Semester 2 - Commercial Law - Welcome

Hey PPL,

Sorry for the delay and I hope you all had a swell time preparing for the test. Remember that the test is only 20% and is a good simulation of the real 80% stuff you will get at the end. Keep practising.

We have now completed Formation of Contract which covered the following topics:-

Agreements
Consideration
Intention

The issues there help us determine if there was a valid contract. These are all covered in Chapters 3 - 4

I saw an interesting wikipedia outlook on Formation - particularly Consideration.

http://en.wikipedia.org/wiki/Contract

Consideration and estoppel


Consideration is known as 'the price of a promise' and is a requirement for contracts under common law. The idea behind consideration is that both parties to a contract must bring something to the bargain. A party seeking to enforce a contract must show that it conferred some benefit or suffered some detriment (though it might be trivial, see below) that is recognized by law. For example, money is often recognized as consideration, but in some cases money will not suffice as consideration (for example, when one party agrees to make partial payment of a debt in exchange for being released from the full amount).[17]

Some common-law and civil-law systems[18] do not require consideration, and some commentators consider it unnecessary—the requirement of intent by both parties to create legal relations by both parties performs the same function under contract. The reason that both exist in common law jurisdictions is thought by leading scholars to be the result of the combining by 19th century judges of two distinct threads: first the consideration requirement was at the heart of the action of assumpsit, which had grown up in the Middle Ages and remained the normal action for breach of a simple contract in England & Wales until 1884, when the old forms of action were abolished; secondly, the notion of agreement between two or more parties as being the essential legal and moral foundation of contract in all legal systems, promoted by the 18th century French writer Pothier in his Traite des Obligations, much read (especially after translation into English in 1805) by English judges and jurists. The latter chimed well with the fashionable will theories of the time, especially John Stuart Mill's influential ideas on free will, and got grafted on to the traditional common law requirement for consideration to ground an action in assumpsit.[19]

Although several rules govern consideration, the following are the principal rules.

Consideration must be "sufficient" (i.e., recognizable by the law), but need not be "adequate" (i.e., the consideration need not be a fair and reasonable exchange for the benefit of the promise). For instance, agreeing to sell a car for a penny may constitute a binding contract.[20]
Consideration must not be from the past. For instance, in Eastwood v. Kenyon,[21] the guardian of a young girl obtained a loan to educate the girl and to improve her marriage prospects. After her marriage, her husband promised to pay off the loan. It was held that the guardian could not enforce the promise because taking out the loan to raise and educate the girl was past consideration—it was completed before the husband promised to repay it.
Consideration must move from the promisee. For instance, it is good consideration for person A to pay person C in return for services rendered by person B. If there are joint promisees, then consideration need only to move from one of the promisees.
The promise to do something one is already contractually obliged to do is not, traditionally, regarded as good consideration. The classic instance is Stilk v. Myrick[22], in which a captain's promise to divide the wages of two deserters among the remaining crew if they would sail home from the Baltic short-handed, was found unenforceable on the grounds that the crew were already contracted to sail the ship through all perils of the sea. (The case has been much criticized on grounds that the ship was in port at the time of the promise.) A very specific example is the "rule in Pinnel's Case"[23], brought into the modern law of consideration by the House of Lords in Foakes v. Beer[24]. This rule is to the effect that a smaller sum of money cannot be good consideration for the release of a larger debt, though if the smaller sum is accompanied by something non-monetary in addition, for instance "a horse, a hawk or a robe", or payment is to be made early or in some special place or way, then there will be good consideration for the promise to discharge the debt. This rule has suffered some inroads recently. In Williams v. Roffey Bros & Nicholls (Contractors) Ltd[25] the English Court of Appeal held that a promise by a joiner to complete the contracted work on time, where this was falling behind, was good consideration for the contractor's promise to pay extra money. The reasoning adopted was that the strict rule of Stilk v. Myrick was no longer necessary, as English law now recognized a doctrine of economic duress to vitiate promises obtained when the promisor was "over a barrel" for financial reasons. Therefore, where the promise to pay extra could be seen as conferring a practical benefit on the promisor, that could be good consideration for a variation of the terms. The rule in Pinnel's Case has also been effectively sidestepped in England by the Court of Appeal in the case of Collier v. P & MJ Wright (Holdings) Ltd[26] which held that a promise to accept less in discharge of a pure debt (as opposed to, say, accepting reduced rent, which has long been recognized) could give rise to a promissory estoppel.[27]
The promise must not be to do something one is already obliged by the general law to do - e.g., to give refrain from crime or to give evidence in court: Collins v. Godefroy.[28]
However, a promise from A to do something for B if B will perform a contractual obligation B owes to C, will be enforceable - B is suffering a legal detriment by making his performance of his contract with A effectively enforceable by C as well as by A.[29]
Civil law systems take the approach that an exchange of promises, or a concurrence of wills alone, rather than an exchange in valuable rights is the correct basis. So if you promised to give me a book, and I accepted your offer without giving anything in return, I would have a legal right to the book and you could not change your mind about giving me it as a gift. However, in common law systems the concept of culpa in contrahendo, a form of 'estoppel', is increasingly used to create obligations during pre-contractual negotiations.[30] Estoppel is an equitable doctrine that provides for the creation of legal obligations if a party has given another an assurance [disambiguation needed] and the other has relied on the assurance to his detriment. A number of commentators have suggested that consideration be abandoned, and estoppel be used to replace it as a basis for contracts.[31] However, legislation, rather than judicial development, has been touted as the only way to remove this entrenched common law doctrine. Lord Justice Denning famously stated that "The doctrine of consideration is too firmly fixed to be overthrown by a side-wind."[32]



The balance part of Contract are :-

Terms
Vitiating factors
Discharge
Remedies

Semester 2 Investment Laws - Welcome!!

Hi Everyone,

It was good to see all of you there last week and looking forward to this evening. The assignments ought to be up soon and I will certainly brief you on this.

I found some interesting sites on MIS:-

This is a very informative Australian site:

http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Managed%20investment%20schemes

http://www.fido.gov.au/fido/fido.nsf/byheadline/Investing+in+managed+investment+schemes?opendocument


And our every "dependable" wikipedia -
http://en.wikipedia.org/wiki/Collective_investment_scheme

Here is a cut and past from my Sem 1 posting in March 2010 -

In Lecture 5 - we introduced to you a kind of financial product known as Managed Investments Schemes. (MIS) In Singapore we refer to these schemes as the Collective Investment Schemes. These schemes allow a collective effort by groups of people to pool their resources to professional and trusted entities to managed their resources to achieve financial gains. An example would be Unit Trust. Unit Trust has been extremely robust in the Singapore Financial markets offering investors a huge array of products from Tech Stocks to Property Stocks to REITS.

MIS or CIS however has a potential risk in that it depends largely on the fundamental principle of "trust". In this sense the investor trusts their monies with a central entity to manage their monies for them. If this central entity (known as the Responsible Entity) is not trustworthy, the investors may be at risk. So rather than leaving it to market forces to determine this, the laws have taken to regulating this segment.

You will therefore be required to think about -

1) What is a trust and why and how has the common law dealt with this issues;

2) What is a MIS - how is it defined and why is it defined like this;

3) Who is the Responsible Entity - what qualities does her posses and why?

4) What are the registration requirements and why do you think these are required.

5) What is the MIS is not registered?


Its really about regulating MIS. MIS is important - we need it and at the same time we need to regulate it. Do you think however that our laws have done enough or too much in their regulating efforts?


All up to you now.

SK