Business Law Assignment 1.2: Common Law, Equity, and Rules

This document presents a comprehensive solution to a business law assignment, analyzing the distinctions between common law and equity, including their historical development, characteristics, and limitations. The assignment further delves into statutory interpretation, examining the application of the mischief rule and the literal rule through the analysis of hypothetical scenarios and relevant case studies. The provided examples, such as R v Lockley and D&C Builders v Rees, illustrate the practical application of legal principles. The document also explores the application of legal rules in scenarios involving prison regulations and drug-related offenses on campus, providing insightful analysis based on the rules of statutory interpretation. The assignment provides a clear understanding of key legal concepts and their practical applications.

Nguyen Hoang Son – 10190311 – Business Law – Assignment 1.2
1

Table of Contents
1. Task 1......................................................................................................................................... 3
2. Task 2......................................................................................................................................... 4
3. Task 3......................................................................................................................................... 5
4. Task 4......................................................................................................................................... 8
5. Task 5....................................................................................................................................... 11
6. Task 6....................................................................................................................................... 12
7. Task 7....................................................................................................................................... 13
8. Task 8....................................................................................................................................... 14
9. Task 9....................................................................................................................................... 16
10. References................................................................................................................................ 18
2

1. Task 1
Common law:
The Norman kings and powerful men in the land built a council called Curia Regis that
implied some primary functions of legislature and exercised judicial power. It led to the
development of the common law and also Court of Common Law in the 13th century. The
formulation of common law includes the Court of Common Law’s representative collected
practices from localities and then evaluated to introduced the common laws.
Limitation of common law:
Although common law has been implied for a period of time, there are limitations that make
the court difficult to obtain justice, mainly from the rigid law system (Sarah & Allen, 2009).
Firstly, the common law could not adapt the need of society that is increasingly complicated,
which cannot fully protect the injured party. Secondly, the writ system was too formal and
complex so that any minor errors might influence negatively to the claim. Next, the only one
remedy available in the common law was inadequate in specific cases. Finally, there were
threads of bribery, intimidation and overwhelmed power from the men of wealth that led to
corrupted judges and affected the final results.
Development of Equity:
In the past, the aggrieved citizens used to send their petition to their King for support.
Nevertheless, the number of petitions increased significantly that made the King to create a
specific committee to listen to citizens’ petitions. The Chancellor was responsible for
presiding the hearings and receiving petitions. Since the 15th century, the Court of Chancery
was created and Equity was called for the body of rules enforced by this court. However, this
derived the conflicts between the Court of Chancery and the court of common law and thus,
in the 17th century, James I decided that in solving conflicts, equity was prioritized. Since
then, the English legal system continued with 2 separated sets of rules from distinct courts.
Comparison between Common Law and Equity
Common Law Equity
Developed by the Court of Common Law Developed by the Court of Chancellor
A complete law system Not a complete system of law but to
complement the common law
Not recognise the concept of trust Recognise and execute beneficiary’s right
under a trust
3

Decisions are made based on stare
decisis
Decisions are made by a court of conscience
that consist of equitable maxims
The only remedy is damages Remedies are discretionary
Example cases:
Common Law: R v Lockley [1995]
Fact: The defendant stole the beers from an off-license and then assaulted the shop owner.
The defendant was accused for robbery. However, he appealed against his conviction based
on section 8(1) and section 1(1) Thief Act 1968 that required proof of a theft that was
completed together with the use of force immediately before or during the thief, and due to
his violence occurred after the theft, his conviction for robbery was not valid. The case
concerned that the defendant is convicted for robbery or not.
Decision: the court referred to similar cases of R v Hale [1978] and R v Gomez [1992]
showed that the act of theft was a continuing act and not completed before the force and the
court decided to remain the robbery conviction. The decision of the court has followed the
stare decisis, which referred 2 previous cases to decide he is convicted as robbery.
Equity: D&C Builders v Rees [1966]
Fact: A firm wanted the payment from the Rees for the building work and materials. Rees
refused to pay but the work continued. The builders got financial shortage and requested for
funding and Rees offered a reduced lump sum for debt and force the company to accept. A
cheque was issued and Rees provided a receipt stating the funds were paid fully in the
account. The firm was afraid that they would get nothing but Rees argued that the work did
not meet the requirement and the builders had signed a binding agreement before. So the
issue was whether the agreement was binding or not.
Decision: The court decided to dismiss the Rees’ appeal because there were no advantage
terms for the builders about the debt. The court saw the result from the case of Foakes v
Beer [1884] that late payment with a lesser amount by cheque was not equivalent to the total
owing from builders (lawteacher.net, 2019). Also Rees had taken advantage from the
builders’ difficulty and hence, the agreement between 2 sides could not be considered as
settlement and Rees had to pay fully to builders. In this case, the court’s decision based on
the equitable maxim “he who comes to equity must come with clean hands”, which means
the claimant cannot get equitable remedy if he was in bad faith with the subject of complaint.
2. Task 2
Issue: Gilly was caught attempting to pass his friend a wig and a jacket when visiting him in
prison. He also brought nail scissors in his pocket. There was a section of the Prison
4

Detention Act that states “a person must not take into a prison any knife, dagger, firearm,
club or other thing whatsoever”. The case was whether Gilly violated the Act or not.
Rule: This case should be considered in 2 types of rule: Mischief rule and Literal rule. Firstly,
about mischief rule, it intends to rectify the statute and interpret the statute with the aim of
giving to the court the most discretion to solve the crime (lawteacher.net, 2019). The mischief
rule concentrates on the main purpose of the law and remedy instead of the original meaning
of the words in statute. It creates the rights for the court to provide their own decision using
common law. A previous case concerning mischief rule was Corkery v Carpenter [1951].
Corkery was one-month sentenced for being drunk when riding bicycle in public according to
section 12 of Licensing Act 1872 that being drunk when in carriage was illegal. Although
bicycles were not mentioned in the Act, the court decided that because the purpose of the
Act was to prevent people using vehicles when being drunk, bicycles could be interpreted as
a kind of transportations and hence Corkery was guilty. Meanwhile, literal rule means the
judges will depend on the plain meaning of the words in the statute (lawteacher.net, 2019). A
statute must be read word by word and be interpreted based on the initial meaning of the
language. In previous case of Fisher v Bell [1960], the weapons act in 1959 prohibited to sell
offensive weapons. James Bell had displayed a flick knife in the shop’s window and
convicted to violate the law. However, due to the literal meaning of the act, the knife on the
window did not mean an intention for sale but an advertisement or invitation instead. Hence,
he was not found guilty.
Analysis: In terms of mischief rule, Gilly’s situation was similar that the main purpose of the
Prison Detention Act was to prevent the thread of violence and escaping. Therefore, beside
the listed tools in the Act, the term “other thing whatsoever” can be understood as any
objects that may create the thread of violence and prisoner’s escape. In fact, everything Gilly
brought into the prison can be used to do those activities. The wig and jacket can be used for
disguise, escaping and hiding weapons, while the nail scissors could be a dangerous tool
that can harm people. As a result, Gilly has violated the law and is likely to be found guilty. In
terms of literal rule, according to the plain meaning in Prison Detention Act, only knife,
dagger, firearm, club that were listed in the Act. Because wig, jacket and nail scissors were
not mentioned, he was not found guilty for bringing them into the prison.
Conclusion: In terms of mischief rule, Gilly is guilty. Nonetheless, in terms of literal rule,
Gilly is not guilty.
3. Task 3
5

a) Issue: Winnie is caught while licking white aspirin powder. Education Act states “an
offence to bring heroin, cannabis, cocaine or any other drug onto a campus” with the
purpose to prevent reports of drug trafficking on campus. The case was whether Winnie
violated the Act or not.
Rule: This case should be considered in 2 types of rule: Mischief rule and Literal rule. The
literal rule refers to the original meaning of the word in statute must be remained and the
court has to follow exactly the initial meaning of the statute to solve the crimes. An example
is the case R v Harris [1836] The defendant was convicted for biting on his victim’s nose.
The court applied the literal rule that it was an offence to “stab cut or wound”, which did not
consist the act of biting. Hence, the defendant was not guilty.
However, if considered the purpose of enforcing the statute, the court also need to
consider mischief rule. There is a case law of Smith v Hughes [1960]. The defendants were
charged according to the street offences act 1959 that it is illegal to solicit in public area.
The defendants were doing the prohibited act from balconies to avoid the law but still can
be seen by public. The court decided to applied mischief rule that the activity of defendants
was aim for illegal prostitution whether it was in public or not and they were guilty.
Analysis: In the case of Winnie, aspirin is considered as a drug, which is literally listed in
the prohibited objects in Education Act in the term “any other drug”. Moreover, according to
mischief rule, the main purpose of this Act is to prevent drug trafficking on campus.
Because Winnie is caught while licking aspirin powder, which show the evidence the she
has brought it into campus and might have possibility of buying it from someone inside
campus, which can be considered as bringing drug and can be interpreted as drug
trafficking.
Conclusion: Winnie is considered to violate the law whether the court applying literal rule
or mischief rule in solving this case.
b) Issue: Doc brought one ecstasy tablet but he claimed that it “must have stuck in his
pocket”. Education Act states “an offence to bring heroin, cannabis, cocaine or any other
drug onto a campus” with the aim of eliminating drug trafficking on campus. The case was
whether Doc violated the Act or not.
Rule: This case should be considered in 2 types of rule: Mischief rule and Literal rule. The
literal rule refers to the original meaning of the word in statute must be remained and the
court has to follow exactly the initial meaning of the statute to solve the crimes. An example
is the case R v Harris [1836]. The defendant was convicted for biting on his victim’s nose.
6

The court applied the literal rule that it was an offence to “stab cut or wound”, which did not
consist the act of biting. Hence, the defendant was not guilty.
However, if considered the purpose of enforcing the statute, the court also need to
consider mischief rule. There is a case law of Smith v Hughes [1960]. The defendants were
charged according to the street offences act 1959 that it is illegal to solicit in public area.
The defendants were doing the prohibited act from balconies to avoid the law but still can
be seen by public. The court decided to applied mischief rule that the activity of defendants
was aim for illegal prostitution whether it was in public or not and they were guilty.
Analysis: In the case of Doc, the court can refer the literal meaning of the Educational Act
that every kind of drug is offended to be brought to campus. Because Ecstasy is classified
as “Class A drug” in UK (nidirect.gov.uk, n.d.), Doc is convicted for carrying drug to
campus. However, in terms of mischief rule, the main purpose of Educational Act is to
prevent drug trafficking on campus. Because Doc brought only 1 tablet of ecstasy, the
amount of this drug might not be enough for the activity of providing or selling drug in
campus. Additionally, about his intention to bring ecstasy, he mentioned that it must have
stuck in his pocket, which means he did not have the intention to bring it to campus or use
it within the area of campus.
Conclusion: Doc is found guilty in accordance to literal rule. However, if the court refers to
applying mischief rule to solve this crime, Doc is not found guilty.
c) Issue: Cisco is caught with his methadone dose legally prescribed for him. Education Act
states “an offence to bring heroin, cannabis, cocaine or any other drug onto a campus” with
the aim of eliminating drug trafficking on campus. The case was whether Cisco violated the
Act or not.
Rule: This case should be considered in 2 types of rule: Mischief rule and Literal rule. The
literal rule refers to the original meaning of the word in statute must be remained and the
court has to follow exactly the initial meaning of the statute to solve the crimes. An example
is the case R v Harris [1836]. The defendant was convicted for biting on his victim’s nose.
The court applied the literal rule that it was an offence to “stab cut or wound”, which did not
consist the act of biting. Hence, the defendant was not guilty.
However, if considered the purpose of enforcing the statute, the court also need to
consider mischief rule. There is a case law of Smith v Hughes [1960]. The defendants were
charged according to the street offences act 1959 that it is illegal to solicit in public area.
The defendants were doing the prohibited act from balconies to avoid the law but still can
7

be seen by public. The court decided to applied mischief rule that the activity of defendants
was aim for illegal prostitution whether it was in public or not and they were guilty.
Analysis: In terms of literal rule, it stated clearly the offence to bring “heroin, cannabis,
cocaine or any other drug”. Because methadone dose is classified as a “class A drug”
according to the Government of UK (gov.uk, n.d.), so whether Cisco is legally prescribed or
not, it is prohibited to bring this kind of drug into campus. However, considering the aim of
the Educational Act is to prevent illegal drug trafficking at school. In this situation, there are
2 assumptions about Cisco’s intention to bring methadone: (1) Cisco brought methadone
as prescribed medicine: In this case, the drug is concerned as legal medicine for treatment,
therefore, Cisco may not be convicted for drug trafficking. (2) Cisco wanted to sell
methadone dose for ones who are not legally prescribed this medicine: despite of the legal
factor of this drug, it is considerable that Cisco may supply illegally for others who are not
prescribed and his activity can be interpreted as “supplying class A drug” according to Drug
Penalties of UK Government (gov.uk, n.d.).
Conclusion: Cisco violated the Act according to its literal meaning. About mischief rule,
the court can consider him to be guilty or not base on his intention of bringing methadone
dose to campus.
4. Task 4
a) Issue: Joan and Effah made a sale contract of a sturdy lawnmower called MowMaster
3000. The problem is whether any part of the Effah’s statements about the product can be
considered to be the part of the contract. The case was whether any parts of Effah’s
statement can be in the contract.
Rule:
A contract is a legally binding agreement between at least two parties that defines and
enforce the rights and obligations of the parties within the scope of the contract (Ryan,
2006). A contract of sale is a kind of contract for purchasing assets by a purchaser from a
seller with an agreement value of money (Moyle, 1892). The statements made during the
negotiation of sale contract could be separated into contractual terms and representations.
Terms, according to Martin and Law (2009), refers to any clause that form a part of a
contract. They require the related parties to have contractual obligation and any breach can
lead to legal litigation (Martin & Law, 2009). Terms can be separated into several typical
features: warranties, conditions and exclusion terms. Conditions are the terms that one or
all parties must follow based on contract agreement. Condition can be expressed clearly in
the contract (expressed condition) or not be mentioned in verbal from but still be a part of
8

the contract (implied condition) (Sturge, 1925). Warranties are less important than
conditions and do not go to the root of contract (Sarah & Allen, 2009). The injured parties
can claim damage if there is a breach of warranty but cannot repudiate the contract.
Exclusive terms are contractual terms that aims to restrict or exclude one or many parties’
liability in the contract and the one who provide this term has to explain it clearly to others.
Representations are a statement aimed to present and induce a party to enter a contract.
Representations are not stated in contract. If there is a breach of representation, the
injured party can receive remedy for misrepresentation but cannot repudiate the contract.
The example case related to deciding a statement as terms or representations is Oscar
Chess Ltd v Williams [1957]. Mrs. Williams bought a Morris second hand car, which was
stated in the registration document that it was registered in 1948. Her son traded this car
with a new Hillman car in the following year to Oscar Chess Ltd. He stated that the car was
1948 model and the firm accepted to reduce the price of the Hillman to trade. However,
they found that the Morris was actually 1939 model and cheaper than they had traded.
They claimed for a breach in the contract that the model of vehicle was a term in contract
and they had the right to repudiate the contract. The court decided that because the
company was a car dealer, they had more knowledge in car age than the defendant.
Hence, the age of the car was not a term but a representation.
Puffery and opinion may not form a contract like terms or representation but persuade the
party to involve in the contract. Puffery is aimed to exaggerate the introduced objects, while
opinion is the seller’s point of view to advertise products to customers. In the case of Carlill
v Carbolic Smoke Ball company [1892], the company advertised their carbolic smoke ball
could prevent cold and influenza and guaranteed 100 pounds for their customers who
catch flu after using product. The company even claimed they had deposited 1000 pounds
in the bank for guarantee. Carlill bought it and used as instructed and caught flu several
weeks later. She wanted to recover 100 pounds but the company said it was just a vague
advertisement. The court decided the company must pay 100 pounds for the plaintiff
because although the 100 pounds was just a puff, the 1000 pounds’ deposit showed their
sincerity and so it became a representation.
Analysis:
“The Mowmaster 3000 is the one for you” is purely an opinion from the seller, it cannot be a
part in the contract.
9

“It’s amazing! The blades can cut through anything, and they’ll never get blunt or bent out
of shape” is the puffery that exaggerate the performance of the machine, which cannot be
in the contract.
“I think you’ll get through your jobs in no time with this one, and be able to fit more clients
into the week” is just the seller’s opinion and will not be mentioned in the contract.
“It was designed in Germany and made from the best quality parts” is a term and a
representation because this is the reason that persuade Joan to buy the machine.
However, only the phrase “designed in Germany” can be considered as a term in the
contract. The other part of the statement is representation.
Conclusion: The only Effah’s statement that is a part of the contract is “Designed in
Germany”.
b) Issue: Joan realized that the performance of the machine was not as introduced before.
When she complained to the store, it refused its liability because they had a sign at the
sale counter about their exclusive term that they would not be liable for any problems after
purchasing product. The issue was whether the sign could be in the sale contract or not.
Rule:
Exclusive terms are contractual terms that aims to restrict or exclude one or many parties’
liability in the contract and the one who provide this term has to explain it clearly to others.
The exclusion clause may not be in document form but still need to be informed clearly.
The exclusive terms only work if the terms have been incorporated in the contract and the
affected party has to be identified the existence of this term or be informed clearly before or
at the time the contract was made (e-lawresources.co.uk, n.d.).
Contra Proferentum is also a protection for unfavorable party in exclusive term. It states
that if there is unfair statement in the contract, the court usually providing advantage
decision for injured party to balance the benefit between the sides in the contract.
A case related to exclusive term is Olley v Marlborough Court [1949]. The plaintiff booked
in the defendant’s hotel for a week. During that time, Olley was stolen a coat. There was a
notice on the bedroom door’s back side that the customers were responsible for their own
assets if they did not hand to the manager for safe custody. The court held that the notice
was not incorporated in the contract because the plaintiff was not noticed before or at the
time of making contract (before entering the room) and therefore the exclusive term was
invalid.
10

Analysis: There was a sign at the counter said that the store would not be liable for any
problem after purchasing. The content in the sign can be considered as an exclusive term
and be incorporated in the sale contract because its position was near the place where
Joan made contract and normally, the plaintiff should have noticed of that sign. However,
because the sign was unintentionally hidden. Thus, the plaintiff did not know about this
exclusive term at the time making contract that might not be incorporated in the contract
and the customer has the right to claim for petition. Additionally, the exclusive term of the
store provided unfair benefit between the 2 parties and the seller did not tell clearly about
this term but only depend on a small sign, which is easily to be distracted by customers like
in this case. Hence, due to contra proferentum, the store still has to provide compensation
for Joan.
Conclusion: The sign can be understood as an exclusive term and the store has to
compensate Joan.
5. Task 5
Issue: Paula hired Barnet for an oral contract to find a favorable real estate for rental
property. He has found a great deal and purchased for himself and found a second most
favorable for Paula. Paula found the truth and claimed that he has acted improperly but
Barnett argued that the contract is only made orally so there is no binding liability and he is
responsible for finding a real estate that met her requirement. The case concerned about
whether Paula have legal resource against Barnet.
Rule:
Oral contract is a verbal agreement that occurs when the spoken communication is legally
enforceable in the court.
Fiduciary duty arises when a person or an organization is required to prioritize another
person’s benefit before their own. The one who has the duty is called fiduciary he/she must
have the highest degree of loyalty and care, which means the fiduciary must always act for
the best benefit of the beneficiary and never has the intention or negligence that may harm
the beneficiary (Sarah & Allen, 2009). This kind of relationship is purely based on trust and
confidence. In the case Aberdeen Railway Co v Blaike Brothers [1854], Blaike Bros had
contract with the Aberdeen company to manufacture iron chairs for 8.5 pounds per ton in
18 months. When Blaike delivered two-thirds of the chairs, Aberdeen argued that they
were not binding with the contract and cannot purchase for the products because the
chairman of Blaike Bros was also Aberdeen’s chairman. Blaike sued the Aberdeen for
breaching the contract. The court’s decision was based on the fact that the company is
11

only able to act through its agents. The agents must ensure that there is no personal
interest or conflicts occur during the transaction. Because Mr. Blaike may take advantage
from adjusting the price for personal interests, Aberdeen is not bound to the contract.
Analysis: in this case, because Barnet is considered as Paula’s agent, he must have the
responsibility in providing the best offer to his beneficiary in terms of finding real estate.
Due to the fact that he did not inform the best choice for Paula, he did not fulfill his
responsibility of an agent. Additionally, the common law stated that the agent is not allowed
to gain personal profit in the position of agency without the beneficiary’s notice or making
any harm to the benefit of his client. Because Barnet has bought the best choice for
himself, which is supposed for Paula, he has violated his fiduciary duty not concerning the
contract is in verbal or written form.
Conclusion: Paula has the right and legal resource to sue Barnett.
6. Task 6
The main distinction between contract of service and contract for service:
Contract of service (CoS) Contract for service (CfS)
A contract made for workers who are
employed by employers.
A contract designed for self-employed
workers
The workers are instructed and managed
by their employers
Self-employed workers must find their
own work and provide their clients with
agreed services.
The tools needed for daily work are
supplied by the employers or the
organizations.
The workers have to prepare tools and
equipment for themselves.
The employees are paid by their
employers in the form of salary. Salary is
paid in a fixed rate in a specific period
(month, quarter, year, etc.). Beside salary,
employees can have bonus and other
benefits: holiday or sick days salary, tax
and insurances.
The workers are paid by their clients with
the payment that is settled in the
contract. They also have to be
responsible for their own insurances and
tax. They are not paid for days off
12