WORKING IN ENGLISH

FOR LAW STUDENTS

Law making
tradition/contracts/legal terms and
concepts
16 January 2013
By Helen Michelle Jrgensen

THE ENGLISH LEGAL SYSTEM

THE NORWEGIAN LEGAL SYSTEM

How do the two compare

Handout: Law Making Tradition

Differences in:
Law-making tradition
Contract writing tradition
Interpretation

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.

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

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.

English Law-Making Tradition

The concept of Sovereignty of Parliament has been lost

by the UKs 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.

English Law-Making Tradition

European law is based on roman law principles, 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.

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.

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.

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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 Norways
participation in the European Economic Area, also the
European law.

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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.

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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 Courts decision.
The final court of appeal in Norway is the Supreme Court.

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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

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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

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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

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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

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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

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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

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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,

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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)

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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TYPES OF DOCUMENT
What is the difference between:

A Heads of Terms
Term sheet
Letter of Intent
Memorandum of Understanding

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TYPES OF DOCUMENT
What is the difference between:

A Contract
An Agreement
A Memorandum of Agreement
A Letter of Agreement
A Letter Agreement

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TYPES OF DOCUMENT

How many ways can we describe a contract:

Promise
Agreement
Committment
Pledge
Bargain
Treaty

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TYPES OF DOCUMENT

How many ways can we describe a contract:

Convention
Pact
Concordat
Trust
Deed
Bond
Undertaking

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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

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TERMINOLOGY USED
What is the difference between:
Condition
Undertaking
Covenant

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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

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TERMINOLOGY USED
What is the difference between:
Representation
Warranty
Indemnity
What are the Norwegian equivalents

Handout: Representation, Warranty,

Indemnity

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REPRESENTATION, WARRANTY
INDEMNITY
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

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REPRESENTATION, WARRANTY
INDEMNITY
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

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UNDERTAKINGS
COVENANTS
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

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EFFECTIVENESS
Differing degrees of ineffectiveness of a contract:

Void
Illegal
Voidable
Unenforceable

Handout: Degrees of Effectiveness

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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

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ENDING A CONTRACT
Rescission:

By agreement
Abandonment
Substituted contract
On misrepresentation

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ENDING A CONTRACT

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

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

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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

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ENDING A CONTRACT
Termination:
Stopping short of completion
Expiry: natural end
In accordance with terms
What would typically be an
event of termination?

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ENDING A CONTRACT
Other forms:
Release
Satisfaction
Variation
Waiver
In accordance with terms
Frustration
Breach
By operation of law

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DEGREE OF EFFORT

Best endeavours
Reasonable endeavours
Best efforts
Reasonable commercial efforts

What is the standard of effort

imposed?

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TERMINOLOGY USED
What is the difference between:
Liquidated damages
Penalty clauses

Why is there focus on these under common law

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