Summary with International Business Law: Custom Edition Groningen University

What is Law? - Chapter 1

This chapter aims to consider law, both as a concept and within its wide context.

What is the definition of law?

Law is the set of rules by which a state or community operates; they govern the actions of the subjects and can be enforced by the imposition of penalties, such as fines or imprisonment.

How does law relate to its subjects?

Law is applicable in social, political and economic disciplines; it relates to all citizens. It is a body of rules that concern many different subjects, such as people, animals, companies and institutions. It outlines both substantive rules of law and the procedures people use when law is applied or enforced.

Everyday examples of the laws that relate to citizens include:

1. Statute: law passed by Parliament.
2. Government and EU regulations: these regulations are put in place as protection from the wrongdoings of service providers.
3. The right to use property is governed by a variety of legal rules, such as statutes, case law or both.
4. There are statutory penalties for crimes such as burglary.

Law is necessary to maintain order in society. Without law, the state would be disorganised, leading to chaos. Formal regulation is needed in order to regulate the affairs of not just human activity but also larger companies and public bodies.

Does law have boundaries?

It is important to not view law in isolation. Law consists of a set of subjects that all have an impact on each other. Law is at the centre of an interlinked variation of academic disciplines. When studying law, boundaries must be waived; law must be viewed within context. Lawyers must also be aware of the dynamics of law; how it works and why.

How does law relate to morality?

Law must be able to provide some guidance about how to conduct oneself. It sets a standard as to how people can be judged. In doing so, it has to reflect the opinions of the majority of the population, so that it can be imposed without controversy.

What is the definition of morality?

There are two important terms to know regarding morality: ethics and metaethics. Philosophers consider the former to be the study of morality itself, whereas the latter examines morality in its abstract nature. Regarding the debate about ethics, there are two general views: objectivism and relativism. Objectivism believes that there is an absolute set of moral principles. Relativism believes that morality is relative. In other words, it can evolve over a period of time and differs from society to society. The argument is that morals are a consequence of independent human thought and therefore are reflective of individual or societal views.

What are some examples of legal, moral and societal duties?

There are three types of duties: moral duty, legal duty and social duty. A moral duty is owed between people in relation to the accepted ethical standards being used. A legal duty, by contrast, is created by law as opposed to a set of moral principles. Social duties differ from the aforementioned duties; they are concerned with more informal duties that contribute to the daily functioning of society. These three duties have a strained relationship with each other. Two examples of this are illustrated by questions such as, first, whether discrimination against an employee because of their weight should be illegal, and second, whether same-sex marriage should be legal.

There is an inherent overlap of these duties. This overlap is examined below.

1. How do legal duties interact with moral duties?

Not all moral duties can be enforced by law. For example, adultery is illegal in certain countries such as Saudi Arabia and Pakistan, whereas in the United Kingdom (UK), that is not the case. Though one cannot be held criminally liable for adulterous acts in countries like the UK, public opinion still has it that adultery is immoral. Also, moral duties cannot be awarded legal protection because some are difficult to maintain/regulate, or they are beyond the scope of a state's involvement.

Case Study 1 - The Enabling Act and the Nuremburg Laws

The Nazis were able to pass immoral laws that severely discriminated against the Jewish population of Germany because they orchestrated social prejudices against them. They did this in two ways. First, they established penalties for those who avoided complying to Nuremburg Laws. Secondly, legislation acted as a medium in the manipulation of the social attitudes of the general population towards the Jews.

2. How do legal duties interact with social duties?

It is impossible for the government to enforce legislation that does not coincide with the social attitudes of the state. Society determines whether or not certain conduct is acceptable. In the past, legal rules reflecting the social values of the state was the norm. This is no longer the case in modern societies as legislation matching all social values would constitute severe problems. For example, one would not expect to be imprisoned for skipping a queue, but one would expect punishment for theft. The Nuremburg Laws highlighted the need for legislation to follow social attitudes - Hitler manipulated these attitudes prior to passing the laws. He was aware that they would only be deemed legitimate to follow if they reflected the values of the general population.

3. How do moral duties interact with social duties?

According to philosophers of morality, there is a clear distinction between social principles and morality. Consider Oscar Wilde and his homosexuality. In many modern moral cultures, homosexuality is mainstream and acceptable. However, Wilde also refers to a practice that many in the same societies would deem amoral - sexual acts between adult men and adolescent boys. In Ancient Greece, such acts were acceptable in society, despite being immoral in today's opinion. Objectivists highlight the fact that in some societies, social and moral values differ - this opens a gap for laws to be passed that follow suit to social ideals instead of moral ones.

Ideally, laws should reflect social practices which in turn could be justified morally. However, because morality is relative between people and thus not everyone will agree on what is moral, this is virtually impossible.

Law is necessary to maintain order in society. Without law, the state would be disorganised, thus leading to chaos. Formal regulation is needed in order to regulate the affairs of not just human activity but also larger companies and public bodies. Objectivism believes that there is an absolute set of moral principles. Relativism believes that morality is relative; in other words, it can evolve over a period of time and varies from society to society.

How do law and morality interact in practice?

Ethics are divided into three categories: virtue theories, duty theories and consequentialist theories.

What are virtue theories?

According to philosophers such as Aristotle, virtue theory concerns itself with the development of good traits of character. He valued the 'good life' over acquiring monetary wealth. Though generally unaccepted in modern society, virtue theory is visible when politicians encourage the notion of social responsibility through volunteering efforts. David Cameron’s Big Society initiative is an example of virtue theory in practice. Thomas Hobbes had a more pessimistic and contrasting view of this. He believed humans to be selfish by nature and viewed morality as a man-made social contract to prevent a war of all against all.

What are duty theories?

Duty theories set out fundamental rights and obligations of the people in society. For duty theories, the distinction between natural and positive law is clear: the former is not validated by man-made concepts such as sovereignty, while the latter is seen as the real law of the land because man made it so.

What is consequentialism and utilitarianism?

This theory attempts to examine the consequences of our actions. The morality of an action is determined by the goodness of its outcome. In other words, there is a focus on legislations that work to promote the greater good, where the means are justified by the end goal.

All three of these theories interlap, though the last two are more relatable to modern society than the first.

Can all law be morally justified?

This question addresses two of the more controversial aspects of law, namely abortion (termination of a pregnancy) and euthanasia (medically assisted suicide at the request of the patient).

Abortion, Roe v Wade

In the United States, the Roe v Wade case stated that the right to privacy extended to a woman's right to an abortion on demand. In society, the two main stances on the issue are pro-choice and pro-life. The stance taken by the Supreme Court has been shown to reflect public opinion on the matter; it fluctuates as the numbers change depending on polls. Supreme Court law tends to reflect social values of the time.

Euthanasia, Diane Petty

A female patient suffered from motor neurone disease, which caused her great suffering and interfered with her quality of life by making her virtually immobile. She requested assisted suicide with the aid of her husband but was denied it by the UK government under the Suicide Act 1961. Public opinion polls suggested that there is great value placed on the preservation of life.

What is jurisprudence and how is it justified?

Jurisprudence is a discipline that aims to figure out how and why laws are made. It helps to understand the impact of a law when it is put into practice. Jurisprudence studies the nature of law as a concept. This helps to add historical, political and social context to the law. Rule of Law is a key aspect of jurisprudence, because it allows lawyers who actually work with the law to consider its significance in the real world.

What does jurisprudence consist of?

There are four main characteristics of jurisprudence: natural law, positivism, realism and critical legal studies.

Natural law

For the perspective of natural law, what gives laws their legitimacy is the natural morals of human beings. It is especially important in cases of judicial reasoning such as in human rights law. Here, the principles of natural law are promoted and the importance of the moral force is necessary for the completion of the views of legal authority. An example of this is Islamic law.

Positivism

According to positivism, law and morality are independent of each other. Law derives its authority from the fact that it is a man-made invention recognized by the general society. It is legitimate because the state has deemed it so, it is not a natural moral force. The main focus is on understanding how a law obtained its authority in society.

Legal Realism

In legal realism, law is determined by how it is used during the procedural element of it, i.e., how it is used by the courts. The emphasis lies on how law works in practice rather than in theory.

Critical Legal Studies

The running theme of this characteristic is summed up in the following quote: "all law is politics". The rules of law are foisted on society by a dominant group in that society. According to this view, political motivations are intertwined with legislative and judicial acts.

In order to effectively examine and develop relevant legal principles, understanding why the law is the way it is, is important. Law is a social construct that stems deeper than just being placed within a moral context.

Jurisprudence aims to figure out how and why a law is made - it is necessary to understand the impact of the law when put into practice.

How legitimate is law, and why is this question important?

Why should laws be obeyed? Regardless of the morality of a given law, it is important that the legitimacy of the law is respected. Not agreeing with a certain rule does not negate the obligation to abide by it. The example given is tax legislation. There are two themes that derive from this:

1. The legitimacy of law can be traced back to one foundational legal rule.
2. Because of this rule an actor in the political system is entitled to sovereignty. This sovereignty enables the actor to create law that is not restricted or limited by other actors.

What are Grundnorms?

Grundnorm is a term that legal theorists use for a law that provides legitimacy to subsequent laws. It essentially means basic rule. All of the laws in a jurisdiction can be characterised as norms - each of these norms are in turn legitimised by a broader basic principle until it is no longer possible to legitimise it further. Though fundamental, Grundnorms are subject to change, particularly in the event of the admission of a new administration that institutes a new regime. Time is an important factor regarding the Grundnorm, because in order to find rules that legitimise other rules, we must trace them back in time, starting from the most recent rule.

What is the importance of sovereignty?

The main characteristic of a sovereign actor is that they can impose their own will without restriction from other actors. Positivists such as Hobbes believed that law received its legitimacy, not because of nature, but because it is the prevailing law of the jurisdiction during that time. One of the consequences outlined by legal and political theorists is that a sovereign body cannot bind its future self. There is a clear distinction in sovereignty: de facto sovereignty and de jure sovereignty. De jure sovereignty lies in the formal body of authority that make the laws, while de facto sovereignty lies in the hands of those who actually make decisions. De facto sovereignty in the UK resides in the Cabinet, for example. The UK is a unitary state, because all powers that local authorities have are granted to them by Parliament. By contrast, in states such as Germany and the United States sovereignty is shared on a federal level. In the United States for instance, powers that are not expressly conferred by federal government remain with the individual states. Some powers are reserved for the states and some for the federal government. Sometimes sovereignty is evenly shared between various institutions in a state.

What is Rule of Law?

Eisenhower stated that the way to recognise rule of law is to "recall what has happened when there is no rule of law" (in reference to Nazi Germany).

What does Rule of Law consist of?

Rule of Law comprises the characteristics that are needed in order for a civilised state to function properly. Lord Bingham identified eight sub-rules of Rule of Law:

1. Law must be accessible, clear and predictable; in other words, there must be legal certainty for the subjects of the law.
2. Legal questions must be answered with the application of law, not by exercise of discretion.
3. All laws must be equally applicable.
4. Law must afford adequate protection of human rights.
5. The means for resolving civil disputes must be provided for with no extra costs.
6. Agents of public offices such as ministers and public officers must exercise good faith.
7. All procedures must be fair.
8. The state in question must operate in compliance with its international obligations.

What are the effects of the absence of Rule of Law?

In the absence of Rule of Law, sovereignty would remain with the individual and thus disorder would arise. In other words, "there is no place for industry". Each would work for their own benefit. Hobbes argued that individuals must surrender aspects of their personal sovereignty to the state in exchange for a guaranteed structured society. A characteristic of Rule of Law is that laws are not arbitrary, meaning they are not based on random choice but rather on reason in a set system. Legal certainty is necessary for citizens to anticipate the nature of the obligations they have to the state.

What is the Nature of the Rule of Law?

The positivist view of Rule of Law is that fairness in a system of law does not really matter, as long as it exists and abides by clear rules. Rule of Law should be able to allow its subjects to plan their lives.

What is the Rule of Law in Practice?

Some argue that Rule of Law is more aspirational than realistic. For example, the governments of the USA and Zimbabwe can both aspire to legitimise the concept of Rule of Law in their societies, but fall short when certain rules are simply ignored or certain laws are applied arbitrarily.

According to some theorists, the idea of Rule of Law is a Western construct which is not cannot always be applied in other parts of the world for cultural reasons. Because different cultures have varying needs regarding rights and obligations, this also applies to the functioning of laws. An example of a Western construct of law is contract law. In other countries, bribery and barter trade are more commonplace forms of business as opposed to controlled agreements in writing. The culpability of a bribe is an alien concept in some cultures. Some sociologists call the spread of Western standards and culture to other civilisations ‘cultural imperialism’.

Rule of Law comprises the characteristics that are needed in order for a civilised state to function properly.

What is Separation of Powers?

Separation of Powers is the division of powers within a state's government, with the aim to prevent an accumulation of excess power in the hands of one person or branch of government. This concept was introduced by Charles Montesquieu. In short, there are three branches of government (trias politica): the legislative, judicial and executive branch. Executive power belongs to the government, judicial power belongs to the courts and legislative power is of the legislature (creator of law). Each of these branches play a different but significant role in the functioning of the state. Ideally, there must not be any overlap between the branches. However, it is nearly impossible to meet this criterion, since states involve people and institutions which are open to human error. Also, the branches differ globally; for example, Chinese government consists of five branches. The system of checks and balances was put in place because the branches cannot operate in isolation. This system keeps each in check and ensures the maintenance of the balance of power.

For example, in England and Wales, this doctrine ensures that public bodies operate within their powers and don't go outside their allowed scope of action. In the UK, the Queen of England remains the head of all the branches of government. The Queen’s Government is the executive branch, the legislature is parliament and the courts constitute the judiciary, so it differs slightly from the United States. To conclude, the success of states depends on the embodiment of the Rule of Law, in particular the characteristic of Separation of Powers.

What are legal systems and the sources of law? - Chapter 2

While the first chapter considered the theories of law in its context, this chapter looks at how these have manifested in the legal systems of England and Wales. It also addresses the language of law in both countries by introducing the essential terminology lawyers are required to know.

What is a legal system?

The limitation to a lawyer's ability to practise law is his or her jurisdiction. The term jurisdiction is used to refer to a particular place where the law can actually be applied. It also means having the power to enforce the law and settle disputes in a particular area or field.

The term legal system is largely synonymous with jurisdiction. It is the body of institutions that create, enforce and carry out dispute resolutions of the law of the jurisdiction concerned.

How do the British legal systems work?

The British legal systems are complex, especially since there is an overlap of jurisdictions for the different types of law. The political system of the British Isles continuously evolves and develops.

British Isles

The British Isles are made up of two states - Republic of Ireland and the United Kingdom, with the monarch Queen Elizabeth being the Head of State. Ireland achieved its independence in 1922, thus separating itself from the rest of the UK in a political and legal sense.

United Kingdom

The United Kingdom (UK) includes the following countries: Scotland, Wales, England and Northern Ireland. Parliamentary legislation has jurisdiction over the whole UK.

Great Britain

Northern Ireland is politically and legally excluded from Great Britain, so legislation made in Great Britain does not apply to Northern Ireland. Both Northern Ireland and Scotland have different legal systems in line with the 'legal forum' in which disputes are settled. Citizens of both countries are, respectively, subject to the laws of their countries only. Though they are similar to the UK in the sense that they are common law systems, they do not mirror that of England and Wales. The legal systems of the two countries are particular to their countries.

England and Wales (the main focus of this chapter)

Wales annexed to England in the 13th century - in 1282. Since then, the legal term to describe the legal system there is English legal system.

What are the Sources of Law in England and Wales?

Recognising the institution that created a certain law and the time period it was made in is important to determine which rule takes precedence. In England and Wales, the legal system has a combination of sources.

How do statutes function as a source of law?

The government majority lies in the House of Commons and they are responsible for the introduction of most of the laws made by Parliament - they are usually called Acts of Parliament, statues or legislation. Legislation is divided into primary legislation and secondary legislation (to be discussed in Chapter 4).

How does case law function as a source of law?

The courts have independent, non-elected judges. Case law is created by senior judges who reach decisions on the cases before them. In other words, this is common law; the judges interpret the sources of law and consequently develop case law. The judiciary has a quasi-legislative role (remember the Trias Politica as discussed in previous chapter); the judges develop case law through their decisions, and at times can fill gaps in legislation.

How do EU Law, ECHR, and international law function as sources of law?

EU law is taken into account and incorporated into UK law by the European Communities Act 1972 and the European Convention on Human Rights (ECHR). The UK is also bound to international law. EU law and ECHR are separate to each other and their judicial branches are distinct, but they both have an impact on the English legal system.

Are there other Sources of Law in England and Wales?

There are some specialized areas of law that concern certain areas of activity, such as military and ecclesiastical law. Any other law that does not belong to the specialised category is known as 'civil law'.

How did the English legal system develop?

Why study the history of the English legal system?

All areas of common law can be traced back to pre-Victorian English legal systems, most of which were around at the time of the Great Britain colonies. The development of English case law is therefore relevant, although it is very broad subject. Law does not operate in isolation, it is a collection of varying disciplines. History plays an important role in the development of law. The two traditional sources of law in England and Wales are case law and statutes.

What is the difference between common law and civil law?

Common law mostly consists of binding judicial decisions that develop a general body of case law. In jurisdictions like this, legislation is not the only source of law as some principles of law can be stated in some courts, which can then bind later judges. In civil law systems, cases do not develop into 'self-standing' legal principles. There is a tendency to not have binding case law.

How did English case law develop over time?

William the Conqueror gained control over a country by gaining control over its legal system. He travelled around the country, accompanied by a court, and made decisions regarding the grievances of his subjects; the term King's Bench (now Queen's Bench) was coined as a result of this practice. As time passed, this role was delegated to Justices. Local customs were applied, as there was no unified, national set of laws. Henry II formalised this system when he divided the country into circuits. These were areas where the judges were to visit regularly. This practice was abolished in 1971, but a version of this still exists in the United States.

What are the drawbacks of common law?

The only way a person was able to litigate in a King's court was through a writ, a document that covered the facts of the case. They were problematic because not only were they inflexible, but a minor mistake could lead to the collapse of an entire case. This caused particular problems in mortgage payments, especially in the instance of some lenders being unavailable on the date of payment, resulting in loss of land for the borrower. There was only one remedy for such civil wrongs: compensation. This was not always appropriate.

What is equity and where does it come from?

In short, equity means fairness. It has morphed into supplementing the common law with rights which are based on fairness. The position of common law is normally considered before equitable rules because common law 'follows the law'. The law of equity was developed by the Chancellor at the Court of Chancery. From that point onward, writs were no longer necessary and remedies were no longer limited to damages. Equity also introduced the notion of a trust. A trust is the legal interest one has vested in the beneficiary with regards to the use of land or other property. A trust is a form of legal title. In common law, a subject only has rights if they possess a legal title. Equity has been criticised to be too erratic, because it is based on the conscience of the Counsellor. It is too broad and vague a norm, and thus an uncertain measure. In summary, a trust is the right to hold property on behalf of another (beneficiary).

What are equitable remedies?

Damages were not always adequate or appropriate to meet the needs of the claimant, so equitable remedies were developed. They are discretionary, it is up to the court to determine whether the parties are deserving of the exercise of equity. Two important examples of these remedies are injunctions and the decree of specific performance. Injunctions are a request from the court to act or refrain from an act. Decrees of specific performance are when the court orders a person to perform an act according to a contract or trust.

What is the discord between common law and equity?

Equity developed as a supplement to the common law. In other words, equity functioned as an alternative forum for dispute settlement. As time passed, equity challenged common law, rather than supplement it. James I decided in 1615 that equity prevails over common law. This decision declined in value, as equity hardened into the inflexibility of common law. It soon became cumbersome and slow to obtain justice.

Amalgamation of courts of common law and equity

The Supreme Court of Judicature Acts of 1873 and 1975 merged common law and equity. Equity can now at times be used as a defence against common law claims. Also, civil courts are able to grant both common law and equitable remedies in the same action. For example, an injunction can be ordered with an addition of damages to be paid.

Statutes

Statutes have begun to replace common law as a primary source of law in England and Wales. Initially, until about the 15th century, statutes were merely laws that were passed with Royal authority. Soon, the consent of the House of Commons became a necessary requirement. Because parliament is the law making body in the UK, parliamentary sovereignty is created. Statutes and parliament, by the 19th and 20th centuries, represented the democratisation of society. As the 20th century progressed secondary legislation became of great importance, as primary legislation was unable to keep up with the demand for regulation (this demand came about as a result of the social democratic model that involved state ownership of utilities and central planning). The number of statutes, however, has been reduced since the 1960s. This is mainly due to the increase in statutory instruments and the increasing complexity of legislation.

What is EU Law?

How does the EU work?

The term Brexit refers to the decision taken by the UK on the 23rd of June 2016 to leave the European Union (EU). EU law applies (has jurisdiction) in the UK. The European Communities Act 1972 was instituted because international law did not apply in the national legal system. This act enabled EU legislation to be incorporated in the UK legal system without Parliament needing to legislate on a separate occasion. When Brexit takes effect, this will probably cease to be the case. This system is known as a dualist system because EU law is not automatically binding, as it needs to initially be incorporated into domestic law by Parliament. Here are some examples of how EU Law impacts UK subjects:

• Prohibition of abuse by a party of its dominant market position. Tying is the encouragement to use one product due to its link to another. This was in breach of Article 102 of the TFEU.
• Regulations put into place to protect employment when one business is sold to another business - Transfer of Undertakings (Protection of Employment) Regulations.
• The Consumer Rights Directive 2011/83/EU: EU member states required to implement directives that are beneficial to consumers and protects their rights.

There are seven EU institutions:

1. The Council of Ministers
2. The European Commission
3. The Parliament
4. The Court of Justice
5. The European Council
6. The European Central Bank
7. The Court of Auditors

What is International Law?

Public International Law

The term international law is a misnomer, because there is no sovereign body that can bind states to international law in the way a sovereign state binds its subjects to national law. However, the conduct of states shows that there is a body of rules they abide by. The United Nations is the main executer through its organisations such as WHO, UNICEF, UN Women, UNESCO, WIPO etc. Other sources of international law include customs, judicial decisions and other general principles. 114 states have ratified the Vienna Convention for instance, which regulates the entry and conduct of treaties. The treaty is binding, but its main idea is consent; states consent to be bound by treaties. An example of this is the Law of the Sea, which is an area of law governed by international law. Among others, there is a strong emphasis on human rights. Other examples include the Universal Declaration of Human Rights 1948, which makes human rights a main topic of consideration in international law.

How is international law enforced?

International law is enforced by International Tribunals and Courts:

• European Court of Human Rights
• International Court of Justice - UN Charter and ICJ Statute
• International Criminal Courts - Rome Statute
• International Tribunal for the Law of the Sea and International Court of Arbitration - UN Convention for the Law of the Sea
• Permanent Court of Arbitration - Hague Convention for the Pacific Settlement of International Disputes 1899

While the first chapter considered the theories of law in its context, this chapter looks at how these have manifested in the legal systems of England and Wales. It also addresses the language of law in both countries by introducing the essential terminology lawyers are required to know.

What is The International Dimension of Competition Law? - Chapter 3

Over a short period of time, there have been drastic changes in the world's economies. For instance, economies that are controlled by the state have been exposed to the general principles of the market. Furthermore, there has been a reduction and, in some cases, an elimination of legal monopolies. Also, there is a large number of multinational companies in operation across the globe.

What is the theory of extraterritoriality?

Regarding the jurisdictional competence of a State, there are two key elements in play. They are as follows:

1. Subject-matter jurisdiction: with this element, a State has jurisdiction to make laws through its legislative, executive or judicial bodies, within its territory (territoriality principle). It also has the power to regulate the behaviours of its citizens abroad, including companies that have incorporated themselves under their law. A distinction is made between objective and subjective territoriality. Objective territoriality looks at the effect of the crime. In other words, it goes beyond the subjective territoriality (where the act is committed) but looks at where the act is completed. In this case, States would be concerned if an act was completed within its territory. An example of this is a shot being fired across a border. Though the shot was fired outside of its territory, the State would still have jurisdiction because the harmful event took place within its boundaries. Relating to subject-matter, both the territoriality and nationality principle help to understand the large number of infringements of competition law. An act can be committed within a State by a subsidiary company that belongs to an overseas parent company. It is important then to treat the two companies as a single economic entity, so that the parent company can be held responsible for the unlawful conduct of its subsidiary company. The territoriality principle is enough for jurisdiction to be established. This doctrine of single economic entity is a well- established feature of European Union law. It is not always effective though. For example, if producers of widgets in Japan refused to export them to the UK, though there would be commercial effects, there would be no way to genuinely establish the conduct there.
2. Enforcement jurisdiction: even taking into consideration the above element, the law in question cannot be enforced with that State's boundaries without prior permission from said State. Enforcement does not only mean imposition of penalties, it also concerns authoritative acts such as service of summons, or carrying out an investigation. The chances of a national authority needing information from locations outside of its jurisdiction increases in accordance with the increasing globalisation of business.

How does the extraterritorial application of US Competition Law work?

What are the Alcoa, Hartford Fire Insurance and Empagran cases?

The question still remains as to whether public international law allows jurisdiction to be taken on the basis of effects alone. One country that has embraced the effects doctrine is the USA. This is present in the case United States v Aluminium Co of America (Alcoa); Judge Learned Hand established that States are able to impose liabilities for conduct that is outside their borders but that has consequences within their borders. This case played a pivotal role in the US acceptance of the effects doctrine. For instance, The Sherman Act of 1980 does not apply to conduct involving trade or commerce with foreign nationals unless this conduct has a direct, substantial and foreseeable effect on US commerce or trade. Another question arises, a more controversial one, concerning foreign plaintiffs and damages. Are foreign plaintiffs able to sue for damages in a US court, even if the harm occurred outside of the US? It was concluded in Hoffman-La Roche v Empagran SA that, if the plaintiffs had suffered damages in Ukraine, Panama, Australia, and Ecuador, they could not sue in the US. Foreign plaintiffs cannot recover damages in the US. A significant element of the judgement in this case was that it left open the question as to whether the foreign plaintiffs were able to sue in the US, if the injury was unable to be separated from the domestic harm caused by the cartel to the customers in the US.

What is a comity?

A comity can be defined as an association of nations for their mutual benefit. There has been attempt by the US courts to apply the effects doctrine in a restrictive manner - there should not only be substantial and direct effects, but also the presence of the respective interests of the US and of other States which may be offended by the assertion of the doctrine to be weighed against each other. This is traceable to jurisdictional rule of reason by Brewster. The concept of applying reasonableness when dealing with matters is met with criticism because the court is not seen as the most appropriate forum to conduct such a process. In the Motorola v AU Optronics, the court held that the plaintiff's position would increase the global reach of the Sherman Act - this would create friction with many foreign countries and the buildup of resentment at the US's efforts to assume the role of world's competition law police.

How does extraterritorial application of US antitrust law work?

An example of extraterritorial action in the United States is present in the case Institute Mereiux. The FTC took action after an acquisition by the Institute of BioSciences company due to a perceived detriment to the competition in the US in their market for anti-rabies vaccines. The implementation of the Institutional Antitrust Enforcement Assistance Act 1994 was intended to improve the US' enforcement agencies' ability to acquire evidence situated abroad, by providing reciprocal agreements between the US and other countries to facilitate the exchange of information. The US entered multiple agreements with other countries, such as the Cooperation Agreement with Colombia in 2014.

How does the extraterritorial application of US competition law to gain access to foreign markets work?

Antitrust laws are not only applied to extraterritorial behaviour that affects imports into the US, but also where American companies are obstructed by anti-competitive behaviour in a bid to gain access to the foreign markets. The Department of Justice of the US threatened to apply these antitrust rules against Japanese practices that affect the US exporters by excluding them from Japanese markets. As a result, the Japanese government substantially increased penalties to be imposed for infringement of Japanese legislation. One of the first cases where the US took action abroad to challenge an action that denied foreign access was US v Pilkington. The latter in the end agreed not to assert certain provisions in tech licenses against US firms.

How does extraterritorial application of EU Competition Law work?

The Court of Justice of the European Union has not specifically ruled that there is an effects doctrine in the EU, because it has always been possible in articles 101 and 102 of the EU Merger Regulation - jurisdiction has been based on other grounds, such as the single economic entity doctrine or when the agreement was entered into outside of the EU but was implemented into it afterwards.

Subject-matter jurisdiction

What is the economic entity doctrine?

The single economic entity doctrine was established in the Dyestuffs case. The Court intended to treat all three companies and their parent companies as a single economic entity. This was criticised because it not only disrespected the independent nature of each company but also because the claim of the Court that a single parent was in charge of the subsidiaries was based on limited evidence. The crucial question is whether the parent company has decisive influence over its subsidiary company. The fact that the parent owns all the shares means they have the ability to exert such influence and creates a rebuttable presumption that such influence was indeed exercised.

What is the implementation doctrine?

The Wood Pulp I case held that jurisdiction could be based on the concerted practice in the EU. It can be referenced to the widely recognised territoriality principle of international law. The Court also held that a cartel was indeed implemented in the EU. There was no comment or reference as to whether this position would have stood if the agreement had been implemented outside of the EU but had created economic effects within it. That would have so in the case of, for example, a collective boycott by members of a non-EU cartel where they deny service to customers within the EU. The question would then arise as to whether this agreement was implemented in the EU because of the refusal to sell there.

What is the qualified effects doctrine?

The Commission has often asserted the fact that EU law recognises the effects doctrine, backed up by several Advocate Generals - though the Court of Justice has not made a definitive statement in this regard. An important case to note is Intel v Commission wherein the latter decided there was an infringement against Article 102. Intel disagreed with the assertion of jurisdiction by the Commission. The General Court ruled as follows: to be able to justify the Commission's jurisdiction, it must be established either by qualified effects of the practice in the EU or by the fact that it was implemented in the EU. The Court says these are alternative requirements, as opposed to cumulative. The qualified effects meet the criteria of immediate, substantial and foreseeable in the European Union.

Enforcement Jurisdiction

How do investigators acquire information?

The Commission has the intention to carry out investigations on trade associations within the EU that represent non-EU business. The fact that they are non-EU businesses does not entitle these associations to refuse to submit to the investigation of the Union. In the case Slovak Telekom v Commission the Court held that the Court was entitled to require the company to relay information relating to its conduct that took place prior to Slovak Republic accessing to the European Union.

How are final decisions reached?

There is the question as to whether a final decision can be served on non-EU undertakings. This, in other words, is the act of enforcement as opposed to stating objections. The Court of Justice held that its decisions on non-EU dealings are valid.

EU Merger Regulation

What are the jurisdiction criteria in the EUMR?

According to article 1(2) of this regulation, for any concentrations that have an EU dimension the European Commission has to be notified in advance. Concentrations have an EU dimension when there is a combined turnover of the undertakings that exceed EUR 5,000million worldwide, provided that at least two of these undertakings have a combined turnover of EUR 250million within the European Union and that their business is not primarily situated in one and the same Member State (this is dealt with in Article 1(3) of the EUMR).

What was the ruling in Gencor v Commission?

In this case, the Commission prohibited a merger between two South African undertakings because they believed it would result in a dominant duopoly in the markets of platinum and rhodium, thus impeding effective competition in the internal market. The General Court supported the Commission and further added that the turnover of these undertakings exceeded the threshold outlined in Article 1(2) of the EUMR. The requirement in this article is consistent with the judgement in Wood Pulp I. Comity analysis should be undertaken in the application of the EUMR.

How does the extraterritorial application of UK Competition Law work?

The UK has always taken the view that jurisdiction cannot be based solely upon commercial effects on the market, but the territorial and nationality principle are applicable. This is evident in the submission of the UK government in the Wood Pulp case, as it maintained its dissent with the effects doctrine.

What does the resistance to Extraterritoriality Application of Competition Law consist of?

The Alcoa case incited a number of battles between the USA and other States that disagreed with the extraterritoriality application of US antitrust legislation. A number of countries have passed block statutes or executive orders in attempts to thwart an excess of assumptions of jurisdiction by the USA. No provisions of EU law have this effect, as it is left up to the individual Member States and their governments. The UK's hostility towards the US practice has resulted in the Protection of Trading Interests Act 1980. An early example of the UK's attempt to prevent the extraterritorial application of US law came in 1952 with the passage of the Shipping Contracts and Commercial Documents Act 1964. These provisions led to the prevention of disclosure of information to US authorities. At a common law level, the UK court has the discretion to order a litigant to restrain foreign proceedings that are oppressive, An example of this is found in Midland Bank plc & Laker Airways plc: the Court of Appeal ordered Laker to discontinue proceedings against the former in the US, because it would have involved the extraterritorial application of US antitrust legislation.

How does the internationalisation of Competition Law work?

Problems can occur as a result of transnational mergers, for instance when several competition authorities investigate the same transaction but have opinions on whether it should be allowed or not. International cooperation between the competition authorities have higher chances of achieving successful and effective solutions. Below are examples of the steps that have been taken towards greater international cooperation between the competition authorities.

1. ICN: Established in October 2001, the International Competition Network plays a major role. It stands for adopting higher standards and procedures in competition policy. An important document in this is the Merger Guidelines Workbook, which provides guidance to countries that are new or in the early stages of merger control.
2. OECD: This is the Organisation for Economic Co-operation and Development. As a more active aspect of this, it calls upon member countries to ensure that their laws 'effectively halt or deter hard-core cartels' in the Recommendation of the Council concerning Effective Action Against Hard Core Cartels.
3. WTO: The World Trade Organisation, as the name suggests, concerns itself more with the issues of trade, as opposed to competition law.
4. UNCTAD: This is the United Nations Conference on Trade and Development, which has taken special interest in development of competition policy for many years.
5. International cooperation agreements. For example, the adoption of bi/multilateral treaties.
6. The EU's dedicated cooperation agreements on competition policy. The EU has dedicated cooperation agreements with the USA, Canada, Japan, South Korea and Switzerland:
   1. The EU/US Cooperation Agreement of 23 September 1991
   2. The Positive Comity Agreement of 4 June 1998
   3. The cooperation agreements in practice

They have been highly successfully in practice. The level of cooperation between them is greater than it was in the 90s. This success is shown most effectively by the substantially reduced number of disagreements between states.

Over a short period of time, there have been drastic changes in the world's economies. For instance, economies that are controlled by the state have been exposed to the general principles of the market. Furthermore, there has been a reduction and, in some cases, an elimination of legal monopolies. Also, there is a large number of multinational companies in operation across the globe.

What is contract law? - Nature of the Agreement: Offer and Acceptance - Chapter 4.4 & 4.5

A contract is the agreement between two or more consenting parties that is legally binding on all of them. Not all agreements are deemed contracts because not all of them have legal sanctions. A common agreement between friends, for example, can be broken without legal sanction and as such does not qualify as a contract. All contracts have clear terms that must be adhered to according to the requirements of and from each party. Terms that are vague cannot be deemed binding on the parties involved. The main sources of contract law are case law and legislation.

What are the basics of Contract Law?

What are the essentials of a contract?

Large businesses use so-called standard form contracts. The terms are set out in a written document and the person wishing to contract can either accept the terms of said contract or refuse them, but they cannot be negotiated. The Consumer Credit Act 1974 regulates some of the content in the standard form contract. An example of a standard form contract is passengers on coach travel not being permitted to consume hot food whilst aboard the coach.

Besides explicit terms, contracts also have implied terms. The parties to the contract are bound to both explicit and implied terms in it. For example, terms for the fitness of foods for consumers are outlined in the Consumer Rights Act 2015.

Certain laws prohibit some types of contractual clauses to the effect that if such clauses are included in a contract document, they will have no legal effect. An example of this is the Unfair Contract Terms Act 1977, which states that certain clauses that seek to remove culpability for death or injury through negligence are legally ineffective.

What are the main issues in Contract Law?

There are three main issues that concern contract law:

1. Is there a contract?
2. Is the agreement recognised by the law?
3. When do the obligations for the parties to the contract come to an end and what are the possible remedies in the event one of the parties breaks some or all of the terms in the agreement?

Essential elements of a contract are:

• Agreement
• Consideration
• Intention to be bound and create legal relations
• Compliance with the formalities
• Capacity to enter into a contract

What are void, voidable, and unenforceable contracts?

Contracts that are void have no legal effects, therefore they actually are not contracts. There was never one and there is not one presently. A voidable contract is a contract that is binding on one of the parties, but the other party has the option to set it aside.

An unenforceable contract is valid and the parties to it have the liberty to follow through with it. However, if one of the parties chooses to not carry out their part of the contract, the courts will not enforce it.

What are bilateral and unilateral contracts?

Most contracts are bilateral. A bilateral contract consists of a promise made by one party in exchange for a promise from the other one. A unilateral contract is a contract where one party promises to do something in return for the completion of a specific act. This can include refraining from an act.

What are the requirements of a contract?

There are three forms (or requirements) of a contract:

1. Contracts are required to be made by deed; a deed is a written legal agreement which states in the agreement itself that it is a deed. It must be signed by those involved, in the presence of a witness. They agree to carry out all performances described by the deed.
2. Contracts are required to be made in writing
3. Contracts are required to be evidenced in writing

What is an offer?

An agreements is necessary for the existence of a contract. This agreement consists of an offer and its acceptance. One party (the offerer) makes an offer that outlines the terms of the contract and the agreements and the other party (the offeree) can accept it, demonstrating their willingness to be bound by the terms of the contract. The court determines whether a statement was an offer by looking at the intentions of the parties, inferring them from the circumstances of the case.

Why must an offer be clear?

Because an offer is a proposal with terms for another person to agree to, it is important that the offer is not vague. For instance, in the case Guthing v Lynn (1831), the court decided that the proposed offer was too vague for it to be open for acceptance. If an offer is vague, then there are specific terms that can be inferred to be more definite so they can be enforced in a contract. Imprecise terms can be inferred from previous dealings between parties and from general trade custom.

How to distinguish an offer?

• A distinction is made between an offer and other acts that don’t qualify as one. An invitation to treat indicates that the party is open to negotiation, but it does not constitute terms that the other party can accept. Party A asks Party B if they would like to make an offer that Party A can either accept or refuse - Party A made the first statement because they expect more negotiations before a contract is formed. An example case of this is Gibson v Machester City (1979). Goods in a shop are usually examples of invitations to treat. The cashier is not contractually bound to sell those items to a customer, because the mere displaying of goods in a stall does not constitute an offer. Advertisements are other examples of invitations to treat, as are applications inviting tenders, catalogues and share prospectus.
• Statements that give information or express an intention are not offers either. There is a distinction between a statement that is made by a party that is merely giving information or one that is expressing the intention to do something. A statement that a party has the intention to sell an item is not an offer and stating the price of an item does not constitute an offer either; this is seen in Harvey v Facey.
• A mere puff or boast is not an offer. For example, stating that one washing powder washes better than another one is a boast and not an offer, it is not meant to be taken as a contractual promise. There is a difference between a boast and a contractual promise which a normal person is reasonably expected to take seriously. An example of a contractual promise as opposed to a mere boast is found in Carlill v Carbolic Smoke Ball Company (1893).

Must an offer be communicated to the other party?

A person cannot accept an offer they do not know about, so it is important for those offers to be expressed by either speech, writing or conduct (Bloom v American Swiss Watch Co, 2015). An offer can be made to one or more persons or to the world at large, but it cannot be accepted by a party without the party’s prior knowledge of it.

How do offers function in unilateral contracts?

A unilateral contract is a contract in which the offerer promises to perform an act, which usually consists of the payment of money. Such contracts can be completed by anyone who fulfils the obligations that are set out in the offer (the offers are made to the world at large).

How is an offer terminated?

An offer can be accepted, but it can also be brought to an end. There is a variety of ways of doing so.

1. Revocation: the offer is withdrawn. Routledge v Grant (1828). If there has been a consideration in law, then the offerer is legally bound by his promise. Communication of the revocation can also be done by a reliable third party. There is no obligation for the offerer to communicate this to the offeree.
2. Withdrawal of offers in unilateral contracts: unilateral contracts are contracts which contain a promise to do something in return for an action. When the offeree has already started the performance, there is a general rule of thumb that the offerer does not withdraw from the contract, as the offeree should be given a reasonable amount of time to perform the act in time for the completion of the contract.
3. Termination by lapse of time: this happens if an offer has a time limit and this limit expires.
4. Death: if the offeree dies, then the contract is terminated. If the offerer dies, the contract is terminated if the offeree is aware of the death.
5. Rejection and counter offer: if an offer is rejected, it ceases to exist and it is impossible to later accept it. A statement of acceptance of an offer that was previously rejected will legally qualify as a new offer, which can be accepted or not (Hyde v Wrench, 1840).

What is acceptance?

Acceptance is the unconditional agreement with all the terms of the offer, for example when an offeree delivers goods to the offerer (Brogden v Metropolitan Railway Company, 1877).

Must acceptance be unconditional?

There must be an agreement of the exact terms set out in the offer by the offerer. The introduction of new terms will be taken to mean a counter offer. Several exchanges of forms before a contract is known as the 'battle of forms'. The last form is what becomes the offer, as opposed to the standard forms that are each considered to be a counter offer.

How is acceptance communicated?

Acceptance has to be communicated to the offerer and received by them at their place of business. In the event that the communication is not clear, for instance if there is a broken telephone line (Entores v Miles Far East Corp, 1955), the courts looks at the circumstances of the case. Acceptance must be communicated by the offeree or his authorised agent. The communication is not effective if an ordinary third party informs the offerer of the offeree's acceptance of the terms.

Which different methods of acceptance are there?

If there is no particular method of acceptance stated by the offerer, then the court will accept any reasonable method that the offeree uses. If there is a required method of acceptance, then the acceptance is only effective if it is communicated in that way or in an equally effective manner.

There are two exceptions to the rule that acceptance must be communicated.

1. Unilateral contracts are an exception, because they imply that notification is not necessary.
2. Postal acceptances are another exception, because for the acceptance to have legal effect it suffices for the letter to enter the postal system (for example, the mail box). Even if the letter never arrives, it being in the postal system with the correct details is sufficient and it is not the fault of the sender that the letter did not arrive. An example case of this is Adams v Lindsell (1818).

What about electronically made contracts?

Websites are often considered to be invitations to treat, due to the offer-seller dynamic and the considerations of time limits. The Electronic Commerce Regulations 2002 regulate how contracts are made over the internet.

What is intention, capacity, consideration, and privity?

This paragraph will examine the issues related to the formation of contracts. There will be objective to learn about the capacity to enter contract, creates of legal relations and commercial and domestic agreements.

When is there an intention to create legal relations?

The parties must have an intention for the agreement to have legal rights and obligations in order for the agreement to be legally binding. It is not always clear whether the parties to a contract actually wanted it to be legally binding and enforceable. If the parties disagree, it is then up to the courts to decide whether there was an 'intention to create legal relations' or not.

How does intention function in contracts in social, domestic, and family arrangements?

In cases where there are agreements between a family or a similarly close-knit community, the courts generally do not intervene, usually working under the presumption that there is no intention for the agreements to be legally binding (Balfour v Balfour, 1919). This presumption also covers agreements between friends and work colleagues (Hedley v Kemp, 1999).

The presumption that parties do not intend to enter into legal relations can be easily rebutted by evidence of a contrary intention. The court will usually find that there was such an intention, especially when the families were willing to put their finances at risk. This presumption between husband and wife does not apply after separation.

How does intention function in commercial or business agreements?

Parties that are entering into a commercial or business agreement are presumed to have the intention to create legal relations, for example, when free gifts are offered when promoting a business (Esso Petroleum Ltd v Commissioners of Customs and Excise, 1976). So called honor clauses state that an agreement is not legally binding on the parties involved. This can rebut the presumption that business agreement have the intention to enter into legal relations - Rose and Frank v Crompton Bros Ltd (1925). If a person is interested in a business, they can write a comfort letter. Such a letter encourages lenders to extend credit to the business by stating that the business has the ability to pay off its debts. These letters are not legally binding (Kleinwort Benson Ltd v Malaysia Corp, 1989).

What happens if the agreement is ambiguous?

If the agreements are ambiguous, regardless of whether there was intention or not, the courts will presume that the parties did intend for the agreement to be binding. The parties have to prove that it was not legally binding and that there was no such intention to create a legal relationship. The agreement can be enforced by the courts if parties cannot prove that there was no intention (Edwards v Skyways, 1964).

A contract is the agreement between two or more consenting parties that is legally binding on all of them. Not all agreements are deemed contracts because not all of them have legal sanctions. A common agreement between friends, for example, can be broken without legal sanction and as such does not qualify as a contract. All contracts have clear terms that must be adhered to according to the requirements of and from each party. Terms that are vague cannot be deemed binding on the parties involved. The main sources of contract law are case law and legislation.

What are the terms of a contract? - Chapter 4.6

The terms of a contract involve the contract’s content, which explains the parties’ legal obligations and duties.

What are pre-contractual statements and their rules?

When the terms of a contract are being determined, it is essential to know what the parties said or wrote. During negotiations, multiple promises and statements are made over a period of time. Not all these statements and promises are included in the terms of the contract. During negotiations, the following four types of statements can be made:

1. Trader’s hype or puff is just a boast used to advertise the product. Consumers are not supposed to consider these statements as literally true. There is no legal remedy, even if the claim is false. For example: a toothpaste which makes your teeth whiter than white.
2. Representation is a statement which was made during the negotiations and is eventually not included in the terms of contract.
3. Misrepresentation is a statement which was made during the negotiations, is eventually not included in the terms of contract and appeared to be untrue. In this case, the misled party cannot not sue the other party for breach of contract, but might have remedies for misrepresentation.
4. Actual term of the contract: this is a statement which belongs to the content of the contract. There is a remedy for breach of contract if the term is broken.

The intention of the parties is the appropriate factor to consider when determining whether a statement is a representation or a term. To objectively test the intention of the parties, the following question is asked: “What would a reasonable person consider to be the parties’ intention when looking at the various circumstances of the case?”. Other factors which the court will take into consideration to determine the intention of the parties are:

• Importance of the statement: when a statement is of great importance to one of the parties and that party would otherwise not have agreed on the contract without the statement, the statement will be defined as a term of the contract.
• Length of the gap between the statement and the contract: when the interval of time between the statement and the contract is lengthy, the statement is often defined as a representation.
• Oral or written nature of the statement: when the contract is documented on paper and the statement is oral, the oral statement is often defined as a representation. If the oral statement is written down after it was made, the statement is more often defined as a contractual term.

• The level of skill and knowledge of the party who made the statement: when the party who made the statement is considered to have specialist skills or knowledge, the statement is more often defined as term of contract.

What are contractual terms and their rules?

A binding contract must have a certainty of terms, meaning that there must be substantial agreement on the meaning of the terms used in the contract. When determining whether the terms have this certainty, the court takes into consideration what a reasonable person would think.

Express terms are the terms which are actually written down or orally stated by one of the parties. Implied terms are the terms which are not expressly stated by one of the parties involved, but are actually included in the terms of contract. This could be done by:

• Statute: terms which are included in a contract by statute are generally supposed to protect the party which has the least bargaining power.
• Trade Custom: terms could be implied in the contract by the custom of the trade. Nevertheless, the express term would prevail over the trade custom.
• Courts: terms could be included in a contract by the courts, as matter of fact or as a matter of law.

There are three types of a contract’s term:

1. A condition is a term which is considered as fundamental to the contract. The moment a condition is broken, the violated party will consider the contract to be breached and claim damages (compensation). The claimant could also consider the contract to be discharged.
2. A warranty is a term which is considered as a minor term of the contract. The failure of performing a warranty would not lead to the collapse of the contract as a whole. The innocent party could in this case claim damages for their suffered losses, however they are obligated to perform the other further contractual duties.
3. An innominate or intermediate term is a term which can neither be defined as condition nor as warranty. In this case, it was not possible to determine whether a breach of the term would result in crucial or irrelevant consequences. An innocent party could discharge the contract when most of the contract’s benefits for this party have been impoverished. Otherwise, when facing minor consequences, the innocent party could only claim damages for a breach of an innominate term.

Sometimes conflicts arise about the right terminology. In that case, the court will determine the classification of the term.

What are exemption clauses and their rules?

An exemption clause is an express clause in the contract which aims to exclude or limit the liabilities of one of the parties towards the other. This clause attempts to exempt a party from specific liabilities for breach of contract.

There are two types of exemption clauses:

1. An exclusion clause is an exemption clause which aims to exclude all legal liabilities.
2. A limitation clause is an exemption clause which aims to limit legal liabilities.

These exemption clauses are often present in standard term contracts. An effective exemption clause conforms to the following criteria:

• The exemption clause should be included in the contract. This entails that the party bound by the clause should have sufficient notice of it. When a party signed a document, that party is treated as being aware and as having agreed to the terms of the contract. Even when there is not a signed contractual document, a party may be bound by an exemption clause. The party is then bound, provided reasonable steps were taken to notify the party of the exemption clause. A mere receipt or a voucher would not lead to a binding effect. However, when exemption clauses are written down in documents given to one of the parties, the document should be considered as a contractual document by a reasonable man, and therefore one which could include exemption clauses. The test to determine reasonable notification is objective. Terms could also be included in a contract through referencing to another document and to terms on a website. When the exemption clause is considered to be an onerous term, the onerous term has to be brought to the attention of the other party. If the other party is not notified, the term will not be included in the contract. A term is only valid if it is inserted before or at the time of entering into the contract, not afterwards. An exception to the notification rule is when the parties have been in consistent dealings previously and have used the exemption clauses multiple times.
• The exemption clause should not be vague, but clear. In case the clause is formulated too vaguely, the court will interpreted it against the party which drafted the clause. This is called the contra proferentem rule. In case a clause is not able to deal with a particular matter conclusively, the court will not apply the clause on the matter. When the exclusion clause is only defined as an implied term, the clause will not apply to express terms.
• Lastly, the exemption clause should follow the statute.

What does liability for a fundamental breach of contract consist of?

The House of Lords determined that no law exists that makes exclusion clauses invalid, if they attempted to exclude liabilities for a fundamental breach of contract.

The terms of a contract involve the contract’s content, which explains the parties’ legal obligations and duties.

What does the International Sales and the Vienna Sales Convention contain? - Chapter 4.8

How did the convention originate?

In international sales, the Vienna Convention on Contracts for the International Sale of Goods (CISG, hereafter also referred to as the Convention) is regarded as the most important legal instrument in the field of international sales. The CISG is built on work done by its predecessors. The convention is inspirited by, based on and built on the Rabel and UNIDRIOT, The Hague Conventions and the United Nations Commission on International Trade (UNCITRAL).

In the late 1920s, professor Rabel worked on the creation of an international uniform sales law. Rabel’s work was taken on and developed by UNIDROIT. UNIDROIT worked on the preparation of an international law on the sale of goods. These developments resulted in two Hague Conventions. Neither Convention is considered as a resounding success. The Hague Conventions have had an effect in Europe, but they did not have any impact elsewhere. Despite the unsuccessful results, the conventions are considered as the starting point for the drafting of the CISG.

The work of UNCITRAL is considered to be the origin of the CISG. The Hague Conventions were sent to all governments, inviting these governments to comment on the Conventions and to notify their attitude towards ratification. This consultation process resulted in the preparation of a new convention. The crucial value adding characteristic of UNCITRAL contains the universal representation. When finalized, the Convention was not implemented immediately. The Convention came into force in 1988. Today, the Convention has been ratified by 83 states.

What is the sphere of application?

The sphere of application of a convention is considered as a fundamental part of any international convention which regulates transnational commercial law. The major question here is: “to which contracts is the Convention to apply?”.

Article 1 of the CISG is one of the provisions that significantly assists in the definition of the sphere of application. Article 1 includes the following terms:

1. “This Convention applies to contracts of sale of goods between parties whose places of business are in different states:
   (a) When the states are contracting states; or
   (b) When the rules of private international law lead to the application of the law of a contracting state.”
2. “The fact that the parties have their places of business in different states is to be disregarded whenever this fact does not appear either from the contract or from any dealings between, or from information disclosed by, the parties at any time before or at the conclusion of the contract.”
3. “Neither the nationality of the parties nor the civil or commercial character of the parties or of the contract is to be taken into consideration in determining the application of this convention.

Which problems can arise out of this article?

Multiple problems arise out of this article, such as:

1. Types of contract covered; the first issue concerns the reference to ‘contracts of sale’. The Convention does give a definition of a contract of sale. Rather, the Convention excludes particular contracts from its scope (in Articles 2 and 3).
2. The internationality requirement; another issue concerns the definition of the word ‘international’. In Article 1 of the CISG, the term international includes the places of business of the parties to the contract. Therefore, the place of business of the contracting parties of sale matter and it does not matter whether the goods themselves have crossed an international border.
3. The connecting factor; the third problem relates to the required existence of a connecting factor between the contract and the contracting state. Below we will elaborate on this issue.

Article 1 (1) (a) states that the Convention applies to contracts for the sale of goods between parties that have their businesses located in different states, provided these states are contracting states. Today, the Article 1 (1) (a) is considered as the most important provision related to the sphere of application of the Convention. The practical significance of Article 1 (1) (b) decreases due to the increase of the number of states that has ratified the Convention.

Article 1 (1) (b) is more problematic than Article 1 (1) (a). This due to the balancing act conducted by Article 1 (1) (b). Article 1 (1) (b) includes an extension of the sphere of application, because the Convention does not only apply under the condition that both parties have located their business in contracting states. The article makes it possible that the convention applies in a situation where one party’s business is located in a contracting state and the other party’s business is located in a non-contracting state. This extension causes an issue. In the situation where the rules of private international law of the forum state result in the use of the law of the non-contracting state, then the domestic law of the state is applied. However, when those rules of private international law result in the use of the law of a contracting state, the CISG will govern the contract and not the domestic law of the contracting state. Therefore, the consequence of Article 1 (1) (b) is a diminishing effect on the significance of the domestic law of the contracting state in favour of the CISG.

The solution for the controversy of Article 1 (1) (b) involves the permission for states to enter an Article 95 reservation, which enables a state to declare that it will not be bound by Article 1 (1) (b). Article 95 has been criticised on two grounds. Firstly, Article 95 would reduce the reach of CISG and undermine the effective spreading of this modern, well-designed tool. The second criticism concerns the technical legal difficulties caused by Article 95.

What were the different effects of the reservation of article 95?

The reservation of Article 95 has the following different effects in distinct situations:

• The effects in the contracting states’ courts that have made an Article 95 declaration include the following:
  • A) The declaration of Article 95 results in the exclusion of the contracting state’s obligation to let the convention govern in accordance with Article 1 (1) (b). But, the declaration does not prevent the courts of the state from still applying the convention when their private international law results in the application of the law of the contracting state.
  • B) In a case where Article 1 (1) (a) applies, the declaration of Article 95 is irrelevant.
• The effect in the contracting states’ courts that have not made an Article 95 declaration includes that:
  In the case where the forum is in a contracting state which did not make a declaration under Article 95, the Convention will govern in accordance with Article 1 (1) (b) even when private international law results in the application of the contracting state’s law that actually has made an Article 95 declaration.
• The effect in the non-contracting states’ courts includes that, in this case, the only effect that Article 95 could have, will be a merely indirect effect.
• The effect in arbitration proceedings includes that, in this case, the effects will be similar to the effects of Article 95 in courts of non-contracting states, considering that the convention neither results into any obligations for arbitration tribunals, nor for contracting states concerning arbitration tribunals having their place of arbitration in that state.

Exclusions from the convention

Subjects that are excluded from the Convention’s scope are matters such as the validity of the contract and the effect that the contract may have on the property in the goods sold. The pragmatic reason for this exclusion involves that the law related to the validity of contracts and the passing of property is sharply distinct between different nation states and making uniform rules on these intractable topics would have been extremely complex.

Contracting out of the convention

Article 6 of the Convention states that the parties to a contract of sale are allowed to exclude the application of the convention.

What are the interpretative rules and what is the role of good faith?

Article 7 of the Convention deals with multiple difficult issues. Article 7 includes the following:

1. “The interpretation of this convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade.”
2. “Questions concerning matters governed by this convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law.”

The provision is related to issues that arise in the convention’s interpretation, of which two are discussed here.

Autonomous interpretation

The first issue is related to the CISG's international character and the need to promote uniformity in its application. These words intend to ensure that the Convention will be interpreted in the same way in different jurisdictions. As such, the Convention aims to have an autonomous interpretation, but the meaning of this autonomy is somewhat ambiguous. When national courts aim for this uniformity in interpretation, multiple problems arise. In trying to resolve the issues mentioned, two steps have been taken:

1. Improvements have been made regarding the access to case law and information in general. There are databases available.
2. The implementation of academic commentaries on the convention may help to achieve a more uniform and harmonious interpretation.

The problem of good faith

The second issue relating to Article 7 concerns the role of good faith. The problem exists due to the three different views on good faith:

1. The first view holds that in the case of an international sales contract the Convention does not impose any positive duty of good faith on the parties. In this view good faith is simply a criterion which should be applied by judges and arbitrators according to the Convention’s interpretation.
2. The second view maintains that the Convention imposes a positive duty of good faith on the parties. Therefore, the interpretation of the Convention may result in the application of the good faith clause.
3. The third view holds that the Convention does not impose a duty of good faith on the parties, however this duty is considered as one of the general principles that are the foundation of the Convention. Therefore, in the case that good faith is the Convention’s general principle, such a duty will be imposed by Article 7 (2), rather than 7 (1).

Which rules are set about the usage?

Article 9 includes the following concerning usage:

1. “The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves.”
2. “The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned.”

The important difference between Article 9 (1) and (2) is related to the scope. Article 9 (1) implies that the usage does not have to be international, nor widely known and observed; agreement between the parties is sufficient. By contrast, Article 9 (2) is broader in its scope due to the possibility of incorporating well-known and observed usages. This applies even in case the parties did not establish an agreement to the contract.

Article 9 could be considered to include a hierarchical superiority to the Convention’s provisions. The binding usages that are imposed by either Article 9 (1) or (2) are seen as having priority over any other conflicting article in the CISG.

What rules are set concerning the formation of a contract of sale?

Part II of the Convention concerns the formation of a contract of sale. The CISG adopted the offer and acceptance framework. According to the Convention, acceptance takes place upon receipt, not upon posting. A state has the possibility to establish a declaration that it will not be bound by Part II.

What are the rights and the duties of the parties?

Part III of the Convention is considered as the heart of the Convention. However, states do have the possibility to establish a declaration that they are not bound by Part III.

General provisions

In chapter I concerning general provisions, two issues occur:

1. The first issue is related to the definition of the fundamental breach in Article 25.
2. The second issue concerns the remedy for specific performance.

The obligations of the seller and the remedies of the buyer

Chapter II concerning the obligations of the sellers is set out into three sections:

1. The first section sets regulations about the delivery obligations of the seller
2. The second section concerns the obligations of the seller involving the conformity of the goods and claims by third parties.
3. The third section sets regulations about the remedies for breach of contract by the seller.

The obligations of the buyer and the remedies of the seller

Chapter III concerns the obligations of the buyer. Paying the agreed price and taking delivery of the goods are the two obligations of the buyer. In case of breach of contract by the buyer the remedies available include paying the price, taking delivery or performing the other obligations of the contract.

Fundamental breach

Article 25 defines the concept of fundamental breach in the following terms: “A breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result.”

What are the rules concerning interest?

Article 78 sets regulations on the payment of interest in the following terms: “If a party fails to pay the price or any other sum that is in arrears, the other party is entitled to interest on it, without prejudice to any claim for damages recoverable under Article 74.”

Article 78 does not address matters such as the rate of the payable interest and the date from which it is payable. This has resulted in significant difficulties in the majority of cases.

What is ‘Force Majeure” and what are the exemptions for non-performance?

Article 79 includes the following terms:

1. “A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences.”
2. “If the party’s failure is due to the failure by a third person whom he has engaged to perform the whole or part of the contract, that party is exempt from liability only if:
   • (a) He is exempt under the preceding paragraph; and
   • (b) the person whom he has so engaged would be so exempt if the provisions of that paragraph were applied to him.”
3. “The exemption provided by this Article has effect for the period during which the impediment exists.”
4. “The party who fails to perform must give notice to the other party of the impediment and its effect on his ability to perform. If the notice is not received by the other party within a reasonable time after the party who fails to perform knew or ought to have known of the impediment, he is liable for damages resulting from such non-receipt.”
5. “Nothing in this Article prevents either party from exercising any right other than to claim damages under this convention.”

The major difficulty resulting of this Article concerns the meaning of the word ‘impediment’.

Which rules are set concerning risk?

Chapter IV relates to regulations on risk. The law uses the notion of risk to allocate the responsibility for accidental loss or damage to goods between the buyer and seller. In the majority of cases the allocation of risk is applied by the express terms of the contract. The CISG rules that the risk passes with control or custody of the goods.

In international sales, the Vienna Convention on Contracts for the International Sale of Goods (CISG, hereafter also referred to as 'the Convention’) is regarded as the most important legal instrument in the field of international sales. The CISG is built on work done by its predecessors. The convention is inspirited by, based on and built on the Rabel and UNIDRIOT, The Hague Conventions and the United Nations Commission on International Trade (UNCITRAL).

What are methods for the discharge of contracts and the relevant contractual remedies? - Chapter 4.8

The discharge of a contract refers to the end of the obligations of the contract.
There are multiple methods of discharging a contract:

• Discharge by agreement
• Discharge by performance
• Acceptance of partial performance
• Prevention of complete performance
• Discharge of the contract by frustration
• Discharge of the contract by breach

What is discharge by agreement?

Discharge by agreement occurs when parties agree to discharge the contract before all the obligations of the contract are completed. This agreement to discharge the contract before the fulfilment of all the obligations is considered to be a second contract between the parties. This second contract is considered binding. There exist two types of agreements to discharge:

1. Bilateral agreement to discharge: this is the case when both parties did not perform all their obligations of the contract. The parties both agree to not completing the contract, therefore both parties benefit from the discharge.
2. Unilateral agreement to discharge: this is the case when one party did perform all his obligations of the contract and the other party did not, but the latter wants to be discharged of his obligations. An agreement on this matter will only be binding when the lacking party gives consideration for the discharge or when the agreement is made by deed (meaning a legal agreement that is signed and witnessed). Accord refers to the name of the agreement in the situation in which consideration is given for the discharge. Satisfaction refers to the supply of the consideration. Therefore, this arrangement can be referred to as accord and satisfaction.

What is discharge by performance?

Discharge by performance is considered to be the ideal method of discharge of a contract. Here both parties performed all the obligations under the contract and the contract is discharged as a result of the completion of the contract. The general rule that applies to this method is that each party must have performed exactly and precisely what has been promised and agreed on by the parties. There are four exceptions to this general rule. In case of these four exceptions the contract is still partly enforceable despite the incompleteness of the performance. The four exceptions are as follows:

1. Substantial performance: in case a contractual obligation has been considered as an entire requirement, the lacking party may hold a right to payment for the already established work if the party has nearly completed the whole performance of the contractual obligation. This exception will allow the party to get payment for the work he has done, minus the amount of costs to cover the uncompleted part of the obligations.
2. Divisible contract: in some circumstances, a contract could be divided into parts, and the payment is expected at different phases of performance as opposed to payment at the completion of all the obligations. Usually, employment contracts are divisible.
3. Acceptance of partial performance: in some cases, it may be possible to prove that the other party voluntarily agreed on partial performance of the contract. When this can be proved, the party which accepted the partial performance should pay for the completed work.
   In this case the parties are both released from their obligations under the original contract and compose a second contract on different terms. The general rule here is that the accepting party should have had a genuine choice whether to accept or refuse the goods or the completed work.
4. Prevention of complete performance: a party holds the right to recover the costs of the partial completion of a contract when he was not able to complete all the work agreed on in the obligations as a result of the fault of the other party. The party who made the crucial fault which prevents the completion of the performance is in breach of contract and the other party can sue for damages for breach of contract. Another possibility would be to sue for the work which has been completed to date and require payment based on quantum meruit, which means 'as much as he has earned’.

What is discharge of a contract by frustration?

In case of discharge by frustration, the contract is frustrated by an event that was not caused by the fault of either party, which results in making the performance of the contract illegal, impossible or radically different from the agreed terms. When a contract has been frustrated, both parties are released from their obligations. Situations which lead to the frustration of a contract are the following:

• The destruction of the subject matter of the contract
• Personal incapacity of one of the parties
• Non-occurrence of events central to the purpose of a contract
• Subsequent illegality
• Government intervention

The limits of the doctrine of frustration are the following:

• The event must occur after the contract has been entered into
• There must not be commercial purpose left in the contract
• The parties must not have foreseen the event
• The frustration must not be self-induced by one of the parties
• No frustration exists when the parties provided for the frustrating event in the contract (Force majeure clauses)
• A contract which becomes more onerous is not frustrated

When the contract is frustrated and therefore discharged, the contract will end at the occurrence of the frustrating event. Then both parties will be discharged from any obligations of the contract.
The Law Reform (Frustrated Contracts) Act 1943 has established the following provisions for discharged contract through frustration:

• All money which is still owed under the contract ceases to be payable
• All money which is paid in advance of the contract’s performance is recoverable
• Recovery of the incurred expenses
• Recovery of a sum for a value benefit

What is discharge of a contract by breach?

A contract is discharged by breach when one or more terms are broken by one of the parties or when one of the parties says in advance that he has no intention to perform the contract. The breach will only result in the discharge of the contract when the term is a condition or an innominate term facing crucial consequences after the breach.
There are five possible breaches of contract:

1. Breach of conditions: in case a condition is broken the injured party could treat the breach of contract as failing to perform the fundamental aspects of the contract. The innocent party has two possibilities. Firstly, the party could claim damages (compensation) and discharge the contract, which would release himself from any further duties of the contract. Another option would be to just claim damages and proceed with the contract.
2. Breach of warranties: in this case the contract is not discharged. The injured party could claim damages but must still proceed with the contract.
3. Breach of innominate terms; the innocent party holds the right to damages for a breach of an innominate term and, when a party is not able to benefit from the contract due to the breach, the party can discharge the contract.
4. Actual breach of contract: an actual breach of contract occurs when one party either does not perform his obligations, or performs so poorly that the aim of the contract is ruined.
5. Anticipatory breach: in this case, one of the involved parties notifies the other party that he does not intend to perform his contractual obligations (completely) in advance of the actual performance. The contract will be treated as ended. The innocent party holds the right to recover damages for the losses of all benefits that the contract would have, if it had been carried out.

After the contract is breached, the injured party has to take reasonable steps to mitigate losses.

What are adequate remedies for breach of contract?

When a contract is breached, the injured party holds the right to claim one (or more) of the following remedies:

• Damages: monetary compensations for damage incurred as a result of the breach of contract.
• Action for the agreed contract price: which is an amount that is agreed on in the contract.
• Quantum meruit: which means ‘as much as he earned’.
• Specific performance: this refers to an order of the court to complete the contract’s obligations.
• Injunction: this is the prevention of breaking the contractual obligations by the party.
• Repudiation: the contract is treated as ended and it is not required to carry out the further obligations of the contract.

Damages

The most commonly claimed remedy are damages. The purpose of damages is not the punishment of the party who has broken the contract, but to bring the injured party to the financial position that is similar to the position if the contract had been performed. The damages can only be claimed for losses that are not too remote. The case Hadley v Baxendale is used to determine the remoteness of damage. Damages will only be rewarded in two cases:

1. When the losses occur naturally as a consequence of the breach of contract
2. When losses occurred that may have been contemplated at the moment the contract was made as a possible consequence of its breach.

In exceptional cases, the court makes use of the assumption of responsibility test. This test refers to the question whether the party has reasonably been contemplating the loss and also whether the responsibility for the occurred loss had been assumed by the party to be his responsibility. The amount of the damages must not bring the claimant in a better financial situation than he would have been in when the contract had been followed. In case the innocent party did not suffer any loss, the party will only hold the right to nominal damages.

The general principle for assessing the loss is to provide compensation for financial losses actually suffered. In case of a contract related to the sale of goods, damages are often assessed by determining at what price the specific good would have been sold on the open market. The duty to mitigate refers to the general rule that the innocent party should take steps to reduce the losses he suffers. A party does not have the right to claim for damages that the party could have avoided by taking reasonable action.

Liquidated damages refers the sum agreed on in a contract that should be paid in case of a breach of contract. In some cases, the sum stated in the contract is considered to be a penalty and therefore the courts will not enforce it. A liquidated damage clause is referred to as a penalty in case it is disproportionately in favour of the interests of the injured party.

Action for agreed contract price

In some cases, the innocent party may sue for the failure of payment of the agreed contract price rather than damages. This is considered as an action for price and not damages. Therefore, the rules concerning mitigation and remoteness are not applicable in this case. Usually, the innocent party is only able to sue for the agreed contract price from the moment that the party has completed his contractual obligations.

Specific performance

In circumstances when a party claims a specific performance, the court decides on the matter. Therefore, this remedy is considered as equitable. The equitable remedy will only be provided by the court in case it is in respect of both parties to do so.

There are limitations to an order of specific performance:

• In cases where providing damages would be considered as an adequate remedy, the specific performance will not be allowed.
• For employment contracts the specific performance order is never available.
• In circumstances where the court is not able to oversee the contract’s performance, the specific performance order will not be allowed.
• The claimant should have acted in an honest and equitable manner.

Injunction

This court’s order to prevent a breach of contract is also referred to as an equitable remedy, which will only be allowed in cases where the court considers it as fair in all circumstances.

There are limitations to an order for injunction:

• In cases where providing damages would be considered as an adequate remedy, the order for injunction will not be allowed.
• An injunction order will only be allowed in cases where it will enforce a negative obligation in a contract.

Repudiation

In case of a breach of a condition of the contract, the innocent party can treat the contract as repudiated and does not have to perform his obligations any longer.

Restitution

This is not a remedy for breach of contract, but refers to returning a benefit that has been obtained. Restitution is based on the principle that one party must not unfairly benefit at the other party’s expense.

Quantum meruit

In circumstances where there is no agreement on a price for performance, the courts will award a reasonable sum based on the quantum meruit rule.

The discharge of a contract refers to the end of the obligations of the contract.
There are multiple methods of discharging a contract:

• Discharge by agreement
• Discharge by performance
• Acceptance of partial performance
• Prevention of complete performance
• Discharge of the contract by frustration
• Discharge of the contract by breach

What is the tort of negligence? - Chapter 5

A tort is a civil wrong. For a tort there is a remedy available to the wronged person. This remedy usually consists of compensation. The law of torts states that in multiple circumstances duties are owed to persons and liabilities for negligence or wrongful actions are imposed by law. The main aim of the law of torts is to provide remedies to claimants who have suffered losses, harm or an infringement of rights. Strict liability torts refer to torts which enforce liability on a person despite the fact that this person did not do anything wrong. Vicarious liability refers to the circumstances in which a person is held strictly liable for torts caused by another person. This form of liability is common in business environments, as employers may be vicariously liable for their employees’ torts.

What is the distinction between the law of torts and criminal law?

The law of torts and criminal law are both concerned with wrongs. The distinction between them lies with the purpose. The main purpose of the law of torts contains providing remedies for harm which people have suffered. The main aim of criminal law is the punishment of people that committed wrongs. In some situations both law of torts and criminal law can be applied to the same case. In case of a crime, the defendant is prosecuted by the state and when he is found to be guilty, the defendant will receive punishment such as imprisonment, fine, etc. In case of a tort, the defendant is sued by the claimant and when he is found liable, the defendant will be forced to pay compensation to the claimant.

What is the distinction between the law of torts and contract law?

The difference between the law of torts and contract law lies in their voluntary and involuntary natures. When referring to contract law, the parties voluntarily entered the contract and the agreed upon obligations imposed by the contract. In case of law of torts, the obligations are involuntarily imposed on a person by law. Sometimes the claimant can choose whether to sue the other party in the law of torts or in the law of contract. In both situations, the most common remedy is damages (compensation).

What is the tort of negligence?

Negligence refers to an essential form of tort that includes a great variety of situations in which persons cause harm to others due to negligence. The following three elements are needed for a claimant to succeed in an action for negligence:

1. The defendant owed the claimant a duty of care.
2. The defendant breached this duty of care.
3. The breach of duty caused reasonably foreseeable damage.

What is meant by duty of care?

For a court to recognise a duty of care, the claimant must find an existing legal authority for a duty of care in those circumstances or the claimant must provide proof for the so-called three-stage test. The House of Lords established this three-stage test to determine the existence of a duty of care. The test consists of the following three requirements:

1. The caused loss or harm is considered as reasonably foreseeable.
2. There was a sufficient relationship of proximity between the defendant and the claimant; the proximity requirement refers to legal closeness between the two parties at the time of the cause of complaint. Relevant issues concerning legal closeness are, for example, a personal relationship between the defendant and claimant, the question whether goods are tampered with and the length of time between the events. In every case, the required level of proximity differs.
3. It is fair, just and reasonable that the law imposes a duty on the defendant in all the circumstances. In the assessment of this requirement an important question is whether the duty of care is in the public interest.

Sometimes, the courts are resistant to expand the duty of care. The reason for this reluctance is that this expansion may encourage a great number of comparable claims. This argument is referred to as the floodgates argument.

What to do in case of pure economic loss?

Pure economic loss refers to a situation in which the financial loss of the claimant does not have any relationship to physical injury of the claimant or damage to the claimant’s property. In cases of purely economic loss, the recovery through tort of negligence is very limited. Damages can be claimed for pure economic loss when there exists a contract between the parties. In general, the duty of care is not imposed in case of pure financial loss stemming from ownership of a product or a building which appears to be defective. Only in the situation where a special relationship between the parties is present, a duty of care will be imposed.

In order to establish a duty of care for pure economic loss caused by a negligent statement, the claimant must prove the existence of a special relationship of proximity between the claimant and defendant, which includes that the claimant has to prove the following:

• The defendant was aware that the statement would be communicated to the claimant.
• The given advice was related to a specific or particular type of transaction.
• It is considered as reasonable for the claimant to rely on the misstatement made, without requesting other independent advice.

What to do in case of psychiatric injury (nervous shock)?

Psychiatric injury is considered as a form of personal injury, but it is more difficult to claim for than in case of a physical injury. Courts are cautious to recognise a duty of care in case of psychiatric injury for the following reasons:

• Psychiatric injury is more complicated to diagnose than physical injury, which makes it easier to make fake claims.
• There is a chance that it opens the floodgates of litigation.
• The compensation for a psychiatric injury could be hard to quantify.

The problem is especially vivid in cases where the claimant suffers pure psychiatric injuries. A primary victim is someone who was actually threatened with bodily harm or had reasons to believe so, as a consequence of the negligent event. The primary victim is owed a duty of care for pure psychiatric injury in a case where it was reasonably foreseeable that a person of reasonable fortitude would suffer some kind of personal injury (physical or psychiatric) as a consequence of the negligence of the defendant.

In the case of a rescuer, the rescuer can only be classified as a primary victim under the condition that the rescuer either was or reasonably believed himself to be in danger of physical injury.

A secondary victim is a person who witnessed an accident or its immediate aftermath and as a consequence suffers a psychiatric illness. There are several requirements which must be met by the claimant in order to claim the defendant to be liable for the psychiatric injury caused to a secondary victim:

• The claimant must have a close tie of love and affection with the one involved in the accident.
• The claimant must have a geographical proximity to the accident or its aftermath.
• The claimant must suffer a psychiatric illness which is medically recognised.

What is meant by the second element ‘the defendant breached his duty of care’?

To successfully enforce a claim for negligence, the claimant must be able to prove that the defendant broke his duty of care. The claimant must provide the court with proof that the defendant acted in a way that a reasonable man would not have in these circumstances.
The standard of care is an objective test. The defendant should act with a level of care and skill which would be expected from a reasonable person. In case of a skilled defendant, the standard of care is the standard to which a reasonably competent person in that specific profession would conform.
Several other factors must be taken into account by the court when determining whether a duty of care was broken:

• The likelihood or probability of harm caused by the claimant;
• The potential seriousness of this harm;
• The reasonableness or practicalities of taking precautions;
• The value to society or the usefulness of the action which the defendant was trying to bring about.

The breach of the duty of care is more likely in a case where the defendant’s actions have a high level of probability of having injury as a consequence.

What is meant by the third element ‘the breach of duty caused reasonably foreseeable damage’?

For the caused breach of duty to be considered as reasonably foreseeable damage, two aspects are necessary. First of all, it should be beyond question that the defendant has caused the loss or damage of the claimant. Furthermore, the particular damage or loss must be considered to be reasonably foreseeable. Therefore, the damage should not be too remote.

Causal link: what is the 'But for' test?

To determine whether there is a causal connection between the breach of duty and the suffered damage the ' but for' test is used. This test poses the question whether the claimant would have suffered the loss but for the defendant’s negligence. In case the claimant would have suffered the injury in any event (even if the defendant would not have been negligent), the defendant is not considered as liable.
In case the breach materially contributed to causing the damage of the claimant by significantly increasing the risk of the claimant contracting a disease, the ‘but for’ test is be disregarded. Sometimes there is a number of possible causes for a specific loss. In that case the claimant must prove that the defendant’s action was a material cause of the injury.

What role does the remoteness of damage play?

The damage suffered will be considered as reasonably foreseeable when the damage is not too remote. To determine this matter an objective test is be conducted. The defendant is only responsible for the loss which a reasonable man would have foreseen as a possible and likely consequence of his particular action.
The specific nature of the damage suffered does not have to be foreseeable, if the damage was of a kind that is considered as being foreseeable, even when the injury is more severe than expected.

What is the eggshell skull principle?

In case a victim has a specific susceptibility or weakness and suffers a more severe injury than a normal person, the defendant will be considered as liable to the full extent of the injuries of the claimant.

What are intervening acts (Novus actus interveniens)?

Usually, the intervening act applies in cases where the defendant’s negligence has caused a sequence of events resulting in harm suffered by the claimant. The intervening event could be an act by the claimant himself or an act undertaken by a third party over which the defendant did not have any control.
In case a defendant injures a claimant who has already been injured, he will be considered as liable only insofar as his act increases or infuriates the already existing injury.
In case the intervening act breaks the sequence of events, the defendant will only be considered as liable for the injuries which the claimant incurred prior to that event. The intervening event is the cause of the final loss suffered by the claimant.

What would happen in the case of liability for defective products?

In case a person suffers a loss caused by a defective product there are three options:

1. He could sue the other party in the tort of negligence for breach of a common law duty.
2. He could undertake action under the Consumer Protection Act 1987 for breach of a statutory duty.
3. In case there is a contract between the parties, the usual action would be in the law of contract.

The last option has particular advantages. In the law of contract the liability is generally considered as strict and all damages caused by the breach of contract are recoverable, provided they are not too remote. However, in some circumstances a contractual remedy will not be available.

The manufacturers of products have a duty of care to the ultimate consumer in case the manufacturers intend to provide the ultimate consumer with the product without further examination. Other defendants could be the persons who have repaired, assembled or supplied the products.

Sometimes, more than one defendant will be considered as liable. In this situation, the defendant will be held jointly and individually liable.

When trying to sue the other party for a defective product in the tort of negligence, a problem arises for the claimant consumer. He has to prove that the defendant is at fault. The claimant must provide proof that the defendant has been negligent, meaning that he did not take reasonable care to protect the claimant against reasonably foreseeable events. The manufacturer may not be held liable in the following cases:

• In case of an interference by a third party or warnings which have not been heeded.
• In case the product is damaged between leaving the manufacturer and reaching the consumer.
• In case the defect is caused by something else than the negligence of the manufacturer.

If the defendant is held liable for a defective product in the tort of negligence, the claimant can only claim compensation for personal injury, death or damage to property which was a consequence of the defective product, and for the financial loss as a consequence of the injury, death or damage. Generally, compensation for the defective product itself cannot be recovered. Furthermore, the claimant cannot claim compensation in case of a defective product which poses a danger but did not actually cause any injury.

The Consumer Protection Act 1987 provides an additional statutory remedy. The act enforces liability on businesses. Consequently, the Consumer Protection Act does not cover private individuals who do not act in the context of a business.

A tort is a civil wrong. For a tort there is a remedy available to the wronged person. This remedy usually consists of compensation. The law of torts states that in multiple circumstances duties are owed to persons and liabilities for negligence or wrongful actions are imposed by law. The main aim of the law of torts is to provide remedies to claimants who have suffered losses, harm or an infringement of rights. Strict liability torts refer to torts which enforce liability on a person despite the fact that this person did not do anything wrong. Vicarious liability refers to the circumstances in which a person is held strictly liable for torts caused by another person. This form of liability is common in business environments, as employers may be vicariously liable for their employees’ torts.

What is Intellectual Property Law? - Chapter 6

Intellectual property is defined as things created by the mind. It includes a wide range of different creations such as inventions, literary and artistic works, symbols, designs and images. A main characteristic of intellectual property is its intangibility. The most important intellectual property rights are copyrights, patents, trade marks and design rights. A single product can comprise multiple kinds of intellectual property.

What is copyright?

Copyright sets rules for the creation and use of goods such as books, films, songs and computer programs. The aim of copyright is to prevent that others are able to copy or reproduce someone’s work without permission. A copyright exists for a defined period of time. Copyright is an automatic right, which means that no registration is needed and that the right is acquired at the moment a work is brought into existence.

To determine whether copyright applies to the situation, the following questions must be answered:

• Does the work fall within one of the categories protected by CDPA 1988; is it original and in permanent form?
• Who is the owner of the work?
• Does the work still fall within the time limits for copyrights or has copyright expired?

What types of works are protected by copyright?

The property of copyright is applicable to the following goods:

• Original literary, dramatic, music or artistic works
• Sound recordings, films or broadcasts
• The typographical arrangement of published editions

The term original refers to creations which were not copied from others. It does not relate to the idea itself, but to the form of the expression. The aim of copyright is not to protect the actual invention or idea, but to protect the original expression of the idea.

The concept literary work refers to any written, spoken or sung work. It does not have to involve any literary merit. Literary work also includes a table or compilation, a computer program, a computer program’s design material and a database.

The concept dramatic work refers to work that could be performed and includes dance, mime, scripts and choreographic works.

The concept music work refers to music, therefore the tune and not the lyrics. The lyrics relate to literary work.

The concept artistic work refers to paintings, drawings, diagrams, maps, charts, plans and models made for sculpture. A sculpture is an item that has a visual appeal for its own sake. The term artistic work also refers to works of architecture and works of artistic craftsmanship.

The concept sound recordings refers to recordings that include a sound which could be reproduced.

The last concept typographical arrangement of published editions refers to the layout, font and lettering of pages of published works.

How does one acquire copyright?

The existence of a permanent form of the work constitutes the main requirement for copyright. This includes any kind of recording such as writing, filming and audio tape. Copyright does not require any formal registration process. When the previously mentioned requirement is met, the work automatically acquires copyright.

Who is the owner of the copyright?

In general, the creator of the work is considered as the owner of the copyright. But in case of an employee who creates a work in the course of his employment, the owner of the copyright will be the employer, unless the parties have come to a different agreement. In case multiple people have worked on the creation and the identification of each author’s individual contribution is impossible, the work is considered to have joint ownership. This joint ownership will exist even in the situation where the parties did not aim to create a joint ownership work and their contributions are not equal.

What is the duration of copyright?

The form of the work is a crucial factor for determining the duration of the copyright protection. Different rules exist for works with varying natures.

What are the rights of the copyright owner?

The owner of the copyright has exclusive rights to rent, lend, copy or adapt the work and to play, perform or exhibit the work publicly. Furthermore, the owner of the copyright has the right to issue the work’s copies, communicate the work to the public and to give others permission to carry out any of the previous actions.

What are primary and secondary infringements of copyright?

The term primary infringement of copyright relates to the people that are directly connected with copying the work. A person will be considered as liable for primary infringement of copyright if he takes actions which fall under the exclusive rights of the copyright owner without his permission. A primary infringement is established when the copies are based on copyright work and a substantial part or all of that work has been been copied. It is irrelevant whether a person is aware of the fact that the work is protected by copyright or not and whether a person does intends to infringe the copyright or not. An action is also considered an infringement in case someone authorises others to exercise the copyrights owner’s rights.

The term secondary infringement of copyright relates to people who deal in the infringing copies or facilitate the works’ copying in a commercial context. It is concerned with the commercial exploitation of copied work. This includes supplying, selling and importing the infringing copies. To be considered liable for secondary infringement the person should know or have a reason to believe that the copies are infringing copies and that their actions are wrongful.

What are permitted actions or defences?

Some actions are permitted with regard to copyright works. Special exemptions apply in case of educational establishments, libraries, archives and court or parliamentary proceedings. The degree and quantity of the use of the copyright work are important factors in determining whether the use is fair.

What are licences for using copyright material?

In some cases the copyright owner is able to license the use of the work directly to a particular costumer, in other cases the owner will use a collecting society or agency. The licensee has to pay royalties for the use of the copyright work.

What are the moral rights?

The moral rights include the following four rights:

1. The paternity right includes the right to get acknowledged as the author of a work when the work is performed publicly or commercially.
2. The right to object to the derogatory adapting or altering of the copyright work. A treatment is derogatory in case it amounts to a distortion or mutilation of the work or if it results in prejudice to the reputation or honour of the author.
3. The right to not be allowed to have a literary, musical, artistic or dramatic work falsely attributed to a person as author.
4. The right that applies in the case that a person who requested to take photographs or film for private use. This person does not have the right to show the work in public.

What are the remedies in case of an infringement?

In case of the infringement of copyrights, the owner can take civil action. Usually, the owner applies to a court for an injunction to prevent further breaches and damages. Moreover, the owner can try to claim any profits made by the infringer and that the infringer must hand over all the copies in his possession. With regards to secondary infringement, a number of cases exist in which criminal offences are considered.

What is a patent?

The term patent is referred to as an exclusive right given to the inventor to make use and exploit their creation for a limited time period, in exchange for a comprehensive description of the invention. A product or process which is a new technical solution to a problem is considered to be a patentable invention. This invention should be uniquely different from already existing products or processes. In order to acquire a patent multiple formal procedures should be completed, therefore the patent does not come into existence automatically. The exclusive rights to make, use and sell the patented invention is given to the inventor for up to twenty years. The existence of patents is an incentive to inventors. The public receives the knowledge of technological advances in return.

Law related to patent is complex and intends to ensure that protection is only given to innovative products and processes.

What can be patented?

A patent can be granted if the following requirements are met:

• The invention is new (to the public).
• The invention involves an inventive step. This means that a person skilled in the relevant art should not consider the invention as obvious.
• The invention is capable of industrial application. The invention should be able to be used or made in some kind of industry. It needs to have some sort of use.

Some cases are excluded from being patented, such as inventions which are referred to as contrary to the public policy or morality and inventions related to new methods of therapy, surgery, or diagnosis concerning humans and animals.

How does the ownership and registration of patent work?

In general, the inventor is entitled to apply for a patent. Problems may arise in case (more than) one person other than the inventor adds value to the invention. In case an employee made an invention in the course of the business and his duties and an invention might reasonably be expected, the employer may be entitled to ownership of the invention. In these circumstances, the employee may have the right to be compensated under the condition that the invention should be of outstanding value to the employer. However, only a very small amount of employees’ claims are successful.

How does the application to register a patent in the UK work?

In case the actual inventor is not the person who applies for the patent, the inventor is entitled to be named in the application. The patent’s registration process is complex. The application should be made to the UK Intellectual Property Office (IPO).

What are the infringements of patents?

The infringement of patent is a complex area of law and is often very costly for businesses. To determine whether an infringement of patents has taken place, the question is raised whether the other product or process is really so similar to the patented invention that it falls within its scope.

Actions that include a breach of patent are actions in situations such as:

• Where the invention is a product, infringement is committed by a person making the product, disposing or offering to dispose of it, using, importing, or keeping it.
• Where the invention is a process, infringement occurs where a person uses it or offers it for use knowing, or where he reasonably ought to have known, that he is infringing a patent. Infringement also occurs if a person disposes or offers to dispose of, uses, imports, or keeps any product obtained directly by means of that process.

As a defence against claims of infringement by private parties, these parties tend to use two arguments: non-commercial use of processes or products and the use for research and experiments.

The remedies available for inventors with infringed patent include an injunction, damages, an order to hand over the infringing products, and an order to hand over any profits made from exploiting the patent.

What is a trademark?

The concept of a trademark covers intellectual property that consists of any symbols or signs which designate distinctions between goods and services in the marketplace. A registered trademark protects the brand owner from competitors that make improper use of the trade mark. The customer may also be protected from buying the wrong or counterfeit goods or services. Trademarks help customers to recognise products or services that belong to a company and can be of great value to a business. A trademark needs to be registered for it to be effective. A trademark is defined as “any sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of another.” Signs are considered to be the most potent trademarks. The words represented graphically refer to the ability to be clearly described on paper by words, images or numbers. A trademark must be clear, precise and distinctive.

What are excluded marks?

Particular signs are excluded from registration on absolute grounds, these include the following:

• The mark is devoid of distinctive character.
• The mark consists exclusively of descriptive signs.
• The mark is customary in the language or practices of the trade.
• The mark represents the natural or technical shape of the goods.
• The mark is contrary to public policy or morality.
• The mark is likely to deceive the public, contrary to law or obtained in bad faith.

Certain emblems also cannot be registered without the consent of the relevant person. In some cases, marks are identical or similar to other trademarks that are applied on similar product or services and the likelihood exist that the public gets confused. In this case, the use of these marks is prohibited.

Similar marks are also prohibited for dissimilar goods, in the case that:

• The existing mark has a reputation in the UK; or
• The use of the later mark would take unfair advantage of, or be detrimental to the distinctive reputation of the earlier trademark.

How does the application for registration of trademarks work?

The application includes the representation of the trademark and a description of the goods and services to which the trademark will apply.
The concept collective trademark applies when a mark distinguishes the goods or services of members of an association from other undertakings.

What are the effects and the duration of a registered trademark?

The owner of the registered trademark will be entitled to put the ® symbol aside the brand and will have certain exclusive rights. These exclusive rights include the use of the mark in various ways, such as using the mark for packaging and on business papers or on advertisements. Initially, trademarks are registered for the period of ten years.

What are trademark infringements?

The moment someone uses the trademark or one similar to it in the course of business without the right to do so, an infringement occurs. It also may be considered as an infringement when a business’ trademark is used in search engine keyword advertising. In case a trademark is simply used as indication of goods or services, when a person uses his own name or when a trademark is needed to indicate the intended purpose of a product or service, there is no infringement.

What are remedies for infringement?

The various remedies available include damages, an injunction to prevent the defendant from continuing the use of the mark, an order to account for the profits, an order to erase the offending sign from the goods or to dispose of them.

What is a design right?

The term design right refers to intellectual property that protects the visual representation or look of products. Design rights are infringed in case another business uses the shape. There are two types of design rights:

1. Unregistered design rights: these rights are automatic and are treated similarly to copyright. This unregistered design right prevents others from copying an author’s design. It only covers three-dimensional objects and protects both the aesthetic and functional aspects of the design. Moreover, the design needs to be original and in permanent form.
2. Registered design rights

Design rights automatically protect a design for 15 years. The first owner is considered to be the designer for all designs, unless a contract states otherwise, or the design was made by an employee in the course of the business and under their contract of employment.

After registration the design right will have greater protection. To be registered for design right, some conditions apply:

• The design is the product or a part of it.
• The design can be mass produced or a unique item.
• The design does not need to have aesthetic quality.
• The design includes three- or two-dimensional designs.

The design should be new and should have individual character. The owner of the design can apply for registration. The registered design right will last for five years and can be renewed every five years by payment of fees, up to a maximum term of twenty-five years.

In general, the design belongs to the actual designer. However, in case the designer made it in the course of employment or in case of a differing agreement the design may belong to someone else.

The owner of the design right has the exclusive right to make use of the design. Design right is infringed in case a person infringes the rights of the owner for commercial purposes without having a licence or authorisation. Remedies for this infringement include damages, order to account for profits and injunction.

What is the tort of passing off?

Passing off is a tort that is committed in the case that a business markets its goods or services in a manner such that they seem to be the goods or services of another business. The passing off action protects the goodwill or reputation of a business. Extended passing off protects the goodwill that applies to classes of goods, often denoting superior quality.

In order to take action against someone for passing off, certain elements have to be present:

• The claimant has to prove that goodwill or reputation is attached to his goods or services.
• A misrepresentation is made by the defendant that has resulted in the public believing that the goods or services offered by the defendant belong to the claimant.
• The claimant is likely to suffer or has already suffered damage due to the erroneous belief as a consequence of the defendant’s misrepresentation.

Intellectual property is defined as things created by the mind. It includes a wide range of different creations such as inventions, literary and artistic works, symbols, designs and images. A main characteristic of intellectual property is its intangibility. The most important intellectual property rights are copyrights, patents, trade marks and design rights. A single product can comprise multiple kinds of intellectual property.

What are the Theoretical Accounts of European Intellectual Property? - Chapter 6

What are intellectual products?

In order to be identified as an intellectual product, the product should possess the following three essential features:

1. The product must have an objectively discernible form: the idea should have an objectively discernible form through expression, such as literary description or visual representation. The idea could be expressed as a method of manufacturing, as a graphic representation, as a statement of fact or in the form of a dramatic work.
2. The product must have expressive or informational properties: the term informational properties refers to methods of expression that derive their value from and are constituted by the information they convey. Examples of informational properties are the methods of manufacturing, sign of commercial origin and information regarding a person. The term expressive properties refers to expressive works, such as a dramatic and graphic depictions.
3. The product must have identifiable human creators: there must exist a person who is considered to be the creator from who the intellectual investment of the product has been derived. This requirement excludes cases in which the product owes its existence to a non-human creator, including animals. The requirement also excludes the facts and products of nature.

What are property rights?

Property rights as the rights of exclusion

The essence of property could be identified as its excludability. In an economic sense, the exclusion rights provide the right to reserve the benefits of the protected product to oneself and to charge for others’ enjoyment of those benefits. Property related with excludability has one issue. Namely, the question how expansive the rights of exclusion have to be in order for them to be identified as rights of property. In conclusion, even the limited right to exclude others from the benefits of a product is properly identified as a property right.

Property right as rights of income

The economic value of property right is contingent on the following three aspects:

1. The desire of the property rights holder to realize the economic value of the relevant property object.
2. The ability of the property rights holder to make the necessary arrangements for realizing this economic value.
3. The willingness of the public to pay for access to the object.

Therefore, the commercial exploitation of property rights in an object can only be considered to be a possibility and not a certainty.

Property rights as sources of power

A considerable amount of power is associated with the form of control over an object that is represented by exclusionary rights of property. Due to the intangibility of the intellectual products, the property rights have a more expansive scope and therefore are considered as more restrictive of public freedoms than the property rights related to tangible products.

In political terms, the exclusionary rights of property result in relationships between individual right holders, objects of property, and the excluded third parties which are state-sanctioned. This enables the right holders to determine the third parties’ rights and duties concerning the protected objects. Thereby, different narratives are supported concerning the value of those objects and the relationships between the property owners and the members of the public. In political terms the importance of IP ownership, including its capacity to be transferred contractually, is frequently addressed.

The property rights concerning intellectual products could be referred to as supportive of capitalist enterprise by transforming creative labour into productive and alienable labour, and intellectual products into commodities that are handled separately from the social relationships in the context of which they are created. Therefore, IP rights are criticized by feminists focused on a different range of social structures and the narratives which their enforcement and construction support.

In the construction of social and economic relations, two issues are considered important in IP. Namely, biopiracy and biodiversity. The term biopiracy refers to the use of indigenous and developing communities’ biological and other resources by European and other western firms to arrange inventions, the use or the benefits of which the communities are then excluded from by the western patent grants and international patent laws.

The Convention on Biological Diversity addresses the sovereign rights over natural resources and obligations to:

• (a): “Encourage the equitable sharing of the benefits arising from the utilization of the knowledge, practices and innovations of indigenous and local communities.”
• (b): “Ensure that patents and other IP rights are supportive of and do not run counter to the convention’s objectives of supporting the conservation and sustainable use of biological diversity and promoting the fair and equitable sharing of the benefits arising from the use of genetic resources.”

What are the accounts from natural law?

Accounts from personhood: IP as manifestations of their creators’ personality

In natural law, individuals have a right to protection of their personhood and personal autonomy. This account from personhood derives from the theories of Georg Wilhelm Friedrich Hegel, who views the intellectual product as the creator’s external manifestations of his personality. The account proposes the idea that each intellectual creation includes the development by the creator of his personhood, therefore of his personal autonomy. Through this creation process, the creator comes to occupy the particular product which he created as an extension of himself. The capacity of personhood theories to provide explanations of copyright and moral rights regimes is limited. The acceptance of the personhood theories of IP has an important consequence, which is the requirement to recognize the claims of all creators, including the creator’s products which involve the use of existing intellectual products.

One issue related to personhood theories of IP is the failure of these theories to make a distinction between the creation of an intellectual product on the one hand and the continued existence of the intellectual product on the other.

Accounts from desert: creators of intellectual product as deserving property rights

The second view on the existence of IP from natural law holds that the creator of intellectual products deserves property because of the respect that he is due (it is his just desert). The basis of this view includes one or more of the following three aspects:

1. In the creation of the intellectual products a special kind of labour was involved. This argument holds that the required intellectual labour for the creation of the intellectual product merits a special protection of the creator by introducing property rights in the resulting product.
2. The intellectual products possess a special value. This argument maintains that the intellectual products’ special value merits a special kind of payment for the creators.
3. The creator of the intellectual products has special needs on account of their investment in creating them. According to this argument, the creator who invest money, energy and time in the intellectual products has special financial or personal needs on account of this investment. These needs will be appropriately met by the introduction of property rights in the created products.

These desert arguments have a broad appeal and application. The supporters face an issue concerning the question why it is that the creators deserve property rights in respect of the created product.

What are the accounts from unjust enrichment/unfair competition?

A quite different view on the existence of IP holds that IP prevents individuals from getting unjustly enriched or unfairly harmed by their or by other’s acts of free riding. The greatest supporter of this view is Wendy Gordon. The challenge for this account relates to the definition of circumstances that constitute unjust enrichment. Gordon states that the circumstances must require the following:

• The user must be aware of the copying.
• The context must involve the exhibition of asymmetrical market failure. This means that the user has failed to seek the creator’s permission to use the product.
• The user must have taken sales from the actual or expected market for the claimant’s product. This means that the user must have entered commercial competition with the creator.
• The use must be of an amount and type which is not likely to be of equal value to the claimant in the long term.

Gordon’s account is remarkable in that it supports something else than property in the form of liability rules which permit for payment in case of unauthorized use of others’ intellectual products. The account of Gordon has the effect of protecting individuals’ freedom to use the intellectual products of others (without payment) in all cases except the one in which the user establishes commercial benefits of the product at the commercial expense of the creator.

These accounts of unfair competition are of great importance in Europe. The Court of Justice frequently emphasizes the principles of free movement and competition. Another IP law aspect which is well explained by the principles concerning unfair competition is the range of exceptions to copyright and patent infringement that EU legislation permits Member States to recognise. There also exists a strong connection between the European trade mark regime and the values of fair competition.

A central issue includes the establishment of the injustice of reaping when one has not sown, without relying on the harm inflicted by the reaping on the creators or third party users of the protected product.

What are the accounts from instrumentalism?

This view on IP holds that IP is founded on the state’s instrumentalist commitment to establish results which reach beyond the vindication of the rights or interests of the creators of the intellectual products themselves, such as maximizing the general welfare of citizens or human happiness. These accounts of IP exist to discourage socially undesirable behaviour or to support socially desirable behaviour. These accounts are widely supported.

There are two key challenges concerning this utilitarian thinking:

1. Issues concerning the demonstration that IP results in the appropriate incentives or disincentives.
2. Issues concerning the demonstration that these IP rights benefit society more than they harm it.

The theories of instrumentalism on IP origin form a belief that deploying the states’ regulatory mechanisms to protect and recognize property concerning intellectual products will have advantages and will protect the public good. IP systems are engaged in the fine balancing exercise between the provision of incentives or disincentives on the one hand and considerations of distributive justice and social welfare on the other. Crucial in striking the right balance is the identification of the nature of the benefits.

What are the accounts from pluralism?

Pluralistic theories of IP reject any ‘one size fits all’ theory, in preference of a view of IP systems which supports multiple moral and economic principles and values related to their diverse legal and social functions, including the varying beliefs of individuals concerning their proper conception and scope. The effect of pluralistic theories is the connection and embedding of the substantive IP rules in the basic values of the European community as expressed by the constitutive legal instruments. Pluralism encourages a view of IP as serving European citizens by the legal harmonization and integration initiatives of Europe.

What are intellectual products?

In order to be identified as an intellectual product, the product should possess the following three essential features:

1. The product must have an objectively discernible form: the idea should have an objectively discernible form through expression, such as literary description or visual representation. The idea could be expressed as a method of manufacturing, as a graphic representation, as a statement of fact or in the form of a dramatic work.
2. The product must have expressive or informational properties: the term informational properties refers to methods of expression that derive their value from and are constituted by the information they convey. Examples of informational properties are the methods of manufacturing, sign of commercial origin and information regarding a person. The term expressive properties refers to expressive works, such as a dramatic and graphic depictions.
3. The product must have identifiable human creators: there must exist a person who is considered to be the creator from who the intellectual investment of the product has been derived. This requirement excludes cases in which the product owes its existence to a non-human creator, including animals. The requirement also excludes the facts and products of nature.

What are the Contracts of Carriage of Goods by Sea? - Chapter 7

The common carrier is referred to as the person who advertises to the public that he is available for providing transportation of goods for a fee. The liability for a common carrier is to carry the cargo safely. Exceptions exist, but are limited. Exceptions include the ‘acts of God’ (natural causes), actions by ‘the Queen’s enemies’ and inherent vice. In these cases, the common carrier remains liable when he has been negligent and this contributed to the loss.

The duties of the carrier to the shipper imposed by common law are the following:

• The duty which concerns the common carrier’s availability; if the carrier refuses to load the cargo without good cause, he breaches the contract. Typically, the terms of any contract will provide that the carrier may ‘shut out’ the goods subject to his returning any prepaid freight charges.
• The implicit duty to take reasonable care; every contract includes an implied term that the carrier should "use due care and skill in navigating the vessel and carrying the goods". Liability can be excluded through an expressly worded exclusion clause.
• The duty which concerns the implicit duty of seaworthiness; seaworthiness means that the ship is fit for its purposes. This duty includes two aspects:
  • The first aspect involves the suitability of the design and construction, which must be suitably equipped to enable it to encounter the normal perils of the contemplated voyage. This condition must be met at the time of sailing.
  • The second aspect involves that the ship should be cargo worthy, meaning that it should be fit to carry the contractual cargo. This condition must be met at the moment of loading. This duty of seaworthiness is an absolute obligation. Therefore, the carrier will be liable even in case he has taken all reasonable care. This duty is also considered as personal.
• The implied duty in relation to deviation; the carrier has the duty to take all reasonable care to deliver the goods to the agreed delivery place within a reasonable time by the agreed route. The master of a ship has the permission to follow all steps necessary to protect the ship and its cargo from undue risks. Therefore, deviating from the agreed route could sometimes be permitted. Deviation can also involve other deliberate acts of the carrier concerning the way in which goods should be carried.
• The implied duty of reasonable dispatch; the carrier has to perform his duties within a reasonable time. This duty will not even be breached when protracted delay occurs, under the condition that the delay is not in the control of a carrier who has taken reasonable care.

If a breach of a duty deprives the innocent party of the whole benefit of the contract, the innocent party is entitled to sue for damages and to treat the contract as ended. Any other breach of contract will only allow for an action in damages.

What are common law exceptions?

There are three common law exceptions to the carrier’s liability. Firstly, the carrier will not be held liable for losses which occur due to natural causes without the intervention of humans. Secondly, the carrier cannot be held liable for losses which resulted from acts committed by states or their subjects with whom the country is at war. This exception does not only cover the seizures of goods but also the losses caused by the deviations of the ship in order to avoid capture. The last exception is referred to as inherent vice, which comes down to inherent defects of a good for which the carrier cannot be held liable.

What is contracting out of obligations?

A long list of exemption clauses is typically included in the contract. These exemption clauses relieve the carrier from liability for occasioned losses by specified causes. It is only permitted to exempt the carrier from the absolute duty of a common carrier and not from the want of reasonable care, diligence and skill.

The following exemptions are considered to be the typical contractual exemptions:

• Loss caused by perils of the sea.
• Loss caused by the arrest or restraint of princes.
• Loss caused by the inherent vice and/or the defective packaging.
• Loss caused by strikes or lockouts.
• Loss caused by errors in navigations.

What are the carriers’ duties under The Hague Visby Rules?

How are the Hague Visby rules applied?

The Hague Visby rules apply to a straight, consigned bill of lading. The Rules only apply to carriages between two different states. The incorporation of the Rules into the contracts of carriage is common, however it is crucial to determine whether this incorporation includes purely contractual effect, due to the engagement with s 1 (6). If not, the Rules will have force of law, therefore the provisions in the contract of carriage which are inconsistent with the Rules will be void. The contract of carriage must be for goods, wares, merchandise and articles of every kind, excluding live animals and cargo which according to the contract has to be carried on deck and is so carried.

What is the scope of the activities covered by the Hague Visby Rules?

The contract of carriage under the Hague Visby Rules covers the period of time between the moment when the goods are loaded and the moment that the goods are discharged from the ship. Art III rule 2 states that "the carrier shall properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried." The Hague Visby Rules apply to contracts which concern the carriage of goods by sea. Therefore, the Rules will cover tackle to tackle. This means that they apply from the time when the ship’s lifting gear engages with the cargo to the point when it disengages at the port of discharge.

What are the duties of the carrier under the Hague Visby Rules?

• As to the ship: “Before and at the beginning of the voyage, to exercise due diligence to (a) make the ship seaworthy; (b) properly man, equip and supply the ship; (c) make the holds, refrigerating and cool chambers and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation.”
• As to cargo management: “The carrier must properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried.”
• As to documents: “After receiving the goods, the carrier shall on demand of the shipper, issue to the shipper a bill of lading showing among other things (a) the leading marks necessary for the identification of the goods; (b) either the number of packages or pieces or, the quantity or weight; (c) the apparent order and condition of the goods.”

There are exclusions to these rules, which consist of cases in which the carrier will not be held responsible.

What is the limitation on the carrier’s liability under The Hague Visby Rules?

The claimant must meet the following two main conditions if he is to make a claim against the carrier:

• The carrier must receive a written notice of loss or damage in case damage is apparent before the goods enter into the consignee’s custody, or within three days of their entering his custody in case the loss or damage is not apparent.
• The action must be started within one year of the date of delivery or the date on which it should have been delivered, subject to extension as agreed by both parties.

The maximum liability of the carrier concerning the goods is the higher of 666.67 units of account per package or two units of account per kilogramme of the gross weight of the foods lost or damaged. An exception applies if the value of the goods is declared to the carrier before shipment and is included in the bill of lading.

The common carrier is referred to as the person who advertises to the public that he is available for providing transportation of goods for a fee. The liability for a common carrier is to carry the cargo safely. Exceptions exist, but are limited. Exceptions include the ‘acts of God’ (natural causes), actions by ‘the Queen’s enemies’ and inherent vice. In these cases, the common carrier remains liable when he has been negligent and this contributed to the loss.

International Business Law - Custom Edition Groningen University - BulletPoints

What is Law? - Bulletpoint 1

• Law is necessary to maintain order in society.Without law, the state would be disorganised and in chaos. Formal regulation is needed in order to regulate the affairs of not just human activity but also larger companies and public bodies. Objectivism holds that there is an absolute set of moral principles. Relativism maintains that morality is relative, meaning that it can evolve over a period of time and varies from society to society.
• Rule of Law are the characteristics that are needed in order for a civilised state to function properly.
• There is a clear distinction between de facto sovereignty and de jure sovereignty. De jure sovereignty applies to the formal body of authority that make the laws, whilst de facto sovereignty lies in the hands of those who actually make decisions. De facto sovereignty in the UK resides in the Cabinet, for example. The UK is a unitary state because all powers that local authorities have are granted to them by Parliament.
• Division of powers within a state's government aims to prevent an accumulation of excess power in the hands of one person or branch of government. The system of checks and balances was put in place because the branches cannot operate in isolation. This system keeps each in check and ensures the maintenance of the balance of power.

Legal Systems and Sources of Law - Bulletpoint 2

• The British legal systems are complex, especially because there is an overlap of jurisdictions for the different types of law. The political system of the British Isles continuously evolves and develops.
• Law does not operate in isolation, it is a collection of varying disciplines. History is an important factor to weigh regarding the development of law. The two traditional sources of law in England and Wales are case law and statutes. William the Conqueror gained control over a country by gaining control over its legal system. He travelled around the country, accompanied by a court, and made decisions coinciding with the grievances of his subjects. This practice is referred to as the King's Bench (now Queen's Bench). As time passed, this role was delegated to 'Justices'; local customs were applied as there was no unified/national set of laws. Henry II formalised this system when he divided the country into 'circuits', which were areas where the judges were to visit regularly. This was abolished in 1971, but a version of it still exists in the United States.
• The two important examples of remedies are injunctions and decree of specific performance. Injunctions are a request from the court to act or refrain from an act. Decrees of specific performance are when the court orders a person to perform an act according to a contract or trust.
• The concept of Public International Law is a misnomer, because there is no sovereign body that can bind states to international law in the way a sovereign state binds its subjects. However, the conduct of states shows that there is a body of rules they abide by.

What is The International Dimension of Competition Law? - Bulletpoint 3

• Subject-matter jurisdiction: a State has jurisdiction to make laws through its legislative, executive or judicial bodies, within its territory (territoriality principle). It also has the power to regulate the behaviours of its citizens abroad, including companies that have incorporated themselves under their law. It is important to note objective territoriality, which goes beyond subjective territoriality (where the act is committed) by focusing on where the act is completed.
• Enforcement jurisdiction: even taking into consideration the above element, states cannot attempt to enforce the law in question within another state's boundaries without prior permission from said state.
• The Court of Justice of the European Union has not specifically ruled that there is an effects doctrine in EU, because it has always been possible in articles 101 and 102 of the EU Merger Regulation. Instead, jurisdiction has been based on other grounds, such as the single economic entity doctrine or when the agreement was entered into outside of the EU but was implemented into it.
• Problems can occur as a result of transnational mergers. For instance, when several competition authorities investigate the same transaction but have different ways to gauge whether it should be allowed or not. International cooperation between the competition authorities has higher chances of achieving successful and effective solutions.

What is Contract Law? - Bulletpoint 4.4 & 4.5

• A contract is the agreement between two or more consenting parties that is legally binding on all of them. Not all agreements are deemed contracts, because not all of them have legal sanctions, such as an agreement between friends.
• Most contracts are bilateral. Bilateral contracts consist of promises made by one party in exchange for promises from the other one. A unilateral contract is a contract where one party promises to do something in return for the completion of or the refraining from a specific performance or act.
• Agreements are necessary for the existence of a contract. This agreement exists by virtue of an offer and its acceptance. One party makes an offer that outlines the terms of the contract and the agreements and the other party can accept it, thereby demonstrating their willingness to be bound by the terms of the contract.
• Acceptance is the unconditional agreement with all the terms of the offer, e.g. when an offeree delivers goods to the offeror (Brogden v Metropolitan Railway Company, 1877). Acceptance must be unconditional. There must be agreement about the exact terms set out in the offer by the offeror. The introduction of new terms will be taken to mean a counter offer. Several exchanges of forms before a contract is known as the 'battle of forms'. The last form is what becomes the offer, as opposed to the standard forms that are each considered as a counter offer.

What are the terms of a contract? - Bulletpoint 4.6

• During negotiations, the following four types of statements can be made: ‘Trader’s hype’ or puff is just a boast used to advertise the product. Consumers are not supposed to consider these statements as literally true. There is no remedy even if the claim is false. ‘Representation’ is a statement which was made during the negotiations and is eventually not included in the terms of contract. ‘Misrepresentation’ is a statement which was made during the negotiations, is eventually not included in the terms of contract and appeared to be untrue. In this case, the misled party could not sue the other party for breach of contract, but could have the remedies for misrepresentation. ‘Term of the contract’ is a statement which belongs to the contract. It explains the parties’ legal obligations and duties. There is a remedy for breach of contract if a term is breached.
• The intention of the parties is the important factor to consider when determining whether a statement is a representation or a term. Other factors which the court takes into consideration when determining the intention are: importance of the statement, length of the interval of time between statement and contract, oral or written nature of the statement, and the skills and knowledge of the party who made the statement.
• ‘Certainty of terms’ means that the terms of the contract should be complete clear. When determining whether the terms have this certainty, the court takes into consideration what a reasonable person would think. ‘Express terms’ are the terms which are actually written down or orally stated by one of the parties. Implied terms are the terms which are not expressly stated by one of the parties involved, but are actually included in the terms of contract.
• A ‘condition’ is a term which is considered as fundamental to the contract. A ‘warranty’ is a term which is considered as a minor term of the contract. An innominate/intermediate term is a term which could neither be defined as condition nor as warranty.
• An exemption clause is an express clause included in the contract which aims to exclude or limit the liabilities of one of the parties towards the other. An exclusion clause is an exemption clause which pursues to exclude all legal liabilities. A limitation clause is an exemption clause which pursues to limit certain legal liabilities. An effective exemption clause has multiple criteria. Namely, the exemption clause should be in the contract, should not be vague, and should follow the statute.

What does the International Sales and the Vienna Sales Convention contain? - Bulletpoint 4.8

• The Vienna Convention on Contracts for the International Sale of Goods (CISG) is defined as the most important legal instrument in the field of international sales. The convention is built on work done by its predecessors. The convention is inspirited by, based on and built on the work of Rabel and UNIDRIOT, The Hague Conventions and the UNCITRAL. In 1988, the convention came into force. Today, the convention has been ratified by 83 states.
• The sphere of application of a convention is considered as a fundamental part of any international convention which regulates transnational commercial law. The question here is: “To which contracts is the convention to apply?”
• Article 1 of the convention is one of the provisions that assists in the definition of the sphere of application. Multiple problems arise out of this article concerning the types of contract covered, the internationality requirement and the connecting factor. The solution for the controversy of Article 1 (1) (b) involves the permission for states to enter an Article 95 reservation that enables a state to declare that it will not be bound by Article 1 (1) (b). Article 95 received criticism on two grounds. Firstly, Article 95 reduces the reach of CISG and undermines the effective spreading of this modern, well-designed tool. Secondly, the Article received criticism concerning the technical legal difficulties caused by Article 95.
• Article 7 of the convention deals with multiple difficult issues. The first issue is related to ‘its international character and the need to promote uniformity in its application’. The convention aims to have an autonomous interpretation. However, there arise issues concerning the ambiguous meaning of the word ‘autonomous’. The second issue relates to three different views on good faith and its application with regards to Article 7.
• Article 9 concerns usage. Article 9 could be considered to include a hierarchical superiority to the convention’s provisions. The binding usages that are imposed by either Article 9 (1) or (2) are seen as having priority over any other conflicting article in the CISG.
• Part II of the convention concerns the formation of a contract of sale. The CISG has adopted the offer and acceptance framework. Part III of the convention is considered as the heart of the convention. Chapter I concerns the general provisions. Chapter II concerns the obligations of the sellers. Chapter III concerns the obligations of the buyer. Article 25 defines the concept of fundamental breach. Article 78 concerns regulations on the payment of interest. Chapter IV relates to regulations on risk.

What are methods for the discharge of contracts and the relevant contractual remedies? - Bulletpoint 4.8

• The discharge of a contract brings an end to the obligations of the contract. Discharge by agreement happens when parties agree to discharge the contract before all the obligations of the contract are completed. In case of a bilateral agreement to discharge, both parties did not perform all their obligations of the contract. A unilateral agreement to discharge happens when one party did perform all his obligations of the contract, and the other party did not, but wants to be discharged of his obligations.
• Discharge by performance is considered as the ideal method of discharge of a contract. Here, both parties performed all the obligations under the contract and the contract is discharged as a result of the completion of the contract. There are four exceptions to the general rule of discharge by performance, namely: substantial performance, divisible contract, acceptance of partial performance and prevention of complete performance. An event can occur which causes a frustration of the contract. The conditions of this event are the following: the event could not be caused by the fault of either party, and must result in making performance of the contract illegal, impossible or radically different from the agreed terms. Discharge of a contract by breach occurs when one or more terms are broken by one of the parties or when one of the parties says in advance that he has no intention to perform the contract. There exist 5 methods of breach of contract, namely: breach of conditions, breach of warranties, breach of innominate term, actual breach of contract and anticipatory breach.
• There are multiple remedies for breach of contracts, namely: damages, action for agreed contract price, specific performance, injunction, repudiation and quantum meruit. Damages are monetary compensations. Action for the agreed contract price is an amount which is agreed on in the contract. Quantum meruit means ‘as much as he earned’. Specific performance refers to an order of the court to complete the contract’s obligations. An injunction is the prevention of breaking the contractual obligations by the party. With a repudiation the contract is treated as ended and it is not required to carry out the further obligations of the contract. Restitution is not defined as remedy for breach of contract, but refers to returning a benefit that has been obtained. The foundation of restitution consists of the principle that one party must not be unfairly benefit at the other party’s expense.

What is the tort of negligence? - Bulletpoint 5

• A tort is a civil wrong. For a tort there is a remedy available to the wronged person. This remedy usually consists of compensation. Providing remedies to claimants who have suffered losses, harm or an infringement of rights is the major aim of the law of torts.
• Negligence refers to an essential form of tort that include a great variety of situations in which persons are causing harm to others due to negligence. The following three elements are needed for a claimant to be able to succeed in an action for negligence: the defendant owed the claimant a duty of care, the defendant breached this duty of care and the breach of duty caused reasonably foreseeable damage.
• Nowadays, for a court to recognise a duty of care, the claimant must find an existing legal authority for a duty of care in the given circumstances or the claimant must provide proof for the three-stage test. The three-stage test consists of the following three requirements: the caused loss or harm is considered as reasonably foreseeable, there was a sufficient relationship of proximity between the defendant and the claimant and it is fair, just and reasonable that the law imposes a duty on the defendant in the given circumstances.
• Pure economic loss refers to a situation in which the financial loss of the claimant does not have any relationship to the physical injury of the claimant or damage to the claimant’s property. To establish of a duty of care for pure economic loss caused by a negligent statement, the claimant must prove the existence of a special relationship of proximity between the claimant and defendant.
• To make a successful claim for negligence, the claimant must be able to prove that the defendant broke his duty of care. The claimant must provide the court with proof that the defendant acted in a way that a reasonable man would not have done in the given circumstances.
• First of all, it must be a fact that the defendant has caused the loss or damage of the claimant. Besides, the particular damage or loss must be considered as one that was reasonably foreseeable. Therefore, the damage should not be too remote. For the caused breach of duty to be considered as reasonably foreseeable damage, two aspects are necessary. To determine whether there is a causal linkage between the breach of duty and the suffered damage, the ‘but for’ test is used. This test includes the question whether the claimant would have suffered the loss but for the defendant’s negligence. The damage suffered will be considered as reasonably foreseeable when the damage is not too remote. To determine this matter an objective test is be conducted. The defendant is only responsible for the loss which a reasonable man would have foreseen as a possible and likely consequence of his particular action.
• In case a person suffers a loss caused by a defective product, there are three options: He could sue the other party in the tort of negligence for breach of a common law duty, he could undertake action under the Consumer Protection Act 1987 for breach of a statutory duty, or in the case where a contract between the parties exists, the usual action would be in the law of contract.
  The manufacturers of products have a duty of care to the ultimate consumer if the manufacturers intend to provide the ultimate consumer with the product without further examination. Other defendants could be the persons who have repaired, assembled or supplied the products. Sometimes, more than one defendant will be considered as liable. The defendants will be held jointly and individually liable.

What is Intellectual Property Law? - Bulletpoint 6

• Intellectual property is defined as ‘things that the mind created’. It includes a wide range of different creations and inventions, literary and artistic works, symbols, designs and images. Intellectual property is mainly characterised by its intangibility. The most important intellectual property rights are copyrights, patents, trade marks and design rights.
• Copyright sets rules for the creation and use of goods such as books, films, songs and computer programs. The aim of copyright is to prevent others from being able to copy or reproduce the work of someone else without permission. This is for a defined period of time. Copyright is an automatic right, meaning that there is no registration needed but the right is acquired at the moment a work is brought into existence. This property right, copyright, is applicable to the following categories: original literary, dramatic, music or artistic works, sound recordings, films or broadcasts and the typographical arrangement of published editions.
• In general, the creator of the work is considered as the owner of the copyright. The owner of the copyright has exclusive rights to rent, lend, copy or adapt the work and to play, perform or exhibit the work publicly. Furthermore, the owner of the copyright has the right to issue the work’s copies, communicate the work to the public and to give others permission to carry out any of the previous actions.
• The term ‘primary infringement of copyright’ is related to the people that are directly connected with copying the work. A person will be considered as liable for primary infringement of copyright if he takes actions which fall under the exclusive rights of the copyright owner without his permission. The term ‘secondary infringement of copyright’ is related to the people who deal in the infringing copies or facilitate the works’ copying in a commercial context. In case of the infringement of copyrights the owner could take civil action. Usually, he applies to a court for an injunction to prevent further breaches and damages. The owner could also try to claim any profits made by the infringer, and that the infringer must hand over all the copies in his possession.
• The term ‘patent’ refers to the exclusive right given to an inventor to make use of and exploit their creation for a limited time period in exchange for a comprehensive description of the invention. A product or process which is a new technical solution to a problem is considered to be a patentable invention. A patent can be granted if the following requirements are met: the invention is new (to the public), the invention involves an inventive step and the invention is capable of industrial application. In general, the person entitled to apply for a patent is the inventor.
• The concept ‘trade mark’ refers to an intellectual property that protects any symbols or signs which make distinctions between goods and services in the marketplace. A trade mark which is registered protects the brand owner from competitors that make improper use of the trade mark. The moment someone else uses the trade mark or one similar to it in the course of business, an infringement occurs. The various remedies available include damages, an injunction to prevent the defendant from continuing the use of the mark, an order to account for the profits and an order to erase the offending sign from the goods or to dispose of them.
• The term ‘design right’ refers to an intellectual property that protects the visual representation or look of products. There are two types of design rights: unregistered design rights and registered design rights.
• ‘assing off’ is a tort that is committed when a business markets its goods or services in a manner such that they seem to be the goods or services of another business. The passing off action protects the goodwill or reputation of a business.

What are the Theoretical Accounts of European Intellectual Property? - Bulletpoint 6

• In order to be identified as an intellectual product, the product should possess the following three essential features: the product must have an objectively discernible form, the product must have expressive or informational properties and the product must have identifiable human creators.
• The essence of property rights could be identified as their excludability. In an economic sense, the exclusion rights provide the right to reserve the benefits of the protected product to oneself and to charge for others’ enjoyment of those benefits. The commercial exploitation of property rights in an object can only be considered as a possibility and not a certainty.
• Exclusionary rights of property constitute a considerable amount of power with regards to control over an object. In political terms, the exclusionary rights of property result in relationships between individual right holders, objects of property, and the excluded third parties which are state-sanctioned. In the construction of social and economic relations, two issues are considered important in intellectual property (IP): biopiracy and biodiversity.
• In natural law, individuals have a right to get protection of their personhood and personal autonomy. This account from personhood relates to the theories of Georg Wilhelm Friedrich Hegel, who views the intellectual product as the creator’s external manifestations of his personality. He proposes the idea that each intellectual product creation includes the development by the creator of his personhood, therefore of his personal autonomy. Through this creation process the creator comes to occupy the particular product which he created as an extension of himself.
• The second view on the existence of IP from natural law holds that the creator of intellectual products deserve property as a form of respect. The basis of this view includes one or more of the following three things: in the creation of the intellectual products a special kind of labour was involved, the intellectual products possess a special value and the creator of the intellectual products has special needs on account of their investment in creating them.
• A quite different view on the existence of IP maintains that IP prevents individuals from getting unjustly enriched or unfairly harmed by their or by others’ acts of free riding. The greatest supporter of this view is Wendy Gordon. Gordon states that infringement of intellectual property must meet the following criteria: the user must be aware of the copying, the context must involve the exhibition of asymmetrical market failure, the user must have taken sales from the actual or expected market for the claimant’s product and the use must be of an amount and type which is not likely to be of equal value to the claimant in the long term.
• This instrumentalist view on IP holds that IP is founded on the state’s instrumentalist commitment to establish results which reach beyond the vindication of the rights or interests of the creators of the intellectual products themselves, such as maximizing the general welfare of citizens or human happiness. These accounts of IP exist to discourage socially undesirable behaviour or to support socially desirable behaviour
• The pluralistic theories of IP include the rejection of any ‘one size fits all’ theory, preferring a view of IP systems which exists to support multiple moral and economic principles and values related to their diverse legal and social functions, and the varying beliefs of individuals concerning their proper conception and scope.

What are the Contracts of Carriage of Goods by Sea? - Bulletpoint 7

• The common carrier is referred to as the person who advertises to the public that he is available for providing transportation of goods for a fee. The liability for a common carrier is to carry the cargo safely. There are few exceptions to this rule. The multiple duties of the carrier to the shipper imposed by common law are the following: the duty which concerns the common carrier’s availability, the duty which concerns the implied duty to take reasonable care, the duty which concerns the implied duty of seaworthiness, the implied duty in relation to deviation and the implied duty of reasonable dispatch. In case a breach of a duty deprives the innocent party of the whole benefit of the contract, the innocent party is entitled to sue for damages and to treat the contract like it has ended. Any other breach of contract will only permit an action in damages.
• The common law exceptions are: the act of God (natural causes), the act of the Queen’s (the state’s) enemies and inherent vice.
• The following exemptions are considered to be the typical contractual exemptions: the loss caused by perils of the sea, the loss caused by the arrest or restraint of princes, the loss caused by an inherent vice and/or defective packaging, the loss caused by strikes or lockouts and the loss caused by errors in navigations.
• The claimant must meet two main conditions if he is to make a claim against the carrier: firstly, the carrier must receive a written notice of loss or damage in the case that damage is apparent before the goods enter into the consignee’s custody, or within three days of their entering his custody in case the loss or damage is not apparent. Secondly, the action must be started within one year of the date of delivery or the date it should have been delivered (subject to extension as agreed on by both parties).

What is international economic law? - Bulletpoint 11(1)

• The foundations of the Bretton Woods system can be traced back to the thoughts and works of Adam Smith. Other important thinkers were John Stuart Mill (the principle of comparative advantage) and David Ricardo. The Bretton Woods system rests on the premise that the whole economic system, including developing countries, is better off when all states focus on one specialty. This idea is mostly based on the concept of opportunity costs. David Ricardo in this respect applied Mill’s principle of comparative advantage towards international trades and he concluded that all countries are better off if they specialize, i.e. France makes wine, England clothes, etc. This advantage can be best exploited if there is free trade. Therefore, in the 60s and 70s developed states aimed to establish a New International Economic Order. Nowadays, there is more attention paid to a fair distribution of welfare.
• Several main principles guide the processes in the World Trade Organisation (WTO). First and foremost, the non-discrimination principle aims to create equal competition for local and foreign goods and services. This principle is translated into two guiding obligations: the most favoured nation treatment and the obligation of national treatment. The former means that a state has to provide the same privileges to different countries if it concludes similar treaties between those countries. The national treatment obligation means that national products should be handled the same as international goods.
• One of the most important documents for the WTO is the 1994 General Agreement on Tariffs and Trade, which is aimed to liberalize international trade. The GATT is not meant to prohibit any and all tariffs by states, but merely aims to impose certain ceilings on these tariffs and ensure that the tariffs imposed are not excessive. Another important agreement is the General Agreement on Trade in Services (GATS), which covers all services supplied except for those supplied by governments. The GATS among other things stipulates that no quantitative restrictions may be imposed, furthermore the telecommunication and financial services are regulated. Intellectual Property Rights are regulated in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). All sorts of intellectual property rights are described in the agreement, such as copyrights, trademarks and several types of designs.
• The IMF oversees compliance to the states’ obligations in relation to their exchange rates. It does so by examining the fiscal and monetary policies of states. In this process it is required to respect the states’ sovereignty and independence.
• Arguably, the principle role of the IMF is to provide states with loans. The International Monetary Fund often functions as a ‘lender of last resort’. These loans are subject to conditions:
  • the member's use of the general resources of the Fund should be in accordance with the provisions of this Agreement and the policies adopted under them;
  • the member proves that it has a need to make the purchase because of its balance of payments or its reserve position or developments in its reserves;
  • the proposed purchase should be a reserve tranche purchase, or should not cause the Fund's holdings of the purchasing member's currency to exceed two hundred percent of its quota;
  • the Fund has not previously declared under Section 5 of this Article, Article VI, Section 1, or Article XXVI, Section 2(a) that the member desiring to purchase is ineligible to use the general resources of the Fund.
• Customary international law stipulates a minimum standard of protection for foreign investors, but it does allow a state to nationalize property under certain conditions. Expropriation needs to benefit the community as a whole and not just the state. Usually, developed states provide full compensation for expropriation. Just and full compensation is the general principle in customary international law, but this principle is not always followed. The compensation needs to reflect the full market value of the investment in question.

How are disputes handled in a peaceful manner under international law? - Bulletpoint 12

• Since the primary aim of international law is to protect peaceful international relations, the settlement of disputes in a peaceful manner is vital. There are several tools available to solve disputes. Diplomatic solutions are usually preferred over the other options. The International Court of Justice (ICJ) is the only international court that has the power to handle disputes with an international nature. Due to the sovereignty of states this jurisdiction has to be granted to the Court by the states. There are some other courts that are more specialized, which can handle certain international cases as well.
• First of all, non-adjudicatory ways of handling a dispute are all ways of handling a dispute that involve political or diplomatic solutions. As stated this is generally preferred by states. The most common way to handle a dispute in a non-adjudicatory way is to engage in negotiations. Members of the United Nations have committed themselves to negotiation in case of conflicts. These negotiations can happen with ‘good office’, which means that a third, neutral party mediates in the conflict. In some cases parties may install a commission of inquiry to help to come to a solution. In other cases an international organization like the UN Human Rights Council will take a role in mediation.
• Arbitration is an important method in the category of adjudicatory settlement of disputes. Arbitration by a commission, for example, led to the solving of the American Civil War dispute between the US and Britain. The Pacific Settlement of International Disputes created the Permanent Court of Arbitration (PCA) to assist in the settlement of international disputes, which can also be used for ‘mixed disputes’, i.e. disputes with states and individuals as relevant parties.
• The ICJ is a unique body in the sense that it is the only party that has jurisdiction to deal with international disputes. The Court is based in the Hague. Judges are appointed by the 5 members of the Security Council and must be of exemplary moral character. In the appointment of the 15 judges account is taken of the geographical distribution. Usually, all 15 judges are involved with the processes and at times several specialized judges are temporarily appointed for a case. Judgments are legally binding and are made by a majority vote.
• Certain courts and tribunals have a special mandate to solve international disputes, an example being the International Tribunal for the Law of the Sea (ITLOS). Judgments by the ITLOS are legally binding and final, i.e. there is no room for appeal. Another body with such jurisdiction in adjudicatory disputes is the Dispute Settlement Body (DSB), which is distinguished for its speedy and flexible decisions. For criminal issues, an important body is the International Criminal Court (ICC), based in The Hague. A distinguishing feature of this court is that it may upon its own initiative start an investigation towards international crimes.

What is Law? - Bulletpoint 1

• Law is necessary to maintain order in society.Without law, the state would be disorganised and in chaos. Formal regulation is needed in order to regulate the affairs of not just human activity but also larger companies and public bodies. Objectivism holds that there is an absolute set of moral principles. Relativism maintains that morality is relative, meaning that it can evolve over a period of time and varies from society to society.
• Rule of Law are the characteristics that are needed in order for a civilised state to function properly.
• There is a clear distinction between de facto sovereignty and de jure sovereignty. De jure sovereignty applies to the formal body of authority that make the laws, whilst de facto sovereignty lies in the hands of those who actually make decisions. De facto sovereignty in the UK resides in the Cabinet, for example. The UK is a unitary state because all powers that local authorities have are granted to them by Parliament.
• Division of powers within a state's government aims to prevent an accumulation of excess power in the hands of one person or branch of government. The system of checks and balances was put in place because the branches cannot operate in isolation. This system keeps each in check and ensures the maintenance of the balance of power.