F1 Legal April

THE INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS IN IRELAND

LEGAL FRAMEWORK FORMATION I EXAMINATION – APRIL 2006

Time Allowed: 3 Hours and 10 minutes to read the paper

Number of Questions to be answered: FIVE (Only the first five questions answered will be marked) All questions carry equal marks

(Note: Case Law and Statute, should, where appropriate, be mentioned)

1.

Discuss the differences in the professions of barrister and solicitor as regards their functions in the Irish legal system. [Total: 20 marks]

2.

Explain the terms ‘real property’ and ‘personal property’, outlining in your answer the differences between both. [Total: 20 marks]

3.

Discuss and analyse the duty of care in Irish tort law. [Total: 20 marks]

4.

Explain the rules of offer and acceptance in the formation of a binding contract. [Total: 20 marks]

5.

Michael agreed to build a new garage for Peter on his property at an agreed price of €50,000. Michael hired Ted to construct the garage for €20,000. Ted was obliged to use materials supplied by Michael and to follow his specifications. Michael monitored the progress of the construction but did not tell Ted what to do or how to do it. Michael also engaged other workers to carry out similar construction work in accordance with his specifications at other locations. Ted was a skilled and experienced builder and had done similar work before for Michael. Ted was recently injured while on the job. He needs to know whether he is an employee of Michael or an independent contractor. Advise Ted. [Total: 20 marks]

6.

Barry saw an advertisement in his local paper placed by Technico Ltd., advertising for sale a second hand DJ stereo system. The advertisement stated that the system was a top of the range system, in excellent condition, that it was a 2004 system and available for only €800. Barry is a music enthusiast who considers himself to be an excellent DJ. He visited the Technico shop and was shown the system. The shop assistant confirmed that the system was in top order and that it was just under two years old. Barry, impressed by the system, decided to buy it. However, on setting up the system, Barry discovers that the speakers are faulty, the decks belong to an older model and that the amplifier has been repaired on a number of occasions. After just three weeks, the system fails to work. Barry now wishes to return the system and recover the €800 that he paid for it. Advise him as to any rights he might have under the Sales of Goods Acts. [Total: 20 marks]

7.

Identify and explain the various sources of European Union law, referring in your answer to the nature of these sources. [Total: 20 marks]

END OF PAPER Page 1

Suggested Solutions

Legal Framework FORMATION I EXAMINATION – APRIL 2006

Solution 1 General Comments The purpose of this question is to test students’ knowledge and understanding of the distinction in the legal profession between barristers and solicitors. Students are asked to do so from the point of view of their respective functions. Students should set out the distinction briefly in their introduction before going on to examine their respective functions. Introduction As is the case in the UK, the legal profession in Ireland is divided into two categories, barristers and solicitors. Collectively known as the Bar, and individually known as Counsel, barristers specialise in advocacy and the presentation of cases in court. They do so on the basis of instructions from solicitors. Solicitors, unlike barristers, can create partnerships as a firm of solicitors. Barristers are self-employed and work from the Law Library whereas solicitors work in law firms, be they individual or partnerships. Functions Barristers usually specialise in certain areas and represent clients before the Irish courts, although solicitors may represent clients before the lower courts and even before the High Court and the Supreme Court. This is something that solicitors are making increased use of, although the norm is still very much for solicitors to hand the case over to a barrister for the court hearing. Solicitors generally appear before the High Court and Supreme Court in preliminary matters relating to the case only. A solicitor is deemed to be knowledgeable in the law and a barrister is considered to be an expert in advocacy. In addition, barristers provide a higher degree of legal expertise than that provided by solicitors. Solicitors specialise generally in the preparation of cases for court and barristers are experts in the preparation of cases for court. Clients usually initially approach solicitors directly and solicitors, as general practitioners, deal with the office or non-contentious side of the work – that is to say that they deal with conveyancing, drafting wills, offer advice on litigation, criminal matters, family law matters, company law, etc. Solicitors consult with barristers, or counsel, for their legal opinion or when court proceedings are intended. Clients can only approach a barrister through the intermediary of a solicitor. However, certain professions, such as accountants may approach them directly, upon permission of counsel. Senior counsel can be appointed as judges of the Circuit, High and Supreme courts. Barristers and solicitors of ten years can be appointed as District Court judges. Prior to 1996, solicitors could only be appointed as judges to the District Court. However, with the introduction of the Courts and Court Officers Act 1995, solicitors of ten years can now be appointed to the Circuit Court, with the possibility of promotion to the High Court and the Supreme Court. The Courts and Courts Officers Act 2002 allows for solicitors who have sat as Circuit Court judges for two years to be appointed to the High Court or Supreme Court. It also provides that solicitors of twelve years standing can be appointed to the High Court or Supreme Court.

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Solution 2 General Comments The aim of this question is to test whether students grasp the fundamental differences between real and personal property. In their introduction, students should explain what is meant by the terms real property and personal property. Students should also define what is meant by the term ‘land’ to indicate that it includes not just physical territory. As part of their answer, students must therefore deal with corporeal and incorporeal hereditaments in real property. Finally, students should clearly set out the source and background of the differences between real and personal property. Students will perform well where they offer detailed and clear explanations of all of the terms mentioned. Introduction The law of real property or the realty of land law, in the words of Wylie is "concerned with rights and liabilities which arise under our law with respect to land". Land, however, is not just physical territory; the term includes things permanently attached to land, such as houses, buildings and other structures such as garden walls or fences. Personal property or personalty covers all of the other forms of property. Real property is, as mentioned, concerned with more than land, including buildings, as we understand the term. To put it another way, real property includes both corporeal and incorporeal hereditaments. Corporeal Hereditaments Corporeal hereditaments are objects which have a physical existence or which, in the words of Blackstone, "affect the senses". They include: (a) land itself; (b) buildings and other structures, the foundations of which are in land; (c) parts of a building which are not grounded in land such as an upper storey flat in an apartment block. It is well established in English law, at least, that land is capable of horizontal as well as vertical division. In England, the title to such apartments or offices is known as a strata title; (d) fixtures comprising material objects which, when attached to land, are regarded as being annexed to realty. It can be notoriously difficult at times to differentiate between a fixture which is part of real property and a chattel which is personal property. It depends as Gray states "on the degree of physical attachment between the object and the pre-existing realty"; (e) trees, plants and flowers whether cultivated or wild as long as they are growing on the realty; (f) minerals and other inorganic substances are, in theory, part of realty, though in Ireland, the rights to most minerals, including petroleum, have been vested in the Irish State under Article 10 of the Irish Constitution. Incorporeal Hereditaments Incorporeal hereditaments are not physical objects but mere rights usually over someone else’s land, but which do not grant any right to possession of that land. These include: (a) easements, usually a right of way, a right to light or a right to support for a building; (b) profits, including rights to pasturage (the right to graze animals on someone else’s land), turbary (the right to go on to someone else’s land to save turf and take it away for fuel), quarrying, fishing and timber rights. The Distinction between Real and Personal Property As with many other aspects of property law, the distinction between real and personal property is due to historical developments. In the early history of the common law, there were different forms of action for different types of cases and these forms of action determined the kinds of remedies that litigants could seek before a court for a grievance that they had. Indeed, taking a case in the first place depended on being able to conform to the correct type of ‘form of action’. Real property is attributed with this name because the appropriate form of action for a person who had been dispossessed of his freehold land was an action in rem. In such an action, the plaintiff could insist on the actual recovery on the ‘thing’ (res) of which he had been deprived. The term action in rem is derived from Roman law and means an action in recovery for the res lost. In actions for the recovery of things other than freehold land, the form of action available was a personal action, an action in personam. This means that it was an action against a particular person. In this instance, the plaintiff could not insist on recovery of the actual thing lost, because the defendant could elect to pay damages. Therefore, property in respect of which an action in personam lay became know as personal property.

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Solution 3 General Comments This is a straightforward and precise question, which asks students to deal with the duty of care in the tort of negligence in Irish law. Students should explain that the duty of care is only one of a number of elements required to prove negligence. They should outline the background to the duty of care by dealing with early case law, paying particular attention to the decision in Donoghue v Stevenson (1932). Students should then explain how the duty of care principle has evolved by examining the case law since Donoghue v Stevenson. As the question requires an analytical answer, students will perform well where they show a good understanding of the case law and engage in some commentary on the case law. Introduction The duty of care is only one of the elements required to prove negligence. In addition, there must be a breach of the duty of care, resulting in loss or damage and there must be a causal link between the breach of the duty of care and the loss or damage suffered. The Duty of Care The rule is that you should not harm those people to whom you owe a duty of care by your acts or omissions. In Ireland, a duty is generally owed to any person who can be classed as your neighbour, as established in Donoghue v Stevenson. A woman suffered shock and gastroenteritis after she consumed a bottle of ginger ale, which contained a decomposed snail. She took an action against the manufacturer of the ginger ale. The court found in her favour, finding that a duty of care was owed to your ‘neighbour’, who was defined as "persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question." This decision was later endorsed and developed in Anns v Merton Urban District Council (1978), in which a two stage test was set out. Firstly, a duty of care must be established and secondly it must be established if there are any factors which negate, reduce or limit that duty of care in any way. This ruling was later rejected in the UK, but accepted until recently in Ireland. For example, in Ward v McMaster, Louth County Council and Nicholas Hardy & Co. Ltd. (1985), the Irish court held that the duty of care arose from the proximity of the parties and the foreseeability of the damage, balanced against the "absence of any compelling exemption based upon public policy." Ward purchased a house with the aid of a local authority housing grant. He later learned that the house was severely substandard and structurally unsound. He was advised by an engineer to leave the house. He brought an action against the builder, the local authority, and the valuer of the local authority. The local authority was required by law to value the house before issuing the housing grant. It did so and its valuer found no defects. However, as the valuer did not have any construction knowledge, he was not found liable. The local authority however, was found to be negligent as it had failed to engage a competent person to carry out the valuation. The Supreme Court found that there was proximity between the parties and that it was foreseeable that the plaintiff would rely on the local authority’s valuation. The builder was also found to be liable on the basis of Donoghue v Stevenson. The Supreme Court ruled that the duty owed would be to avoid foreseeable harm and also to avoid any financial harm that might arise from having to repair defects in the house. In Purtill v Athlone UDC (1968), at issue was the injury of a young boy resulting from activity at the premises of an abattoir. Young boys used to go to the abattoir to observe the slaughtering of animals by pistol-like instruments and detonators. The doors and gates of the abattoir were always open during slaughtering. The young boy stole detonators from the abattoir on several occasions, exploding them in his back garden or in the garden shed. A detonator hit him in the right eye causing the loss of that eye. He sued the abattoir for negligence. The Supreme Court focused on whether a duty of care existed. It examined the issues of proximity and foreseeability and held that the relationship was proximate, given the frequency with which young boys visited the abattoir. They were owed a duty by employees of the abattoir. The Court did accept however, that the plaintiff had contributed to his own injuries and a 15% liability was apportioned to him. In McNamara v ESB (1975), a young boy was injured when he broke into an ESB substation which was surrounded by a wire mesh fence, which was being replaced by a wall at the time. The accident occurred where there was wire meshing topped with barbed wire. There were easily reachable uninsulated conductors at the ESB substation. The ESB knew at the time that children were entering the substation. The Supreme Court found the ESB liable on the basis of proximity and foreseeability. However, the recent Supreme Court decision of Glencar Exploration plc and Andaman Resources plc v Mayo County Council (2002) suggests a move away from this approach. In Glencar, the plaintiffs were granted ten licences by the Minister for Energy to explore for gold in the Westport area and had invested heavily in this activity Page 4

for 24 years. In 1991, they set up a joint venture with an Australian company, Newcrest Mining Ltd. This collapsed when a mining ban was introduced by Mayo County Council pursuant to its 1992 draft county plan. The plaintiffs successfully challenged the mining ban in a judicial review proceeding in the High Court. They subsequently sought to recover damages from Mayo County Council for breach of duty but the High Court dismissed the claim because although Mayo County Council had been negligent in adopting the ban, this did not give rise to any right to damages as there was a lack of proximity between the parties. The Supreme Court dismissed the action on appeal, stating that the two step approach of the Anns case was no longer appropriate to follow. The case of Fletcher v Commissioners of Public Works in Ireland [2003] IESC 8 also heralds a more restrictive approach to the duty of care. The plaintiff had developed a reactive anxiety neurosis as a result of exposure to asbestos during the time he was employed as a general operative in Leinster House between 1985 and 1991. His duties involved assisting plumbers, electricians, and fitters in the maintenance of what was described in the High Court as an enormous and labyrinthine central heating system. The piping in the system was covered with a lagging containing asbestos of various types and much of it was in an extremely poor condition as it was friable, dusty and falling off in many places. The plaintiff was regularly obliged to hack off the lagging in order to enable tradesmen to get access to the pipe work. The work had to be done in difficult conditions in very confined areas. In 1984, a report by a factory inspector from the Department of Labour recommended that the lagging had deteriorated to such an extent that it be removed under appropriate conditions in accordance with the Factories (Asbestos Processes) Regulations 1975, even though this would not have actually applied to Leinster House, as it is not a factory. It would appear, however, that no action was taken on this report for many years. The defendants in Fletcher did not appeal the finding of 'gross negligence', but they contested liability in negligence as the plaintiff had not suffered any physical illness arising from his lengthy exposure to asbestos. Nonetheless, he developed a 'reactive anxiety neurosis' and continued to worry about his future health. In the High Court, O 'Neill J had decided that his employer, the Office of Public Works, was liable for the anxiety neurosis which the plaintiff had developed and awarded him £48,760 compensation. On appeal, the Supreme Court reversed this finding, holding that an employer does not owe a duty of care to an employee for injuries that arise from an irrational fear of disease. Also at issue was whether the courts could extend liability to cover mental injury of the type demonstrated and according to Keane CJ, this would require that the courts give due weight to ‘policy considerations.’ The following policy considerations were used to justify not extending liability in such circumstances: 1. 2.

the undesirability of awarding damages to plaintiffs who have suffered no physical injury and whose psychiatric condition is solely due to an unfounded fear of contracting a particular disease. the implications for the health care field of a more relaxed rule as to recovery for psychiatric illness.

The CJ questioned whether the ‘egg-shell-skull’ principle was one which could appropriately be applied to psychiatric injury cases.

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Solution 4 General Comments This is a straightforward question which requires students to show an understanding of the basic requirements in the formation of a contract. Students are expected to define the meaning of an offer and of acceptance and to explain the rules that pertain to each. Students who demonstrate a clear understanding of these concepts will perform well in the question. Extra marks will be awarded to those students who show a good knowledge of case law in the area. Introduction A contract arises from an agreement that is formed on the basis of offer and acceptance. The rules of offer and acceptance are therefore important in determining agreement between the various parties to a contract. One party, the offeror, makes the offer, and another, the offeree, accepts that offer. An offer is a clear and precise proposition outlining the conditions and terms upon which the offeror is willing to contract, dependent upon the acceptance of the offeree. There is a distinction in law between an offer and an invitation to treat. The latter is merely a statement which lacks any intention to contract. Acceptance is defined as the ultimate expression of agreement to the terms and conditions offered by the offeror. Acceptance is made up of two parts: first, the fact of acceptance and secondly, the communication of acceptance. Offer An offer can be in written or oral form and can also be indicated by conduct. It can be made to an individual or to a group of people. The offeror must indicate that he is willing to be bound by the proposition that he makes. Such an intention need not necessarily be in written format. In fact, it can be inferred from the nature of the proposition or from the circumstances in which it is made. It is necessary to distinguish between an offer and an invitation to treat. In the case of a true offer, the offeror is bound to contract once his offer is accepted. However, in the case of an invitation to treat, where the offer is not considered to be a true offer, a contract cannot be formed on the basis that another party accepts the offer. In other words, the offeror cannot be bound by acceptance. There are several cases which serve to highlight this distinction, particularly as regards newspaper advertisements offering goods for sale. In certain instances, a newspaper advertisement will only amount to an invitation to treat. For example, in Partridge v Crittenden (1968), Mr. Partridge was charged with illegally offering for sale a wild live bird contrary to the Protection of Birds Act 1954. He had placed an advertisement in a periodical, which stated "Bramblefinch cocks, Bramblefinch hens, 25s. each." This advertisement offering for sale wild birds was deemed by the court to be an invitation to treat not an offer for sale and hence the charge could not stand. The reason for the court’s decision was that as the seller did not have an unlimited supply of birds, he could not possible enter into a binding contract with everyone who replied. However, the outcome was different in the famous case of Carlill v Carbolic Smoke Ball Co. (1893). In this case, the defendants produced medicinal smoke balls. They released an advertisement to the effect that anyone who caught influenza after using the smoke ball for a specified period in the prescribed manner would be entitled to claim £100 from them. They indicated that they had deposited £1,000 with their bankers to cover this eventuality. Mrs. Carlill caught influenza having used the smoke ball as prescribed and successfully sued for £100. The Court of Appeal accepted that the advertisement offering £100 to such persons was a true offer, not an invitation to treat. The difference between the two cases is that in Partridge v Crittenden, the contract was a bilateral one whereas in Carlill v Carbolic Smoke Ball Co., it was a unilateral one. A unilateral contract is one that is one-sided and conditional upon another party fulfilling the condition set out by the offeror. In such an instance, the contract only becomes valid and effective once the other party performs his part. It is possible to withdraw or revoke an offer once it has been made. In a unilateral contract, the offeror is usually entitled to withdraw it at any time before performance is complete. However, the courts in general do not allow the withdrawal of an offer after performance. The offeror must indicate that the offer has been withdrawn. Acceptance Acceptance consists of two parts: 1) the fact of acceptance and 2) the communication of acceptance. The Fact of Acceptance There are a number of issues involved in the fact of acceptance. It must be ascertained that acceptance had occurred as a fact. What amounts to acceptance must also be addressed. Acceptance can take the form of words, written or oral or alternatively, acceptance can be made by conduct. The obvious example of acceptance by conduct is that in a unilateral contract, where by virtue of the performance of some act by a party, they accept the offer made by the offeror. Acceptance by conduct can also occur in the case of a bilateral contract. This is evident Page 6

from the case of Brogden v Metropolitan Railway Co. (1877). Brogden had supplied the defendants with coal for years without any formal agreement between them. The defendants later sent a draft agreement to Brogden, who inserted a new term and returned the draft contact marked approved. The arrangement continued under the draft agreement for two years, at which time a dispute arose. Brogden denied the existence of a binding contract but the House of Lords held that a contract had been created by conduct. This contract came into existence when the defendants ordered their first coal delivery from Brogden under the draft agreement or if not at that time, when Brogden delivered it. Acceptance must exactly fit the offer. This means that acceptance is only effective as such if it accepts all the terms and conditions of the offeror without qualification or additional terms and conditions. Therefore, in Brogden v Metropolitan Railway Co., there was no acceptance of the offer made by the defendants as Brogden had introduced a new term. Modifications to the original offer by the offeree amount to a counter-offer which must in turn be accepted by the original offeror. The original offeror can reject the counter-offer, in which case, no contract is formed. The Communication of Acceptance It is not sufficient that the offeree decide to accept the terms and conditions offered by the offeree – he must communicate as much to the offeror. In Brogden v Metropolitan Railway Co., when the draft agreement was returned to the defendant company, the company’s agent put it in a drawer, where it sat for two years. This did not amount to acceptance of Brogden’s counter-offer, even though the agent accepted the modification in his own mind. However, it is possible to waive the requirement of communication of acceptance. This occurs in the case of unilateral contracts. In Carlill v Carbolic Smoke Ball Co., it was suggested that Mrs. Carlill should have communicated her intention to put the smoke ball to the test to the defendants. This was rejected by the court. Bowen L.J. stated that "If I advertise to the world that my dog is lost and that anybody who brings the dog to a particular place will be paid some money, are all the police and persons whose business it is to find lost dogs to be expected to sit down and write me a note saying that they have accepted my proposal?" Communication of acceptance, in the ordinary sense, cannot be required in such instances. Of course, returning the lost dog, in other words performance, would amount to communication of acceptance. The question of whether you can accept an offer that you know nothing about was considered in a number of cases. In Gibbons v Proctor (1891), a police officer passed on information to his superior. This information was then passed on to a person who had offered a reward for it. When the police officer initially passed on the information he was not aware that there was a reward for it, but he found out about it by the time the information reached the offeror. The court held that he was entitled to receive the reward. Finally, the postal rule, as established in the case of Adams v Linsdell (1818), applies in the case of acceptance. This means that where acceptance is communicated to the offeror by means of post, the date of acceptance is that of the date of postage. This is the case even if the acceptance is delayed or even lost in the post.

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Solution 5 General Comments This question is designed to test students’ knowledge and understanding of the differences between a contract of services and a contract for services in the law of employment. Students are to make this distinction because, if Ted is an employee of Michael, he will be afforded protection under employment legislation and be entitled to sue Michael for his injuries. Students must be able to explain how the relationship of employee/employer comes into being and to distinguish it from the relationship between a person who buys the services of someone who is selfemployed. Students are expected to set out the various tests used by the courts to determine if an individual is an employee or a self-employed independent contractor. Reference to relevant case law is required and students must apply this case law to Ted’s scenario to determine whether he is an employee or not. Good application will result in students achieving good marks. Introduction It is important for Ted to establish whether he is an employee of Michael or whether he is an independent contractor. An employee is hired under a contract of service whereas an independent contractor is hired under a contract for services. Independent contractors under a contract for services are responsible for their own injuries. If it transpires that Ted is in fact an independent contractor, then he could not pursue an action in damages against Michael. In order to bring an action against Michael, Ted must show that a relationship of master and servant exists between them. Distinction between Employees and Independent Contractors Basically, a servant or an employee is any person employed by another to work for him on condition that the servant is subject to the control, supervision and direction of his employer in respect of the manner in which his work is to be done. It is not generally difficult to decide if a person is employed by another as usually an employee will be selected by the employer, will work full or part time for the employer, be subject to the employer’s control and receive a wage or salary. An employee will have his income tax deducted by the employer under the PAYE scheme and the employer will also make social security contributions for the employee and often provide a pension scheme for the employee. An independent contractor is one who is his own master. He is engaged to do certain or specific work for another, but can exercise discretion as to the method and time of doing it. He is not bound by orders of the employer and maintains control over his method or means of work. The test of control is of utmost importance as it is one of the tests used for distinction between the contract of service and the contract for service. Other important factors are the master’s power and choice in selecting the servant, the payment of wages or remuneration, methods of dismissal, the degree of skill involved, the owner of tools or equipment, and the level of integration into the business of the employer. Court Applied Tests Ted must further look to the case law of the courts as the courts have established a number of criteria to determine the nature of the employment relationship. The Control Test The first test is the control test, first established in Yewen v Noakes (1880). The Irish courts have adopted this test. In Roche v Kelly (1969), it was held that the principal test is the right of the master to direct servants as to what is to be done and how it is to be done. In this case, the defendants had a contract with a farmer to build a barn and had employed the plaintiff to build it for a lump sum of £300. The defendants were to supply the construction materials and the plaintiff was to build the barn under their specifications. The defendants monitored the progress of the construction but at no time did they tell the plaintiff how to do the job nor did they supervise his working methods. The defendants had hired people to carry out such work for them at other locations in the past. The plaintiff had considerable experience and expertise in building barns and had done similar jobs for the defendant in the past. The plaintiff was injured during the construction of this barn and one of the issues was whether he was an employee of the defendant or an independent contractor. The Supreme Court found that the main factor in determining the relationship is the element of control that the employer can exercise over the employee. The Court found in this instance that the plaintiff was not an employee as the defendants did not have the right to interfere with the manner in which he carried out his obligations and hence they did not exercise any control over him. This case is largely similar to that of Ted’s scenario. The question seems to indicate that Michael exercises a minimal level of control over Ted. The fact that Michael does not tell Ted how to carry out his functions may not be detrimental however. There are cases where an employer may by unable or unwilling to give specific orders to a skilled man, thinking it best to Page 8

allow him to carry out his functions in his own way, but this does not relieve the employer from liability. The question is not what specific orders are given or whether any specific orders were given, but rather who is entitled to give the orders as to how the work should be done, as per Mersey Docks & Harbour Board v Coggins and Griffith (Liverpool) Ltd (1947). In Re Sunday Tribune (1984), the court recognised that given difficulties in relation to skilled workers who are told what to do but not how to do it, the control test was no longer of universal application and cannot be used definitively as in a modern context, the nature of the employment relationship may not be so simplistic. Integration or Organisation Test The second test that can be used in determining the relationship is the integration or organisation test. This test was introduced by Denning LJ in Stevenson, Jordan & Harrison Ltd v Macdonald & Evans Ltd (1952). He stated that an employee is a person who is integrated with others in the work place or business even though the employer does not necessarily exercise a detailed control over what he does. The courts, in applying this test, will consider whether the worker was a vital part of the operation of the work place. The Mixed Test The third test, one favoured by the Irish courts is the mixed test, developed by McKenna J in Ready Mixed Concrete v Minister for Pensions (1968). A contract between the plaintiff company and a lorry driver stated that the lorry driver was self-employed. He owned, insured and maintained his own lorry, but the plaintiffs had helped finance its purchase. He wore a uniform, and the lorry was painted with the company’s colours. He could delegate the driving and was paid per mile driven. The issue arose as to whether he was an employee and whether the plaintiffs should have been making pension contributions for him to the defendant. McKenna J stated that three conditions had to be fulfilled to establish a contract of service: (1) (2) (3)

there must be an obligation of the person to provide his own skill and work in return for a wage or other remuneration; there must be a sufficient degree of control by the employer; the other provisions of the contract must not be inconsistent with its being a contract of service.

The court found that the economic reality of the situation should also be considered when coming to a decision. Having regard to all of the factors, the court concluded that the lorry driver was an independent contractor. In Kirwan v Dart Industries and Leahy (1980), the Employment Appeals Tribunal applied the mixed test and set out a number of criteria to consider including the extent of control over the task, the manner in which it is carried out, the means used to carry it out and where it is to be carried out; whether the person was in business of his own account or whether he was an integral part of the business; whether the person was required to provide personal service or whether he could delegate the job and finally whether the person was free to work for other employers. The case of Henry Denny & Sons (Ireland) Ltd t/a Kerry Foods v The Minister for Social Welfare (1998), involved a question as to whether a shop demonstrator was an employee or not. Despite the contract stipulating that she was not an employee and the fact that she was responsible for her own tax affairs, Keane J, held that she was an employee, applying a combination of tests. Keane J, stated that: ‘in general a person will be regarded as providing his or her services under a contract of service and not as an independent contractor where he or she is performing those services for another person and not for himself or herself.’ In making this assessment, regard had to be had to the degree of control, the contract of employment and its express and implied terms, the level of integration of the individual into the workplace, whether the individual provides equipment, premises or investment, employment for others, whether they work on their own account, whether the person engaged receives holiday pay, sick pay or is part of the pension scheme. Despite the fact that the contract stated that she was not an employee, the other terms of the contract – the requirement to be at work specified hours, the requirement to wear a certain uniform provided by employers, the requirement to carry out tasks in a particular way - led the court to conclude given other factors that she was an employee. Application We are not told what type of remuneration Ted receives. However, if it can be shown that his employer, Michael, is responsible under the PAYE system and that he does not carry out his own self-assessment for tax purposes, then he will be under a contract of services as an employee. On the facts of the case, the most relevant tests are the control and mixed tests. The facts are very similar to those of Roche v Kelly, where the degree of control was of utmost importance. Although a number of different tests have been formulated since then, the decision in Roche is still applicable. Michael does not control the work done by Ted, nor is Ted integrated into Michael’s business. The application of the mixed test does not alter this and therefore Ted is an independent contractor. As a result, he cannot sue Michael for the injuries he has suffered. Page 9

Solution 6 General Comments This problem question deals with the protection of consumers’ rights under the Sale of Goods Acts 1893-1980. Students are firstly required to identify the area. They should recognise that the problem question deals essentially with the implied terms provisions of the Acts. Students are expected to explain these terms in detail and to discuss any relevant case law. Students must apply the relevant law to the problem at hand. Students will perform well where they do so and offer an opinion on Barry’s success in taking an action. Introduction This question involves an examination of the implied terms in the Sale of goods Acts 1893-1980. Under the Acts, there are a number of conditions implied into contracts for the sale of goods. Barry will be entitled to a remedy is there has been a breach of the terms implied under the Act. These terms cover the description, quality and fitness for purpose and are dealt with in sections 13 and 14 of the Acts. Section 13 Section 13 provides that in every sale of goods by description, there is an implied condition that the goods will correspond to that description. A sale by description is where the purchaser is buying on the sole basis of the description having never seen the product. However, this does not preclude a sale by description where the product is seen or examined by the purchaser. In the case of Beale v Taylor (1967), a car was advertised as a 1961 Triumph Herald 1200. The buyer came to see the car and noted the metal disc on the rear of the car showing ‘1200’. It transpired after he bought the car that only the rear of the car met with the description. Two separate and different models of Herald car had been welded together. The seller tried to rely on the buyer’s inspection of the car, arguing that it was not in fact a sale by description. However, it was held that the advertisement and the metal disc indicated that the car was a 1200. It was a sale by description in spite of the buyer’s inspection of the car. The buyer had relied to some extent on the description contained in the advertisement. He was entitled to damages for breach of section 13. In contrast, if the purchaser does not rely on the description offered by the vendor, then there will be no remedy for a breach of section 13. In Harlingdon and Leinster Enterprises Ltd. v Christopher Hull Fine Art Ltd. (1990), it was held that the purchaser must show that the description influenced their decision to buy the product. If Barry is to establish a remedy under section 13, he must show that the description attached to the system was intended to be a term of the contract which was assigned to the identity of the good rather than just to its attributes. On the authority of Beale v Taylor, there may be a breach of the implied term as to description. The description in the advertisement stated that the system was a 2004 model and in excellent working condition. If Barry can prove that he relied on this description which was attached to the system in the advertisement and by the words of the sales assistant, then he should be able to obtain a remedy for breach of section 13. Section 14 He may also have a remedy under section 14(2) of the Acts. This section provides that when a seller sells goods in the course of business, there is an implied condition that the goods supplied under the contract are of merchantable quality. This condition only applies to goods sold "in the course of business". The vendor must be carrying on a business or profession and make the sale in connection with that activity. This implied condition will not apply where the buyer’s attention is drawn to defects before the contract is made of where the buyer examines the goods before the contract is made and that examination ought to reveal the defects. The DJ system in this scenario is clearly being sold in the course of a business. The sales assistant has not pointed out any defects in the system to Barry. We are told the sales assistant showed Barry the system but there is no evidence that Barry actually examined it himself. So it would appear that neither of the exclusions would apply to Barry. Barry must establish that the goods were of merchantable quality. This is defined in section 14(3). Goods are defined as being of merchantable quality if they are fit for the purpose for which the goods of that description are commonly bought and as durable as is reasonable to expect having regard to any description applied to them, the price if relevant and all other relevant circumstances. The fact that the system was second hand and its price are therefore relevant to the question of merchantable quality. The courts have held that if a person buys a secondhand good or a very cheap good, that person cannot reasonably expect the highest standards of quality. In Bartlett v Sidney Marcus Ltd. (1965), Bartlett bought a second hand car from the defendants who were car dealers. He was warned that the clutch was defective but he agreed to a reduction in the price of the car on account of this defect. However, the defect turned out to be more serious than he thought and was more expensive to repair. He claimed that the car dealers were in breach of the implied term of merchantable quality. The Court of

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Appeal held that in these circumstances, the car was of merchantable quality. Denning MR pointed out that "A buyer should realise that when he buys a second-hand car, defects may appear sooner or later". However, in Barry’s favour is the fact that the description applied to the goods is also of importance in determining whether the goods were of merchantable quality. In our scenario, the DJ system is described as a top of the range system, in excellent condition and only two years old. In reality, the system has had a number of repairs and some of its parts belong to an older model. Therefore, it was not of merchantable quality. The fact that the system malfunctioned in a relatively short period of time is also significant as goods must remain of merchantable quality for a reasonable time. In this situation, it is likely that the court would imply a condition of merchantability into the contract and find that the system did not comply with this implied term. Barry should also consider section 14(4) of the Acts and argue that Technico is in breach of an implied condition because the system is not fit for its purpose. Section 14(4) provides that where the purchaser expressly or by implication makes it known to the vendor any particular purpose for the which goods are bought, it is an implied condition that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is the common purpose of such goods, unless the circumstances show that the purchaser does not rely on it or it is unreasonable for him to rely on the skill or judgment of the vendor. There is no need for the purchaser to specify the particular purpose for which the goods are required when they have in an ordinary way only one purpose. For Barry to be able to rely on this section, he does not have to show that he made known the purpose for which the system was to be used as there is one obvious intended use for it. It appears that Barry did rely on the skill and judgement of the sales assistant who showed the system to him. It is clear that the system was not fit for its purpose. If Technico wishes to escape liability under this section, it would have to show that Barry did not rely on the sales assistant’s judgement or that it would have been unreasonable for him to have done so. This would only apply if Barry had expert knowledge of DJ systems himself. Conclusion If Barry is successful in his claim that Technico is in breach of implied terms contained in sections 13 and 14 of the Sale of Goods Acts 1893-1980, his remedy will be to terminate the contract and recover the purchase price, together with any foreseeable consequential losses, as long as he has not accepted the goods. If he has accepted the goods, he will be limited to a remedy in damages. There is no fixed period over which the right to reject is lost. Lapse of reasonable time is a question of fact and for the courts to decide in each case.

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Solution 7 General Comments The aim of this question is to test both students’ knowledge of European law sources and to see that they clearly understand the distinction between the various sources. Students should outline the sources in their introduction before going on to deal with each source in detail, explaining its nature. Students who set out the sources in a clear and logical manner, will perform well in the question. Students will obtain good marks for identifying the hierarchical structure of the various sources. Introduction As is the case in the Irish legal system, there is a hierarchical set of sources of European law. At the head of the sources, are the European Treaties. At the same level as the Treaties, fall the general principles of European law. Underneath the treaties, we find secondary legislation. The European Treaties There are currently two European treaties in existence, the Treaty of Rome 1957 (known as the EC Treaty), as amended, which brought both the European Economic Community (EEC) and EURATOM into existence and the Treaty on European Union of 1992. Preceding the Treaty of Rome, was the Treaty of Paris of 1951 which set up the European Coal and Steal Community. This Treaty is no longer in existence and the coal and steal sector has been subsumed into the general rules of the Treaty of Rome. The Treaty of Rome has been amended on a number of occasions. Firstly, by the Single European Act of 1986, which aimed to bring about the completion of the internal market; secondly, by the Treaty on European Union, which created the EU, changed the name of the EEC to the European Community (EC) and introduced two new intergovernmental pillars – Justice and Home Affairs and the Common Foreign and Security Policy pillars; thirdly by the Treaty of Amsterdam of 1997 and more recently by the Nice Treaty of 2001, both of which were primarily designed to deal with the enlargement of the EU. With the exception of the Treaty on European Union, which is a stand alone treaty, the amendments introduced by the other treaties were incorporated into the body of the Treaty of Rome. General Principles The general principles of Community law have been to a large extent set out by the European Courts and have been sourced from the laws of the Member States. These principles include for the most part human rights. Secondary Legislation There are five different types of Community measures or legislation provided for in Article 249 of the EC Treaty: 1. Regulations. 2. Directives. 3. Decisions. 4. Recommendations. 5. Opinions. Article 249 EC Treaty specifically states that "in order to carry out their task and in accordance with the provisions of this Treaty, the European Parliament acting jointly with the Council and the Commission shall make regulations and issue directives, take decisions, make recommendations or deliver opinions." It is the responsibility of the Community institutions to enact secondary legislation. Each of the institutions has a role to play in the law making process and the extent of their respective roles depends on the procedure that is used in a particular area. All secondary legislation must derive from the EC Treaty. It must be based on a provision of the EC Treaty. This is to ensure that the Community institutions act only in the areas of EC competence and that they legislate as provided for in the Treaty. Otherwise, any legislation they enact will be ultra vires. Regulations Regulations are general in their application. They apply to everybody and every organisation in the Member States (governments, companies and citizens). They are binding in their entirety – this means that an incomplete application of a regulation is forbidden. They are also directly applicable. That means that once enacted in Brussels, they become part of EC law in all the Member States without the need for the Member States to ratify them into law individually. Regulations are used by the Council of Ministers or Commission when they want to achieve identical or uniform rules in all the Member States. Directives A directive is only binding on the Member State or States to which it is addressed, so it does not have general application. It is also only binding as to the result to be achieved. This means that only the result of the directive is binding. Each Member State to which it addressed has the discretion to decide how that result is going to be achieved. The obligation that is imposed on the Member State is to make the necessary changes to achieve the substantive objective of the directive. Page 12

A directive envisages two general obligations: 1. The adoption of the directive at Community level. 2. The implementation or transposition obligation on the national governments of the Member States at national level. So, each Member State must pass implementing legislation but the method of implementation is at the discretion of each Member State. The transposition can be subdivided into firstly a formal obligation to implement the legislation and secondly the substantive obligation to subscribe to the objectives of the legislation. In contrast to regulations, under Article 249 EC Treaty, directives are not directly applicable. They are addressed to Member States and only binding as to the result to be achieved, leaving to the Member State the choice of form and method of implementation. Initially because directives were not directly applicable and contemplate further action by a Member State, they were thought not to be directly effective. Direct effect is the right of individuals to rely on provisions of Community law before their national Member State courts. However, over time the European Court of Justice recognised that the effectiveness of a directive would be undermined in if Member State nationals could not rely on them against a Member State that had failed to implement the directive on time or had wrongly implemented the directive. Individuals must prove that the provision that they are seeking to rely on is clear, precise and unconditional. Individuals may also bring actions on the basis of Member State liability in damages if they suffer loss as a result of the failure of the Member State to implement the directive on time or correctly. They must prove that the directive conferred rights on individuals, that the content of those rights was ascertainable from the terms of the directive and that there is a causal link between the failure of the Member State to implement on time and the damage suffered. In addition to this, the Commission may bring an enforcement action against the Member State that has failed to implement the directive under Article 226 of the EC Treaty for failure to fulfil its obligations of Community law. Other Member States can do so under Article 227. Decisions Decisions are really administrative acts. They are binding in their entirety but only on those Member States, undertakings or individuals to which they are addressed. They are the equivalent of a personalised regulation – they are addressed to specific people. In fact when a decision is issued, it has to be directed to a limited and defined group. They differ from directives as they are binding in their entirety and the Member States have no discretion as to how to implement them. Recommendations and Opinions As with decisions, these two measures are administrative in nature. They are not legally binding. They are addressed to Member States, to real or legal persons. Recommendations are usually given on the initiative of an institution. An opinion is usually given in response to a question asked. Although they are not binding they are very important, as they are indicative of the view of the institution on a particular matter.

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