Business law and its environment.

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This assignment has brought forth all the various aspects of business law and its environment. In this assignment I have undertaken a critical analysis of Statutory Interpretations as my chosen sources of law and will explain it in detail with regards to relevant statutes. I furthermore apply my basic knowledge of business law and use it to the advantage of the party I will be advising concerning the scenario set.

Part 1: A (statutory interpretation)

Why is it that we need rules for the interpretation of statutes set by parliament?

Words are a means of imperfect communication, words have more than one meaning and broad terms may set confusion in legal situations. We will explore a number of rules developed by the courts to assist with the interpretation of statutes.

Lord Robert Lowry once said that "To ignore punctuation disregards the reality that literate people, such as parliamentary draftsmen, do punctuate what they write." At present the UK uses an expanded method of statutory interpretation for the purpose of serving domestic statutes. 'Ejusdem generis' meaning "of the same kind" in Latin is used to interpret loosely written statutes. A judge will always apply one of the rules of interpretation to imprecise words to determine their statutory meaning. (M.souper, Sixth Form Law, 2008. Cases - Statutory interpretations. [Online] (Last updated 2008) Available at: [Accessed 21 November 2009].


Statutory interpretation has reemerged as an important topic of academic theory and discussion. This development is welcome, since few topics are more relevant to legal craft and education than the interpretation of statutes, of which are now our primary sources of law.

There is a major importance in interpretation of statutes, because there may be errors when statutes were first drafted, as statutes are also amended from their original enactment, i.e. the Statute of Westminster, The First (1275) (c.5) has seen many versions from the UK Statute Law Database (SLD), making the most recent version the latest revised one, meaning any following amendments and other effects to the text are incorporated with annotations. As societies develop in such a globalised era, words used in a statute can become out of date and they may no longer cover a contemporary situation.

Statutory rules are modern acts usually containing interpretation sections which define certain key words used in an act; to eliminate existing law difficulties such as unforeseen situations. Uncertainties may be added to the statute in the course of enactment in favour of an interest group. To aid in solving words in statute vagueness or ambiguity there are important rules of interpretation and various presumptions which include:

  • The literal rule
  • The golden rule
  • The mischief rule

Literal rule

According to the literal rule, if the words in a statute are clarified and understood in their literal, grammatical meaning they must be given their ordinary plain meaning, regardless of what result they might bring. Though, where a literal interpretation of a statute produces an inane decision, it is seen as the responsibility of Parliament to put things to justice and not the job of a non-elected judge. An example of literal rules is presented in [Fisher v Bell 1960] where D displayed a flick knife in a shop contrary to the Restriction of Offensive Weapons Act 1959 which was a set legislation, naturally however, this was seen to be the kind of act Parliament aimed to outlaw. It is stated under the conditions of contract law that displaying goods in shop windows are merely an invitation to treaty, not an offer. Since the defendant was not offering to sell those flick knives he could not be found guilty of disobeying the law and Parliament later overruled all concerns by amending the legislation act a year later.

During the eighteenth and nineteenth centuries courts took a strict approach towards the use of the literal rule, and it was then where it became trendy to view the words of a statute to its precise meaning. At the time, Tindal CJ in the [Sussex Peerage Case 1844] said this statement concerning the literal rule's precision: "the only rule for the construction of Acts of Parliament is, that they should be construed according to the intent of the Parliament which passed the Act. If the words of the statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense. The words themselves alone do, in such case, best declare the intention of the lawgiver." The Law Commission has favoured the literal rule in the past, which is indeed clarified by Tinal CJ - though today many would construe this statement. (Academic answers - Law resources, 1996. Help with your law essay and law dissertation - law resources. [Online] (Last update 21 December 2009) Available at: [Accessed 21 November 2009].

There are various advantages and disadvantages to the literal rule. Legislation wise it enforces parliamentary authority, bridging the gap between Parliament and the supreme rights in British law even if the results are silly. It ensures that anyone who is able to read English can determine the law. However, there are disadvantages which are the uncertainties. It does not recognise that in the modern English language, there are vast imperfections and words have different meanings in different contexts. The literal rule sometimes drifts into loopholes which can be exploited by certain bodies. Some argue that the literal rule ignores the limitations of language and that parliament draftsmen cannot obtain perfection.

Golden rule

Secondly, there is the golden rule. The golden rule is applied when the literal rule provides an absurd meaning, usually when the words of a statute are capable of two or more meaning; in this matter the judge adopts the golden rule of interpretation. Some argue that the golden rule can be applied where the words have only one meaning, but the literal interpretation would lead to an absurdity. An example of this would be in [Re Sigsworth 1935] where a man who murdered his mother. The mother had not made a will, while the son could not inherit her property even though he appeared to be entitled on a literal interpretation of the Administration of Estates Act 1925. The literal rule here was against the basic legal principle; a person should not profit from his own wrongful doings.

The Law Commission (1969) noted that the rule did not provide a means to test the existence of absurdity or inconsistency, or to measure their extent. As the rule progressed, it seemed to depend on the result of each individual case. Hence the golden rule has the advantage of avoiding absurdities.

Some judges have suggested that a court may become distant from the ordinary meaning where that could lead to absurdity. Lord Wensleydale said: " the grammatical and ordinary sense of the words is to be adhered to, unless that would lead to some absurdity, or some repugnance or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the words may be modified, so as to avoid that absurdity and inconsistency, but no farther." While the golden rule has its significant disadvantages that no test exists to determine what an absurdity is, it became known as "Lord Wensleydale's golden rule" (Academic answers - Law resources, 1996. Help with your law essay and law dissertation - law resources. [Online] (Last update 21 December 2009) Available at: [Accessed 21 November 2009].

Mischief rule

Thirdly, there is the Mischief rule. Parliament's intention for this rule is to regiment that the court must look at the Act to see what 'mischief' or defect is in the common law. The Act was passed to remedy, and then interpret the words of the Act in the light of these principles. The mischief rule is closely associated with the modern purposive approach to interpretation, which says that a judge should adopt the construction which will promote the general aims or purposes underlying the provision.

The mischief rule, which derives from [Heydon's Case 1584] (Co Rep 7), at the time of this case, it was emphasised that all statutes must consider the following to truly interpret their understandings:

  • The common law before the enactment of the Act
  • The mischief and defect of which the common law did not provide
  • What remedy Parliament resolved and appointed to resolve the problem
  • The true reason of the remedy followed by the function of the judge in terms of suppressing the mischief and advancing the remedy

This rule gives judges more discretion than either the literal or the golden rule. This rule requires the court to look to interpret the statute in such a way to ensure that the gap is covered between the times before the statute was passed and mischief the statute was intended to cover. It is clear that this is the most flexible rule of interpretation, but it is limited to using previous common law to determine what mischief the Act in question was set up to remedy.

An example of which the practice of the mischief rule is present is: [Smith v Hughes 1960] (2 A11 ER 859) at the time the mischief rule began, statutes were a minor source of law in comparison with the common law, at a period where statute draftsmen were not as exact as the draftsmen of the modern era and before Parliament had such a strong influence; as established today. The mischief rule could often be of keen insight from the usual lengthy forewords included. The law commission has noted in the past that the mischief rule was better established than the other two and that it serves more satisfaction to Access to Justice.

Satisfying access to justice

To conclude, there are various distinctions amongst the three main types of statutory interpretations, each appreciating the significance of one another; effectively creating a relationship that demonstrates awareness of why they have been set by Parliament, initially proving their abilities relevant to the demands of law on business. Although there are constant doubts that seem to linger about imperfections in its intellect, yet there is no legal barrier to those who defend the ignorant that shield language as an excuse rather than a legal means of protection - to valuing the legal duty of statutory interpretations.

Part 1: B - Section A & B

Background (Cassey the lost dog scenario):

On Monday, Andy advertised in a local newspaper, the East Anglia Mail, which he was offering a reward of £5,000 for finding a rare breeding dog, answering to the name of "Cassey". Andy had lost the animal while exercising it on a nearby hillside. On Wednesday, Bolam saw the advertisement and bought special equipment costing £500, which he intended to find the dog. On Tuesday, Stan, a shepherd, found the dog attacking its sheep. He captured the dog and on Friday, brought it down to the town of Oldcastle where he was told about the reward. He went to Andy to claim it. On Thursday, Andy had placed a notice in a local shop saying that the reward was no longer an offer.

Advise Andy. Which difference, if any, would it make to your advice IF (a) Stan is the younger brother of Andy AND (b) Cassey dies before it could be returned to Andy.


Why so much law is rooted in common sense and the balance of probability?

Andy, like most people are not aware of the legal significance of their actions when they are pursuing day to day activities this can be as simple as buying a newspaper. At present day people have the impression that contract law is quiet formal and usually in written documentation, though through a more realistic view; most contracts nowadays are binding without officalism or any legal formalities. The skeleton of present law of contract was written in the 19th century.

Offer or Invitation to treat?

A unilateral offer is an exchange of pay for performance. The second party does not have to accept, but merely perform; making the offer performers responsible to fulfilling the conditions set in the offer. Although advertisement is merely an invitation to treat, for example when a supermarket displays goods on the shelf with a price tag they are merely showing a statement of price. However, when an advertisement involves unilateral situations i.e. monetary rewards in clear and precise wordings it is to be considered as an offer.

Unilateral offer

In Andy's advertisement it is clearly shown that he has put up a unilateral offer because he is offering a reward of £5,000 in exchange for Cassey, his lost dog. An example of a case that portraits a similar advertisement is [Carlil v Carbolic Smoke Ball co.] This is probably one of the most famous cases in modern common law. It was the law of contract. An advertisement was place, which might have contained an offer with a reward Mrs.Carlill claimed. The offer behind the advertisement was by the Carbolic Smoke Ball Company which was offering £100 for the use of a certain medicine which guaranteed that a person would never catch influenza. The company later claimed otherwise when Mrs.Carlill tried to claim her reward, they stated that is was a mere marketing puff and not intended to have any basis in the law of contract. Mrs.Carlill claimed that she saw it as an offer, and followed all the instructions in the advertisement. She later won her case and the court went on saying that it was an offer that could be taken seriously, not just an advertisement gimmick, the court also noted that the offer could be made to anyone in the whole world. This was a cornerstone in modern common law and an example of wrongful intend through advertisement which is illustrated in Andy's situation.

Communication of offer, does it count as performance?

In a unilateral transaction an offer need not be communicated, performance alone will suffice. An offer, acceptance or agreement must always be made with intention. The intention in this scenario is to locate and return Andy's dog Cassey.

At this point Andy clearly advertised an offer to whoever is able to find his rare breeding dog. Bolam on the other hand cannot claim any money because he did not fulfill the conditions set in the offer, in other words he did not perform. "In contracts, if someone takes some steps ("changes his position" is the usual legal language) in reliance on the other's statement, claim or promise then the person upon whom the actor relied is entitled to contend there is a contract he/she can enforce. However, the reliance must be reasonable." (ALM Law dictionary, 2009. Law dictionary. [Online] Available at: [Accessed 12 November 2009].

If someone were to argue that there is a claim for Bolam because he intended to find the dog, it is an invalid argument because he did not attempt to find nor return Andy's dog, making him ineligible to the claim the £5,000.

(Farlex, Inc. Gerald N.Hill and Kathleen T.Hill, 2005. The free online law dictionary. [Online] Available at: [Accessed 13 November 2009].

Domestic Arrangements

Stan the shepherd can claim the £5,000 because he did complete the performance, however some might disagree because he inquired for more information from the town of Old castle, but even so, this will still make the original offer valid as it originally was. At this stage, Andy has no reason to revoke or reject the fact that he has to reward £5,000 to Stan the shepherd, naturally however, if Stan is the younger brother of Andy - domestic arrangements apply, where there is a presumption that the contract is not legally binding unless the situation points to the opposite direction. However, where a party (even in proximate relationship) has accepted an offer made to the whole section of community (world); the presumption will be rebutted.

Medium of cancellation and practical benefit

Andy's attempt to cancellation of the advertisement failed because it is not a valid cancellation, the same method was not deployed. If the cancellation were to be valid he would have to advertise in the same medium as the original advertisement was based (Newspaper - East Anglia Mail). Effectively the original offer remains valid, making Stan the shepherd entitled to some kind of claim. In [Shuey v U.S] where the United States Supreme Court is present in a reward case. Strong J appealed that the revocation of a unilateral offer has to occur if the revocation was in the same medium as the form of newspaper advertisement, otherwise the revocation communicated is invalid.

If Cassey died before it could be returned to Andy, generally, the offer will stay valid because the advert made no reference to Cassey being brought back alive which is a disadvantage for Andy as he might have not intended it. Yet Stan the shepherd could enforce contract terms, however the court will have to take the issue of practical benefit into consideration. If it is then seen reasonable, the contract terms will be enforced. Put in mind that claims under £5,000 go to the county court. Practical benefit is a measure of law present if Stan the shepherd were to take his claim to court, it is portrayed in [Williams v Roffey] "the court found valid consideration in the practical benefits that Roffey obtained by his agreement with Williams. So far the practical/factual benefit (Denning) has been refused as good consideration. The argument has always been that consideration must be something of value in the eyes of law - something that provides or brings about a legal benefit."

(Acumen Professional Intelligence - The Student Room, 2008. Williams v. Roffey bros. and Nicholls - how has the laws changed? [Online] (Last updated 6 November 2008) Available at: [Accessed 2 December 2009]

Consideration and a conditional offer

Consideration (something of value, such as money) can be sought after by Stan the shepherd, if there was an intention in creating a legal relation. The purpose and effect of the alleged rule of English law is that an agreement supported by consideration will not be enforceable as a contract unless there is additional proof of an intention to create legal relations, but the court would presumably link this to commercial contracts, which doesn't fit the description.

If Andy were to put conditions in the acceptance of the offer he advertised then any performance alone would not be legally binding, because it may not meet his prerequisites. In a similar turn of events, the method of acceptance may bind a condition to the offer where the acceptance must reach the offering party, in such situations actual communication will be required - performance alone will not suffice. [Holwell Securities v Hughes 1974]

Discharge of contract and doctrine of frustration

Aside from all alternatives present in such a situation, I would advise Andy that the best approach in these circumstances would be to discharge the contract by resorting to the doctrine of frustration. The frustrating issue here is that the subject matter is no longer in existence, this being Cassey the dog. In [Taylor v Caldwell 1863] Where the implied term's theory is relevant to the contract's nature. The performance of the contract was made impossible by the destruction of a music hall, which then frustrated the contract.

The doctrine of frustration was set to meet the demands of justice, to initially reach a just and reasonable result without any fault. Frustration can terminate a contract and discharge all parties from any liability. It suffices for any changes in contractual performance which can seem impossible.

The old position of Common Law towards frustration was that when a contract is ended automatically and no refund is awarded for any deposits or up-front money. In more recent years, the Law Reform (Frustrated Contracts) Act 1943 stated that if there is frustration, any sum of money will be recoverable. The case of [Hirji Mulji v Cheong Yue steamship Co. Ltd. 1926] displays the old position of Common Law towards frustration which brings no claim once the contract is ended by the frustrated party. (M.souper, Sixth Form Law, 2008. Cases - Statutory interpretations. [Online] (Last updated 2008) Available at: [Accessed 21 November 2009].