Law Making Tradition by pptfiles

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									  WORKING IN ENGLISH
   FOR LAW STUDENTS

            Law making
tradition/contracts/legal terms and
             concepts

        16 January 2013
   By Helen Michelle Jørgensen
 THE ENGLISH LEGAL SYSTEM
THE NORWEGIAN LEGAL SYSTEM



     How do the two compare

   Handout: Law Making Tradition
Differences in:

• Law-making tradition

• Contract writing tradition

• Interpretation




                               3
English Law-Making Tradition


• The English legal system is a Common Law system.

• Formation of English Common Law was completed around
  1250.

• Before that there distinct legal systems, including based on
  customs and varied from place to place.

• William the Conqueror and his Norman successors had
  orderly minds and were good administrators, and they
  achieved in England uniformity of the law, making it the
  Common Law.




                               4
English Law-Making Tradition

 As well as Common Law, there is also Equity.

 This means fairness and the application of good conscience
 to the settlement of disputes – it is natural justice. The
 English Equity system is a supplement to Common Law,
 and fills in the gaps that exist in Common Law, and prevails
 over it in the case of conflict.




 Handout: the Maxims of Equity

                             5
English Law-Making Tradition

 In the English system certainty, uniformity and
 consistency are important.

 To achieve this there is Judicial Precedent. ‘Case Law’ but
 to have certainty and flexibility judges can overrule,
 reverse or disapprove of previous case decisions.




                            6
English Law-Making Tradition


 The concept of Sovereignty of Parliament has been lost
 by the UK’s membership of the European Union.

 Now European Law takes precedence over English law if
 there is a conflict with English Common Law or Statute.

 European law has been superimposed on English national
 law.




                            7
English Law-Making Tradition


 European law is based on roman law principles, and is
 different from the English legal system.

 The English principle that legislation must spell out
 precisely and in detail what the law is to be.

 Statements of broad principles are strange to the English
 system, and trying to convert European directives into
 legislation has defeated many English parliamentary
 draftsmen.

 For England, the final court of appeal is not the Supreme
 Court but the European Court.



                              8
Norwegian Law-Making Tradition


 Norway first had regional law making assemblies.

 The King was represented at the various assemblies by one
 or more of his officials, but the King had no judicial
 authority in the first few centuries after Norway was
 united.

 Like in the early years in England, rules of law were based
 on custom, and to some extent precedent, but the
 assemblies also passed laws.

 The process of recording the laws in written form began
 around 1100.



                             9
Norwegian Law-Making Tradition


 In the 1270s the various regional codes were compiled
 and revised to form a common national code.

 The national code was completed in 1274 and it remained
 in force for over 400 years, and included royal exercise of
 legislative powers.

 In 1687 Norway received a complete codification of its laws
 when many Danish rules of law were introduced.




                             10
Norwegian Law-Making Tradition


 The Constitution of Norway (Grunnloven) was adopted in
 1814 after the dissolution of the union with Denmark.

 The present Norwegian legal system has a purely national
 foundation, but it is closely related to the legal systems of
 other Nordic countries, which have largely the same
 traditions in terms of legal history and legal policy.

 Influenced by other legal systems, and through Norway’s
 participation in the European Economic Area, also the
 European law.




                              11
Norwegian Law-Making Tradition


 Norway has a statute law system with the highest
 authority being the 1814 Constitution.

 Norway is a member to the EEA and under the EEA it is
 bound by a large number of regulations adopted by within
 the EU.

 As in England, these need to be transformed or
 incorporated into Norwegian law.




                            12
Norwegian Law-Making Tradition


 Unlike the English Judicial Precedent concept whereby the
 lower courts are bound by the decisions of the higher
 courts, the Norwegian courts are not bound by judgments
 or decisions made by higher courts, although in general
 they will follow the Supreme Court’s decision.

 The final court of appeal in Norway is the Supreme Court.




                            13
English Drafting Style and Tradition


  English contracts have traditionally been long, compared
  to Norwegian contracts

Ø England has never had an underlying constitutional
  document, and the practice has been to try to cover every
  eventuality in the contract,

Ø with more complicated transactions earlier, and

Ø more ‘clever drafting’ by lawyers, leading to

Ø longer and longer documents in England




                               14
English style – why so wordy:


Differences between Civil and Common law systems
      clash of legal cultures
      different legal principles, especially on interpretation
   Common law system is based on ‘precedent’
      words used before in contracts are important to follow
   No underlying Code to rely on
      nothing to regulate in detail various legal relations which the
       parties can rely on if they do not cover it in their document
   Freedom of contract and fewer statutory codes
      lead to documents which regulate all conceivable aspects


                                  15
Courts will not intervene
 if the meaning is clear from the words ‘that is it’
 no moral or ethical obligation
 no obligation to deal fairly
 English courts will not ignore words and look
  behind them to determine their meaning
 Courts will not will not ‘re-write’ contracts
English business/legal environment
 Business world was more developed in the context
  of company sales – e.g. fixing price, tax
 Complex legal systems
English documents were driven by lawyers – not
commercial people



                           16
Norwegian Drafting Style and Tradition


 Norwegian contracts have traditionally been shorter,
 compared to English contracts

 Norway has a constitution and has therefore been able to
 have shorter and less detailed contracts, relying on the
 underlying law to fill in the gaps




                            17
Norwegian Drafting Style and Tradition


 Possibly less complicated transactions previously:

 (economy traditionally based on local farming communities
 and fishing, hunting, wood and timber, and a domestic and
 international-trading merchant fleet)

 Norwegian documents were perhaps driven by commercial
 people e.g. ship brokers – not lawyers




                             18
Norwegian Drafting Style Now


  Norwegian contracts have moved to being longer and
  more like contracts from Common Law juridisctions, due to:

Ø English (American) concepts and drafting styles being
  adopted in Norway

Ø Large Norwegian companies adopting English as their
  corporate language

Ø Parties becoming used to the longer Anglo-American style
  and content and being comfortable with it as a recognised
  ‘norm’




                              19
Norwegian Drafting Style Now


  Norwegian contracts are also now longer and more like
  Common Law contracts, due to:

Ø the ‘Petroleum economy’ which has developed since Philips
  Petroleum discovered petroleum       sources at the
  Ekofisk field in 1969, and

Ø increased international business, and

Ø parties expect to see a longer and more detailed contract,




                              20
Norwegian Drafting Style and Tradition


 Examples:

 BIMCO (The Baltic and International Maritime Council)
 standard in shipping (Example Handouts BIMCO and BIMCO
 Barecon)

 The LMA (Loan market Association) standard in financing
 (Example Handout Single Currency Term Facility)




                            21
INTERPRETATION -English

  Traditional English approach:

Ø Identify the intention of the parties from the wording of the
  document itself

Ø Sometimes means that parties have had to live with a
  mistake in the wording of a contract, even if it defeated the
  intention and allowed one party to take advantage of the
  mistake

Ø Evidence of prior negotiations not traditionally considered

Ø Words given their plain and literal meaning




                               22
INTERPRETATION - Norwegian

  Norwegian approach:

Ø Interpret in accordance with the parties common intention
  at the time of the agreement

Ø If common intention cannot be ascertained, then interpret
  in accordance with a reasonable objective understanding of
  the words of the document




                             23
INTERPRETATION - Norwegian

  Norwegian approach:

Ø Can take into consideration other circumstances that may
  indicate intention

Ø Can consider preceding negotiations and subsequent
  behaviour

Ø Can consider previous dealings between the parties

Ø Can take into account what would be the fairest result in
  the actual dispute




                              24
INTERPRETATION

  The compromise between Norwegian and English
  tradition:

Ø the value of reaching a reasonable result in the individual
  case

Ø compared to the value of having firm rules and the greater
  possibility to pre-direct the result

Ø the English way needs to think it all out in advance and
  express the thoughts correctly, and if this is not done, to
  suffer the consequences




                               25
INTERPRETATION

  The compromise between Norwegian and English
  tradition has been:

Ø Norwegian rules of interpretation have sacrificed certainty
  for reasonableness

Ø English rules have sacrificed reasonableness for certainty




                               26
INTERPRETATION

 New approach in England

 Law according to Lord Hoffman (the ICS Case) in 1997

 Reconfirmed according to the Supreme Court (the Kookmin
 Bank Case) in 2011




 Handout: ICS Case/Kookmin Bank Case


                           27
INTERPRETATION

  New approach in England

Ø Continuing influence of European law on the English courts

Ø Look less at language and more to the purpose of the
  document according to common sense principles




                              28
INTERPRETATION

  New approach in England

Ø Strict approach to contractual interpretation has been
  relaxed in favour a common sense approach in commercial
  contracts

Ø Anything can be investigated which would affect the way in
  which the words used in the document would have been
  understood by a reasonable man

Ø Purposive, common sense approach




                             29
CONTRACTS AND CONTRACT LAW


Ø Freedom of contract: concept that the parties are free to
  enter into a contract on whatever terms they consider are
  in their best interests

Ø Today: a reasonable social ideal to the extent that equality
  of bargaining power can be assumed and no injury is done
  to the economic interests of the community at large

Ø Freedom of contract has suffered as a result of
  developments in modern life and policy




                               30
CONTRACTS AND CONTRACT LAW


Freedom of contract has suffered due to:

Ø   Statutory restrictions – which override
Ø   ‘Standards’ for contracts – not resulting from negotiation
Ø   ’Compulsory’ transactions – essentials of life – utilities
Ø   Implied terms – by Statute or law




                                31
CONTRACTS AND CONTRACT LAW

    Contracts are entered into daily by people in private life or
    business, e.g.:

Ø   Contract of carriage
Ø   Sale of goods
Ø   Supply of services
Ø   Commercial contracts




                                 32
CONTRACTS AND CONTRACT LAW

    Functions:
Ø   Securing that the parties’ expectations are fulfilled
Ø   To give recourse to legal sanctions
Ø   To faciliate forward planning of a transaction
Ø   Establish a value of the exchange
Ø   Establish respective responsibilities
Ø   Establish a standard of performance
Ø   Allocate economic risk
Ø   Provide for what happens if things go wrong

    So that the separate and conflicting interests of the parties
    can be reconciled and brought to a common goal

                                 33
TYPES OF DOCUMENT

What is the difference between:

Ø   A Heads of Terms
Ø   Term sheet
Ø   Letter of Intent
Ø   Memorandum of Understanding




                             34
TYPES OF DOCUMENT

What is the difference between:

Ø   A Contract
Ø   An Agreement
Ø   A Memorandum of Agreement
Ø   A Letter of Agreement
Ø   A Letter Agreement




                             35
TYPES OF DOCUMENT


How many ways can we describe a contract:

Ø   Promise
Ø   Agreement
Ø   Committment
Ø   Pledge
Ø   Bargain
Ø   Treaty




                            36
TYPES OF DOCUMENT


How many ways can we describe a contract:

Ø   Convention
Ø   Pact
Ø   Concordat
Ø   Trust
Ø   Deed
Ø   Bond
Ø   Undertaking




                            37
FORMATION OF A CONTRACT

 What is Consideration and
 why is it so important in
 Common Law?

 Why as a Norwegian lawyer
 do you need to be aware of
 this and its relevance?




                              38
TERMINOLOGY USED

What is the difference between:

Ø Condition
Ø Undertaking
Ø Covenant




                             39
CONDITIONS

Ø “Condition Precedent” so called ‘subjects’: contract does
  not come into force until the event named in the condition
  has taken place

Ø “Condition Subsequent”: a condition that causes the
  contract to become invalid if a certain event happens




                              40
TERMINOLOGY USED

What is the difference between:

Ø Representation
Ø Warranty
Ø Indemnity

What are the Norwegian equivalents




Handout: Representation, Warranty,
  Indemnity
                             41
REPRESENTATION, WARRANTY
INDEMNITY

Ø Representation:
      • Statement of fact made by one party to induce another to enter
        into a contract, or to do or not do something
      • Different remedies in incorrect – compensation to recission


Ø Warranty:
      • Promise that something is true
      • Liability if breach of promise
      • Liability subject to ordinary contract law rules, e.g:
          • Remoteness
          • Duty to mitigate




                                     42
REPRESENTATION, WARRANTY
INDEMNITY

Ø Indemnity:
      • Undertaking to meet a liability, as suffered by the indemnified
        party
      • Can be subject to normal legal principles, but
      • Can be to compensate NOK/NOK if a specific situation arises, and
        not subject to rules on liability for breach of contract
      • Like on demand guarantee
      • Scope depends on contract wording




                                  43
UNDERTAKINGS
COVENANTS
 Essentially the same:
 Undertaking:
 • To take responsibility for a task
 • An obligation to do something


 Covenant:
 • From the French convenir: to agree
 • A promise to do something
 • Formal agreement



                             44
EFFECTIVENESS

Differing degrees of ineffectiveness of a contract:

Ø   Void
Ø   Illegal
Ø   Voidable
Ø   Unenforceable




Handout: Degrees of Effectiveness

                               45
ENDING A CONTRACT

What is:

Ø   Rescission
Ø   Repudiation
Ø   Renunciation
Ø   Cancellation
Ø   Termination

    Cancellation/Termination can
    be the same and mean what
    it says they mean in the
    contract


                              46
ENDING A CONTRACT

Rescission:

Ø   By agreement
Ø   Abandonment
Ø   Substituted contract
Ø   On misrepresentation




                           47
ENDING A CONTRACT


Repudiation:

  ‘discharge by breach’

  Breach justifying the
  innocent party, if it chooses,
  regard itself as absolved or
  discharged from further
  performance.




                               48
ENDING A CONTRACT

Renunciation:

  Where one party shows an
  intention not to go on with
  the contract

  Refusal to perform, by
  conduct or actual




                            49
ENDING A CONTRACT

Cancellation:

  Backing out, returning both
  parties to the state they
  were in as if they had never
  signed the agreement

  e.g. ‘cooling off’ periods in
  consumer contracts




                              50
ENDING A CONTRACT

Termination:

  Stopping short of completion

  Expiry: natural end

  In accordance with terms

  What would typically be an
  event of termination?




                             51
ENDING A CONTRACT

Other forms:
Ø Release
Ø Satisfaction
Ø Variation
Ø Waiver
Ø In accordance with terms
Ø Frustration
Ø Breach
Ø By operation of law




                             52
DEGREE OF EFFORT

•   Best endeavours
•   Reasonable endeavours
•   Best efforts
•   Reasonable commercial efforts

What is the standard of effort
  imposed?




                                 53
TERMINOLOGY USED

What is the difference between:

Ø Liquidated damages
Ø Penalty clauses



Why is there focus on these under common law




                             54

								
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