WORKING IN ENGLISH FOR LAW STUDENTS

WORKING IN ENGLISH FOR LAW STUDENTS

Law making tradition/contracts/legal terms and

concepts

16 January 2013By Helen Michelle Jørgensen

THE ENGLISH LEGAL SYSTEMTHE NORWEGIAN LEGAL SYSTEM

How do the two compare

Handout: Law Making Tradition

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Differences in:

• Law-making tradition

• Contract writing tradition

• Interpretation

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English Law-Making Tradition

• The English legal system is a Common Law system.

• Formation of English Common Law was completed around 1250.

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

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

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As well as Common Law, there is also Equity.

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

Handout: the Maxims of Equity

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

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

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

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

European law has been superimposed on English national law.

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

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

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

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

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Norwegian Law-Making Tradition

Norway first had regional law making assemblies.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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English Drafting Style and Tradition

English contracts have traditionally been long, compared to Norwegian contracts

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

with more complicated transactions earlier, and

more ‘clever drafting’ by lawyers, leading to

longer and longer documents in England

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English style – why so wordy:

Differences between Civil and Common law systems clash of legal cultures

different legal principles, especially on interpretation

Common law system is based on ‘precedent’ words used before in contracts are important to follow

No underlying Code to rely on nothing to regulate in detail various legal relations which the

parties can rely on if they do not cover it in their document

Freedom of contract and fewer statutory codes lead to documents which regulate all conceivable aspects

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Courts will not intervene if the meaning is clear from the words ‘that is it’ no moral or ethical obligation no obligation to deal fairly English courts will not ignore words and look

behind them to determine their meaning Courts will not will not ‘re-write’ contracts

English business/legal environment Business world was more developed in the context

of company sales – e.g. fixing price, tax Complex legal systems

English documents were driven by lawyers – not commercial people

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Norwegian Drafting Style and Tradition

Norwegian contracts have traditionally been shorter, compared to English contracts

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

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Possibly less complicated transactions previously:

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

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

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Norwegian Drafting Style Now

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

English (American) concepts and drafting styles being

adopted in Norway

Large Norwegian companies adopting English as their corporate language

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

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Norwegian Drafting Style Now

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

the ‘Petroleum economy’ which has developed since

Philips Petroleum discovered petroleum sources at the Ekofisk field in 1969, and

increased international business, and

parties expect to see a longer and more detailed contract,

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Examples:

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

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

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INTERPRETATION -English

Traditional English approach:

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

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

Evidence of prior negotiations not traditionally considered

Words given their plain and literal meaning

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INTERPRETATION - Norwegian

Norwegian approach:

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

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

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INTERPRETATION - Norwegian

Norwegian approach:

Can take into consideration other circumstances that may indicate intention

Can consider preceding negotiations and subsequent behaviour

Can consider previous dealings between the parties

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

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INTERPRETATION

The compromise between Norwegian and English tradition:

the value of reaching a reasonable result in the individual case

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

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

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INTERPRETATION

The compromise between Norwegian and English tradition has been:

Norwegian rules of interpretation have sacrificed certainty for reasonableness

English rules have sacrificed reasonableness for certainty

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INTERPRETATION

New approach in England

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

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

Handout: ICS Case/Kookmin Bank Case

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INTERPRETATION


Continuing influence of European law on the English courts

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

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INTERPRETATION


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

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

Purposive, common sense approach

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CONTRACTS AND CONTRACT LAW

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

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

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

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Freedom of contract has suffered due to:

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

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

Contract of carriage Sale of goods Supply of services Commercial contracts

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

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

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TYPES OF DOCUMENT

What is the difference between:

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

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TYPES OF DOCUMENT


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

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TYPES OF DOCUMENT

How many ways can we describe a contract:

Promise Agreement Committment Pledge Bargain Treaty

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TYPES OF DOCUMENT

How many ways can we describe a contract:

Convention Pact Concordat Trust Deed Bond Undertaking

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FORMATION OF A CONTRACT

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

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

Handout 9

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TERMINOLOGY USED


Condition Undertaking Covenant

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CONDITIONS

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

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

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TERMINOLOGY USED


Representation Warranty Indemnity

What are the Norwegian equivalents

Handout: Representation, Warranty, Indemnity

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REPRESENTATION, WARRANTYINDEMNITY

Representation:• Statement of fact made by one party to induce another to enter

into a contract, or to do or not do something• Different remedies in incorrect – compensation to recission

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

• Remoteness• Duty to mitigate

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REPRESENTATION, WARRANTYINDEMNITY

Indemnity:• Undertaking to meet a liability, as suffered by the indemnified

party• Can be subject to normal legal principles, but• Can be to compensate NOK/NOK if a specific situation arises, and

not subject to rules on liability for breach of contract• Like on demand guarantee• Scope depends on contract wording

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UNDERTAKINGSCOVENANTS

Essentially the same:

Undertaking:

• To take responsibility for a task

• An obligation to do something

Covenant:

• From the French convenir: to agree

• A promise to do something

• Formal agreement

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EFFECTIVENESS

Differing degrees of ineffectiveness of a contract:

Void Illegal Voidable Unenforceable

Handout: Degrees of Effectiveness

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ENDING A CONTRACT

What is:

Rescission Repudiation Renunciation Cancellation Termination

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

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ENDING A CONTRACT

Rescission:

By agreement Abandonment Substituted contract On misrepresentation

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ENDING A CONTRACT

Repudiation:

‘discharge by breach’

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

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ENDING A CONTRACT

Renunciation:

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

Refusal to perform, by conduct or actual

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ENDING A CONTRACT

Cancellation:

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

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

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ENDING A CONTRACT

Termination:

Stopping short of completion

Expiry: natural end

In accordance with terms

What would typically be an event of termination?

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ENDING A CONTRACT

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

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DEGREE OF EFFORT

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

What is the standard of effort imposed?

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TERMINOLOGY USED


Liquidated damages Penalty clauses

Why is there focus on these under common law

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