UNIVERSITY OF SOUTHAMPTON

SEMESTER 1 ASSESSMENT 202122

LAWS2034 INTRODUCTION TO COMMERCIAL LAW
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This paper contains THREE questions.

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Questions are available on the Law Assessment Blackboard site and
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 Answer TWO questions (including part (a) and (b))

1. (a) Lewis, a chartered arboriculturalist, runs a forestry

consultancy business. He has been approached by Darren, the
‘Estate Manager’ of a large estate owned by Paula and her
family, to oversee the planting of 250,000 native trees on the
estate. It is a normal part of Darren’s job as the estate manager
to engage forestry consultancy services. Lewis and Darren have
been negotiating the contract, and the only issue that remains to
be resolved is which native trees should be planted in what
proportions. Darren has told Lewis that Paula takes an interest in
trees and has said that she would get back to them on the issue
of the trees before long. However, Paula is very busy and forgets
about it; meanwhile Darren is keen to press ahead with the
contract, and tells Lewis that Paula is happy with a number of
native trees being planted in equal proportions across the estate.
He thinks that this is what Paula would like. Lewis orders the
trees, and starts planting them. When Paula eventually finds out
about Darren’s decision about the trees, the planting has been
under way for five weeks. She is very unhappy about it and does
not want to pay Lewis.

Advise Lewis.

AND

(b) In Banca Nazionale del Lavoro SPA v Playboy Club London

Limited & Ors [2018] UKSC 43, para 12, Lord Sumption
observed: ‘The rule of English law that an undisclosed principal
may declare himself and enter upon a contract is an anomalous
legacy of eighteenth and nineteenth century jurisprudence, which
survives in the modern law on account of its antiquity rather than
its coherence.’

Would you agree with that statement? Give your reasons.

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2. (a) Rainbow Ltd is in the business of leasing computer
equipment to other companies. In a particularly high-value
transaction, Rainbow had to finance the purchase of the
computer equipment (at a price of £1.2m) through selling it
immediately to Findex Ltd, a special purpose company, which in
turn hired it back to Rainbow on a hire purchase agreement.
Rainbow then leased the equipment to Kipple Ltd, the sub-
lessee, for an initial period of two years. Under the hire purchase
agreement, the hire fees payable by Rainbow to Findex were
‘secured against all present and future rental payments due to
Rainbow Ltd by the sub-lessee’ by way of their ‘assignment to
Findex in full satisfaction of the hire purchase instalments, for the
duration and to the extent of the hire purchase agreement.’ In the
case of a termination of the hire purchase agreement due to
Rainbow’s default, Rainbow would ‘absolutely assign’ to Findex
all rights under the lease agreement with Kipple Ltd, without any
prejudice to Findex’s right to sue Rainbow for damages for
breach of contract. Rainbow is now in insolvent liquidation; and
the liquidator disputes Findex’s priority over Kipple’s rental
payments on the basis that the hire purchase agreement created
a charge which was not registered and thus void against the
liquidator and Rainbow’s creditors.

Advise Findex.

AND

(b) Why should a bank not be able to hold a fixed charge on the
uncollected book debts of a company which, upon collection,
turns into a floating charge over the proceeds?

3. (a) Antonia has been running a small travel site, myquest.com,

that sells adventure tours in the UK to mainly British and
European holiday makers. The main features of the site are
available in English, French, Spanish and German, but Antonia
never got round to having its Terms and Conditions translated
which are available only in English. Those terms include an
English choice of forum and law clause. The site is advertised on

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google.de, google.fr and google.es. Recently, Antonia has had
the following complaints with which she comes to you for advice.

Torsten, an Austrian customer, is threatening to sue Antonia in

Vienna as the promised fully catered mountain bike adventure
through the Lake District turned sour when the promised luxury
accommodation turned out to be a sub-standard Airbnb.
Torsten’s English is not bad, but he says he could not
understand the site’s terms, including the one that allowed for
lesser quality accommodation whenever necessary.

During the pandemic Mathilda from the Netherlands had booked

a rock climbing holiday in Snowdonia which Antonia had to
cancel due to another lockdown. According to the site’s terms, in
case of such cancellations the customer will not receive a refund,
but credit towards a later holiday. This term was inserted after
Mathilda had booked her holiday, with a notification of the
change emailed to her and all other customers with bookings.
The Terms and Conditions include a term that gives Antonia the
discretion to to make changes to the terms from time to time.
Mathilda seeks a refund, and threatens to sue in a small claims
court in The Hague.

AND

(b) Do you think it is fortunate that the ‘directing’ test as

provided for under Art 17 of the Recast Brussels Regulation
1215/2012 on jurisdiction and the recognition and enforcement
of judgments in civil and commercial matters has been retained
in the UK after Brexit?

Give your reasons.

END OF PAPER

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