Contract Law, Company Law, and Directors’ Duties in Ireland
Contract Law
Parties to a Contract
The parties to a contract are typically the offeror (the party making the offer) and the offeree (the party accepting the offer).
Unilateral Contract
A unilateral contract involves a promise made by one party in exchange for a specific act performed by the other party (e.g., a reward for finding a lost dog).
Popular Types of Contracts
Common types of contracts include:
- Employment contracts
- Service contracts
- Sales contracts
- Lease agreements
Offer vs. Invitation to Treat
An offer is a definite proposal that, when accepted, creates a binding contract.
An invitation to treat is an indication that one party is willing to negotiate but is not yet making a binding offer (e.g., displaying goods in a store).
Termination of an Offer
An offer can be terminated by:
- Revocation (withdrawal)
- Rejection by the offeree
- Counteroffer
- Lapse of time
- Death of the offeror or offeree
Consideration and its Rules
Consideration is the value (money, goods, services) exchanged between parties in a contract.
Rules of consideration include:
- Must be sufficient but need not be adequate
- Must move from the promisee
- Cannot be past consideration
- Must be legal and possible
Acceptance and Termination of an Offer
An offer can be accepted by express communication (verbally or in writing) or by conduct.
It can be terminated by revocation, rejection, counteroffer, lapse of time, or failure of a condition.
Contra Proferentem
Contra proferentem is a legal principle that ambiguities in a contract are interpreted against the party that drafted the contract. It advantages the party that did not draft the ambiguous term.
The Postal Rule
The postal rule states that acceptance of an offer is effective when the letter of acceptance is posted, not when it is received by the offeror.
Contract Terms & Remedies
Discharge of a Contract
A contract can be discharged by:
- Performance (both parties fulfill their obligations)
- Agreement
- Frustration (unforeseen event makes the contract impossible)
- Breach
Damages
Damages are monetary compensation awarded to a party for loss or injury caused by the breach of a contract.
Damages and Remoteness
Remoteness limits damages to losses that are reasonably foreseeable at the time of the contract. Unforeseeable losses generally cannot be recovered.
Types of Damages
Types of damages include:
- Compensatory damages (to cover direct losses)
- Consequential damages (indirect losses)
- Nominal damages (small amount for technical breach)
- Punitive damages (to punish egregious conduct)
Equity
Equity refers to fairness and justice in legal decisions, particularly in cases where strict application of common law may not lead to a just outcome.
Equitable Remedy vs. Damages
Equitable remedies (like injunctions or specific performance) are non-monetary solutions that require a party to act or refrain from acting.
Damages are monetary compensation.
Equitable Remedies
Equitable remedies include:
- Specific performance (court orders to fulfill a contractual obligation)
- Injunction (court orders to do or refrain from doing something)
- Rescission (canceling a contract)
- Rectification (correcting mistakes in a contract)
Types of Injunctions
Types of injunctions include:
- Prohibitory injunction (stopping someone from doing something)
- Mandatory injunction (requiring someone to do something)
- Interim/interlocutory injunction (temporary measure before final resolution)
Injunctions at Early Stages
An interim/interlocutory injunction is likely to be used to prevent harm while the case is still being decided.
Emotional Distress and Damages
In contract law, emotional distress damages may be awarded if a breach of contract causes mental suffering, although such awards are rare and typically limited to specific circumstances, like wrongful termination or discriminatory practices.
Introduction to the Company, Directors and Statutory Oversight
Characteristics of a Company
A company is a legal entity distinct from its owners, offering limited liability, separate legal personality, and continuity regardless of ownership changes.
Commencement of the Companies Act 2014
The Companies Act 2014 commenced on 1st June 2015.
Company Obligations Regarding Registered Office
A company must have a registered office in Ireland, where legal notices and official correspondence can be served. The address must be notified to the Companies Registration Office (CRO).
Appointment of a Director
A director is typically appointed through a resolution passed by the company’s shareholders at a general meeting, or through the board of directors if the company’s constitution allows.
Company Obligations Regarding Books of Account
Companies must maintain proper books of account that accurately reflect financial transactions, as per Section 281 of the Companies Act 2014.
Implications of Section 609 for Directors
Section 609 allows the court to hold directors personally liable for a company’s debts if they are found to have engaged in reckless trading.
Characteristics of a Company Exempt from Audit
Companies can be exempt from audit if they meet certain criteria, such as having fewer than 50 employees, a turnover below €12 million, and assets not exceeding €6 million.
Annual Returns and Compliance
Annual Returns are documents that companies must file with the CRO annually, detailing key company information like directors, shareholders, and financial statements. Failure to file on time can result in penalties and loss of audit exemption.
Sections of the Companies Act Dealing with Secret Profit
Section 228(1)(a) of the Companies Act 2014 outlines the duties of directors, including the prohibition of making secret profits from their position.