Legal Sources and Legal Method and product liability, choice of law and international procedural law

Question 1

Sources of Law

Answer 1

refer to all the factors which influence the authorities applying the law (primarily courts of law) in their choice and/or formulation of rules applicable in the decision of concrete legal issues

Question 2

Legislation

Answer 2

The statutory process and the importance of legislation as a source of law

Legislation - refers to so-called “formal enactments”, i.e. the general “directives” which have been given statutory status in the manner prescribed in the Constitution

The process normally involves introduction to the Danish parliament of the proposed legislation in the form of a bill which must undergo three stages of reading and adoption, followed by royal assent

Acts must be promulgated (made public) in order to be enforced by the courts and administrative authorities, cf. s. 22 of the Constitution

Unless the individual Act otherwise directs, publication shall be made in the legal gazette “Lovtidende” - an official paper published by the government in electronic form (the Ministry of Justice, Legal Information Office)

Question 3

Ministerial orders and other statutory instruments

Answer 3

• Statutory instruments - such as ministerial orders are general rules of law directed towards everybody
  o Issued by central administrative authority, usually by the Minister within whose province the regulation in question has been made
• Legality Principle - implies that administrative acts in relation to citizens must be authorized by legislation a minister may not on his own lay down rules of law creating rights or obligations in respect of the citizens
• To obtain enforceability, statutory instruments must be promulgated in the same way as statutes, i.e. by publication in the “Lovtidende”
• The difference between “Consolidated” Acts and ordinary Acts is that the former “sweep up” existing piecemeal legislation, original and with subsequent amendments, so that the total legislation on the subject is presented in an updated form including all currently applicable provisions
• In a sense the issuing of statutory instruments implies a delegation of legislative (to make generally binding rules) to the administrative authorities which also implies, in principle, such instruments have just the same legal force as sources of law as primary legislation
• As regards the direct field of application it may thus be taken for granted that the courts will consider rules in statutory - always provided, of course, that the issuing authority (the Minister) has kept within the authority conferred upon

Question 4

Case Law

Answer 4

• Case Law - refers to the importance of the contribution decisions made by the courts in earlier cases on the same or related issues may make for the assessment of a current case
  o Previous decisions act as precedents on the argument that the decisions already made and reflecting an established approach to certain legal problems should also be followed in the case now being tried
  o The legal terminology describes such earlier decisions as judicial precedents and the value of earlier decisions is reflected in their value as such (binding) precedents

Question 5

INTERPRETATION

Answer 5

Legal rules require interpretation to fill inherent uncertainty or vagueness with meaning.

• Linguistic interpretation emphasizes the literary meaning of a term
• Structural or systematic interpretation emphasizes grammatical construction
• Contextual interpretation emphasizes the relationship between the term and internal or external factors
• Teleological interpretation emphasizes the purpose and objective of the legal rule

Question 6

Various types of interpretation results

Answer 6

With an approach based on ordinary language usage the result of the interpretation process may be viewed as a defining, a narrow or a wide construction

• Narrow Construction - more common, will only seek to specify the application possibilities of the rule in question within the limits made up by ordinary language usage
• Wide Construction - references the data available and the assessment from a practical point of view

Question 7

UNCERTAINTY AND VAGUENESS IN LEGAL RULES

Answer 7

The Marketing Pracices Act 2017

5.-(1) A trader’s commercial practice must not contain false information or in any other way, including overall presentation, deceive or be likely to deceive the average consumer, even if the information is factually correct

8.-(1) To be in conflict with sections 4-7, the commercial practices must materially distort or be likely to materially distort the economic behaviour of the average consumer, or of the average member of the group when the commercial practices are directed to a particular group of consumers.

Question 8

The EU Law. Nature of legal basis

Answer 8

• Denmark has become a member of the European union in 1973
• When there is a conflict between a national rule and an EU rule, the EU law takes precedence

Question 9

Some fundamental EU law principles

Answer 9

1. The EU authorities are subject to a principle of legality which corresponds in nature to the equivalent principle in Danish Law, under which decisions may only be made where the requisite sanction for them is present in the Treaties, and naturally, decisions made must not be contrary to EU law, in particular to Treaty terms.
2. EU membership requires the member states to become subject to a solidarity principle under which the main obligation is for the Member states to loyally perform their duties under the Treaties and enter a loyal co-operation
3. The aims of the EU dictate a principle of non-discrimination, where any discrimination exercises on the ground of nationality is as a predominant rule prohibited within the jurisdiction of the Treaties
4. When applying the EU rules a principle of proportionality must be followed, which states that measures taken under EU law must be necessary in light of the object pursued, i.e. there must be a reasonable proportion between the objects pursued and the means applied in their pursuit
   - EU also acknowledges the fundamental rights guaranteed under the European Convention of Human Rights and the way these rights arise from the common constitutional traditions of the Member States
   - The EU is also said to be carried by the principle of conferred powers, which means that the Community must act within the limits of the powers conferred on it by the Member States under the Treaties
   - Finally, a subsidiarity principle applies, which states that outside the areas in which the EU authorities have sole jurisdiction under the Treaties in relation to national authorities a measure from the EU ranks as subsidiary to a national solution, i.e. the EU measure will only be relevant where national measures are inadequate in the light of the common objective set up in respect of the activity in question

Question 10

The Community Institutions:

Answer 10

General European Council
The Council of the European Union
The European Commission
The European Parliament
The European Court of Justice

Question 11

Written Sources of EU law

Answer 11

· The Treaties - most Treaty provisions describe rules of competence concerning the authority of the EU institutions, but there are also various obligation rules applicable to citizens in the individual member states, e.g. the prohibition against agreements in restraint of trade which may affect trade between member states

· Regulations - Regulations are issued by the Council and the Parliament, the Council on its own or by the Commission

· Directives - are binding on all member states but they leave the choice of form and method of implementation to the national authorities

· Decisions - decisions are binding in their entirety on the parties to whom they are addressed

· Recommendations and Opinions - not legally binding

Question 12

Unwritten Sources of EU Law

Answer 12

• Decisions by the European Court of Justice - the ECJ may of course apply precedent-importance to earlier decisions of its own and will also do so to a great extent, e.g. when referring to previous decisions interpreting the Treaty provision which is in issue in a subsequent case
• Other unwritten source of law factors - no national court would dare to decide based on these, so no one cares

Question 13

PRIMACY OF EU LAW

Answer 13

In case of conflict between a national legal rule and an EU legal rule, EU law supersedes the national legal rule.
Conflict with EU law does not invalidate the national law but triggers a responsibility for national courts and authorities not to apply the national legal rule.
BUT

As a general principles, national legal rules should be interpreted as far as possible in conformity with EU legal rules.

Question 14

PRINCIPLE OF DIRECT EFFECT

Answer 14

EU legal rules in the Treaties and Regulations that are clear, precise, and unconditional can be relied upon before the Danish courts. Directives can only have direct effect if they have not or have been wrongfully implemented.

The direct effect of legal rules in the Treaties or Regulations can be invoked in relationship between an individual and the state (vertical direct effect) or between individuals (horizontal direct effect). Directives do generally not have horizontal direct effect.

Question 15

INTERPRETATION EU part 1

Answer 15

Only the The Court of Justice of the European Union can definitively interpret EU law!

• Linguistic interpretation needs to take account of all available language versions.
• Structural or systematic interpretation emphasizes grammatical construction.
• Contextual interpretation emphasizes the relationship between the term and internal or external factors.
• Teleological interpretation is most prominent in the CJEU as it promotes the intended purpose of a legal rule, often in light of the integration principle.

Question 16

INTERPRETATION EU part 2

Answer 16

EU law conform interpretation.
- Danish legal rules must be interpreted and applied in light of EU legal rules.
- Even Directives can therefore have legal effect in relationship between individuals, circumventing the lack of horizontal direct effect.
- EU law here includes relevant primary and secondary EU law, including general principles of EU law.

–> You have to interpret national law in accordance with the interpretative method of the The Court of Justice of the European Union! (Vigtig)

Question 17

INTERNATIONAL TREATIES

Answer 17

Denmark is a dualist country, meaning that all international treaties must be incorporated into national law before they take legal effect.

Question 18

The concepts of “direct applicability” and “direct effect”

Answer 18

• Direct Applicability - is used to describe the way a community rule is to be subject to national incorporation measures in order to fully become part of national law, e.g. and especially, any legislation which transforms the Community rule to a national rule

o Direct applicable EU rules are not subject to such a process and will thus become elements of national legal systems without more
* Direct Effect - relates to the way in which EU rules may justify rights and obligations in respect of citizens of member states capable of being upheld at the national courts

Question 19

Product liability

Answer 19

Why do you care about product liability?

Product liability – liability in damages for defective products.

Every link in the chain is potentially liable for defective products. That includes retailers, that become liable simply by offering the product to the consumer.

Question 20

APPLICABLE LEGAL INSTRUMENTS of product liability

Answer 20

• Danish Case Law
• UN Convention on International Sales of Goods (CISG)
• EU Products Liability Directive 1985
• Products Liability Act of 1989

Question 21

Product liability p.2

Answer 21

• Injury to persons or damage to property may occur as a result of dangerous properties in a product
• In such cases, the issue of liability in damages will arise in respect of the loss the harmful/dangerous properties have caused – the issue of product liability
• The product liability problems may be treated both in combination with the rules on the sale of goods and supply of services and in combination with the rules on liability in damages – which latter context is chosen for the following account
• The product causing harm may be a hired product or a product used in in- dependent contractor relationships, but most often the product involved is a chattel transferred from seller to buyer in an ordinary
  sale and possessing dangerous properties
• The common reference to such product in daily par- lance is a “defective” product, but it is important to bear in mind that the legal rules applying to defects in individual contract relationships do not govern product liability
• Thus, the Sale of Goods Act rules on defects in the goods (cf. Chapter 8) will not be applicable to a seller’s product liability. It will be a defect in the Sale of Goods Act sense that a weed killer fails to kill off the weeds, but it is a defect in the product liability sense if the weed killer causes the lawn to be ruined
• Likewise, a sale-of-goods defect will lie if an engine has been filled with the wrong kind of oil, whereas it is a product liability defect if an oil causes the engine to break down
• Where an international sale is comprised by the UN Convention on International Sales of Goods (CISG) (cf. Chapter 9), the Convention rules (cf. CISG, Art. 5) will also comprise the seller’s liability for damage to the buyer’s goods, but not the seller’s liability for personal injury)
• Product liability is not limited to contractual relationships

Question 22

The basis of liability

Answer 22

Fault Liability: Sometimes when people do something wrong and it causes harm to others, they have to take responsibility for it and make things right.

Vicarious Liability: If someone is in charge of another person, like a boss or a parent, and that person does something wrong, the one in charge might also have to take responsibility because they were supposed to make sure the person behaved properly.

Strict Liability: There are some things that are very dangerous or can cause a lot of harm, so if something bad happens because of them, the person who made or did that thing has to take responsibility, even if they didn’t mean to cause any harm

Question 23

APPLICATION OF THE LEGAL FRAMEWORKS

Answer 23

Case Law
- Product: any product or service subject to production, sale, and use.
- Defect: not having the expected effect, having unexpected effects, side-effects.
- Causation: link between the defect and the harm caused
- Fault or negligence

Statute:
- Product: consumer product. (s. 3(1))
- Damage: bodily and property damage, excluding the defective product itself (BUT be aware of sub- suppliers). (s. 2(2))
- Defect: fails to provide the safety that can reasonably be expected. (s. 5)
- Causation: link between damage and defect (s. 6(1))
- Fault or negligence: only for intermediaries –> Case C-327/05- Commission v Denmark

Question 24

EXCLUSION OF LIABILITY

Answer 24

Case Law:
· development risks: defects that develop throughout the life of a product, but which could not be foreseen at the time of manufacture.
- System risk: known risks that were unavoidable because of the indispensable nature of the product (e.g. pharmaceuticals).
–> information requirements!

Statute:
- Development risks (s. 3.1) and system risks (s 7(1)(iv)) appear to be excluded.
- s 7(1)-(3) provide defences against liability
- s 9(1) provides for contributory negligence

Question 25

The Injured Party’s Loss

Answer 25

• The injured party may only recover compensation from the tortfeasor if he has suffered a loss and such loss may be attributed to the tortfeasor
• The measure of damages is based on a first principle of restitution – i.e. the injured party’s loss is to be compensated in full, and, secondly, that the injured party should obtain no enrichment, but these starting points are not always fully observed in either respect
• The third fundamental principle of the measure of damages is that the injured party is under a duty to mitigate his loss
• Under s. 24(1) of the Liability for Damages Act liability may – under absolutely exceptional circumstances – be reduced or lapse altogether where the imposition of liability is deemed an unreasonable burden on the person liable in damages or where quite special circumstances indicate that such an out- come is reasonable
• The decision to allow reduction or lapse of liability will comprise deliberations on the amount of damage sustained, the nature of the liability incurred, the tortfeasor’s circumstances, the injured party’s interests, insurance cover, and the circumstances otherwise prevailing

Question 26

Which losses will be recovered?

Answer 26

• As regards property damage, value losses may be fully recovered and the measure of damages will follow the principles set out in the rules of the Insurance Contracts Act ss 37-38
• The injured party may also claim full compensation for consequential loss from the tortfeasor
• The principle regarding the injured party’s duty to mitigate combined with the huge evidence problems encountered exactly with consequential losses imply that in practice the injured party will find it difficult to recover his actual consequential loss in full
• As regards personal injuries, the Liability for

Damages Act Part I contains a set of detailed rules as to the types of loss for which recovery may be ought and the amounts recoverable

• Loss of earnings and health recovery expenses are compensated in full

Question 27

CHOICE OF LAW

Answer 27

Rome Convention – on the law applicable to contractual relationships
* Arts 3(3) and 7: mandatory legal rules are not contracted out of by means of a contractual choice-of-law clause.
* Art 4: in the absence of a specific choice, the applicable law is the law of the country with which the contract is ‘most closely connected’.
* Usually the place of business of the seller, unless the contract is performed through a branch or subsidiary in another country.

• Typically, Danish substantive law on product liability, i.e. the rules referred to throughout the present Section 3 – will be applicable when products are marketed in this country and cause damage here, whereas Danish law will not be applicable when goods produced in Denmark are exported to a foreign country and cause damage in that country

Question 28

INTERNATIONAL PROCEDURAL LAW

Answer 28

Brussels I Regulation: scope of international jurisdiction
of domestic courts in the member states

Billede

Question 29

KEY TAKE-AWAYS

Answer 29

1) Business transactions are governed by legal rules. Awareness of these rules help you make sound business decisions and risk assessments.

2) Look beyond national legislation. Business life is increasingly penetrated by EU and international law. National law that implements EU Directives should always be read inlight of the text of the Directive, and the case law of the Court of Justice of the European Union.

3) Producer and retailers are liable for the damage caused by defective products they put on the market. You can manage those risks through your contracts, but also effective marketing.

4) Contracts enjoy autonomy. That includes the choice of applicable law, which can have significant effects. However, it does not allow for the contracting out of all mandatory legal rules of the otherwise applicable national law.

Question 30

The Choice of Law Convention

Answer 30

Which contract relationships?

• Under Art. 1(1), the Convention provisions are applicable to contractual obligations in all situations in which a choice between the laws of several countries is to be made. Thus, the Convention will prima facie comprise all contractual relationships.
• There is no express requirement that the contract relationship is inter- national. However, under Art. 3(3) the parties’ agreement to apply the law of a foreign country – where all other circumstances of importance at the time of conclusion of the contract are connected to only one country – will not imply that non-mandatory rules of that country are set aside

Which legal issues?
- Under s. 10(1) the law appointed by the choice of law rules in the Convention is, in particular, to be applied in issues of interpretation, performance, consequences of breach, including the assessment of damages, the various methods of “extinguishing” (discharge) of obligations, including limitation and other lapse of rights as a result of exceeding time-limits, and the effects of nullity of the contract.

• However, s. 10(2) provides that as regards the manner of performance and steps to be taken in relation to defective performance regard is to be had to the law of the country of performance.