3. Legal Rules Flashcards
What is the significance of the ‘IF-THEN’ approach in legal rules?
- Law is a set of rules that follow ‘IF-THEN’ structure
- IF a certain event occurs, THEN a certain sanction is applied
- Significance lies in its ensuring that the law is applied consistently and fairly, “IF” (conditions) “THEN” (consequences). Allows doctrines like the rule of law to work, individuals will follow the rules because they know what they are and what will happen if they break them.
Differentiate between general and abstract rules in legal systems, and discuss their implications for the principle of equal treatment.
General Rules:
- Broad applicability. Not tailored for individuals or certain circumstances. All people.
- Ex: If a person sells illegal drugs, then they will be prosecuted. Applies to all cases of drug sale, regardless of who they are or other things.
- Rules are applied uniformly to all individuals in similar circumstances, equal treatment under the law
Abstract Rules:
- Apply to any event having to do with the rule, regardless of the specific nature. All similar events.
- Ex: All contracts must be honored. Applies to all contracts, regardless of the specific type.
- Ensures the law can be applied consistently, and gives equal treatment accross circumstances of slightly different nature.
Distinguish between mandatory and default rules in private and public law, providing examples of each.
Mandatory Rules:
- Rules are mandatory in public law (state’s authoritative power) to preserve public interest over the individual one
- Ex: sanctions for crimes that cannot be negotiated with offender, administrative rules regulating the exercise of power by the state
- Plea bargaining is an example of the gray area in mandatory rules
Default Rules:
- Rules in private law. Can be set aside by an agreement between parties.
- Ex: default rules says that payment for a good must be done within 30 days of delivery, this rule can however be modified by the parties if they agree on different terms
- Play role in contract law, supplementing agreements.
Explore the concept of legal gaps (lacunae) and the methodologies used in different legal systems to fill these gaps.
Legal Gaps (Lacunae):
- Situations where existing body of law does not provide a resolving rule.
- Typically arise from changes in society and technological advancementes
Methodologies to Fill Gaps:
- Common Law Systems: Filled by judicial discretion, create new rules or extend the scope of existing ones.
- Civil Law Jurisdictions: Filled by normative devices (analogy). First level is “analogia legis”, legal rules in similar cases can fill the gap. Second level (if no similar cases found), “analogia iuris”, means to apply legal principles of the law to regulate the matter.
Analyze the concept of good faith in contract law, comparing its application in civil law jurisdictions and common law systems.
Civil Law Jurisdictions:
- Core aspect of contracts and obligations
- Acting with honesty and consideration for other parties when engaging with them. Violated when parties act inconsistently with their prior statements or actions.
Common Law Systems:
- More uncommon
- Not universally applicable to all contracts. Approach is more cautious and limited
- Don’t care about fairness as long as contract terms are respected
Evaluate the challenges in applying general clauses in legal interpretation and the role of judges in determining their preceptive content.
General Clauses:
- Big rules that decide how to play in lots of different situations
- What to do in many different situations
- Ex: rule in a game saying “be fair to everyone”, affects many aspects of the game.
Challenges:
- Wide but not Indeterminate: ex: Reasonable care, wide scope (covers broad range of behaviors), not indeterminate (courts have developed a standard to assess what constitutes reasonable care). Up to judges’ discretion to make rulings on such matters.
- Complete Juridical Norms: general clauses are norms imposed by judiciary, meaning they do not follow the structure the majority of pieces of legislature in a system do. Depend on application of other norms.
Role of Judges:
- Unrestricted Powers: Judges can interpret preceptive content of general clauses using extra-legal criteria such as moral and social values.
- Application of Legal Principles: Judges can interpret preceptive content of general clauses using legal principles.
Donoghue v Stevenson (1932) AC 562, UKHL 100
Facts of the Case:
- Plaintiff (Mrs. Donoghue [MD]) drank from a bottle of ginger beer bought to her by a friend in a café
- Bottle was opaque (not transparent) and when she dumped the contents into a glass she noticed a decomposed snail at the bottom
- Snail made her sick
- There was no contract between MD and the beer manufacturer (Stevenson) so she had to seek compensation through the tort of negligence.
Decision & Rationale:
- Court created close relationship outside of contract
- Needed physical harm to establish damage
- House of Lords said Stevenson owed MD a duty of not wanting to cause her injury. Sometimes referred to as “neigborhood principle”
- Created binding precedent that would be used in common law
1. Negligence is a distinct element of tort law
2. Duty of care in tort does not require a contract
3. Manufacturers owe duty to those who intent to buy their product
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465
Facts of the Case:
- Mr Hedley worked as an advertiser for Hedley Byrne & Co (HB&C) and was personally liable for the costs of orders
- Hedley asked Company X’s bank if company X was good for the money
- Bank said yes but that they were not responsible if they were wrong
- Hedley made the order but company X failed and HB&C lost money, economic loss, no physical damage (can’t appeal to Donaghue)
- HB&C sued the bank for the wrongful advice
- Is the bank responsible for giving advice that turns out to be wrong?
- Did their disclaimer of responsibility enable them to avoid liability?
Decision & Rationale:
- When an entity claims to be an expert on something, they must be careful with the advice they give because people will rely on that advice.
- Nonetheless, since the bank made the disclaimer, they could not be held liable
- Appeal was dismissed
Caparo Industries Plc v Dickman [1990] 2 A.C. 605
Facts of the Case:
- Caparo Industries bought assets of company X believing they were making a lot of money
- Bought so much they eventually acquired company X
- When they found out that company X was not making as much money as it appeared they took action, saying there was fradulent misrepresentation and negligence under sections 236 and 237 of the Companies Act 1985
- Did auditors and directors of company X owe duty of care to Caparo industries as existing shareholders or as potential investors?
- Was there enough closeness between both parties to find that the duty was owed?
Decision & Rationale:
- Appeal by defendants allowed, duty of care not owed to the plaintiffs
For the opposite to be the case there/it must be:
1. Enough closeness in the relationship of the parties
2. Knowledge that in the absence of reasonable care a party will be injured
3. Fair, just, and reasonable for defendant to owe duty
- Since financial reports were not made for potential investors or shareholders, auditors did not owe duty to people who might have investment decision based on the report
