WORKING IN ENGLISH FOR LAW STUDENTS

1. WORKING IN ENGLISH FOR LAW STUDENTS Law making tradition/contracts/legal terms and concepts 16 January 2013 By Helen Michelle Jørgensen

2. THE ENGLISH LEGAL SYSTEMTHE NORWEGIAN LEGAL SYSTEM How do the two compare Handout: Law Making Tradition

3. Differences in: Law-making tradition Contract writing tradition Interpretation

4. English Law-Making Tradition • The English legal system is a Common Law system. • Formation of English Common Law was completed around 1250. • Before that there distinct legal systems, including based on customs and varied from place to place. • William the Conqueror and his Norman successors had orderly minds and were good administrators, and they achieved in England uniformity of the law, making it the Common Law.

5. English Law-Making Tradition As well as Common Law, there is also Equity. This means fairness and the application of good conscience to the settlement of disputes – it is natural justice. The English Equity system is a supplement to Common Law, and fills in the gaps that exist in Common Law, and prevails over it in the case of conflict. Handout: the Maxims of Equity

6. English Law-Making Tradition In the English system certainty, uniformity and consistency are important. To achieve this there is Judicial Precedent. ‘Case Law’ but to have certainty and flexibility judges can overrule, reverse or disapprove of previous case decisions.

7. English Law-Making Tradition The concept of Sovereignty of Parliament has been lost by the UK’s membership of the European Union. Now European Law takes precedence over English law if there is a conflict with English Common Law or Statute. European law has been superimposed on English national law.

8. English Law-Making Tradition European law is based on roman lawprinciples, and is different from the English legal system. The English principle that legislation must spell out precisely and in detail what the law is to be. Statements of broad principles are strange to the English system, and trying to convert European directives into legislation has defeated many English parliamentary draftsmen. For England, the final court of appeal is not the Supreme Court but the European Court.

9. Norwegian Law-Making Tradition Norway first had regional law making assemblies. The King was represented at the various assemblies by one or more of his officials, but the King had no judicial authority in the first few centuries after Norway was united. Like in the early years in England, rules of law were based on custom, and to some extent precedent, but the assemblies also passed laws. The process of recording the laws in written form began around 1100.

10. Norwegian Law-Making Tradition In the 1270s the various regional codes were compiled and revised to form a common national code. The national code was completed in 1274 and it remained in force for over 400 years, and included royal exercise of legislative powers. In 1687 Norway received a complete codification of its laws when many Danish rules of law were introduced.

11. Norwegian Law-Making Tradition The Constitution of Norway (Grunnloven) was adopted in 1814 after the dissolution of the union with Denmark. The present Norwegian legal system has a purely national foundation, but it is closely related to the legal systems of other Nordic countries, which have largely the same traditions in terms of legal history and legal policy. Influenced by other legal systems, and through Norway’s participation in the European Economic Area, also the European law.

12. Norwegian Law-Making Tradition Norway has a statute law system with the highest authority being the 1814 Constitution. Norway is a member to the EEA and under the EEA it is bound by a large number of regulations adopted by within the EU. As in England, these need to be transformed or incorporated into Norwegian law.

13. Norwegian Law-Making Tradition Unlike the English Judicial Precedent concept whereby the lower courts are bound by the decisions of the higher courts, the Norwegian courts are not bound by judgments or decisions made by higher courts, although in general they will follow the Supreme Court’s decision. The final court of appeal in Norway is the Supreme Court.

14. English Drafting Style and Tradition English contracts have traditionally been long, compared to Norwegian contracts • England has never had an underlying constitutional document, and the practice has been to try to cover every eventuality in the contract, • with more complicated transactions earlier, and • more ‘clever drafting’ by lawyers, leading to • longer and longer documents in England

15. English style – why so wordy: Differences between Civil and Common law systems • clash of legal cultures • different legal principles, especially on interpretation Common law system is based on ‘precedent’ • words used before in contracts are important to follow No underlying Code to rely on • nothing to regulate in detail various legal relations which the parties can rely on if they do not cover it in their document Freedom of contract and fewer statutory codes • lead to documents which regulate all conceivable aspects

16. Courts will not intervene • if the meaning is clear from the words ‘that is it’ • no moral or ethical obligation • no obligation to deal fairly • English courts will not ignore words and look behind them to determine their meaning • Courts will not will not ‘re-write’ contracts English business/legal environment • Business world was more developed in the context of company sales – e.g. fixing price, tax • Complex legal systems English documents were driven by lawyers – not commercial people

17. Norwegian Drafting Style and Tradition Norwegian contracts have traditionally been shorter, compared to English contracts Norway has a constitution and has therefore been able to have shorter and less detailed contracts, relying on the underlying law to fill in the gaps

18. Norwegian Drafting Style and Tradition Possibly less complicated transactions previously: (economy traditionally based on local farming communities and fishing, hunting, wood and timber, and a domestic and international-trading merchant fleet) Norwegian documents were perhaps driven by commercial people e.g. ship brokers – not lawyers

19. Norwegian Drafting Style Now Norwegian contracts have moved to being longer and more like contracts from Common Law juridisctions, due to: • English (American) concepts and drafting styles being adopted in Norway • Large Norwegian companies adopting English as their corporate language • Parties becoming used to the longer Anglo-American style and content and being comfortable with it as a recognised ‘norm’

20. Norwegian Drafting Style Now Norwegian contracts are also now longer and more like Common Law contracts, due to: • the ‘Petroleum economy’ which has developed since Philips Petroleum discovered petroleum sources at the Ekofisk field in 1969, and • increased international business, and • parties expect to see a longer and more detailed contract,

21. Norwegian Drafting Style and Tradition Examples: BIMCO (The Baltic and International Maritime Council) standard in shipping (Example Handouts BIMCO and BIMCO Barecon) The LMA (Loan market Association) standard in financing (Example Handout Single Currency Term Facility)

22. INTERPRETATION -English Traditional English approach: • Identify the intention of the parties from the wording of the document itself • Sometimes means that parties have had to live with a mistake in the wording of a contract, even if it defeated the intention and allowed one party to take advantage of the mistake • Evidence of prior negotiations not traditionally considered • Words given their plain and literal meaning

23. INTERPRETATION - Norwegian Norwegian approach: • Interpret in accordance with the parties common intention at the time of the agreement • If common intention cannot be ascertained, then interpret in accordance with a reasonable objective understanding of the words of the document

24. INTERPRETATION - Norwegian Norwegian approach: • Can take into consideration other circumstances that may indicate intention • Can consider preceding negotiations and subsequent behaviour • Can consider previous dealings between the parties • Can take into account what would be the fairest result in the actual dispute

25. INTERPRETATION The compromise between Norwegian and English tradition: • the value of reaching a reasonable result in the individual case • compared to the value of having firm rules and the greater possibility to pre-direct the result • the English way needs to think it all out in advance and express the thoughts correctly, and if this is not done, to suffer the consequences

26. INTERPRETATION The compromise between Norwegian and English tradition has been: • Norwegian rules of interpretation have sacrificed certainty for reasonableness • English rules have sacrificed reasonableness for certainty

27. INTERPRETATION New approach in England Law according to Lord Hoffman (the ICS Case) in 1997 Reconfirmed according to the Supreme Court (the Kookmin Bank Case) in 2011 Handout: ICS Case/Kookmin Bank Case

28. INTERPRETATION New approach in England • Continuing influence of European law on the English courts • Look less at language and more to the purpose of the document according to common sense principles

29. INTERPRETATION New approach in England • Strict approach to contractual interpretation has been relaxed in favour a common sense approach in commercial contracts • Anything can be investigated which would affect the way in which the words used in the document would have been understood by a reasonable man • Purposive, common sense approach

30. CONTRACTS AND CONTRACT LAW • Freedom of contract: concept that the parties are free to enter into a contract on whatever terms they consider are in their best interests • Today: a reasonable social ideal to the extent that equality of bargaining power can be assumed and no injury is done to the economic interests of the community at large • Freedom of contract has suffered as a result of developments in modern life and policy

31. CONTRACTS AND CONTRACT LAW Freedom of contract has suffered due to: • Statutory restrictions – which override • ‘Standards’ for contracts – not resulting from negotiation • ’Compulsory’ transactions – essentials of life – utilities • Implied terms – by Statute or law

32. CONTRACTS AND CONTRACT LAW Contracts are entered into daily by people in private life or business, e.g.: • Contract of carriage • Sale of goods • Supply of services • Commercial contracts

33. CONTRACTS AND CONTRACT LAW Functions: • Securing that the parties’ expectations are fulfilled • To give recourse to legal sanctions • To faciliate forward planning of a transaction • Establish a value of the exchange • Establish respective responsibilities • Establish a standard of performance • Allocate economic risk • Provide for what happens if things go wrong So that the separate and conflicting interests of the parties can be reconciled and brought to a common goal

34. TYPES OF DOCUMENT What is the difference between: • A Heads of Terms • Term sheet • Letter of Intent • Memorandum of Understanding

35. TYPES OF DOCUMENT What is the difference between: • A Contract • An Agreement • A Memorandum of Agreement • A Letter of Agreement • A Letter Agreement

36. TYPES OF DOCUMENT How many ways can we describe a contract: • Promise • Agreement • Committment • Pledge • Bargain • Treaty

37. TYPES OF DOCUMENT How many ways can we describe a contract: • Convention • Pact • Concordat • Trust • Deed • Bond • Undertaking

38. FORMATION OF A CONTRACT What is Consideration and why is it so important in Common Law? Why as a Norwegian lawyer do you need to be aware of this and its relevance? Handout 9

39. TERMINOLOGY USED What is the difference between: • Condition • Undertaking • Covenant

40. CONDITIONS • “Condition Precedent” so called ‘subjects’: contract does not come into force until the event named in the condition has taken place • “Condition Subsequent”: a condition that causes the contract to become invalid if a certain event happens

41. TERMINOLOGY USED What is the difference between: • Representation • Warranty • Indemnity What are the Norwegian equivalents Handout: Representation, Warranty, Indemnity

42. REPRESENTATION, WARRANTYINDEMNITY • Representation: • Statement of fact made by one party to induce another to enter into a contract, or to do or not do something • Different remedies in incorrect – compensation to recission • Warranty: • Promise that something is true • Liability if breach of promise • Liability subject to ordinary contract law rules, e.g: • Remoteness • Duty to mitigate

43. REPRESENTATION, WARRANTYINDEMNITY • Indemnity: • Undertaking to meet a liability, as suffered by the indemnified party • Can be subject to normal legal principles, but • Can be to compensate NOK/NOK if a specific situation arises, and not subject to rules on liability for breach of contract • Like on demand guarantee • Scope depends on contract wording

44. UNDERTAKINGSCOVENANTS Essentially the same: Undertaking: • To take responsibility for a task • An obligation to do something Covenant: • From the French convenir: to agree • A promise to do something • Formal agreement

45. EFFECTIVENESS Differing degrees of ineffectiveness of a contract: • Void • Illegal • Voidable • Unenforceable Handout: Degrees of Effectiveness

46. ENDING A CONTRACT What is: • Rescission • Repudiation • Renunciation • Cancellation • Termination Cancellation/Termination can be the same and mean what it says they mean in the contract

47. ENDING A CONTRACT Rescission: • By agreement • Abandonment • Substituted contract • On misrepresentation

48. ENDING A CONTRACT Repudiation: ‘discharge by breach’ Breach justifying the innocent party, if it chooses, regard itself as absolved or discharged from further performance.

49. ENDING A CONTRACT Renunciation: Where one party shows an intention not to go on with the contract Refusal to perform, by conduct or actual

50. ENDING A CONTRACT Cancellation: Backing out, returning both parties to the state they were in as if they had never signed the agreement e.g. ‘cooling off’ periods in consumer contracts