UNIT 1 - Key Pre-Action Steps Flashcards
A client purchases a software package to assist in the ordering and distribution of stock for their manufacturing process. The system does not comply with the client’s requirements and they instruct their solicitors to issue proceedings for breach of contract.
What is the best advice the solicitor can give their client concerning alternative dispute resolution (ADR)?
A) There is no need for the client to engage in ADR unless they choose to do so.
B) The client may decide not to engage in ADR but the court could order them to do so.
C) If the client fails to engage in ADR, the court will impose costs sanctions.
D) The only options of ADR that are available to the client are mediation and arbitration.
E) In ADR, a third party selected by the claimant will assist the parties to resolve their disputes.
CORRECT ANSWER B - Although the client may choose whether to engage in ADR, there are consequences if they refuse and, in any event, the court may order them to do so. Hence, the advice in option A is incomplete. Option C is wrong as the courts have discretion as to whether to impose sanctions; whilst D is wrong as there are other forms of ADR available to the client, although this chapter has concentrated on mediation and arbitration. Option E is wrong as the third party is independent and should be agreed between the parties, rather than being selected by the claimant.
A client runs a business providing educational software to colleges of further education to improve their assessment processes. However, complaints have been received from one college that the assessments are not being correctly recorded and the principal has indicated that they will not be renewing the contract. It becomes apparent to the client there may be errors in the system. The client has a number of other colleges that are considering using the system.
Which of the following statements describes the client’s best option for resolving the matter and why?
A) Mediation because it is a cheaper and faster option than litigation.
B) Mediation because it takes place in private and will ensure that other colleges do not become aware of the dispute.
C) Mediation because it is more likely that the parties will preserve their business relationship.
D) Arbitration because the decision is binding on both parties.
E) Arbitration because an expert on information technology can determine the dispute.
CORRECT ANSWER B - as the client has a number of other colleges that are considering using the system and it is unlikely they will do so if they become aware of the problems with the software. Although speed and cost are advantages of mediation over litigation, they are not the most important issues here, so option A is not the best answer. Option C is wrong because the college are not looking to renew the contract, so maintaining the business relationship is immaterial in this instance. The statement in D is correct but the binding nature of any decision is both an advantage and a disadvantage. Option E is also not the best answer for the reasons already stated, although it is an advantage of arbitration as a means of resolving the dispute.
A company is owed a significant amount of money by a partnership in relation to an alleged failure to comply with a contract to supply goods. The partners are adamant they do not owe the money, arguing that the company is in breach of contract of an implied term as to quality. Negotiations to resolve the matter have failed, as has mediation, and the company has not received the outstanding monies.
What advice should the solicitor give to the company before issuing proceedings?
A) As it has not been possible to resolve the dispute, there is no alternative but to resort to litigation and issue proceedings.
B) Civil litigation is governed by the Civil Process Rules, which dictate the procedure that must be adopted when pursuing a claim through the courts.
C) The only advantage of litigation is that a final decision will be made by the judge but the disadvantage is the increased cost.
D) Once a judgment has been given, the parties must write to the High Court for permission to enforce the judgment.
E) Once a claim has entered the litigation process, it must follow all five stages up to and beyond the trial.
CORRECT ANSWER A - A sets out the best advice as litigation is the only means of resolving the dispute
in the absence of agreement. Option B is wrong as the procedure is governed by the Civil Procedure Rules and not the Civil Process Rules. Option C is not the best advice as there
are other advantages to litigation over ADR including the availability of full disclosure of documents. Option D is wrong as the successful party does not have to write to the High Court for permission to enforce the judgment – this is the procedure required to enforce a decision in arbitration. Option E is wrong as most claims are settled well before a trial.
A man, who owns a florist business, entered into an oral contract on 16 January with a company that grows and sells flowers. He submits that the contract contained an express term the flowers would be delivered on 8 February with time being of the essence. The reason for this provision was that the flowers were required for the lucrative Valentine’s Day market on 14 February. The flowers failed to arrive until 17 February and most remained unsold. The company disputes such a term was agreed and neither party has a written note that time was of the essence.
Which of the following statements best describes the advice the solicitor should give to the man concerning the commencement of proceedings?
A) There is no hurry to issue proceedings as the limitation period does not expire for three years from 16 January.
B) The limitation period runs from the date of breach of the contract, this being the date of delivery of the flowers on 17 February.
C) When issuing proceedings, it does not matter whether the defendant is sued in their company name or as individual directors.
D) There is no need to look into the defendant’s finances until judgment has been obtained.
E) The prospects of the man succeeding in his claim are likely to be affected by his failure to record in writing that a specified delivery date was agreed and that time was of the essence.
CORRECT ANSWER E - To succeed in a breach of contract claim, the man must establish that a contract existed, a term was breached and this caused his losses. The crucial issue will be whether a delivery date was specified and whether time was of the essence in relation to the delivery of the flowers. The lack of written evidence to support the man means that the court will have to decide this based upon conflicting oral evidence.
Option A is wrong because, as this is a contract claim, the man has six years from the date when the cause of action accrued to commence proceedings. Option B is also wrong as the limitation period runs from the day of the breach of contract which, in this case, is 8 February when delivery was not made in accordance with the terms of the contract; it does not run from the date of the actual delivery on 17 February.
Option C is wrong because proceedings must be issued in the correct name of the defendant and, in this instance, the company is a separate legal entity to the individual directors. Option D is not the best advice to give a client as there is little point in winning a claim only to discover that the defendant is insolvent or otherwise cannot pay the damages and costs awarded.
A company client seeks advice in relation to a contract for the sale of a carpet to a hotel. The customer strongly disputes payment on the basis that the carpet supplied did not match the sample provided. The client instructs their solicitor to issue proceedings against the customer.
Which of the following best describes the approach that should be taken by the client?
A) The client may issue proceedings against the customer immediately with confidence that sanctions will not be imposed.
B) As the only purpose of the pre-action protocols is to assist the parties in settling cases without litigation, the client need not comply as agreement is unlikely.
C) Unless the limitation period is about to expire, the client should write to the customer with concise details of the claim and disclose key documents.
D) The client may choose whether to follow a pre-action protocol or whether to rely upon the Practice Direction for Pre-Action Conduct.
E) When trying to resolve matters, all possible steps should be taken by the client to effect this but only proportionate costs need be incurred.
CORRECT ANSWER C - According to the Practice Direction on Pre-Action Conduct and Protocols, these are the steps with which the claimant should usually comply before issuing a claim. Option A is wrong as there are a number of sanctions that the court could impose if a party fails to comply with the Practice Direction or a relevant pre-action protocol. These include penalties relating to costs and interest. Option B is wrong as assisting the parties in settling cases without litigation is not the ‘only’ purpose of the protocols and the parties should comply even if agreement seems unlikely.
Option D is wrong as the client cannot choose which route to take. The PDPAC only applies if there is no specific protocol in relation to the particular dispute. Option E is also wrong as the client is required to take ‘reasonable and proportionate steps’ to try and resolve the matter, not ‘all’ steps, although it is correct that the costs incurred in doing so should be proportionate.
Resolving a Dispute Through a Civil Claim
TRUE OR FALSE:
breach of contract, negligence, misrepresentation and nuisance are all examples of a cause of action.
TRUE - When solicitors refer to a cause of action, they are referring to the set of facts that establish the client’s right to make a claim to recover money or property, or otherwise enforce a legal right against another party. Each legal element of a cause of action must be established, for example, misrepresentation requires an untrue or misleading statement of fact by Party A, which induces Party B to enter into a contract with Party A, and which causes loss to Party B.
Which of the following concerning parties to a claim and causes of action is correct?
A) A solicitor is instructed to prepare a contract for a business person. The solicitor owes the client a concurrent duty of care in both contract and tort to prepare the contract exercising reasonable care and skill.
B) A protected party means a child under the age of 18.
C) Companies and other corporate bodies are legal fictions and therefore cannot sue or be sued in their own names.
D) When a child reaches 21, their litigation friend’s appointment ceases.
E) Tree roots causing damage to an adjoining property and water flooding from another person’s property are both examples of potential actionable claims in tort for trespass to land.
CORRECT ANSWER A - It is an implied term of the retainer that the solicitor will exercise reasonable care and skill when preparing the contract for the business person (pursuant to section 13 of the Supply of Goods and Services Act 1982). In addition, the solicitor will owe a concurrent duty of care in tort to exercise reasonable care and skill when preparing the contract which arises as a result of the relationship with the business person as their client.
B is wrong. A protected party is a person who lacks capacity (within the meaning of the Mental Capacity Act 2005: in general terms, a person who is unable to make decisions for themselves because of a mental disorder). A child is a person under the age of 18. A protected party and a child are both treated as being unable to take or defend proceedings in their own right and have to act through a litigation friend.
C is wrong. Companies and other corporate bodies are legal persons and therefore can sue and be sued in their own names as a public limited company or Plc or limited company.
D is wrong. When a child reaches 18, their litigation friend’s appointment ceases (unless they are at that point in time a protected party).
E is wrong. Tree roots causing damage to an adjoining property and water flooding from another person’s property are both examples of potential actionable claims in tort for nuisance.
TRUE OF FALSE:
for the purposes of civil dispute resolution there is no difference between a partnership and a limited liability partnership.
FALSE - A partnership and a limited liability partnership (LLP) are different legal persons. For example, with a traditional partnership, the partners own the business and are responsible for its liabilities. If a LPP business fails, its debts are not the responsibility of the partners. Limited liability ensures that creditors cannot pursue the personal income or assets of the members of the LLP for anything that the business owes.
Which of the following concerning limitation is correct?
A) Time under the relevant limitation period ceases to run when the claimant commences legal proceedings in respect of the cause of action in question.
B) In any action for damages for negligence, where at the time the cause of action accrues the damage in question is unknown, the limitation period is three years from the date of knowledge of the facts that justify embarking on the preliminary steps to the starting court proceedings.
C) The expiry of a relevant limitation period ends the claimant’s right to start court proceedings.
D) The basic period of limitation for a personal injury claim is three years from the date on which the cause of action accrues.
E) Limitation periods do not begin to run against a child until the child reaches 21 years of age.
CORRECT ANSWER A - It is an important general principle that the bringing of an action stops the running of time for the purposes of that cause of action only.
B is wrong. In any non-personal injury action for damages for negligence, where at the time the cause of action accrues the damage in question is unknown, the limitation period is three years from the date of knowing the facts that justify embarking on the preliminary steps to starting court proceedings. By way of information, this is the latent damage provision in section 14A of the Limitation Act.
C is wrong. The expiry of a relevant limitation period is normally said to bar the remedy by action but not extinguish the right. So, a claimant in this position may start court proceedings but the defendant may in its defence rely on the limitation period having expired. If that defence is established, the claim will fail as it is said to be statute barred.
D is wrong. Whilst the the basic period of limitation is only three years for a personal injury claim this period runs from the date on which the cause of action accrued, or the date, if later, of the claimant’s knowledge.
E is wrong. Limitation periods begin to run against a child when the child reaches 18 years of age.
TRUE OR FALSE :
the limitation period for making a claim based on breach of a contract is always six years.
FALSE - In a contract case it is very important to check whether a longer, or more usually, shorter limitation period has been agreed between the parties.
TRUE OR FALSE:
mediation is always cheaper and quicker than arbitration and arbitration is always cheaper and quicker than litigation; whilst mediation does not give rise to any binding precedent, arbitration and court proceedings can set a precedent.
FALSE - First, mediation is usually cheaper and quicker than arbitration and arbitration is usually cheaper and quicker than litigation but not always. Second, neither mediation nor arbitration proceedings can set a precedent.
TRUE OR FALSE:
the court may impose a costs sanction on a party if it unreasonably refuses to take part in an alternative dispute resolution (ADR) process proposed by another party
TRUE - he burden is on the other party to show that the refusal was unreasonable. Factors which may be relevant in determining whether a party has unreasonably refused ADR include (a) the nature of the dispute; (b) the merits of the case; (c) the extent to which other settlement methods have been attempted; (d) whether the costs of the ADR process would be disproportionately high; (e) whether any delay in setting up and attending the ADR process would have been prejudicial; and (f) whether the ADR had a reasonable prospect of success. By way of information, these are often known as the Halsey principles after the leading case in this area of Halsey v Milton Keynes General NHS Trust [2004].
TRUE OR FALSE:
arbitration is a voluntary process but the parties are bound by the arbitration decision (known as an award).
TRUE - Arbitration is voluntary in the sense that the parties either voluntarily entered into an arbitration agreement or agreed to decide the matter in this way once a dispute arose. Once an award has been reached, it is binding on the parties. If necessary, the successful party to an arbitration can apply to the High Court for permission to enforce the arbitration award as if it were a court judgment
TRUE OR FALSE:
under the Practice Direction on Pre-action Conduct and Protocols, the parties should consider the possibility of reaching a settlement at all times, including after proceedings have been started. If proceedings are started, the parties may be required by the court to provide evidence that ADR has been considered. A party’s silence in response to an invitation to participate or a refusal to participate in ADR might be considered unreasonable by the court and could lead to the court financially punishing that party.
TRUE - By way of information, you will find the detail in the Practice Direction on Pre-action Conduct and Protocols at paragraphs 9 and 11.
TRUE OR FALSE:
the court cannot order the parties to engage in ADR?
FALSE - By way of information, Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 determined that the court can lawfully stay [suspend] proceedings for, or order, the parties to engage in a non-court-based dispute resolution process. However, this is only if the stay or order does not impair the very essence of the claimant’s right to proceed to a judicial hearing, and it is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.
