Commercial Law: Security during the Transactions - Essay Example

Commercial Law This dis considers various ways through which different participants in commercial enterprise take security during the transactions. Specific advice goes to David, Bernadette, and Barkers Bank in the identified case. This paper defines taking security a manner in which an entity in commercial dealings seeks to protect himself from omission or action of another party involved in the transaction. Issues that warrant protection include among others failure of remitting payment, bankruptcy1, as well as legal prevention from clearing payment as detailed in the contract. This explains the reasons why people in commercial undertakings consult legal minds2 on various ways through which they secure themselves as well as their businesses from unwarranted losses. In this case, protection takes different formats. The aim of taking protection measures is to make sure that the commercial person gets particular property and rights that will offer enough compensation to him or her just in case another member in the transaction fails in the obligations assigned to him or her by the contract for any reason. For instance, Arthur agreed to sell to David who resides in Paris five thousand tones of unrefined sugar imported from Jamaica. The fear in this context comes in two perspectives3. First Arthur would fear that David could not pay his money either in full, not all, or delay the payment. This is from the viewpoint of the supplier4. The second fear pertains to the receiver. David would fear that Arthur would fail to supply the right quality of sugar, pack less quantity, delay delivery, or fail to deliver completely5. The right ways of taking security including the receiver withholding payment until reception of the goods is one of the alternatives available to the receiver. On the other hand, the supplier would ask for payment before making any deliveries to take of uncertain eventualities6. To safeguard his rights, Arthur could stipulate in the contract that he remains the absolute owner of the sugar until payment is cleared. In case, Arthur has more needs for the money he could stipulate that the money goes to a specific agency before delivering the sugar to David7. However, in this case, David is one the receiving end because he was the receiver who received sugar8 outside the agreed time to a level that the market price is now half the officially estimated one. If one follows proper restructuring, trusts are the best means by which participants in commercial enterprises can take security. First, trusts work in dealings where the identified item is part of the transaction9. For instance, David was to refine the sugar before producing it to the market. In this form, the owner of the sugar who is Arthur will take the initiative to that the ownership of unrefined sugar if the deal fails to go through or by legal means David goes into bankruptcy10. If the purchase of unrefined sugar by David and Arthur entailed equal shares only for the reason of transaction, the idea of ownership of the crude sugar becomes complicated. This is considering the fact that David received spoilt sugar damaged by sea water11. It is important for David to go a trust. It would isolate the rights of the two parties namely; Arthur and David pertaining to the spoilt sugar. The trust will also address the issue of the ownership of the goods while they remain part of the manufacturing process12. This is important because David would definitely refine sugar, which constitutes a manufacturing process before releasing it to the market. It will important to clarify on who owns the sugar before receiving and refining. Supposing the sea water did not damage the sugar but David went bankrupt, Arthur his creditor and many others would want to know what quantity of the sugar was owned by David13. The proportion would go a long way in paying David’s debts. The second perspective is where the unrefined sugar was not part of the transaction process as it seems the case in this context. Nevertheless, Arthur and David would both remain uncertain on whether or not each other would deliver their part of the contract14. It happens that David appears to be the loser in these terms. It would be appropriate15 for David to ask Arthur to commit himself to the delivery of sugar using anything is it cash or property as collateral of ascertaining the delivery of the sugar on transit. David would take absolute ownership if Arthur fails to deliver unrefined sugar. Arthur agreed to deliver unrefined sugar to David over a particular time16. However, delays resulted in David receiving partly damaged sugar and could only send what is left to the market at a loss. Trust offers flexibility to David as its foremost and greatest advantage. To protect David, the second party in the correct against the present uncertainty, trust would draft a contract to allow money held on trust is for the benefit of David is Arthur fails to deliver goods on time, in good condition, and in the right quantity. If Arthur fails to meet his part of the bargain just as he did, then money held by the trustee reverts to David. This situation allows both Arthur and David receive protection within the same framework of trust. The value of trust is that it gives room to more than one party to the contract to have rights in the same property, which sugar in this context simultaneously. The trustee becomes the third person with legal rights in the trust. The trustee in this case is the Barker Bank. Barker Bank posses’ legal title in the ownership of the sugar that gives him powers to the remit money in and out of the accounts and surrender the same to the receiving authority. Under the laws applicable in the United Kingdom, Hudson writes in his Equity and Trusts that the trust gives beneficiaries rights to take legal action against the trustee for breaching trust when situations arise where the trustee fails to meet his or her part of the bargain. Furthermore, the trust allows the first and second party to sue the trustee if he interferes with the trust, and following up the trust sugar one it appears away from the trustee in breach of the terms of the trust. Modern definition of equity introduces essential concepts that however, fail to put into perspective justice of organizations and contracts as in the case with Arthur and his three contracts to David, Bernadette, and Barker Bank 17that comes out as the trustee in all the transactions. This is not to despise the important notions applicable in other judicial aspects in the corridors of justice. Equitable trust is a product of the owner of the property such as sugar trading between Arthur and David in the process of securing his rights even in the presence of future uncertainties. Alternatively, an equitable trust originates from the court to provide a solution to an injustice to one party of the contract because of loopholes available in common law. This qualifies equitable as a component of commercial law. Through this, Bernadette ought to understand that these laws are applicable in the spheres of United Kingdom law. The concepts of obligation and responsibility of an individual party to the contract is alive and important in this context. Bernadette has three views while responding to the issue of the influence of the rights and equity. The laws took care of this when in eighteen seventy-five the High Court Judicature Act combined two courts to form one. Ashburner illustrates that, the two streams of jurisdiction though they run in the same channel; run side by side and do not mingle their waters. This paper presents that in the circumstances such as the one currently facing Bernadette, equity will prevail over the common law. It is even more important when courts attempt to fuse common law and equity18. However, many other scholars have a descending opinion on the same matter. Sir Jessel, in one of his rulings about rent disputes supports the view held in this discourse; there are not two estates as there was formerly, one estate in common law by reason of the payment of rent from year to year and an estate in equity under the agreement. There is only one court, and equity rules prevail in it. On the contrary, those opposed to this view aver that amalgamating the common law and equity causes confusion and kills the desire for having separate solutions outlined in and outside the common law. According to them, the common law protects the issues without leaving any loopholes. Through natural evolution, the common law now protects equitable rights that the law does not hold in a discretionary manner but holds them as the common law stipulates. In this case, equitable rights do not prevail since legal rights have high value and the assertion by Ashburner is wrong. To them, the concept proposed by Ashburner requires treatment of equity in special forms different from what applies in the common law. Lord Diplock presiding over the United Scientific Holdings Ltd v Burnley Borough Council comes out as one of the strongest supporters of this assertion. The Lord regards the explanation provided by Ashburner as conservative and outdated. According to him, rights offered in in rem and in personam fused in the same way they apply in common law and equity. The modern view therefore, holds separation of rights in both cases does not exist concerning solutions and equitable rights against legal rights as well as solution. It is important however, the most essential difference between the legal and the equity within the Law of Property Act 1925. This law legislated in the first quarter of the twentieth century defines the difference between legal and equitable ownership. It is important to understand in this circumstance that the definition provided leaves gaps. Issues that warrant protection include among others failure of remitting payment, bankruptcy, as well as legal prevention from clearing payment as detailed in the contract. This explains the reasons why people in commercial undertakings consult legal minds on various ways through which they secure themselves as well as their businesses from unwarranted losses. In this case, protection takes different formats. The aim of taking protection measures is to make sure that the commercial person gets particular property and rights that will offer enough compensation to him or her just in case another member in the transaction fails in the obligations assigned to him or her by the contract for any reason19. For instance, Arthur agreed to sell to David who resides in Paris five thousand tones of unrefined sugar imported from Jamaica. The fear in this context comes in two perspectives. First Arthur would fear that David could not pay his money either in full, not all, or delay the payment. This is from the viewpoint of the supplier. The second fear pertains to the receiver. David would fear that Arthur would fail to supply the right quality of sugar, pack less quantity, delay delivery, or fail to deliver completely. The law gives much concentration on property as a way of adequately engaging the equity of the owner getting justice. The laws created equity to satisfy the interest of justice that remains at the core of formulating equity. It is important to explain that addressing the other aspect of the assertion in order to demonstrate that the debate in the public domain does not psyche Bernadette to pursue her rights. The perspective held by descending voices create a notion that differentiating between solutions and equitable rights within the common law through combining equitable and legal systems appears not to fill the holes created by deficiency in the common law system. The case bidding Medforth v Blake 20demonstrates that the British Law is moving towards modernity. The ruling appreciates that the amalgamation of laws indicates the law is growing further. The development of the process is likely to continue into the future as people tend to refine decision-making. ‘What can be said is that a century of fused jurisdiction has seen the systems working more closely together; each changing and developing and improving from contact with the other; and willing to accept new ideas and developments, regardless of their origin. They are coming closer together. But they are not yet fused. Alternatively, an equitable trust originates from the court to provide a solution to an injustice to one party of the contract because of loopholes available in common law. This qualifies equitable as a component of commercial law. Through this, Bernadette ought to understand that these laws are applicable in the spheres of United Kingdom law. The concepts of obligation and responsibility of an individual party to the contract is alive and important in this context. Bernadette ought to invoke three views while responding to the issue of the influence of the rights and equity. Bibliography Ashburner, W. (1933) Principles of Equity 2nd Edition, London, Butterworths Cheshire & Burn (2000) The Modern Law of Real Property 16th Edition London, Butterworths Edwards, R. & N. Stockwell (2002) Trusts and Equity, Harlow England, Longman Eekelaar, J. (1987) A Womans Place - A Conflict between Law and Social Values, Conv93 Ferguson, P. (1993) Constructive Trusts - a Note of Caution, 109 LQR 530 Goff & Jones (1998). The Law of Restitution 5th Edition, London, Sweet & Maxwell Hayton & Marshall (1996) Commentary and Cases on the Law of Trusts and Equitable Remedies 10th Edition, London, Sweet & Maxwell Heydon, Gummow & Austin (1993) Cases and Materials on Equity & Trusts 4th Edition, London, Butterworths Holdsworth (1974) History of English Law Vol. 17, London, Sweet & Maxwell Maitland (1936) Maitlands Equity 2nd Edition, Cambridge, Cambridge University Press Martin, J. (2001) Hanbury and Martin: Modern Equity 16th Edition, London, Sweet & Maxwell Megarry & Wade (2000) The Law of Real Property 6th Edition, London, Sweet & Maxwell Meagher, Gummow & Lehane (1992) Equity: Doctrines & Remedies 3rd Edition, London, Butterworths Mockler, E. J. (1962) Commentary on Gladys Evans v Minister of National Revenue, 40 CBR 265-284 [The Case that this piece is referring to can found at: [1960] CTC 69] Oakley (1997) Constructive Trusts 3rd Edition, London, Sweet & Maxwell Parker & Mellows (1998) The Modern Law of Trusts 7th Edition, London, Sweet & Maxwell Pettit (1997) Equity and the Law of Trusts 8th Edition, Croyden, Butterworths Tolley Probert, R. (2001) Trusts and the Modern Woman - establishing an interest in the family home, CFam 13.3 275 Snell (2000) Principles of Equity 30th Edition, London, Sweet & Maxwell Waters, D.W.M (1967) The Nature of Trust Beneficiarys Interest, 45 CBR 219-283 Read More