Sophie Xinyu Huang - British Chinese
Introduction
In this article, I will evaluate the importance of having a principle-based legislation and its impacts upon our legal system, if it is imposed. When writing this essay, I was presented with a fictitious fiduciary duty case. You may be wondering what fiduciary duty is, and it is defined as a “person who will act on behalf of another person, called the beneficiary and must put their beneficiary’s interest above their own”. (Kati, 2023)
The case was particularly intriguing as it was upon the issue of purchasing Pokemon cards (which essentially have no monetary value) illegitimately by a non-member, within an exclusive club and the main focus was about two friends who had a fiduciary relationship: Aparna, who was the beneficiary and Beth who was the person acting on behalf of the beneficiary. Now you may be wondering why they have a fiduciary relationship, and this is because Beth had “expressly or impliedly assumed a responsibility to, the claimant and an expectation of loyalty” by verbally agreeing in a phone call to Aparna’s favour with “I’ll go” to the club.
Brief summary of the case
Firstly, the case begins with Beth receiving “£500 from Aparna” and purchasing exclusive Pokemon cards Aparna wanted. However, Beth took advantage of Aparna’s membership number to purchase the cards at a “50% discount” and pocketed the “£250 left over” from the transaction. Unfortunately, Beth had breached her fiduciary duties, as Aparna’s consent of Beth keeping some money was only related to the “£100 to cover transport and food” to be able to attend the event at the venue, as she previously expected the Pokemon cards to be worth the exact sum of £500. During Beth’s time at the Club meeting, the previous president of the Club was also stepping down and offering a bonus to whoever replaced his/her position and despite being an illegitimate member of the club, Beth discussed with the President and took the position, alongside the “signing off bonus of £20,000” from him/her. The final breach of their verbal contract was the fact that Beth also concealed the presidential position, which Aparna previously stated her interest in. Lastly, Beth’s breach of fiduciary duty was shown through the legislation that “fiduciaries must not make any profit, gain or benefit by use or by reason of their fiduciary undertaking”.
Many could argue that Beth and Aparna’s friendship has gradually faded over time, due to Aparna hiding aspects from Beth despite their supposed strong relationship, such as the Pokemon club. Both have an avid passion for collecting rare cards, however “Aparna thinks of the club as her little secret” and therefore never openly stated the benefits of participating in the club. This possibly suggests that Aparna does not fully trust Beth and in turn has increased Beth’s resentment towards her, meaning that she decided to retain the money of £250 remaining and therefore became the President without telling Aparna about the opportunity. As we can see the flaws in their relationship, it thus excuses Beth’s actions of not fulfilling her fiduciary duties, which weakens Aparna’s case. Another factor that should be taken into account is also the “claimant’s vulnerability and defendant’s power or discretion to alter the claimant’s position”. In the first place, Aparna should not have asked Beth to travel there, as it could be possibly against club membership policy. Because the club is “exclusive”, membership is “by invitation only”, meaning it should not be accessed by a non-member, as it is legally a private members club. From understanding this context, Aparna here is not the victim, as she in fact has caused this situation, causing Beth to do a morally wrong thing under her directions. This therefore has altered (the claimant) Aparna’s role within this issue as she is now seen as the instigator to the conflict they have. In summary, as with any legal dispute, there are always counterarguments on both sides due to its sheer complexity.
Lastly in conclusion, I have evaluated the disadvantages and advantages of principle-based legislation and come to a judgement upon it, however the answer of course will not be effectively the “right answer”, as it depends on subjectivity and our intrinsic moral nature.
Introduction and Advantages
By having a set of principles like those contained in the Act means that it can allow a predictable outcome in a potential court case scenario. By generalising a set of principles, it can allow a greater application of Law through numerous different cases, which can ensure a fairer process for the public. Having a rigid set of principles also means it provides clear information for both the defendant and claimant, reducing the impact of asymmetric information and gives a pathway for democracy within our legal system. When there has been confirmation of clarity within a legal process, it therefore means that people will be more likely to “view those in authority as more legitimate and respect them more” (HM Inspectorate of Probation, n.d), hence meaning that they will be compliant. This in turn can ensure a more efficient court process in terms of dealing with any issue, not just a breach of fiduciary duty.
Furthermore, it can allow judges involved in court cases to be “impartial and independent of all external pressures”(Courts and Tribunal Judiciary, 2022), meaning that there will be no bias and will ensure neutrality in the final judgement. This is particularly significant as it allows judges to think objectively, rather than subjectively or emotionally. As a general rule of thumb, lawyers often need to be unemotionally attached within cases, because when they act emotionally, “there may not be a core reason guiding a representation and ensuring positive strategies” (Rothman, 2022), which can massively affect the outcome of a case and thus create bias. By having clear information and guidance through principles, it thus allows for the Rule of Law proposed by the United Nations to be enforced in the U.K. This is because laws can be “equally enforced and independently adjudicated” when a principle-based legal system is used.
Globally it can allow for co-operation of Law enforcement, as other countries can take inspiration from our neutral justice system. Not only does it aid our country but also it can help lead to greater “economical and social progress and development” (United Nations and the Rule of Law, n.d) internationally, meaning it also will ensure a maintenance of human rights. Therefore by having principles, it prevents potential inequalities or prejudices from arising.
Counter Arguments
With any legal system and institution, there are always disadvantages with strictly relying on a set of principles. As rigidity allows for inclusion of righteousness, however does not give room for flexibility. This is because principles are only designed to be generalised and are often used to “focus on outcomes, rather than inputs” and a key example that has been shown in recent times is the “FCA’s consumer duty Law”, set by the Financial Conduct Authority, which covers all existing products and services within the market to furthermore ensure “good outcomes”. The flaws within the legislation is shown through the vagueness and confusion of what “good outcomes” is actually referring to, as through further inspection, it seems to be “firms providing evidence that their products serve the customers with products and services that meet their needs and offer fair value”(FCA, 2022). Furthermore, this means that firms and companies can also be largely affected when there are new principles based regulation, as it could take a long time for these changes to be even implemented from the bill to the actual legislation further increasing the costs of a firm. This is because there must be “interpretation” from a legal team and can possibly increase an “interpretation risk” for a firm, and these costs can often be placed onto consumers, which can potentially in fact breach the legislation.
Therefore meaning that justice can be manipulated if the Laws are not used accordingly by not considering the circumstances of each unique case, hence it can cause bias in unprecedented ways. Each legal case is different in its own aspect and may be hard to determine the reasonings behind each party’s actions, as shown in the case of Aparna and Beth. Both side will have complex multi-faceted arguments, thus coming to a conclusion of each case is difficult at a first glance. For fiduciary duty, this means that there must be consideration of the relationship between each party involved in the case, such as the fact whether it is professional or personal and the clear identification of the scope of duty between them. As principles are largely based on “qualitative rather than quantitative terms” (CFA UK, 2023), it therefore means that people who have not been professionally legally trained may find it hard to interpret these principles and how it can be applicable to them. This may mean that people who are in dire need of help are unable to tell where their rights have been affected in a specific act and mean that they cannot claim compensation and even support for the negative situations that could have affected them.
Overall judgement
In conclusion, the advantages and disadvantages of having such principles largely depends on how the legal system will operate. If there is a need for legal certainty and a generalised approach, a principle-based legislation will offer that ability, however if there is a need for legal flexibility and fairness, this means that a differing approach must be considered in order to ensure justice will be served with impartiality.
Bibliography
1. Kati, E. (2023, November 12) What is a fiduciary relationship in England and Wales?, LegalVision
UK. Available at: https://legalvision.co.uk/corporations/fiduciary-relationship/ (Accessed: 14
January 2024).
These quotes are taken from the Peter Cane Corpus Christi College Legal reasoning prize
question in 2024:
2. Applicable Law under Section 2: establishing a claim under this Act (2) (Duty) (a) (i) (undertaking)
3. 1. Hypothetical case paragraph 4
4. Taken from Aparna’s dialogue line 1
5. Applicable Law under Section 2: establishing a claim under this Act (3) (Breach) (no profit)
6. Hypothetical case paragraph 4
7. Hypothetical case paragraph 1
8. Applicable Law under Section 2: establishing a claim under this Act (2) (Duty) (b) (iv)
9. Hypothetical case paragraph 1
10. HM Inspectorate of Probation (n.d) Procedural justice using models and principles Procedural
justice. Available at: https://www.justiceinspectorates.gov.uk/hmiprobation/research/the-evidence-
base-probation/models-and-principles/procedural-justice/ (Accessed: 10 January 2024).
11. Courts, and T.J. (2022) Independence, Protection of independence. Available at:
(Accessed: 03 January 2024).
12. Rothman, J. (2022) Lawyers shouldn’t get too emotional when representing friends and family,
Above the Law. Available at: https://abovethelaw.com/2022/06/lawyers-shouldnt-get-too-
emotional-when-representing-friends-and-family/ (Accessed: 06 January 2024).
13. United, N. (no date) What is the rule of law? - United Nations , Rule of Law-International
regulation. Available at: https://www.un.org/ruleoflaw/what-is-the-rule-of-law/ (Accessed: 16
January 2024).
14. FCA, P. (2022) PS22/9: A new consumer duty, FCA. Available at:
May 2024).
15. Rules versus principles based regulation (2023) CFA UK. Available at: https://www.cfauk.org/pi-
listing/rules-versus-principles-based-regulation#gsc.tab=0 (Accessed: 18 January 2024).
16. Nb see 11
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