The English Legal System. Part II - The English Civil Law

Introduction to the English Legal System

III. The English Civil Law

A. General

In law, persons are regarded as subjects who possess certain rights and owe certain duties. An adult human being is a legal person and may be referred to as a “natural person”. The opposite of individual humans are various corporations and incorporated associations. Those 'constructs' attach similar rights and duties to themselves. Those legal persons are called, ”legal entities”.

A third party in a law system are unborn persons, minors, persons of unsound mind. As in continental legal systems, also in the English law, a person is without legal recognition before birth.

-The antenatal individual is protected by the Infant Life Preservation Act 1929.

Animals are not legal persons but legal objects (things).

B. Civil Law and its components

1.0. Legal capacity

Legal capacity is the basis for commerce. A mere trust can make a contract problematic per se. English law offers a different application of law than the continental European law system. English law applies legal capacity upon reaching the age of majority. After that, the individual`s developments. A person reaches his/her majority at the age of 18 years.

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1.1. Necessaries

In case of necessaries, a minor may effectively avail him-/herself of things, he/she benefits from.

-for the minor´s benefit

One of the peculiarities in English law is the concept of necessaries. According to section one of the Family Law Reform Act 1969, in connection with The Minor´s Relief Act 1987 (!! Sale of Goods Act 1979!!), necessaries are goods of an appropriate amount that a minor buys.

-(everyday commodities - clothes, food), goods are reasonable in price

The purchase may not rely on the minor, with the result that the contract may also be stopped and may not be challenged by the minor or its representatives.

-English law does not know contract invalidity or a permission of the representatives in such cases.

The payment claim does not arise from the contract itself but from the delivery of goods or provision of the service to the minor.

- A quasi-contractual claim according to the Sale of Goods Act, 1979 whereas it is written

“Goods are suitable to the condition in life of the minor and to the actual requirements at the time of sale and delivery.”

Quasi-contractual here means:

-claim development upon delivery or handover
-the price must be reasonable

Regarding the question of a reasonable price it is important that the price is usual (normal). Whereas the amount may not be a requirement.

- compare cases, Minors` Contracts Act, 1987, Sale of Goods Act, 1979

1.2. Beneficial commitments (duties)

In addition, contracts advantageously for the minor may become binding. There does not exist any 3 The English Legal System all rights reserved by Michael Sack LLP regular jurisdiction, therefore many various criteria are applied by judges.

Training and skills contracts and the claim of a service are considered beneficial. Those contracts are always binding.

- Criterion is the prospect of the minors´ beneficial

In contrast, not all courts see a benefit in all kinds of beneficial contracts. (Court decisions are different)

- For example a trading business, even with a benefit for the minor. Reason is the possible loss of capital by the minor.

1.3. Avoidable contracts

Contracts that are not necessaries are avoidable. The majority party is bound to the contract. If the minor wants to cancel his/her contractual binding just a message is sufficient and the contract stops. The minor can only claim his services if he can refund the services received. In cases of total failure of consideration he may reclaim the services.

- such are cases in which the minor has bought something and paid without getting the services. In case of useless goods the minor has the right to return the goods and reclaim the paid amount.
- English law knows the term contracts not binding unless ratified which are -loans
-contracts for useless items

Those contracts get binding upon the minor's signature when reaching majority at the age of 18.

1.4. Guarantees

The Minors´ Contract Act 1987 has a special position with regard to guarantees. For example; a loan is given to a minor by a bank and a representative guarantees for it. This contract would be floatingly ineffective. Nevertheless, the bank may claim against the guarantor if the loan is not refunded. On the other hand, a claim of the minor by the bank is impossible.

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1.5. Persons of unsound mind, drunks

The legal capacity has also influence on persons of unsound mind and drunks.

- please refer to the Mental Health Act, 1983 Part VII

A binding contract can only be brought about by the legal representative. A contract with persons of unsound minds and Drunken is inoperative if proof can be given that the essential of the contract has not been understood and the opposite party, whereas did not see such a problem. In the event of the contract including delivery of necessaries, a reasonable price must be paid on the other hand.

2.0. Conclusion of contracts

According to the historical background of the English law system, and furthermore according to the system of writs, there is one thought in law.

- A contract is a commitment between (two) parties.
Through influence of contract law, English law now assumes that a contract is concluded by offer and acceptance. Yet there is a difference, because English law knows two special features.
-Contract under seal
-contract of consideration

See following subtopics.

2.1. The offer

Every contract comes into being after an offer having been submitted by one party to another.¹The party declaring the offer is known as the offerer (supplier). The party to whom the offer is made is called the promisee or acceptor.

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An offer, that is different to German law, may be revoked at any time, in so far it is not accepted yet.

-so called revocation

-landmark decision in case Payne vs. Cave (1789)

This rule even applies in cases where the offering person has bound him-/herself to the offer for a certain time. The reason lies in the 'consideration theory'. According to this, a contractual obligation can only be entered into if there is a return on the other party´s side.

- Not so with contracts under seal

English law therefore knows such letters of intent. Letters of intent are kinds of memorandums

(offers) for a later conclusion, where a conclusion is not a must. Nowadays jurisdiction considers a contract binding in such letters of intent, especially if the other party has to carry costs in trust.

-letters of intent with the words such as “subject to contract”` do not bind on the other hand.

2.2. Contracts under seal

A contract under seal is, in contrast to a simple contract, a signed and sealed contract that is handed over to the other contracting party. The hand over (delivery) can be subjected on a condition.

-so called “escrow” cases
▬In cases of land purchases, delivery does not take place before payment, Law of Property Act, 1925

This form of contract goes on with the known “covenants” of the middle ages. At that time, a contract has been sealed.

-the term of deed as a contractual agreement

Nowadays, only few contracts are still made by deed. Contracts according to the Statute of Frauds 1677 must be sealed. Also every contract can be done with seal for emphasizing its importance for 6 The English Legal System all rights reserved by Michael Sack LLP example. But in such cases the contract under seal does not compensate its effectiveness because a simple contract has it done too.

The prescribed form of written contracts of Sale of Goods, according to the Statute of Fraud 1677 erased in England 1954, still exists in some states of the United States of America and in other countries of the Commonwealth, so for example in Australia for contracts of Sale of Goods with an amount exceeding 20 Australian Dollars.

2.3. Simple contracts

Most contracts in England are entered into by simple form. Most of those simple contracts are concluded verbally. Consumer credit contracts require the written form, according to Consumer Credit Act 1974, or payment duties according to the Bills of Exchange Act 1882.

The difference between written contracts and contracts of seal is that the seal and delivery are missed.

Even if a contract is concluded verbally one requirement is necessary; a return service must be provided.

- Principle of consideration - with its historical background of the constructs of writs of dept / assumpsit

This theory includes the opinion that a lawsuit was possible only if the plaintiff could prove damage because of a breach of contract.

In English law, it is not crucial if somebody commits him-/herself informally or formally. The importance is to see in the contracting party itself and when.

- a contract does not become binding before a return promise is rendered.

A service has to follow an in-return service. A so called past consideration in this case is not sufficient (exception: exchange law).

In particular, this means that every change of contract has to be seen as a new offer that requires an in-return service. Also, a waiver provided by a party needs an in-return service.

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Special features in this case are:

-doctrine of equitable estoppel
-promissory estoppel
-proprietary estoppel

The estoppel theory is transmitted from the equity principle, in German Law known as - “Verwirkungseinwand” (estoppel by laches).

Whereas, equitable estoppel means that somebody who gives a one-side promise is bound to his promise only if the given promise involves a reaction of the other party.

On the other hand, promissory estoppel means, if a creditor refrains from his claim he is bound to it. Probrietary estoppel gets in action if somebody claims an amount even if he gives a free-of-charge promise of performance.

-Result of the consideration theory is that a contract gets binding only if a consideration is given.

Whereas it is without importance that the consideration is adequate, it just must have a value, even if low.²The consideration must be lawful and must not build on a service already provided in the past. The consideration must be based on the promise. Only privities of contracts can move from such requirements.

2.4. Mailbox theory

English law, as seen, has a free cancellation ability of an offer. Therefore, acceptances are embedded in a different theory than in German law.

English law does not know the point of acceptance.

Here, the effectiveness starts already with sending. It means the point is reached at that time when a statement is `brought on its way`.

This may be the throw in the mailbox, the start of a facsimile or email, nevertheless if the addressee takes a note.

- Also in this point English law offers an advantage over German law³. The advantage is clearly on the sender´s side.

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-in cases Brinkibon Ltd. vs. Stahag Stahl und Stahlwarenhandelsgesellschaft GmbH (1993) 2 AC 34: “acceptance becomes effective if it is placed under the control of the post office”

English law consequently distinguishes here on the loss of the sphere of influence of the sender. Consequently, acceptance must be communicated. (Silence is considered a No of acceptance) Acceptance can be done in writing or orally by the acceptor or by a messenger.

The place of conclusion of the contract is the place where acceptance was dispatched.

2.5. Silence

Silence by a receiver of an offer cannot be suggested as an acceptance.

-At German Civil law, esp. Trade law mostly.

Also confirmation notes, are not considered binding if not based on a contractual agreement.

3.0. Contents of contracts

1. Agreements and collateral agreements

Agreements are essential undertakings (commitments) of a contract. Whereas collateral agreements are pre-contractual negotiations and do not intend to form an integral part of the contract. The difference of both is important as non-observance of a promise or commitment has different consequences.

That can be

-complaint for breach of contract
-fraudulent misrepresentation
-compensation of damage

A complaint for breach of contract can only have success if the defendant has made an incorrect indication or did not respect a commitment, if the commitment was agreed in the contract and the basis of conclusion of contract.

In contrast, consequences of non-adherence to collateral representations are different. 9

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¹Alpmann-Schmidt Introduction to English civil law

²Case Thomas vs. Thomas (1842), also Chappell & Co Ltd. vs. Nestle Ltd (1959)

³This is own opinion