The Interpretation of Scottish Commercial Law - Case Study Example

In law, a contract is a legally binding agreement between two or more parties and provides specific legal remedies in the event of breach of those promises. An oral agreement between two parties can also constitute a binding legal contract provided the goods or services contracted for are legal. The English Law requires that an agreement must be bilateral and hence a consideration is necessary for any contract to be complete. However Scottish Contract law differs as it does not require a consideration and a unilateral promise is sufficient thereby making one of the parties under an obligation to the other, that is, to perform a duty to the other without any consideration. Based upon the above interpretation of Scottish commercial law we study the following two examples: Example 1: First we need to examine if there was a valid contract between Mr. Smithfield and UK Rail. The facts state that the rail company did not know Smithfield’s full name and address. This implies that there was no written contract between the two parties. But there is no doubt that UK Rail accepted Horace for delivery to the contest. In the absence of a written agreement there was obviously only a verbal agreement between them. We have noted above that Scottish law of contract does not require a consideration and even by a unilateral promise it is possible to have a gratuitous contract. Now we examine whether UK Rail was under any obligation to put up Horace in the expensive resort for pigs. The Animal Health and Welfare (Scotland) Act 2006 (section 18) makes it obligatory for the welfare of an animal on anyone having permanent or temporary charge of an animal covered by this Act. For the purpose of this section the owner of the animal is always regarded as in charge of it. But here UK Rail had assumed responsibility for the specific purpose of delivering the pig to the ‘Pig of the year’ contest and was thus in temporary charge of the pig and its welfare was obligatory upon them. Section 19 of this Act also makes it obligatory on any one incharge of the animal to prevent any harm or suffering to the animal. Horace, being a prized pig that was regularly entered each year into the ‘Pig of the year’ award, was obviously used to the best possible care. It was thus, obligatory on UK Rail to provide Horace the best possible care which they did by putting him up in the expensive resort which took good care of him. Smithfield, being the owner of the pig, also had a permanent obligation towards Horace. But here it was UK Rail that had temporary charge of Horace till such time as they were able to locate Smithfield and return Horace to him. Hence it was the primary obligation of UK Rail towards the welfare of Horace as long as he was in their temporary charge. Example 2: The Partnership Act 1890 [sec.1 (1)] defines a partnership as: ‘The relationship which subsists between persons carrying on a business in common with a view of profit’. In Scots law it has long been held that the personality of the firm is distinct from that of the individual partners and [sec. 4(2)] of The Partnership Act 1890 states: ‘In Scotland, a firm is a legal person distinct from the partners of whom it is composed.’ Further, in [sec 17(2) and (3)] of the said 1890 Act [sec (2)] provides that a partner who retires from a firm does not thereby cease to be liable for partnership debts or obligations incurred before his retirement but [sec (3)] states that a retiring partner may be discharged from any existing liabilities, by an agreement to that effect between himself, the members of the firm as newly constituted and the creditors. By a simple reading of these sections it is obvious that a retiring partner is not absolved from his liability towards partnership debts incurred before his retirement merely by retiring from the firm. However, the case of a dormant partner can be distinguished from that of a regular member. The dormant partner, although he may be sharing in the profit or loss of the firm, does not take any active part in the management of the firm or in the business of the firm. He is generally not held out as a partner of the firm to third party creditors. As such, under normal working of the firm the dormant partner is liable for the costs of the firm only till such time as he continues to be a dormant partner and all his liabilities cease with his retirement. In our present example it has not been shown that the dormant partners were held out as partners to Smithers and he was retained by the firm as such, to recover its dues. However, when he was retained by the firm, the dormant partners Barney and Moe were still partners of the firm. They were therefore liable for all the costs of the firm including the fees of Smithers as the firm became liable to Smithers as soon as he was formally retained by the firm. However, under Scottish law Smithers is required to sue the firm for his unpaid fees and not the individual partners, the firm being a sparate entity from the partners. In all likelihood, Barney and Moe would have been required to settle all their accounts with the firm including any dues owed by them to the firm at the time of their retirement. In our opinion therefore, Smithers should have sued the firm instead of the individual members, it being a separate entity from its partners under Scottish law. Homer, who continues to be a regular partner of the firm, is liable for his dues directly to the firm and only indirectly to Smithers. Barney and Moe, the dormant partners are not directly liable to Smithers and may be presumed to be liable to the firm only in case they had failed to settle all their accounts with the firm at the time of their retirement. References 1. Animal Health and Welfare (Scotland) Act 2006: Part 2 Animal Welfare http://www.legislation.gov.uk/asp/2006/11/pdfs/asp_20060011_en.pdf 2. Animal Health and Welfare (Scotland) Act 2006: http://en.wikipedia.org/wiki/Animal_Health_and_Welfare_(Scotland)_Act_2006 3. Contracts of Partnership: A Treatise on the Law of Partnerships From the 5th English ed (1888)--Authors: Lindley, Nathaniel Lindley, Baron, 1828-1921; Dormant Partners (page no. 77) http://www.archive.org/stream/treatiseonlawofp01linduoft#page/76/mode/2up 4. GUIDANCE ON THE ANIMAL WELFARE PROVISIONS (PART 2) OF THE ANIMAL HEALTH AND WELFARE (SCOTLAND) ACT 2006 http://www.scotland.gov.uk/Resource/Doc/972/0040944.pdf 5. Scots Contract Law: Wikipedia http://en.wikipedia.org/wiki/Scots_contract_law 6. Scots Law: Wikipedia http://en.wikipedia.org/wiki/Scots_law 7. The Law Commission and The Scottish Law Commission (LAW COM No 283) (SCOT LAW COM No 192): PARTNERSHIP LAW http://www.lawcom.gov.uk/docs/lc283.pdf 8. The Law Commission Consultation Paper No 159 The Scottish Law Commission Discussion Paper No. 111: Partnership Law A Joint Consultation Paper dp 111_partnership_law.pdf (Secured) 9. The Scottish Partnership: http://www.martinfrost.ws/htmlfiles/scottish_partnership.html#DUTIES Read More