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Your unique passcode is: 6713Suftx4dkPK LAW FOR NON-LAW STUDENTS Third Edition Cavendish Publishing Limited London • Sydney LAW FOR NON-LAW STUDENTS Third Edition Keith Owens, LLB, MA Chair of the Law Subject Group University College Northampton Cavendish Publishing Limited London • Sydney Third edition first published in Great Britain 2001 by Cavendish Publishing Limited, The Glass House, Wharton Street, London WC1X 9PX, United Kingdom Telephone: +44 (0)20 7278 8000 Facsimile: +44(0)20 7278 8080 Email: [email protected] Website: www.cavendishpublishing.com © Owens, K 2001 First edition 1995 Second edition 1997 Third edition 2001 This title was previously published under the title of ‘Law for Business Studies Students’. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except under the terms of the Copyright Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 9HE, UK, without the permission in writing of the publisher. British Library Cataloguing in Publication Data Owens, Keith Law for non-law students–3rd ed 1 Business law–England 2 Business law–Wales I Title 346.4’2’07 ISBN 1 85941 671 3 Printed and bound in Great Britain PREFACE When writing under such a broad remit as this, it is difficult to know exactly what to include and what to exclude. Previous editions have not contained any material on agency or negligence. I have decided to include these because so many business courses include them in the syllabus nowadays. I have also tried to put the law in its practical business context so that the reader knows why the law has developed as it has, rather than simply presenting the reader with a set of somewhat abstract rules. It would be helpful if readers would give some feedback about the book. For example, what do you think could usefully be expanded and what do you think could be omitted without any loss? I would also be pleased to learn of areas which you find difficult to understand—I can then work on trying to simplify the text for any future edition. If you would care to email me with your views at [email protected], I will try to reply within a reasonable time, though there are some times of the year where it might be weeks rather than days! Keith Owens Northampton July 2001 v CONTENTS Preface v Table of Cases xxv Table of Statutes xlix Table of Statutory Instruments lix 1 THE LEGAL SYSTEM 1 INTRODUCTION 1 COMMON LAW AND CIVIL LAW 2 Common law systems 2 Civil law systems 3 Differences between civil law and common law 4 Different meanings of ‘civil law’ and ‘common law’ 5 The relationship between equity and common law 6 Why distinguish between common law and equity? 9 THE SOURCES OF LAW 11 Legislation of the European Union 11 Primary legislation 13 Secondary legislation 13 Uses of legislation 17 Types of legislation 17 Interpretation of statutes 22 Case law, governed by the doctrine of binding precedent 28 How precedent works 29 CLASSIFICATION OF LAW 33 Criminal law 33 Civil law 34 Terminology 35 Relationship between civil and criminal law 36 Proving your case 36 Compensation in a criminal case 37 THE COURTS 37 Appeals 41 Court of Appeal (Civil Division) 43 House of Lords 43 Tribunals 43 Arbitration 44 Costs 44 CRIMINAL COURTS 46 Types of criminal offence 47 Legal advice and assistance 48 Advocates in court 49 vii Contents Where to find the law 50 Where to find statutes 51 Where to find law reports 51 On the web 51 2 CONTRACTS AND WHAT THEY ARE USED FOR 53 WHAT IS A CONTRACT? 53 Bilateral contracts 53 Unilateral contracts 53 Claims for restitution 54 The theory of ‘agreement’ 54 Scope of the law of contract 55 THE PRACTICAL USE OF THE LAW OF CONTRACT 56 Standard form contracts 58 Formal and informal contracts 59 IMPORTANCE OF THE LAW OF CONTRACT 59 GENERAL PRINCIPLES AND SPECIFIC CONTRACTS 60 3 HAVE WE GOT A CONTRACT? 61 HAS AN OFFER BEEN MADE? 61 TERMINATION OF AN OFFER 67 Acceptance 68 The ‘postal rule’ 68 The normal rule 70 Acceptance by conduct 71 Where the offeror prescribes a particular method of acceptance 72 Effect of offeree’s silence 73 Tenders 74 Cases in which there is no apparent offer and acceptance 75 Attempts to avoid having to find a strict offer and acceptance 77 Rejection 80 Revocation 80 Communication of the revocation 82 Lapse of time 83 Lapse due to death 84 Counter-offer 84 Cancellable agreements 88 The Consumer Protection (Distance Selling) Regulations 2000 89 Making the contract by electronic means 92 4 CERTAINTY OF TERMS AND SUBJECT MATTER 95 Getting rid of the uncertainty 96 viii Contents 5 CONSIDERATION 101 PURPOSE OF CONSIDERATION 101 DEFINITION OF CONSIDERATION 102 SUFFICIENCY OF CONSIDERATION 103 CONSIDERATION MUST BE SUFFICIENT BUT NEED NOT BE ADEQUATE 104 THE COMPROMISE OF A LEGAL CLAIM 105 PAST CONSIDERATION IS NO CONSIDERATION 106 Exceptions to the rule 107 Price-variation clauses 109 Existing obligations as consideration 110 Duties laid down by law and duties laid down by contract 111 Exceptions to the above rules 112 PART-PAYMENT OF DEBT 117 Exceptions to the rule in Pinnel’s case 118 PROMISSORY ESTOPPEL 119 Conflict between common law and equity 123 The principle of promissory estoppel, as it is currently applied 123 Suspensory or extinctive of strict legal rights? 124 The equitable nature of promissory estoppel 125 PROPRIETARY ESTOPPEL 127 CONSIDERATION MUST MOVE FROM THE PROMISEE 128 6 INTENTION TO CREATE LEGAL RELATIONS 129 DOMESTIC PROMISES 129 COMMERCIAL PROMISES 132 Advertising puffs 133 Honour clauses 133 Cases in which the existence of an intention to create legal relations is denied by the courts or by statute 135 Letters of comfort 136 7 THE TERMS OF THE CONTRACT 137 CONTENTS OF THE CONTRACT 138 Relative importance of contractual terms 138 CONDITIONS AND WARRANTIES 141 INNOMINATE TERMS 142 CONCLUSION 146 WHICH STATEMENTS ARE PART OF THE CONTRACT? 148 Express terms 148 The ‘Parole Evidence’ rule 148 MERE REPRESENTATIONS AND ADVERTISING PUFFS 150 Advertising puffs 150 ix Contents Mere representations 151 Distinguishing between mere representations and contractual terms 151 IMPLIED TERMS 156 The court 156 Common law 157 Custom 157 Statute158 Relationship between express terms and implied terms 158 8 UNFAIR CONTRACTS 161 UNCONSCIONABLE CONTRACTS IN THE USA 162 DURESS AND UNDUE INFLUENCE 163 Duress163 Violence or threats of violence 164 Duress to goods and economic duress 164 Undue influence 166 Classification of undue influence 169 Rescission 174 ALLOWING THE CONSUMER SECOND THOUGHTS 175 RE-OPENING OF EXTORTIONATE CREDIT BARGAINS 176 RESTRAINT OF TRADE 176 UCTA 1977 AND OTHER STATUTORY AND COMMON LAW CONTROLS OVER THE USE OF EXEMPTION CLAUSES 177 Incorporation into the contract 178 Course of dealing 182 Defeating an exemption clause 184 Statutory provision 185 Negligence 187 Contractual obligations generally 188 Indemnity 189 Guarantees 189 Misrepresentation 190 Section 13 clauses 190 Dealing as ‘consumer’ 191 Reasonableness 192 Other statutory restrictions on exemption clauses 198 The Unfair Terms in Consumer Contracts Regulations 1999 200 x Contents 9 IMPOSSIBILITY 205 THE CIRCUMSTANCES IN WHICH IMPOSSIBILITY MIGHT AFFECT THE CONTRACT 206 IMPOSSIBILITY ARISING BEFORE THE CONTRACT IS MADE 207 An alternative analysis 208 Mistakes as to quality 209 Equitable relief 210 IMPOSSIBILITY ARISING AFTER THE OFFER HAS BEEN MADE BUT BEFORE IT HAS BEEN ACCEPTED 211 IMPOSSIBILITY WHICH ARISES AFTER THE CONTRACT IS MADE 212 The circumstances in which a contract is frustrated 213 EXCEPTIONS TO THE DOCTRINE OF FRUSTRATION 220 Self-induced frustration 220 Where the parties expressly provide for the frustrating