LEGAL SYSTEMS

Law
Law prescribes what acceptable social
conduct for any given society is and
punishes deviant behaviour which
results in conflict or disorder.

LEGAL FAMILIES

Common Law Customary Law

Civil Law Religious Law Law consisting of customs that are
Common law was born at the end of the Norman Conquest in 1066
The civil law tradition is the oldest and most Based on holy books accepted as legal requirements
ad. The identifying character of this tradition, unlike civil law where,
widely distributed of all legal traditions and is said such as the Torah and or. obligatory rules of conduct;
typically, principles and ideas are formally recorded, is its reliance on
to date back to 450 BC. It is based on Romanic Law Quran practices and beliefs that are so vital
precedents and judge-made law. Judicial discretion finds expression
is characterised by codification of legal principles. and intrinsic a part of a. social and
in common law countries where new law emerges frequently to deal
with changing times and needs. economic system that they are treated
as if they were laws.

Case Law
Case law refers to the creation and Constitution
Legislation
refinement of law in the decision-making Every independent Commonwealth country has a written constitution with the exception of
The Constitution provides parliament with the power to make laws for the
process of judges in the courts. Britain itself. Constitutions are primarily about political authority and power – the location,
peace, order and good governance of Trinidad and Tobago.1 Parliament
conferment, distribution, exercise and limitation of authority and power among the organs of
may enact, revoke, or alter such and any law as it sees fit (within the
a state. Constitutions generally also include explicit guarantees of the rights and freedom of
constraints of the Constitution, of course).
an individual. A constitution may be as the whole system of government of a country and the
collection of rules which establish and regulate or govern the government. These rules are
both legal and customary, where the latter takes the form of usages, understandings, customs
or conventions and are as effective as law strictly construed. In most countries, the
constitution is generally the supreme law of the land.

Statutory Interpretation
Hierarchy of the courts
The House of Lords reigns at the top of
the English hierarchical court structure
Binding Precdent
as well as of some Commonwealth
Stare decisis, or the doctrine of binding precedent, is an important
Caribbean countries in the form of the
aspect of all legal traditions. A fundamental characteristic of law is the Literal Rule Mischief/Purposive Rule
Board of the Judicial Committee of the Golden Rule
objective that like cases should be treated alike – this is even the case The literal rule requires the court to consider The mischief/purposive approach
Privy Council and its decisions are The golden rule is generally considered to be an
in religious legal systems. This doctrine refers to the fact that within the what the legislation actually says rather than is that judges may decide what
binding on all courts below it. extension of the literal rule. This rule is given
hierarchical structure of the courts in the common law tradition the try to infer what Parliament might have they think Parliament intended to
decision of a higher court will be binding on a lower court where the meant by it. Words of the legislation must preference when the application of the literal say rather than what the Act
facts of the case appear to be similar. be given their literal meaning even if this rule is likely to result in a manifest absurdity. actually says
results in a complete absurdity.
 FORMATION OF THE CONTRACT (PART 1)

Contract
A contract is an agreement, either written or oral, by which two or more parties having legal capacity agree with
Unilateral Contract
sufficient certainty in accordance with terms and conditions that are express or implied to perform certain obligations
A unilateral contract arises where only one party undertakes
(either for a benefit or a detriment) that are not contrary to law or public policy.
an obligation, such as where the promisor makes an offer to
pay another party (the promisee) in return for the
performance or forbearance of an act, and the promisee gives
his assent by performing or forbearing the said act.

Offer Counter-Offer Invitation to Treat

An offer is an expression of willingness to contract, When a person makes an offer and the person Acceptance
Where a party is invited to make an offer, this is commonly
on specified terms, made with the intention that it to whom the offer is made responds by An acceptance is a final and unqualified expression of assent
known as an invitation to treat. As opposed to an offer, an
shall become binding on the person making it as proposing changes to the terms of the offer, the to the terms of the offer. An acceptance must be
invitation to treat is not made with the intention that it is to
soon as it is accepted by the person to whom it is law considers the response of that party not as communicated to the offeror orally or in writing.
become binding as soon as the person to whom it is addressed
addressed an acceptance but rather as a counter-offer. simply communicates his agreement with the terms

Advertisements
Tenders
Advertisements for the sale of goods
Tenders are generally placed in the category of
or job positions are intended to be
invitation to treat, where a party is only being invited
invitations to treat where the
to make a bid which constitutes the offer and the
interested party responds by
party issuing the invitation is merely seeking offers.
making a purchase or submitting an
application for consideration which
may be accepted or rejected

By post/telegram
Contract A and Contract B Instantaneous Communication
Duty to act fairly It is usually considered Conduct By Silence
While the party inviting tenders is not bound to accept any submitted Acceptance through forms follow the
Recent decisions suggest that there is an implied that an acceptance by The essence of the It is generally
tender unless it is specifically stated, there are circumstances under rule that a contract is formed at the
duty to act fairly in treating with all tenderers. In post or telegram takes principle is that an offer the case that
which a submitted tender must be considered by the party inviting the place where acceptance is
other words, the duty to act fairly means that all place at the time of the may be accepted by an silence in
tenders. Where tenders are to be submitted by a stated deadline, the communicated to the place of the
compliant tenders or bids should be treated posting of the letter of offeree’s conduct which response to an
person submitting the tender has the contractual right to have the offeror.
equally. acceptance or a reasonable person, offer will not be
tender considered, even if it is not accepted (Contract A). The • Email
transmission of the viewing the matter considered
corollary term is the obligation of both parties to enter into a contract • Fax
telegram. objectively, would acceptance.
(Contract B) upon the acceptance of the tender. • Text Messaging interpret as acceptance.
• WhatsApp

No Bid Shopping
A sub-component of the duty to act fairly is the duty to not
engage in bid shopping. This is “the practice of soliciting a
bid from a contractor, with whom one has no intention of
dealing, and then disclosing or using that in an attempt to
drive prices down amongst contractors with whom one
does intend to deal
 FORMATION OF THE CONTRACT (PART 1)

Contract
A contract is an agreement, either written or oral, by which two or more parties having legal capacity agree with
sufficient certainty in accordance with terms and conditions that are express or implied to perform certain obligations
Consideration (either for a benefit or a detriment) that are not contrary to law or public policy.
Consideration concentrates on the
requirement that something of value must be
given and accordingly states that
consideration is either some detriment to the
promisee or some benefit to the promisor.
Certainty of Contract
Intention to Create Legal Relations Consideration
For a contract to be binding, it must be certain and not Terms
The law stipulated that promises supported by
suffer from vagueness or obvious incompleteness such Contracts may be wholly in writing, partly in writing and
consideration would be legally enforceable. A moral
that it cannot give rise to a binding contract. In partly oral, or wholly oral and the terms therein may be
obligation to pay is not regarded by the law as sufficient to
deciding whether or not the agreement as a whole is express or implied. Regardless of its form, for a contract
make a promise legally enforceable. The purpose of the
sufficiently certain to amount to a contract, the court to be valid and legally enforceable, it must contain all the
doctrine of consideration is to put some legal limits on the
will try to determine what the reasonable man would essential terms necessary for the particular contract to
enforceability of agreements even where they are intended
have thought. The court will not make contracts or be workable
to be legally binding and are not vitiated by some factor
supply to a contract a fundamental term for parties
such as mistake, misrepresentation, duress or illegality
which have obviously not addressed it. It is the
obligation of parties to make contracts with such
certainty that is capable of being enforced.

Commercial Contracts Domestic Contracts

In commercial agreements In domestic agreements, in contrast, there is
a rebuttable presumption that the parties do Implied Terms
there is a rebuttable Express Terms
not have an intention to create legal Although the primary obligations are
presumption that parties Express terms are those Conditions and Warranties
relations. In agreements between family contained in express terms, it is quite
intend to create legal relations terms that are Conditions are terms that are considered to be
members or friends, there is no intention to unusual for the parties to express all of
and conclude a contract. The contained in a contract critical to a contract, the breach of which may
create legal relations and no intention that the primary obligations, or to provide
establishment of the intention and are openly entitle a party to terminate the contract and claim
the agreement should be subject to litigation. for every contingency. The court, in
to create legal relations will be articulated by the damages for loss sustained on account of the
Familial relationships or friendships, these circumstances, usually implies
determined by the court on the parties to the contract, breach.
however, do not preclude the formation of a terms to fill in the gaps in the contract,
basis of facts and may be whether orally or in Warranties, like conditions, are also important
binding contract, though to create based on the circumstances of the
established by evidence. writing terms in a contract. However, the breach of a
contractual relations, there must be a clear contractual relationship.
intention on either party to be bound. warranty does not entitle the innocent party to
rescind the contract; he may only claim damages.

Officious Bystander Business Efficacy

Custom and Usage Law
The proposed term will be implied if it This asks whether the term was
A term may be implied in a In many classes of contract, statutory
is so obvious that it goes without necessary to give the contract
contract in a contract on terms annexed to a contract will often
saying, for example, if a bystander business efficacy ie would the
the basis of industry custom not be expressly included in the
suggested to the parties that they contract make business sense
and usage. contract. Certain terms will be
include the term in the contract they without it? - The courts will only
implied by law in contracts related,
would reply “but of course”. imply a term where it is necessary
for example, to the sale of goods.
to do so.
 ATTACKING THE CONTRACT (PART 1)

What is a contract – Offer – Acceptance – Consideration – Intention to Create Legal Relations-Certainty

CAPACITY FRUSTRATION MISTAKE

For a contract to be binding, it must be made by

parties with the requisite capacity, that is, the FRUSTRATION
If one, or both, of the parties to a contract
legal ability to make the contract. The law has changed from the days of strict
enter into it under some misunderstanding
enforcement even when performance of a
or misapprehension, in certain
contract has been prevented by acts beyond
circumstances the courts are prepared to
the control of a party. Frustration occurs
permit the parties to rely on the
whenever the law recognises that without
defectiveness of the contract on the basis
default of either party a contractual obligation
MINORS DRUNKARDS that if the parties had known of the correct
has become incapable of being performed
Where a minor enters into a contract with Cases involving the issue of fact, they would not have entered any
because the circumstances in which
MENTALLY ILL contractual arrangement.
another person for the purchase or supply intoxication as it affects capacity are performance is called for would render it a
A contract made by a person of unsound
of necessaries, the contract will bind the approached with great caution. It has thing radically different from that which was
mind is not voidable at that person’s
minor.. What constitutes necessaries will been asserted that mere undertaken by the contract.
option if the other party to the contract
depend largely on the individual drunkenness affords no ground for
believed at the time he made the
circumstances and requirements of the resisting a suit to enforce a contract.
contract that the person with whom he
minor. Generally, necessaries include food, Where, however, there is real ground
was dealing was of sound mind. In order
education, drink, clothing, medical aid, for thinking that the judgment of one
to avoid a fair contract on the ground of
board and lodging. party was, to the knowledge of the
insanity, the mental incapacity of the
other, seriously affected by drink, the
one must be known to the other
courts will be more willing to invoke
contracting parties.
the capacity defence and generally
refuse specific performance at the
suit of that other.

COMMON/MUTUAL MISTAKE UNILATERAL MISTAKE

This occurs when there is a common mistaken A party who has entered
assumption of fact which renders the service into a written contract
that will be provided, if the contract is under a serious mistake
performed in accordance with its terms, about its contents in
something different from the performance that relation to a fundamental
the parties contemplated. term will be entitled in
equity to an order
rescinding the contract.
 ATTACKING THE CONTRACT (PART 2)

What is a contract – Offer – Acceptance – Consideration – Intention to Create Legal Relations-Certainty

ILLEGAL CONTRACTS TAKING ADVANTAGE MISREPRESENTATION

Contracts contrary to
public policy Contract to Commit a Crime A person may, strictly speaking, possess a legal
The court will not Restraint of Trade The classical position is that if a party enters
The public policy which a capacity to contract; yet, the courts may be inclined to
countenance a contract to A restrictive covenant in a into a contract on the basis of certain
court is entitled to apply as set aside a contract on the basis that such capacity
commit a crime and will contract of employment will be material and unambiguous statements of
a test of validity to a void ab initio unless the may be suffering from a defect that would move the
refuse to uphold or attach fact which turn out to be untrue, the court
contract is in relation to restraints that it imposes are court to offer relief from contractual obligations
legal sanction to such a may be prepared to hold that the reliance on
some definite or governing reasonable having regard to the incurred while under claimed defect.
bargain. such untrue statements of fact can form the
principle which the interests of the parties and of
basis of relief for an aggrieved party where
community as a whole has the public. In practice, this test
such party has in reliance of such untrue
already adopted, either of what is reasonable tends to be
resolved by considering whether statements of facts been induced to enter
formally by law or tacitly in into a contract to his/her detriment. In
or not the restrictive covenant is
its general course of limited circumstances, where a party ought to
reasonably necessary to protect
community life. have been able to ascertain the true facts, the
legitimate interests of the
employer. Courts may not permit the contract to be
Time – Geographical Space-Skill avoided.

Unequal Bargaining Power

Duress
Unequal bargaining power is often perceived as another
A contract may be set aside in the presence of
manifestation of the broader doctrine of unconscionability. A
economic duress. A finding of economic duress
person is not in a position of relevant disadvantage simply is dependent on the extraction of a promise as
because of inequality of bargaining power. Most contracts are a result of the exercise of ‘pressure’, whether
Undue Influence Unconscionability made between parties of unequal bargaining power, and good characterised as a ‘demand’ or a ‘threat’ and
The equitable relief of undue influence has two categories: The courts of equity will set aside a contract on
conscience does not require parties to contractual negotiations the exercise of that pressure must have been
actual or expressed undue influence and presumed undue the basis of it being unfair and unconscionable in to forfeit their advantages, or neglect their own interests. such that the coerced party had no practical
influence. Actual undue influence comprises overt acts of circumstances where one of the parties has However, courts of equity may intervene whenever one party alternative but to agree to the coercer’s
improper pressure or coercion, such as unlawful threats; it imposed objectionable terms in a morally
to a transaction is at a special disadvantage in dealing with the demand.
is an equitable wrong committed by the dominant party reprehensible manner.
other party because illness, ignorance, inexperience, impaired
against the other which makes it unconscionable for the
faculties, financial need or other circumstances affect his ability
dominant party to enforce its legal rights against the other.
to conserve his own interests, and the other party
It is typically some express conduct overbearing the other
unconscientiously takes advantage of the opportunity placed in
party’s will. Presumed undue influence arises out of a
his hands.
relationship between two persons where one has acquired
a measure of influence or ascendancy over another, of
which the ascendant person then takes unfair advantage.
 THE PRINCIPAL-AGENT RELATIONSHIP

PRINCIPAL

AGENT

THIRD PARTY

Agency is ‘the fiduciary relationship which exists

between two persons, one of whom expressly or
impliedly consents that the other should so act as
Duty of Principal to Agent to affect his relations with third parties, and the
P’s duties to A seem to be much less onerous that those other of whom similarly consents so to act or so
owed by A to P (see previous section). Nevertheless, it is acts on his behalf.
expected that P will act in good faith in his relations with A.
P must accept legal commitments made by A in accordance Duty of Agent to Principal
with the authority granted to. P may also ex post fact, ratify It is expected that a commercial agent will adhere to the following
TYPES OF AUTHORITY fiduciary duties:
unauthorised act of A
a. the duty not to delegate his office (unless this is agreed to by P or is a
usual practice in the particular trade of A);
b. the duty not to put himself in a situation where his duties as agent
Express conflict with his own interests (unless he fully discloses his interests to P
Implied Necessity
P may explicitly state to A the and P approves);
An agent has implied authority to do whatever The law imposes an agency of necessity in a limited
authority he may exercise when c. the duty not to accept bribes or secret commissions from T (otherwise
is necessary for, or ordinarily incidental to, the number of situations where a party (the ‘agent’),
conducting transactions on P’s A will be held criminally liable and liable to P to forfeit any monies so
effective execution of his express authority in confronted with an emergency which poses such an
behalf. imminent threat to the property or other interests of received in excess of the remuneration agreed to by P – T will also be
the usual way liable);
another person that there is no opportunity to seek the
latter’s prior authority or instructions, acts for that person d. the duty not to take advantage of his position in order to gain benefits
without his authority in order to preserve or protect that for himself (such as deposit P’s monies into A’s account to accrue interest
property or those interests. for himself or use for his own purposes information or knowledge
There are four conditions which must be met to create an acquired for use by P to make a profit);
agency of necessity: e. the duty to hand over to P money which he holds to his use, and to
account to P (any monies or property held by A for P are deemed to be
• A must be able to show that he was unable to
held in trust for P).1
obtain instructions from P.
• A must satisfy the court that he acted in a bona
These strict fiduciary duties necessarily require A to:
fide manner in the interests of P.
• comply with reasonable instructions given by his principal;
• A’s actions must have been reasonable and
prudent in the circumstances. • act with skill and care
• There must have been some necessity or • make proper efforts to negotiate and, where appropriate,
emergency to compel A to so act. conclude the transactions he is instructed to take care of; and
• communicate to P all the necessary information available to
him.
 TORT

WHAT IS A TORT (SOCIAL CONTRACT)

NEGLIGENCE BASED TORTS

NEIGHBOUR

DUTY OF CARE

STANDARD OF CARE

CAUSATION

DAMAGES

VOLENTI NON FIT INJURIA

CONTRIBUTORY NEGLIGENCE

OCCUPIERS LIABILITY VICARIOUS LIABILITY NEGLIGENT MISSTATEMENT PRODUCT LIABILITY EMPLOYER’S LIABILITY

It is hardly surprising that Lord Atkin’s

Occupiers’ liability generally
arises from occupancy or ‘Under the principle of vicarious liability, an A false statement is made by a person owing a duty of care A manufacturer of products, which he sells in such
neighbour principle extends to the imposition of
employer will be liable for the tort of his or her responsibility upon one person for the failure of
control, not on ownership. to the recipient. The necessary relationship between the form as to show that he intends them to reach the
employee, provided that the tort is sufficiently another with whom the person has a special
Responsibility for the maker of a statement or giver of advice (the adviser) and ultimate consumer in the form in which they left
connected with the individual’s relationship, such as that of employer and
condition of premises resides the recipient who acts in reliance upon it (the advisee) may him with no reasonable possibility of intermediate
employment.’1 It is clear that the test is employee, to exercise such care as a reasonably
with the person in actual typically be held to exist where: 1.the advice is required for examination, and with the knowledge that the
whether the wrongful conduct of the a purpose, whether particularly specified or generally prudent person would use under similar
occupation or possession, absence of reasonable care in the preparation or
employee is so closely connected with acts the described, which is made known, either actually or circumstances. The duty of care of the employer
whether or not such person putting up of the products will result in an injury to
employee was authorised to do that, for the inferentially, to the adviser at the time when the advice is to the employee extends to the provision of
enjoys legal or beneficial the consumer’s life or property, owes a duty to the
purpose of the liability of the employer to given; 2. the adviser knows, either actually or inferentially, competent staff, a safe place of work, safe
ownership. Duty is owed to consumer to take that reasonable care.
third parties, the wrongful conduct may fairly that his advice will be communicated to the advisee, either equipment and a safe system of work. It would
lawful and unlawful visitors.
and reasonably be regarded as done by the specifically or as a member of an ascertainable class, in appear that the provision of a safe system of
employee while acting in the ordinary course order that it should be used by the advisee for that purpose; work includes ensuring its proper operation1
of the employee’s employment and not on a 3. it is known, either actually or inferentially, that the advice through reasonable supervision where required
frolic of his own. An act is deemed to be in the so communicated is likely to be acted upon by the advisee and adherence to it by employees.
for that purpose without independent inquiry; and 4. it is so
course of employment if it is either authorised
acted upon by the advisee to his detriment.
by the employer or can be considered a mode,
albeit an improper mode, of doing an
authorised act.
 NON-NEGLIGENCE BASED TORTS

NEIGHBOUR

DUTY OF CARE

DAMAGES

INJURIOUS FALSEHOOD INDUCEMENT TO BREACH OF CONTRACT PASSING OFF

If C has an existing contract with A and B is

Injurious falsehood affords a remedy where the business or aware of it, and if B persuades or induces C to Lord Diplock, in the landmark decision of Erven Warnink BV v J Townend & Sons (Hull) Ltd. [1979] 2 All ER 927
professional reputation of an individual is maliciously disparaged break the contract with resulting damage to A, (UK), identified five elements that must be present to create a valid cause of action for passing off, namely, (1)
even though no aspersion is made against his personal character this is, generally speaking, a tortious act for a misrepresentation (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate
sufficient to give rise to a cause of action in defamation. which B will be liable to A for the injury he has customers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of
Nonetheless claims for damages for injurious falsehoods have caused. Malice is not an element of the tort of another trader (in a sense that this is a reasonably foreseeable consequence) and (5) which causes actual
often been successfully pursued in conjunction with claims for inducement to breach a contract but damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will
defamation. knowledge is. It does not matter whether the probably do so. Simply put, the tort of passing off protects commercial undertakings against misrepresentations
inducement is direct or indirect as long as there aimed at their customers which are calculated to damage their business or goodwill.
is knowledge of the act and outcome. There are two main forms of passing off. The first type deals with competitors engaged in a common field of
activity and the plaintiff has alleged that the defendant has named, packaged or described its product or
business in a manner likely to lead the public to believe the defendant’s product or business is that of the
plaintiff.
Passing off with respect to similar products may occur even where names are distinctly different in
circumstances where the packaging is the mechanism used to generate the misrepresentation.
The second type of passing off is where it is alleged that a person has promoted his product or business in such
a way as to create the false impression that his product or business is in some way approved, authorised or
endorsed by another or that there is some business connection between the person promoting the product
and the person with whom a business connection is being made. By these means a person may hope to ‘cash
in’ on the goodwill of another. This type of passing off may occur by using a similar name or design for a
distinctly different product.
The Courts have however held, that where parties have different products and operate in different markets,
the issue of passing off may not arise.
 CRIMINAL LAW

Crime
A crime is an act which the
law, with appropriate penal
sanctions, forbids.

ELEMENTS OF A CRIME DEFENCES CRIMES INVOLVING COMPANIES

Ignorance of the law Mistake as to facts

Actus Reus Mens Rea The idea of ignorance of the An honest mistake as to facts may
actus reus can be Mens rea is the other necessary law being a defence against provide a defence against criminal
summarized as meaning an component of criminal liability criminal liability is one that has liability.
act (or sometimes an and it refers to the state of mind been rejected. It has been
omission or other event) expressly or impliedly required frequently asserted that a
indicated in the definition of by the definition of the offence purported defence of
the offence charged together that constitutes the crime. ignorance of the law is wholly
with unacceptable and has no place
in the jurisprudence of
criminal law. Liability on the basis of the ‘directing
Individual liability for breach mind’ principle
of a statutory duty In mens rea offences, if the court finds
There are criminal offences the officer or managerial level employee
Intentional Recklessness Negligence
committed in the name of a to be a vital organ of the company and
A person intends a consequence A person may be reckless A person is negligent if his conduct in relation
company that can be attributed virtually its directing mind in the sphere
of his act (or omission) if he as to a consequence or a to a risk of which a reasonable person would
to individuals. A model of of duty assigned him so that his actions
acted (or failed to act) with the circumstance. A person is have been aware, falls below the standard
individual responsibility has and intent are deemed the action and
aim or purpose of thereby reckless as to a which would be expected of a reasonable
been adapted by the common intent of the company itself, the
bringing about that consequence if he is aware person in the light of that risk.’1 As eloquently
law to companies by breaking company can be held criminally liable
consequence. In addition, if a of a risk that it will occur, stated in Smith and Hogan, ‘Recklessness is
them down into their even where the criminal act was
person foresees that a and as to a circumstance if the conscious taking of an unjustifiable risk,
underlying human components performed not wholly for the benefit of
consequence is virtually certain he is aware of a risk that it negligence is the inadvertent taking of an
to see if there was an individual the company. The individual must,
to result from his conduct, exists or will exist, and in unjustifiable risk.’
within the company who had however, have been acting within the
although it is not his aim or either case, in the committed the actus reus of a
purpose to achieve it, he can be circumstances known to scope of the area of the work assigned to
crime with the appropriate him.
found to have achieved that him, it is unreasonable to mens rea.
consequence. take the risk.
 NATURE OF A COMPANY

SEPARATE LEGAL PERSONALITY

In the case of Salomon v. Salomon & Co.

Ltd.,1 the principle was established that a
company's benefits and liabilities are
separate and distinct from its members,
directors and officers.

LIFTING THE CORPORATE VEIL

COMMON LAW STATUTORY LAW

Sham/Façade Fraudulent or wrongful trading

Section 447(1) of the Companies Act, Ch. 81:01 (TT)

The separate legal personality of a company may be
prohibits fraudulent trading. To establish that
disregarded where the company is considered to be
intent, what has to be shown is actual dishonesty
sham, facade or the alter ego of its shareholders.
involving, according to current notions of fair
Generally, the evidence should suggest that it was the
trading. Where a company trades and incur debts
shareholder who was carrying on business, rather that
in spite of directors and officers having a
the company itself.
reasonable belief that such debts would not be
paid.

Fraud or Misrepresentation Premature Trading

The corporate veil will be pierced where the company

Another example of personal liability can be
is used as a shield to cover an act of fraud or a
found in Section 20 of the Companies Act, Ch.
misrepresentation by the persons who stand behind
81:01 (TT). Under the section, if a person
the company.
enters into a contract in the name of a
company before the company comes into
existence such person can held personally
liable with respect to the contract so entered.

Agency

The corporate veil will be pierced where the company is used

as an agent of its owner. In order for limited liability to apply,
the company must act for itself rather than as an agent of the
shareholder.

Single Economic Entity

There is no general principle that all companies in a group of companies are

to be regarded as one. Indeed, the fundamental principle is unquestionably
that each company in a group of companies is a separate legal entity
possessed of separate rights and liabilities. Notwithstanding this proposition,
the Court may in appropriate circumstances treat companies in a group of
companies as a single economic unit.
 SHAREHOLDERS

MAJORITY RULE

COMMON LAW STATUTORY LAW

The general principle

Section 37 Interpretation Act- Words in a written law passed
of law is the will of
or made after the commencement of this Act and establishing
the majority is the
or providing for the establishment of a body corporate— (c)
will of the company.
vest in a majority of the members of the body the power,
subject to any quorum fixed by the written law under which it
is established or by any relevant standing orders, to bind other
members thereof;

EXCEPTIONS

EXCEPTIONS

It has been generally accepted however, that there are

four exceptions to the rule. Jenkins L. J. in Edwards v Dissenting Shareholders
Halliwell(1950) 2 ALL E R 1064 states the four
exceptions as (1) the special majority exception (2) the
illegal or ultra vires acts exception (3) the personal
rights exception and (4) the true exception; “Fraud on Section 227(1) of the Companies Act, Ch. 81:01(TT) provides that a
the Minority”. shareholder of any class of a company may dissent where the majority
has decided to amend its articles, to add, change or remove any
provisions restricting or constraining the issue of transfer of share of that
class; to amend its articles under Section 214 to add, change or remove
any restriction upon the business that the company can carry on; to
amalgamate with another company, otherwise than under section 223
or 224; or to sell, lease or exchange all or substantially all its property
However, to redress a wrong done to a under section 138.1 This remedy is available even where the conduct of
company or to recover money or damages the majority is not oppressive or also unfairly prejudicial to the interest
alleged to be due to it, the company is the of the minority. The remedy is the purchase of shares.
only proper plaintiff and no such action
can be taken by minority shareholders.
This is known is the rule in Foss v
Harbottle.
Restraining Oppression

There are certain exceptions that emerged with

respect to the rule in Foss v Harbottle. One such 242. (1) A complainant may apply to the Court for an order under this
exception is the derivative actions. Minority section. (2) If, upon an application under subsection (1), the Court is
shareholders may bring an action known as a satisfied that in respect of a company or any of its affiliates— (a) any act
derivative action where the right to sue is derived
or omission of the company or any of its affiliates effects a result; (b) the
from that of the company. It is not an action that is
business or affairs of the company or any of its affiliates are or have been
permitted where personal right of shareholders is
carried on or conducted in a manner; or (c) the powers of the directors of
violated
the company or any of its affiliates are or have been exercised in a manner
that is oppressive or unfairly prejudicial to, or that unfairly disregards the
interests of, any shareholder or debenture holder, creditor, director or
officer of the company, the Court may make an order to rectify the matters
complained of.

Where a personal right is infringed the proper

action is a representative action which an
individual shareholder may bring in his own name
or on behalf of himself and others where his right
alone and those of others are affected.
 DUTY OF DIRECTORS

COMMON LAW STATUTORY LAW

Misfeasance According to Section 99(1) of the Companies Act,

Ch 81:01(TT) “Every director and officer of a
company in exercising his powers and discharging
Particular acts of directors may constitute breaches of his duties is required to act honestly and in good
trust or misfeasance for which they will be liable to the faith with a view to the best interests of the
company. Misconduct involving misapplication of funds company and is also required to exercise the care,
or property of the company is generally termed "breach diligence and skill that a reasonably prudent
of trust", whereas the word "misfeasance" characterizes person would exercise under comparable
other breaches of duty, which do not involve such circumstances.”1 In addition, every such person
misapplication but result in pecuniary loss to the under 99(5) is to comply with the requirements
company. Directors have a wide discretion, and while of the Act, regulations, articles, by-laws and any
acting honestly within it cannot be charged with unanimous shareholder agreement. Except as
misfeasance. provided by any unanimous shareholder
agreement, no provision in any contract or
resolution, the articles or by-laws relieves a
director or officer from the duty to act in
accordance with the Act or the regulations or
Liability in Tort relieves him from any liability for breach thereof
as stated in Section 99(6) of the Companies Act,
Ch 81:01 (TT).

In the discharge of the particular duties, which they have

assumed, directors are bound, to take reasonable care, and
failure to exercise such care constitutes negligence.

A director is not bound to bring

Criminal Liability any special qualifications to his
office. A director need not
exhibit in the performance of his
As to the criminal liability of directors, more than duties a greater degree of skill
mere acquiescence is required to make them parties than may reasonably be
to criminal offences. expected from a person of his
knowledge and experience.

Non-Intervention in Company’s’ Affairs

A director is not bound to take any definite part in the

conduct of the company's business, and a director who
takes no part in the negligent or ultra vires acts of the
board will escape liability.

Trustees and Fiduciary Duties

A company must act by agents, and usually the persons by whom it acts are termed directors. The Act does not define the exact
position of directors. Directors have been described as mere trustees of the company; trustees of the company's money and
property; and trustees in the transactions which they enter into on behalf of the company. Directors cannot use the company's
property for their own benefit.

It is a director's duty to give his whole ability, business knowledge, exertion and attention to the best interests of the
shareholders who have placed him in that position. Directors, by reason of their fiduciary obligations, in the exercise of their
powers are bound to act with the utmost good faith for the benefit of the company. Directors must not act in bad faith..

A director is liable for secret profits

Directors as Agents

Directors are agents in the transactions which they enter into

on behalf of the company
 INSIDER TRADING

Definition

Insider trading has been described as the

purchase and sale of shares of a company by a
person with access to material non-public
information about a company that can affect the
value of its shares and that is not known by other
shareholders or the general public. Section 100-
106 of the Securities Act, Ch. 83:02 (TT)

Connected to a Reported Issuer

Section 4(1) of the Securities Act, Ch. 83:02 (TT) defines the critical characteristic of being connected to a reporting issuer.

(3) For the purposes of this Act, a person is connected to a reporting issuer if the person—(a) is a senior officer of the reporting
issuer; (b) is a senior officer of— (i) an affiliate of the reporting issuer; or (ii) any person who beneficially owns, directly or
indirectly, or exercises control or direction over voting securities of the reporting issuer, or a combination of both, carrying
more than ten per cent of the votes attached to all voting securities of the reporting issuer outstanding; (c) beneficially owns,
directly or indirectly, or exercises control or direction over, voting securities of the reporting issuer, or a combination of both,
carrying ten per cent or more of the votes attached to all voting securities of the reporting issuer outstanding; (d) is engaging
in or is proposing to engage in, whether alone or with any other person— (i) a take-over bid for any securities of the reporting
issuer; (ii) any amalgamation, merger or similar business combination with the reporting issuer; or (iii) any other material
transaction with or including the reporting issuer; (e) is engaging in or is proposing to engage in any business or professional
activity with or on behalf of the reporting issuer or any person identified in paragraph (d), or is an employee of any such person
or of the reporting issuer or any affiliate; (f) learns, directly or indirectly, of material nonpublic information with respect to a
reporting issuer from any person and knows, or ought reasonably to have known, that the other person is connected to the
reporting issuer; or. (g) is an entity that is controlled by— (i) a person referred to in paragraph (a) or (b); or (ii) a relative of a
senior officer of the reporting issuer;

Material Non-Public Information

A challenge for the courts is to determine the meaning of the critical phase “material non-pubic information”.

Section 4(1) of the Securities Act, Ch.83:02 (TT) “material non-public information” means, in relation to securities of a reporting
issuer, any material fact or material change that has not been published;

“material fact” means, when used in relation to the affairs of an issuer or its securities, a fact or a series of facts, the disclosure
of which would be considered important to a reasonable investor in making an investment decision;

“material change” means— (a) when used in relation to an issuer other than a collective investment scheme, a change in the
business, operations, assets or ownership of an issuer, the disclosure of which would be considered important to a reasonable
investor in making an investment decision and includes a decision to implement such a change made by the directors of the issuer
or other persons acting in a similar capacity; or (b) when used in relation to an issuer that is a collective investment scheme, a
change in the business, operations or affairs of the issuer, the disclosure which would be considered important by a reasonable
investor in determining whether to purchase, sell or transfer or continue to hold securities of the issuer, and includes a decision
to implement such a change made by the directors of the issuer or the directors of the manager of the issuer or other persons
acting in a similar capacity;

The meaning of “material non-public information” has been well explored in the legal system of the USA. In addition to the
law’s imprecision in detailing the acts that constitute insider trading, there is also no clear answer as to what constitutes
“material, non-public information.” In general, “material” information is information that fits into one or more of the following
categories: (1) there is a substantial likelihood that a reasonable investor would consider the information as important in making
his or her investment decisions,(2) the disclosure of such information would be “viewed by the reasonable investor as having
significantly altered the ‘total mix’ of information made available” or (3) the disclosure of the information is “reasonably certain
to have a substantial effect on the market price of the security.
 PARTNERSHIP

Definition of a Partnership

According to Section 3 of the Partnership Act, Ch. 81:02 (TT),1 a partnership is the relation
which exists between persons carrying on a business with a view to profit.

Elements of a Partnership

Persons Carrying on a Business In Common View of Profit

A partnership is a relationship that exists The term ‘carrying on’ implies some form of continuous undertaking, as such
A partnership that is being established A partnership should be established with the intention of
between persons. The word ‘persons’ is restricting the creation of a partnership for the purpose of a one off transaction.
to carry out some form of business, making profit. A business in common in which no financial
essential as it signifies that one person cannot The courts however, have not limited the creation of partnership in this manner
the persons involved must be carrying return is expected, does not establish a partnership.
create a partnership. A partnership can and have held that a partnership may be formed for a one-off transaction.
on the business ‘in common
comprise of both persons and companies.

Statutory Factors In Determination Of Partnership

Co-Ownership of Property Sharing of Profits Sharing Gross Returns

Section 4(a) of the Partnership Act, Ch. 81:02 (TT) states that co- Section 4(c) of the Partnership Act, Ch. 81:02 (TT) Section 4(b) of the Partnership Act Ch. 81:02 (TT), clarifies that the sharing of gross returns does
ownership of property does not of itself create a partnership, as to stipulates that sharing of profits of a business is prima not of itself create a partnership, whether the persons sharing the returns have or have not a joint
anything so held or owned, whether the tenants or owners do or do not facie evidence of the existence of a partnership or common right or interest in any property from which, or from the use of which, the returns are
share any profits made by the use thereof.1 derived

Partnership Is A Mixed Question of Law And Facts

There is a clear statutory definition of what constitutes a partnership, however the

question of whether a partnership exists is a mixed one of law and facts.
 Partnership Agreement

A partnership agreement can be in writing or oral. The relations

between partners are regulated by partnerships agreements.

Power Of Partner To Bind Firm

A partner is perceived as an agent of a partnership and the acts of a

partner subject to certain qualifications binds all partners.

Liability Of Partners To Third Parties

Every partner is liable jointly and severally for debts and obligations
incurred on behalf of the partnership while he is a partner.