ICAEW BL Introduction to legal principles: practice questions with answers

Question 1

Kofi, a self-employed courier, knocks a cyclist, Megan, off her bike. Kofi is prosecuted for careless driving, and Megan also sues him for damages for her injuries. Which of the following correctly describes the two sets of proceedings?

1. A Megan must prove her claim beyond reasonable doubt, because the same facts are being tried in a criminal court.
2. B If Kofi is acquitted in the criminal case, Megan's civil claim for damages must then be dismissed.
3. C The prosecution must prove Kofi's guilt beyond reasonable doubt; Megan must prove her claim on the balance of probabilities.
4. D Megan brings the criminal case as claimant, and the Crown brings the civil case as prosecutor.

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Answer: C. Criminal and civil law differ in their parties, burden and standard of proof, and outcomes. A criminal case is brought by the state (the Crown, usually through the Crown Prosecution Service) against a defendant. The prosecution bears the burden of proof and must prove guilt beyond reasonable doubt; the outcome is conviction or acquittal and, on conviction, a sentence. A civil case is brought by a claimant against a defendant to enforce private rights. The claimant must prove the case on the balance of probabilities, and the usual remedy is damages. The same incident can give rise to both, and because the standards differ, an acquittal does not prevent a successful civil claim.

Question 2

A judge in the High Court is deciding a contract dispute. Under the doctrine of judicial precedent, which of the following is the judge bound to follow?

1. A The ratio decidendi of a Court of Appeal (Civil Division) decision on materially similar facts
2. B Obiter dicta in a Supreme Court judgment on a closely related point of contract law
3. C The ratio decidendi of an earlier High Court decision on the same point of law
4. D The ratio decidendi of a Supreme Court of Canada decision on almost identical facts

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Answer: A. Under stare decisis a court is bound by the ratio decidendi (the legal reason necessary for the decision) of courts above it in the hierarchy, where the material facts are not distinguishable. The High Court is bound by the Supreme Court and the Court of Appeal. Obiter dicta (things said by the way) are only persuasive, however senior the court. High Court judges are not bound by each other, though they usually follow earlier High Court decisions for consistency. Decisions of foreign courts, such as the Supreme Court of Canada, are persuasive authority only.

Question 3

Pelham Ltd loses a £3 million breach of contract claim heard in the King's Bench Division of the High Court. Pelham wishes to appeal. To which court will its appeal normally go, if permission is given?

1. A The Supreme Court, which hears appeals from the High Court as of right
2. B A Divisional Court of the King's Bench Division
3. C The County Court, sitting with a circuit judge
4. D The Court of Appeal (Civil Division)

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Answer: D. In the civil system, larger or more complex claims are heard at first instance in the High Court, which has three divisions: King's Bench (named since September 2022), Chancery and Family. An appeal from a High Court judge's final decision normally goes, with permission, to the Court of Appeal (Civil Division). A further appeal on a point of law of general public importance may go to the Supreme Court, again with permission. A 'leapfrog' appeal straight from the High Court to the Supreme Court is possible only in exceptional cases.

Question 4

Which of the following is an advantage of alternative dispute resolution (ADR) over litigation in the courts?

1. A The outcome creates a binding precedent that guides the resolution of later disputes on similar facts.
2. B Either party may appeal an arbitrator's award on any point of fact or law, as of right.
3. C The parties can be sure that the outcome will reflect their strict legal rights in every case.
4. D The process is private, so commercially sensitive details are less likely to become public.

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Answer: D. Advantages of ADR commonly include privacy and confidentiality, lower cost, speed, flexibility of procedure, the ability to choose an expert neutral, and (especially in mediation) preserving the business relationship. Disadvantages include the lack of precedent, limited rights of appeal from arbitration, and the risk that a compromise does not reflect a party's full legal entitlement.

Question 5

In a judicial review claim against a government department, the High Court decides that a section of an Act of Parliament passed in 2019 cannot be read in a way that is compatible with Article 8 (right to respect for private and family life), even using section 3 of the Human Rights Act 1998. What may the court do?

1. A Strike the section down, so that it ceases to have legal effect from the date of the judgment
2. B Make a declaration of incompatibility; the section stays valid and in force unless Parliament amends it
3. C Refuse to apply the section in this case, but leave it in force for all other cases
4. D Refer the section to the European Court of Human Rights, whose ruling repeals it in the UK

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Answer: B. Under the Human Rights Act 1998, s 3 requires courts to read legislation compatibly with Convention rights 'so far as it is possible to do so'. If that is not possible, the High Court or a higher court may make a declaration of incompatibility under s 4. The declaration does not affect the validity, continuing operation or enforcement of the Act, so the parties' case is decided under the Act as it stands. It is for Parliament (or a minister by remedial order under s 10) to decide whether to change the law.

Question 6

Whitcombe Ltd, based in England, sells a machine to a buyer in Singapore 'FOB Felixstowe (Incoterms 2020)'. At Felixstowe, the machine is damaged when a crane drops it on the quay before it is loaded on board the buyer's nominated vessel. Who bears the risk of this damage?

1. A The buyer, because under FOB risk passes when the goods arrive at the named port of shipment
2. B The buyer, because risk passes when the contract is made and the goods are identified
3. C Whitcombe, because under FOB risk passes only when the goods are placed on board the vessel
4. D Whitcombe, because under FOB the seller bears the risk until the goods reach Singapore

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Answer: C. Incoterms 2020 are standard contractual terms published by the International Chamber of Commerce; they apply only because the parties incorporate them. Under FOB (Free On Board), the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment, and risk passes when the goods are on board. Damage on the quay before loading therefore falls on the seller. By contrast, under EXW risk passes when the goods are made available at the seller's premises, under FCA on delivery to the buyer's carrier, under CIF on loading on board (as with FOB, although the seller also pays freight and insurance), and under DAP and DDP on arrival at the named destination.