NATIONAL RESEARCH UNIVERSITY
HIGHER SCHOOL OF ECONOMICS
INTERNATIONAL COLLEGE OF ECONOMICS AND
FINANCE
OKSANA LOPATINA
INTRODUCTION TO LAW
STUDY GUIDE
MOSCOW 2011
1
CONTENTS
Course description…………………………………………….3
Course objectives……………………………………………...3
Teaching methods……………………………………………..4
Main reading…………………………………………………..5
Supplementary reading………………………………………...6
Means of student control………………………………………7
Assessment and grade determination………………………….7
Course outline…………………………………………………8
Introduction………………………………………………...8
Part 1. Introduction to Constitutional Law…………………8
Part 2. Introduction to Contract Law………………………14
Part 3. Introduction to Company Law……………………..22
Teaching hours for topics and activities………………………28
Individual assignments………………………………………..29
Sample case brief……………………………………………..30
Sample examination questions………… …………………….35
Sample final exam (January 2010)……………………………61
2
Course description
INTRODUCTION TO LAW is a half course for the 2-end year ICEF students which
is a part or the HSE degree programme. It is specifically designated so as not to
require any prior exposure to law, and does not suppose that students will necessarily
pursue any further law options. Nevertheless, it is designed in the belief that an
acquaintance with core law concepts and processes is an essential element in the ICEF
curriculum.
The course seeks to place law in its social, economic, political, historical and
philosophical context and thus not only to provide students with a knowledge of legal
rules but also to help them develop a critical understanding of the operation of those
rules in society. The critical and analytical skills required by a lawyer are valuable in
many other contexts. The programme is therefore suitable not only for students who
intend to seek entry into the legal professions but also for students intending to seek
careers in many other areas, such as banking, management, economics and finance.
Course objectives
The main objective of the course is to provide insight into the nature and function of
law, familiarize the students with legal concepts and terminology, principal sources of
law and of the means by which laws are made, develop an understanding of the nature
and purpose of rights and duties in law. The course provides an overview of the major
legal systems of the world, introduces the students to the study of constitutions and
constitutional system of Government. It also focuses on the key legal concepts,
principles and doctrines which underpin the core areas of law, including public law,
the law of obligations and company law.
It is also designed to develop a number of skills associated with clear argumentation,
critical reasoning and research:

research skills: finding relevant cases and articles; effective use of large ( and
highly technical ) body of statutory material;

reasoning skills: understanding how judges can reach radically different
conclusions on the same facts;
3

problem-solving: understanding how many issues can be thrown up by the
same set of facts. Strong emphasis is placed on this in tutorials, and all tutorial
sheets contain at least one detailed problem question for analysis;

critical skills: assessing how effective the law is, and how it might be made
more effective.
Teaching methods
The knowledge base is developed through a combination of lectures, classes, tutorials,
coursework and directed reading. Different parts of the course utilize different
combinations of these methods.
* Lectures (One two-hour lecture per week).
Lectures provide an overview framework of the area of study and of the key issues
and arguments. Lectures will be delivered using a combination of teaching styles,
which include the use of practical questions, real life cases and examples as a basis for
explaining concepts. Overhead transparences, case studies and supplementary
material will also be supplied.
* Classes (One two-hour class per week).
Classes provide an opportunity to test knowledge and understanding of key
substantive areas and clarify any uncertainty. Discussion will usually cover topics to
be dealt with in assignments. Detailed reading lists are provided and students are
expected to be fully prepared beforehand in order to be able to participate in class.
The knowledge base is then developed through directed and self-directed reading of
main and supplementary source materials, building on the framework provided by
lectures.
* Written home assignments – case briefs and essays
* Teacher’s consultations (Two hours per week)
* Self study
4
Main reading
Students will be expected to read the relevant chapters on the topics set out above in
one of the textbooks marked as main reading on the detailed reading list provided
below. Students can also use the textbooks written by O. Lopatina together with two
readers complied by the same lecturer.
Besides, students are also strongly encouraged to spend time browsing through the
books in the ICEF reading hall. There is a vast array of material which can be used to
supplement their notes and also for research assignments and tests.
1. Youngs, Raymond. English, French and German Comparative Law.
Cavendish Publishing Limited, London, 1998.
2. Slapper, Gary, Kelly, David. The English Legal System, London, 2004.
3. Mckendrick, Evan. Contract Law, Palgrave Macmillan, 2005 (6th edition).
4. Dine, Janet. Company Law, Sweet &Maxwell Textbook Series, London, 2001.
5. Emerson, Robert W. Hardwicke, John W.
Business Law, Barron’s
Educational Series, 1997 (3rd edition).
6. Lopatina, Oksana. Introduction to Contracts, HSE, Moscow, 2008.
7. Lopatina, Oksana. Introduction to Company Law, HSE, Moscow, 2010.
8. Introduction to Company Law. Reader, Higher School of Economics,
Moscow, 2005.
Supplementary reading
1. Цвайгерт, Конрад, Кетц, Хайн. Введение в сравнительное правоведение в
сфере частного права, т. I и II. Международные отношения, Москва,
1998.
2. Конституционное право зарубежных стран. Под ред. Баглая М.В., Лейбо
Ю.И., Энтина Л.М. М., Норма,2004.
3. Давид, Р. Основные правовые системы современности, Москва, 1999.
4. Barendt, E. An Introduction to Constitutional Law, Oxford University Press,
2001.
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5. Finer, S.E., Bodgdanor, V. and Rudden, B. Comparing Constitutions, Oxford
University Press, 1998.
6. Church, J. Workbook for Introduction to the Law, Butterworths, 1996 (2d
edition)
7. Shaw, Jo. Law of the European Union, Palgrave Macmillan, 2000.
8. Poole, Jill. Casebook on Contract Law, Oxford University Press, 2005.
Internet resources and databases
1.
2.
3.
4.
5.
http://law.lse.ac.uk/ie/
www.venables.co.uk/studentsresources.htm
http://mief.hse.ru
http://en.wikipedia.org/wiki/constitution
http://www.londonintrnational.ac.uk/current_students/programme_
resources/laws/
Means of student control
* Current control includes: written home assignments (case briefs and/or essays),
participation in
classes’ discussions and case presentations
*Intermediate control is based on a test which is set at the end of October
The test is compulsory and should be taken seriously. It assists borderline students
and consolidates knowledge, making it easier to learn for the examination. The mark
for the test together with the tutorial assignments marks counts towards a student’s
class record. The class record constitutes 30% of the final grade (20% - test, 10% each assignment).
The topics for the written assignments will be prescribed well before the due date.
*Final exam is set at the end of January
Assessment and grade determination
6
There will be an end-of-course 3 hour final examination worth 70% of the final grade.
The students will be required to answer a number of Multiple Choice Questions
(30%) and two from a choice of four to six problem and essay questions (70%).
Suggested approach: 40 minutes for MCQ, 40 minutes each for problem and essay
question. (Indicative length – 1.5 pages, not to exceed 2.5 pages per question). On
problem and essay questions the grade received will be based upon:

The relevance of an answer to the question set

Clarity of expression and continuity

Evidence of reading and thought related to the topic

Quality of the arguments presented
Grade determination
Final course grade is calculated as weighted average with the following weights:




Final exam* - 70%
Class record:
Test
- 20%
Assignment
- 10%

Final exam’s mark cannot be less than satisfactory for a student to get a
positive overall grade.
7
Course outline
INTRODUCTION TO NATURE, CLASSIFICATION AND
SOURCES OF LAW
Main theories of the origin of law. Analysis of the basic concepts as to the nature
of law and its connection with social science. Function of law. General and specific.
Classification of legal systems into legal families and the typical cleavage Common
Law- Civil Law. Structure of the legal system. Origin and development of the
Common law legal system and the Civil law legal system.
Classification of law:
* Public and Private Law
* Substantive Law and Procedural Law
* Criminal Law and Civil Law. The distinction between criminal and civil liability,
criminal and civil proceedings. It is important to bear in mind that it is not an act or
event which creates the distinction, but the legal consequences of it.
* Common Law and Statutory Law. Law and Equity.
* Sources of Law. Definition.
MR 1 (Ch.1, 2), MR 2 (Ch.1, 2 ), AR1 ( Vol. I, Ch. I, III), MR 5 ( Ch.1)
Part I INTRODUCTION TO CONSTITUTIONAL LAW
Definition: Constitutional law is the body or branch of law concerned with the study,
interpretation, and application of a state’s constitution, including the issues of
governance, the powers of the branches and levels of government, civil liberties, and
civil rights.
1. Principles of Constitutional law. Doctrine of the separation of
powers. Rule of law.
8
The concept of constitutionalism. Constitutional principles: the Separation of
Powers, the Rule of Law and the Independence of the Judiciary. The origin of the
doctrine of the separation of powers. Constitutional significance of the separation of
powers. Does a separation of powers control the executive?
What is democracy? The nature of state, limited government and the concept of
legitimacy. Organization of executive government and the relationship between the
legislature, the executive and the courts, with particular emphasis on how the system
actually works in practice.
The concept of federalism. The division of lawmaking power – horizontal and
vertical.
Sources of Constitutional law.
General :



Statute
Legal precedent
Legal custom
UK :
When considering the sources of UK law one must consider that the UK is made up
of four different countries and as a result the sources of law vary between those
countries.
Scotland has its own system of laws and courts and its own Parliament. Northern
Ireland has a similar system to that of England and Wales. England and Wales have
the same legal system and laws passed by the UK Parliament automatically apply to
Wales. The Welsh Assembly has created some measures resulting in different law in
Wales, although this has yet to produce any significant differences.
The main source of law for the UK is legislation, which is law passed by Parliament.
Primary legislation will come into force following debate and subsequent approval in
the House of Commons, approval in the House of Lords and will then receive Royal
Assent if it is to become law. Secondary legislation is law made outside of Parliament
9
where the power to make law has previously been granted by Parliament in a ‘Parent
Act’. This means that Parliament delegates the power to make legislation to another
body.
Case law (Judicial precedent) is another important source of UK law. It is worth
noting that while the case law governing England and Wales is the same, case law
governing Scotland is different. English law has developed through case law with a
decision of a court binding lower courts to enforce the same decision.
EU law is also an important source of UK law. EU law can be made in a number of
ways, including law in treaties, regulations, directions and decisions. These types of
law are binding on Member States and must be adhered to. The European Court of
Justice will also make decisions.
Advisory sources:
Constitutional law theorists and writers of authority (e.g., Dicey, Jennings Wade etc.)
Conventions:
Influential political rules and ethics, which are not enforced by the courts. Dicey on
the place and the role of conventions in the UK constitutional law. Nature and
characteristics of conventions. Difference between conventions and rules of law.
Significance of conventions and their role in the UK Constitution.
When studying the sources of the UK Constitutional law and the UK legal system it is
important to be aware of three main theories:
Parliamentary Sovereignty
The Separation of Powers
The Rule of Law
Parliamentary Sovereignty ( Supremacy)
10
Four elements of Parliamentary Sovereignty according to A.V. Dicey in An
Introduction to the Study of the Law of the Constitution 1885, Parliamentary
Sovereignty consists of 4 elements:
1. Parliament may introduce any law it wishes
2. Parliament can not bind future Parliaments
3. Laws made by Parliament override all other forms of law
4. The courts must apply the laws made by Parliament.
Until 1972 the UK Parliament held absolute sovereignty. Parliament was only limited
in its actions by political, media and public pressure. This contrasts with other
jurisdictions where there exists a Bill of Rights granting the courts powers to advance
the rights of the citizens above that of Parliament. However when the UK joined the
EEC (now EU), Parliament handed over sovereignty to Europe to the extent that EU
law now takes precedence over Acts of Parliament. Outside the areas of law that EU
law operates Parliament retains supremacy. Most notably Parliament retained
Sovereignty in relation to the European Convention on Human Rights when it
introduced the Human Rights Act 1998.
The Separation of Powers
The Separation of Powers is a principle of the constitution rather than a legal rule
applied by the courts. The principle of the Separation of Powers is that the three
branches; the executive, the legislature and the judiciary, should be SEPARATE,
UNIQUE and EQUAL.
In democratic systems of governance, a continuum exists between Presidential
systems and Parliamentary system of government. “Separation of powers” is a feature
more inherent to presidential systems, whereas “fusion of powers” is characteristic of
parliamentary ones.
The origin of the doctrine of the Separation of powers.
The philosophers. Aristotle ( 384-322 BC)
John Locke (1690)
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Charles-Louis de Montesquieu
The Doctrine of the Separation of Powers is particularly associated with Montesquieu.
In order to eradicate the corruption of absolute power, Montesquieu identified three
branches of government between which power should be allocated and separated: the
executive which takes action to implement the law, defend the nation, conduct foreign
affairs and administer internal policies; the legislative which makes law, and the
judiciary which applies the law to determine disputes and punish criminals. According
to the doctrine of the separation of powers, the executive cannot make law. Neither
can the legislative determine disputes or any of the three branches exercise the power
of the other. Nor can any one person be a member of any two of the branches. This is
in order to protect our liberty as according to Montesquieu:
'When the legislative and executive powers are united in the same person, or in the
same body of magistrates, there can be no liberty... there is no liberty if the powers of
judging is not separated from the legislative and executive... there would be an end to
everything, if the same man or the same body... were to exercise those three powers.”
De l’esprit des lois (1748) On the spirit of the laws. To achieve a pure separation of
powers in practice however is almost impossible. The closest constitutional
arrangements to the doctrine of separation of powers are found in the United States of
America and in the Russian Federation. In the United States the Congress is elected
separately from the President, the President can veto legislation passed from Congress
if one third of the house agrees with him and the Supreme Court can declare
unconstitutional the acts of both Congress and President. The constitution of the
United States is arranged in such a way as to allow a complex system of checks and
balances between the three branches of government while maintaining a clear
separation of powers between them.
In the UK, perhaps due to the history of the evolution of the British constitution and
the absence of a codified constitutional text - the emphasis are more on checks and
balances rather than a pure separation of powers. Yet, according to H.Barnett, the
doctrine of the separation of powers 'runs like a thread throughout the constitution of
the United Kingdom'.
The relationship between the three branches.
12
* The executive and the legislature.
* The executive and judiciary.
* Legislature and judiciary.
Judicial independence .
The Rule of Law
Introduction. History. Absolute supremacy of regular law. Equality before the law.
The Constitution – the result of the ordinary law of the land.
The rule of law- modern meaning.
MR 1(Ch.1), MR 2 (Ch.1,2 )
2. Classification of constitutions. Power Structure.
Classification of constitutions:
Written and unwritten
Rigid and flexible
Federal and unitary
Monarchical and republican
Supreme and subordinate
Separated and fused powers
Why does any country have a constitution at all? The obvious answers are: first, to
limit the power of the government so that it cannot do whatever it likes; secondly, to
protect the rights and liberties of the individuals not just from the government, but
also from other powerful groups; and third, probably, the most important reason for
the adoption and the existence of constitutions is to establish the legitimacy of the
governing power, to ensure the stability of the power structure and simultaneously
allowing changes in political, economic and other spheres by employing the
constitutional procedures stated in the constitution.
13
3. Institutions of government. The Legislature, the Executive and the
Judiciary.
The Legislature. Unicameral and bicameral legislative bodies. Main functions of
Parliament. Privileges, composition and parliamentary controls. Parliament and the
law-making process. Stages of the legislative process .(A comparative analysis )
The doctrine of parliamentary supremacy (UK). The source and scope of
parliamentary supremacy. Parliamentary supremacy and political reality. European
Union law and parliamentary supremacy. The challenge to doctrine of the sovereignty
of Parliament. The supremacy of EC law. Judicial interpretation of ECA 1972 by the
courts and its impact on the doctrine of parliamentary supremacy.
The electoral systems.
* A simple majority system known as “first past the post” or “plurality” system.
* Proportional representation system: party list system
.
The Executive.
Introduction. Government and executive power. The formation of governments in a
comparative perspective. Function and membership ( The RF and UK models).
Scrutiny of the Executive – Parliament’s most constitutionally significant role.
Judicial review of executive action – mechanism and effectiveness. The relationship
between the legislature, the executive and the courts with particular emphasis on how
the system actually works in practice.
The Judiciary
The courts and judicial power. Why is an independent judiciary desirable? The basis
of judicial independence. Judicial immunity. Structure of the court system. A
comparative analysis of the court systems in the UK, the United States of America
and the Russian Federation.
Judicial review – the most important element of the system of checks and balances.
How does this system works in practice in different countries?
MR 1 (Ch.1), MR5 ( Ch.2)
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PART II CONTRACT LAW
1. Fundamentals of Contract Law. Basic principles.
Introduction. The relationship of contract and tort. The difference between
obligations arising under the contract and under the tort. Obligations ensuing from
law. The most important source of obligations ensuing from law are those that relate
to tort. Tort is present in cases where actions are in conflict with written or unwritten
law. Definition of Torts in Torts, by Prosser and Keeton:
Broadly speaking, a tort is a civil wrong, other than a breach of contract, for which the
court will provide a remedy in the form of an action for damages.
It is a large subject area in litigation, in which a victim (e.g., plaintiff) generally seeks
money from some person, or some corporation, who harmed the victim.
The easiest way to get a sense of torts is to list the major areas of tort litigation:

personal injury (e.g., automobile accident, slip and fall, dog bite)

medical malpractice

products liability (e.g., defect in either manufacturing or design of product,
failure to warn)

patent infringement; copyright infringement

defamation (i.e., libel or slander)

intentional wrongs against a person: assault, battery, false imprisonment,
intentional infliction of emotional distress.

wrongs involving tangible property: conversion, "trespass to chattels" (N.B.,
same occurrence could also result in criminal prosecution for theft)

wrongs involving real property: nuisance against nearby landowner, trespass
on land
15

wrongs against a business, such as "unfair competition" or trademark
infringement

dignitary harms against a person, such as
o
invasion of privacy: intrusion on seclusion, unreasonable publicity
given to private life, publicity placing person in false light
o
civil rights violations.
There are four elements to a tort, all of which must be present before the court can
order a remedy:
1. Duty. The defendant must owe a legal duty to the victim. A duty is a legally
enforceable obligation to conform to a particular standard of conduct. Except
in malpractice and strict liability cases, the duty is set by what a "reasonable
man of ordinary prudence" would have done. There is a general duty to
prevent foreseeable injury to a victim.
2. Breach of the duty (fault) The defendant breached that duty.
3. Causation. The breach was the cause of an injury to the victim.
4. Injury. There must be an injury. In most cases, there must be a physical or
financial injury to the victim, but sometimes emotional distress,
embarrassment, or dignitary harms are adequate for recovery.
In most torts (with the exception of so called strict liability torts which include
products liability, keeping of wild or ferocious animals, abnormally dangerous
activities ) the defendant's actions were an accident (e.g., defendant was negligent),
but torts also cover wrongs where the defendant intended to harm the victim.
Contract. Definition. Classification of contracts. Simple and specialty contracts.
Unilateral and bilateral contracts.
A UNILATERAL CONTRACT is an offer to the world at large which is accepted by
someone who performs the conditions of the offer. The offeror is then bound to make
good his promise. Common examples of unilateral offers : The offer of a reward for
performing some act – e.g. finding a lost piece of property or pet, or giving important
information leading to an arrest and conviction of a criminal.
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A BILATERAL CONTRACT is an offer to a person or a particular group of persons
which is capable of being accepted by these particular persons, and once accepted
becomes a bilateral contract.
It is important to distinguish between unilateral and bilateral contracts. Unilateral
contracts differ from bilateral contracts in the following ways:
First, as noted above, it is an offer to a world at large.
Second, acceptance is by commencing the performance of the condition stipulated in
the offer. The acceptor does not need to communicate acceptance to the offeror. The
offeror is bound, even though he does not know that the acceptor has embarked on
performance. Acceptance is, however, not complete until performance is complete.
Third, there is an implied condition that the offer cannot be revoked once performance
has commenced.
The obvious question arises: What if a number of people choose to commence a
performance which is subject matter of the offer? The answer is - if a number of
people embark on performance, the first to complete will have accepted the offer.
MR 1 (Ch.6-I, II ), MR 3 ( Ch.1), MR 5 (Ch.4), MR 6 (Ch.1 )
2. Formation of contracts
Historical development and the theories underlying contract. The will theory.
Freedom of contract. Some factors affecting modern contract law.
Influence of economic theory. Inequality of bargaining power, the use of standard
form contracts.
Key ingredients to the formation of a contract:

agreement

consideration

intention to create legal relations

Other factors affecting the formation of a contract.
The phenomena of agreement:
17
* Offer. The character of an offer, essential elements of an offer. Types of offer:
bilateral and unilateral. Communication of offers, revocation of offers and
termination of offers.
Offer v. invitation to treat. The distinction between offers and invitations to treat.
Cases in which the distinction is settled, presumptively by authority or by statute.
The rules governing revocation of an offer, in both bilateral and unilateral
contracts: can there be revocation once performance of a unilateral contract has
started?
* Acceptance and its role in agreement. The basic rules of acceptance.
The general rule – acceptance must be communicated to the offeror. That is to say
that it must be brought to the attention of the offeror. The only exception to this
rule is the “postal rule” (mainly the common law countries) which states that
acceptance sent by post is affective when posted.
Forms and methods of acceptance:
Instantaneous and not instantaneous forms of communication.
Acceptance of bilateral offers.
Acceptance of unilateral offers . Cases and the analysis of principles developed by
judges. Silence for acceptance.
* Consideration. The doctrine of consideration. Consideration is another element
of a simple contract. The mere fact of agreement alone does not make a contract.
Both parties to the contract must provide consideration if they wish to sue on the
contract. This means that each side must promise to give or do something for the
other. (Note: if a contract is made by deed, then consideration is not needed.)The
nature and purpose of consideration in English contract law.
Executed and executory consideration.
Consideration is called "executory" where there is an exchange of promises to
perform acts in the future, e.g. a bilateral contract for the supply of goods whereby A
promises to deliver goods to B at a future date and B promises to pay on delivery. If A
does not deliver them, this is a breach of contract and B can sue. If A delivers the
goods his consideration then becomes executed.
If one party makes a promise in exchange for an act by the other party, when that act
is completed, it is executed consideration, e.g. in a unilateral contract where A offers
£50 reward for the return of her lost handbag, if B finds the bag and returns it, B's
consideration is executed.
18
The main question in this area – what amounts to “valuable” or “good”
consideration.
Four principles of consideration:
1. consideration must move from the promise;
2. consideration need not move to the promisor;
3. past consideration is not good consideration;
4. consideration must be sufficient but need not be adequate.
Difference between “adequate” and “sufficient” consideration. What kinds of
actions or promises can or cannot amount to consideration, the general irrelevance
of the value of consideration.
Existing obligations as consideration – whether owed to the public, a third party,
or the contracting party.
* Intention to create legal relations.
Legal intention is generally straightforward, it can be discerned from the nature of
the transaction and the relationship of the parties. Test, which is usually applied
by the courts when it is necessary to determine whether there was an intention to
become legally bound.
Domestic and commercial agreements. Presumption that the parties to social and
domestic agreements do not intend them to be legally binding.
* Capacity
Capacity as one of the factors which is needed before an enforceable contract can
be made, alternatively, incapacity can be regarded as a “vitiating factor”, which
prevents a contract being enforced.
Three principal types o0f incapacity:
* being under 18 (a “minor”)
* being mentally incapacitated
* being intoxicated
Presumption of unenforceability against a minor. Examples.
Principles applying to the intoxicated or mentally incapacitated: in particular the
issue of awareness of the other party as to the incapacity at the time of the
contract.
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* Legality
MR 1 (Ch.6-III-IX), MR 3 (Part 1), MR 6 (Ch.1), AR 1 ( Vol. 2, B.I)
3. Form and contents of a contract
Form of a contract. Simple contracts which have to be in writing. Contracts which
must be by deed.
Terms of contract
The nature of terms:

expressly stated and incorporated into the contract by the parties themselves;

implied factually from the circumstances as being the presumed intention of
the parties;

imputed into the contract by process of law for some other purpose, e.g. for
consumer protection.
Classification of terms:

conditions

warranties

Exemption clauses. Definition and scope of exemption clauses. Incorporation
of exemption clauses in a contract. Statutory control of exemption clauses.
MR 3 (Part II), MR 6 (Ch.3)
4. Matters affecting the validity of a contract
Definitions:
* Unenforceable contracts,
* Void contracts,
* Voidable and
* Illegal contracts.
Vitiating factors.
20
Mistake. Introduction. Mistakes which do not affect the validity of a contract.
Mistakes which affect the validity of a contract. General rule. Plea of non est
factum ( this is not my deed). Restriction on the plea.
Classes of mistake:

Common mistake,

Mutual mistake,

Unilateral mistake.
Effect of an operative mistake, both in common law and equity.
Mistake at common law:

Operates to nullify consent

Its effect is to render a contract void

It operates only within narrow limits
Mistake in equity:
Even if the contract is not void at common law rescission may be available.
Rescission is not available for unilateral mistake, unless the one party
contributed to the other’s mistake.
Misrepresentation.
Representations
Introduction.
distinguished
What
from
constitutes
terms
of
a
misrepresentation?
contract.
Criteria
for
misrepresentation:
General requirements for actionable misrepresentation:
1. it must be one of fact, not opinion or intention or
law;
2. it must have induced the contract.
Silence. Prima facie silence is nota misrepresentation. Mere non-disclosure is
generally not actionable. Fundamental exceptions to this rule.
Types of misrepresentation and their remedies.

Fraudulent misrepresentation,

Negligent misrepresentation,

Innocent misrepresentation.
Remedies for different types of misrepresentations.
21
Duress, economic duress and undue influence. Introduction. Duress. The
meaning of duress. Contracts made under duress or following the application of undue
influence are voidable at the instance of the party affected.
Where undue influence is presumed. The effects of undue influence on a contract. If
there has been undue influence exerted in obtaining a contract, the transaction is
voidable.
Illegality. Contracts illegal by statute. Contracts which are illegal at common law.
Consequences of illegality.
MR 1(Ch.6-XII), MR 3 (Part 3), MR 6 (Ch.7)
5. Discharge of contract and remedies for breach
Introduction. The basic rules.

Discharge by performance. General rule – performance must be strictly in
accordance with the terms of the contract to be a discharge. Time for
performance. Tender. Payment/ Waiver.

Discharge by agreement. Ways to discharge a contract by agreement : a)
release, b) new agreement, c) accord and satisfaction, d) provision for
discharge contained in the contract itself.

Termination by notice.

Acceptance of breach. Repudiation before time for performance. Acceptance
of repudiation. Disability. Breach in performance.

Discharge by frustration. The purpose and the development of the doctrine.
Types of frustrating event. Limitations on the doctrine. Common law effects
of frustration. Statutory effects of frustration.
Remedies for breach of contract. The nature of a breach of contract. Different types of
breach. The consequences of breach. Damages. The purpose of damages is to
compensate the innocent party. Liquidated damages and penalties.
The bases of assessment.
Injunction. Rescission. Rectification. Quantum meruit.
22
MR 3 (Part 4), MR 6 (Ch.7), AR 1 (Vol.2, B-2)
PART III COMPANY LAW
1. Business Organizations
Introduction. Past, present, future.
Forms of business organization.

The Proprietor form of business ( Sole trader, Sole proprietor ) Characteristics
of a Proprietorship. Creation of a Proprietorship.

The Partnership form of business organization. Definition of a Partnership.
Rules for determining the existence of a partnership.
The receipt of a share of profits is prima facie evidence of partnership. It should be
noted that a written partnership agreement is not a prerequisite for the existence of a
partnership. The existence of a partnership is always a question of fact.
Characteristics of a Partnership. Three general principles of partnership law:
2
Each partner has unlimited liability for the debts and liabilities
of his firm.
3
Each partner is an agent both of the firm and of his fellow
partners whenever he acts in the partnership business.
4
The affairs of the firm are regulated by the provisions of the
Partnership Act except in circumstances where the partners
have specifically agreed to the contrary.
Types of partnerships :
1
- GENERAL PARTNERSHIP
2
– LIMITED PARTNERSHIP
3
-
LIMITED LIABILITY PARTNERSHIP
Formation of a partnership compared to similar entities. Partnership agreement.
Partnership management and finance. The legal relationship between the partners. The
duty of good faith. The partnership’s finances. The distinction between a partner and a
lender. Division of profits and sharing of losses between partners. Sharing of capital.
23
Sharing of profits. Sharing of losses. Interest on capital. Interest on loans.
Remuneration of partners.
Partnership property. The test to determine whether property is partnership property
or remains the separate property of a partner.
Liability of partners to outsiders. Nature of liability.
General rule: Partners are liable for the debts and obligations of the partnership
without limit. Where a partnership is unable to pay its debts out of partnership
property, the creditor is entitled to obtain payment from the private estates of
the partners. Special rules apply in such cases, so as to attempt to do justice
both to the creditors of the firm and to the creditors of the individual partners.
They may be summarised as follows:
a) in the first instance, the partnership property is used to
pay partnership creditors in priority to private creditors
and the private property of each partner is used to pay
his private creditors in priority to partnership creditors;
b) if the private creditors of a particular partner is paid in
full from private property, the partnership creditors may
resort to the balance of that partner’s private property;
and
c) if the partnership creditors are paid in full from
partnership property then the private creditors of a
partner may resort to the balance of his share of the
partnership assets.
Partnership disputes. Termination and retirement from a partnership.
Dissolution by order of the court.
Differences between companies and partnerships.
MR 4 (Part 1); MR 7.
2
Companies
24
Introduction. Sources of company law. Company legislation. The Companies Act
2006. The company’s own regulations: Articles of association.
The meaning of incorporation. The legal consequences of incorporation. Judicial
acceptance of a company as a separate legal personality. Analysis of a leading case –
Salomon v A. Salomon and Co. Ltd [1897] AC 22. Attributes of a company: A
company as a separate legal personality:
a) has its own property;
b) is liable for its own debts;
c) can sue and be sued in its own name;
d) has “perpetual “ succession.
“Lifting the veil of incorporation”. Analysis of the circumstances in which the court
may be willing to ignore the fact that a company is a separate legal entity.
The legal characteristics of a registered company.
The classification of companies. Two approaches to classification: by potential
liability of owners and by pattern of ownership.
Potential liability of members:

limited by shares

limited by guarantee
Pattern of ownership:

Public company (PLC)

Private company (LTD)
Differences between public and private companies:
a) Authorised minimum share capital
b) Payment for shares
c) Issuing shares
d) Name
e) Directors
f) Miscellaneous
MR 4 (Ch.1,2), MR 7 (Ch.17 )
25
3
Formation of a company
Introduction. Promoters. Pre-incorporation contracts. Promoter’s duties. Preincorporation contracts. Steps leading to incorporation. Drafting the Constitution of a
future company: Memorandum of association (charter) and its contents. The articles
of association. Changes, introduced by the Companies Act 2006. The articles of a
private company. Provisions concerning shares and membership.
The objects clause. Common law doctrine of “ultra vires” and the effect of modern
companies legislation on the doctrine.
The liability clause.
The capital clause. Authorised share capital, issued share capital and paid-up share
capital.
Amendment of the articles of association.
The certificate of incorporation. Steps necessary after the incorporation.
Commencement of business.
Comparison of tailor-made with “off the shelf “ companies.
MR 4 (Ch.3), MR 7 (Ch. 20)
4 Financial structure
Introduction. Legal nature and characteristics of holding shares in a limited company.
Issue of shares. Share capital. Legal nature of shares. Rights attaching to shares:
Generally the list of the shareholders’ rights will include the following:
a) a right to a dividend (a share in profits) But note, that a
dividend is only payable if the company has made profits and
it is decided to declare a dividend.
b) Most, but not all shares, give the shareholder a right to vote
at general meetings of the company.
c) A right to participate in any undistributed profit ( and in the
case of a company’s wounding up a right to repayment of his
26
investment, which is very unlikely because in such situations
the company is usually insolvent)
d) A right to transfer the shares.
Classes of shares. Ordinary shares. Preference shares. The rights attaching to a
specific class of shares. The acquisition of shares in a public company. Listed
securities, unlisted securities.
Share capital. Maintenance of capital.
Distribution of profits – the provision for dividends payment.
Disposal of shares. Transfer of shares. Restrictions on right to transfer. Pre-emption
rights. Transmission by operation of law. By-back and redemption by a company.
MR 4 (Ch.4, 5), MR 7 ( 21)
4 Loan capital
Introduction. The power to borrow.
Debt securities. The “loan stock” or “debenture stock” ( bonds ) The issue of debt
securities. A comparison between a legal position of a debenture (bond) – holder
and a shareholder. Different types of bonds.
Secured loans.
A debenture document. Terms relating to repayment and interest. Terms relating
to security. Clauses designed to give the lender further protection. Registration of
charges. Types of security: the mortgage - legal charge; the fixed - specific
charge; the floating charge. Crystallisation of the floating charge.
The priority rights of creditors and the registration of charges. Remedies of
debenture-holders. Express and implied powers. Application to the court.
Receivers, administrative receivers.
MR 4 (Ch.6,7), MR 7 ( Ch. 22 )
6
MANAGEMENT STRUCTURE
27
Introduction. Directors. Division of power within a company. Appointment of
directors. Removal of directors from office. Powers of directors. Director’s
duties: fiduciary duties of directors, director’s duty of care. Director’s dealings
with their company.
Statutory provisions concerning directors. Managing directors. Alternate
directors. Shadow directors.
Meetings. Types of meeting: annual general meeting, extraordinary general
meeting. Convening a meeting. Proceedings at meeting. Quorum, agenda, voting.
Written resolution. Minutes and returns. Proxies.
Shareholders. Registration of membership. Powers and duties of shareholders.
Actions by shareholders. Minority protection.
MR 4 (Ch.6-8), MR 7 ( Ch.3,24,25)
7 FUNDAMENTAL CHANGES
Introduction. Charter amendments. Dissolution of a company. Methods of
dissolution.
Insolvency. Introduction. The bankruptcy procedure. The trustee in bankruptcy.
Assets in a bankrupt’s estate. Distribution of the bankrupt’s assets. Duration of
the bankruptcy and discharge of the bankrupt.
Company
insolvency
proceedings.
Administration
orders.
Voluntary
arrangements. Receivership. Liquidation or winding up. Liquidators. Collection
and distribution of assets in liquidation. Priority of charges.
Takeovers and mergers.
MR 4 (Ch.9), MR 7 ( Ch.26)
Distribution of hours
Distribution of hours for topics:
N
TOPIC TITLES
TOTAL
CONTACT HOURS
HOURS LECTUR CLASSES
SELF
STUDY
28
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Introduction to nature,
classification and sources of
law
Principles of Constitutional
law. Doctrine of the
separation of powers
Classification of
constitutions. Power
structure.
Institutions of Government.
The Legislature, the
Executive, the Judiciary
Fundamentals of Contract
law. Basic principles
Formation of contract.
Essential elements
Terms of contract
Matters affecting the validity
of contract
Discharge of contract
Types of business
organizations
Company. Legal
characteristics
Formation of company
Financial structure.
Company’s capital
Loan capital
Management structure.
Directors and shareholders
Fundamental changes.
Insolvency, mergers and
liquidations
12
ES
2
2
8
12
2
2
8
10
2
2
6
16
2
2
12
18
2
2
14
12
2
2
8
10
18
2
2
2
2
6
14
16
10
2
2
2
2
12
6
12
2
2
8
12
16
2
4
2
4
8
8
12
18
2
4
2
4
8
10
14
2
2
10
Individual assignments
There are two types of individual assignments: essays and case briefs. During the
course of the semester you will be asked to write one essay and several case briefs.
The basic objective of writing an essay is to develop your independent thinking and
formulating your ideas. You must show your ability to criticize and come up with
your own answers.
29
Academic writing is difficult, no doubt. Writing such an essay requires extensive
research and literary skills. So it should never be left to the last minute. Chances are
high that as you rush through your project you will end up with poor mark. If the
paper topic is assigned, it is important to clearly understand the assignment. Analyse
the topic word by word to understand the requirements and scope of work. You might
want to underline key words in the assignment and think about how they relate to the
reading and/or lectures. Figure out whether you must interpret or simply state the
facts. If in doubt, ask the lecturer for clarification.Always illustrate your ideas with
the help of examples. Examples are always helpful in putting your point across
effectively.
Academic writing essays normally deals with arguments. As an essay writer you are
required to develop your own line of argument.
Another type of an individual assignment is a case brief. A student brief is a short
summary and analysis of the case prepared for use in classroom discussion. It is a set
of notes, presented in a systematic way, in order to sort out the parties, identify the
issues, ascertain what was decided, and analyze the reasoning behind decisions made
by the courts.
Although student briefs always include the same items of information, the form in
which these items are set out can vary. Before committing yourself to a particular
form for briefing cases, check with your lecturer to ensure that the form you have
chosen is acceptable.
Structure is essential to a good brief. There are, of course, an unlimited number of
formats that can be utilized. However, it is best to find one that suits your needs and
stick to it. Any format, as long as it presents the essential elements of a case in an
organized fashion, can be used. Once armed with a format that encourages
succinctness, it is as important to be economical with regard to the time spent on the
actual reading of the case as it is to be economical in the writing of the brief itself.
This does not mean "skimming" a case. Rather, it means reading the case with an
"eye" trained to recognize into which "section" of your brief a particular passage or
line fits and having a system for quickly and precisely marking the case so that the
passages fitting any one particular part of the brief can be easily identified and
brought together in a concise and accurate manner when the brief is actually written.
30
Students often have difficulty identifying relationships between the parties involved in
court cases. The following definitions may help:
Plaintiffs/claimants sue defendants in civil suits in trial courts.
The government (state or federal) prosecutes defendants in criminal cases in trial
courts.
The losing party in a criminal prosecution or a civil action may ask a higher
(appellate) court to review the case on the ground that the trial court judge made a
mistake. If the law gives the loser the right to a higher court review, his or her lawyers
will appeal
A person who files a formal appeal demanding appellate review as a matter of right is
known as the appellant. His or her opponent is the appellee.
The name of the party initiating the action in court, at any level on the judicial ladder,
always appears first in the legal papers.
Items to include in a case brief
A case brief can be extensive or short, depending on the depth of analysis required
and the demands of the lecturer. A comprehensive brief usually includes the following
elements:
1. Case title and citation
2. Facts of the case
3. Issues
4. Decision (Holding)
5. Reasoning (Rationale)
6. Separate opinions
7. Disposition
31
1. Case Title and Citation
The title of the case shows who is opposing whom. The name of the person who
initiated legal action in that particular court will always appear first.
The citation tells how to locate the reporter of the case in the appropriate case
reporter. In the UK , for example, court opinions are collected and bound together in
books known as reporters. The numbers and abbreviation of the citation indicate in
which book and on what page to find the case. The third line of the citation gives the
name of the court that wrote the opinion. Generally, this is an appellate court, a court
that reviews the decision made by a lower court. If you know only the title of the case,
the citation to it can be found using the case digest covering that court, or one of the
computer-assisted legal research tools (Westlaw or LEXIS-NEXIS).
2. Facts of the Case
A good student brief will include a summary of the pertinent facts and legal points
raised in the case. It will show the nature of the litigation, who sued whom, based on
what occurrences, and what happened in the lower court/s. The important facts of the
case should be stated and the unimportant facts omitted. The important facts provide
information needed to resolve the problem confronting the court. After reading the
entire case, you will be able to determine which facts are important to the court in
deciding the issue before it. Note, the facts entry should never be longer than one to
three short sentences.
The facts are often conveniently summarized at the beginning of the court’s published
opinion. Sometimes, the best statement of the facts will be found in a dissenting
opinion.
The fact section of a student brief will include the following elements:

A one-sentence description of the nature of the case, to serve as
an introduction.

A summary of the complaint (in a civil case) or the indictment
(in a criminal case) plus relevant evidence and arguments
presented in court to explain who did what to whom and why
the case was thought to involve illegal conduct.
32

A summary of actions taken by the lower courts, for example:
defendant convicted.
3. Issues
The issues identify the legal problem that must be solved to determine which of the
disputing parties wins the case. The issues or questions of law raised by the facts
peculiar to the case are often stated explicitly by the court. It may also help to label
the issues, for example, “procedural issues,” “substantive issues,” “legal issue,” and
so on. The complexity of the issues in the cases will vary, but in all cases a singlesentence question should sum up the issue. In a few cases, there will be two, or even
more rarely, three issues of equal importance to the resolution of the case. Each
should be expressed in a single-sentence question.
Constitutional cases frequently involve multiple issues, some of interest only to
litigants and lawyers, others of broader and enduring significant to citizens and
officials alike. Be sure you have included both.
With rare exceptions, the outcome of an appellate case will turn on the meaning of a
provision of the Constitution, a law, or a judicial doctrine. Capture that provision or
debated point in your restatement of the issue. Set it off with quotation marks or
underline it. This will help you later when you try to reconcile conflicting cases.
When noting issues, it may help to phrase them in terms of questions that can be
answered with a precise “yes” or “no.”
For example, the famous case of Brown v. Board of Education involved the
applicability of a provision of the 14th Amendment to the U.S. Constitution to a
school board’s practice of excluding black pupils from certain public schools solely
due to their race. The precise wording of the Amendment is “no state shall... deny to
any person within its jurisdiction the equal protection of the laws.” The careful
student would begin by identifying the key phrases from this amendment and deciding
which of them were really at issue in this case. Assuming that there was no doubt that
the school board was acting as the State, and that Miss Brown was a “person within
33
its jurisdiction,” then the key issue would be “Does the exclusion of students from a
public school solely on the basis of race amount to a denial of ‘equal protection of the
laws’?”
Of course the implications of this case went far beyond the situation of Miss Brown,
the Topeka School Board, or even public education. They cast doubt on the
continuing validity of prior decisions in which the Supreme Court had held that
restriction of Black Americans to “separate but equal” facilities did not deny them
“equal protection of the laws.”.
4. Holding
The decision, or holding, is the court’s answer to a question presented to it for answer
by the parties involved or raised by the court itself in its own reading of the case.
There are narrow procedural holdings, for example, “case reversed and remanded,”
broader substantive holdings which deal with the interpretation of the Constitution,
statutes, or judicial doctrines. If the issues have been drawn precisely, the holdings
can be stated in simple “yes” or “no” answers or in short statements taken from the
language used by the court.
5. Reasoning (Rationale)
The reasoning, or rationale explains why the court reached the decision it did reached.
It is the chain of argument which led the judges in either a majority or a dissenting
opinion to rule as they did. This should be outlined point by point in numbered
sentences or paragraphs. Why did the court reach the decision it did? What arguments
justify the holding? Because judges often write many pages when justifying and
explaining their decisions, this can be a difficult section for student’s to write. The
doctrine of stare decisis requires judges to align their decision with legal principles
established in previously decided cases. As a result, court opinions take considerable
space to show how the current decision is consistent with the established principles.
Your job is to state, as succinctly as possible, the rationale provided by the court’s
majority in support of their decision.
34
6. Separate Opinions (Dissent)
Both concurring and dissenting opinions should be subjected to the same depth of
analysis to bring out the major points of agreement or disagreement with the majority
opinion. Make a note of how each justice voted and how they lined up. Knowledge of
how judges of a particular court normally line up on particular issues is essential to
anticipating how they will vote in future cases involving similar issues.
Disposition
So, what happened as a result of the court’s decision? You will find a specific
disposition somewhere in the opinion. The three most common dispositions:

Affirmed —the appellate court agrees with the opinion of the lower court from
which the appeal came.

Reversed —the appellate court disagrees with the opinion of the lower court
from which the appeal came and sets aside or invalidates that opinion.
Reversals are often accompanied by a remand.

Remanded —the case is sent back to the court from which it came for further
action consistent with the appellate court opinion. Remand often accompanies
a reversal.
Below is an example of a case and the example of the case brief.
MARVIN KATKO, Appellee v. EDWARD BRINEY and BERTHA L. BRINEY,
Appellants
No. 54169
Supreme Court of Iowa
183 N.W.2d 657; 1971 Supreme Court of Iowa
February 9, 1971, Filed
PRIOR HISTORY:
Appeal from Mahaska District Court. Harold Fleck. Action at law for damages
resulting from injuries suffered by trespassing plaintiff when he triggered a spring gun
35
placed in an uninhabited house by defendant owners. From judgment for both actual
and punitive damages, defendants appeal.
DISPOSITION: Affirmed.
CASE SUMMARY
PROCEDURAL POSTURE: Appeal from Mahaska District Court (Iowa), upon a
jury verdict awarding actual and punitive damages to plaintiff in an action resulting
from injuries suffered by trespassing plaintiff when he triggered a spring gun placed
in an uninhabited house by defendant owners.
OVERVIEW: Plaintiff filed an action for damages resulting from serious injury
caused by a shot from a 20-gauge spring shotgun set by defendants in a bedroom of an
old farm house which had been uninhabited for several years. Plaintiff and his
companion had broken in and entered the house. At defendants' request plaintiff's
action was tried to a jury, which returned a verdict for plaintiff and against defendants
for $ 20,000 actual and $ 10,000 punitive damages. The trial court overruled
defendants' motions for judgment notwithstanding the verdict and for a new trial. The
primary issue was whether an owner could protect personal property in an unoccupied
boarded-up farmhouse against trespassers and thieves by a spring gun capable of
inflicting death or serious injury. The court affirmed, holding that the law did not
permit spring guns to be used in such instances.
OUTCOME: Judgment affirmed because the use of spring guns to protect
uninhabited property was not permissible.
CORE TERMS: trespasser, intruder, gun, spring gun, punitive damages, trap, spring,
human life, trespass, repel, door, property owner, exemplary damages, dwelling,
invader, felony, injure, window, inflict great bodily injury, breaking and entering,
mere trespasser, means of force, criminal law, intentionally, installation, unoccupied,
privileged, injuring, shotgun, thief
JUDGES: Moore, C.J. All Justices concur except Larson, J., who dissents.
OPINION BY: MOORE
OPINION: The primary issue presented here is whether an owner may protect
personal property in an unoccupied boarded-up farm house against trespassers and
thieves by a spring gun capable of inflicting death or serious injury.
We are not here concerned with a man's right to protect his home and members of his
family. Defendants' home was several miles from the scene of the incident to which
we refer.
Plaintiff's action is for damages resulting from serious injury caused by a shot from a
20-gauge spring shotgun set by defendants in a bedroom of an old farm house which
had been uninhabited for several years. Plaintiff and his companion, Marvin
McDonough, had broken and entered the house to find and steal old bottles and dated
36
fruit jars which they considered antiques.
At defendants' request plaintiff's action was tried to a jury consisting of residents of
the community where defendants' property was located. The jury returned a verdict
for plaintiff and against defendants for $20,000 actual and $10,000 punitive damages.
After careful consideration of defendants' motions for judgment notwithstanding the
verdict and for new trial, the experienced and capable trial judge overruled them and
entered judgment on the verdict. Thus we have this appeal by defendants.
Most of the facts are not disputed. In 1957 defendant Bertha L. Briney inherited her
parents' farm land in Mahaska and Monroe Counties. Included was an 80-acre tract in
southwest Mahaska County where her grandparents and parents had lived. No one
occupied the house thereafter. Her husband, Edward, attempted to care for the land.
He kept no farm machinery thereon. The outbuildings became dilapidated.
For about 10 years, 1957 to 1967, there occurred a series of trespassing and
housebreaking events with loss of some household items, the breaking of windows
and "messing up of the property in general". The latest occurred June 8, 1967, prior to
the event on July 16, 1967 herein involved.
Defendants through the years boarded up the windows and doors in an attempt to stop
the intrusions. They had posted "no trespass" signs on the land several years before
1967. The nearest one was 35 feet from the house. On June 11, 1967 defendants set "a
shotgun trap" in the north bedroom. After Mr. Briney cleaned and oiled his 20-gauge
shotgun, the power of which he was well aware, defendants took it to the old house
where they secured it to an iron bed with the barrel pointed at the bedroom door. It
was rigged with wire from the doorknob to the gun's trigger so it would fire when the
door was opened. Briney first pointed the gun so an intruder would be hit in the
stomach but at Mrs. Briney's suggestion it was lowered to hit the legs. He admitted he
did so "because I was mad and tired of being tormented" but "he did not intend to
injure anyone". He gave no explanation of why he used a loaded shell and set it to hit
a person already in the house. Tin was nailed over the bedroom window. The spring
gun could not be seen from the outside. No warning of its presence was posted.
Plaintiff lived with his wife and worked regularly as a gasoline station attendant in
Eddyville, seven miles from the old house. He had observed it for several years while
hunting in the area and considered it as being abandoned. He knew it had long been
uninhabited. In 1967 the area around the house was covered with high weeds. Prior to
July 16, 1967 plaintiff and McDonough had been to the premises and found several
old bottles and fruit jars which they took and added to their collection of antiques. On
the latter date about 9:30 p.m. they made a second trip to the Briney property. They
entered the old house by removing a board from a porch window which was without
glass. While McDonough was looking around the kitchen area plaintiff went to
another part of the house. As he started to open the north bedroom door the shotgun
went off striking him in the right leg above the ankle bone. Much of his leg,
including part of the tibia, was blown away. Only by McDonough's assistance was
plaintiff able to get out of the house and after crawling some distance was put in his
vehicle and rushed to a doctor and then to a hospital. He remained in the hospital 40
37
days.
Plaintiff's doctor testified he seriously considered amputation but eventually the
healing process was successful. Some weeks after his release from the hospital
plaintiff returned to work on crutches. He was required to keep the injured leg in a
cast for approximately a year and wear a special brace for another year. He continued
to suffer pain during this period.
There was undenied medical testimony plaintiff had a permanent deformity, a loss of
tissue, and a shortening of the leg.
The record discloses plaintiff to trial time had incurred $710 medical expense,
$2056.85 for hospital service, $61.80 for orthopaedic service and $750 as loss of
earnings. In addition thereto the trial court submitted to the jury the question of
damages for pain and suffering and for future disability.
Plaintiff testified he knew he had no right to break and enter the house with intent to
steal bottles and fruit jars therefrom. He further testified he had entered a plea of
guilty to larceny in the night time of property of less than $20 value from a private
building. He stated he had been fined $50 and costs and paroled during good
behaviour from a 60-day jail sentence. Other than minor traffic charges this was
plaintiff's first brush with the law. On this civil case appeal it is not our prerogative to
review the disposition made of the criminal charge against him.
.
IV. The main thrust of defendants' defence in the trial court and on this appeal is that
"the law permits use of a spring gun in a dwelling or warehouse for the purpose of
preventing the unlawful entry of a burglar or thief". They repeated this contention in
their exceptions to the trial court's instructions 2, 5 and 6. They took no exception to
the trial court's statement of the issues or to other instructions.
In the statement of issues the trial court stated plaintiff and his companion committed
a felony when they broke and entered defendants' house. In instruction 2 the court
referred to the early case history of the use of spring guns and stated under the law
their use was prohibited except to prevent the commission of felonies of violence and
where human life is in danger. The instruction included a statement breaking and
entering is not a felony of violence.
Instruction 5 stated: "You are hereby instructed that one may use reasonable force in
the protection of his property, but such right is subject to the qualification that one
may not use such means of force as will take human life or inflict great bodily injury.
Such is the rule even though the injured party is a trespasser and is in violation of the
law himself."
Instruction 6 stated: "An owner of premises is prohibited from wilfully or
intentionally injuring a trespasser by means of force that either takes life or inflicts
great bodily injury; and therefore a person owning a premise is prohibited from
setting out 'spring guns' and like dangerous devices which will likely take life or
38
inflict great bodily injury, for the purpose of harming trespassers. The fact that the
trespasser may be acting in violation of the law does not change the rule. The only
time when such conduct of setting a 'spring gun' or a like dangerous device is justified
would be when the trespasser was committing a felony of violence or a felony
punishable by death, or where the trespasser was endangering human life by his act."
Instruction 7, to which defendants made no objection or exception stated: "To entitle
the plaintiff to recover for compensatory damages, the burden of proof is upon him to
establish by a preponderance of the evidence each and all of the following
propositions:
"1. That defendants erected a shotgun trap in a vacant house on land owned by
defendant, Bertha L. Briney, on or about June 11, 1967, which fact was known only
by them, to protect household goods from trespassers and thieves.
"2. That the force used by defendants was in excess of that force reasonably necessary
and which persons are entitled to use in the protection of their property.
"3. That plaintiff was injured and damaged and the amount thereof.
"4. That plaintiff's injuries and damages resulted directly from the discharge of the
shotgun trap which was set and used by defendants."
The overwhelming weight of authority, both textbook and case law, supports the trial
court's statement of the applicable principles of law.
Prosser on Torts, Third Edition, pages 116-118, states:
the law has always placed a higher value upon human safety than upon mere rights in
property, it is the accepted rule that there is no privilege to use any force calculated to
cause death or serious bodily injury to repel the threat to land or chattels, unless there
is also such a threat to the defendant's personal safety as to justify self-defence. …
spring guns and other man-killing devices are not justifiable against a mere trespasser,
or even a petty thief. They are privileged only against those upon whom the
landowner, if he were present in person would be free to inflict injury of the same
kind."
Restatement of Torts, section 85, page 180, states: "The value of human life and limb,
not only to the individual concerned but also to society, so outweighs the interest of a
possessor of land in excluding from it those whom he is not willing to admit thereto
that a possessor of land has, as is stated in § 79, no privilege to use force intended or
likely to cause death or serious harm against another whom the possessor sees about
to enter his premises or meddle with his chattel, unless the intrusion threatens death or
serious bodily harm to the occupiers or users of the premises. … A possessor of land
cannot do indirectly and by a mechanical device that which, were he present, he
could not do immediately and in person. Therefore, he cannot gain a privilege to
install, for the purpose of protecting his land from intrusions harmless to the lives and
limbs of the occupiers or users of it, a mechanical device whose only purpose is to
inflict death or serious harm upon such as may intrude, by giving notice of his
intention to inflict, by mechanical means and indirectly, harm which he could not,
39
even after request, inflict directly were he present."
In Volume 2, Harper and James, The Law of Torts, section 27.3, pages 1440, 1441,
this is found: "The possessor of land may not arrange his premises intentionally so as
to cause death or serious bodily harm to a trespasser. The possessor may of course
take some steps to repel a trespass. If he is present he may use force to do so, but only
that amount which is reasonably necessary to effect the repulse. Moreover if the
trespass threatens harm to property only - even a theft of property - the possessor
would not be privileged to use deadly force, he may not arrange his premises so that
such force will be inflicted by mechanical means. If he does, he will be liable even to
a thief who is injured by such device."
V. Plaintiff's claim and the jury's allowance of punitive damages, under the trial
court's instructions relating thereto, were not at any time or in any manner challenged
by defendants in the trial court as not allowable. We therefore are not presented with
the problem of whether the $10,000 award should be allowed to stand.
We express no opinion as to whether punitive damages are allowable in this type of
case. If defendants' attorneys wanted that issue decided it was their duty to raise it in
the trial court.
When malice is shown or when a defendant acted with wanton and reckless disregard
of the rights of others, punitive damages may be allowed as punishment to the
defendant and as a deterrent to others. Although not meant to compensate a plaintiff,
the result is to increase his recovery. He is the fortuitous beneficiary of such an award
simply because there is no one else to receive it.
The jury's findings of fact including a finding defendants acted with malice and with
wanton and reckless disregard, as required for an allowance of punitive or exemplary
damages, are supported by substantial evidence. We are bound thereby.
This opinion is not to be taken or construed as authority that the allowance of punitive
damages is or is not proper under circumstances such as exist here. We hold only that
question of law not having been properly raised cannot in this case be resolved.
Study and careful consideration of defendants' contentions on appeal reveal no
reversible error.
Affirmed.
All Justices concur except Larson, J., who dissents.
DISSENTBY: LARSON
DISSENT: Larson, J.
40
I respectfully dissent, first, because the majority wrongfully assumes that by installing
a spring gun in the bedroom of their unoccupied house the defendants intended to
shoot any intruder who attempted to enter the room. Under the record presented here,
that was a fact question. Unless it is held that these property owners are liable for any
injury to an intruder from such a device regardless of the intent with which it is
installed, liability under these pleadings must rest upon two definite issues of fact, i.e.,
did the defendants intend to shoot the invader, and if so, did they employ unnecessary
and unreasonable force against him?
It is my feeling that the majority oversimplifies the impact of this case on the law, not
only in this but other jurisdictions, and that it has not thought through all the
ramifications of this holding.
There being no statutory provisions governing the right of an owner to defend his
property by the use of a spring gun or other like device, or of a criminal invader to
recover punitive damages when injured by such an instrumentality while breaking
into the building of another, our interest and attention are directed to what should be
the court determination of public policy in these matters. On both issues we are faced
with a case of first impression. We should accept the task and clearly establish the law
in this jurisdiction hereafter. I would hold there is no absolute liability for injury to a
criminal intruder by setting up such a device on his property, and unless done with an
intent to kill or seriously injure the intruder, I would absolve the owner from liability
other than for negligence. I would also hold the court had no jurisdiction to allow
punitive damages when the intruder was engaged in a serious criminal offense such as
breaking and entering with intent to steal.
It appears to me that the learned trial court was and the majority is now confused as to
the basis of liability under the circumstances revealed. Certainly, the trial court's
instructions did nothing to clarify the law in this jurisdiction for the jury. Timely
objections to Instructions Nos. 2, 5 and 6 were made by the defendants, and thereafter
the court should have been aware of the questions of liability left unresolved, i.e.,
whether in this jurisdiction we by judicial declaration bar the use in an unoccupied
building of spring guns or other devices capable of inflicting serious injury or death
on an intruder regardless of the intent with which they are installed, or whether such
an intent is a vital element which must be proven in order to establish liability for an
injury inflicted upon a criminal invader.
Although the court told the jury the plaintiff had the burden to prove "That the force
used by defendants was in excess of that force reasonably necessary and which
persons are entitled to use in the protection of their property", it utterly failed to tell
the jury it could find the installation was not made with the intent or purpose of
striking or injuring the plaintiff. There was considerable evidence to that effect. As I
shall point out, both defendants stated the installation was made for the purpose of
scaring or frightening away any intruder, not to seriously injure him. It may be that
the evidence would support a finding of an intent to injure the intruder, but obviously
that important issue was never adequately or clearly submitted to the jury.
Unless, then we hold for the first time that liability for death or injury in such cases is
absolute, the matter should be remanded for a jury determination of defendant's intent
to installing the device under instructions usually given to a jury on the issue of intent.
41
I personally have no objection to this court's determination of the public policy of this
state in such a case to ban the use of such devices in all instances where there is no
intruder threat to human life or safety, but I do say we have never done so except in
the case of a mere trespasser in a vineyard. Hooker v. Miller, 37 Iowa 613 (1873). To
that extent, then, this is a case of first impression, and in any opinion we should make
the law in this jurisdiction crystal clear. Although the legislature could pronounce this
policy, as it has in some states, since we have entered this area of the law by the
Hooker decision, I believe it proper for us to declare the applicable law in cases such
as this for the guidance of the bench and bar hereafter. The majority opinion utterly
fails in this regard. It fails to recognize the problem where such a device is installed
in a building housing valuable property to ward off criminal intruders, and to clearly
place the burden necessary to establish liability.
My second reason for this dissent is the allowance of an award of punitive damages
herein. Plaintiff claimed a remedy which our law does not allow, and the trial court
should not have submitted that issue to the jury. Like the law establishing liability for
installing a spring gun or other similar device, the law recognizing and allowing
punitive or exemplary damages is court-made law, not statutory law. As to the
property owner's liability for exemplary damages where one is engaged in a serious
criminal offense at the time of his injury, we also have a case of first impression. We
have never extended this right to such a claimant, and I would not do so now. Unless
we do, or there is a compelling reason or authority for such a right, which I fail to
find, the trial court erred in submitting that issue to the jury. Like the case where a
judgment is entered without jurisdiction of the subject matter, I would hold the award
of $10,000 to plaintiff is void.
I do not wish to criticize, but believe the factual statement of the majority fails to give
a true perspective of the relative facts and issues to be considered.
Plaintiff's petition at law asking damages alleged wilful and malicious setting of a trap
or device for the purpose of killing or inflicting great bodily harm upon any trespasser
on defendants' property. We are, therefore, factually concerned with how such force
may be properly applied by the property owner and whether his intent is relevant to
liability. Negligent installation of a dangerous device to frighten and ward off an
intruder or thief is not alleged, so unless the proof submitted was sufficient to
establish a wilful setting of the trap with a purpose of killing or seriously injuring the
intruder, no recovery could be had. If the evidence submitted was such that a jury
could find defendants had wilfully set the spring gun with a purpose to seriously
injure the plaintiff intruder, unless they were privileged under the law to set the gun
under these circumstances, liability for the injury would follow.
From the record we learn that plaintiff and a companion made a second trip to a
furnished but uninhabited house on defendants' farmland in Mahaska County on the
night of July 16, 1967. They tore a plank from a porch window, entered the house
with an intent to steal articles therein, and in search of desired articles plaintiff came
to a closed bedroom door where he removed a chair braced under the door knob and
pulled the door toward him. This action triggered a single shot 20-gauge shotgun
which defendants had wired to the bottom of a bed. The blast went through the door
and struck plaintiff two or three inches above the right ankle.
42
The Mahaska County Grand Jury issued a true bill charging plaintiff with breaking
and entering in the nighttime, but the county attorney accepted a plea of guilty to the
lessor offense of larceny in the nighttime of property of a value of less than $20 and
did not press the greater charge.
At the trial of this case Mr. Briney, one of the defendants, testified that the house
where plaintiff was injured had been the home of Mrs. Briney's parents. He said the
furniture and other possessions left there were of considerable value and they had
tried to preserve them and enjoy them for frequent visits by Mrs. Briney. It appeared
this unoccupied house had been broken into repeatedly during the past ten years and,
as a result, Mr. Briney said "things were pretty well torn up, a lot of things taken." To
prevent these intrusions the Brineys nailed the doors and some windows shut and
boarded up others. Prior to this time Mr. Briney testified he had locked the doors,
posted seven no trespassing signs on the premises, and complained to the sheriffs of
two counties on numerous occasions. Mr. Briney further testified that when all these
efforts were futile and the vandalism continued, he placed a .20-gauge shotgun in a
bedroom and wired it so that it would shoot downward and toward the door if anyone
opened it. He said he first aimed it straight at the door but later, at his wife's
suggestion, reconsidered the aim and pointed the gun down in a way he thought
would only scare someone if it were discharged. On cross-examination he admitted
that he did not want anyone to know it was there in order to preserve the element of
surprise.
Plaintiff testified he knew the house was unoccupied and admitted breaking into it in
the night time without lawful reason or excuse. He claimed he and his companion
were seeking old bottles and dated fruit jars. He also admitted breaking in on one
prior occasion and stated the reason for the return visit was that we decided we would
go out to this place again and see “if there was something we missed while we was
out there the first time." An old organ fascinated plaintiff. Arriving this second time,
they found that the window by which they had entered before was now a "solid mass
of boards" and walked around the house until they found the porch window which
offered less resistance. Plaintiff said they crawled through this window. While
searching the house he came to the bedroom door and pulled it open, thus triggering
the gun that delivered a charge which struck him in the leg.
Plaintiff's doctor testified that he treated the shotgun wound on the night it was
sustained and for some period thereafter. The healing process was successful and
plaintiff was released after 40 days in the hospital. There was medical testimony that
plaintiff had a permanent deformity, a loss of tissue, and a shortening of the leg.
That plaintiff suffered a grievous wound is not denied, and that it constituted a serious
bodily injury cannot be contradicted.
As previously indicated, this appeal presents two vital questions which are as novel as
they are difficult. They are, (1) is the owner of a building in which are kept
household furniture, appliances, and valuables, but not occupied by a person or
persons, liable in damages to an intruder who in the night time broke into and entered
the building with the intent to steal and was shot and seriously injured by a spring gun
allegedly set by the owner to frighten intruders from his property, and (2) if he is
43
liable for compensatory damages, is this a proper case for the allowance of exemplary
or punitive damages?
The trial court overruled all objections to the instructions and denied defendants'
motion for a new trial. Thus, the first question to be resolved is the status of the law in
this jurisdiction as to the means of force a property owner is privileged to use to repel
(1) a mere trespasser, (2) a criminal invader, thief or burglar, where he presents no
threat to human life or safety, and (3) an intruder or criminal breaking and entering a
dwelling which poses a threat to human life and safety. Overlooked by the majority is
the vital problem relating to the relevancy and importance of the owner's intent in
placing the device.
I have been unable to find a case exactly like the case at bar, although there have been
many cases which consider liability to a mere trespasser for injuries incurred by a
spring gun or other dangerous instruments set to protect against intrusion and theft.
True, some of these cases seem to turn on the negligence of the party setting the trap
and an absence of adequate warning thereof, but most of them involve an alleged
intentional tort. It is also true some hold as a matter of public policy there is liability
for any injury following the setting of a device which is intended to kill or inflict great
bodily injury on one coming on the owner's property without permission, unless the
invader poses a threat to human life, and this is so even though there is no statutory
prohibition against the setting of spring guns in the jurisdiction.
Since our decision in Hooker v. Miller, supra, we have recognized in this state the
doctrine that the owner of a premise is liable in damages to a mere trespasser coming
upon his property for any injury occasioned by the unsafe condition of the property
which the owner has intentionally permitted to exist, such as installed spring guns,
unless adequate warning is given thereof. In Hooker, which involved stealing grapes
from a vineyard, we held a property owner had no right to resist such a trespass by
means which may kill or inflict great bodily injury to the trespasser. But it does
appear therein that we recognized some distinction between a mere trespass against
property and a trespass involving a serious crime or involving a dwelling. Except
when the trespass involves a serious crime, a crime posing a threat to human life, it
may be argued that the law in this jurisdiction should limit the right of one to protect
his property, that he does not have a privilege to resist a mere trespass by using a
spring gun or other device which poses a threat to life.
However, left unsettled by this and other court pronouncements is the means which
may be used to repel, prevent, or apprehend a trespasser engaged in a more serious
criminal offense. True, there is a line of cases which seem to apply the same rule to all
criminal trespasses except those involving arson, rape, assault, or other acts of
violence against persons residing on the property invaded. There are others which at
least infer that any serious law violation by the trespasser might permit the reasonable
use of dangerous instrumentalities to repel the intruder and prevent loss or damage to
one's valuable property.
Most of these discussions centre around what should be public policy regarding a
property owner's right to use a dangerous weapon or instrumentality to protect his
premises from intruders or trespassers, and his duty to protect the trespasser from
serious injury while upon his premises.
44
Some states, including Wisconsin, have statutes which announce the jurisdiction's
public policy. Often they prohibit the use of spring guns or such devices to protect
real and personal property, and of course in those instances a property owner,
regardless of his intent or purpose, has no right to make use of them and is liable to
anyone injured thereby. Since there has been no such statutory prohibition or direct
judicial pronouncement to that effect prior to this time in this state, it could not be
said as a matter of law that the mere placing of a spring gun in a building on one's
premises is unlawful. Much depends upon its placement and purpose. Whether an
owner exceeds his privilege to reasonably defend his property by such an installation,
and whether liability is incurred in a given case, should therefore depend upon the
circumstances revealed, the intent of the property owner, and his care in setting the
device. In any event, I question whether it should be determined solely by the results
of his act or its effect upon the intruder.
It appears there are cases and some authority which would relieve one setting a spring
gun on his premises of any liability if adequate warning had been given an intruder
and he ignores the warning. In all of these cases there is a question as to the intent of
the property owner in setting the device. Intent, of course, may be determined from
both direct and indirect evidence, and it is true the physical facts may be and often are
sufficient to present a jury issue. I think they were here, but no clear instruction was
given in this regard.
If, after proper instructions, the finder of fact determines that the gun was set with an
intent and purpose to kill or inflict great bodily injury on an intruder, then and only
then may it be said liability is established unless the property so protected is shown to
be an occupied dwelling house. Of course, under this concept, if the finder of fact
determines the gun set in an unoccupied house was intended to do no more than to
frighten the intruder or sting him a bit, no liability would be incurred under such
pleadings as are now presented. If such a concept of the law were adopted in Iowa, we
would have here a question for the fact- finder or jury as to whether the gun was
wilfully and intentionally set so as to seriously injure the thief or merely scare him
away.
I feel the better rule is that an owner of buildings housing valuable property may
employ the use of spring guns or other devices intended to repel but not seriously
injure an intruder who enters his secured premises with or without a criminal intent,
but I do not advocate its general use, for there may also be liability for negligent
installation of such a device. What I mean to say is that under such circumstances as
we have here the issue as to whether the set was with an intent to seriously injure or
kill an intruder is a question of fact that should be left to the jury under proper
instructions, and that the mere setting of such a device with a resultant serious injury
should not as a matter of law establish liability.
In the case of a mere trespass able authorities have reasoned that absolute liability
may rightfully be fixed on the landowner for injuries to the trespasser because very
little damage could be inflicted upon the property owner and the danger is great that a
child or other innocent trespasser might be seriously injured by the device. In such
matters they say no privilege to set up the device should be recognized by the courts
regardless of the owner's intent. I agree.
45
On the other hand, where the intruder may pose a danger to the inhabitants of a
dwelling, the privilege of using such a device to repel has been recognized by most
authorities, and the mere setting thereof in the dwelling has not been held to create
liability for an injury as a matter of law. In such cases intent and the reasonableness of
the force would seem relevant to liability.
Although I am aware of the often-repeated statement that personal rights are more
important than property rights, where the owner has stored his valuables representing
his life's accumulations, his livelihood business, his tools and implements, and his
treasured antiques as appears in the case at bar, and where the evidence is sufficient to
sustain a finding that the installation was intended only as a warning to ward off
thieves and criminals, I can see no compelling reason why the use of such a device
alone would create liability as a matter of law.
If this is not a desirable expression of policy in this jurisdiction, I suggest the body
selected and best fitted to establish a different public policy would be the State
Legislature.
The next question presented is, which view of the law set out above did the trial court
take, the view that the mere setting of a spring gun or like device in defendants'
building created liability for the resulting injury, or the view that there must be a
setting of the device with an intent to shoot, kill, or seriously injure one engaged in
breaking and entering this house? Appellants argue this was not made clear in the
court's instructions to the jury and, being material, is error. I agree.
They contend Instructions Nos. 2, 5 and 6, to which proper and timely exceptions
were taken, are improper, that they were so inadequate and confusing as to constitute
reversible error and required the trial court to grant their motion for a new trial.
Instruction No. 5 provides:
"You are hereby instructed that one may use reasonable force in the protection of his
property, but such right is subject to the qualification that one may not use such means
of force as will take human life or inflict great bodily injury. Such is the rule even
though the injured party is a trespasser and is in violation of the law himself."
(Emphasis supplied.)
Instruction No. 6 provides:
"An owner of premises is prohibited from willfully or intentionally injuring a
trespasser by means of force that either takes life or inflicts great bodily injury; and
therefore a person owning a premise is prohibited from setting out 'spring guns' and
like dangerous devices which will likely take life or inflict great bodily injury, for the
purpose of harming trespassers. The fact that the trespasser may be acting in violation
of the law does not change the rule. The only time when such conduct of setting a
'spring gun' or a like dangerous device is justified would be when the trespasser was
committing a felony of violence or a felony punishable by death, or where the
trespasser was endangering human life by his act." (Emphasis supplied.)
Specific objections were made to Instruction No. 2, inter alia, to the statement that in
46
this jurisdiction the use of force which may take life or inflict serious bodily injury
might be used was restricted to occupied dwellings or where specific statutes
permitted its use; to the reference to an Iowa case wherein the subject related to a
simple trespass in a vineyard where no breaking and entry of a building was involved,
without pointing out the difference as to permissible force permitted to repel one
entering the owner's buildings with intent to ravish and steal valuable personal
property; and to the error resulting when the court wrongfully directed the jury to find
defendants' acts were illegal by stating "that in so doing he violated the law and
became liable for injuries sustained by the plaintiff "
In other words, defendants contended that this instruction failed to tell the jury the
extent of defendants' rights to defend against burglary in buildings other than their
dwelling, inferring they have no right to employ a device which is dangerous to life
and limb, regardless of its intended purpose only to ward off or scare the intruder.
Defendants also specifically objected to Instruction No. 5 because it also limited the
right or privilege of one to use dangerous devices in any way to protect his property,
and made it applicable to cases where the invader was in violation of the law, without
classifying his offense.
Instruction No. 6 was specifically objected to as not being a proper statement of the
law, as being inadequate, confusing, and misleading to the jury in regard to the vital
issues in this case, because it would not be possible for a jury to understand the court
when it told the jurors an owner of premises is prohibited from wilfully or
intentionally injuring a trespasser by means of force that either takes life or inflicts
great bodily injury, and then told them a person owning premises is prohibited from
setting out spring guns and like dangerous devices which will "likely" take life or
inflict great bodily injury, for the purpose of harming trespassers.
Appellants argue from these instructions the jury could conclude it must find any
setting of a spring gun or such other device to protect his property from a burglar or
other criminal invader made the owner absolutely liable for injuries suffered by the
intruder, unless the building being so protected was a dwelling, regardless of the
owner's intent and purpose in setting the device in his building. On the other hand, in
Instruction No. 6 the court refers to such a setting with the intent and purpose of
killing or seriously injuring the intruder in order to make the owner liable for
damages.
I too find these instructions are confusing. If the court was telling the jury, as
appellants contend, that an owner of a premise may not set a spring gun to protect his
property unless the trespasser's act amounts to a felony of violence and endangers
human life, the phrase used, "for the purpose of harming trespassers", introduces the
element of intent and would tend to confuse the jury as to the law on that issue. If the
issue here was that such an intent was necessary to establish liability, the instruction
was erroneous and confusing; otherwise the error was without prejudice.
I would, therefore, conclude there is merit in appellants' contention that the law was
not made clear to the jury as to whether the act of placing a spring gun on this premise
was prohibited by law, or whether the act of placing such a device requires a finding
of intention to shoot the intruder or cause him great bodily injury to establish liability.
47
I cannot tell whether the jury found liability on the mere act of placing the gun as Mr.
Briney did in this house or on the fact that he did so with the intent to seriously harm
a trespasser.
In the case at bar, as I have pointed out, there is a sharp conflict in the evidence. The
physical facts and certain admissions as to how the gun was aimed would tend to
support a finding of intent to injure, while the direct testimony of both defendants was
that the gun was placed so it would "hit the floor eventually" and that it was set "low
so it couldn't kill anybody." Mr. Briney testified, "My purpose in setting up the gun
was not to injure somebody. I thought more or less that the gun would be at a distance
of where anyone would grab the door, it would scare them", and in setting the angle
of the gun to hit the lower part of the door, he said, "I didn't think it would go through
quite that hard."
If the law in this jurisdiction permits, which I think it does, an explanation of the
setting of a spring gun to repel invaders of certain private property, then the intent
with which the set is made is a vital element in the liability issue.
In view of the failure to distinguish and clearly give the jury the basis upon which it
should determine that liability issue, I would reverse and remand the entire case for a
new trial.
As indicated, under these circumstances the trial court should not have submitted the
punitive damage issue to the jury in this case. By Instruction No. 14 the learned trial
judge wrongfully instructed the jury that the law of Iowa allows a jury in such a case
to award exemplary damages if it is found that the act complained of is wanton and
reckless or where the defendants are guilty of malice. True, this instruction was in
accordance with certain past pronouncements of this court and no objection was taken
to the substance of the instruction, but defendants have always contended under these
circumstances the court should not have submitted the question of exemplary
damages to the jury. We have never extended the exemplary damage law to cover
such cases and I maintain we should not do so now, directly or indirectly. Without
such a pronouncement to that extent, or some legislation extending that right to a
person engaged in a serious criminal offense at the time of his injury, I believe the
trial court possessed no jurisdiction to permit the jury to pass on such a claim, even
though no objections thereto were made by the defendants.
…I adhere to the rule (recognized in other cases) which states: "… the principle
that intentional wrongful action in disregard for the rights of others amounts to
conduct to which the law will attach a penalty and deterrent by way of
exemplary damages." However, I would not extend this privilege to a case where
the injured party's conduct itself was criminal and extremely violative of good
public behaviour.
A further study of this law indicates punitive damages have a direct relation to the
criminal law. Historically, it was undoubtedly one of the functions of tort law to deter
wrongful behaviour. However, in modern times its priority has become that of
48
compensating the victim of the injury. The business of punishing wrongdoers has
increasingly become the exclusive purview of the criminal law.
The award of punitive damages in modern tort law gives rise to considerable
anomalies. Such damages, of course, go to the private purse of the individual plaintiff
and may be classified a windfall as to him in excess of his actual losses due entirely to
a social judgment about defendant's conduct.
In the case at bar the plaintiff was guilty of serious criminal conduct, which event
gave rise to his claim against defendants. Even so, he may be eligible for an award of
compensatory damages which so far as the law is concerned redresses him and places
him in the position he was prior to sustaining the injury. The windfall he would
receive in the form of punitive damages is bothersome to the principle of damages,
because it is a response to the conduct of the defendants rather than any reaction to the
loss suffered by plaintiff or any measurement of his worthiness for the award.
When such a windfall comes to a criminal as a result of his indulgence in serious
criminal conduct, the result is intolerable and indeed shocks the conscience. If we find
the law upholds such a result, the criminal would be permitted by operation of law to
profit from his own crime.
Furthermore, if our civil courts are to sustain such a result, it would in principle
interfere with the purposes and policies of the criminal law. This would certainly be
ironic since punitive damages have been thought to assist and promote those
purposes, at least so far as the conduct of the defendant is concerned.
We cannot in good conscience ignore the conduct of the plaintiff. He does not come
into court with clean hands, and attempts to make a claim to punitive damages in part
on his own criminal conduct. In such circumstances, to enrich him would be unjust,
and compensatory damages in such a case itself would be a sufficient deterrent to the
defendant or others who might intend to set such a device.
The criminal law can take whatever action is appropriate in such cases, but the civil
law should not compound the breach of proper social conduct by rewarding the
plaintiff for his crime. I conclude one engaged in a criminal activity is an unworthy
object of largesse bestowed by punitive damages and hold the law does not support
such a claim to enrichment in this case.
The admonitory function of the tort law is adequately served where the compensatory
damages claimed are high and the granted award itself may act as a severe
punishment and a deterrence. In such a case as we have here there is no need to hold
out the prospect of punitive damages as an incentive to sue and rectify a minor
physical damage such as a redress for lost dignity. Certainly this is not a case where
defendants might profit in excess of the amount of reparation they may have to pay.
In a case of this kind there is no overwhelming social purpose to be achieved by
punishing defendants beyond the compensatory sum claimed for damages.
Being convinced that there was reversible error in the court's instructions, that the
49
issue of intent in placing the spring gun was not clearly presented to the jury, and that
the issue as to punitive damages should not have been presented to the jury, I would
reverse and remand the matter for a new trial.
Example of a case brief
Katko v. Briney
Supreme Court of Iowa (1971)
Facts
Katko entered a boarded-up and uninhabited farmhouse owned by Briney with the
intent of steeling some old bottles that he believed to be there. Although a No
Trespassing sing had been posted in front of the farmhouse, there was no notice that
Briney had rigged a shotgun to go off when a bedroom door in the farmhouse was
opened. When Katko opened the door, the shotgun went off, blowing away a part of
his leg and causing him serious injury. Katko sued Briney for damages caused by the
shotgun blast. Briney claimed that he was not liable because he did not intend to
seriously injure anyone and that he was entitled to protect his property against thieves.
Issue
May an owner protect private property in an uninhibited house against trespassers and
thieves by a spring gun capable of inflicting serious injury or death?
Holding (Decision)
No. An owner cannot use dangerous force in protecting personal property; the person
using such force is liable in damages for any injury caused.
Reasoning (Rationale)
The law places a higher value on human safety than on property rights. Deadly or
dangerous force is permitted to protect property only if there is a threat of death or
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serious injury to those on the premises. Since these premises were unoccupied, deadly
force could not be used. Although Briney said that he did not intend to injure anyone,
he should have known that a shotgun could cause serious injury or death and what he
should have known, not his stated intent, is the basis for judging his actions.
Disposition
Affirmed.
Comments
Even if there had been notice of the danger to an intruder, such as a sign indicating
that there was a shotgun trap, the law would hold the person who injures another
liable for doing so. The case does not deal with the force that a person may use to
protect both people and property. The law seeks to balance the interests of the
property owner against a person’s interest in being free from injury by others. Even
when committing a trespass or larceny, people have an interest in being free from
injury by others. Human life is given a higher priority than property.
Sample examination questions
Sample examination questions found below are similar to those in the final exam.
There are three types of examination questions used: multiple choice questions
(MCQ), problem questions and essay questions.
Essay questions require you to write a mini-essay, and approach each answer with a
shortened version of the process that you’ve been taught to use when writing full
essays. You will be asked to discuss some wide question, for example some aspects of
legal doctrine or legal principles. You may be asked to analyze, define, compare,
evaluate, and illustrate the subject of the question, and you need to focus on
answering the question with an analysis, a definition and so on in order to respond to
the question appropriately.
Problem questions take the form of presenting some factual situation and asking you
to analyse the legal aspects of this situation, recall the applicable principles and/ or
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statutes, express your opinion on the possible defence of the imaginary client. Hence,
problem questions are about applying law.
Advice on dealing with essay question
1. Read through all the questions before you begin to answer any of them,
underlining key words and phrases that will help guide you in your answer.
After you have reviewed all questions, decide approximately how much time you
have for questions that are relatively easy for you to answer and, conversely, which
questions will require more time to answer correctly and thoroughly. This is a very
important step because it will help you organize your time and effort.
2. Answer the Question.
This is the most important suggestion. Answering the wrong question is a common
mistake made by students. Make sure you understand what the examiner wants.
Before attempting to answer a question, look at the directive words.
Your examiner may give you specific directions how to write your answer. If he/she
wants you to evaluate a legal doctrine, you won't get full credit if you describe just
the theory. Make sure you know what you are being asked to do.
The following words are commonly found in essay questions. Understanding them is
essential to success on these kinds of questions. Know these words.
ANALYZE: Break into separate parts and discuss, examine, or interpret each part.
COMPARE: Examine two or more things. Identify similarities and differences.
Comparisons generally ask for similarities more than differences.
CONTRAST: Show differences. Set in opposition.
CRITICIZE: Make judgements. Evaluate comparative worth. Criticism often
involves analysis.
DEFINE: Give the meaning; usually a meaning specific to the course of subject.
Determine the precise limits of the term to be defined. Explain the exact meaning.
Definitions are usually short.
DESCRIBE: Give a detailed account. Make a picture with words. List
characteristics, qualities and parts.
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DISCUSS: Consider and debate or argue the pros and cons of an issue. Write
about any conflict. Compare and contrast.
ENUMERATE/LIST: List several ideas, aspects, rules, things, reasons, etc.
EVALUATE: Give your opinion or cite the opinion of an expert. Include evidence
to support the evaluation.
ILLUSTRATE: Give concrete examples. Explain clearly by using comparisons or
examples.
INTERPRET: Comment upon, give examples, describe relationships. Explain the
meaning. Describe, then evaluate.
STATE: Explain precisely.
SUMMARIZE: Give a brief, condensed account. Include conclusions. Avoid
unnecessary details.
3. Outline the answer before writing
Impress your examiner by the compactness and clarity of an organized answer. To
begin writing in the hope that the right answer will somehow turn up is time
consuming and usually futile. To know a little and to present that little well is, by and
large, superior to knowing much and presenting it poorly. Be sure to follow the
directive words, and check your outline to see that it is logical.
4. Take time to write an introduction and summary.
The introduction will consist of the main point to be made; the summary is simply a
paraphrasing of the introduction. Just as you do when you draft an essay, try to begin
the answer with one or two sentences that answer the question directly and succinctly.
In other words, think of the first two sentences as a thesis statement of an essay, and
after you’ve stated the answer’s “thesis,” support that thesis with specific examples in
the body of the answer. A neat bundle with a beginning and ending is very satisfying
to the reader.
5. Take time at the end to reread the answer.
Make sure that your answer is direct and really answers the question. Make any
necessary corrections neatly and legibly.
How Much To Write?
There is no right answer as to how much you should write. The important thing is to
write as much as you can in the allotted time, but, only write what is relevant.
Although it is true quality is more important than quantity, don’t try to do a
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minimalist style and write as little as possible. Generally speaking, if you write more
you have a better chance of getting more points across.
Problem questions should be dealt in much the same way as the case brief.
1. Make a summary of the facts. Do not invent or imagine any facts. Base
your analysis only on the facts which are given.
2. Identify the issues.
3. Consider the principles and norms that may apply. Depending on the
subject matter of the problem, you may need to site some relevant case
law.
4. Formulate your answer to the issue/s. State expressly which party
would win the lawsuit. (If you are asked to do it).
5. Discuss the issues raised, explain your reasoning.
6. Make any comments which you think are helpful.
Example of essay question
“ In a variety of important ways, ideas of the separation of powers have shaped
constitutional arrangements and influenced our constitutional thinking, and continue
to do so. The separation in the British constitution, although not absolute, ought not to
be lightly dismissed” Colin Munro, Studies in Constitutional Law.
Discuss.
This example is a pretty typical question. To answer the student must be able to
explain the theory of the separation of powers, give examples of constitutions based
on these principles, such as the Russian Federation or the USA. Then it is necessary to
show that the UK constitution does not conform to the theory. But it is obvious that
the question asks the student to argue that nevertheless there is a certain type of
separation of powers in the UK constitution.
Suggested Answer
Munro is suggesting that the separation of powers in its classic form does not exist in
the UK constitution and yet it still has an importance. It is best to start by exploring
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the classic definition of the separation of powers and then seeing how it applies to the
UK constitution.
In 1748 a French author, C. Montesquieu, who visited England, wrote his book, De
L’Esprit des Lois. (On the spirit of the laws). In it he put forward his theory of the
separation of powers, which was influenced by what he had seen of the British system
of government. The idea of the separation of powers was not new. It can be traced
back to Aristotle and John Lock. Very simply, to prevent the abuse of power,
government power should not be left completely in the hands of one person or body.
According to Montesquieu it should be divided between the legislative, executive and
judicial branches of power. The three branches should be kept separate in two ways.
Different persons or bodies should exercise each power. One branch of government
should not exercise the power of another, e.g., the executive should not legislate.
Montesquieu’s theory was popular and was incorporated into several constitutions
such as those of France, the United States and the Russian Federation. The clearest
example for a long time was the constitution of the United States of America. Article
1 of the constitution (1787) states that the legislative power shall belong to Congress.
Congress is elected separately from the President and may turn out not to be of the
same political persuasion. Article 2 states that the executive power belongs to the
President and his advisers are not permitted to be members of the Congress. Article 3
declares that the judicial power belongs to the Supreme Court and such inferior courts
as may be created.
Another feature of the US constitution is an intricate set of “checks and balances”
between the three branches of government. The President may veto legislation, but he
needs the support of a third of either House of Congress to do this. The Supreme
Court in a trademark case Marbury v Madison (1803) ruled that it has the power to
compare legislation with the written constitution and declare it void.
The United Kingdom’s constitutional arrangements have a very different story.
Traditionally it is termed as a fusion of powers. By convention, the Prime Minister,
the Cabinet and other ministers must be members of either the House of Commons or
the House of Lords. This is a complete contradiction of the separation of powers. The
judges form a separate body, but even here up until recently there was incomplete
separation. The Lord Chancellor spanned all three government functions: he acted as
Speaker of the House of Lords, when it sat as a legislature, he is a member of the
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Cabinet, controlling an important government department and he also sat as a judge in
the House of Lords.
(The present Lord Chancellor is a Cabinet minister and currently a Member of the
House of Commons. Recent reforms including the creation of the Ministry of Justice
and the election of a Lord Speaker for the House of Lords have significantly altered
the role of Lord Chancellor. On 9 May 2007, the Ministry of Justice was created. The
Ministry of Justice is responsible for courts, prisons, probation and constitutional
affairs. On 4 July 2006, Members of the House of Lords elected their first Lord
Speaker. This new role assumed some of the Lord Chancellor's responsibilities, such
as chairing debates in the Lords' chamber and speaking for the House on ceremonial
occasions. A new Judicial Appointments Commission began to operate from 3 April
2006. This ended the Lord Chancellor's past position as head of the judiciary (courts
of law in England and Wales) and power to appoint judges. The reform of the Lord
Chancellor's role separate its different responsibilities and make a clear distinction
between government, Parliament and the judiciary).
On the other hand, there are “checks and balances”; the executive is accountable to
the legislature, government ministers must explain and justify their actions to the
Commons and to a lesser extent to the Lords. The independence of the judiciary is
fiercely protected. Once appointed, judges can decide a case in any way that they
want. The executive cannot dismiss them.
The relationship between the legislature and the judiciary is fairly clear. The judiciary
have accepted the supremacy of Parliament. The courts cannot question the validity of
an Act of Parliament. As regards the relationship between the judiciary and the
executive: the courts may use their powers of judicial review if they consider that the
executive has gone beyond the powers granted to it by the legislature.
Conclusion: Munro’s statement is only partially correct. There is a peculiar version of
the separation of powers in the UK, but it differs from the classic (pure) doctrine of
the separation of powers. The executive, as noted above, is fused with the legislature,
and, although the judiciary can exercise some control over the executive, they cannot
control the legislature: Acts of Parliament cannot be questioned.
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Example of problem question
Art and Betty own adjoining farms in County, an area, where all agriculture requires
irrigation. Art bought a well-drilling rig and drilled a 400-foot well from which he
drew drinking water. Betty needed no additional irrigation water, but in January 1985,
she asked Art on what terms he would drill a well near her house to supply better
tasting drinking water than the County water she has been using for years. Art said
that because he had never before drilled a well for hire, he would charge Betty only
$10 per foot, about $1 more than his expected cost. Art said that he would drill to a
maximum depth of 600 feet, which is the deepest his rig could reach. Betty said, "OK,
if you guarantee June 1 completion." Art agreed and asked for $3500 in advance, with
any additional further payment or refund to be made on completion. Betty said, "OK”
and paid Art $3500.
Art started to drill on May 1. He had reached a depth of 200 feet on May 10 when his
drill struck rock and broke, plugging the hole. The accident was unavoidable. It had
cost Art $12 per foot to drill these 200 feet. Art said he would not charge Betty for
drilling the useless hole, but he would have to start a new well close by, and could not
promise its completion before July 1.
Betty, annoyed by Art's failure, refused to let Art start another well and on June 1, she
contracted with Carlos to drill a well. Carlos agreed to drill to a maximum depth of
350 feet for $4500, which Betty also paid in advance, but Carlos could not start
drilling until October 1. He completed drilling and struck water at 300 feet on October
30.
In July, Betty sued Art seeking to recover her $3500, plus the $4500 paid to Carlos.
On August 1, County's dam failed, thus reducing the amount of water available for
irrigation. Betty lost her apple crop worth $15,000. The loss could have been avoided
by pumping from Betty's well if it had been operational by August 1. Betty amended
her complaint to add the $15,000 loss.
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In her suit against Art, what are Betty's rights and what damages, if any, will she
recover? Discuss
Suggested answer
It is fairly clear from the facts given that an effective contract has been formed so as
to bind the parties. Betty asked Art to drill a well; Art laid out price and the maximum
depth to which he could drill. Then Betty asked for a guaranteed completion date and
Art agreed, asking for an advance. Betty paid the advance - thus manifesting her
intent to be bound by all of the terms of the parties. Sufficient consideration is present
since both parties incurred a legal detriment.
The real issue in this case involves the terms of performance and attempt at
performing by Art. By the terms of the agreement, upon receipt of his advance, Art
was to commence drilling a well for Betty up to a depth of 600 feet. He was to
complete performance by June. Any balance was payable on completion.
Now, the issue of impossibility should be discussed.
Art began performance and at 200 feet of depth he hit rock and his drill bit broke. The
facts state that the accident was unavoidable. This raises the doctrine of impossibility.
A performance under a contract is excused if the performance becomes objectively
impossible, if no one in the world could complete the performance. From the facts
given, it appears that drilling a well at this exact site is objectively impossible since
the broken drill was unavoidable. Betty may claim that this does not render the
performance impossible since Art could move and drill on a different site. The
problem, though, is that Art cannot complete a new drill hole until July 1, a month
after the deadline in the old contract.
Art will argue that the broken drill is a temporary impossibility and thus he should be
allowed to continue his work. The modern trend among courts (and under the U.C.C.Uniform Commercial Code (USA), although that doesn't govern here) is to allow a
reasonable time to "cure " performance if the time element in the contract is not
crucial to the parties. Either under this doctrine or the doctrine of temporary
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impossibility, absent a showing of time being a crucial element of the contract, Art
would be given an opportunity to reasonably complete his performance.
Material alteration?
It must, of course, be determined whether or not time is truly of the essence to Betty.
If time was of the essence so as to constitute a material alteration of the contractual
agreement, then Betty may rescind the contract based on impossibility of
performance, or she may attempt to rescind based on a mutual mistake of fact as to
the ability to complete performance at the chosen site, and the court may try to
unwind the transaction as far as possible, probably refunding to Betty $1500 as the
difference in the agreed value of A's services and what Betty paid.
Betty may also try to show that Art had assumed the risk of not being able to
complete performance at a given site. This would be especially helpful to Betty if she
can show that Art picked the site to drill. (If Betty picked the site, she may have
assumed the risk of impossibility ). If the court finds that Art assumed the risk, which
is common in building contracts, then it must once again determine if this breach of
the time element is a material one or not. This is based on a consideration of the time
element and whether failure to meet this element will impair Art's ability to
substantially perform.
The original agreement guarantees a June 1 completion, but the well is only for
drinking. There are no facts that support the need for a June 1 completion.
Is “time is of the essence” rule should be applied to this case?
Courts have held "time is of the essence " clauses inoperative where the clause was
not supported by the facts. It is likely that the courts would not stringently enforce this
June 1 completion date.
If it is determined that there has been no material breach, either by the doctrine of
temporary impossibility, or the finding of non-material breach due to non-importance
of the date, then Art has a right to go and complete performance. It is an implied-infact condition, however, that he has access to the land on which he is to drill. Betty
has refused to let Art begin performance again. Her prevention of satisfaction of the
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implied-in-fact condition will excuse Art from any further performance. It will
effectively put Betty in breach.
The likely outcome of a court's resolution of the dispute: Art's performance will be
excused due to Betty's prevention of Art's performing - drilling the new well. This is a
prevention of an implied-in-fact condition precedent to Art's performance, which
excuses the performance.
Damages:
If Art is found to have breached the contract due to a failure to conform to a "material
provision as to time," then Betty can sue for damages under this breach.
Cover damages:
The starting point for Betty is the cost of "cover". The cost of obtaining substitute
performance - here being the $4,500 paid to Carlos less the price she would have had
to pay to Art for the job. This later figure would be $10 per foot times 300 feet which
is where Art would have struck water. Betty would recover $4,500 less $3,000, or
$1,500. Included in this is a refund of $500 from Art since he promised a refund.
Betty will argue she should get more since Art said he wouldn't charge her for the
useless hole, but Art would argue and the court would probably find that Art's
statement was made as a condition of his continuing performance.
Betty would probably claim her loss as a result of the crop failure. This is an
incidental damage. Damages in contract must be caused by the breach, must be
foreseeable, certain and unavoidable. Although the damages here may be certain and
unavoidable, there are serious problems with causation and foreseeability.
Causation
The causation is extremely remote here, although Betty may claim that but for Art's
non-performance she would have had water for her crops. The greater problem is
foreseeability. Contract damages must be those that a reasonable person would
foresee or those damages that would be foreseen by communication by the innocent
party to the breaching party.
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Foreseeability
There is no way to have foreseen that the County dam would fail, leaving Betty with
no irrigation water. More important, Betty told Art that the water was for drinking, so
he was not on notice of any special facts: quite to the contrary since Betty specifically
said the well was for drinking water.
Betty would fail on her claim for these special damages from crop loss.
If Art did not materially breach the contract and Betty prevented his performance,
then the court would excuse Art and try to rescind the contract. Since the court can't
rescind the contract to the starting point, they would likely give Art payment in the
agreed-upon amount of his services, $2,000, and would ask him to refund the rest to
Betty. This is the likely outcome.
The court may, if it finds Betty in breach, give Art the profit he would have made on
the contract, "the benefit of his bargain," but this is not as likely as awarding him the
value of services rendered with only the small refund to Betty.
Example final test (2010)
QUESTION 1
List the sources of the Constitutional law of the Russian Federation.
1
2
3
4
QUESTION 2
Explain the meaning of the doctrine of parliamentary sovereignty. What is the impact
on the doctrine of the UK joining the European Union?
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QUESTION 3
In January 2010 J. Smedly privately advertised his house for sale for 600,000 pounds.
John Smith and his wife, Mary, who was expecting a baby in March 2010, came to
inspect the House. Smedly informed John that the house was in “first-class condition
throughout” and that he, Smedly, had just installed a new gas central heating system
that was safe and efficient and that John need not worry about the house being cold
for his new baby. When John asked if the house was noisy Smedly replied that it was
always quiet. “You would not find a better place to raise your child” added he. John
agreed to buy the house.
After living in the house for only a few days John and Mary discovered that their
neighbours were extremely noisy and more than that, they fought all the time. John
and Mary could hear these fights.
Soon after John smelt gas and it was discovered that the gas central heating was
defective and dangerous and need to be replaced at a cost of 12,000 pounds. John was
forced to move his family to a hotel for a week at a cost of 1400 pounds while the
central heating was replaced. While at the hotel John heard that the local authority had
just granted planning permission for the house next door to be used as a day centre for
homeless teenagers. The value of John’s house immediately fell by 180,000 pounds.
John wants to rescind the contract and claim damages.
Advise John.
QUESTION 4
A Head of State may hold a ceremonial post with little real power. This is a position
in :
A France
B Russia
C United Kingdom
D Germany
QUESTION 5
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Consider the following:
If the Act of British Parliament is partially or wholly inconsistent with the previous
Act, then the previous Act is repealed. It is known as
A Implied repeal
B Express repeal
C Statutory repeal
D Constitutional right of the Parliament
QUESTION 6
Which of the following characteristics are correctly applied to Russia’s constitutional
arrangements?
A The Russian constitution is rigid
B The Russian constitution is unitary
C The Russian constitution is codified
D The Russian constitution cannot be found in one document
QUESTION 7
Which one of the following correctly describes the modern application of the Rule of
Law?
A Legality, inequality before the law and institutional morality.
B Illegality, inequality before the law and institutional morality.
C Legal uncertainty, equality before the law and no subjection to discretionary
powers.
D Legal certainty, equality before the law and no subjection to discretionary
powers.
QUESTION 8
List the mistakes which do not affect the validity of contract.
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QUESTION 9
What are the circumstances in which the “veil of incorporation” will be lifted?
Identify them.
QUESTION 10
Lisa wants to sell her grandfather clock. She writes the following letter to four people:
‘Dear X, In the past you have shown an interest in my grandfather clock. I have
decided to sell my clock; if you are interested to making an offer please send me a bid
by first-class post to reach me no later than 3 p.m. on the 15th of this month. I am
writing the same letter to four people’ James sends in the highest bid. After
considering the bids Lisa rejects them all and accepts instead an offer from Tony, a
work colleague who offered her $ 200 more than James. Which of the following is
correct?
A The letter requesting the bids is an invitation to treat and Lisa can accept or reject
any bid.
B The letter requesting the bid is an invitation to treat but Lisa has a contractual
duty to accept a bid only from the four invited.
C The letter requesting the bids is an offer and Lisa has a duty to accept the highest
bid.
D The letter requesting the bids is an offer and Lisa must chose to accept one of the
four bids.
QUESTION 11
In January John arranged for Quick Spray to repaint his car. It was agreed that it
would be ready for collection by the end of February. At the end of February the car
was not ready for collection due to a shortage of qualified staff. In the circumstances
John reluctantly agreed that he would collect his repainted car at the end of April. At
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the end of April he discovered from an employee of Quick Spray that the work had
not yet been completed. Jack immediately served notice requiring completion of the
work by the end of May.
If the work is completed in the middle of June the contract is discharged by which of
the following reasons?
A Breach
B Agreement
C Frustration
D Performance
QUESTION 12
Carolyn telephones John and offers to sell him 5000 pounds worth of oriental rugs.
John accepts Carolyn’s offer and says that he will confirm his acceptance in writing.
Carolyn also says that she will confirm their agreement in writing. Carolyn writes to
John stating “Just to confirm the details of our contract: 100 oriental rugs for a total
price of 5000 pounds. “ On the same day John writes to Carolyn stating: “I promised I
would confirm the details of our contract: 150 oriental rugs for a total price of 5000
pounds.” Which of the following situations is correct?
A There is an enforceable contract for 100 oriental rugs.
B There is an enforceable contract for 150 oriental rugs.
C There is an enforceable contract for 125 oriental rugs.
D There is no enforceable contract.
QUESTION 13
In the case of discharge by fundamental breach of contract what can an injured party
do?
A The injured party is entitled to treat the breach as repudiatory and is therefore
able to rescind the contract.
B The injured party is entitled to either affirm the contract or reject it.
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C If the injured party does nothing then he will be taken to have affirmed the
contract.
D The injured party may claim damages.
Which of the above statements are correct?
QUESTION 14
Beril needed glasses to read. She decided to buy a second-hand car from a local car
dealer. Included in the purchase price was a three –year maintenance agreement. The
car dealer informed Beril the maintenance agreement was only valid if certain
conditions were met but he did not explain those conditions. Beril paid cash for the
car. Shortly before she was due to collect the car Beril broke her glasses and the car
dealer agreed to deliver the car to her home. On delivery she signed the maintenance
agreement without reading it. Beril’s glasses has now been repaired and she has had
the opportunity to read the maintenance agreement. Beril is unhappy about the
agreement and would like to cancel the contract, return the car and recover her
money. Which of the following answers is correct?
A The car dealer has misrepresented to her the contents of the maintenance
agreement and therefore she can rescind the contract.
B Beril was unaware of the contents of the contract and therefore she can
terminate the contract and recover the money she paid for the car.
C Beril cannot end the contract because she cannot establish either
misrepresentation or “non est factum”
D Beril cannot cancel the contract because once a party has signed a contract they
cannot cancel for any reason.
QUESTION 15
Which of the following is NOT an agreement of “utmost good faith” ?
A A contract between a doctor and his patient.
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B A contract of insurance.
C The fiduciary relationship between a solicitor and his client.
D A contract between a vendor and a purchaser.
QUESTION 16
Police offers a reward of 10 000 pounds “ for information leading to the criminal
conviction of J. Smith, a robber”. In which of the following circumstances, if any, is
Fred entitled to the reward ?
A Fred gave the information that he possessed to the police but J. Smith was
acquitted.
B Unaware of the reward Fred gave the appropriate information to the police
which resulted in J. Smith being convicted of robbery.
C Aware of the reward Fred gave the appropriate information to the police which
resulted in J. Smith being convicted of robbery.
D None of the above since such rewards are void as being contrary to public
policy.
QUESTION 17
Mary is doing her weekly shop for groceries in her local TESCO’s. When does the
contract for the sale of her groceries come into existence?
A When Mary puts the goods in her shopping trolley.
B When Mary hands the goods to the cashier.
C When the cashier scans the price of the goods.
D When Mary pays for the goods.
QUESTION 18
Terms may be implied into a contract by :
A The court, to replace an express term which is not “usual”
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B Trade practice and usage.
C The court to provide for events not originally contemplated by the parties.
D The court to establish important provisions which the parties had overlooked,
but which they would have included in the contract if they had thought about it.
QUESTION 19
Whilst Ross was selling his speed boat to Mary, he said “the boat is a sound old tub
but I would advice you to have her surveyed just in case” If Mary buys the boat
without a survey what is Ross’s statement most likely to constitute?
A A mere puff.
B A warranty.
C A mere representation.
D A term.
QUESTION 20
Consider the following statements:
1
A frustrating event automatically brings the contract to an end.
2
The breach of a condition in a contract always brings the contract to an end.
Which of the above statements are correct?
A (1) only.
B (2) only.
C Both of them.
D Neither of them.
QUESTION 21
In which of the following situations would a contract be discharged by frustration?
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A Bob booked a hotel room for two nights to visit the sights of London and attend
a concert. The concert was cancelled.
B Neil entered into a contract to deliver wheat from Canada to Tim in England by
3 March 1996. The ship carrying the wheat did not leave port until 1 March and then
ran aground because of a storm. As of June 1996 the ship is still under repair and is
unlikely to be ready to sail until August 1996.
C Peter hired a room to watch a street carnival. The carnival was cancelled at the
last minute due to fears for crowd safety.
D Quentin is a builder entered into a contract to build an extension of the terrace
for Simon. Quentin expected the work to last 3 month. Due to a shortage of materials
the extension took 12 month to complete.
QUESTION 22
Eric, who lost his dog, placed a notice outside his house which read ; “ REWARD –
200 pounds to anyone who returns my dog to me” Fred, who had already found the
dog, read the notice and immediately returned the dog to Eric. Eric, who had second
thoughts, said to Fred “Thanks for the dog, I’ll give you 5 pounds for your trouble”.
Fred protested that this was not enough and Eric is now refuses to give Fred either the
200 pounds or the 5 pounds.
Which of the following statements is correct?
A Fred is entitled to the 200 pounds because he returned the dog to Eric.
B Fred is only entitled to the 5 pounds because he did not know of the reward
when he found the dog.
C Fred is not entitled to either the 200 or 5 pounds.
D Fred is entitled to be paid a reasonable sum because he returned the dog to Eric
at Eric’s request.
QUESTION 23
The case of Salomon v Salomon 1897 established which important principle of
company law?
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A A company and its members are separate legal persons.
B A director cannot take a decision to employ himself and later make a claim against
the company as an employee.
C When a company is wound up, directors who knowingly carried on the business
with intent to defraud creditors may be made personally liable for the company’s
liabilities.
D The sale of business to a company owned by the vendor of the business will be a
legal nullity if the sale made no change in the business’ s commercial position.
QUESTION 24
The minimum authorized share capital of a public limited company is :
A 12 000 pounds.
B 50 000 pounds.
C 100 000 pounds.
D 500 000pounds.
QUESTION 25
What is the minimum number of directors which a private company is required to
have ?
A One.
B Two.
C Four.
D Seven.
QUESTION 26
The term “authorized share capital” is best defined as:
A The total amount of share capital which the company is authorized to issue by
the capital clause of its memorandum
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B The total amount of share capital which the board of directors may from time to
time decide to issue
C The total amount of shares which been allotted to members
D The aggregate amount of shares which been fully paid up
QUESTION 27
Shares and debentures have much in common. Which one of the following is
UNTRUE of the two forms of capital?
A Both are transferable company securities
B Both are used to finance the company
C The procedure for the transfer of registered shares and debentures is the same
D The holders of both are proprietors of the company
QUESTION 28
Which one of the following is an INCORRECT statement of the relationship between
ordinary shares and debentures?
A Debentures do not confer voting rights, whilst ordinary shares do.
B The company’s duty is to pay interest on debentures, and to pay dividends on
ordinary shares.
C Interest paid on debentures is deducted from pre-tax profits, share dividends are
paid from net profits.
D A debenture holder takes priority over a member in liquidation.
QUESTION 29
Mr. Smith is managing director of a company which has just failed to win a large
contract. Feigning a rare disease, he persuades a company to release him from his
service agreement. Now that he is no longer a director, he feels free to attempt to
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obtain the contract for himself, which he successfully does. Is he accountable for his
profit when the company sues him?
A Yes. he is accountable in this situation
B No, since he is no longer a director and therefore no longer owes any duty
C No, since the company could not have obtained the contract anyway and
therefore lost nothing
D No, since the company chose to release him from his service agreement and
therefore from his obligations to it
QUESTION 30
The right of a member to appoint a proxy is
A statutory
B conferred by the articles
C at the chairman’s discretion
D at the board’s discretion
QUESTION 31
For how much of the company’s debts are shareholders in a company limited by
shares liable when the company is wound up ?
A They are liable to the full extent of those debts
B Their liability is limited to the amount unpaid for their shares
C They are not liable at all
D They are liable for an equal proportion of those debts shared equally between all
the shareholders
QUESTION 32
Jonah Lomas is the sole director and majority shareholder in Lomas Limited ( his wife
Mary is a nominee shareholder). Lomas Limited is a company which specializes in
the manufacture of walking boots. Jonah has loaned 50 000 pounds to the company
secured by a debenture. The company’s trading position appears to be weak and there
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is a risk of it going into liquidation. If the company does go into liquidation will Jonah
be entitled to the return of his 50 000 pounds ?
A He will only be entitled to repayment when all the other creditors have been
repaid
B This depends on whether the company has enough assets to pay all the creditors
including Jonah
C The costs of liquidation will use up all the company’s assets
D He will have priority for repayment over ordinary trade creditors but will only
be repaid if the company has sufficient assets and there are no other creditors with a
security which has priority to his debenture
QUESTION 33
Jane and Isobel intend to set up a company. They have given instructions to their
solicitors to form a company called “ J & I Designs Limited” Before the company has
actually been incorporated Jane decides to buy some office equipment which been
substantially reduced in a sale. She signs a contract with the supplier in the following
way: “ Jane Brown for and on behalf of J & I Designs Limited” Three days later the
company is incorporated. What will be Jane’s liability under the contract?
A She will have no liability for the items purchased
B She should ensure that the contract is affirmed by the company on incorporation
C She will be personally liable under the contract.
D The supplier will have to enforce the contract against J & I Designs Limited
QUESTION 34
Joint plc has 2 directors, Tom and Beril. Beril resigns from her position as director.
Tom continues as the sole director of Joint plc and arranges for Joint plc to enter into
a variety of trading contracts and credit agreements. Tom is now wondering whether
he should continue as a sole director or seek a replacement for Beril. What is the
correct advice to give to Tom?
A Every public and private company must have a minimum of 2 directors
B Every public company must have 2 directors and every private company at least
1 director only
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C Every company can choose a minimum number of directors and that Tom should
seek the amendment of the company’s articles to permit the appointment of 1 director
only
D Tom should secure the passing of a special resolution authorizing the
appointment of 1 director only
QUESTION 35
Which one of the following accurately reflects the position of a promoter?
A Promoters are automatically entitled to remuneration from the company for
services they provide
B Promoters are only entitled to remuneration from the company if the articles of
association provide for remuneration
C Promoters are automatically entitled to the preliminary expenses connected with
the formation of a company, such as registration fees only
D Promoters can only claim remuneration from a company if they can establish the
existence of a binding contract with the company
QUESTION 36
Manic Ltd has been compulsory wound up by one of its creditors. The liquidator has
discovered that the following creditors are due to be paid after the fixed charge has
been cleared:
Inland Revenue PAYE $ 4000
VAT $ 2,200
Floating charge to Noble Investors Limited $ 4,800
Total costs of liquidation estimated at $ 9,000
Trade creditors $ 60,000
The total assets available for distribution are $ 40,000. What advice would you give
Tom, a trade creditor, who is owed $ 3,000 about the amount of his he can expect to
obtain from the liquidation?
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A As an unsecured creditor Tom will not receive any payment on the liquidation of
Manic Ltd.
B Tom will receive two-thirds of the debt owed to him as will all other creditors in
the same class.
C Tom will receive $ 1,000.
D Tom will be paid in full the $ 3,000 owed to him.
QUESTION 37
Which of the following propositions is INCORRECT ?
A Directors are not entitled as of right to any remuneration.
B The articles of association may provide for the payment of director’s fees.
C All directors are appointed under service contracts entitling the director to a salary.
D If a director performs services which are not comprehended by the terms of any
service contract, he may claim in quantum meruit.
QUESTION 38
In which of the following situations will “crystallization” of a floating charge occur?
A Liquidation of the company
B Disposal by the company of the charged asset
C Cessation of the company’s business
D The appointment of an administrative receiver
QUESTION 39
P.Whitehouse have been appointed as liquidators on the liquidation of Caramel
Limited. There is a fixed charge which has been granted to the bank and substantial
sums of money are owed to the Inland Revenue and employees have not been paid for
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3 month. Percy is an ordinary trade creditor of Caramel Limited. What advice would
you give him about his chances of being paid the monies owed to him?
A Percy will rank after the fixed charge.
B He should challenge the costs of the liquidators P. Whitehouse if they seem to be
excessive.
C As an unsecured creditor Percy will rank after the fixed charge, costs of the
liquidation and monies owed to the Inland Revenue and the employees.
D In any event he will only be repaid if the company has sufficient assets which
may be sold to repay the creditors.
QUESTION 40
Which of the following statements is correct?
A Members of a company no longer enjoy the right to prevent or object to an ultra
vires act.
B Members of a company can still seek an injunction to prevent a company from
acting ultra vires.
C It is only the directors of a company who can prevent a company from acting
ultra vires.
D A company cannot in any circumstances act ultra vires.
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