ENGLISH AND EU COMPANY AND COMMERCIAL LAW

1
ENGLISH AND EU COMPANY AND COMMERCIAL LAW

• 11th-13th November 2009
• HELSINKI UNIVERSITY LLM PROGRAMME

2

• THE TYPES OF BRITISH BUSINESS ORGANISATION
• SOLE TRADER UNINCORPORATED CORPORATIONS
• ASSOCIATIONS
• PARTNERSHIPS LIMITED CLUBS CHARTERED
  COMPANIES
• 
  PARTNERSHIPS COMPANIES INCORPORATED
• BY STATUTE
• STATUTORY COMPANIES PUBLIC CORPORATIONS
  REGISTERED
• COMPANIES

3
SUBSIDIARY COMPANY

• Company S is a subsidiary company of Company H
  if-
• Company H holds a majority of the voting rights
  in Company S
• or
• Company H is a member of Company S and has the
  right to appointment or remove a majority of its
  board of directors
• or
• Company H is a member of Company S and controls
  alone, pursuant to an agreement with other
  shareholders, a majority of the voting rights in
  Company S
• or
• Company S is a subsidiary of Company X which is a
  subsidiary of Company H

4
(No Transcript)
5
A PRIVATE COMPANY LIMITED BY SHARESMEMORANDUM
OF ASSOCIATION

• The companys registered office is to be situated
  in England
• The companys name is The Carthew Electronics
  Company Limited.
• The companys objects are the manufacture and
  development of such electronic equipment,
  instruments and appliances as the company may
  from time to time determine, ands the doing of
  all such other things as are incidental or
  conducive to the attainment of that object.,
• The liability of the members is limited.
• The companys share capital is 100 pounds divided
  into 100 shares of one pound each.

6

• We, the subscribers to the memorandum of
  association, wish to be formed into a company
  pursuant to this memorandum and we wish to take
  the number of shares shown opposite our
  respective names.
• Names and addresses Number of shares taken
• Of subscribers by each subscriber
• John Bates, 25 High St, Esher 1
• Ann Bates, 25 High St, Esher
  1
• Dated 23rd September 2005
• Witness to the above signatures
• David Baker, 10, Masterton Road, Esher

7

• Cyf
• (cyfyndedig)
• Ccc
• (cwmni cyhoeddus cyfyndedig)

8
PARTNERSHIPS

• What is a partnership?
• Contract between partners
• Joint object
• Profit motive
• Features
• Each partner has unlimited liability for debts,
  liabilities of partnership
• Each partner is an agent for others
• Maximum number 20. Exceptions.
• Not required to be registered

9
PART II COMPANIES ACT 2006

• S.250 Director
• In the Companies Acts director includes any
  person occupying the position of director, by
  whatever name called.

10
Part II Companies Act 2006

• S.251 Shadow Director
• In the Companies Acts shadow director, in
  relation to a company, means a person in
  accordance with whose directions or instructions
  the directors of a company are accustomed to act.
• A person is not to be regarded as a shadow
  director by reason only that the directors act on
  advice given by him in a professional capacity.
• (3) A body corporate is not to be regarded as a
  shadow director of any of its subsidiary
  companies . by reason only that the directors
  of the subsidiary are accustomed to act in
  accordance with its directions or instructions

11
NEWGATE LIMITED

• The Annual General Meeting of the Company will
  be held at 10.30am on Friday 16th January 2009
  at the Companys registered office at 35
  Piccadilly, London W1
• AGENDA
• 1. Apologies
• 2. Minutes of the Annual General Meeting held
  on 16th January 2008
• 3. Matters arising.
• 4. To receive the accounts and directors and
  auditors reports for the year ending 31st
  December 2008
• 5. To reappoint as director Mr D.Blair, who
  retires under Article 74 of the Companys
  Articles of Association, and is eligible for
  re-election.

12

• 6. To consider, and if thought fit pass, the
  following resolution, which will be proposed as
  an ordinary resolution
• That the remuneration of the directors for the
  year ending 31st December 2009 be-
• Mr D.Blair 90,000
• Mrs B.Jackson 85,000
• 7. To confirm the companys acceptance of the
  contract signed on 3rd October 2008 with Eccles
  Ltd for the building of an extension to the
  Companys offices at 35, Piccadilly, London W1
• B.Smith
• Company Secretary
• 27th October 2008

13
(No Transcript)
14
Re Tottenham Hotspur 1994 1 BCLC 655

• Alan Sugar, chairman of Tottenham Hotspur, and
  Terry Venables, originally held a 50/50 interest
  in the company. Sugar later obtained control and
  Venables was sacked as chief executive. Venables
  claimed in a S459 action that his removal was
  contrary to his legitimate expectation that he
  would be involved in managing the company.

15
Re Tottenham Hotspur

• The courts decision
• The court found little if any evidence to
  support Venables allegation of unfair prejudice
  and made no order.

16
Estmanco (Kilner House) Ltd v Greater London
Council

• The GLC built a block of flats with sixty
  separate flats for sale with each purchaser
  taking a share in the management company. The
  company articles provided that , until all the
  flats were sold, the GLC should exercise all the
  voting rights. After selling twelve flats, the
  GLC decided to transfer council tenants into the
  block. A tenant brought an action in the
  companys name. The GLC then called a general
  meeting and voted to discontinue the action. The
  court allowed the tenant to take over the action
  as a derivative action.

17
Re Westbourne Galleries

• E and N had been in partnership for many years
  trading in Persian carpets. They were equal
  partners. Later they formed a private company
  and became its first directors. Ns son G then
  became a director/shareholder. G and N used
  their voting strength to remove E as a director.
  E asked for the company to be wound up. The
  court lifted the veil the company was really
  a partnership and E was like a partner with a
  right to be involved in management. The winding
  up order was granted.

18
Parent and subsidiary undertakings

• Takes definition of parent/subsidiary and adds-
• P has the right to exercise a dominant influence
  over S by virtue of-
• - a provision in the memorandum or articles
• - a control contract
• P has a participating interest in S and either-
• - exercises a dominant influence over S or
• - P and S are managed on a unified basis

19
LOANS TO DIRECTORS

• Includes quasi-loans.
• E.g. D owes money to X. Company pays X.

20
SECURITY INTERESTS

• Mortgages
• Charges
• Pledges
• Liens

21
FLOATING CHARGE

• Charge on class(es) of assets of a company
  present and future or on all the assets of a
  company
• Assets will change from time to time
• Company may carry on business in ordinary way as
  regards those assets

22
(No Transcript)
23
(No Transcript)
24
(No Transcript)
25
Ways of forming a European Company (SE)

• 1)Merger of PLC's from at least two Member
  States
• 2) Formation of a holding company by public or
  private companies from at least two MS
• 3) Companies from at least two Member States
  forming a subsidiary
• 4) Transformation of a PLC which has had a
  subsidiary for at least two years in another MS

26
DRAFT CLAUSE EXCLUDING THE CONTRACTS (RIGHTS OF
THIRD PARTIES) ACT 1999 A person who is not a
party to this Agreement has no right under the
Contracts (Rights of Third Parties) Act 1999
to enforce any term of this Agreement but this
does not affect any right or remedy of a third
party which exists or is available apart from
that Act.
27
CASE STUDY

• On 1st October A Plc sent a letter to B Ltd
  offering them a contract to service all As
  computers for the next five years at a cost of
  10,000 per annum. The letter said that B should
  reply by return of post. Unfortunately the letter
  was not delivered until 6th October. B replied at
  once accepting. This letter was posted at
  11.00am on 6th October. In the meantime, on 4th
  October, A had received an offer from C Ltd to do
  the servicing work for 9000 per annum. A,
  having heard nothing from B, telephoned C on 5th
  October and offered them the contract at 8000.
  C accepted. A sent a fax to B on 6th October
  telling them that the offer of 1st October was
  withdrawn. This fax was received on Bs fax
  machine at 10.45am on 6th October but not read by
  anyone until 5pm on the same day. Advise A.

28
BRITISH ROAD SERVICES LTDVARTHUR CRUTCHLEY CO
LTD 1988 1 AER 811

• The supplier delivered a consignment of
  whisky
• to the purchasers warehouse
• The suppliers employee handed over a
  delivery
• note containing the suppliers standard
  terms
• and conditions
• Instead of signing the delivery note, the
• purchasers warehouseman stamped it
• Received on the Buyers conditions.
• Held, the purchasers terms prevailed.

29

• BECK CO
• V
• SZYMANOWSKI
• A contract for the sale of cotton provided-
• The goods delivered shall be deemed to be in all
  respects
• in accordance with the contract
• Unless the buyer gave notice of a complaint
  within 14 days
• of the arrival of the goods. The buyers claimed
  damages
• for short delivery.

30
MISREPRESENTATION

• 1. This lorry is in exceptional condition
• 2. This car has done only 20,000 miles
• 3. To the best of my knowledge and belief this
  car has done only 20,000 miles

31
MISTAKE

• A buys a picture from B both A and B believe
  it to be the work of an old master, and a high
  price is paid. It turns out to be a modern copy.
  In the absence of representation or warranty,
  has A got a remedy?

32
DURESS

• X Plc has a contract with Y Ltd. X tells Y that
  unless Y enters into a five-year contract with
  Xs subsidiary X2 Ltd, on terms which are very
  favourable to X2, X will terminate their
  agreement with Y. Although his means that Y Ltd
  will make a loss on the deal with X2, they agree
  because of the importance they place on their
  contract with X. Two year later X goes out of
  business. Y now wants to escape from its contract
  with X2. Advise X2.

33
UNDUE INFLUENCE

• Elisabeth, an orphan, married Richard five
  years ago when she was 16 and he was 45. She has
  a valuable collection of jewellery which she
  inherited from her mother. Richard, whose
  business is in trouble asks her to guarantee a
  loan of 30,000. Elisabeth refuses. Later,
  Richard brings his bank manager home and presents
  Elisabeth with a document to sign, guaranteeing
  the loan of 30,000 with Elisabeths jewellery as
  security. The bank manager tells her that she
  may consult her solicitor if she wishes, but
  there is little danger of her losing her
  jewellery. Elisabeth signs the guarantee.
  Richards business collapses and the bank wants
  to enforce the guarantee.
• Advise Elisabeth.

34
BRITISH STEEL CORPORATION VCLEVELAND BRIDGE
1984 1 AER 504

• During negotiations between the two parties,
  Cleveland Bridge Co sent B.S.C. a letter of
  intent-
• - regarding the terms of the proposed contract
• asking B.S.C. to begin work immediately
• producing the goods required by the company
• B.S.C. did the work and delivered the goods but
  the parties never agreed on the terms of the
  contract
• Following a dispute over prices and delivery
  dates, the company refused to pay for the goods
• B.S.C. sought to recover its costs on a
  restitutionary (quantum meruit ) basis. They
  succeeded because the company had had the benefit
  of faster delivery of the goods (as requested in
  the letter of intent)
• The companys counter-claim for damages for late
  delivery failed, since that was a breach of
  contract claim and no contract had been formed.

35
Rome Convention on Applicable Law

• Article 4 (1)
• To the extent that the law applicable to the
  contract has not been chosen in accordance with
  Article 3, the contract shall be governed by the
  law of the country with which it is most closely
  connected. Nevertheless, a severable part of the
  contract which has a closer connection with
  another country may by way of exception be
  governed by the law of that other country.

36
Rome Convention on Applicable law

• Article 12 Voluntary Assignment
• The mutual obligations of assignor and assignee
  under a voluntary assignment of a right against
  another person ('the debtor') shall be governed
  by the law which under this Convention applies to
  the contract between the assignor and the
  assignee
• The law governing the right to which the
  assignment relates shall determine its
  assignability, the relationship between the
  assignee and the debtor, the conditions under
  which the assignment can be invoked against the
  debtor and any question whether the debtor's
  obligations have been discharged.

37
Rome 1 Regulation (593/2008)

• Comes into force on 17.12.09 (except Denmark)
• Article 3 minor change (choice must be
  demonstrated "clearly")
• Article 4. Applicable law in absence of choice.
  Complete revision.
• Articles 5 and 7. New provisions on carriage and
  insurance

38
Rome 1 Regulation

• Article 6
• Expansion of choice of law rules re consumer
  contracts
• Article 9
• Rephrasing of mandatory rules ("mandatory
  provisions")

39
Bundesgerichtshof VIII ZR 159/94

• In this case the German Supreme Court held that-
• 1) a Swiss seller who delivered to the German
  buyer New Zealand mussels containing a cadmium
  concentration higher than recommended by the
  German health authorities, was not in breach of
  contract since the mussels were still eatable.(no
  lack of conformity under Article 35 CISG)
• 2) It is not the duty of the seller to ensure
  that the goods meet public health regulations in
  the import state (unless the same provisions
  exist in the export state or the buyer informed
  the seller that it was relying on the seller's
  expert knowledge)
• 3) In any case the buyer had not acted within the
  reasonable time-limit provided by Article 39 (1)
  CISG

40
Court of Appeal of Grenoble 13.9.95Societe
Francaise de Factoring International v Roger
Caiato

• An Italian cheese exporter failed to meet French
  packaging regulations. The French court held
  that it was the duty of the seller to comply with
  French regulations and that the goods were
  non-conforming within the meaning of Article 35
  CISG
• The French court chose not to consider the German
  court's decision (Bundesgerichtshof VIII ZR 159/94

41
Signatories of CISG - update

• Albania, Armenia, Belgium, Burundi, Colombia,
  Croatia, Cyprus, El Salvador, Gabon, Greece,
  Honduras, Iceland, Israel, Japan, South Korea,
  Kyrgystan, Latvia, Lebanon, Liberia, Luxembourg,
  Macedonia, Mauritania, Moldova, Mongolia,
  Montegro, Paraguay, Peru, St Vincent, Serbia,
  Uruguay, Uzbekistan

42
LICRA v Yahoo

• Is a court case decided by the Tribunal de
  Grande Instance of Paris in 2000. LICRA
  complained that Yahoo were allowing their online
  auction service to be used for the sale of Nazi
  memorabilia contraray to Article R645-1 of the
  French criminal code.
• Yahoo's defence-
• 1)these auctions were conducted under the
  jurisdiction of the USA.
• 2) There were no technical means to prevent
  French residents from participating in these
  auctions

43
LICRA v Yahoo

• Yahoo also noted that-
• their servers were on US territory
• 2) their services were aimed primarily at US
  residents
• 3) the First Amendment to the US Constitution
  guarantees free speech and expression
• Yahoo therefore contended that the French court
  was not competent to hear the case
• The French court issued an injunction against
  Yahoo and ruled that Yahoo must comply with the
  injunction within three months or face a fine of
  100,000 Francs per day.

44
LICRA v Yahoo

• In 2001 Yahoo gave up its case in France and
  decided to take the case before the US District
  Court for Northern California who found for
  Yahoo.
• In 2006 the decision of the District Court was
  eventually reversed by the US Court of Appeals
  for the 9th Circuit.