LECTURE I -THE LAW OF TORTS, THE LAW OF CONTRACTS

Now we shall move into the field of private law which is administered by the civil courts and is
concerned with rights and duties of individuals between each other, rather than rights and duties vis-á-
vis the State.

1.1. THE LAW OF TORTS IN ENGLAND

The word tort derives from the Latin tortus, meaning crooked or twisted, and the Norman French tort
meaning wrong. In English law, the word tort is used to denote certain civil wrongs as distinct from
criminal wrongs.

1.1.1. The Nature of torts

To understand what a tort is, torts must be distinguished from crimes, breaches of contract and breaches
of trust.

CRIMES
A crime is a wrong which, by means of punishment or otherwise, is inhibited by the State. In case a crime
is committed, the object of the criminal proceedings is primarily to punish the offender. Although a
private person may prosecute another for a criminal offence, the police are most of the time the
prosecutors. If the accused is found guilty, the court will award a proper punishment.

BREACHES OF CONTRACT
A breach of contract is a civil wrong, but it is different from a tort. In a contractual relationship,
contractual duties are imposed on the parties by the parties themselves.

BREACHES OF TRUST
In order to speak of trusts, we must refer to the meaning of the term use, which is said to derive from the
Latin opus. A use arose in medieval time when a person conveyed property of any sort to another upon
the understanding that the other was to hold that piece of property on behalf of the donor or on behalf of
a third party. Clearly the person who held the use was in a position of confidence that he might abuse, so
the rights of the third party required protection. The common law courts refused to recognize uses and
failed to offer any protection, but the Court of Chancery acted as a court of conscience and intervened to
force holders of uses to administer the property for the benefit of the third party according to the terms of
the grant. In time, this interest came to be covered by the Chancellor’s equitable jurisdiction, so trusts are
dealt with in equity. The holder of the use came to be known as a trustee and the person on whose
behalf the use is held came to be known as the beneficiary. So, a trust is an equitable obligation
bonding the trustee to deal with property over which he has control (which is called trust property) for
the benefit of the beneficiaries. In such a case, a breach of trust may give rise for compensation for
damage suffered.

TORT
A tort is a civil wrong which entitles a person who is injured by the act committed to claim damages for
his loss, whether purely as reparation or as a way of making the defendant understand the anti-social
nature of his act. The object of proceedings in tort is not punishment, but compensation or reparation to
the plaintiff for the loss or injury caused by the defendant, i.e. damages. In tort, the duty to refrain from
committing torts is imposed by the general law of the land, independently of the wishes of the plaintiff or
of the defendant. In very many cases, a crime or a breach of contract may include a tort element. In case
of tort, liability arises from the breach of a duty primarily fixed by law. It is a duty towards persons
generally. A tort arises from the breach of a duty primarily fixed by law; such duty is towards persons
generally, and the redress against its breach is an action for damages.
As a general rule, when a person suffers unlawful harm at the hands of another, an action in tort for that
damage or injury arises. For instance, if A, by his negligence, collides with B’s car parked on a road and
causes damage to it, B may take action in court.
The law of tort does not regard the motives of an act, it is merely concerned with the effects of the
injurious conduct, which means that a good motive will not be a lawful excuse to commit tort.
Conversely, a bad or malicious motive will not make a lawful act unlawful. In some cases, harm may be
done by one person to another, but the law provides no remedy – this is damnum sine injuria
(damage without legal wrong). On the contrary, there may be a wrong without loss or damage (injuria
sine damno). Such cases are exceptions to the rule that there must be damage or injury in order to
bring an action. Therefore, it is important to mention that tort does not simply consist in the infliction of
an injury, but in the infliction of a legally recognized injury.
Torts are divided into two main classes: trespasses and actions on the case. A trespass is a direct and
forcible injury. It is the most dramatic and obvious of all wrongs and it was the earliest tort which the law
recognized and remedied. Actions on the case are actions for damage caused otherwise than ‘directly
and forcibly’. They were called actions on the case because they were originally granted in circumstances
in which there had been no remedy but the plaintiff could show that, upon the facts of the case, he had
suffered a damage as the result of some acts or omission of the defendant.

Examples of trespasses – A walks over B’s land; A hits B; A kicks the paint off B’s car, etc

Examples of actions on the case – A accidentally leaves a mat on a slippery floor where B is likely to
walk and B slips on the mat and is injured; A negligently permits a fire that has arisen on his land to
spread and to damage B’s crops.

1.1.2. General defences to actions in tort

In case a person is sued for tort, mistake, either of law or fact, is no defence. For a mistake of law, the
principle ignorantia legis non excusat (ignorance of the law is no excuse). For a mistake of facts,
there are exceptions to the rule, as some reasonable mistakes of facts may be accepted as an excuse.
Nevertheless, in the case of trespass, the trespasser may be sued even though he sincerely believed that
the land he entered belonged to him or that he had a right of entry.

The person who is sued for tort may resort to various types of defence:
- he may deny the facts alleged by the plaintiff
- he may argue that the victim was consenting and cannot sue on the tort. This argument is called
volenti non fit injuria (no injury can be done to a willing person). It is the principle of the
assumption of risks. It is a principle of general application. It applies not only in cases where
people agree to run the risk of injury, but also in cases where the law presumes that they have
consented to do so.
- in some cases, damage done intentionally may be excused if it was done out of necessity (eg. when
a person causes damage to another person’s property to prevent fire from spreading)
- an inevitable accident, namely an accident that could not be avoided by taking all the ordinary
precautions
- if damage or injury was done by a person trying to defend himself or another person against
unlawful force, the defendant shall not be liable provided he used force in proportion to the harm
threatened.

There are three points to be mentioned in connection with ‘assumption of risk’:

1. no one will be allowed to consent to run the risk of illegal harm. (eg. the rule does not apply in
the case of a boxing match conducted with bare fists).
2. mere knowledge of a risk need not necessarily amount to consent to run it. (eg. a worker drilling
rock while a crane is carrying loads of stones over his head. There is a danger that a stone might
drop on him due to the negligent way in which the crane is operated. In case he is hurt, his
knowledge of the danger does not imply that he consents to run the risk of injury).
3. where a person creates a dangerous situation and another tries to avert the danger (eg. a cart is
left unattended in the street, a boys throws a stone at it, the horses gat scared and bolt away, a
policeman runs to stop the horses and is injured. The policeman can claim and recover damages
from the owner of the cart for injuries received while stopping the horses as the incidents occurs
in a public street and children are in danger).
The rule of ‘assumption of risk’ applies to cover people who run risks in the protection of the property
(as well as of the persons) of others, provided that they bear any special relationship to the owner of the
property (eg. master – servant relationship. If there is a fire caused by the negligence of the master and
the servant is injured while trying to rescue his master, after the incident the servant is entitled to claim
against his master).

1.1.3. Capacity of the parties in a tort action

Generally, anyone of full age can sue and be sued in tort.
- the Crown may be sued for torts committed by its servants or agents
- corporations can sue and be sued for torts committed by themselves, their servants and agents,
because a corporation, even if regarded as an abstraction, is an employer of its agents, and
employers may be held “vicariously’ responsible for the torts of their agents acting within the
course of their employment.
- Minors – as a general rule, minors enjoy no special exemption from tortuous liability and they
have full capacity to sue in tort. Nevertheless, infants and minors are not liable for breach of
contract as they have no capacity to contract.
- Persons of unsound mind are in general liable for the torts they commit, but, if a person is so
insane that his actions are involuntary, he will escape liability.
- Spouses cannot sue each other in tort, except for the protection of their own property
- Judges cannot be sued in tort for the acts done in their judicial capacity
- Foreign sovereigns and diplomats cannot be sued in tort during the terms of office

1.1.4. Liability for tort

The defendant shall only be liable in tort if the damage is not too remote from the original wrong. Under
the test of directness, a defendant is liable for all damage which is the direct consequence of his act,
whether such damage is or not foreseeable by a reasonable man. Under the test of reasonable
foresight, the defendant is only liable for the damage which a reasonable man should have foreseen.
Intended damage is never considered too remote.

1.1.5. Vicarious liability

In some cases, a person who did not commit the tort himself is held liable for the torts of another.
Employers (formerly called masters) are held vicariously responsible for torts committed by their
employees (formerly called servants) in the course of their employment, namely they are liable for the
wrong committed by the servant even though the tort is one which they have not ordered or authorized.
Before vicarious responsibility can be imposed upon a defendant, it has to be shown that: (i) the person
who committed the tort was the defendant’s servant, and (ii) that the servant was, at the time when the
tort was committed, acting within the course of his employment.
A servant is any person who works for another and is subject to the control of that other as to the
manner in which he shall do his work. The term servant includes any person under a contract of service:
domestic servants, chauffeurs, clerks, labourers. Independent contractors (electricians, carpenters,
dressmakers, etc, who come at people’s houses) are not regarded as servants because they are under the
control of the master as to what they must do but not as to the manner in which the work is performed.
Nevertheless, legal practice has interpreted and modified the definition of servant, as, nowadays, for
instance, hospital authorities are held vicariously responsible for the negligence of nurse, radiographers,
etc, while companies are made liable for the torts committed by their executives.

1.1.6. The survival of actions

The death of either of the parties may affect the right of action in tort. At common law the general rule
was expressed by the maxim actio personalis moritur cum persona (a personal action dies with the
litigant), in other words, whether the plaintiff or the defendant died, the right of action died with him.
Yet, since the Law Reform Act 1934, this rule no longer exists, so the right to action survives both in
favour of the estate of a deceased plaintiff and against the estate of a deceased defendant, with some
exceptions, for instance, actions for defamation do not survive.

1.1.7. Categories of torts

The law of torts is case law par excellence, which means s that there are numerous examples, classes and
categories out of which the most important ones shall be presented in what follows.

1.1.7.1. Negligence
For the purpose of the law of torts, the term negligence is used in a dual sense: (i) on the one hand, it
may signify the attitude of mind of a party committing a tort (for example trespass committed out of
carelessness) and, (ii) on the other hand, the independent tort which signifies the breach by the
defendant of a legal duty to take care not to injure the plaintiff or cause him loss . If such a duty is
broken, and the plaintiff can show that he has been injured or that he has suffered a loss as a result of the
breach he will have a right to action against the defendant.
In front of a court of law several factors have to be taken into account for the plaintiff’s case of negligence
to be established:
- that there is a duty of care
- that the duty of care has been broken
- that the injury resulted or was caused by the breach of duty
- that the defendant owed a duty, that he breached the duty and that the plaintiff was damaged in
some way as the result of the breach

THE DUTY OF CARE

The most important duties of care are:
- as to highways (it applies to railways, shipping at sea and canal navigation)
- employers’ liability (employees must be provided with reasonably safe machinery, etc.)
- duty of care of professional persons (doctors, dentists, solicitors, etc)
- duty of care of carriers to passengers and goods
- duty of care of schools to children
- duty of care of police to the public

For a person to be held liable for negligence the harm inflicted must be reasonably foreseeable and the
circumstances must be such that there is a close and direct relationship between the parties.

BREACH OF DUTY
The essence of a claim in negligence lies in the assertion that, in all the circumstances, the defendant has
omitted to take reasonable care to avoid the injury complained of. Therefore, one might think that every
claim should be decided on its merits and that there would be no need of prior enquiry as to whether a
‘duty of care’ has arisen. Negligence in its legal sense means failure to take such reasonable care as a
reasonable man placed in the position of the defendant ought to have taken.
Obviously, it is for the court to decide, on a case by case basis, what is reasonable, what a reasonable man
means, etc.

CAUSATION
In all cases of torts the element of causation is usually assumed either to exist or not to exist, in which
latter case there is no liability. But in cases of negligence, the causal element creates difficulty, where it is
doubtful that the defendant caused the loss the burden of proving that he did lies on the plaintiff.

DAMAGE
- physical injury
- mental suffering
- damage to property

BURDEN OF PROOF
The plaintiff is the one who has to adduce sufficient evidence to establish a prima facie case of negligence.
Yet, there are cases in which res ipsa loquitur (the thing speaks for itself). This means that the facts
are such that they point so strongly to negligence that the court may find in the plaintiff’s favour unless
the defendant can provide some explanation to rebut the presumption of negligence (eg. a barrel of flour
falling upon the plaintiff from an open door in the upper floor of the defendant’s warehouse).
1.1.7.2. Trespass
Trespass is the most ancient and the most common type of tort. It is a direct and forcible injury. There
are three forms of trespasses:
1. Trespass to the person – assault, battery and false imprisonment.
- Assault is the fact of using or threatening unlawful personal violence against another person, even
though the victim does not suffer any actual injury. Words do not constitute assault.
- Battery is the fact of using force against the person of another hostilely. The charge of battery is usually
combined with that of assault and is known as “assault and battery”.
- False imprisonment is the fact of inflicting bodily restraint on another unlawfully, even though there
is no actual damage.
2. Trespass to land- is committed when a person enters upon land in the possession of another
without lawful justification or remains upon it after his authority to be upon it has been revoked. It may
also be committed by merely throwing or putting things upon the land. It may also take three forms
(entry upon the land, remaining upon the land, throwing a material object upon the land). There need
not be any actual damage to the land for the plaintiff to take action.
3. Trespass to goods – covers three things –detinue, conversion and wrongful interference with
goods. Detinue is the unlawful act of holding goods that belong to another possessor.Conversion is the
wrongful dealing with a person’s goods in a way that constitutes a denial of the owner’s rights.
Wrongfully taking possession of goods, disposing of them, destroying them or refusing to give them back
are acts of conversion. Nowadays detinue and conversion are regarded as equivalent. Wrongful
interference is any unlawful act of direct interference with goods in the possession of another which
results in damage to goods or in interest in goods. Generally speaking, wrongful interference is physical,
such as touching or removing the goods.

1.1.7.3. Nuisance
The word nuisance is connected with the Latin nocumentum (harm). Nuisances are divides into two
main classes: (i) public nuisances and (ii) private nuisances.
1. Public nuisance – a crime indictable at common law and it is also restrainable by injunction. It
is an unlawful act which endangers or interferes with the lives, safety or comfort of the public
generally or of a section of the public, or by which the public or a section of the public is
obstructed in the exercise of a common right (obstructing highways and rendering them
dangerous). If a person suffers special damage as the result of a public nuisance, over and above
the damage caused to the public at large, he may bring action in tort against the person who
caused the nuisance.
2. Private nuisance – an unlawful interference with a man’s use of his property or with his
comfort or convenience. It is a wrong which incommodes a person and it also embraces certain
injuries and inconveniences caused to users of highways.
Nuisance is not actionable per se, some damage must have occurred to the plaintiff to enable him to sue.
The basic rule is that one should “live and let live” and that one should use his property so as not to cause
harm to others.

1.1.7.4. Defamation
It may be broadly defined as the publication of a statement which tends to lower a person in the
estimation of right-thinking members of society generally. It is divided into two main categories, libel
and slander. Libel is defamatory matter published about a person in some permanent form. Slander is
the publication of defamatory matter in a transient form, normally under the guise of an oral statement.
Libel is actionable per se, without proof of special damage, while slander is only actionable if the plaintiff
can show that he has actually suffered damage. Libel is a crime, as well as a tort, whereas slander is only a
tort (except for words spoken directly to create a breach of the peace or which are blasphemous, obscene,
or reflect upon the due administration of justice).
Special defences to an action for defamation:
(i) justification - the defendant proves that the statement was substantially justified (true).
(ii) Privilege – a defamatory statement made upon a privileged occasion is not actionable
because the occasion needs total freedom of speech (parliamentary or judicial proceedings,
when giving a reference to a prospective employer
(iii) Fair comment – in the public interest, criticism and statements of opinion should be free as
long as it is fair, especially when made upon a matter of public interest (the behaviour of
public men, ministers, local officials performing public functions, the work of artists and
authors).
1.1.7.5. Product liability
A manufacturer could be liable to the consumer for defects in his products. The liability arises when the
damage is caused wholly by a defect in a product. The liability may be imposed on the producer of the
product or on any person who, by putting his name on the product or using a trade mark or other
distinguishing mark in relation to the product, has held himself out to be the producer of the product.
1.1.7.6. Conspiracy
It is an agreement between two or more people to injure a third party so as to cause damage to the person
against whom the conspiracy is aimed. The execution of the agreement is tortuous in itself, provided that
loss is suffered (business partners, economic interests).
1.1.7.7. Interference with contractual relations
It is the tort of deliberately inducing a beach of contract between two parties, thereby causing damage to
one of the parties (the plaintiff).
1.1.8. Remedy in the law of torts
The two principal remedies available to a plaintiff in an action in tort are damages and injunctions,
that is orders of the court to restrain the commission of continuance of the tort.
TYPES OF DAMAGES
- general damages (damages at large which are not susceptible to exact calculation; eg. for loss of a
limb)
- special damages (damages awarded for such losses – medical expenses, loss of earnings prior to
trial)
- nominal damages (the plaintiff proves that his rights have been infringed but he is unable to
prove any actual damage)
- substantial damages (they are assessed by reference to the actual loss, whether physical or non-
physical however great or small)
- compensatory damages
- aggravated damages – the act committed causes greater than normal injury to the feelings of the
plaintiff. In such a case exemplary/punitive/vindictive damages are awarded aimed at punishing
the defendant rather than compensating the plaintiff.
TYPES OF INJUNCTIONS
- mandatory injunctions (orders of the court commanding something to be done)
- prohibitory injunction (orders of the court prohibiting or forbidding something)

LIMITATION
The law prescribes a period of 6 years from the date on which the cause of action accrued as the normal
period within which actions founded upon tort must be brought. There are variations depending on the
specific nature of the tort.

1.2. THE LAW OF TORTS IN THE US

In the US torts cover a variety of civil wrongs, other than breach of contract. These wrongs interfere with
person, property, reputation and commercial or social advantage. Some acts, such as assault, may be
both a crime, punishable by the state in criminal prosecution and a tort for which the victim can sue the
defendant in damages before the civil courts.
1.2.1 Categories of torts Torts can be divided into two main categories depending on whether the
result was intended or was caused by negligence. Yet, there are some injuries, resulting from defamation
and from highly dangerous activities which involve absolute liability, whether they were intentional or
negligent.
 - intentional torts – are those causing interference with person or property and were adopted
from English law – assault, battery, conversion, false imprisonment and trespass. There are cases
of intentional torts were the interference is less tangible, such as infliction of mental anguish,
injurious falsehood, malicious prosecution, invasion to the right of privacy.
- torts inflicted through negligence – eg. automobile accidents involving personal injuries

1.2.2. Procedure and prevailing rules

The jury is almost universally employed in tort damage actions, especially in personal injury litigation. In
the US the rules that prevails is the rule of contributory negligence which allows the defendant to
avoid all liability, even though he has been negligent, by proving that the plaintiff’s own negligence
contributed to his loss.

1.3. THE LAW OF CONTRACTS IN ENGLAND

1.3.1. The nature, formation and validity of a contract
1.3.1.1. The nature of a contract

The duties embraced by the law of torts are imposed by the general rules of law and they are owed to all
and sundry. Contractual duties are imposed and defined by the contract itself and they are owed to the
other party to the contract. Thus, contractual obligations are a kind of law peculiar to the parties and only
enforceable by means of an action for damages or otherwise between the parties.

A contract is a legally binding agreement. An agreement occurs when two minds meet upon a common
purpose. This meeting of minds is called consensus ad idem (consent to the matter). The essence of
contractual liability rests upon the notion that someone who suffers a loss in reliance upon the promise of
another ought to receive compensation for the loss.

1.3.1.2. Types of contracts

(i) specialty contracts – contracts by deed or contracts under seal used for various transactions such
as conveyances of land, a lease of property for more than 3 years, articles of partnership, settlements.
Such contracts are signed, sealed and delivered. A specialty must be registered by a solicitor

(ii) simple contracts – informal contracts which may be made in any form, orally, in writing, by
telephone, by telegram or by any implication from conduct (eg. a person who takes a seat in a bus is
entering into an implied contract to pay his fare).

1.3.1.3. The formation and validity of a contract

Contractual obligation (excluding the case of a specialty) starts by the acceptance, by word or conduct of
an offer. One party is called the acceptor (offerree / promisee) and the other party is the offeror
(promissor). An offer may be made to a private person or to the world at large.

In order to form a valid simple contract the following elements are necessary:

(i) intention to create binding legal relations (animus contrahendi)

(ii) offer and acceptance – one party makes an offer and the other party must show unreserved
acceptance of that offer. Silence is not considered an acceptance
(iii) consideration – the price for which the promise of the other party is bought. Consideration must be
present or future (executed or executory). Consideration must not be previous to the contract itself,
except in the case of services rendered at the express request of the other party
(iv) certainty of terms. There are two types of terms:
1. express terms (oral or written). They must state clearly and precisely the rights and obligations
of each party. Express terms are of two kinds – (a) conditions which go to the root of the
 contract and (b) warranties or terms of the contract which are collateral or subsidiary to the
main purpose of the contract.
2. implied or innominate terms –. The contents of the contract include general rules which are
not formulated (commercial local usage, customs or statutes) but to which the courts will give
much as importance as to the express terms
(v) capacity of the parties to enter into a contract– the general rule is that any person may enter into a
binding contract. Special rules apply to infants, minors, mentally disordered and drunken persons,
enemy aliens and corporations.
(vi) legality of the object – a contract is illegal if it contravenes a statute or the common law or morality
(vii) genuine consent – It can be vitiated by the following elements:
1. mistake. The general rule is that mistake does not affect the validity of a contract. Nevertheless,
there are some kinds of mistakes (operative mistakes) which undermine the agreement so that
there is no true consent and render the contract void.
2. misrepresentations– they make a contract voidable. The aggrieved party will have to go to
court to have the contract declared void. Misrepresentation has to be active, as silence does not
amount to misrepresentation. There are three kinds of misrepresentations: (a) innocent when the
defendant, in good faith, is unaware that his statement is wrong; (b) negligent when the
defendant is unaware that his statement is wrong but is liable for not controlling its authenticity;
(c) fraudulent when the defendant intentionally makes false statements
3. duress
4. undue influence

For a contract to be valid all the above elements must be present. If one or more is absent the contract is
void or voidable.

1.3.1.4. Privity of a contract

A contract creates a special legal relationship for the parties who enter upon it. It follows that only such
people are the parties (privy) to a contract who can be normally affected by it. Thus, as a rule, a contract
can only bind the parties, it cannot impose obligations upon other people, nor can it confer rights upon
other people. Yet, there are exceptions to this rule.

1.3.1.5. Discharge of contracts (termination of a contract)

A contract may be discharged by:

- agreement
- performance
- breach
- frustration. Unforseen events may occur which render further performance impracticable or
impossible (sickness, accident, war, the interference of third parties, legislation which renders
further performance illegal)
- operation of the law – for instance lapse of time, if the contract is entered into for a particular
period of time, the contract is discharged at the expiration of that period.

1.3.1.6. Remedies for breach of contract

Given the circumstances in which a contract may be discharged (terminated) as the result of a breach,
there are some categories of remedies which may be awarded to the party injured by the breach:
- damages – common law remedy, may be claimed by the injured party as a right. They are
monetary compensation for a loss.
- quantum meruit- (as much as he deserved) a claim for an amount earned, a claim in respect of
unremunerated services
- specific performance – a decree of the court ordering a defendant to perform his obligations
under a contract
- injunctions- for the purposes of contract law, they are generally prohibitory, that is to say they
are orders commanding a person to refrain from doing something
 - rescission- The court may order rescission of a contract where it would be unreasonable to
uphold it on account of mistake, misrepresentation or otherwise
- rectification – in case it is sought to correct, to rectify a document which purports to embody
some prior agreement, whether oral or written, and this prior agreement has not been properly
reproduced in the document

1.3.1.7. Limitation

Rights of action cannot be permitted to endure forever. People must be made to press their claims with
reasonable diligence. Hence the following rules of limitation have been made:
- an action upon a simple contract must be brought within 6 years of the accrual of the cause of
action
- an action upon a contract under seal must be brought within 12 years of the accrual
- actions in which the damages claimed consist or include damages in respect of personal injuries
to the plaintiff or any other person must be brought within 3 years subject to the same rules which
apply to the same claims in tort

1.4. THE LAW OF CONTRACTS IN THE US

The law of contracts deals with the enforcement of promissory obligations. Contractual liability derives
from consent freely given in the form of a promise whether express or implied from the acts of the
parties. The court will sometimes imply a promise (implied in law or quasi contract) to prevent
unfair profit even in the absence of consent on the part of the party bound by it.
Contract law applies to a wide range of agreements concerning employment, insurance, sale of goods,
sale of land, services, etc and to such varied parties as individuals, business organizations and
government entities.

Contract law is more state than federal law although differences from state to state are generally
insignificant. It is mainly case law, although there are statutes governing it as well. For instance, the
Uniform Commercial Code provides for the formation of contracts for the sale of goods.

A contract may be defined as a promise for the breach of which the law gives a remedy. The word contract
applies to the whole series of acts by which the parties have given their agreement, to any executed
document or to the legal relations which have resulted. For a promise to be enforceable (for the law to
give a remedy) at least two criteria must be met:
(a) the requirement of a writing (contract must be evidenced by a writing – sales of land, contracts to sell
goods above a minimum value, contracts to be liable for the debt of another, contracts to be performed
after a one-year period)
(b) the requirement of a consideration ( it is something for which the promissor has bargained and which
he has received in exchange for his own promise). If it is another promise given in return the contract is
known as bilateral, if it is another act given in return, the contract is known as unilateral.
However, contracts to perform services do not come under these requirements and are enforceable
without a writing. In the US, contracts, like statutes, are detailed and prolix, especially when drafted by a
lawyer.
LECTURE II – COMPANY LAW (UK)
A company is regarded in law as being a separate “legal person”, with a separate legal personality. This
means that it has rights separate from its owners and managers to enter into contract, employ people,
own property and conduct business.
Incorporation, or the creation of a legal person, different from the individual or natural person, is based
on the notion that a corporation is a legal entity, with a name and a perpetual succession. Corporations
are divided into two categories: 1) corporation sole, represented by one person and 2) corporation
aggregate, represented by several persons considered as one single person. In the UK corporations are
established in three ways:
 By Charter granted by the Queen who is petitioned by a group of subjects (universities, charitable
organizations, etc) to obtain corporate status
 By Statute or Acts of Parliament (the case of the Independent Broadcasting Authority by the
Televison Act 1954)
 By registration under the Companies Acts. In the UK the creation and management of a company
is governed by the Companies act 1985 and the Companies Act 1989. A corporation created under
these Acts and belonging to this category is called a company.

Two important issues must be mentioned in relation to companies:

 A company is based upon the limited liability principle established by the 1855 Act, namely that
shareholders investing in companies are liable to the extent of the capital they have contributed
 A company becomes a legal person or enjoys corporate personality after receiving the Certificate
of Incorporation from the Registrar of Companies in England and Wales. A company is distinct
from and independent of the persons who manage it, its directors or those who own it, the
shareholders

A company can be private or public. A public company must have a minimum issued share capital of
£50,000 as required by law. A public company may offer its shares for sale to the public, whereas a
private company must not. A public company may also have its shares listed and traded on the Stock
Exchange.

Business may be conducted in several ways, under various types of organizations:

1. sole trader – enters business on his own account; he may be assisted in his venture by
employees. He is the person liable for all the debts and obligations of the business. In the event of
bankruptcy, his personal assets will satisfy the creditors’ demands. No formal procedures are
required to set up a business as a sole trader; the proprietor has only to observe the rules laid
down in the Business names Act 1985.
2. partnership – The Partnership Act 1890 regulates partnerships and defines them as “the
relation which subsists between persons carrying out business in common with a view of profit”.
The business entity created in this way is called firm. Each partner is liable jointly with the other
partners for all the debts and obligations of the firm since the latter has no legal existence of its
own. A partnership follows a contract between two or at most twenty persons, except in the case
of professional partnerships (accountants, solicitors, stock exchange firms whose members can be
more numerous). When partners are more than twenty in a firm (except a professional one) they
must incorporate, that is form a company. The contract agreed upon by the partners is called
“Articles of Partnership”; if it si signed and sealed it is called “Deed of Partnership”. These
documents spell out the following
 the firm’s trading name,
 the purpose of the business
 the partners’ contribution to the capital
 their shares in profits and losses
 their powers
 admission of new partners
 expulsion of a partner
  dissolution of the partnership
 the accounts and audit of the books
 goodwill
 outgoing partners’ refunding or deceased partners’ estates
 arbitration in case of disputes between partners
Partners are agents of the firm and of each other and also principals.

3. company- there are five types of companies

1. private limited companies with share capital - they must have a minimum number of
two members (no maximum number); their shares and debentures cannot be offered to the
public
2. public limited company with share capital - they must have a minimum number of two
members (no maximum number); their issued share capital must never be below £ 50,000.
The shares are transferable. The shares of the largest public companies are quoted on the
Stock Exchange
3. private limited companies without share capital – (guarantee companies or
companies limited by guarantee). Each member will contribute a certain sum and nothing else
in the event of a winding up
4. private unlimited companies with share capital
5. private unlimited companies without share capital – these two last types are not
common in the world of business; they hold property or provide services where they do not
run the risk of having large debts while keeping their finances

Characteristics of a limited liability company

 has a separate legal personality in law
 is owned by shareholders, management decisions being primarily made by directors
 shareholders and directors have limited liability
 must be registered at the Companies Registry
 it comes into existence upon issue of a certificate of incorporation
 documents required for incorporation – Memorandum of Association, Articles of
Incorporation
 Memorandum of Association indicates – the name of the company, whether it is a
private or public limited company; the objects of the company (the purpose of the
company and the scope of its legal capacity to conduct business with outside parties)
 Articles of Association – provide the company internal rules (rules, regulations,
internal working of the company, duties of directors, etc
 A shareholder’s personal liability is limited to paying fully for shares held
 A company’s nominal (authorized) share capital refers to the quantity of shares a
company is authorized to issue
 A company’s issued share capital (allotted share capital) refers to the value of shares
actually issued to shareholders
 A company’s paid-up capital refers to the amount of the total (nominal) value of the
issued share capital actually paid-up by the shareholders
 A company can issue different types of shares, such as: 1) ordinary shares (carry voting
rights and a right to any dividend declared by the company (share of any profits made
by the company; paid only after the preference shares have been given their dividends)
; 2) preference shares (do not carry voting rights but provide a priority to payment of a
dividend); the dividend is given at affixed rate and are repaid first in case of winding
up; 3)deferred or founders’ shares receive their dividends after the last two
 Continuing duty of the company to maintain annual accounts and to file annual
accounts with the Registrar of Companies
Setting up a company

The documents must be deposited with the Registrar of Companies. The Memorandum of Association
(the charter of the company) is the document governing the external management of the company. It
states whether the company is private (Ltd) or public (plc). It also states the address of the registered
office, the legal basis for its activities within the fields specified, the powers of the company (vires) as
well as other activities (ultra vires) which are outside its powers. Notice of the creation of a company
must be given to the London Gazette.

When investing in a company, a person must buy shares and become a shareholder and a member of
the company or lend money to the company usually against a security, becoming a debenture holder.
Debentures are documents stating that a person has extended a loan to a company; they are secured by a
fixed (plant or machinery) or floating (stock in trade) charge over the company’s assets. The debenture
holder has no voting rights but receives a fixed interest.

Management

In a private company the directors and shareholders are the same persons, while in a public company
there is a board of directors presided over by the chairman and managing director. The board of directors
is the governing body of a public company. The secretary is the next important person in an English
company. In a public company he must be an accountant, a barrister, a chartered secretary or a solicitor.
He is the main administrative officer of the company.

Types of directors

In English law there is no legal definition of director. It can be “any person occupying the position of
director by whatever name called”. In practice, the term is applied to anyone who is responsible for the
management of the company, because he is on the board of directors and takes part in the decision-
making process. A director of a company need not be a natural person – a company could act as the
director of another company. A director is said to be an officer of the company. The articles of
association usually state that directors are appointed by an ordinary resolution.

There are various types of directors:

 Executive director- a full-time officer of the company, with the task of day-to-day
management. Many have a service contract (salaried employee of the company)
 Non-executive director – not a salaried employee, not responsible for the day-to-day
management; usually chosen for his expertise or public recognition in some particular field. Even
if not a salaried employee, he is paid for his services. He is independent of the company and can
be objective
 Managing director (chief executive officer = CEO) – the director who is in charge of the
whole company

Duties of the directors

 The duty of care and skill – a duty not to act negligently in managing the company. The
director is not liable if he has done his best, if he has made a mistake because he did not have
specialist knowledge. For instance, the director of a life insurance company does not have the
knowledge of a doctor. The director must act honestly for the benefit of the company
 Fiduciary duty – as a director, you must always act with honesty and integrity. A director must
use his powers for the benefit of the company. If there is a conflict of interest, the interests of the
company must come first. A director is under a duty of disclosure to the company of any personal
interests which could cause a situation of conflict of interests. If a director acts against the
interests of the company and in his own interests, he will be in breach of directors’ duties. He
could be personally liable for such breach. (example – company A wants to take over company B.
 A director is appointed to write a report on the advantages and disadvantages of the take over.
Yet, if the take over goes ahead, the director will win £ 500,000. He is in a situation of conflict of
interest. His fiduciary duty to the company obliges him to specify that the take over is not
beneficial to the company, if this is true, despite his personal interst to win the money).

Corporate insolvency may arise from various factors, such as recession and inflation at home and
abroad, industrial action, government policies, consumer habits and mismanagement. Creditors can take
control of a defaulting company in three ways: 1) by appointing an administrative receiver, 2) by
appointment by the court of an administrator who, in three months, will settle the company’s finances
without the latter going into liquidation; 3) by voluntary arrangements, composition or scheme or
arrangement. Winding up or liquidation may be voluntary (by an extraordinary resolution passed by
shareholders) or compulsory (by court order, after a petition in bankruptcy had been filed). The company
ceases to exist by dissolution three months after being wound up by a liquidator.

Shareholders’ meetings

Company law dictates that certain business decisions concerning a company need the shareholders’
approval. In particular, shareholders’ meetings are required when major changes to the company are
being proposed. Such proposals are put to the shareholders’ meetings in the form of resolutions. Such
meetings can be attended by the company directors as well, however only shareholders have the rights to
vote.
Types of shareholders’ meetings:
 A shareholders’ annual general meeting (AGM) – can be held only if a 21-day notice is sent to the
members
 Extraordinary general meetings (EGM)- a 14-day notice is necessary

Voting on resolutions
 By a show of hands (each shareholders has one vote irrespective of the number of shares he
possesses)
 A poll – each member has one vote for each share he holds
 The chairman has a casting vote in the event that the number of votes for and against the
resolution are the same

Types of resolutions
 Ordinary resolutions – require a simple bare majority (50%+1 of the votes cast); usual notice for
such resolution – 14 days
 Special resolutions – require 76% of votes cast; usual notice requirement -21 days
 Extraordinary resolutions – similar to a special resolution, but notice requirement – 14 days
 Elective resolution – enables private companies to “opt out” of certain company law formalities by
unanimous agreement (e.g. dispense with the need to hold an AGM each year)
 Written resolution - a resolution in writing which can be validly passed without the need for a
meeting provided all those entitled to vote sign the written resolution to signify their unanimous
approval of the resolution
LECTURE III– LABOUR LAW / EMPLOYMENT LAW

The relationships between employer and employee are based both in the UK and the USA on the agency
principle (mandatare/reprezentare). However the rights and duties of principals (mandanti) and
their agents evolved from the individualistic tradition of common law which relied on unequal
bargaining powers that employers and employees had. Two counterbalancing factors emerged in the two
countries to help employees have more leverage in bargaining: 1) organized trade unions (UK) and
labour unions (USA) and 2)statutory law asserting the rights of employees in definite sectors, such as
safety at work, discrimination and termination of employment.Labour, employment and industrial law
originates in the law of contract and of tort (civil liability) , thought immunities for tort have been
granted either in order to help industrial action or they have been removed in order to control it. Labour
law depends on common law and on statutes. The former is the base of the relationship between master
and servant, which entails a contract of employment and certain rules. The contract may be written or
oral; it may be a letter of appointment giving the name of the parties, the job title, the date of
commencement, initial wage or salary and the duration of the appointment. It also states the number of
working hours, holidays and so on.

According to the contract, and at common law, am employer has the following duties:
 he must pay wages
 provide work
 provide a safe system of work
 maintain the working relationship under mutual trust and confidence
Various statutes provide for other duties which prohibit discrimination against employees because race
or sex as far as job opportunities and wages are concerned.

The main statutory rights of employees include entitlements to:

 a national minimum wage
 equal pay for like work, that is, broadly similar work
 a written statement of employment particulars
 an itemized pay statement
 time off and holidays
 statutory sick leave
 a healthy and safe working environment
 family and paternal leave
 protected rights on transfer of business to another employer
 notice of termination of employment
 not to have unlawful deductions from wages
 not to be discriminated against on grounds of sex, race, sexual orientation, disability, religion,
age, part-time or fixed term employment or trade union membership

An employee must
 do the job for which he is paid
 obey lawful and reasonable orders given by his employee
 perform his duties with reasonable care
 behave in good faith with mutual trust and confidence
 account to his employer for ant property his job make him use
 not allow any conflict of interest during or after employment (neither set up his business in
competition with his employer while he is still employed nor use a trade secret after the
termination of his contract)

It is usual for employers and employees to enter into a written agreement which sets out their respective
obligations and rights, and which constitutes a contract of employment either at the commencement of
employment of shortly before. Clauses in the contract generally deal with:
  pay
 deductions,
 hours of work
 time off and leave
 place of work
 absence
 confidentiality
 restrictions on the actions of an employee once employment is ended (restrictive covenant)
 giving notice
 the grievance procedure in the event of job loss
 variation of contract (meaning parties may agree to vary terms of the contract but terms cannot
be unilaterally varied, that is by one party without agreement)

Employers are bound by the employment contract and statutory regulation as to how they may deal with
employees, particularly in relation to the termination of employment.

A contract of employment can be terminated

 by mutual consent of the parties
 may be frustrated as any other contract (its execution may become impossible like in the case of
any other contract)
 may be brought to an end by performance if it is for a fixed period of time
 on the death of either party on the winding up of the company
 on the appointment of a receiver
 on the employer’s cessation of business
 constructive dismissal – the employee resigns because of the conduct of his employer
 summary dismissal (immediate) – for gross misconduct by the employee, for example theft from
the employer

A dismissed employee is able to bring a claim on three grounds:

 wrongful dismissal – the employer is in breach of contract (concediere ilegala)
 unfair dismissal – the employer has not followed a fair dismissal and disciplinary procedure
before terminating the contract (concediere abuziva)
 redundancy payment after a business failure, insolvency or its transfer (plati compensatorii
pentru disponibilizari colective pe motive de reducere a activitatii economice)

The claim for wrongful dismissal must be brought before the ordinary civil courts or before an industrial
tribunal (since the Employment Protection Act 1978). Industrial tribunals were established by the
Industrial Training Act in 1964. They consist of two lay members representing the employers and the
employees with a chairman who is legally qualified. Appeals from them lies with the Employment Appeal
Tribunal. This tribunal is a superior court which consists of one judge seconded from the High Court or
the Court of Appeal and two lay members, representing the employers and employees. They hear
questions of law from the industrial tribunal. Their jurisdiction covers redundancy payments, equal pay,
sex discrimination, contracts of employment, employment protection. Appeals from the Tribunal lie to
the Court of Appeal.

As far as unfair dismissal is concerned, the employee normally requires at least one year’s service with his
employer in order to be eligible to pursue a claim of unfair dismissal. This qualifying period does not
apply in discrimination cases (dismissals based on race, sex, disability, sexual orientation or
religious/belief discrimination). There is a three-month limitation period (commencing from the date of
dismissal) for issuing a claim for unfair dismissal. The venue for hearing an unfair dismissal claim is the
Employment Tribunal. To defend an unfair dismissal claim an employer must firstly satisfy the
Employment Tribunal that the employee was dismissed for a legally acceptable reason. This includes
conduct at work, capability (including ability or professional qualifications) and redundancy. A large
percentage of unfair dismissal claims are defended on the basis of the employer contending that the
dismissal was justified on the first of these three grounds. Yet, alternative possibilities should have been
considered by the employer (such as a written warning or demotion as opposed to dismissal). If the
Employment Tribunal determines that the reason for dismissal does not observe the law then it will make
a finding of unfair dismissal. If it is satisfied that the dismissal was for one of the legally acceptable
reasons it will then consider whether the dismissal was fair in the circumstances. This involves
consideration of whether the employer adopted a fair procedure in the course of the dismissal. The
Employment Tribunal will take the following into consideration:
 a disciplinary hearing was held prior to dismissal
 the employee was provided with the opportunity to explain his version of the events
 the employee was provided with the right of appeal

In such a case what the employer must prove is not guilt but rather:
 genuine belief that the employer is guilty of the alleged wrongdoing
 that the employer had reasonable grounds upon which to sustain that belief
 that the employer had carried out as much investigation into the matter as was reasonable in all
the circumstances

The Employment Tribunal is empowered to award damages for losses such as loss of earnings and other
benefits (e.g. health insurance) to a claimant successfully establishing a claim for unfair dismissal.

Employment Tribunals have jurisdiction over most employment law related cases including
discrimination in employment cases. The tribunal’s decision is reached by a unanimous or majority
decision. The procedure for hearing tribunal cases is similar to usual court procedure, yet Employment
Tribunal proceedings are more informal. Fro instance a Claimant is entitled to act for himself or appoint
someone to represent him who is not legally qualified. Thus anyone has ‘rights of audience’ in an
Employment Tribunal.

In 1975, the Advisory, Conciliation and Arbitration Service was established to promote and develop
collective bargaining machinery. It deals with conciliatory advice and questions raised by the recognition
of a union. It issues codes of practice which are guidelines both to employers and employees for their
relationship and are referred to by individual tribunals and the Central Arbitration Committee set up in
1975. The Committee consists of three members – a legal chairman and two lay members representing
the employers and the employees. It is independent of the judiciary and arbitrates disputes with the
parties’ consent.

Employment law usually involves a mixture of contractual provisions and legislation regulating the
relationship between employer and employee. Developments in case law and changes to legislation, for
example from the implementation of EU directives, affect employees and employers alike. The practice of
living and working in different jurisdictions means that lawyers also have to refer to international
conventions to establish legal requirements.

It is usual for employers and employees to enter into a written agreement which sets out their respective
obligations and rights, and which constitutes a contract of employment either at the commencement of
employment of shortly before.

A distinction must be made between employment law and labour law. Employment law covers the rights
and obligations of employers and employees before employment (during the recruitment process),
during employment and at the end of employment (termination of employment). Labour law deals with
the relations between employers and the trade unions.
LECTURE IV– ALTERNATIVE DISPUTE RESOLUTION (ADR)

The generally held view is that the English legal system is solely composed of state legal rules, state
courts and the related personnel – judges, the police, barristers and solicitors, who work with those rules
and in those courts. However, since the latter part of the 20 th c, there has been a growth in different
mechanisms for resolving disputes, outside the courts. These different types of dispute resolution are
called alternative dispute resolution (ADR). There are many types of dispute resolution which fall under
ADR. Some of them are relatively formal (arbitration) and very similar to courts. Other forms of ADR
(mediation) are much more informal than traditional courts, they involve assisted dispute settlement
rather than adjudication by a third party. In fact, a very wide range of dispute resolution mechanisms,
from those which are almost indistinguishable from a court, to those which are very informal, fall under
the heading of ADR. However, what all the forms of ADR have in common is that they are not actually
courts. This is the sense in which they are alternative, because they provide a different way of resolving
a dispute than that which is offered by courts.
Interest in ADR has developed for a different number of reasons:
 concern about the costs
 delays
 general inaccessibility of courts
 the need to find quicker, cheaper and more readily available methods of resolving disputes`

In some cases, the dispute resolution offered by ADR is independent from the formal legal system
because interaction with the formal legal system is implicit, rather than explicit, in that the parties will
often be aware, to some extent, of the relevant legal rules, but they will not form the main focus of the
discussion. In other cases, ADR will interact more closely with the legal system – for instance a court may
suggest the use of ADR to solve all or part of a dispute. For instance, in the UK, the judges of the
Commercial Court have been actively encouraging the use of ADR for some time. In 1994 they issued a
Practice Note indicating that they wished to encourage parties to consider the use of ADR as a possible
means of resolving either particular issues in their disputes or whole disputes. In appropriate cases, they
would invite parties to consider the use of ADR.

There are several forms of ADR – mediation, arbitration, conciliation.

1. Mediation

Mediation can range from a minimal intervention aimed merely at improving the quality of
communication between the parties (passing messages, facilitating the exchange of information) to an
active, direct intervention including the provision to the parties of specialist evaluation and services.
Mediation is generally resorted to in civil law cases, involving a dispute between two private parties.
Generally speaking, in mediation the parties agree to use the services of a mediator to help them reach an
agreement which is acceptable to both sides. No settlement can be imposed on the parties and the parties
are not automatically legally bound by the agreement which is reached. Yet, the parties may agree to have
the agreement set out in a legally binding contract. The mediator can either be thought of as simply
providing the linkage through which the negotiations may take place or as actively seeking to eliminate
differences. The mediator need not have a legal background.
Here is how a mediation session generally works:
 the mediator and the disputing parties (and their legal representatives, if any) sit round a table,
or in a circle
 the mediator explains how the session works and stresses the fact that the process is entirely
voluntary, so either party is free to leave at any time if they are unhappy with the process
 the role of the mediator is to facilitate the parties’ negotiations and act as an expert consultant
 if the atmosphere is tense, the role of the mediator is to reduce tension and produce a calm,
constructive atmosphere
 mediation involves several sessions – in the opening one, the mediator will give each party about
15 minutes to summarize their complaint against the other side. Relations can be so very bad
 between the parties that they do not want to be in the same room together, so mediators can
organize two separate sessions, in two different rooms and shuttle between the parties
 after the opening joint session, the mediator will have separate, private meetings with each of
the parties and any advisers who may be present.
 The mediator will discuss with each party while exploring the strengths and weaknesses of each
party’s claim
 Information given to the mediator is strictly confidential and will not be disclosed to the other
party without the express permission of the party.
 What the mediator tries to do during this process is establish whether there is any common
ground between the parties and to discover the scope of the compromise
 The mediator also tries to discover the main points of disagreement and understand why the
disputing parties take different views of these points
 After a time in private session, possibilities for agreement start to emerge
 Once this happens, the mediator will work out the exact terms of an agreement ensuring that
both sides are happy with them. Intense bargaining may be necessary at this stage
 When the overall agreement has been reached, the mediator brings the parties together to work
out the details and draft a document setting out the agreed terms
 Even if the parties fail to reach an agreement, the mediator will use the session to draw attention
to any progress which has been made

Mediation can work faster that going for a court solution. It may have a higher arte of settled disputes
than non-mediated cases. Mediation saves money and court time. Parties often appreciate the fact that
they cam participate fully in the process, they also appreciate the lack of legal technicality and jargon.
Yet, there is a small number of cases when both parties involved are willing to go for mediation rather
than go to court, despite the dissatisfaction with the cost and delay of civil courts. At the same time, there
is little knowledge about mediation among litigants and solicitors (the legal profession).

In some cases, the parties are invited by the Court to go for mediation. If both parties agree to mediate,
the Court of Appeal arranges mediations and mediators provide their services without charge. Parties
refusing to mediate are asked to give reasons for refusal.

2. Arbitration

Arbitration involves a neutral third party (chosen by the parties) listening to the evidence and arguments
and the deciding a question which the parties have brought before him/her. It involves a decision made
by an independent third party, the arbitrator (who may be an expert in the field of the dispute or a
lawyer). The arbitrator’s decision is legally binding on both sides. So, there is much less of a contrast
between arbitration and traditional litigation in a court.
There are several features which differentiate arbitration from litigation
 Both parties agree to go to arbitration
 Both parties agree that the arbitrator’s decision will be binging upon them
 Arbitration is generally carried out as a private process
 The parties have influence over the rules which will be used – they often design the process to be
employed and state substantive standards to be used by the arbitrator in making an award
 Arbitrators do not consider themselves as bound by the doctrine of precedent
 The parties themselves select the arbitrator – they usually select a person who has expert
knowledge of the subject-matter of the dispute, with personal experience of the same sort of
business and a good grasp of its working norms

Arbitration is widely used in the context of international commercial arbitration. It is governed by the
Arbitration Act 1996 which sets out some general rules and principles:
 Parties who agree to refer a dispute to arbitration in a contract, must do so in writing
  The object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal
without unnecessary delay or expense
 The parties should be free to agree how their disputes are resolved, subject only to such
safeguards as are necessary in the public interest
 In matters in England and Wales governed by the Act, the court should not intervene except as
the Act provides
 The arbitrator must act impartially and fairly, give each party a reasonable opportunity to put
their own case and deal with the opponent’s case
 The arbitrator must adopt procedures suitable to the circumstances of each case, avoid
unnecessary delays and expense and provide fair means for the resolution of the dispute
 The arbitrator can adopt an inquisitional approach rather than the adversarial approach which
has traditionally been adopted by courts

Reasons for arbitration:

 A court refers a dispute to arbitration
 Contacting parties agree that, in the event of a dispute arising, they will refer it to arbitration

Arbitration is a private form of adjudication which brings with it flexibility and simplified procedures.
The opportunity for speedier and cheaper resolution of disputes has made arbitration very popular
within the commercial world.

Criticism to ADR
 The possibility to enhance differences in power between the parties rather than redress them
 The litigant with less resources may be less capable to gather and analyze the information
necessary to gain a reasonably accurate picture of the probable outcome of litigation so as to have
a baseline from which to bargain
 Litigants with less financial resources may be under pressure to settle because they need the
money
 The poorer disputant may be forced to settle using ADR because he feels he lacks the financial
resources to take their dispute to court
 By referring cases to ADR and by assisting ADR schemes, the state increases its power into an
area in which previously it would not have been active
 ADR relaxes the procedural rules which govern litigation in court and which are there to ensure
that all parties to litigation are treated fairly and have an equal opportunity of presenting their
case
 There is a danger that the intervening third party (for instance the mediator) may impose
solutions bt coercing or manipulating one or both parties rather than enabling the parties to come
to an agreement on their own terms

3. Med-Arb
The dispute is initially submitted to mediation, but if mediated settlement cannot be reached, than the matter is
referred to arbitration

4. Adjudication

It is the method most commonly used in construction disputes. A quick decision is made by the
adjudicator and a time period is specified during which either party may give notice to refer the matter to
arbitration or litigation. The adjudicator’s decision is binding upon the parties and must be followed,
unless a later decision is made by an arbitrator or the court.

5. Conciliation

Conciliation is much the same as mediation. In conciliation, as in mediation, an independent person (the
conciliator) tries to help the people in dispute to resolve their problem. The conciliator should be
impartial and should not take sides. The parties in dispute are responsible for deciding how to resolve the
dispute, not the conciliator. In certain types of problem, the most common ADR scheme for resolving
disputes is called 'conciliation' rather than 'mediation' even though it is essentially the same process. All
conciliation should have the following elements in common:

 It is voluntary - the parties choose to conciliate or not

 It is private and confidential
 The parties are free to agree to the resolution or not.
 Conciliation is free to the person complaining.

There are two commonly used conciliation schemes which you may come across in the UK. It's easy to
get confused, since the way conciliation works is slightly different in each of these schemes. They are :

 ACAS (Advisory, Conciliation and Arbitration Service) conciliation in employment disputes - the
parties do not meet, but the conciliator speaks to the employer and the employee separately,
usually over the telephone.
 The Furniture Ombudsman scheme for disputes about furniture, fitted kitchens and bathrooms -
the first stage of the procedure is referred to as conciliation, and involves a caseworker contacting
both sides to try to resolve the dispute.

It is also easy to confuse conciliation in two other ways:

 Conciliation can appear very similar to the negotiation stage of resolving a dispute. But in
negotiation, the negotiator usually represents one side in the dispute: in conciliation, the
conciliator may well try to resolve the dispute through negotiation, but s/he is independent and
impartial, and does not take sides.
 Confusingly, the initial stage of some internal complaints procedures, such as the national health
system complaints procedure, is often called 'conciliation'. In such cases, the conciliator will try to
negotiate a way to resolve the dispute with both parties. However, the conciliator is not
independent but instead represents the organisation involved, either directly or through a
member organisation.

In each conciliation scheme, there is a slightly different approach to how binding the agreement is.

 In ACAS conciliation, a signed agreement is binding on both employee and employer.

 In the Furniture Ombudsman conciliation process, a conciliated agreement is binding on the
retailer if the consumer accepts it. If the consumer is not happy, s/he can request an independent
inspection and adjudication.

Because conciliation is private, the terms of settlement are not made public unless the parties agree. The
sort of outcomes agreed through conciliation are likely to be similar to those in mediation and include:

 an apology
 an explanation
 compensation
 changes in practice and procedure
 agreements for future behaviour or communication

Conciliation agreements can be made into legally binding settlements if both parties agree.
LECTURE V– INTELLECTUAL PROPERTY RIGHTS

Intellectual property rights are the rights given to persons over the creations of their minds. They usually
give the creator an exclusive right over the use of his/her creation for a certain period of time .IP is
divided into two categories:

 Industrial property, which includes inventions (patents), trademarks, industrial designs, and
geographic indications of source. Industrial property can usefully be divided into two main areas:

1. One area can be characterized as the protection of distinctive signs, in particular

trademarks (which distinguish the goods or services of one undertaking from those of
other undertakings) and geographical indications (which identify a good as originating in
a place where a given characteristic of the good is essentially attributable to its
geographical origin).
2. The protection of such distinctive signs aims to stimulate and ensure fair competition and
to protect consumers, by enabling them to make informed choices between various goods
and services. The protection may last indefinitely, provided the sign in question continues
to be distinctive.
3. Other types of industrial property are protected primarily to stimulate innovation, design
and the creation of technology. In this category fall inventions (protected by patents),
industrial designs and trade secrets.
4. The social purpose is to provide protection for the results of investment in the
development of new technology, thus giving the incentive and means to finance research
and development activities.
5. A functioning intellectual property regime should also facilitate the transfer of technology
in the form of foreign direct investment, joint ventures and licensing.

The protection is usually given for a finite term (typically 20 years in the case of patents).

 Copyright, which includes literary and artistic works such as novels, poems and plays, films,
musical works, artistic works such as drawings, paintings, photographs and sculptures, and
architectural designs. Rights related to copyright include those of performing artists in their
performances, producers of phonograms in their recordings, and those of broadcasters in their
radio and television programs. The rights of authors of literary and artistic works (such as books
and other writings, musical compositions, paintings, sculpture, computer programs and films) are
protected by copyright, for a minimum period of 50 years after the death of the author.Also
protected through copyright and related (sometimes referred to as “neighbouring”) rights are the
rights of performers (e.g. actors, singers and musicians), producers of phonograms (sound
recordings) and broadcasting organizations. The main social purpose of protection of copyright
and related rights is to encourage and reward creative work.

 The innovations and creative expressions of indigenous and local communities are also IP, yet
because they are “traditional” they may not be fully protected by existing IP systems. Access to,
and equitable benefit-sharing in, genetic resources also raise IP questions. Normative and
capacity-building programs are underway at WIPO (World Intellectual Property Organisation) to
develop balanced and appropriate legal and practical responses to these issues.

PATENTS

A patent is an exclusive right granted for an invention, which is a product or a process that provides, in
general, a new way of doing something, or offers a new technical solution to a problem. In order to be
patentable, the invention must fulfill certain conditions (please see the answer to the question below "
what kinds of inventions can be patented?").A patent provides protection for the invention to the owner
of the patent. The protection is granted for a limited period, generally 20 years.Patent protection means
that the invention cannot be commercially made, used, distributed or sold without the patent owner's
consent. These patentrights are usually enforced in a court, which, in most systems, holds the authority
to stop patent infringement. Conversely, a court can also declare a patent invalid upon a successful
challenge by a third party.

A patent owner has the right to decide who may - or may not - use the patented invention for the period
in which the invention is protected. The patent owner may give permission to, or license, other parties to
use the invention on mutually agreed terms. The owner may also sell the right to the invention to
someone else, who will then become the new owner of the patent. Once a patent expires, the protection
ends, and an invention enters the public domain, that is, the owner no longer holds exclusive rights to the
invention, which becomes available to commercial exploitation by others.

Patents provide incentives to individuals by offering them recognition for their creativity and material
reward for their marketable inventions. These incentives encourage innovation, which assures that the
quality of human life is continuously enhanced. Patented inventions have, in fact, pervaded every aspect
of human life, from electric lighting (patents held by Edison and Swan) and plastic (patents held by
Baekeland), to ballpoint pens (patents held by Biro) and microprocessors (patents held by Intel, for
example).All patent owners are obliged, in return for patent protection, to publicly disclose information
on their invention in order to enrich the total body of technical knowledge in the world. Such an ever-
increasing body of public knowledge promotes further creativity and innovation in others. In this way,
patents provide not only protection for the owner but valuable information and inspiration for future
generations of researchers and inventors.

The first step in securing a patent is the filing of a patent application. The patent application generally
contains the title of the invention, as well as an indication of its technical field; it must include the
background and a description of the invention, in clear language and enough detail that an individual
with an average understanding of the field could use or reproduce the invention. Such descriptions are
usually accompanied by visual materials such as drawings, plans, or diagrams to better describe the
invention. The application also contains various "claims", that is, information which determines the
extent of protection granted by the patent.

An invention must, in general, fulfill the following conditions to be protected by a patent. It must be of
practical use; it must show an element of novelty, that is, some new characteristic which is not known in
the body of existing knowledge in its technical field. This body of existing knowledge is called " prior art".
The invention must show an inventive step which could not be deduced by a person with average
knowledge of the technical field. Finally, its subject matter must be accepted as "patentable" under law.
In many countries, scientific theories, mathematical methods, plant or animal varieties, discoveries of
natural substances, commercial methods, or methods for medical treatment (as opposed to medical
products) are generally not patentable.

A patent is granted by a national patent office or by a regional office that does the work for a number of
countries, such as the European Patent Office and the African Regional Intellectual Property
Organization. Under such regional systems, an applicant requests protection for the invention in one or
more countries, and each country decides as to whether to offer patent protection within its borders. The
WIPO-administered Patent Cooperation Treaty (PCT) provides for the filing of a single international
patent application which has the same effect as national applications filed in the designated countries. An
applicant seeking protection may file one application and request protection in as many signatory states
as needed.

At present, no “world patents” or “international patents” exist. In general, an application for a patent
must be filed, and a patent shall be granted and enforced, in each country in which you seek patent
protection for your invention, in accordance with the law of that country. In some regions, a regional
patent office, for example, the European Patent Office (EPO) and the African Regional Intellectual
Property Organization (ARIPO), accepts regional patent applications, or grants patents, which have the
same effect as applications filed, or patents granted, in the member States of that region. Further, any
resident or national of a Contracting State of the Patent Cooperation Treaty (PCT) may file an
international application under the PCT. A single international patent application has the same effect as
national applications filed in each designated Contracting State of the PCT. However, under the PCT
system, in order to obtain patent protection in the designated States, a patent shall be granted by each
designated State to the claimed invention contained in the international application. Further information
concerning the PCT is available. Procedural and substantive requirements for the grant of patents as well
as the amount of fees required are different from one country/region to the other. It is therefore
recommend that you consult a practicing lawyer who is specialized in intellectual property or the
intellectual property offices of those countries in which you are interested to get protection. A list of
URLs and a directory of national and regional intellectual property offices are available.

TRADEMARKS

A trademark is a distinctive sign which identifies certain goods or services as those produced or provided
by a specific person or enterprise. Its origin dates back to ancient times, when craftsmen reproduced
their signatures, or "marks" on their artistic or utilitarian products. Over the years these marks evolved
into today's system of trademark registration and protection. The system helps consumers identify and
purchase a product or service because its nature and quality, indicated by its unique trademark, meets
their needs. A trademark provides protection to the owner of the mark by ensuring the exclusive right to
use it to identify goods or services, or to authorize another to use it in return for payment. The period of
protection varies, but a trademark can be renewed indefinitely beyond the time limit on payment of
additional fees. Trademark protection is enforced by the courts, which in most systems have the authority
to block trademark infringement. In a larger sense, trademarks promote initiative and enterprise
worldwide by rewarding the owners of trademarks with recognition and financial profit. Trademark
protection also hinders the efforts of unfair competitors, such as counterfeiters, to use similar distinctive
signs to market inferior or different products or services. The system enables people with skill and
enterprise to produce and market goods and services in the fairest possible conditions, thereby
facilitating international trade. The possibilities are almost limitless. Trademarks may be one or a
combination of words, letters, and numerals. They may consist of drawings, symbols, three- dimensional
signs such as the shape and packaging of goods, audible signs such as music or vocal sounds, fragrances,
or colors used as distinguishing features. In addition to trademarks identifying the commercial source of
goods or services, several other categories of marks exist. Collective marks are owned by an association
whose members use them to identify themselves with a level of quality and other requirements set by the
association. Examples of such associations would be those representing accountants, engineers, or
architects. Certification marks are given for compliance with defined standards, but are not confined to
any membership. They may be granted to anyone who can certify that the products involved meet certain
established standards. The internationally accepted "ISO 9000" quality standards are an example of such
widely-recognized certifications.

First, an application for registration of a trademark must be filed with the appropriate national or
regional trademark office. The application must contain a clear reproduction of the sign filed for
registration, including any colors, forms, or three-dimensional features. The application must also
contain a list of goods or services to which the sign would apply. The sign must fulfill certain conditions
in order to be protected as a trademark or other type of mark. It must be distinctive, so that consumers
can distinguish it as identifying a particular product, as well as from other trademarks identifying other
products. It must neither mislead nor deceive customers or violate public order or morality.Finally, the
rights applied for cannot be the same as, or similar to, rights already granted to another trademark
owner. This may be determined through search and examination by the national office, or by the
opposition of third parties who claim similar or identical rights.
Almost all countries in the world register and protect trademarks. Each national or regional office
maintains a Register of Trademarks which contains full application information on all registrations and
renewals, facilitating examination, search, and potential opposition by third parties. The effects of such a
registration are, however, limited to the country (or, in the case of a regional registration, countries)
concerned.

In order to avoid the need to register separately with each national or regional office, WIPO administers a
system of international registration of marks. This system is governed by two treaties, the Madrid
Agreement Concerning the International Registration of Marks and the Madrid Protocol. A person who
has a link (through nationality, domicile or establishment) with a country party to one or both of these
treaties may, on the basis of a registration or application with the trademark office of that country, obtain
an international registration having effect in some or all of the other countries of the Madrid Union.

INDUSTRIAL DESIGN

An industrial design is the ornamental or aesthetic aspect of an article. The design may consist of three-
dimensional features, such as the shape or surface of an article, or of two-dimensional features, such as
patterns, lines or color. Industrial designs are applied to a wide variety of products of industry and
handicraft: from technical and medical instruments to watches, jewelry, and other luxury items; from
housewares and electrical appliances to vehicles and architectural structures; from textile designs to
leisure goods. To be protected under most national laws, an industrial design must be new and/or
original. Novelty or originality is determined with respect to the existing design corpus. An industrial
design is primarily of an aesthetic nature, and does not protect any technical features of the article to
which it is applied .Industrial designs are what makes a product attractive and appealing; hence, they add
to the commercial value of a product and increase its marketability. When an industrial design is
protected, this helps to ensure a fair return on investment. An effective system of protection also benefits
consumers and the public at large, by promoting fair competition and honest trade practices.

Protecting industrial designs helps economic development, by encouraging creativity in the industrial
and manufacturing sectors and contributes to the expansion of commercial activities and the export of
national products. The existence of a grace period and the corresponding requirements can be provided
by national or regional laws applicable in some countries. If so, the law can allow the filing of an
application for registration of an industrial design after its disclosure, within a limited time period from
the date of disclosure (generally six months or a year).During the grace period, the product which
constitutes the industrial design or in relation to which the industrial design is used could in particular be
commercialized without destroying the novelty of the industrial design and it could still be possible to file
an application for registration in the country concerned before the expiry of the grace period. In most
countries, an industrial design must be registered in order to be protected under industrial design law. As
a general rule, to be registrable, the design must be "new" or "original". Different countries have varying
definitions of such terms, as well as variations in the registration process itself. Generally, "new" means
that no identical or very similar design is known to have existed before. Once a design is registered, the
term of protection is generally five years, with the possibility of further periods of renewal up to, in most
cases, 15 years.

Depending on the particular national law and the kind of design, an industrial design may also be
protected as a work of art under copyright law. In some countries, industrial design and copyright
protection can exist concurrently. In other countries, they are mutually exclusive: once the owner chooses
one kind of protection, he can no longer invoke the other. Under certain circumstances an industrial
design may also be protectable under unfair competition law, although the conditions of protection and
the rights and remedies ensured can be significantly different.

Designs that are generally barred from registration in many territories include:

 designs that do not meet the requirements of novelty, originality and/or individual character;
  designs that are considered to be dictated exclusively by the technical function of a product; such
technical or functional design features may be protected, depending on the facts of each case, by
other IP rights (e.g. patents, utility models or trade secrets);
 designs incorporating protected official symbols or emblems (such as the national flag);
 designs which are considered to be contrary to public order or morality.

Some countries exclude handicrafts from design protection, as industrial design law in these countries
requires that the product to which an industrial design is applied is “an article of manufacture” or that it
can be replicated by “industrial means”. When an industrial design is registered, the holder receives the
right to prevent unauthorized copying or imitation by third parties. This includes the right to prevent all
unauthorized parties from making, selling or importing any product in which the design is incorporated
or to which it is applied. Because industrial design rights are territorial in nature, this right is limited to
the territory for which the design is registered. Generally, industrial design protection is limited to the
country in which protection is granted. Under the Hague Agreement Concerning the International
Registration of Industrial Designs, a WIPO-administered treaty, a procedure for an international
registration is offered. An applicant can file a single international application with WIPO. The applicant
can designate as many Contracting Parties as he wishes. In case of infringement, the holder of industrial
design rights could, firstly, decide to send a “cease or desist letter” to the alleged infringer, informing him
of a possible conflict between his industrial design rights and the alleged infringing product and asking
him to cease said infringement. If the infringement persists, the holder of the industrial design rights
could decide to take all appropriate legal measures against the infringer, as provided for by the applicable
law.The enforcement of industrial design rights may be a complex issue for which it is usually advisable
to seek professional assistance from a lawyer who would in principle be the competent person to provide
you with advice on how to settle any dispute.

GEOGRAPHICAL INDICATIONS

A geographical indication is a sign used on goods that have a specific geographical origin and possess
qualities, reputation or characteristics that are essentially attributable to that place of origin. Most
commonly, a geographical indication includes the name of the place of origin of the goods. Agricultural
products typically have qualities that derive from their place of production and are influenced by specific
local factors, such as climate and soil. Whether a sign is recognized as a geographical indication is a
matter of national law. Geographical indications may be used for a wide variety of products, whether
natural, agricultural or manufactured.

An appellation of origin is a special kind of geographical indication. It generally consists of a geographical

name or a traditional designation used on products which have a specific quality or characteristics that
are essentially due to the geographical environment in which they are produced. The concept of a
geographical indication encompasses appellations of origin.

The use of geographical indications is not limited to agricultural products. They may also highlight
qualities of a product which are due to human factors associated with the place of origin of the products,
such as specific manufacturing skills and traditions. That place of origin may be a village or town, a
region or a country. For example, “Bohemia” is recognized as a geographical indication in many countries
for specific products made in the Czech Republic, in particular crystal ware.

A geographical indication points to a specific place, or region of production, that determines the
characteristic qualities of the product which originates from that place. It is important that the product
derives its qualities and reputation from that place. Since those qualities depend on the place of
production, a specific "link" exists between the products and their original place of production.
Geographical indications are understood by consumers to denote the origin and the quality of products.
Many of them have acquired valuable reputations which, if not adequately protected, may be
misrepresented by dishonest commercial operators. False use of geographical indications by
unauthorized parties is detrimental to consumers and legitimate producers. Consumers are deceived into
believing that they are buying a genuine product with specific qualities and characteristics, when they are
in fact getting an imitation. Legitimate producers are deprived of valuable business and the established
reputation of their products is damaged.

A trademark is a sign used by an enterprise to distinguish its goods and services from those of other
enterprises. It gives its owner the right to exclude others from using the trademark. A trademark will
often consist of a fanciful or arbitrary name or device. A geographical indication tells consumers that a
product is produced in a certain place and has certain characteristics that are due to that place of
production. It may be used by all producers who make their products in the place designated by a
geographical indication and whose products share specified qualities. Unlike a trademark, the name used
as a geographical indication will usually be predetermined by the name of the place of production.

Geographical indications are protected in accordance with international treaties and national laws under
a wide range of concepts, including –

 special laws for the protection of geographical indications or appellations of origin

 trademark laws in the form of collective marks or certification marks
 laws against unfair competition
 consumer protection laws, or
 specific laws or decrees that recognize individual geographical indications.

In essence, unauthorized parties may not use a geographical indication in respect of products that do not
originate in the place designated by that indication. Applicable sanctions range from court injunctions
preventing the unauthorized use to the payment of damages and fines or, in serious cases, imprisonment.

A number of treaties administered by WIPO provide for the protection of geographical indications, most
notably the Paris Convention for the Protection of Industrial Property of 1883, and the Lisbon
Agreement for the Protection of Appellations of Origin and Their International Registration. In
addition, Articles 22 to 24 of the Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS) deal with the international protection of geographical indications within the framework of the
World Trade Organization (WTO).

If a geographical term is used as the common designation of a kind of product, rather than an indication
of the place of origin of that product, then the term no longer functions as a geographical indication.
Where this has occurred in a certain country, then that country may refuse to recognize or protect that
term as a geographical indication. For example, the term “cologne” now denotes a certain kind of
perfumed toilet water, regardless of whether or not it was produced in the region of Cologne.

WIPO is in charge of the administration of a number of international agreements which deal partly or
entirely with the protection of geographical indications (see, in particular, the Paris Convention for the
Protection of Industrial Property, and the Lisbon Agreement for the Protection of Appellations of
Origin and Their International Registration). Furthermore, through the work of the Standing
Committee on the Law of Trademarks, Industrial Designs and Geographical Indications (SCT), made up
of representatives of Member States and interested organizations, WIPO explores new ways of enhancing
the international protection of geographical indications.
COPYRIGHT

Copyright is a legal term describing rights given to creators for their literary and artistic works. The kinds
of works covered by copyright include: literary works such as novels, poems, plays, reference works,
newspapers and computer programs; databases; films, musical compositions, and choreography; artistic
works such as paintings, drawings, photographs and sculpture; architecture; and advertisements, maps
and technical drawings. The original creators of works protected by copyright, and their heirs, have
certain basic rights. They hold the exclusive right to use or authorize others to use the work on agreed
terms. The creator of a work can prohibit or authorize:

 its reproduction in various forms, such as printed publication or sound recording;

 its public performance, as in a play or musical work;
 recordings of it, for example, in the form of compact discs, cassettes or videotapes;
 its broadcasting, by radio, cable or satellite;
 its translation into other languages, or its adaptation, such as a novel into a screenplay.

Many creative works protected by copyright require mass distribution, communication and financial
investment for their dissemination (for example, publications, sound recordings and films); hence,
creators often sell the rights to their works to individuals or companies best able to market the works in
return for payment. These payments are often made dependent on the actual use of the work, and are
then referred to as royalties.These economic rights have a time limit, according to the relevant WIPO
treaties, of 50 years after the creator's death. National law may establish longer time-limits. This limit
enables both creators and their heirs to benefit financially for a reasonable period of time. Copyright
protection also includes moral rights, which involve the right to claim authorship of a work, and the right
to oppose changes to it that could harm the creator's reputation.

The creator - or the owner of the copyright in a work - can enforce rights administratively and in the
courts, by inspection of premises for evidence of production or possession of illegally made - "pirated" -
goods related to protected works. The owner may obtain court orders to stop such activities, as well as
seek damages for loss of financial rewards and recognition.

Copyright protection extends only to expressions, and not to ideas, procedures, methods of operation or
mathematical concepts as such. This principle has been confirmed by the Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS Agreement) of the World Trade Organization (WTO) as
well as the WIPO Copyright Treaty.

A field of rights related to copyright has rapidly developed over the last 50 years. These related rights
grew up around copyrighted works, and provide similar, although often more limited and of shorter
duration, rights to:

 performing artists (such as actors and musicians) in their performances;

 producers of sound recordings (for example, cassette recordings and compact discs) in their
recordings;
 broadcasting organizations in their radio and television programs.

Copyright and its related rights are essential to human creativity, by giving creators incentives in the
form of recognition and fair economic rewards. Under this system of rights, creators are assured that
their works can be disseminated without fear of unauthorized copying or piracy. This in turn helps
increase access to and enhances the enjoyment of culture, knowledge, and entertainment all over the
world.

Copyright itself does not depend on official procedures. A created work is considered protected by
copyright as soon as it exists. According to the Berne Convention for the Protection of Literary and
Artistic Works, literary and artistic works are protected without any formalities in the countries party to
that Convention. Thus, WIPO does not offer any kind of copyright registration system.

However, many countries have a national copyright office and some national laws allow for registration
of works for the purposes of, for example, identifying and distinguishing titles of works. In certain
countries, registration can also serve as prima facie evidence in a court of law with reference to disputes
relating to copyright.

Two treaties were concluded in 1996 at the World Intellectual Property Organization (WIPO) in Geneva.
One, the WIPO Copyright Treaty (WCT), deals with protection for authors of literary and artistic works,
such as writings and computer programs; original databases; musical works; audiovisual works; works of
fine art and photographs. The other, the WIPO Performances and Phonograms Treaty (WPPT), protects
certain "related rights" (that is, rights related to copyright): in the WPPT, these are rights of performers
and producers of phonograms.

The purpose of the two treaties is to update and supplement the major existing WIPO treaties on
copyright and related rights, primarily in order to respond to developments in technology and in the
marketplace. Since the Berne and Rome Conventions were adopted or lastly revised more than a quarter
century ago, new types of works, new markets, and new methods of use and dissemination have evolved.
Among other things, both the WCT and the WPPT address the challenges posed by today's digital
technologies, in particular the dissemination of protected material over digital networks such as the
Internet. For this reason, they have sometimes been referred to as the "Internet treaties."

Both treaties require countries to provide a framework of basic rights, allowing creators to control and/or
be compensated for the various ways in which their creations are used and enjoyed by others. Most
importantly, the treaties ensure that the owners of those rights will continue to be adequately and
effectively protected when their works are disseminated through new technologies and communications
systems such as the Internet. The treaties thus clarify that existing rights continue to apply in the digital
environment. They also create new online rights. To maintain a fair balance of interests between the
owners of rights and the general public, the treaties further clarify that countries have reasonable
flexibility in establishing exceptions or limitations to rights in the digital environment. Countries may, in
appropriate circumstances, grant exceptions for uses deemed to be in the public interest, such as for non-
profit educational and research purposes. The treaties also require countries to provide not only the
rights themselves, but also two types of technological adjuncts to the rights. These are intended to ensure
that rightholders can effectively use technology to protect their rights and to license their works online.
The first, known as the "anti-circumvention" provision, tackles the problem of "hacking": it requires
countries to provide adequate legal protection and effective remedies against the circumvention of
technological measures (such as encryption) used by rightholders to protect their rights. The second type
of technological adjuncts safeguards the reliability and integrity of the online marketplace by requiring
countries to prohibit the deliberate alteration or deletion of electronic "rights management information":
that is, information which accompanies any protected material, and which identifies the work, its
creators, performer, or owner, and the terms and conditions for its use.The WCT entered into force on
March 6, 2002. For the WPPT, the date of entry into force was May 20, 2002. A number of countries
have implemented the provisions of the two treaties in their national legislation. The WIPO Lex database
can be consulted to search copyright laws of a wide range of countries.