the Limitation Act 1980^[9]. The specific distinction between legal and equitable ownership originated through the historical significance of common law and the law of equity, as established through the Courts of Chancery. It is readily acknowledged that a correlation exists between constructive trusts and the doctrine of equity, with effect from the date in which circumstances dictated a need for such intervention, a factor noted in Westdeutsche Bank^[10] by Browne-Wilkinson, LJ who observed that “A remedial constructive trust……is a judicial remedy giving rise to an enforceable equitable obligation…”^[11]

Institutional Constructive Trust

There have been a number of significant cases heard, where the courts have ruled that institutional constructive trusts will prevail^[12]. An institutional constructive trust might be invoked in such cases as domestic disputes involving property, breaches within a fiduciary relationship, contracts relating to sales of land, and certain situations relating to commercial insolvency. Case law established ‘in law and in equity that land could be the subject of ownership’^[13], with a further recognition that ‘the person owning either type of estate has a right of property’ according to Lord Browne-Wilkinson^[14], established through statute in the Law of Property Act 1925. Freehold land, or land held in fee simple, relates to land held in trust to the Crown, with the owners being beneficiaries, or trustees, or land that is held in cestuis que trust which is revealed as an equitable estate.

The requirement for a formal record of equitable entitlement to the transfer of land in accordance with the Law of Property Act 1925 53 (2)^[15] reveals a situation inconsistent with the ethos of remedial trusts. Shares in property can be transferred from the owner of a property to bestow the gift of beneficial ownership on another person through the conveyancing procedure of legal transfer by deed according to the Law of Property Act 1925, section 52 (1). Conversely, where full consideration has not been paid when land is transferred an inference of fact would result, as clarified in Subsection 60(3) of the Law of Property Act 1925.

Remedial Constructive Trusts

Pascoe^[16] notes an apparent lack of consensus as to whether remedial constructive trusts are based on an enforcement of proprietary rights or to avoid unconscionable conduct, but suggests it ‘is imposed by equity regardless of actual or presumed agreement or intention’^[17] in order for the courts to implement a measure of restitution^[18]. Certain situations require a remedy within the law that is particularly suitable for a specific set of circumstances. This is determined at the discretion of the court and is realised in the imposition of a remedial constructive trust, characterised by the particular facet that no trust existed prior to the intervention of the court. An interesting development in the definition attached to constructive trusts was suggested in Barnes v Addy^[19] in which Lord Selborne, LC introduced the distinction between a duty owed by directors and duty owed by ‘non-fiduciary strangers’, referring to this concept as ‘the two limbs of Barnes v Addy’. More recently this referent has been recognised as ‘recipient liability’^[20] and ‘accessory liability’^[21].

Various jurisdictions around the world acknowledge a distinct emphasis between institutional constructive trusts and remedial constructive trusts, based on the common law precepts of unjust enrichment. The constructive trust would then be recognised as a means of restitution^[22], a remedy available for the courts to resort to when other methods of restitution are inappropriate. Often considered synonymous with remedial constructive trusts is the case of Polly Peck International plc (in admin) (No 2)^[23]. Referring to additional rights of restitution that might be accorded the plaintiff in respect of legitimate rights to property the Court of Appeal in England made reference to the decision in the Supreme Court in Canada^[24].

Different Jurisdictions

Amongst the different jurisdictions who habitually utilise the remedial approach, Australia^[25] generally adheres to a traditional approach characterised by a link between claimant and the property at dispute, whilst acknowledging the distinction between recipient and accessory^[26] liabilities. Accordingly, remedies might be applied ‘in personam’ rather than ‘in rem’. According to Fardell and Fulton^[27], the constructive trust has become an important remedy within the courts in New Zealand, fully utilising the concept of remedial constructive trusts in any situation in which a defendant might have prejudiced a plaintiff’s claim to equity as a matter of principle^[28]. This particular application of the remedial system has been criticised by the judiciary in Australia as they perceive it represents “a medium for the indulgence of idiosyncratic notions of justice and fairness”^[29]. However, at the New Zealand Court of Appeal Tipping, J concurred with the Australian opinion, although using different reasoning^[30].

There have, however, been instances whereby a more controversial approach has been taken, often utilised in the US^[31] although, on occasion, in other jurisdictions such as New Zealand in the case of Re Liggett^[32] based, as it was, on the decision in the US case of Chase Manhattan Bank. Since then, however, both the Privy Council^[33] and the House of Lords^[34] have overruled that decision^[35]. The law relating to constructive trusts has recently changed in Canada following the Supreme Court’s ruling in the cases of Soulos v. Korkontzilas^[36]. Prior to this, such cases as Pettkus v Bekker^[37], Sorochan v Sorochan^[38] and Rosenfeldt v Olson^[39] were the definitive referents in relation to remedies imposed by the courts to prevent the perpetuation of injustices within the specific categories associated with benefiting through unjust enrichment^[40]. The Supreme Court focused on the ethos of ‘good conscience’ in their decision when ruling on Soulos v. Korkontzilas^[41]. They decided that constructive trusts needed to be imposed to maintain certain standards^[42], with four conditions introduced, each of which must present if a constructive trust was to be implemented^[43]. Subsequently, these conditions have been applied to all cases relating to constructive trusts heard in Canada’s Supreme Court.

CONCLUSION

It has been suggested that every resulting trust is realised through the transfer of property in a situation where benefit to the recipient was not the intended option, the consequence of which is a presumption of resulting trust. This significance is recognised in the doctrine of equity in terms of recognition of the terms of endowment. In the UK it is in this particular situation that the inherent importance between constructive and resulting trusts lie. Furthermore, it is this particular situation in which other jurisdictions more often introduce the doctrine of remedial trusts. It appears to be accepted by the majority of commentators that, for a resulting trust to be formed, actual assets must be present in terms of identifiable property, the remedy of which may be found in common law.

Despite Millett LJ being of the opinion that the remedial approach is unlikely to take root in England^[44], it has been acknowledged in the Court of Appeal^[45], the Privy Council^[46] and in the House of Lords^[47], in obiter dicta, that a possibility might exist for the future incorporation of remedial constructive trusts into UK legislation. This controversy has, by no means been resolved and, at some point will undoubtedly become incorporated into UK legislation, either in its present format, or modified to enable “…an aggrieved party to obtain restitution”^[48] through the correlation that exists between constructive trusts and the doctrine of equity which is represented through the concept of morality and obligations, with “the benefit of an obligation [being] so treated that it has come to look rather like a true proprietary right”^[49].

Total Word Count [excluding footnotes and bibliography]: 1,496 words

BIBLIOGRAPHY

BOOKS:

Cope, M (1992): Constructive Trusts. Sweet and Maxwell

Maitland, F W (1936): Equity. Cambridge: Cambridge University Press. Page 115

Underhill and Hayton (1995): Law of Trusts and Trustees [15^th ed]. London: Butterworth: Page 1

Wilkie, Margaret; Luxton, Peter; and Malcolm, Rosalind (1998): Blackstone’s Land Law. London: Blackstone Press, Page 111

HALSBURY’S LAWS Available Online from: Butterworth’s Direct Search facilities. Access via Athens Gateway: http://www.butterworths.com/butterworths.asp

Vol 16 (2000 Reissue) Para 1072

Vol 48 (2000 Reissue) Paras 401 – 403: former Court of Chancery

Vol 48 (2000 Reissue) Para 501.

Vol 48 (2000 Reissue) Para 592

ARTICLES:

Austin, RP (1988): The Melting Down of the Remedial Trust. 11 NSWLJ 66. Available from: Pascoe, Janine: Remedial Constructive Trusts and Corporate Insolvency: an Australian Perspective. Department of Business Law & Taxation, Monash University, Australia. Available from: http://www.lbc.com.au/academic/ccl-ezine/pdf/vol8issue1_RemedialTrusts.pdf [Accessed 24th July 2005]

Bryan, M (1995): Cleaning up after Breaches of Fiduciary Duty – the Liability of Banks and other Financial Institutions as Constructive Trustees. In 7 Bond Law Review 67. Available in: Pascoe, Janine: Remedial Constructive Trusts and Corporate Insolvency: an Australian Perspective. Department of Business Law & Taxation, Monash University, Australia. Available from: http://www.lbc.com.au/academic/ccl-ezine/pdf/vol8issue1_RemedialTrusts.pdf [Accessed 24th July 2005]

Dodds, J (1988): The New Constructive Trust: An Analysis of its Nature and Scope. 16 MULR 482. In Pascoe, Janine: Remedial Constructive Trusts and Corporate Insolvency: an Australian Perspective. Department of Business Law & Taxation, Monash University, Australia. Available from: http://www.lbc.com.au/academic/ccl-ezine/pdf/vol8issue1_RemedialTrusts.pdf [Accessed 24th July 2005]

Fardell, R and Fulton, K (1991): Constructive Trusts-A New Era. NZJL: 90. In Pascoe, Janine: Remedial Constructive Trusts and Corporate Insolvency: an Australian Perspective. Department of Business Law & Taxation, Monash University, Australia. Available from: http://www.lbc.com.au/academic/ccl-ezine/pdf/vol8issue1_RemedialTrusts.pdf [Accessed 24th July 2005]

Hayton, DJ (1985): Personal Accountability of Strangers as Constructive Trustees. 27 Malaya LR 313,314: Singapore Journal of Legal Studies.

Access via ATHENS Gateway

McKendrick, E (1994): Unascertained Goods: Ownership and Obligation Distinguished. 110 LQR 509 – 513

Millett LJ (1998): Restitution and Constructive Trusts 114 LQR p. 399

O’Connor, P (1996): Happy Partners or Strange Bedfellows: the Blending of Remedial and Institutional Features in the Evolving Constructive Trust 30 MULR 735. In Pascoe, Janine: Remedial Constructive Trusts and Corporate Insolvency: an Australian Perspective. Department of Business Law & Taxation, Monash University, Australia. Available from: http://www.lbc.com.au/academic/ccl-ezine/pdf/vol8issue1_RemedialTrusts.pdf [Accessed 24th July 2005]

ONLINE RESOURCES

Pascoe, Janine: Remedial Constructive Trusts and Corporate Insolvency: an Australian Perspective. Department of Business Law & Taxation, Monash University, Australia. Available from: http://www.lbc.com.au/academic/ccl-ezine/pdf/vol8issue1_RemedialTrusts.pdf [Accessed 24th July 2005]

TABLE OF CASES:

Baden Delvaux and Lecuit v Societe Generale [1993] 1 WLR at 509, 575

Bannister v Bannister [1948] 2 All ER 133

Banner Homes Group plc v Luff Developments Ltd [2000] Ch 372, CA

Barnes v Addy (1874) LR 9 Ch App 244

Beatty v Guggenheim Exploration Co 225 NY 380 at 386 [1919]

Chase Manhattan Bank NA v Israel British Bank (London) Ltd [1981] Ch 105

Cia de Seguros Imperio (a body corporate) v Heath (REBX) Ltd (formerly CE Heath & Co (North America) Ltd) [2000] 2 All ER (Comm) 787; [2001] 1 WLR 112, CA

Daly v The Sydney Stock Exchange Ltd (1986) 160 CLR 371

Fortex Group Ltd (In Rec and Liq) v MacIntoshes [1994] 3 WLR 199; [1998] 3 NZLR 171.

Hussey v Palmer [1972] 3 All ER 70 (CA)

Linter Group Ltd v Goldberg (1986) 160 CLR 371

Mabo v Queensland (No 2) [1992] 175 CLR 1, High Court of Australia

Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391 and [1989] 3 All ER 14 CA

Muschinki v Dodds (1985) 160 CLR 583 at 614

Pallant v Morgan [1953] Ch 43, and [1952] 2 All ER 951

Paragon Finance plc v DB Thakerar & Co (a firm) [1999] 1 All ER 400, CA

Pettkus v Bekker [1980] 19 RFL (2d) 165

Polly Peck International plc (in admin) (No 2) [1998] 3 All ER 812 at 825-826

Re Goldcorp Exchange Ltd

Re Goldcorp Exchange Ltd (in receivership) [1995] 1 AC 74; [1994] 3 WLR 199 and [1994] 2 All ER 606 PC

Re Liggett v Kingston [1993] 1 NZLR 257

Re Polly Peck International plc (in administration) (No 2) [1998] 3 All ER 812, and [1998] 2 BCLC 185, CA

Re Sharpe [1980] 1 WLR 219

Rosenfeldt v Olson 1 BCLR (2d) 108, [1986] 3 WWR 403, 25 DLR (4th) 472 (CA).

Sorochan v Sorochan [1986] 2 SCR 39

Soulos v Korkontzilas [1997] S.C.J. No. 52

Taylor v Davies [1920] AC 636, PC

Tinsley v Milligan [1993] 3 WLR 126; [ 1994] 1 A.C. 340, 371

Westdeutsche Landesbank Girozentrale v. Islington London BC [ 1994] 4 All E.R. 890, 962, CA.; varied [ 1996] 2 All E.R. 961, HL; [ 1996] 2 All E.R. 961, 990, H.L; [1996] AC 669 at 714-415

1

The purpose of this brief is to examine and evaluate the effectiveness and relevance of the Postal rule in the modern context of contract law. Generally, the Postal rule is used to resolve disputes where there is no formal communication received, or it is delayed by post. It is a set of principles that allow the courts to establish that a contract has or has not been formed at a particular point in time, despite the absence of the offeror receiving any formal communication of an offer. Specifically, this brief sets out to examine the aged precedents that the Postal rule relies upon to survive, and analyse them in conjunction with the changing face of communication on a global scale. Finally, it will attempt to recommend a conclusion based upon this discussion, and assess a way forward for the UK jurisdiction, given the increase of use of electronic communication, and the embracing of such means in the community worldwide.

The postal rule is an alternative means of accepting an offer. It is a set of rules that govern whenever communication of acceptance has been sent by post, and are used to resolve any disputes where there is doubt as to the effectiveness of the communication of the offer. The general rule that has been adopted under English law in regards to acceptance by post is given by the case of Adams v Lindsell.^[1] This case involved the defendants offering to sell wool to the plaintiffs, and asking for a reply by post. The plaintiffs’ letter was delayed in the post, and hence the defendants sold the wool to someone else, believing that the plaintiffs were no longer interested in the deal. However, the court heard that the plaintiffs had sent a letter of reply on the same day they received the offer, and hence the court held that there was an enforceable contract. The principle behind this decision was that a communication of acceptance of an offer becomes valid once it is posted by the offeree, not when it is received and opened by the offeror. This principle allows for a party to still have rights to an enforceable contract even where the procedural matters are delayed beyond their control. It effectively exonerates the offeree from any liability once a letter of acceptance has been posted to the offeror, and places the onus on the offeror to satisfy the procedural requirements of the contract. As was seen in Adams v Lindsell if the offeror does not wait for a reasonable period of time for confirmation, and subsequently disposes of the goods or services, then they may be liable if it so happens that the confirmation arrives at a later stage.

Justifications for the Postal Rule

A number of justifications for the postal rule of Adams v Lindsell are discussed by Ewan McKendrick in his book, ‘Contract Law’. Firstly, it is argued that the Post Office acts as an agent of the offeree, and hence once the letter is received by an agent, this constitutes valid communication of acceptance.^[2] McKendrick says that this is open to debate, given that the Post Office clearly has no express authority to contract on behalf of the offeree.^[3] Secondly, it is argued that given the offeror has chosen to initiate negotiations by post, then the offeror must bear all responsibility associated with the postage of documents relating to the contract. However, this justification has been brought into question by the decision in Henthorn v Fraser,^[4] where it was held that the postal rule only applies where it is reasonable to use the post. As McKendrick discusses, the issue of what exactly constitutes a reasonable situation to use the post is questionable, for example, where two parties live a significant distance from one another it may be reasonable to use the post, however it is not necessary to initiate negotiations through the post.^[5] It would, therefore, be unlikely that such a justification could be relied upon; given there is uncertainty as to when it becomes reasonable to use the post. A more solid justification is that an offeree should be able to rely upon the fact that he or she has posted the acceptance, and hence has satisfied his or her procedural duties under the rules governing the formation of a contract. McKendrick says that a better way of viewing the postal rule in light of this justification is that, once the letter is posted, the offeror cannot revoke his offer, rather than the acceptance taking effect once the letter has been sent.^[6] It places the onus squarely on the offeror, given that the offeree has complied with all reasonable requests required of him in accepting the offer. However, the general rule discussed in Adams was further elaborated upon and entrenched in the later case of Household Fire and Carriage Accident Insurance Co Ltd v Grant.^[7] In this case, it was held that an acceptance of offer communicated by post becomes valid once it has been posted by the offeree, not when it is received and opened by the offeror. This further strengthens the justification that it is the responsibility of the offeror to allow for any delays or mishandlings by the Post Office in regards to any contractual negotiations conducted by post.

Adherence to Proper Postal Procedure

The Postal rule has been further refined since its inception by the English courts. In the case of Re London and Northern Bank,^[8] it was held that a postal acceptance was not valid, as proper postal procedures were not adhered to. It emerged in the facts of the case that a party had allowed a postman to take a letter of acceptance (bundled with other letters) when he offered to post them for the party. The case affirmed the notion that an acceptance is deemed to be enforceable from the moment it is posted,^[9] however it was discovered that postmen are prohibited, under the regulations of the Post Office, from taking charge of any post. This meant that the postman was not authorised to act as an agent of the Post Office in this regard, given he was specifically prohibited from handling any post that he was not charged with delivering. Therefore, the court held that the postal acceptance was not pasted correctly, and hence could not have been said to have complied with the implied terms of the Postal rule. Given that this case was decided over a century ago, it raises questions in the modern context. For example, can the postal rule extend to private courier services, where a document is picked up by a courier? One would imagine so, given that a courier acts as an agent of the courier service, which would be consistent with the principles set out in Re London and Northern Bank^[10] and Harris’ Case,^[11] regarding agency principles involving the Post Office.

Limitations on the Postal Rule
Instantaneous Communication

While the Postal rule has been refined over the last century by the courts, it is important to consider the consequences such an aged doctrine can have in the modern context. Especially in current times, where a large majority of communication takes place by telephone, email, facsimile and other ‘instantaneous’ means, it is important to consider what effects (if any) the Postal rule can have on these methods of communication. The leading authority on this issue is the case of Entores v Miles Far East Corporation,^[12] where an acceptance of offer was communicated by telex. It was held by the court that the Postal rule did not apply to instantaneous forms of communication, and as such the contract was formed at the time the communication was received by the plaintiffs, not from the time it was communicated by the defendants. This decision was subsequently affirmed by the case of Brinkibon Ltd v Stahag-Stahl und Stahlwarenhandelsgesellschaft mbH GmbH,^[13] where the facts between the two cases were similar in that an acceptance was communicated by telex, and as such the decision was the same. Again, when this is applied to the modern context, it would appear that means of communication, such as email, fax, telephone and similar are exempt from the Postal rule, and as such the contract is deemed to be formed with these means when the communication reaches the offeror, and not pursuant to the Postal rules.

Reasonableness

It has been established at English common law that it must be ‘reasonable’ for the offeror to accept that communication by post. The leading authority in this case is that of Henthorn v Fraser,^[14] which involved the plaintiff handing the defendant a written offer to sell property to him, with which the defendant had fourteen days to reply. The plaintiff sought to revoke their offer by writing to the defendant, however this revocation arrived after the defendant had already posted their letter of acceptance. It was held by the court that there was still a valid contract as, given that the two parties resided in different and distant towns, it would have been reasonable to assume that the defendant was going to reply to the offer by post, hence it would have been in comprehension of the parties that the Postal rule would apply at the formation of the contract. In terms of practically applying this to the modern context, it would directly relate to any negotiations that were communicated by email, for example. If a negotiation was commenced by email, then it would be reasonable to assume that the acceptance would be replied by email. Modern technology would appear to not allow for a reasonable comprehension of the use of post, unless some form of the negotiation was conducted by post, or the offeror specifically requested the acceptance be communicated by post. While a great deal of communication still takes place by post in modern times, it would appear that the need for the use of post has decreased over the course of the last century, when the Postal rule was introduced, due to the increase in alternative (and instantaneous) means of communication available to modern individuals and businesses. This means that the reasonableness factor may prevent the Postal rule from taking effect in many contractual negotiations, given that it may not be reasonable (or necessary) to use the post in many circumstances.

Displacement by the Offeror

There are circumstances that exist in English common law where an offeror can ‘contract out’ of the application of the Postal rule, thus limiting or nullifying its effect on the communication of acceptance issue of the contract. For example, it was held in the case of Holwell Securities v Hughes^[15] that the purpose of clause 2 of the contract in that case was to exclude the operation of the Postal rule. This was so even though the clause provided for notice in writing to be given, however it was the opinion of the court that this was to merely ascertain that a communication was required to the defendant, and posting of the letter was not necessary to constitute notice. This essentially ties in with the reasonableness argument, in the sense that it was not reasonable to assume that a reply would come by post, given that the party was only required to give notice in writing, and not post a letter of acceptance. What this example shows is that, while the Postal rule plays a fundamental role in cases where it has been held that it applies, it is not a necessary part of the formation of any contract by post. There are ways for parties to avoid using the Postal rule where the express or implied terms of the contract give leave to do so. This is further enhanced by the decision in Household Fire and Carriage Accident Insurance Co v Grant,^[16] which also dealt with the ability of the offeror to displace the postal rule by way of ‘contracting around’ the use of such principles. The evidence in previous discussions have shown that the Postal rule can be an effective means of resolving a contractual dispute regarding acceptance, however it has been shown that cases do exist where the Postal rule does not apply, and hence does not form a necessary part of every written contract negotiated by post. This raises questions as to the protection of the offeree in situations where he or she has complied with all reasonable requests of the offeror in accepting the offer. Perhaps this needs to be addressed in future decisions or legislation, given the commercial and highly litigious tendencies that modern society has developed.

Specification of Mode of Communication of Acceptance

This limitation of the Postal rule does draw some similarities to the displacement limitation discussed above. However, rather than ‘contracting around’ the use of the Postal rule on implied terms, there are ways which a party can avoid the use of the rule on the basis of express terms included in the contract. The leading general authority on such a principle is the case of Holwell Securities Ltd v Hughes,^[17] where it was suggested the Postal rule should not apply where it created “manifest inconvenience and absurdity”. Obviously, forcing the Postal rules upon a contract where they would clearly not apply, such as a contract where email or fax transmissions are used in the negotiations would create such absurdity, and hence the Hughes case recommends it not be applied in these circumstances. Other cases are used in this area to reinforce and specialise the principle laid down in Hughes. Most notably, the case of Tinn v Hoffman & Co asked for acceptance to be given by ‘return of post’, which was held to mean “telegram or by verbal message, or by any means not later than a letter written and sent by return of post”.^[18] Obviously if the offeree in this case had chosen to reply by return of post, then Postal rules would have applied; however the enforcement of Postal rules in the event of a communication of acceptance by other, quicker means would create an ‘absurdity’ which the Hughes case expressly prohibits at common law. The view of Honeyman J in the Tinn case was later affirmed by Buckley J in Manchester Diocesan Council for Education v Commercial and General Investments Ltd, where it was held that an offer may be deemed to be accepted where the offeree does not adhere to the prescribed method of acceptance, provided that the use of such a method in no more disadvantageous to either party than it would be to use the prescribed method.^[19] This impacts on the use of the postal rules because of the fact that it gives the offeree the ability to avoid being subject to them by using an alternative form of communication that is quicker than sending a letter by post (for example, email). It further shows that modern society is leaning towards not requiring the Postal rule as much as in times where post was a primary method of communication, which is when the Postal rule is introduced. The Postal rule appears not to cater for the more modern advances in technology that the last few decades have seen, and hence adds further weight to the argument that the Postal rule is an outdated doctrine, in need of some serious overhaul in order to be effective once more.

In the decades following the introduction of the Postal rule, many advances in technology were made that changed the way the people of the world were able to communicate with one another. First came the telex machine: a slow form of communication by today’s standards however, by comparison to the posting of a letter, it allowed the global community to communicate with one another virtually instantaneously. Next was the fax machine, an improvement on the telex, which allowed whole documents to be copied and transmitted long distances, as opposed to the typewriter-style of the telex machine. Now, in the modern times, we have seen the advent of technology such as e-commerce and email, which effectively links the world on an instantaneous basis virtually 24 hours a day. It has created a truly global market. But how do we regulate contracts in such an advanced technological world with, what seem to be, outdated and outmoded legal principles? The basic premise of Entores v Miles Far East Corporation Ltd still seems to give us basic guidance on the issue, in that the communication of acceptance must still be in such a form that is clear, concise and easily understandable to the offeror.^[20] If anything, it would appear that technology has made the task of accepting an offer easier, both for the offeree and the law. Methods such as email have allowed for an offeree to communicate his or her acceptance of an offer by swift and efficient means, and in a way that benefits both parties due to the time and expense associated with posting a letter now seemingly made redundant. E-commerce has given rise to a new form of entering into a contract, and the use of electronic signatures, which are now recognised in English statutory law.^[21] This allows for the acceptance of an electronic transaction to have the same effect as a hand-written signature, which allows for Internet contracting to boom and the global market to flourish. Additionally, the use of email to communicate the acceptance of an offer is also covered by statute,^[22] which provides that certain information must be provided to the offeree before the contract is concluded, which serves to protect unsuspecting parties from being unduly entered into contractual arrangements. It also makes it easier to distinguish where a contract has been concluded, thus alleviating some of the confusion associated with such a new technology. However, by continuing to consider the Entores v Miles Far East Corporation^[23] decision in conjunction with the case of Pretty Pictures v Quixote Films Ltd,^[24] it would appear that the responsibility for getting the message through to the destination now lies with the sender, given that a sender now has an idea that the communication may not have sent properly.

Given the advances in technology, it is also important to have some idea as to the time of acceptance guidelines that would now apply. Under the Postal rules, it would be reasonable to assume that a posted letter would arrive at the offeror’s premises during a reasonable hour, if not business hours. However, given that technology such as email and faxes can be accessed 24 hours a day, 7 days a week, then it is important to understand what the law considers as a ‘reasonable time’ for such a communication to reach the offeror. If, for example, a person was to send an email in order to communicate and acceptance, then it would be reasonable to assume that a person monitors their business email during business hours. This could lead to a delay in the offeror reading the acceptance until the following business day, if it was sent after hours. This would turn an instantaneous communication into a non-instantaneous form, despite all the best efforts of the offeree. The leading authority on this principle is Brinkibon Ltd v Stahag-Stahl und Stahlwarenhandelsgesellschaft mbH GmbH,^[25] and was further enforced by certain elements of The Brimnes^[26] case. An offeree must be mindful of such possibilities, and must not take advantage of the highly instantaneous forms of communication that exist today, as they can easily cause delays and problems in the event of an acceptance not being communicated to the offeror properly.

European Directive on Electronic Commerce

The advent of e-commerce on a global scale had lead to the need for the laws of various countries to allow enough flexibility for the incorporation of electronic contracts, and electronic signatures. The idea of electronically signing a document has already been discussed in this brief at a statutory level in England, but what of the broad concept of electronic trade? The European Union has adopted the E-Commerce Directive,^[27] which sets out certain requirements for Member States to comply with in order for the concept of electronic commerce to function effectively. Most significantly, the Directive requires that all Member States allow for the completion of contractual documents by electronic means, and thus have the required systematic arrangements in place in order to comply.^[28] This demonstrates the importance of e-commerce to the European common market, allowing trade and other contracts to be completed in an easier, time-saving and more user friendly form. It would appear that England has already taken its first steps towards the embracing of electronic contracts, with legislation giving Ministers the authority to review any legislation that requires contractual documents to be in writing, and to amend them through secondary legislation “in such a manner as [the Minister] may think fit for the purpose of authorising or facilitating the use of electronic communications or electronic storage”.^[29] This reflects an acknowledgment by the Government that electronic commerce is the way of the future, and thus the need to update an otherwise conservative and outdated system to adapt to some quite radical changes in the way contracts, and business in general, are done.

In a practical sense, United Kingdom legislation is showing a move towards the disuse of hardcopy contractual documents, in light of electronic means as given by the European Directive. The most classic example, perhaps, of a transaction requiring a hardcopy contractual document would be a contract for the conveyancing of property or land, which derives its requirements from sections 52 and 54 of the Law of Property Act 1924. These requirements were further amended by the Law of Property (Miscellaneous Provisions) Act 1989, such as the requirement for a proper signature, delivery and making clear that fact that the document intends to be a deed.^[30] Normally this would require the use of a deed in order for the transaction to have complied with the legislative requirements under statute. However, under section 91 of the recently introduced Land Registration Act 2002, now allows an electronic document that meets the requirements of that section to “be regarded for the purposes of any enactment as a deed”.^[31] This shows the willingness of the executive and judiciary to embrace the new technological advances that have been presented by the times. The Land Registration Act 2002 has also specified that electronic signatures are as valid as a hand-signed document in law, which essentially allows for all parts of a contract regarding the dispensation of land, or an interest in land, to be completed by electronic means. This may serves to allow for a faster method of processing contracts regarding land conveyancing, especially where parties live a significant distance from one another, and avoids the use of a slow (by today’s standards) postal service, and thus provides a way of escaping the use of the Postal rule. This may serve to benefit the offeror, or offeree, in the sense that it may eliminate a significant amount of doubt as to the formation of contracts, especially during the offer and acceptance phases, where the Postal rule features prominently. It may generate more certainty in regards to the acceptance, where principles such as those featuring in Brinkibon (above) may apply, regarding suitable time for acceptance. It eliminates the need for estimation by the courts in regards to when a contract is formed, and also allows each party to be more certain of when they have entered into contractual arrangements. The rules governing electronic contracts are clearer, and they do not call for any speculation by either party, or by the courts. It also ensures that both parties will have a record of any correspondence sent and received, due to the technology of electronic storage. Overall, it appears that e-commerce and electronic contracts can only benefit society, given the ambiguities and difficulties they help to overcome in the contractual domain.

It has been established, through the consideration of statutory and common law principles, that the current situation regarding the Postal rule creates a certain amount of ambiguity and doubt in the modern context. While the rule served a valid purpose when it was created in the late 19^th and early 20^th centuries, the advent of modern technology has lead to the Postal rule losing its value and relevance over time, given that a great deal of communication now occurs by electronic means. It would seem that the Postal rule may require a certain amount of updating, or even abolition in favour of the newly incorporated electronic rules. There seems to be a favouring in the English system for the incorporation of electronic signatures and e-commerce into law, thus recognising the fact that the times are changing. It has been established through analysis of precedent that the Postal rule is suffering considerable as a result of the advance in technology, given the fact that they cannot apply to electronic contracts in the same way they do with posted letters. In terms of a resolution to the problem of the Postal rule, it would appear that it best is abandoned, due to its redundancy, and a more technologically advanced set of protocols be adopted, that will cater for the future. It would appear that the general principles of electronic communication will not change drastically in the future, and thus it should be easy to cater for these in drafting legislation. The system is already in place to cater for electronic contracts in some areas of contract law, and it should be incumbent on the legislature to ensure that other areas of contract are explored and refined as necessary. Ministers of the Crown have the power to do this under certain legislative provisions,^[32] and this power of discretion needs to be exercised in order to ensure that the community is ready to embrace the electronic commerce revolution to its fullest extent. The strategic framework has already been set in place by the legislature, and the onus now lies with the executive and judiciary to complete the separation of powers circle, and play their role in administering the e-commerce revolution. The Postal rule will always be there to be used as necessary; however it would be reasonable to assume that the use would be infrequent at best, especially in regards to contracts governing long distance trade and similar transactions. This would also allow for both parties to be certain that they have entered into a contractual agreement, and would reduce the ability for a party to enter into a contract without communicating formal acceptance, except in cases where silence or a similar conduct may amount to sufficient acceptance under the terms of the contract. All in all, the Postal rule has served the community well, however it appears that it is time for it to be retired in favour of a newer, and more promising, principle.

Books

Cited

McKendrick, E, Contract Law (2005, 6^th ed), London: Palgrave MacMillan

Considered

Beale, H, Chitty on Contracts (2002, 28^th ed), London: Oxford University Press
McKendrick, E, Contract Law: Text, Cases and Materials (2003), London: Oxford University Press
Poole, J, Textbook on Contract Law (2004, 7^th ed), London: Oxford University Press
Stone, R, The Modern Law of Contract (2005, 6^th ed), London: Cavendish

Legislation

Consumer Protection (Distance Selling) Regulations 2000, SI 2000/2334
Electronic Communications Act 2000
Land Registration Act 2002
Law of Property (Miscellaneous Provisions) Act 1989
Law of Property Act 1924

Cases

Adams v Lindsell (1818) 1 B & Ald 681
Brinkibon Ltd v Stahag-Stahl und Stahlwarenhandelsgesellschaft mbH GmbH[1983] 2 AC 34
Entores v Miles Far East Corporation[1955] 2 QB 327 (CA)
Harris’ Case (1872) 7 Ch 587
Henthorn v Fraser [1892] 2 Ch 27
Holwell Securities v Hughes [1974] 1 WLR 155 (CA)
Household Fire and Carriage Accident Insurance Co Ltd v Grant (1879) 4 ExD 216
Manchester Diocesan Council for Education v Commercial and General Investments Ltd [1970] 1 WLR 242
Pretty Pictures v Quixote Films Ltd [2003] EWHC 311
Re London and Northern Bank [1900] 1 Ch 220
Tenax Steamship Co v Owners of the Motor Vessel Brimnes (“The Brimnes”) [1975] QB 929
Tinn v Hoffman & Co (1873) 29 LT 271

Journal Articles

Considered

Evans, ‘The Anglo-American Mailing Rule: Some Problems of Offer and Acceptance in Contracts by Correspondence’ (1966) 15 International and Comparative Law Quarterly 553
Gardner, S, ‘Trashing with Trollop: A Deconstruction of the Postal Rules in Contract’ (1992) Oxford Journal of Legal Studies 170
Hills, S, ‘Flogging a Dead Horse – The Postal Acceptance Rule and Email’ (2001) 17 Journal of Contract Law 151
Stone, R, ‘Making Electronic Contracts’ (2000) Student Law Review 15, Autumn
Stone, R, ‘The Postal Rule in the Electronic Age’ (1992) Student Law Review 15, Spring

European Union Documents

E-Commerce Directive 2000/31/EC [2000] OJ L176/1
Electronic Signatures Directive 1999/93/EC [2000] OJ L13/12

1

The obligation to obey the law – the normative phenomenon in jurisprudence.

Introduction:

This dissertation aims to provide a general discourse into the normative jurisprudential phenomenon of political obligation. The debate surrounding the issue of whether or not there exists a general obligation to obey the law shall be defined and described, and the arguments of the different positions within this debate shall then be summarised at length, and critically analysed. The author shall then engage with this debate and provide his own opinions as to the correct approach to take when tackling the important question of whether or not there is an obligation to obey the law.

Defining the scope of the debate:

Before we attempt to define the scope of this debate, it is important to first understand the nature of the obligation in question, and also the characteristics of the duty arising from that obligation.

The nature of the obligation: A moral or legal obligation?

Jurists are not often concerned with the legal duty to obey the law, after all, such a notion is circular and meaningless; of course the law imposes a legal duty on its citizens to obey it. As Alexy^[1] notes, “… in the praxis of any system of dominion there is an implicit claim to correctness, which must be redeemed to anybody. A normative system which does not raise a claim to correctness explicitly or implicitly is not a legal system.”

Neither can the law provide ultimate reasons for action, just as a parent will be unable to explain to their perpetually inquisitive child why they must not steal without recourse to the underlying morality of the actions involved in such a crime. As Nino^[2] notes, “Legal norms do not by themselves constitutive reasons for justifying actions and decisions (like those of judges), unless they are conceived as deriving from moral judgments; normative propositions that exhibit the distinctive traits of autonomy, justificatory finality, universalisability, generality, supervinience and finality”.

Therefore, rather than an assessment of the legal obligations to obey the law, most^[3] jurists are instead concerned with the moral aspect of this obligation; are we always morally obliged to obey the law, and if not, in which situations may such a moral duty be deemed non-existent?

The characteristics of the duty arising from this obligation: An absolute duty, or merely a prima facie one?

To argue that there is an absolute duty to obey the law is to simultaneously suggest that in the case of every law, the moral reasons for obeying such law could never be outweighed by moral reasons pointing to disobedience. Such a position seems to pay no regard to notions of individual autonomy. As Menendez^[4] writes, “if we consider it as providing an absolute reason, then we cannot any longer see it as part and parcel of the exercise of our practical reason, but as an alternative to it.”

On the other hand, if we are to argue that the only duty that exists is a prima facie one, i.e. that a duty can be said to exist until it is rebutted by an assessment of the moral content of the law, then we are in essence suggesting that the law will only impose an obligation upon us where we as individuals are able to agree with the morality underlying the law in question. Such a position seems to pay little regard to the need of a legal system to be generally obeyed in order for it to successfully perform its roles of conflict solving and social co-ordination. As Raz^[5] writes: “legal norms are reasons for acting, and not merely statements to the effect that there are reasons for acting.”

The actual characteristics of the duty in question must lie somewhere between these two positions; the law must respect the processes of individual reasoning, but at the same time must impose obligations upon its citizens, at least to the extent that the system is able to retain social order and manage social conflict. As we shall observe later in this essay, different jurists have their own opinions of where the balance should be perceived to lie, although as we shall also see, this position tends to be nearer a notion of a prima facie duty, than that of an absolute duty.

With these considerations in mind, let us now briefly attempt to define the scope of this jurisprudential debate.

Defining the scope of the debate

There is a divide amongst legal philosophers over the fundamental question of whether or not there is an obligation to obey the law.

Some jurists, such as Rawls^[6], Finnis^[7] and Honore^[8], argue that the law always has prima facie authority over its citizens, i.e. that before the content of a law is assessed, it is morally right to comply- albeit that it may later be qualified. For the sake of later discussion, let us refer to this position as position 1. Other legal philosophers such as Smith^[9], have rejected this position arguing that whether or not there is such a duty to obey the law depends entirely upon which law in question is being obeyed/disobeyed i.e. that only sometimes will there be a prima facie moral obligation to obey the law [Position 2]. Between these two positions lie the opinions of jurists such as Raz^[10], who argues for a more or less general prima facie obligation to obey the law, and Greenawalt^[11], who, as mentioned earlier, offers an interesting alternative view which tries to show how there could be legitimate authority without a moral obligation to obey the law, a theory which is contrary to the working assumption of this paper that the nature of the obligation in question must be a moral one.

At this point in my dissertation I would like to make some more general points about the issue of whether or not there is a duty to obey the law, in particular to make some remarks about the irreconcilability of this question with the basic tenets of legal positivism.

Critics of positivism have often voiced their concerns over this very point; they argue that if the claims which positivism makes are correct about the separation of laws and morals, then there can never be a moral obligation to obey the law which arises because of the law. In other words, they cannot suggest that the law must be obeyed without resorting to some other authority other than the law itself. Lon Fuller, a natural lawyer, is one of these critics, as is Feinberg^[12], who argues that: “The positivist account of legal validity is hard to reconcile with the claim that valid law as such, no matter what its content, deserves our respect and general fidelity. Even if valid law is bad law, we have some obligation to obey it simply because it is law. But how can this be so if a law’s validity has nothing to do with its content?”

In many respects this is an argument that is hard to dispel. Certain contemporary positivists have even accepted, such as Himma^[13], that positivism is irreconcilable with a notion of a duty to obey the law arising from the mere fact that it is the law. He argues that a citizen has a moral obligation to obey laws which contain norms worthy of moral obedience, such as those law prohibiting theft, murder, and even laws which are necessary to retain certain levels of human control, such as driving offences, but admits that a law creates no moral duty of obedience simply on the basis that it is the law.

The result of this admission is as follows; positivists have been forced to seek out justifications for a prima facie obligation to obey the law, and have done so, quite unsuccessfully [as we shall now see], through reference to arguments based on gratitude, fairness, social contract via implied consent and utilitarian arguments pertaining to the common good.

Let us now discuss the intricacies of these position 1 arguments in more detail, and critically analyse some of the justifications that have been offered by these leading jurists in support of their position.

Defending position [1]: there is a general prima facie moral duty to obey the law.

Four concepts have been advanced as giving rise to this duty^[14]; 1] Gratitude; 2] Promise-Keeping; 3] Fairness, and; 4] Promotion of the Common Good. Let us assess each of these concepts in turn:

Gratitude:

The basic concept underlying this justification for a general prima facie moral duty to obey the law is as follows: In light of the great benefits which the law has conferred upon its citizens, those citizens should obey those laws, unless there is a good reason not to in a particular case.

Promise-Keeping:

This concept suggests that any citizen who enjoys the benefits and protections of the law commits him or herself to a social contract, which states that in return for such benefits they will obey the law. In this way a citizen is morally obliged to obey the law unless they have good reasons to the contrary.

John Rawls^[15] was a strong proponent of this thesis, although his formulation was somewhat more sophisticated than the reasoning above: He asserted that a society is just if it is governed by principles which people would have agreed to in a state of ignorance about their own particular position in society. He went on to argue that a natural consequence of this ‘veil of ignorance’ is a natural duty to obey the law; where the society is just (or nearly just), then there is a ‘natural duty’ of all citizens to support and further just institutions, because they would be collectively labelled right by the very people that are governed by them. Under Rawls’ theory, the duty exists independently from the promise to obey that which is required of them by an institution in a just society, because behind their ‘veil of ignorance,’ people would have agreed to it. In this way Rawls manages to justify the existence of a duty to obey, even where a particular law is not particularly just, provided the basic structure of the society is reasonably just. Rawls does not advocate an absolute duty however; he argues that where a particular law exceeds certain limits of injustice, conscientious refusal is warranted, or even civil disobedience, should the injustice reach blatant levels.

3] Fairness

This argument is twofold; firstly, in light of all the benefits that the law confers on its citizens, it would be unfair for a citizen not to obey them, and; secondly, a citizen has a duty to obey the law, not because that citizen owes anything to the government, but because he or she owes something to his or her fellow citizens; if everyone else complies with the law, then it is not fair for one citizen not to, whilst at the same time still receiving the benefit which that law confers.

In essence therefore, under this concept, there are two tests that must be satisfied before it can be said that a prima facie moral obligation to obey the law has been established on the grounds of fairness. Firstly, the law must have generally beneficial effects; and secondly, most citizens must obey the law, so that a citizen would be taking an unfair advantage should he or she decide not to.

The latter part of this test is identical to the argument offered by Dworkin^[16] in justification of his general moral duty to obey the law; Dworkin asserts that a man is under a moral duty to obey the law for reasons of fairness, as outlined above, but at the same time, that same man may also be under conflicting duties other than those he owes to the state, such as to God and his own conscience; if these further duties conflict with his duties to the state, then Dworkin argues that such a man is entitled to do what he judges to be right.

4] Promotion of the Common Good:

This ground for the existence of a prima facie duty is grounded in the ideals of utilitarianism; if citizens break the law then the collective welfare of society will diminish: therefore citizens are morally obliged to obey the law. The disadvantage suffered by one citizen through giving to obey the law should, under this reasoning, be balanced against the benefit conferred to society as a whole by his compliance.

Finnis^[17] is one of the main proponents of this theory, although his reasoning does go somewhat further than the simple utilitarian approaches offered above. Finnis argues that fulfilling legal obligations is necessary for the common good, simply because the common good is the good of individuals.

Having described and understood all of the possible justifications promoted for the existence of a general prima facie moral duty to obey the law [position 1], let us now return to each of them and offer some critical analysis:

Defeating Position [1]: no prima facie moral duty to obey the law can be justified via the concepts of gratitude, promise-keeping, fairness or the promotion of the common good:

1] Gratitude:

Whilst gratitude in its normal everyday meaning might indeed lead to certain moral obligations, never has it been suggested that as a direct result of gratitude one should do everything that is asked of you. It is for this reason that this ground is weak, and does not adequately justify a general prima facie moral duty to obey the law.

2] Promise-Keeping:

It is instantly obvious that no general prima facie duty could ever be said to exist by virtue of the basic promise-keeping rationale; unlike a party to a contract, a citizen has no real choice as to which country he or she belongs, and therefore even though that citizen may indeed receive benefits, be given the chance to vote, and be subjected to a just social structure, there is nothing embedded in the process of receiving these benefits which would lead one to automatically assume the imposition of a promise to obey. Therefore, I do not agree that a general prima facie obligation to obey the law can be derived by way of this rationale.

3] Fairness:

This justification for a prima facie moral obligation to obey the law relies heavily upon an idea that all law confers benefits; an anarchist however may argue that the state produces no such benefits.

Also, it is difficult to the concept of ‘fairness’ to a legal constraint which actually does no-one any good: if this type of case is frequently occurring, then the analysis of fairness as day to day co-operative transactions will break down.

4] Promotion of the Common Good:

Whichever brand of utilitarianism one chooses to apply to this concept, the same conclusion results; ‘promotion of the common good’ cannot be used to justify the existence of a prima facie duty to obey the law:

Act-Utilitarianism:

The very mechanics of act-utilitarianism require a balancing act of all the positive and negative attributes of a certain action before deciding which course would be in the interests of the common good; to decide whether or not a duty to obey the law exists will therefore depend upon which particular law is in question. As such, there can be no prima facie obligation to obey the law via this concept.

Rule-Utilitarianism:

The very mechanics of rule-utilitarianism suggest that an action is right if it is required by a rule where general observance of that rule would have the best consequences. Following on from this, it makes sense that a rule requiring one to obey (with certain exceptions) would probably have better consequences than a rule requiring one always to obey. The process of formulating a comprehensive list of such exceptions would in effect require an assessment using the same mechanisms as relevant to act-utilitarianism, and as such, the same criticisms to a prima facie duty will apply.

It should be noted that these criticisms do no necessarily serve to destroy the arguments of Finnis; Finnis argues that that fulfilling legal obligations is necessary for the common good, simply because the common good is the good of individuals. This is a theory that I will address in more detail at a later point in this dissertation. For now, we should simply be satisfied that any justifications based upon act- or rule- utilitarianism cannot be successful in establishing the existence of a general prima facie duty to obey the law.

In essence, the criticisms of act-utilitarianism and rule-utilitarianism do not preclude there ever being a duty to obey the law, merely that the existence of such a duty can only be determined with reference to each particular law. This leads us back to our earlier discussion of ‘position 2’ jurists, those such as Smith^[18], who argue that whether or not there is such a duty to obey the law depends entirely upon which law in question is being obeyed/disobeyed i.e. that only sometimes will there be a prima facie moral obligation to obey the law. Before we go on to discuss the rationales that have been offered in support of position 2, let us first take a brief look at the work of George Klosko^[19], and his multiple principle theory of political obligation:

George Klosko’s multiple principle theory of political obligation; combining the failing justifications of Natural Duty, Fairness and the Promotion of the Common Good, into a comprehensive justification for the existence of a general moral obligation to obey the law:

George Klosko employs three concepts in order to combine the principles of Natural Duty, fairness and the promotion of the common good into a single comprehensive unifying theory. He labels these three concepts as cumulation, mutual support and overlap. He describes these three principles in the following way:

‘First is what we call cumulation. Different principles can cover different services provided by the state, and so by combining principles, a larger range of state services can be accounted for. Second is what can be referred to as mutual support. In regard to certain state functions, if a given principle on its own cannot justify compliance, the problem might possibly be overcome by more than one principle working in tandem. The third way is simple overlap. The intuition here is that, while requirements to obey given laws could be relatively weak, these can be strengthened by support of additional principles.^[20]’

These three concepts admit that individually arguments of Natural duty, fairness and those argument pertaining to the common good must fail in their task of explaining and identifying a general moral duty to obey the law, but using these three principles as described above, he purports to show how these failing arguments can be combined to successfully address those limitations. The principle of culmination serves to suggest that the main limitation of these theories is their applicability to a limited area of state function, i.e. the services that the state provides to its citizens. Mutual support deals with the limitations of these individual arguments in relation to their attempt to justify a general moral obligation to obey the law, and the overlap principle deals with the respective weaknesses of each of these individual arguments, very much in the same way as we have done earlier in this essay.

Klosko argues that a theory that only purports to account for one type of state function cannot be said to lead to a general duty to obey the law. He argues that state functions are social facts, and as such the failure of theorists to account for the variety of these functions in their theories is a factual failure in their arguments, a factual failure which must therefore lead to conclusions which are non-comprehensive and cannot therefore be said to give rise to the general moral duty to obey the law which they purport to do.

Whilst prima facie I can see the point that Klosko is making; each of these theories do work to a certain extent, the problem being that we are always able to find many situations which exist where the theories fail to hold up to scrutiny. What Klosko has therefore tried to do is to incorporate these theories together, so that when one of them fails, another justification can step in to uphold our position of there being a general moral duty to obey the law. Whilst at first this may seem somewhat artificial, at least Klosko has tried to justify the fusion of these very different arguments by reference to state function.

One cant help however feeling that some of the failures of the very individual justifications that he is using, rather than being simply due to their limited scope [by virtue of differing state functions], are so fundamental as to render any fusion of them inappropriate. By the end of this essay I shall hopefully have demonstrated that the best analysis of the question of whether or not there is a general moral duty to obey the law does not result from any of these individual arguments, neither from the fusion of them, but rather from a wholly new conceptualization of the character of the obligation and duty itself.

Let us now turn to the position 2 theorists, and see if we can find some compelling arguments amongst their writing:

Defending Position [2]; there may be a prima facie obligation to obey some laws, but such a duty cannot be a general one:

M.B.E. Smith is commonly known as an advocate of this position. In his earlier work, ‘Is There a Prima Facie Obligation to Obey the Law?’ he performs an analysis of all the arguments which purport to support the existence of a ‘position [1]’ duty to obey the law, providing successful counter arguments for each, and finally concluding as a result these analyses that the true answer to the question of whether or not there is a general prima facie moral duty to obey the law must reside at ‘position [2];’ whether or not there is such a duty to obey the law depends entirely upon which law in question is being obeyed/disobeyed i.e. there will only sometimes be a prima facie moral obligation to obey the law.

Defeating Position [2]; Simply because we cannot find adequate justification for the existence of a general prima facie moral duty to obey the law does not mean that we must, by default, resort to the conclusion that the most accurate description of this normative phenomenon is that of there only sometimes being a prima facie moral obligation to obey the law:

Simply because we cannot find adequate justification for the existence of a general prima facie moral duty to obey the law does not mean that we must, by default, resort to the simplistic conclusion that the most accurate description of this normative phenomenon is that of there only sometimes being a prima facie moral obligation to obey the law.

Joseph Raz, in his ‘Theory of Justice’ (1971) argues this point exactly. He does not understand why theorists have not ventured to reach a compromise between position [1] and position [2], especially in light of the fact that it seems so clear that the true answer must lie somewhere between these two extreme positions. Raz therefore proposed such a theory.

The compromise between position [1] and position [2]; J. Raz, in search of a new characterisation:

Earlier in this essay we discussed the character of the duty in question. We argued that whilst the duty will never be an absolute one, neither is it realistic to suggest that such a duty will be generally prima facie in character.

To reiterate those arguments, for the duty to be absolute is to deny a place for individual reasoning and autonomy in a society; if every law must be obeyed regardless of any extraneous personal beliefs or opinions, then personal practical morality is denied. Likewise, if the duty was prima facie in character, the ability of the law to retain social order and manage social conflicts may come into question;

Raz therefore decided that an alternative characterisation of the obligation was required, and so was born the notion of an ‘absolute reason’, or, as it has become known by certain other jurists^[21], ‘the exclusionary reason.’ Let us now consider exactly what Raz understands by it:

Raz’s new characterisation of the obligation to obey the law:

Raz introduces the idea of there being two orders of practical reason; first-order reasons and second order reasons. These reasons are ‘practical’ in that they are the kind of reasons that may feature in an individual’s decision process when that individual is attempting to decide upon a particular course of action, i.e. reasons to act or to refrain from acting for a reason. Second order reasons are higher in priority that first-order reasons, and as such, if two such reasons should come into conflict, it will be the second-order reason that shall prevail. Second-order reasons however might themselves be trumped by what Raz describes as ‘cancelling-reasons’, reasons which might exist within the context of the particular decision process at hand which could render the secondary-reasons void. The jurisdiction of a ‘cancelling-reason’, i.e. its scope within the context of a particular decision, will be affected by what Raz calls ‘scope-affecting reasons.’ Exclusionary reasons are second-order reasons of a special kind; whereas all the other types of reasons may be distinguished by their ground, exclusionary reasons have a special normative role to play in the whole practical deliberative process, and it is this normative role by which exclusionary reasons should be distinguished. In effect therefore, ‘A second-order reason is any reason to act or to refrain from acting for a reason, whereas an exclusionary reason is a second-order reason to refrain from acting for some reason.^[22]’ Exclusionary reasons exclude other secondary reasons from playing their normal role in the deliberative process, in effect cancelling these otherwise valid reasons from the decision making process. To best understand the nature of these exclusionary reasons, and how they operate within the practical decision making process, let us follow through Raz’s very argument for the existence of these special secondary reasons:

Raz commences his argument with an analysis of a couple of examples of the decision-making process. The first example scenario involves an agent who refuses to accept a business deal on the basis that he is too tired to think about whether or not the deal could be advantageous to him. Raz explains how the decision making process in this example did not involve the processing of the actual fact pertaining to the deal in question, but rather on the basis that she realised that she was too tired to perform a thorough assessment, and as such decided to play safe and decline. In this case, the first order reasons would be the facts relating to the deal, and these are trumped by the second-order reason of tiredness. Raz then proposes the situation where a colleague of the agent, another like-minded agent of similar financial status, decides to accept an identical deal; this may prove to be an adequate reason for the agent, despite her tiredness and inability to assess all the intricacies of the deal, to accept the deal. In such a case, we could say that the fact that the other agent accepted the deal serves as a reason for her to accept it herself. This reason does not outweigh the tiredness reason, nor does it undermine it, but it does result in a different outcome to her decision-making process.

The second example scenario offered by Raz is as follows: ‘While serving in the army Jeremy is ordered by his commanding officer to appropriate and use a van belonging to a certain tradesman. Therefore he has reason to appropriate the van. His friend urges him to disobey the order pointing to weighty reasons for doing so. Jeremy does not deny that his friend may have a case. But, he claims, it does not matter whether he is right or not. Orders are orders and should be obeyed even if wrong, even if no harm will come from disobeying them. That is what it means to be a subordinate’^[23]. According to Raz, the order given to Jeremy by his commanding officer should be regarded as an exclusionary reason in that it excludes the reasons offered to him by his friend, from featuring in his practical deliberative process, despite the fact that these reasons were sound in nature. This is what Raz means by ‘exclusionary reasons.’ As stated above, these reasons are distinguishable by virtue of their normative role, a role which Raz describes as “…reasons for performing certain actions, and, other things being equal, the fact that they are excluded by an exclusionary reason merely means that they should not be complied with, not that they should not be conformed to. The best course is if they are indirectly obeyed, i.e. if the action they indicate is performed for some other, independent, reason.^[24]’

Let us now apply this characterization to our general duty to obey the law. The first thing which becomes evident is that the duty to obey the law can itself be described as an exclusionary reason; when we state that someone is under a duty to obey the law, we are effectively stating that in the decision process of that person, reliance on extra-legal considerations in the formulation of the decision of whether or not to act in such a way has no actual place in that process. Such extra-legal considerations are thus excluded from the practical decision making process by the very existence of a duty to obey the law.

One might argue here that an analysis of the duty in this way yields no different results to that of the characterization of the duty as an absolute one. In fact, whilst the result may very well be the same, the description of the duty as an exclusionary reason does give respect to the existence of a balancing decision making process, in a way which an absolute conception would not; as Menendez^[25] writes, “the duty to obey the law, when conceptualized as an exclusionary reason, precludes direct weighting and balancing, but it does not rule out a margin of exercise of practical reason. This is enough to render compatible the obligation with individual autonomy.”

Raz’s picture of the duty to obey the law is certainly the most convincing to date; although somewhat contrived, it does manage to reconcile legal and moral duty in a way which allows the law to retain a legitimate authority, whilst respecting the fact that human beings are essentially autonomous in their decision making.

Let us now see if we can find any criticisms of Raz’s

‘The Law Commission’s review of the law of intention confirms the view…that the English law of intention for murder is based upon an understanding that lacks in two opposite ways. First, as regards direct intention, the law is morally under-inclusive in that it places too much moral weight on a psychological conception of the required mental state. It therefore fails to recognise properly the issue and significance of the concept of ‘indiscriminate malice’. Secondly, as regards direct and indirect intention, the law is morally over-inclusive, failing to differentiate culpable and non-culpable acts.'(Norrie, 2006)

Critically discuss the above statement with reference to the doctrine of intention in relation to the crime of murder and the Law Commission’s Consultation Paper Homicide (No.177, 2005).

Before we commence our discussion, let us first be quite clear on what is meant by ‘direct intention’, ‘indirect intention’ and ‘indiscriminate malice’ in the context of the above statement.

Intention literally means ‘aim or purpose that guides an action^[1]’. Therefore, ‘direct intention’, in the context of murder, means an act committed with the direct purpose of killing, or causing serious harm to, another. This has been one of the mens rea requirements for murder as far back as the 17^th Century^[2]. Clearly, this precludes an intention to achieve another criminal purpose altogether, where the actor ought reasonably to have foreseen, but did not directly intend, the death of another to be a virtually certain result of his actions, e.g. the intention of a ‘person who places a bomb on a plane for the purpose of making an insurance claim in respect of property but who foresees as a virtual certainty the death or serious injury of those who are on the plane when the bomb explodes.^[3]’ This is what Norrie refers to as ‘indiscriminate malice’; ‘malice,’ in that the actor intended to perform an illegal act, and; ‘indiscriminate,’ in that the actor paid little or no regard to the virtually certain consequences of his actions, namely the death of another. It has long been recognised that the law should bring actions of indiscriminate malice within the scope of the crime of murder, but that a strict requirement of ‘direct intention’ would fail to do so; ‘direct intention is simply ‘too narrow for the purposes of criminal responsibility^[4]’. Thus, the concept of cognitive ‘indirect intention’ was born, introduced into English law in the case of Nedrick^[5]. Such intention does not have to be direct, but can merely involve a degree of foresight which, if possessed, should warrant a conviction of murder rather than manslaughter, a crime which denotes a too low a degree of criminal and moral culpability for actions where the death of another is virtually an incidental certainty. This doctrine, in its current form, was laid down by Lord Lane CJ Nedrick^[6] in 1986, and modified by Lord Steyn in Woollin^[7]: “Where the charge is murder and in the rare case where the simple direction is not enough, the jury should be directed that they are not entitled to find the necessary intention, unless they feel sure that death or serious bodily harm was a virtual certainty (barring some unforeseen intervention) as a result of the defendant’s actions and the defendant appreciated that such was the case.^[8]”

Some commentators have argued, as Norrie does at the top of this paper, that such an extension has gone too far; whilst indiscriminate malice now clearly comes within the scope of this extended intention requirement for murder, which is a good thing, other actions are now also included under the crime of murder, crime which, due to the lack of criminal and moral culpability involved, would be more fairly labeled as manslaughter. An example of such an action being so unfairly labeled was provided by Lord Goff in the Nathan Committee Report by the House of Lords Select Committee on Murder and Life Imprisonment ^[9]: “A house is on fire. A father is trapped in the attic floor with his two little girls. He comes to the conclusion that unless they jump they will all be burned alive. But he also realises that if they jump they are all [virtually certain] to suffer serious personal harm. The children are too frightened to jump and so in an attempt to save their lives he throws one out of the window to the crowd waiting below and he jumps with the other one in his arms. All are seriously injured, and the little girl he threw out of the window dies of her injuries.” The Law Commission, in citing and analyzing this example, came to the conclusion that the father in this case should not be labeled a murderer. Under the concept of ‘indirect intention’ however, the father should be guilty of this second-degree crime. As Norrie notes^[10], the Law Commission were forced to conclude that ‘indirect intention’, by focusing on the knowledge of the father rather than the wishes behind his actions, was morally over-inclusive, failing to differentiate correctly between culpable and non-culpable acts, i.e. between actions of indiscriminate malice, such as the insurance fraudster who blows up the plane with no regard to the life of those on that plane, and actions involving no malice, but which are indiscriminate in their effects, such as the actions of the desperate father in Lord Goff’s example above.

In this paper I shall address these concerns in detail, concluding that a cognitive approach to intention may simply be unsuitable for the crime of murder; it fails to adequately demark the boundaries of culpability between this crime and that of manslaughter. I shall then examine the Law Commission’s Consultation Paper Homicide (No.177, 2005), and shall critically discuss their approach to these problems, concluding with an assessment of how successful these reform proposals would be in their aim of differentiating correctly between culpable and non-culpable acts, if implemented.

As we have already seen from the examples discussed above, Norrie is quite right in his assertions; the requirement of direct intention is too focussed on the specific mental state of the actor with the effect that the charge of murder would be precluded for anyone other than an offender who either directly intended to kill his victim, or at least intended to cause that victim serious harm from which death was a reasonably foreseeable result. Likewise, the extension of this requirement to include indirect intention, whilst at least serving to bring crimes of indiscriminate malice under the scope of ‘murder’, also serves to bring other such actions under this label, actions which should only be considered manslaughter, in light of the lower degree of criminal culpability possessed by their perpetrators. In other words, it is not always fair to equate foresight of a virtually certain result with intention. Let us now look at the reforms to the doctrine of direct intention, which have been proposed by the Law Commission in their Report on Homicide^[11], and assess to what extent these reform might actually serve to correct the current inadequacies:

In this Report, the Law Commission make two different reform proposals; the first of these is to create a statutory definition of intention which avoids the problems of indirect intention being construed too widely by a jury; the second is to codify the existing common law doctrine of indirect intention, but to modify it so that the current problems of indirect intention can be avoided. Both of these proposals are therefore designed to rectify the problem of indirect intention being construed too widely, whilst at the same time allowing this doctrine to continue its prosecution of indiscriminate malice as murder where appropriate. The rationale behind both of these alternative proposals is to rectify the distinction which can, in exceptional cases, exist between intention, in its natural form, and intention implied by reasonable foreseeability/ virtual certainty. They reform proposals recognise that it is possible for an offender to have not intended a particular outcome, even though he or she may have realised that such an outcome was a virtually certain consequence of their actions. This is commonly known as the ‘Woolin^[12]’ problem.

Under the first proposal, the Commission have state that ‘It is crucial that a statutory definition of intention should not cause injustice, or absurdity, by deeming certain conduct to be intended when the circumstances show it to be otherwise^[13]’. Thus, under this first proposal, the Commission propose to insert a proviso into a statutory definition of intention, i.e. ‘A person is not to be deemed to have intended any result, which it was his or her specific purpose to avoid.^[14]’ This should not be seen as reinserting a motive assessment into that of intention, but rather to provide a means by which a jury will not be forced to convict someone of murder, in an exceptional case where that offender specifically did not intend to cause death even though he knew it would almost certainly result from his actions.

Under the second proposal, the Commission suggest a codification of the current doctrine of intention, modified to take account of those exceptional cases where it would be unfair to equate foresight of a virtually certain result with intention, might be as follows. Such a formulation might read as follows:

“(1) A person is to be regarded as acting intentionally with respect to a result when he or she acts in order to bring it about.

(2) In the rare case where the simple direction in clause (1) is not enough, the jury should be directed that: they are not entitled to find the necessary intention with regard to a result unless they are sure that the result was a virtual certainty (barring some unforeseen intervention) as a result of the defendant’s actions and that the defendant appreciated that such was the case.

(3) In any case where the defendant’s chance of success in his or her purpose of causing some other result is relevant, the direction in clause (2) may be expanded by the addition of the following phrase at the end of the clause (2) direction: or that it would be if he or she were to succeed in his or her purpose of causing some other result, and that the defendant appreciated that such was the case.^[15]”

This would have the effect of maintaining the current law in relation to virtual certainty, which as Lord Steyn pointed out in Woolin, “has [over a period of 12 years since Nedrick] apparently caused no practical difficulties,^[16]’ whilst at the same time, limiting the doctrine of indirect intention so as to exclude those situations where an offender might have seen death as being virtually certain, but where he specifically tried to avoid it. This proposal purports to do this by providing the jury with more specific guidelines as to when they are entitled to infer indirect intention.

Both of these reform proposals are encouraging; it would seem that the Law Commission is heading in the right direction at last. The first proposal specifically precludes the Woolin problem with the insertion of a provision which, although purportedly reintroducing a motive element to the doctrine of intention, can actually be used to ensure that intention is not implied where it would be unfair to do so. The second is less specific, but purports to achieve the same ends by clarifying the necessary circumstances in which indirect intention should be implied.

In conclusion, I would favour the first proposal for the following reason; the second proposal will only slightly modify the doctrine of indirect intention, and will only slightly limit its scope. The proviso contained in the first proposal however, is, as yet, unlimited in its scope, and as such, can be used by a jury to greater effect. This may have the result of reverse injustice, i.e. offenders who should morally be guilty of murder escaping this label for the lesser conviction of manslaughter, but I feel that it will so significantly decrease the chances of the reverse occurring, i.e. offenders who should only be found guilty of manslaughter being labeled as a murderers, that such a risk is justified; after all, it is more important to encourage this latter phenomenon than it is to prevent the former from occurring at all costs, especially in light of the huge sentences which are imposed on those offenders convicted for the crime of murder.

Bibliography:

Law Commission’s Consultation Paper Homicide (No.177, 2005)

Nathan Committee Report, Report of the House of Lords Select Committee on Murder and Life Imprisonment (HL paper 78-1, 1989).

A Ashworth, Principles of Criminal Law (4th ed 2003)

A Norrie, “Subjectivism, Objectivism, and the Limits of Criminal Recklessness” (1992) 12 OJLS 45.

A P Simester, “Why Distinguish Intention from Foresight?’” in A P Simester and A T H Smith, Harm and Culpability (1996) 71.

Williams, G. (1955) The definition of Crime Current Legal Problems 8, 107-30

Smith, A. H. (2004) ‘Criminal Law: The Future’ Criminal Law Review, Dec, 971-80

1

“The House of Lords decision in Bolitho (Bolitho v City and Hackney HA [1998] AC

232) is a belated and welcome departure from judicial deference to medical opinion but there is still too much deference and more has to be done”.

Critically comment on the above statement.

In any negligence claim, in order to succeed the claimant must show that he was owed a duty of care by the defendant, that the duty of care was breached, and that the breach of duty caused the damage complained of.^[1] Kennedy and Grubb comment that the duty of care arises ‘from a request for medical services by an individual and a consequent undertaking by a doctor [or other health care professional] to provide these services.^[2] Margaret Brazier has observed: ‘[a] patient claiming against his doctor … usually has little difficulty in establishing that the defendant owes him a duty of care’.^[3]

The second stage of a clinical negligence action is to show that the doctor has breached his standard of care. In any negligence claim, the standard of care is set by law and is an objective standard.^[4] Words such as reasonable or responsible are normally attributed to such a standard. Such adjectives are not normally equated with a practice that is ‘common’ or ‘accepted’. With respect to medical negligence claims however, the law has not taken such a view. The case of Bolam v Friern Hospital Management Committee^[5] has established that ‘a doctor is not guilty of negligence if he has acted in accordance with a practice accepted as proper by a responsible body of medical men skilled in that particular art’. The Bolam case was a decision at first instance, but was later approved by the House of Lords in Whitehouse v Jordan.^[6]

The courts have continuously taken a protectionist view of the medical profession in clinical negligence claims. Jackson acknowledges that this could be due to the complexity of medical evidence, but it could also be explained by a sense of professional solidarity.^[7] The medical profession has been highly regarded in society, and the courts have also expressed their respect. In Wilsher v Essex AHA,^[8] Mustill LJ comments:

“For all we know, [The doctors in this case] far surpassed on numerous occasions the standard of reasonable care. Yet it is said that for one lapse they (and not just their employers) are to be held liable in damages. Nobody could criticise the mother for doing her best to secure her son’s financial future. But has not the law taken a wrong turning if an action of this kind is to succeed?”

It is interesting to note the difference in policy in cases involving medical professionals. In other negligence cases, the courts have commented that the function of the law of negligence (and the law of torts in general), is to compensate injured parties for loss. The judiciary have had no moral objections to awarding damages in cases where they can apply the ‘deepest pocket’ principle. Thus, in Nettleship v Weston,^[9] Lord Denning had no problems in asserting that a learner driver would be held to the same standard of a competent driver (competent would be ascertained on an objective basis by the court), as the driver would be insured and thus, the law will award damages from the deepest pocket. Yet, there has been considerable hesitation in holding doctors negligent for public policy reasons, despite the fact that doctors will be also be insured. Furthermore, doctors working in the NHS will generally not be personally held accountable for the negligence – the action is brought against the Trust vicariously and NHS Trusts in England and Wales are part of an ‘insurance like’ scheme, the Clinical Negligence Scheme for Trusts (CNST) administered by the NHS Litigation Authority.

The Bolam principle may be formulated as a rule that a doctor is not negligent if he acts in accordance with a practice accepted at the time as proper by a responsible body of medical opinion even though other doctors may adopt a different practice. ‘In short, the law imposes the duty of care; but the standard of care is a matter of medical judgment.’^[10] In Maynard v West Midlands RHA,^[11] Lord Scarman seemed to favour an approach that a doctor will not be negligent if there are other reasonably held approaches that are the same as the defendant doctor’s approach:

“I have to say that a judge’s ‘preference’ for one body of distinguished professional opinion to another also professionally distinguished is not sufficient to establish negligence in a practitioner whose actions have received the seal of approval of those whose opinions, truthfully expressed, honestly held, were not preferred … For in the realm of diagnosis and treatment negligence is not established by preferring one respectable body of professional opinion to another.”

The pure Bolam approach is the subject of scathing academic criticism. Kennedy and Grubb comment: “It may seem curious that the law would defer to the medical profession in setting the content of the duty in negligence.”^[12]

Despite the deference to the medical profession in the courts, there have been some exceptions and one example is the case of Hucks v Cole.^[13] The case involved a pregnant woman with a septic finger whose doctor failed to prescribe her penicillin. The patient suffered puerperal fever as a result and a number of witnesses gave evidence stating that they would not have prescribed penicillin in the same situation. However, the Court of Appeal held that even if there are relatively small risks involved, the fact that it would have been easy to avoid such risks so easily and inexpensively, is clearly not reasonable. Sachs LJ comments:

“On such occasions the fact that other practitioners would have done the same thing as the defendant practitioner is a very weighty matter to be put on the scales on his behalf; but it is not … conclusive. … Despite the fact that the risk could have been avoided by adopting a course that was easy, efficient and inexpensive, and which would have entailed only minimal chances of disadvantages to the patient, the evidence of the four defence experts to the effect that they and other responsible members of the medical profession would have taken the same risk in the same circumstances has naturally caused me to hesitate … The reasons given by the four experts do not to my mind stand up to analysis …”

The approach taken in Hucks v Cole was also adopted by the House of Lords in Bolitho v City and Hackney HA,^[14] in which the traditional Bolam approach was departed from. Lord Browne-Wilkinson comments:

“In the vast majority of cases the fact that distinguished experts in the field are of a particular opinion will demonstrate the reasonableness of that opinion. In particular, where there are questions of assessment of the relative risks and benefits of adopting a particular medical practice, a reasonable view necessarily presupposes that the relative risks and benefits have been weighed by the experts in forming their opinions. But if, in a rare case, it can be demonstrated that the professional opinion is not capable of withstanding logical analysis, the judge is entitled to hold that the body of opinion is not reasonable or responsible.”

The relevance of the Bolitho decision was initially regarded as a major shift from the pure Bolam approach. Following the decision, Kennedy and Grubb comment that ‘the law has been put back on its proper course’.^[15] Lord Browne-Wilkinson was suggesting that medical approach must be defensible and capable of withstanding logical analysis. However, he qualified this by stating that this would only occur in ‘rare’ cases. Hucks v Cole was certainly one of those rare cases, but it is arguable whether there has been a significant shift in approach by the courts. In Wisniewski v Central Manchester Health Authority,^[16] the defendant did not follow a procedure that would have detected that a baby’s umbilical cord was wrapped around his neck during birth and the medical opinion differed over the reasonableness of such. Brooke LJ comments that:

“Hucks v Cole itself was unquestionably one of the rare cases which Lord Browne-Wilkinson had in mind … In my judgment the present case falls unquestionably on the other side of the line, and it is quite impossible for a court to hold that the views sincerely held by [the experts supporting the actions of the defendant] cannot logically be supported at all … the views expressed by [those experts] were views which could be logically supported and held by responsible doctors.”

There have been a small number of ‘rare’ cases where the courts have gone as far as questioning the logic and defensibility of medical authority. The case of Reynolds v North Tyneside Health Authority,^[17] is one such example. Thus, Gross J comments that it is one of those ‘rare cases where the Court could and should conclude that such body of opinion was unreasonable, irresponsible, illogical and indefensible.’ Similarly, in Marriott v West Midlands RHA,^[18] the Court of Appeal stated that the expert evidence given by the witnesses defending the doctor’s conduct could not be logically supported. The Court of Appeal also affirmed that the trial judge was entitled to question whether an opinion was reasonably held and Mason and Laurie comment that ‘[o]n the face of things, then, Marriott moves the Bolitho test from one of logic to one of reasonableness, which is much more akin to the reasoning applied in other, non-medical standard of care decisions.’^[19]

The approach taken by the courts post Bolitho seems to suggest that the courts are only prepared to examine the credibility of witnesses and not the content of their evidence. So long as the evidence given is ‘truthfully held’ and ‘honestly expressed’ then the court is reluctant to question the evidence.^[20] Furthermore, there have been a number of post-Bolitho decisions and it seems as though there is still a constant reluctance to question medical experts, and if there has been any departure from the traditional Bolam approach, this certainly seems to have been on the basis of the credibility of expert witnesses, and not on the reasonableness of their opinion. Thus, the subsequent case law suggests a somewhat restrictive approach on the modification of the Bolam principle in its new Bolitho interpretation.^[21]

Writing extra judicially, Lord Woolf comments that there have been a number of reasons for a shift away from the traditional approach in Bolam.^[22] The courts apparently now have a less deferential approach to those in authority.^[23] The courts have also apparently recognised the difficulties that genuine claimants have in successfully bringing a clinical negligence claim. At the same time, there has been a raise in the number of clinical negligence claims in England and Wales over the last number of years.^[24] Furthermore, with an increasing awareness of patient rights, an increasing loss of faith in the public health service following various health ‘scandals’ such as Bristol and Alder Hey, a judicial deference to the medical profession certainly has its days numbered. Also, as Woolf acknowledges, ‘our courts were aware that courts at the highest level of other Commonwealth jurisdictions, particularly Canada and Australia, were rejecting the approach of the English Courts. They were subjecting the actions of the medical profession to a closer scrutiny that the English Courts …’^[25]

Other commentators have also noted the way in which lawyers approach the issue of using expert witnesses. Teff comments:

“Reassertion at the highest level of the court’s role in scrutinizing professional practice is welcome, not least because of current concerns about the dynamics of providing expert evidence for the purposes of adversarial litigation. Some law firms’ choice of experts is apt to depend too much on perceived presentational skills and acuity in advancing the client’s case, and too little on detached expertise…

… One prominent medicolegal authority has bluntly declared that ‘Bolam will only work fairly if the use of hired hands as defence medical experts is eliminated. It would then be possible to talk of a responsible body of medical opinion’.”^[26]

Teff has thus outlined some of the practices that demonstrate how the Bolam principle is deferential in practice. Lawyers tend to look for an expert who will make their case stronger, and a survey of 500 expert witnesses revealed that about a quarter noted comments that in some instances, witnesses were requested to change comments that were alteration of their opinions.^[27]

The problems associated with the Bolam test have not only presented themselves in clinical negligence cases. The traditional Bolam approach was also questioned under the scope of ‘informed consent’ cases, which involve a claim of negligence for failing to warn of risks inherent in treatment.

The leading case on the issue of disclosure of risks in treatment is Sidaway v Board of Governors of the Bethlem Royal Hospital.^[28] Discussion of the Bolam test was present in practically all of the judgments delivered. Lord Bridge asserted that the law should reject the ‘reasonable patient’ test and follow a modified version of the Bolam test. Accordingly, disclosure of information is ‘primarily a matter of clinical judgment’, but this does not mean that the profession is entitled to set its own standard in such cases. Thus, a judge would be entitled to hold that a clinician should have disclosed a risk where there was a procedure that involved a ‘substantial risk of grave adverse consequences’, giving the example of a 10 per cent risk of stroke as substantial, but a 1 or 2 per cent risk of spinal cord damage was not substantial. Similarly, Lord Templeman also suggested that a modified Bolam approach should be taken.

Subsequent interpretation of the Sidaway case has not been straightforward. The reasoning of the judges in the case is far from consistent, and furthermore, according to Lord Browne-Wilkinson, the modified test put forward to Bolitho did not apply to such cases. The Court of Appeal in Gold v Haringey HA,^[29] merely referred to the judgment of Lord Diplock and therefore applying the Bolam principle in its purest form, an approach not generally followed by the House of Lords in Sidaway. The Australian High Court on the other hand decided the issue differently in the case of Rogers v Whitaker.^[30] In that case, the shortcomings of the Bolam test were identified by the High Court:

“One consequence of the application of the Bolam principle to cases involving the provision of advice or information is that, even if a patient asks a direct question about the possible risks or complications, the making of that inquiry would logically be of little or no significance; medical opinion determines whether the risk should or should not be disclosed and the express desire of a particular patient for information or advice does not alter that opinion or the legal significance of that opinion. The fact that the various majority opinions in Sidaway … for example, suggest that, over and above the opinion of a respectable body of medical practitioners, the questions of a patient should truthfully be answered (subject to the therapeutic privilege) indicates a shortcoming in the Bolam approach.”

The Australian High Court specifically chose not to follow the Bolam test in information disclosure cases, commenting:

“In Australia, it has been accepted that the standard of care to be observed by a person with some special skill or competence is that of the ordinary skilled person exercising and professing to have that special skill … But, that standard is not determined solely or even primarily by reference to the practice followed or supported by a responsible body of opinion in the relevant profession or trade … Even in the sphere of diagnosis and treatment, the heartland of the skilled medical practitioner, the Bolam principle has not always been applied … Further, and more importantly, particularly in the field of non-disclosure of risk and the provision of advice and information, the Bolam principle has been discarded and, instead, the courts have adopted the principle that, while evidence of acceptable medical practice is a useful guide for the courts, it is for the courts to adjudicate on what is the appropriate standard of care after giving weight to “the paramount consideration that a person is entitled to make his own decisions about his life”.”

The comments made by Lord Woolf^[31] in his paper are clearly justified when examining the decision in Rogers v Whittaker. Commonwealth decisions have been far more willing to examine and scrutinize medical evidence and it may not always be a question of what is more preferential for the judge to follow, but it is instead what the judge feels is reasonable. This does not involve the judge merely accepting that two courses of treatment may have both been reasonable in the circumstances in the opinion of medical experts. The judge’s actual role is to establish the reasonableness of each on the basis of the evidence presented to him and that does not necessarily mean that both have to be right. Mason and Laurie comment:

“[W]hile the courts are increasingly determined to see that the Bolam principle is not extended [into areas such as judging ‘best interests’], they still have an innate reluctance to abandon it in respect of medical opinion; there is a sense that Bolitho, although welcome, is being used mainly in a ‘back-up’ position. What is certain is that Bolam can no longer be regarded as impregnable.”

Thus, on the basis of the above comment, the post-Bolitho meaning of Bolam is that it is merely a back up for when the case faced by the court suits a change in approach. Furthermore, while the courts have been apparently reluctant to extending the Bolam principle into the best interests test,^[32] the principle has already been incorporated into the concept of best interests. Airedale NHS Trust v Bland^[33] required an analysis of what was in the best interests of a patient in a persistent vegetative state, who was being kept alive by artificial nutrition and hydration. In an analysis of whether such nutrition and hydration should be withdrawn (resulting in the death of the patient), the Law Lords turned to analyse the patient’s best interests.

The treatment was apparently not in the patient’s best interests. This was because it was regarded as futile. In Lord Goff’s words^[34], ‘the patient is unconscious and there is no prospect of any improvement in his condition’. In deciding whether the treatment was futile, the doctor had to act in accordance with a responsible body of medical opinion. More precisely the doctor had to satisfy the Bolam test. It is difficult to comprehend how it is relevant in deciding what is in the best interests of a patient –conflicting views of doctors will always be Bolam reasonable as long as one other doctor supports that view.

In conclusion, the courts have established a completely different system of establishing the standard of care for medical professionals to that of other professionals. The Bolam approach has traditionally been interpreted as a principle that a doctor will not be negligent if other professional opinion holds his actions as reasonable, even if that opinion is a minority. The courts have been deferential to the profession, and the apparent move away from such approach in Bolitho is a disappointment of this deference. Lord Browne-Wilkinson’s words were read quite literally, the emphasis being placed upon the words, ‘but if in a rare case’ – the courts have only questioned ‘reasonable and responsible’ medical opinion in a very small amount of cases and it seems as though the Bolitho approach is, as Mason and Laurie commented, a mere ‘back up’ if the judge wishes to find for the claimant. Whilst the courts have slowly begun to depart from the traditional approach, more needs to be done before there is any comparison with the approach of other Commonwealth jurisdictions, such as Australia. Furthermore, the courts should be more clear in their reasoning, as it is also important to be able to ascertain objectively how cases should be decided on grounds of precedent. The majority of clinical negligence claims that are commenced, are settled by the NHS Litigation Authority before they even reach court and would it not be more economic for the NHS to be able to ascertain with greater certainty when a doctor has been negligent? Finally, the decision in Bolitho is far from a departure of judicial deference to the medical profession, it is a mere spin on the language originally used in Bolam. The courts now have ground to make in establishing a more fair, predictable and objective approach in line with other negligence actions.

Bibliography

Brazier, M. ‘Medicine, Patients and the Law’ (2003, 3^rd edn) Penguin Books, London

Davies, M. ‘Textbook on Medical Law’ (2001, 2^nd edn) Blackstone Press, London

Jaskson, E., ‘Medical Law – Text, Cases and Materials’ (2006) Oxford University Press, Oxford

Kennedy, I. & Grubb, A. ‘Medical Law’ (2000, 3^rd edn) Butterworths, London

Mason, JK et al, ‘Law and Medical Ethics’ (2002, 6^th edn) Butterworths, London

Montgomery, J. ‘Health Care Law’ (2003, 2^nd edn) Oxford University Press, Oxford

National Audit Office, Handling Clinical Negligence Claims in England, 2001

Singer, P., ‘Rethinking Life and Death: The Collapse of our Traditional Ethics’ (OUP Oxford 1994)

Journal Articles

Brazier, M., Miola, J., ‘Bye-Bye Bolam: A Medical Litigation Revolution?’ (2000) 8 Med L Rev 85

Keown, J., ‘Reining In the Bolam Test’ (1998) 57 CLJ 248

Teff, H., ‘The Standard of Care in Medical Negligence – Moving on from Bolam?’ (1998) 19 Oxford Journal of Legal Studies 473-84

Woolf, Lord., ‘Are the Courts Excessively Deferential to the Medical Profession?’ (2001) 9 Medical Law Review 1-16.

1

“The ‘fair dealing’ defences occupy a pivotal position in copyright law. They ensure a balance between the interest of the copyright owner in securing a just return on creative work and the public interest in ensuring that intellectual property does not impede the flow of ideas and information.” J Griffiths Preserving Judicial Freedom of Movement –Interpreting Fair Dealing In Copyright Law IPQ 2000, 2,2 164-186. To what extent do you consider that the fair dealing provisions and the supporting case law provide a desirable and consistent balance between these interests?

This paper will criticize the restrictive approach of ‘fair dealing’ defences in UK copyright law. American copyright law will be examined in comparison to discuss the alternative attitudes towards ‘fair dealing’ defences in infringement disputes. Changes to the rule will be proposed and discussed to demonstrate how the current copyright defence can be improved to maintain the balance of protecting intellectual property and freedom of information.

Fair Dealing defences which are used against copyright infringement cases raise important philosophical issues at the heart of Intellectual Property. There is a need for society to share and build on existing knowledge for progress. For example it can be argued the need to allow freedom of expression, is ‘more than necessary to incentivise creative expression in the first place.’^[1] Fair dealing defences attempt to mediate between the fine line of the commercial proprietary rights granted through copyright and the legitimate public use of material in good faith, to teach, educate and share cultural works. Thus there is a fundamental dichotomy between the free expression of ideas in the public domain and the rightful protection of creative works which use such knowledge and information. This is termed the ‘idea-expression divide.’^[2] Kretschmer ^[3] argues against the concept of copyright, due to its capacity to act as an ‘artificial barrier’^[4] impeding the exchange of ideas in society. One explanation behind such divisions can be suggested to lie in the historical Lockean conceptualization of property. This is defined negatively creating ‘rights to exclude access.’^[5] This ‘absolutist conception of property rights’^[6] allows the creators to exploit and monopolize economic, cultural production at the expense of fair uses in the public interest and freedom of expression. But there are those who support the rights of the author. For example the French system of droit d’auteur enables an artist to control how their work is distributed in the market. While concerned about economic exploitation of work, moral rights also ensure the author has rights to protect the integrity of a work. Thus the British concept of fair dealing defences must balance these conflicting tensions.

British copyright law protects the manner of expression or form of the idea, not the idea itself. A book can be protected but not the actual underlying ideas and themes conveyed in the written text. This was stated in the case of Donoghue^[7] where the judge held ‘the person who has clothed the idea in form, whether by means of a picture, a play or book’ will enjoy the benefits of copyright protection.

Fair Dealing in UK copyright law is a defence under Sections 28-76 of the CDPA 1988^[8]. The legislation provides for a set of prescribed circumstances, where reproductions of copyright material will not be considered an infringement. Fair dealing is outlined in sections 20-30. There are three categories where copying can be considered a fair action to take when using copyright protected material. They are 1) for research and private study under section 29; 2) for criticism and review in section 30; and 3) reporting current events under section 31. It must be noted that the legislation provides no clear definition of what constitutes fair use of material which attracts copyright. Thus the act restricts the defence to the non exclusive purposes as stated above. One reason for restricting fair use to a number of permitted acts enables the judge to consider other factors which are unique to the case itself. Fair dealing in this sense is shaped in the UK by judges as a ‘matter of impression’^[9] on a case by case basis.

The scope of fair dealing was clarified by Lord Denning in Hubbard v. Vosper. ^[10] This case suggested certain criteria to be considered by the judge in order to determine whether fair use can be permitted in different situations involving the use of copyrighted material. Denning outlined considerations, such as the frequency and extent of quotations, and subsequently the nature of using quotations. Denning states in response to this test, ‘If they are used as a basis of comment, criticism or review that may be fair dealing. If they are used to convey the same information for a rival purpose, they may be unfair.’ Another rule of thumb is the extent of the quotation within copyrighted work. This considers the size of the actual quote used and its justified proportions in fair use. For example Denning suggests ‘to take long extracts and attach short commentary maybe unfair.’ Each case of infringement is judged by objective standards, through the eyes of an honest person as to whether they would have dealt with the protected material in the same way as the infringer has acted.

Existing fair dealing case law, only serves to highlight the ambiguity of the defence under English law. It is difficult to provide a desirable balance which protects the exclusive rights of the copyright holder but maintain a consistent approach which provides certainty to use material which is permitted in law.

For example the purposes of legitimate research, the courts will not allow commercial research if it is used to produce a competing product or work. This was highlighted in the case of Time Out.^[11] It can be suggested large amounts of copying will be allowed for private research and study in the eyes of the law. Academics argue in this context fair dealing functions to enable freedom of individual research and study. To require and enforce protective measures to prevent the use of copyrighted material is impractical and uneconomic. It is argued copyright should not be used as a bar to those who wish to use the work in their own studies. Torremans argues copyright property rhetoric should not be allowed to supersede important value of free ideas. For example ‘copyright should not become a financial and practical obstructing barrier. There needs to be a balance between the interests of the copyright owners and society in the good functioning of the copyright system and the interest of society for its development.’^[12] It can be suggested this same line of reasoning underpins the fair dealing doctrine for educational purposes. Copying is permitted for intellectual property in dramatic, literary, artistic or musical work for purposes of instruction. Thus a student would be allowed to copy a part of an academic article in order to support their research or point of view in an essay.

Under the category of infringing material for the purposes of criticism and review, it has been established that infringement will not occur if there is adequate acknowledgement of the author, the title or description of work is made available, as held in the case of Sillitoe.^[13] Fair dealing was extended in the case of Pro Sieben Media AG ^[14] which held criticism of work can be fair, even if including the ideas in a work to discuss its ethical implications. The case stated that the ‘defence is limited to criticizing or reviewing that or another work or a performance of a work.’ The function of the defence is to allow a critic a sensible degree of leeway to conduct a review of the work. The courts stated the use of infringing material in a documentary was ‘a genuine piece of criticism and review rather than an attempt to dress ordinary copyright infringement up as criticism.’^[15] This case suggests it is fair to critically treat copyrighted material using the ideas within the work. But crucially ‘the defence does not cover those cases where only ideas, doctrine, philosophy and events are criticized.’ ^[16] Therefore the fair dealing doctrine is narrow in scope, restricted only to the fair use for the purposes of critical review. This case been criticized by Torremans who has argued it is not sufficient to rely on the infringers ‘sincere belief’ they are conducting fair criticism. There is an imbalance for those to wishing to exploit the fine line and cynically infringe work and simply claim the fair dealing defence for the purpose of criticism and review.

It can be suggested in comparison to US legal ‘multi – purpose’^[17] concept of fair use, the UK fair dealing doctrine is too restrictive in scope and interpretation. The UK is restrictive because the CDPA legislates three categories of permitted copying under the fair dealing defences, which are determined on a case by case basis of the judge. Thus anything else will be uncovered by the doctrine. The American legal system in contrast uses four standard ‘balancing’^[18] tests to determine the extent of copying protected material which is covered under the fair use doctrine. The fair use doctrine is a wider and more flexible legal concept to balance the ‘idea-expression’ division in intellectual property. Under the American Copyright Act 1976 17 U.S.C Section 107 states:

‘In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include-

1.the purpose and character of the use, including whether such use is of a commercial nature or it is for non profit educational purposes;

2.the nature of the copyrighted work;

3.the amount and substantiality of the portion used in relation to the copyrighted work as a whole, and

4.the effect of the use upon the potential market for or value of the copyrighted work.’

The fair use doctrine is not defined within the statute, it is left open to broad interpretation by judicial opinion. This ensures a degree of flexibility for the continued transmission of ideas in society. This for example can be seen when analyzing the primary factor of purpose and character. The concept of fair use rests on the idea of limited ‘transformative use’^[19] for similar purposes of educating, parody or comment. The standard allows the courts to asses whether the use is fair and justified. It also requires the burden of proof on the infringer to ‘demonstrate how the consideration is the extent to which the use is interpreted as transformative as opposed to merely derivative.’^[20] This point of law was considered in cases such as Mattel Inc.^[21] The toy company lost the claim against an artist who parodied the iconic “Barbie” doll figure in a non derivative manner. The doll was used in an entirely different context which defeated the copyright infringement claim.

Secondly the benefits of American fair use can be seen when considering the nature of the work. The standard allows for the distinction between created work and factual information which serves the public through its dissemination into the open arena. It is argued there is more ‘leeway’^[22] to copy factual material. This provision directly allows the courts to ‘prevent the private ownership of work that rightfully belongs in the public domain, as facts and ideas are separate from copyright.’^[23] This was held to be the case in Time Inc ^[24]concerning the public interest of the film depicting the assignation of President Kennedy. The social need to keep this in the public domain was greater than the commercial need to uphold the copyright in the film footage.

The third factor assessing the amount and substantiality of the original copied work is a more troublesome standard to determine in the courts. For example the issue of sampling in hip – hop music, which reclaims existing music and uses it to create a new track, was litigated. Here the courts have been unusually strict seen in the decision Grand.^[25] The case enforced the copyright of a Gilbert O’Sullivan song and lead to the restrictive requirement of licensing samples of music from the copyright owner, if the sample if substantially recognizable.

The fourth factor of investigating the effect upon the work’s value attempts to quantify the commercial impact infringement has had on the protected material. The ‘Betamax’^[26] case involved the copyright owner Universal loosing the infringement claim as it could not prove with any reliable evidence that the Betamax technology had dented the commercial broadcaster’s profits. Such an approach allows the courts to factor in alleged market harm to copyrighted material, and give equal consideration to economic concerns of the rights holder to make a fully informed assessment of the situation.

These four non exclusive factors provide enough flexibility for judicial opinion to consider other important considerations in relation to each individual case of infringement. In addition flexibility is encouraged as the fair use doctrine is a positive ‘defense to copyright, which means if the defendants actions do not constitute and infringements of the plaintiffs rights, fair use does not even arise as an issue.’^[27] Thus a broader view is established in the US system. You do not need the consent of the copyright owner under American law to engage in fair use of material which attracts copyright.

However further criticism of the UK approach to fair dealing arises in the wider context of digital copying technology and file sharing. The doctrine is made to look ineffective, mainly through the botched nature of the UK implementation of the EU Directives on the Information Society. This paper believes it is necessary to resolve these problems and rethink the traditional approach to copyright infringement in a digital environment. The aim to balance the conflicting factors of the author’s rights and the need to allow the free exchange of knowledge in society is harder to perform with widespread digital copying. But it is possible through Digital Management Systems, to distribute copyrighted content through technology which limits the capacity to duplicate files by the consumer. Despite DMS, this paper believes the frequency and simplicity of replication facilitated through digital technology far outweighs such content managed systems that use inbuilt licensing restrictions. For example peer 2 peer file sharing and online digital content has facilitated the exchange of copyrighted music in huge numbers among users of a globalised network on the internet.

It can be suggested that the UK’s implementation of the EU Information and Society Directive (2001) shows how outdated the present conception of fair dealing defences are. Article 5 deals with the exceptions and limitations to the use of copyright, in order to harmonize European policy. Under Article 5(5) a ‘draconian’^[28] three step test is used to assess any infringement exceptions in special cases. This section is to be ‘applied if they do not conflict with normal exploitation of the work and if the exception does not unreasonably prejudice the legitimate interests of the rights holder.’^[29]Critics suggest this is an even stricter standard providing no fair use for ‘copy protected on demand services.’^[30] Critics view the directive to mistakenly allow principles of freedom of expression to be ‘handed over to the rights owner.’^[31] For example under article 6(4) availability of research material through on-demand services can be contractually blocked by the copyright holder. This has major repercussions for the role of UK fair dealing defences as it renders the doctrine ineffective in the digital arena. Kretschmer worries this amounts to a ‘possibility of perpetual copyright.’^[32] In addition to this under 5(1), the directive provides for technical exceptions which involve necessary copying for technological process and digital content. Temporary reproductions such as the cache of files within a browser which copy files of data will not infringe copyright as such acts are ‘incidental and should have no economic significance.’^[33]

In light of such developments it can be suggested there is a need to find alternative solutions to reward copyright owners interest within a digital context. There is a need for copyright to ‘generate new resources of remuneration’^[34] for rights owners instead of functioning in a prohibitive manner. Kretschmer proposes alternative system of royalties to be used to compensate owners who can not stem the tide of digital copying. For example ‘a small royalty percentage on content traffic revenues from ISP’s would have been the obvious legal innovation.’^[35] Such novel solutions are needed in order to successfully balance the freedom of information with traditional copyright interests.

In conclusion this paper argues for the need to make changes and decided upon pragmatic alternative solutions to the current legal situation. Fair dealing should be redefined to enable copyright infringement defences take into account the development of digital content. It can be suggested to ensure greater flexibility the UK should adopt the wider US fair use doctrinal approach to defending infringement. Legislation should widen the scope of fair dealing through standard factor based tests. Adopting such standards would promote a liberal approach to asses the degree and nature of infringement. This is needed to make sure the vital balancing act of competing ideological tensions continue within intellectual property law.

Bibliography

Klang & Murray (eds) Human Rights in the Digital Age, 2005 Cavendish

Lloyd, Information Technology Law 4^th Ed, 2004 ,OUP

Bently & Sherman, Intellectual Property Law, 2^nd Ed, 2004, Oxford

Holyoak & Torremans, Intellectual Property Law, 3^rd Ed, 2001, Butterworths

Intellectual Property Law, Fourth Edition 2004, Cavendish Publishing

J Griffiths, Preserving Judicial Freedom of Movement –Interpreting Fair Dealing In Copyright Law IPQ 2000, 2,2 164-186

M. Kretschmer, Digital Copyright: End of an Era, 2003 www.cippm.org.co.uk

Joint Information Systems Committee and Publishers Association, Guidelines for Fair Dealing in An Electronic Environment, 1998, www.ukonln.ac.uk/services/elib/papers/pa/fair/intro.html

R. Buchan, Fair Picture, Guidance from the English High Court on Fair Dealing for the Purpose of Criticism and Review, as Applied to Copyright Material, The Journal of Law and Society, August 2005, Page 52, www.journalonline.co.uk/article/1002090.aspx

1

“The decision of the House of Lords in Street v Mountford in 1985 represented a sea-change in the approach of the courts” (Smith R, Property Law 6th edition (2009) p. 354, Longman Press). Discuss in the context of the court’s approach to the distinction between leases and licences.

Introduction

Many cases prior to Street v Mountford^[1] had attempted to identify the difference between a right to ‘possess’ land and a personal right to ‘occupy’ land. Lord Denning explained the difference as ‘the nature and quality of the occupancy.’^[2] In other words, ‘a legal right of exclusive possession of the land for a term’^[3] would constitute a lease, and a mere permission to use land would amount to a licence. The ‘exclusive possession’ test established by the House of Lords in Street v Mountford, per Lord Templeman, was that an occupier would not be a tenant if he had no exclusive ‘possession’ for a ‘certain’ duration. This case has now been regarded as having marked a ‘sea-change’ in land law.

The distinctions to be drawn between leases and licences

There are certain reasons why the courts have sought to distinguish between licences and leases. Different statutory protections exist for both. The real problem, however, is in how the courts have attempted to draw the line between leases and licences, particularly in the light of the exclusive possession test^[4]. The court’s first concern would be that the term ‘licence’ is too broad – it covers almost all types of permission. When we use the term ‘licence’ in relation to land, however, we mean, not merely a personal right to occupy the land but also, a right to use the land in any way. However, such right can be distinguished from a proprietary right^[5]. In licences, the individual holding the licence (i.e. the licensee) has, in general, no right to exclude others from the land (including the landowner). A difficulty therefore arises in circumstances where the licensee has the full right (including where s/he has been granted exclusive possession) to occupy the land. In this context, as shall be discussed below, Lord Denning stated that exclusive possession does not necessarily equate to the grant of a lease, particularly if the parties did not intend to create a tenancy. Although the test in distinguishing between licences and leases does assist in practice, such test is not as straightforward (at least in theory) as one might first expect.

Difficulties in distinguishing between leases and licences

According to Lord Templeman, the exclusive possession test is conclusive: a person granted exclusive possession must have a lease. However, it does not necessarily mean that one has a lease even though the courts have tended to adopt this approach. Furthermore, it is not easy to apply the exclusive possession test in practice. The first problem for the courts to consider would be when the grant of a right to ‘occupy’ land should amount to a grant of a lease for ‘possession’. The same problem also arises in the definition of ‘certain’ duration.

An underlying issue arising out of the first problem would be for the courts to distinguish between ‘possession’ and ‘occupation’^[6]. The meaning of ‘possession’ and ‘occupation’ are not exactly the same. The inconsistent use of the term ‘occupation’ and the term ‘possession’ in the Street v Mountford judgment somewhat confused the understanding of the concepts of ‘exclusive occupation’ and ‘exclusive possession’. Lord Templeman also failed to distinguish whether those concepts were statements of legal entitlement or statements of fact. Nevertheless, according to the judgment read as a whole, the term ‘occupation’ should refer to the fact that an occupier merely enjoys the occupation of the land. The term ‘possession’ should refer to those situations where the occupier has the right to enjoy land and exclude all others (including the landowner) from the land. Lord Templeman sought to distinguish leases and licences in the following ways:

‘Occupation’ is not sufficient for the occupier to grant a lease; ‘exclusive possession’ is essential.
No lease is granted when there is no exclusive possession. Even though an occupier has exclusive possession – the landowner and the occupier may have no intention to create a legal relationship or the intention may be negatived by the facts of the case – those occupations should not amount to the grant of lease. The latter factor is sufficient to distinguish between lodgers and tenants in circumstances such as renting a hotel room.
In the absence of those negative factors, the possession held by the occupier should amount to ‘exclusive possession’.
When the occupier has been granted ‘exclusive possession’ for a certain period and at a rent, the grant of a lease should be presumed.
Although the occupier has exclusive possession and the right to exclude all others from the land, the right granted might be considered to be something other than a lease such as ‘fee simple ownership’.

Prior Street v Mountford, the element of exclusive possession was not a necessary requirement to be considered.^[7] However, Lord Templeman confirmed that the consideration of exclusive possession was necessary and conclusive. He further developed the principle expounded by Lord Denning: ‘the nature and the quality’ of occupation is essential to determining whether the occupation is a lease or a licence.^[8] Lord Denning stated that although exclusive possession could be considered as the main element in deciding whether an occupier has granted a lease, it does not necessarily mean that an occupier who grants exclusive possession is not necessarily granting a lease. Nevertheless, a person in ‘occupation’ has no tenancy if he has no exclusive right in the land. Lord Templeman explained that the intention of creating a legal relationship is also important to distinguishing between a lease and a licence. However, the subjective intention between the occupier and landowner is irrelevant – the court should look at the objective agreement, i.e. whether the parties intended to create a legal relationship. First, the parties cannot assume that the label attached to the agreement will be conclusive.^[9] Secondly, the parties’ agreement cannot act as a device in order to disguise^[10] the grant of a tenancy.^[11] Thirdly, specific provisions within the agreement may be ignored by the court if the surrounding circumstances suggest that those provisions could not have been intended to form part of the agreement.^[12] It has been held that a time limitation may apply (in this case between 10:30am to noon) in respect of exclusion of persons from a property.^[13] Finally, if the occupier shares occupation with others, the court may read the relevant agreements together and treat those agreements as one transaction, even if the facts suggest that those occupiers’ relationships are interdependent.^[14]

The House of Lords reaffirmed these principles in the latter case Burrows v Brent LBC^[15]. In that case, the landowner granted a possession order against the tenant for unpaid rent. They agreed temporarily not enforce the order and to allow the tenant to remain in occupation if she paid a sum equivalent to the rent due. Applying those principles to this situation, it was held that the parties had not intended to create a legal relationship, and the tenant therefore was considered a ‘tolerated trespasser’.

Lord Millett^[16] also confirmed the principle that exclusive possession on its own is not sufficient for the granting of a lease, but that occupation with the identification of a legal relationship between the occupier and the landlord is an essential consideration. Lord Millett therefore regarded Street v Mountford^[17] as a significant authority for the proposition that a person in ‘occupation’ or ‘possession’ may be regarded as merely a licensee if there is no legal relationship. Notwithstanding the fact that the debate about the definition of ‘legal relationship’ will be ongoing, the differences between leases and licences may be distinguished by the degree of ‘possession’. If someone who is purely holding a personal right to occupy land without a legal relationship, then such right will, in most cases, be a licence. Alternatively, if someone grants a right to exclude all others from the land in question, including the landlord, for a certain period of time, then such right may be called a lease.

The ‘terminology’ problem of the words ‘possession’ and ‘occupation’ appear to have been solved by the cases which were decided after Street v Mountford^[18]. The debate surrounding the meaning to be given to ‘certain’ duration, however, still remains alive. Lord Denning posed: what would the court do if the occupier has been granted exclusive possession of land without certain duration?^[19] In law, if a landlord grants an occupier (who pays rent) exclusive possession of a property without certainty of duration, the occupier will have a periodic tenancy (demonstrated by the payment of a periodic rent) rather than a licence.^[20] This case reaffirmed that the element of ‘exclusive possession’ is the most important consideration to the granting of a lease.

Nevertheless, the distinction between the tenant (leaseholder) and the lodger (licensee) is very significant^[21]. Case law has established that the distinction will arise from the fact that an agreement might allow a landowner to exercise unrestricted rights to use or access property, and not simply ‘from the provision that the landowner provides service to such property’.^[22] An additional consideration for the courts, established by one particular case, was to examine the extent of the right which the landowner actually has to exercise.^[23] By reference to that approach, it will become clear whether there is a tenant or a lodger to property.^[24]

Another significant impact which Street v Mountford^[25] has made in the context of litigation has been in relation to the duties of local authorities to provide accommodation for the homeless under the Housing Act 1985 (now Part VII of the Housing Act 1996). The Court of Appeal has held that although an occupier has been granted exclusive possession, a local authority might have had provided accommodation pursuant to its statutory duties towards the homeless which will have the effect of negating the intention of creating a legal relationship between the parties.^[26] However, if the accommodation was provided by a housing association or an organisation other than the local authority (even on referral from the local authority), the background of homelessness will not negative the intention of creating a tenancy as such an association or organisation does not exercise any statutory duty.^[27] Therefore, the House of Lords affirmed that the duties of local authority were held to negative the intention of creating a lease even though the occupier was granted an exclusive possession of the property.^[28]

In the case Burton v London and Quadrant Housing Trust, since the agreement in question stated that the housing trust had no legal title to the property and the parties had attempted to create a licence rather than a lease, the Court of Appeal held that there was no lease because the housing trust had no legal title to the property. However, the House of Lords found that legal title was not relevant.^[29] Nonetheless, the distinction between licence and lease in this context (under statutory duty) has been reduced by the Housing Act 1996, section 216(3), Schedule 17, para 3.

Having regard to the Housing Act 1996, the Court of Appeal held that granting exclusive possession under the statute would not amount to the creation of a lease. This rule also applies to the relationship between beneficiaries and trustees – the trustee has the power to grant the right, but the grant of a lease may intrude upon the trustees’ duties.^[30]

Conclusion

Although the rules of Street v Mountford^[31] apply in cases of residential occupation, certain principles deriving from it such as the distinction to be drawn between ‘lodger’ and ‘tenant’ may not be applicable in certain circumstances. The basic elements of ‘exclusive possession’ and ‘the nature and quality’ test will, however, be applicable in the commercial occupation context. Nevertheless, we should note that Street v Mountford^[32] was a case of a single occupier. Multiple occupation may, therefore, lead to a more complicated situation, which Lord Templeman has not discussed.

(2,333 words)

Bibliography

Texts

Gravells N P, Land Law: Text and Materials (1999) Street & Maxwell, London
Dixon M, Principles of Land Law (2002) Cavendish Publishing Ltd, London
Oakley A J, Megarry’s Manual of the Law of Real Property (2002) Street & Maxwell, London
Clarke A and Kohler P, Property Law Commentary and Materials (2005) Cambridge University Press, Cambridge

Articles

Wilkinson H, The lease – licence distinction. Again? (2001) NLJ
Pawlowski M, Contractual licences, personal tenancies and tenancies at will (2001) L & T Review 2001, 5(6), 117-118
Colbey R, Detecting a sham (2001) NLJ
Morgan J, The changing meaning of ‘dwelling-house’ (2002) CLJ 61(2), 312
Grundy N and Joss N, Landlord and tenant update (2006) SJ 805
Peachey L, Elements of a tenancy assured and assured shortholds (2007) HLM 14 5(5)

Cases

Errington v Errington and Wood [1952] 1 KB 290
Radaich v Smith (1959) 101 CLR 209 at 222
Marchant v Charters [1977] 3 All ER 918
Street v Mountford [1985] AC 825
Markou v Da Silvaesa (1986) P & CR 204
Brooker Settled Estates Ltd v Ayers (1987) 54 P & CR 165
AG Securities v Vaughan (1988) 56 P & CR 168
Hadjiloucas v Crean [1988] 1 WLR 1006
Ogwr BC v Dykes [1989] 1 WLR 295
Aslan v Murphy (No. 1) [1990] 1 WLR 766
Antoniades v Villiers [1990] 1 AC 417
Duke v Wynne [1990] 1 WLR 766
Family Housing Association v Jones [1990] 1 WLR 779
Prudential Assurance Co. Ltd v London Residuary Body [1992] 2 AC 386
Westminster City Council v Clarke [1992] 2 AC 288
Burrows v Brent LBC [1996] 1 WLR 1448
Gray v Taylor [1998] 1 WLR 1093
Family Housing Association v Jones [1999] 3 WLR 150
Ramnarace v Lutchman [2001] UKPC 25

1

Introduction

This essay will consist in an attempt to analyse the doctrine of impossibility and its operation in relation to contracts. It will look closely at both the concept of initial impossibility arising from a common mistake on the part of both parties as to the state of things before the contract was agreed and the concept of subsequent impossibility and frustration. The latter deals with a situation whether the parties enter into agreement on terms both express and implied and then a supervening event renders the performance of that agreement radically different from that which was envisaged by both parties at the outset. These themes will be discussed in greater detail in the first section and will run throughout the work. The essay will examine the concept of objective and subjective impossibility, and the rules relating to discharge of contractual obligations and allocation of risk. It will look at the situation when either the subject matter or a thing essential for performance is destroyed or unavailable, either partially or completely. It will then look at how the death or supervening incapacity of a party will affect a personal contract. Towards the latter part of the essay, it will discuss the problems that arise when a method of performance becomes impossible or a particular source becomes unavailable. It will conclude by looking at the effect of delay and temporary impossibility on a contract.

The concept of impossibility

The concept of impossibility in contract law can be split into two distinct categories. There are the cases where the parties never actually reach a true agreement because they are mistaken as to some element of the contract before the contract is concluded and the cases where the contract becomes impossible to perform subsequent to the agreement having been reached. Generally speaking, in the first instance, the contract is void ab initio and in the second, an otherwise valid contract is brought to an end from the point when the impossibility arises. A basic example to illustrate the difference would be a contract for the sale of a car. If unknown to the parties, the car had blown up 5 minutes before the contract was signed the contract would be void ab initio, whereas if the car blew up 5 minutes after the contract was signed, the contract would be valid, but brought to an end by the fact that its subject matter no longer existed. Essentially the courts are implying into the contract a condition precedent that the subject matter exists and is capable of transfer. This concept of implied condition precedent has been regarded with considerable scepticism among commentators in light of the traditional common law view that the courts should neither make nor amend a bargain.

The main problem arises when dealing with the first type of impossibility. It is not always entirely clear how the courts will formulate the implied condition precedent. Smith and Thomas suggest three possibilities:

A impliedly promised B that the thing existed.
A impliedly promised B that he had taken reasonable care to ascertain that the thing existed.
A and B proceeded on the common assumption, for which neither was more responsible than the other, that the thing existed and its existence was a condition precedent of the contract.^[1]

Which of these options it will be, depends largely on the relative means of knowledge of the parties and whether one is relying on the other. This will be discussed at length through the course of the work.

It also may be that on proper construction of the contract either, or both of the parties have made absolute promises. In that event, the courts will not excuse non-performance for either type of impossibility. There are also cases where the contract has not become entirely physically or legally impossible, but an event has occurred which “strikes at the base of the contract so as to frustrate its purpose.”^[2] This is commonly referred to as frustration and it operates as a form of subsequent impossibility.

Objective and Subjective Impossibility

The contract will have to be objectively impossible to perform before it is held to be void. The case of Thornborow v Whitacre (1705) 2 Ld Raym 1164 held that a party cannot escape liability on the grounds of impossibility purely relating to his individual ability or circumstances. Neither will he be discharged from his obligations simply because he finds the contract particularly difficult or onerous to perform:

“It is not hardship or inconvenience or material loss itself which calls the principle of frustration into play”^[3]

Subsequent impossibility will similarly not excuse the parties from performance if it was brought about by the conduct of one of the parties. The case of Southern Foundries (1926) Ltd v Shirlaw ^{[1940] AC 701} held at 717 per Lord Atkin:

“…conduct of either promisor or promisee which can be said to amount to himself of his own motion, bringing about the impossibility of performance is in itself a breach.”

Clearly, any impossibility that can be attributed to either party will be considered a breach of contract and the defaulting party will become liable in damages in the usual way. Where the impossibility brought about by one of the parties existed at the time of the contract he is likely to be held to have warranted possible performance of the contract and held to be in breach of that warranty.

As discussed above it is sometimes possible for the courts to hold that a party made an absolute promise and therefore accepted the risk of the fact that the contract might be impossible to perform. Whether a contract is considered to be absolute will be a matter of objective construction of the terms of the contract. If the contract is held to be absolute, the party will be held to his performance whether or not the impossibility is his fault or not. In the case Paradine v Jane (1647) Aleyn 26 a lessee was held liable to pay rent even though he had been evicted from the property by armed forces during the civil war. A lease is a type of contract that is commonly regarded as being objectively absolute without reference to the subjective intentions of the parties.

Overall the contract must be objectively impossible to perform, the subjective views of the parties as to their circumstances and their personal ability to perform the contract will not usually be taken into account. Similarly, if a party is active in bringing about the impossibility the contract will not be seen as objectively impossible, but as having been breached. Conversely, some contracts will be held to be objectively absolute and the subjective intentions of the parties in forming the contract and their level of fault in bringing about the impossibility of performance will not be relevant.

Destruction of the Subject Matter

In the case of Taylor v Caldwell (1863) 3 B & S 826 the claimants granted the defendants the use of a music hall and gardens for a series of music concerts. After the contract had been concluded, but before the concerts had begun the music hall was destroyed by fire and the concerts could no longer be held there. The claimants argued that the defendants were in breach of the contract for failing to provide the music hall and sought to recover ?58, which they had spent on advertising the concerts. The courts however held that the contract had become impossible to perform and was therefore frustrated. Both parties were therefore released from their obligations under the contract. In coming to this conclusion Blackburn J referred to the dicta of Pothier[4] stating that:

“The debtor is freed from obligation when the ting has perished, neither by his act nor his neglect and before he is in default, unless by some stipulation he has taken on himself the risk of the particular misfortune which has occurred.”

He recognises that the civil law is not binding on English Courts, but states that it is a useful indicator of the principles on which the law is grounded.

Blackburn J also refers to a line of authority involving bailment. For example the case of Williams v Lloyd W.Jones 179 the claimant had delivered a horse to the defendant on the condition that it be returned on request. Without fault on the part of the defendant, the horse became sick and died and was therefore not able to be returned on the request of the claimant. It was held that bailee was discharged from his promise by the fact that the horse had died. Blackburn J stated that it was a settled principle of English law that in contracts for loans of chattels or bailments, if the promise of the bailee or borrower to return the goods becomes impossible because the goods have perished through no fault of his own, the bailee is excused from this promise. It is noted that in none of the cases relating to bailment was it expressly agreed that the destruction of the subject matter would release either party from their obligation, “the excuse is by law implied” ^[5]

This principle established in Taylor and subsequent cases^[6] is now contained in section 7 of the Sale of Goods Act 1979

“Where there is an agreement to sell specific goods and subsequently the goods, without any fault on the part of the seller or buyer, perish before the risk passes to the buyer, the agreement is avoided.”

Partial Destruction of the Subject Matter

It is interesting to note that the contract in Taylor was for the use of ‘Surrey Music Hall and Gardens’. It was therefore only part of the subject matter that was destroyed by the fire; the gardens were still in tact. However, it was held that the destruction of the music hall rendered performance of the contract impossible. This implies that when part of the subject matter is destroyed the courts will investigate the purpose of the contract. If the part that is destroyed renders that purpose impossible the contract will be held to have been frustrated by its destruction.

Discharge and Rules Governing Risk

As discussed above a contract, which is the subject of a mistake made by both parties prior to its formation that makes performance impossible, will be void ab initio. This is not the case if the impossibility arises after the formation of the contract, i.e. the contract is frustrated. In that event, the contract is said to be discharged from the time when the frustrating event arose. The parties are discharged from any future performance without having to elect that that will be the case.^[7] Where the core of the contract is the happening of some future event and that event is cancelled the time of frustration will be the time when the cancellation is announced. In the case of Krell v Henry [1903] 2 KB 740 the defendant hired a flat on Pall Mall to watch the coronation procession of Edward VII, though this purpose was not expressed in the contract. The procession was cancelled before the formation of the contract, but the announcement was not made until after the contract had been agreed.

If the contract is severable, it may be that only part of the contract is frustrated and the other parts remain in force. It seems that even when an entire contract of sale is held to be discharged because it has become impossible to deliver some of the goods, the buyer can ‘waive’ this and demand delivery of the rest of the goods. This was the case in HR & S Sainsbury Ltd v Street ^{[1972] 3 All ER 1127}. Supervening events may also make the suspend the contract without actually discharging it.[8] Temporary impossibility will be discussed in greater detail in a later section. Furthermore, illegality may frustrate a minor obligation without discharging the entire contract. The implications of things like this for a potential doctrine of partial frustration will also be discussed later.

The essay will now go on to look at who should bear the risk and hence the loss of a frustrating event. For a long time it was thought that the losses resulting from the frustration of a contract should lie where they fell. This led to the conclusion that any money paid before the frustrating event occurred was irrecoverable and conversely any money already due under the contract for services provided was enforceable. In the case of Chandler v Webster ^{[1904] 1 KB 493}, CA, a room was hired to view the coronation procession, the price being payable immediately. When the procession was cancelled, ?100 had been paid on account. It was held that the contract was frustrated thereby releasing the parties from further performance, but leaving promises performable before the frustrating event still standing. On the other side a party who had only partially performed the contract could not recover anything for his services even when he had conferred a benefit on the other side.[9] It is possible however that a party who, after a frustrating event, takes reasonable steps to protect the other party’s interest will be entitled to recover remuneration for his expenditure on a restitutionary quantum meruit basis. This was the case in Societe Franco-Tunisienne d’Armement v Sidermar SpA ^{[1961] 2 QB 278}[10].

Until 1942 it was also considered that there could be no recovery for total failure of consideration. This was on the basis that up until the point of frustration the party who had paid any money had the benefit of a executory contractual promise and that was consideration enough^[11]. However, in the case of Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd ^{[1943] AC 32} the House of Lords held that a party could recover where there had been a total failure of consideration. This was an improvement on the Chandler position discussed above, but two principle defects in the law remained. The first was that the principle only applied when there was a total failure of consideration; where there was a partial failure the claimant could not recover anything.[12] The second defect was that the payee could not set off any expenditure that he had incurred in the performance of his side of the contract. These defects were rectified by section 1(2) of the Law Reform (Frustrated Contracts) Act 1943. The subsection states:

“All sums paid or payable to any party in pursuance of the contract before the time when the parties were so discharged (in this Act referred to as “the time of discharge”) shall, in the case of sums so paid, be recoverable from him as money received by him for the use of the party by whom the sums were paid, and, in the case of sums so payable, cease to be so payable:

Provided that, if the party to whom the sums were so paid or payable incurred expenses before the time of discharge in, or for the purpose of, the performance of the contract, the court may, if it considers it just to do so having regard to all the circumstances of the case, allow him to retain or, as the case may be, recover the whole or any part of the sums so paid or payable, not being an amount in excess of the expenses so incurred.”

This deals with the defects in the common law by stating that monies paid before the frustrating event are recoverable, sums payable prior to the time of discharge cease to be payable and the payee is entitled to set off expenses reasonably incurred in their performance of the contract. Goff and Jones note that whilst the Act does deal in outline with the deficiencies of the common law it does not completely resolve the issues.^[13] For example, the Act does not say what principles the court ought to employ to decide how much the payee is entitled to set off. In the case Gamerco SA v ICM/Fair Warning Agency Ltd [1995] 1 WLR 1226 Garland J felt that the court’s task was to:

“…do justice in a situation which the parties had neither contemplated nor provided for, and to mitigate the possible harshness of allowing all loss to lie where it has fallen.”

Section 1(2) does permit the payee to recover or retain more than he has been paid up to the tine of frustration. I.e. for expenses incurred in expectation of future payment. They may be able to recover such expenditure under section 1(3), which takes effect when one party has conferred a valuable benefit on the other party (other than money) before the time of discharge. In that event, he will be able to recover a just sum, which shall not exceed the value of the benefit conferred.

Robert Goff J held in the case of BP v Hunt [1979] 1 WLR 783 that there were two steps to assessing a claim under section 1(3), the first was identifying and valuing the benefit conferred. Goff J held that usually the benefit would be the end product of any services. In some contracts the services were the end product themselves, for example, a contract for the transportation of goods. He held that if the end product is destroyed by the frustrating event then no benefit is conferred because the other party does not have the product either. This interpretation has been heavily criticised as failing to give effect to the intention of the Act.^[14] This section of the Act was intended to mitigate against the harsh consequences of the common law rule of ‘entire obligations’. In the case of Appleby and Myers (1876) LR 2 CP 651 the claimants contracted to make machinery in the defendants factory and to maintain the machinery for two years. Payment was upon completion of the work. After part of the machinery had been erected, a fire destroyed the whole factory and all the machinery. The claimants could not recover anything, as they had not completed the work. Goff J’s interpretation of section 1(3) would lead to the same result. However, this interpretation has also been adopted in the Commonwealth^[15]. It does appear to accord closely with the wording of section 1(3), which draws a distinction between the performance by on party and the benefit conferred on the other. This implies that the claimant must actually have received the benefit of any performance on the part of the defendant before the defendant can recover or retain any money.

The second step Goff J laid down was the measurement of a ‘just sum’. Contractual allocation of risk will of course be a factor. Goff J thought that it ought to be as much as is necessary to prevent the unjust enrichment of the other party. This approach was rejected by the Court of Appeal in the same case, who simply held that it was in the almost unrestricted discretion of the trial judge. In conclusion, the Act is sadly deficient in its guidance as to the allocation of risk and loss between the parties to a contract that has been discharged for frustration.

It is possible for the parties to allocate the risks contractually. This is one of the main reasons that the courts have kept a tight reign on the doctrine of frustration. Parties are expected to be able to foresee the possibility of dramatic price increases and the outbreak of labour disputes etc. Contracts therefore regularly include clauses which allocate the risk of such an unforeseen event occurring. One common example is a ‘force majeure clause’. In the case of Channel Island Ferries Ltd v Sealink UK Ltd [1988] 1 Lloyd’s Rep 323 the relevant clause stated:

“A party shall not be liable in the event of non-fulfilment of any obligation arising under this contract by reason of Act of God, disease, strikes, Lock-Outs, fire and any accident or incident of any nature beyond the control of the relevant party.”

The advantages of such clauses are that they provide a degree of certainty and the parties can agree to a wider range of circumstances than are currently available under the doctrine of frustration. For example, an unexpected increase in prices is not considered to be a frustrating event,^[16] but it is common in a commercial contract to see a force majeur clause containing provision for ‘abnormal increase in prices and wages.’ It also allows the parties to determine their future relationship. The frustration doctrine discharges the contract regardless of the wishes of the parties, but they can provide for a continuing, adapted relationship if they so wish.

Unavailability of the Subject Matter

Where both parties are mistaken as to the availability of the subject matter at the time of the contract, this may be sufficiently fundamental to avoid the contract. The leading case on this issue is that of Courturier v Hastie (1856) 5 HLC 637 in which the parties entered into a contract for the sale of a cargo of corn, which was believed to be in transit from Salonica to England. Unknown to both the parties, the corn’s quality had deteriorated to such an extent that the master had sold it. The House of Lords held that the matter turned on the construction of the contract concluding that:

“The contract plainly imports that there was something which was to be sold at the time of the contract, and something to be purchased, no such thing existing,… judgment should be given for the defendants.”^[17]

The exact legal basis for importing this term has been the subject of some debate among commentators and will be discussed briefly now. The draftsmen of section 6 of the Sale of Goods Act 1979 appear to have interpreted the decision as stating that a mistake as to the existence of the subject matter of the contract inevitably renders it void:

6 Goods which have perished

Where there is a contract for the sale of specific goods, and the goods without the knowledge of the seller have perished at the time when the contract is made, the contract is void.

The court in Couturier did not however mention the word mistake; they based their reasoning on the construction of the contract and the fact that there was a total failure of consideration on the part of the sellers.

Lord Denning applied a different interpretation in the case of Solle v Butcher [1950] 1 KB 671 at 691 in which he held that there was an implied condition precedent that the contract was capable of performance. He reasoned that in Couturier the parties had proceeded on the assumption that the goods were capable of being sold, when in fact they were no longer available for sale. Lord Denning’s interpretation does seem to give effect to the most likely intention of the parties. However, in the absence of a clear intention to release each other from the agreement if the subject matter is not available, it is not clear when Lord Denning is suggesting a term of this nature should be implied into the contract.

The third interpretation is that whether or not the contract will be void, depends on the its construction. This was the interpretation put on Couturier by the High Court of Australia in the case of McRae v Commonwealth Disposals Commission 84 C.L.R. 377. The defendants invited tenders for the purchase of an oil tanker described as lying on the Jourmand Reef off Papua, together with its contents, which were stated to be oil. The Claimants won the tender and spent a considerable amount of money modifying a vessel for the salvage work. In a bizarre turn of events it was later discovered that no such tanker had ever existed. The court held that:

“The only proper construction of the contract is that it included a promise by the commission that there was a tanker in the position specified.”

On that construction the Commission had assumed the risk of the tanker not existing. They distinguished Couturier, holding that this was not a case in which both parties had entered the contract on a common assumption. The Commission had assumed the existence of the tanker, but the buyers had only relied on their assertion. In policy terms there can be little doubt that the approach taken in McRae is a sound one and one which ought to be followed by the English courts, but its is somewhat difficult to reconcile with section 6 of the Sale of Goods Act. There is the possible argument that McRae does not fall under section 6 because the tanker had never existed and therefore could not have ‘perished’. This distinction does seem somewhat artificial and not within the intention of the court in McRae.

If the subject matter becomes unavailable after the contract has been concluded this may also render the contract frustrated for impossibility. For example in the case of Bank Line Ltd v Arthur Capel & Co [1919] AC 435 a charterparty was held to be frustrated when the ship was requisitioned and so unavailable to the charterer. Temporary unavailability may also suffice, but this will be discussed later.

Destruction or Unavailability of a Thing Essential for Performance

Lord Atkin in the case of Bell v Lever Brothers Ltd [[1932] A.C. 161, discussed the circumstances in which one might wish to imply a condition into the contract. He states that a condition derives its efficacy from the consent of the parties, express or implied. He supposes a possible term:

“Unless the facts are or are not of a particular nature, or unless an event has or has not happened, the contract is not to take effect.”

If there are express words in the contract such as ‘a foundation essential to the existence’, there need not be any further enquiry, but when there are no such words the court must investigate the circumstances of the agreement to see whether any such condition can be implied. Lord Atkin uses the example of the hire of a professional vocalist whose continued health would be essential to the performance of the contract.

The case of Krell v Henry [1903] 2 KB 740 has been discussed earlier. For present purposes it can be described in the following terms: The contract was for the hire of a room on Pall Mall to watch the coronation procession of Edward VII. The subject matter of the contract was the room and that was still in tact. However, the purpose of the contract was to watch the procession and without the procession the contract was not capable of full performance. Vaughn Williams LJ refers in his judgment to the case of Nickoll v Ashton [1901] 2 K.B, which is authority for the proposition:

“ English Law applies the principle not only to cases where performance of the contract becomes impossible by the cessation of existence of the thing which is the subject matter of the contract, but also to cases where the event which renders the contract incapable of performance is the cessation or non existence of an express condition the continued existence of which is necessary for the fulfilment of the contract, and essential to its performance.”

This concept was extended in Krell to include a situation in which that particular set of circumstances (the viewing of the coronation) was not expressly mentioned in the contract. The contract in Krell was, however a strange one; the room was only hired out by the day, not the night, and the purpose for the contract on both sides was the viewing of the coronation. It is clear that the particular set of circumstances must have been in the contemplation of the parties and one that they both realised was necessary for the full performance of the contract. There is some dispute surrounding the Krell case. Cheshire and Fifoot point out that the cancellation was probably not in the contemplation of the parties, but with regard to the proposition that the buyer should be discharged from his obligation to pay on cancellation:

“It is incompatible with the character of a hard bargainer to say that the owner of the room would have agreed to this proposal if it had been put to him during negotiations.”^[18]

It is more likely that the owner would have told the hirer that that was a risk he would have to take. It seems somewhat unreasonable to import to the seller a state of mind which he may well not have been in had he thought about it. McElroy and Williams, on the other hand say that the contract was impliedly for the hire of “rooms to view the procession”, the fact that there was no procession therefore amounted to a complete failure of consideration on the part of the owner of the rooms, discharging the hirer from his obligation to pay.^[19]

The circumstances in which Krell will apply are extremely limited. The set of circumstances, which the parties assume to be continuing, must be the common foundation of the contract. In the case of Herne Bay Steamboat Co v Hutton [1903] 2 KB 683 the claimant hired a ship from the defendant to watch the naval review and for a day’s cruise around the fleet. After the contract, the naval review was cancelled owing to the same illness of Edward VII, but the contract was held not to have been frustrated. This is thought to be because the hirer could still see the fleet and the boat had not been hired out by the owner for the specific purpose of seeing the Naval Review. This meant that seeing the Naval Review was not the common purpose of the contract and its cancellation was not therefore a frustrating event. Thus interpreted, Krell can be seen as a very narrow decision and as indeed been distinguished in more recent cases.^[20]

The Death of a Person Essential to Performance

In the case of Galloway v Galloway (1914) 30 TLR 531 the defendant thought that his first wife had died and married the claimant. The defendant and claimant subsequently separated and entered into a deed of separation under which the defendant agreed to pay the claimant a weekly sum in maintenance. The defendant then discovered that his firs

The Children’s Act 2004

The Children’s Act introduced in 2004 aimed to address concerns about the protection of children. As such, to a significant extent it built on the provisions of the 1989 Children’s Act. Above all, the main motivation for establishing a new act relating to children was a series of high profiled cases involving abuse against young children. Moreover, many people felt that the provisions of the 1989 act failed to fully unite the various different organisations that are involved in the protection of children.^[1]

The purpose of this essay is to examine the aims and provisions of the 2004 Children’s Act. Above all, we will see that the 2004 act aimed to bring about a series of changes that would allow for greater cooperation between various different agencies and organisations. This change has also taken place across the wide general area of social policy in Britain. The name given to this process of greater cooperation is collaborative partnerships.^[2] The idea behind this new initiative is that if differing groups involved in social service provision work together then there will be greater possibilities for safeguarding the security and interests of children. However, before I go into detail on this subject let us first examine the reasons and cases that brought about the 2004 Children’s Act.

Ultimately, the aim of the 2004 Children’s Act was to build on the previous legislation passed in 1989 and further the possibilities for effective child protection. However, another further motivating factor was the murder of Victoria Climbie in 2000. Nine-year-old Victoria was abused and murdered by her guardians in her London home. The public and media outcry following the case was enormous. Furthermore, it was widely felt that the case had highlighted serious problems within the children protection service. Above all, it was felt that different agencies had failed to act in unison in the months and years prior to Victoria’s murder. As such, a series of new ideas and approaches were adopted towards the protection of children.^[3]

This new wish to provide better and more effective protection can be seen in the form of two moves. Firstly, the establishment of the Every Child Matters programme and secondly the passing of the 2004 Children’s Act. Every Child Matters was launched in 2003 and aimed to ensure that all children regardless of the financial or social background would be able to achieve their full potential in life.^[4] Furthermore, Every Child Matters was set up in an attempt to allow for greater cooperation between varying agencies and organisations involved with children. The setting up of Every Child Matters was a prelude aimed at laying the basis for the Children’s Act of 2004. The Children Act itself aimed to put in place a legal framework, which would provide better protection for children and greater levels of efficiency in the organisations charged with child protection. Local authorities were to receive more support and advice on how to carry out better service for children. There were also changes to the law with regard foster homes, caring and babysitting services, and adoption services. However, although all these issues are very important provisions within the act, the ultimate purpose was to create far greater levels of cooperation and multi agency action in relation to the protection of children.^[5]

Above all, the Victoria Climbie case had highlighted the extent to which there was little cooperation between different agencies in terms of child protection. Furthermore, it was now realised that there were a considerable number of organisations and agencies that could play a role in child protection. Naturally, local authority child protection services were seen as the most important agency. However, it was clearly vital that child protection services needed to work in close collaboration with other agencies. Therefore, agencies such as the police, school authorities, social services, doctors and charity organisations now all work together in order to provide better protection for vulnerable children. Because each agency has a unique role to play in relation to children it is hoped that such collaborative partnerships will produce better services for children.^[6] For example, if a social worker feels that a particular child is in possible danger, they can call upon the expertise and opinion of a variety of other professionals such as the child’s schoolteacher or doctor. Therefore, with everyone working together for same purpose possible problems can be highlighted and dealt with in a much more effective manner.

Now although the 2004 act and Every Children Matters has brought about significant changes to the way in which child protection services operate, there have nonetheless been serious problems. For example, it is sometimes difficult to bring different agencies together in combination when they have previously not worked in collaboration.^[7] Also, different agencies may have very different ways of understanding a particular situation, such as that of a social worker compared to a police officer. Very recently such problems have been highlighted in the form of another tragic and horrible case. The case of baby P shows above all the extent to which collaboration between multi agency organisations can break down with terrible consequences. Doctors, police and social services failed to work together effectively enough to protect baby P and therefore the case shows the possible problems that could continue in the future.

In conclusion, the main reasons behind the 2004 Children’s Act have been discussed. Above all, it is clear that both the act and the Every Child Matters initiative came about because of perceived failings within the child protection service as highlighted in the case of Victoria Climbie. Above all, government has attempted to enact a system whereby agencies involved with children work in collaboration to achieve better levels of protection. However, although such moves are positive the case of baby P highlights the extent to which there are still serious problems. Ultimately, it will take a considerable time for such moves to work effectively.

Cree, Viviane and Myers, Steve. Social Work: making a difference, Bristol: Policy, 2008.

Sheldon, Brian and Macdonald, Geraldine. A Textbook of Social Work, London: Routledge, 2008.

UK Government, Every Child Matters: Change for Children, “Children’s Act 2004: guidance on the duty to cooperate” http://www.everychildmatters.gov.uk/strategy/guidance/, date accessed, 01/01/2009.

UK Government, Every Child Matters: Change for Children, “Aims and Outcomes”, http://www.everychildmatters.gov.uk/aims/, date accessed, 01/01/2009.

1

“The cases provide many examples of judicial awareness of the danger that too strict an application of the requirement of certainty could result in the striking down of agreements intended by businessmen to have binding force” – Treitel.

Critically evaluate this statement in light of case law and consider in your answer whether the extent to which the parties have acted on an agreement influences the judges.

Introduction

In looking to critically evaluate the above statement in view of the case law that has been decided in this area, so as to also be able to consider the extent to which parties have acted on a business agreement serves to influence any judge, this essay will first look to consider the importance of certainty in agreements by recognising the significance where there is a lack thereof. Then, this essay will also look to reflect upon how a contract is generally formed and as to how the issue of certainty relates specifically to a contract’s formation in this regard for when it is said to come into being. Following on from this, this essay will look to determine the issues that a court will look to consider in evaluating as to whether a particular agreement before them is sufficiently certain to be considered a legally binding contract, whilst also looking to consider the extent to which the parties have acted on an agreement serves to influence the judges in coming to their decisions in relation to these matters, before finally looking to conclude with a summary of the key points that have been derived from an understanding of this discussion.

The significance of certainty

On this basis, to begin with it must be appreciated that the issue of certainty in any business agreement is generally considered to be paramount to the formation of a formal contract because it has been a long-held maxim of the law that that which is certain is that which can be made so leading to a binding contract being formed that is enforceable by the courts^[1]. Consequently, a lack of certainty increases the costs of disputes because the ability to avoid, manage and/or resolve any dispute early, and on a reasonable commercial basis, is clearly negated where there is a lack of accurate documentation, whilst the lack of certainty also serves to create risks for those involved where there is a lack of a formally recognised agreement in place.

Therefore, by way of illustration, it was recognised in Montreal Gas Company v. Vasey^[2] that where the company in question made a contract with the other party to this case with the promise that, if it was ‘satisfied’ with them as a customer, the company would then look ‘favourably’ on an application for renewal of their contract with them, this was not considered sufficiently certain to create a legal obligation because of the indefinite or unsettled nature of such a term. Nevertheless, it is also important to appreciate a transaction that may otherwise be considered to have left some essential term of their agreement undetermined may provide some method of determination other than what is considered to be a future agreement.

The formation of a contract – Where do the problems lie?

Ostensibly, it is commonly understood that a contract is effectively formed where there is an offer, consideration and acceptance that is sufficiently certain so that it is then for the courts to determine whether the required elements are present in any business arrangement^[3]. This is because the offer refers to a proposal that is expressed orally or in writing from one party (the ‘offeror’) to another (the ‘offeree’) to do or give something for remuneration with a view to forming an agreement that is usually legally binding on the basis of the conduct the parties. Such a view arises from the fact it was recognised in Adams v. Lindsell^[4] the rules in relation to the recognition of a valid offer states that thus will be so where it is (a) made to definite person, class, or the world; (b) it is effectively communicated; and (c) it reaches the offeree. Then, with regards to the element of consideration required, this consists of a “right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss, or responsibility given, suffered or undertaken by the other”, in keeping with the decision in Currie v. Misa^[5], that must be legal, not past, and move from the promisee to the promisor^[6].

However, the problem with certainty in business agreements arguably arises most commonly in relation to the issue of acceptance of an offer to formalise the agreement between the parties in the prescribed manner. This is because it was recognised in Hyde v. Wrench^[7] that the offeree must accept the offer made by the offeror unequivocally without qualification in words or through conduct in conformation with the indicated or prescribed terms of the offer. But then, in the decision in Chillingworth v. Esche^[8], it was effectively understood that it is possible to have an acceptance of terms that are ‘subject to contract’ where the parties will only be bound by a formal contract. Moreover, where the terms of an offer are not accepted by the offeree without alteration, then it could be argued that negotiations will continue because anything that the offeree then proposes may be considered to be a counter-offer so that the positions of the respective parties change (i.e. offeror becomes offeree and vice versa). Therefore, this effectively means that there is only likely to be an agreement on terms that are substantially different from those originally put forward by the parties in such circumstances^[9].

Buying and selling

More specifically, where there is an unequivocal desire to buy and sell, but a lack of certainty as to terms of the agreement, the courts will look to consider the nature of the transaction for themselves that may be determined by the standard of reasonableness (i.e. what is considered reasonable) in the specific circumstances of the case. Such a view is effectively illustrated by the examples of the decisions in Brown v. Gould^[10], where what was considered the ‘market value’ of the goods was determined by the courts, and Didymi Corporation v. Atlantic Lines & Navigation Company Ltd^[11], where the idea that an agreement regarding a hire was to be ‘equitably decreased’ was also determined by the courts. But, in the case of price of goods and services in such cases, this has largely been governed by section 8 of the Sale of Goods Act 1979^[12] which effectively means that the courts are able to allow actions for the recovery of reasonable sums of the value of the goods or services in question^[13] so long as the contract itself is silent as to the issue of price^[14]. Therefore, by way of illustration, in May & Butcher v. The King^[15] when the supplicants agreed to purchase all of the Crown’s old tentage for a price “agreed upon … as the quantities of the said old tentage become available and are offered to the purchasers” it was held there was no concluded contract because the price would be agreed subsequently for the transference of the goods in question.

The influence of parties to an agreement upon the courts

However, more generally, the function of any court is to put a fair construction on what the parties have said and done because Lord Wright in Hillas & Co v. Arcos Ltd^[16] said “Business men often record the most important agreements in crude and summary fashion”, that are “far from complete or precise” to those unfamiliar so that it is arguable that the parties to such agreements may be considered to have some influence over the approach that the courts may take in such cases. On this basis, this means that it is “the duty of the court to construe such documents fairly and broadly”^[17] because the courts need to be satisfied that parties to an agreement have concluded a contract, whilst also still considering what has been said and done in its context, the relative importance of the unsettled matter and whether the parties have provided machinery within the terms of their agreement for settling any dispute.

By way of further illustration, in the decision in Hillas & Co v. Arcos Ltd^[18] the court decided that the terms of the contract in this case were based on previous transactions (the original contract) between the parties and the custom of the timber trade because it was determined that in view of their previous agreements there was still sufficient intention to be bound in the future. Therefore, with this in mind, in view of the influence of the parties in acting on the same basis as under their previous transaction, clearly, in such circumstances it will be extremely difficult for the courts to say that a “contract is void for vagueness or uncertainty”, where it has been either or wholly or partially performed, since this serves to make it easier to imply a term into an agreement to resolve such problems^[19].

However, as well as the influence acceded to the parties to agreements by the courts, it is also important to appreciate that a court will not commonly allow a contract to fail for uncertainty more generally if the contract also provides the means to acquire the level of certainty required for the particular contract. For example, in cases including Foley v. Classique Coaches Ltd^[20], it was recognised that if the contract in question provides parties are to agree a price or quantities for delivery, but also contains an arbitration clause in this regard, the courts will imply a reasonable price will be paid where there is otherwise default on the part of the parties to the agreement determined by arbitration so that parties to the agreement still retain a level of influence even where they are in dispute.

Moreover, matters in this regard may actually only be further complicated by the fact that parties in business often act on their informal agreements – even their version of events – pending the formalising of their agreement into a contract^[21]. Then, where a contract is formalised, the courts may allow this contract to take on a retrospective effect to cover the work done during the period when the parties were working on the basis of an informal agreement^[22]. But where there is no formalisation of an agreement between parties, work that is done, or goods that are delivered, under a letter of intent may lead to a restitutionary obligation to pay a reasionable sum by way of remuneration for this^[23] so that the parties actions continue to have an effect on any decision that is reached.

The problem with documentation

In spite of the influence of the parties themselves on the decisions reached by the courts, however, in looking to consider how the courts deal with the issue of certainty (or lack thereof) in business contracts, it is important to appreciate that matters are also complicated somewhat by the use of other documents in the build up to the recognition of a formal agreement. Such a view is effectively illustrated by the use of letters of intent in the construction industry with a view to formalising a contract at a later date. This is because whilst, in the past, in decisions including British Steel Corporation v. Cleveland Engineering Co^[24], such a document may have been considered akin to a conditional contract by the courts since it is effectively looked upon as a sign that one party is likely to want to contract with another, in Regalian Properties Plc v. London Dockland Development Corporation^[25] there was an unsuccessful action for reimbursement of expenses incurred by a property developer regarding preparatory work regarding a contract that also never materialised in spite of the presence of a letter of intent since it is a matter of interpretation.

Consequently, it is important to appreciate that the courts have become prone to taking a differing view from case to casxe because they do not consider cases decided in this area to be analogous in the circumstances. Such a view is reflected in the fact that whilst one party, in British Steel Corporation v. Cleveland Bridge Engineering Co^[26], requested the other to perform services and supply goods needed under the expected contract, the costs Regalian Properties Plc v. London Dockland Development Corporation^[27] sought reimbursements for what it did in an effort to put itself in a position to obtain and then perform the contract that was unsuccessful. This is largely because the court in such cases may be unwilling to imply a contract on the basis of a letter of intent because the language used is often uncertain and, in view of previous negotiations, it may also be argued that all that is assumed is a moral responsibility and not something that is contractual but, again, that is something for the courts to determine on the facts as they arise as a matter of interpretation^[28].

Nevertheless, matters in this regard are also not helped in relation to the recognition of certainty in business agreements where the contract between the parties is considered incomplete because of a failure to cover all of the pertinent points that are considered significant by the parties so that one party asserts that a contract has been formalised and the other claims that it has not. Therefore, it is important to appreciate that in such cases the courts will need to consider whether an agreement is reached by the parties to a contract at a particular time, or as to whether there are other terms of the intended contract without the settlement of which the parties to the agreement have no hope of formalising a contract^[29].

But where documentation produced in correspondence between the parties in dispute shows the parties have definitely come to terms – despite having some material points left open – a subsequent revival of negotiations will not affect the contract that is believed to have been made in the eyes of the court without the consent of the parties to the agreement that has been made so that they retain some influence over the courts that look to resolve their disputes^[30]. More specifically, Justice Parker recognised in the decision in Von Hatzfeldt-Wildenburg v. Alexander^[31] that if “documents or letters relied on as constituting a contract contemplate the execution of a further contract … it is a question of construction whether the execution of the further contract is a condition or term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through”^[32]. Consequently, it is matter upon which the courts could arguably go either way on in looking to interpret because it is really something to be decided upon on the facts of each individual case.

Negotiations

However, even where negotiations are successful, it was recognised in practice, as long ago as the decision in Kennedy v. Lee^[33] that it may prove difficult to say with certainty when an agreement has been reached. This is because of the fact that it was recognised in this case that negotiations can often be long and complex with significant variations derived from offers and counter offers that may serve to detract or embellish the original basis of attempted agreement between the parties. Nevertheless, in the dcecision in Davies v. Sweet^[34] it was understood that in spite of a prolonged period of negotiations courts may still find a concluded bargain by the conduct of the parties – thus seemingly bypassing the need for certainty – so that any continuance of the negotiations will not necessarily serve to terminate an agreement between the parties. Such a need largely arises from the fact it is important to look to give effect to the reasonable expectations of business people that is an important object of the law of contract to facilitate in relation to their ongoing relations^[35].

But, in the context of negotiations, a ‘lock out’ has also come to be considered to be unenforceable where it does not specify a time limit for its duration because it would indirectly impose a duty to negotiate in good faith which could not be considered a contract^[36] – although such an agreement may be considered thuse if it is for a fixed period^[37] – regardless of this it has been argued that certainty should have been resolveable in the interests of the parties through the recognition of the standard of reasonableness alluded to earlier in this discussion. Moreover, the courts have also felt at liberty to ‘strike out’ indefinite, but subsidiary, provisions as being insignificant so as to be able to give effect to the rest of the agreement^[38]. Furthermore, with regards to an agreement to negotiate, the House of Lords recognised in Walford v. Miles^[39] that such an agreement was effectively an agreement to agree so it was considered unenforceable because “it lacks the necessary certainty”^[40]. Such a view has arisen because negotiations are, by their very nature, adversarial and allowed them to pursue their own interests, so long as they do not make misrepresentations, and withdraw where they see fit^[41], whilst damages were also out of the question because no can tell whether the negotiations would be successful and what the result would be^[42].

Conclusion

In conclusion, in looking to critically evaluate the aforementioned statement so as to also be able to consider the extent to which parties have acted on a business agreement serves to influence any judge, it must be recognised that certainty within any agreement perpetrated by a business is extremely important. This is because certainty in relation to the agreements that are formed between parties clearly goes some way to limit and even negate the need to go to seek the resolution of their disputes. However, by its very nature, business negotiations are somewhat adversarial. Everyone involved with business wants to get ahead so it is perhaps little wonder that disputes do arise. But just because a dispute arises does not mean that the parties want to end the relationship that they have built up just because there is a lack of certainty in some aspect of the agreement that has been formed.

Therefore, whilst the courts may look to resolve issues of certainty between the parties on the basis of the law as it stands and the understanding of what is considered reasonable in the circumstances, the parties themselves can and do retain an element of influence over proceedings between them. Consequently, the respective parties intentions when forming an agreement must be taken into account when determining the binding nature of any agreement. However, that is not meant to assuage the role that the courts do play in the resolution of disputes. It is just that the area is actually somewhat complicated by the lack of certainty in aspects of an agreement that is formed that need to be effectively resolved and, in view of the close proximity of the parties to their dispute, it is sometimes considered best for the parties to accede to the resolution of their dispute to the courts where they cannot otherwise be resolved between the parties themselves despite the influence that the courts will still allow their dealings to have on their decisions in most cases.

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(i) Research Strategy

To begin with it is necessary to decide what the question set is asking – i.e. in this case, determining the need for something different to rectify a problem that apparently exists. This effectively means that any research carried out is required to seek to facilitate a ‘discussion’ involving the specific terms identified within the question so as to effectively determine and incorporate the academic and legal opinions of authorities to support the pertinent issues that have been derived from the research that has been carried out here for the purposes of answering the question.

(ii) Materials

Therefore, on this basis, it is particularly important to look to include case law in particular, in view of the stated requirement in the scope of the question, throughout the writing of this essay before listing them all in the bibliography for ease of further reference. As a result, both ‘Lexis Nexis Professional’ and ‘Halsbury’s Laws of England’ are websites that serve as significant research aids for writing this kind of work in view of the fact that they offer the most contemporary accounts of all legal subjects.

(iii) Search Terms

Legal professor David Stott’s work on legal research^[43] has recognised the best approach to researching an essay is to look to take the title/question that you have been given and then highlight what you think are the key words and phrases so that, in this case, the following search terms are recognised –

‘Business’
‘Contract’
‘Buying’
‘Selling’
‘Legislation’
‘Dispute Resolution’
‘Certainty’.

Then, having identified search terms for the purposes of research, combinations of these terms must be uses, whilst also looking to appreciate the fact that certain terms (i.e. ‘legislation’) will offer very little in view of the specifics elsewhere within the question without looking at more specific aspects. As a result, in view of the fact that the focal point of this essay’s discussion is the issue of certainty within, a particular context (i.e. business agreements), then it is clear that this must be recognised so as to be able to effectively achieve the required results to lead to further research into judicial decisions and other paper based sources outlined in the bibliography by looking at combinations of the aforementioned search terms (e.g. ‘contract’, ‘certainty’, ‘business’ and ‘agreement’).

(iv) Review of Results

In looking to effectively be able to evaluate the academic value of the research that has been carried out here, it is abundantly clear that, whilst the initial materials uncovered were excellent in view of their relevance, a true understanding of as to how successful the research actually was is only possible where we look to consider the content of what has been written in the essay itself. But then it is also necessary to look to consider as to how the answer to the question set looks to show an effective appreciation of how the materials that have been identified in the bibliography have been used. Therefore, it would seem that the results of this research have served to effectively facilitate a broad discussion of various areas in relation to the recognition of certainty within the context of business agreements and as to how the courts have dealt with the resolution of disputes, whilst also recognising the influence that the parties themselves can have in relation to the courts resolution, that have put been together in this paper so as to present an effective answer to the question that has been posed here.

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Beatson. J ‘Anson’s Law of Contract’ 27^th Edition, Oxford University Press (1998)

Fridman. D. F ‘Construing, without constructing, a contract’ (1960) 76 LQR 521

‘Halsbury’s Laws of England’ Lexis Nexis, Butterworths (2007)

Lexis Nexis Professional (2007)

(www.lexisnexis.com)

Stott. D ‘Legal Research’ Cavendish Publishing Ltd (1998)

Adams v. Lindsell (1818) 1 B & Ald. 681

Bishop & Baxter v. Anglo-Eastern Trading Co & Industrial Ltd [1944] KB 12

British Steel Corporation v. Cleveland Bridge Engineering Co [1984] 1 All ER 504

Brown v. Gould [1972] Ch 53

Butler Machine Tool Co v. Ex-Cell-O Corp [1979] 1 WLR 401

Carlill v. Carbolic Smoke Ball Company [1893] 1 QB 256

Chillingworth v. Esche [1924] 1 Ch 97

Courtney & Fairbairn Ltd v. Tolaini Brothers (Hotel) Ltd [1975] 1 WLR 297

Currie v. Misa (1875) LR 10 Ex 153

Davies v. Sweet [1962] 2 QB 300

Didymi Corporation v. Atlantic Lines & Navigation Company Ltd [1988] 2 Lloyd’s Rep 108

Foley v. Classique Coaches Ltd [1934] 2 KB 1

G. Percy Trentham Ltd v. Arhital Luxfer Ltd [1993] 1 Lloyd’s Rep 25

G. Scammell & Nephews Ltd v. Ouston [1941] AC 251

Hillas & Co v. Arcos Ltd (1932) 147 LT 503

Hussey v. Horne Payne (1879) 4 App Cas 311

Hyde v. Wrench (1840) 3 Beav 334

Kennedy v. Lee (1817) 3 Mer 441

Kleinwort Benson Ltd v. Malaysia Mining Corporation Bdh [1989] 1 WLR 379 at

Lipkin Gorman v. Karpnale [1991] 3 WLR 10

May & Butcher v. The King [1934] 2 KB 17n

Mitsui Babcock Energy Ltd v. John Brown Engineering Ltd (1996) 51 Con LR 129

Montreal Gas Company v. Vasey [1900] AC 595

Nicolene Ltd v. Simmonds [1953] 1 QB 543

Pitt v. PHH Asset Management Ltd [1994] 1 WLR 327

Queensland Electricity Generating Board v. New Hope Collieries Property Ltd [1989] 1 Lloyd’s Rep 205

Regalian Properties Plc v. London Dockland Development Corporation [1995] 1 WLR 212

Trollope & Colls Ltd v. Atomic Power Construction Ltd [1963] 1 WLR 333

Von Hatzfeldt-Wildenburg v. Alexander [1912] 1 Ch 284

Vosper Thornycroft Ltd v. Ministry of Defence [1976] 1 Lloyd’s Rep 58

Walford v. Miles [1992] 2 AC 128

Sale of Goods Act 1979

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