#10366 - Classifying Remedies And Who To Sue - BPC Civil Litigation

CLASSIFYING REMEDIES

a) Compensatory remedies - compensate C for loss

• e.g. damages - if D fails to pay, various enforcement methods

• C usually gets costs too (not part of damages)

b) Coercive remedies - prevent harm occurring/re-occurring

• injunction

• Specialised orders e.g. specific performance of a contract

• Failure to obey order is contempt of court fine and/or prison and/or sequestration of assets

c) Declaratory remedies - interpret documents ad resolve disputes about parties' rights

• declaration

i. preventative - resolve before parties take steps based on (false) view of matter

ii. indirectly 'coercive' - declaration puts parties on notice of legal interpretation of matter; if parties act contrary to that interpretation compensation + possible injunction

d) Exemplary or punitive remedies - punish offending party for deliberate/grave acts

• order for exemplary/punitive damages - penalise D via civil (rather than criminal) litigation

Legal remedies - e.g. damages

Equitable remedies - e.g. injunction, specific performance - only awarded if legal remedy inadequate

WHO TO SUE

LEGAL PERSONALITY - determine legal status of both C and D

• Individuals - same/different legal status?

• Groups

  • 1. determine if

    • trust

    • corporation

    • unincorporated association

  • 2.

    • a. any limits on capacity?

    • b. who can bind the group i.e. how do rules of agency apply to type of legal status?

Trust

• Determine roles of settlor, trustees, beneficiaries

e.g. if acting for trust, is action in trustees' power / in line with terms of trust?

Corporation - legal person separate from its members

• Formed by:

  • Royal Charter

  • Statute

  • under Companies Acts as private/public company

• Who has legal authority to act on behalf of corporation?

Unincorporated associations - no legal personality separate from members 1 member liable for acts of another

• trade unions / employers' associations

• (proprietary / members') clubs

• partnerships

BUSINESS ASSOCIATIONS - incorporation for trade purposes

• sole trader - individual trades in own name

• partnership - 'the relation which subsists between persons carrying on a business in common with a view of profit' (s1(1) Partnership Act 1980)

• company - registered under Companies Act 2006 (into force 1 Oct 2009; incorporated/restated CA 1985 and codified case law)

Formation

Sole Traders

• no formalities to set up

• personality of trader indistinguishable in law from individual (except for accounting purposes re: personal assets and assets owned by business)

• business debts unlimited liability of sole trader

Partnerships

• no formalities to form, but must satisfy s1(1) Partnership Act 1980 and be lawful business

• Limited Liability Partnerships Act 2000 (IF 6 April 2001)

limited liability partnerships

• cf formalities for company - law for partnerships does NOT apply / law for companies DOES

• liability of partnership unlimited / liability of individual partners limited to obligation to contribute to assets on winding up

  • + limited liability

  • - obligatory disclosure of info

Companies

• comply with formalities in Companies Act 2006 (CA 2006)

file articles of association etc with Registrar of Companies certificate of incorporation + entry in register of companies + file at Companies House

• legal person distinct from members (from date in cert of incorporation)

  • company has unlimited liability for debts (can be liquidated to pay creditors)

  • members NOT liable for debts - liability to contribute to assets limited by share/degree

• Categorisation:

a) liability of members to assist co to pay its debts

i) ltd by shares - ltd to nominal value and any premium on shares (mostly for trading)

ii) ltd by guarantee - liability to contribute (only on liquidation) ltd to amount of guarantee (mostly non-trading e.g. educational)

iii) unltd company - liability to contribute (only on liquidation) unltd

b) ability to offer securities (shares/debentures) to public

i) public ltd company - must end with 'plc'

ii) private company - any other company. Unless unltd, must end with 'ltd' (some ltd by guarantee cos exempt). Companies that are unltd and ltd by guarantee MUST be private.

• Groups of companies i.e. one controls other(s) by members' voting rights/composition of directors' board

  • holding co usually = principal shareholder of subsidiary

  • various companies = distinct legal persons with own debts

Internal management and control of the association

Sole traders - law has no impact, except to provide contractual remedies

Partnerships

• partner = equity partner full rights

• other 'partners' - e.g. sleeping, salaried - have limited/no partnership rights

• Equity partners - own the firm (have invested capital) and manage business

  • rights set out in partnership agreement

    • s24 Partnership Act 1890 (PA 1980) - implies terms into agreement subject to express/implied agreement to contrary

i.e. terms apply insofar as not inconsistent with those agreed (expulsion of a partner must be express)

• right to manage

• right to access to books

• differences decided by simple majority

  • BUT unanimity required for: change in nature of business; expulsion/introduction of a partner

    • s19 PA 1890 - rights and duties of partners may be varied by consent (express/implied by conduct) of all partners

    • ss 28-30 PA 1980 - partners must act in good faith towards one another

  • duty to act within actual authority

Companies

• Decisions of the company (via voting)

  • The General Meeting - collective decisions of members (own company)

    • most decisions = simple majority; constitutional decisions = 75% majority

    • formalities set out in CA 2006; more stringent for public cos

    • impractical to hold members' meeting for all decisions decision-making power delegated to directors

  • The Board Meeting - collective decisions of directors (manage company)

    • once members delegate, board and GM cannot exercise simultaneously

  • Members and directors NOT usually same people ownership and management separate

• Directors' duties

  • Pre-CA 2006 governed by fiduciary duty

  • now codified in ss171-177 and 182 CA 2006 - inc:

    • acting in accordance with co constitution

    • promoting co's success

    • independent judgment

    • avoiding conflicts of interest

    • not accepting benefits from 3rd parties

    • declaring interest in transactions/arrangements with company

    • exercising reasonable care, skill, diligence

• Members' rights

  • contained in arts of association (deemed a contract by s33 CA 2006)

  • company ltd by shares can adopt model form of arts set out in SI

  • if directors / other person wrongs co, co itself must sue (Foss v Harbottle 1935)

    • power to institute proceedings delegated to directors

    • if directors refuse, member may take collective action on co's behalf, but action not favoured in recent cases (Breckland Group Holding Ltd v London and Suffolk Properties Ltd 1989)

    • simple majority of members can dismiss directors they disagree with

    • rare for individual member to bring action

  • s994 CA 2006 - members can petition court for order if running of co prejudices member unfairly

  • Dept for Business, Innovation and Skills can investigate a co

Contractual capacity and agency rules

General agency rules - where agent negotiates contract on behalf of principal

must check to see who's bound:

• Authority of agent

  • Actual authority - agreed between agent and principal

    • express

    • implied - including

      • incidental or implied - anything incidental to express auth

      • usual - usual things an agent in that trade would do

      • customary - to act in accordance with customs of places where agents in trade act

  • Apparent (or ostensible) authority - as it appears to others (based on principle that 3rd parties are entitled to assume an agent has the authority he appears to)

  • actual v apparent

    • generally same

    • apparent may exceed actual e.g. if restrictions on actual authority exist but principal has not told 3rd party of these

    • actual may exceed apparent e.g. principal specifically gives agent more actual authority that agent in that position would usually have, but 3rd party unaware

    • regardless of actual, principal generally bound by contracts within agent's apparent authority

BUT even if principal bound, if agent acts outside actual authority, principal will have action against agent

• Disclosed/undisclosed principal

  • Disclosed principal (usual) - agent discloses agency to 3rd party

    • Contract between principal and 3rd party general rule (with exceptions): agent CANNOT sue/be sued on contract

  • Undisclosed principal

    • agent appears to be contracting party agent can sue and be sued on contract

    • undisclosed principal can intervene and claim against 3rd party provided contract does not forbid

Sole traders

• law of contract between individuals applies

• general agency rules apply to acts of employees

• sole trader personally liable for torts and contractual breaches in course of business

• assets to satisfy judgment debts = trader's personal and business assets

Partnerships

• law of contract between individuals applies

• normal agency rules apply - ss5-18 PA 1890

  • each partner = both: agent AND part of principal

  • s5 - acts of individual partners bind all partners (unless individual acting outside authority AND 3rd party aware of this OR 3rd party not aware dealing with a partner)

  • case law:

    • all partners have usual auth to: buy and sell goods; pay debts; give receipts; draw cheques

    • usual auth of trading partners wider than non-trading partnerships and inc. borrowing money

  • ss5 and 8 - if limits placed on partner's auth, firm still bound unless 3rd party has notice of limitation

  • s6 - acts done and instruments executed in firm's name

  • s7 - pledging...