In Order to Convict a Company

Crimes comprise of two basic elements: the guilty act (actus reus) and a guilty mind (Mens rea). Actus reus refers to the physical elements of a prohibited conduct. Mens rea refers to the mental element of a fault. Generally, liability for a serious criminal offence always requires an actus reus and mens rea. For example, in a murder case, for a defendant to be guilty, the trial must prove that the actus reus of murder which is the cause of victim’s death and the mens rea which is the intention to kill. However, in less serious crimes, only proof of actus reus is necessary to ensure a conviction. The four main types of actus reus are: voluntary, state of affairs, omissions and causation. An example of a voluntary case is R v Quick [1973]. The court held the defendant not guilty on the ground of automatism. The result of his unconscious state was the effect of the consumption of insulin. An example of a “state of affairs” case is Winzar [1983]. The defendant was convicted with “being found drunk in a public highway”, even though he did not go to the public road on his own will. The two main types of men’s rea are: intention and recklessness. Intention is practically assumed when there is a likelihood that consequences resulting depend on the persons action as evident in R v Moloney [1985] which overruled the decision in Hyam v DPP [1974]. An example of recklessness is R v Cunningham [1957] where carelessness involved the defendant in being mindful of the danger that his actions might cause the unlawful result. Criminal law is declared in Acts of Parliament such as Theft Act 1968, Fraud Act 2006 and Offences Against Persons Act 1968.

There is only one case in which a company has ever committed and guilty of corporate manslaughter. That is the case on R-v-Kite and OLL Ltd [1996], also known as the Lyme Bay Canoeing Disaster case. The managing director (Peter Kite) of the company sent a group of students into the harsh sea and due to unforeseen errors, the canoes capsized, resulting in four drowned and others badly injured. The company OLL ltd was prosecuted for corporate manslaughter. And uncommonly, the conviction held and Peter (managing director) and his company were each convicted of four counts of manslaughter charges. From here, we can conclude that business operations that have been successfully prosecuted for corporate manslaughter are normally those small “one man” companies where the responsible “controlling mind” was easily identified. In today’s business world, common business operations that are subjected to criminal law are money laundering, tax evasion and corporate manslaughter. In recent news, the head of the Vatican Bank, Ettore Gotti Tedeschi, was under the investigation of a money laundering of nearly 23m Euros from various bank’s accounts. Who haven’t heard of infamous Walter Anderson who was a former telecommunications senior manager accused of secretly earning via utilising from offshore bank accounts and shell companies. Also, in Tesco Stores Ltd v Brent LBC [1993], Tesco was guilty of strict liability offence for the sales of pornography videos to under-age children.

But what was the difficulty?

In order to convict a company, we need to be able to identify a human being who has what we called the “controlling mind”. A case that clearly highlights the difficulties of securing a corporate manslaughter conviction against a company for organisational failure under current legislation is the case on R v P&O European Ferries (Dover) Ltd [1991]. Law report says that the Herald of Free Enterprise, was on the way to Zeebrugge (Belgium) where the car ferry capsized and the officer responsible was asleep (as he had been on duty for 12 hours) and had forgotten to ensure the doors were close. As a result, 190 passengers killed, many injured and cars ruined. However, held that manslaughter charges against P&O Ferries was dismissed, as the director was clever not to have appointed anyone to be responsible for health and safety. Hence, the Court was unable to identify the controlling mind of P & O. It got away with “scot free”. This is similar to Piper Alpha [July 1988], where charges were withdrawn, as there was a difficulty in identifying the “controlling mind”. Opposing these two cases is the case on R-v-Kite and OLL Ltd [1996] mentioned above.

The complexity in ensuring convictions of companies for major criminal offences resulted to the Corporate Manslaughter and Corporate Homicide Act 2007, which came into effect on 6th April 2008. The Act will be able to convict those who may be held directly responsible for deaths at work due to gross negligence and also will not only look at the guilt of a sole individual which may seem unfair. Another reason for the creation of Corporate Manslaughter Act 2007 was the need to reintroduced entrepreneurship. So to encourage people to take risks which is an key thing in business. European union issued a directive of law that said an artificial legal person or a company will need only one director (e.g. OLL Ltd) whereas the directive of the European union has to reply to all members of service. As a result of that, the trade union organisation got together and persuaded the government to introduce the Corporate Manslaughter Bill, which was passed and now called the Corporate Manslaughter Act. However, it only came into effect a year later. This long delay was to give businesses company an opportunity to get used to the new law.

b)

First of all, I would decide if the advertisement constitutes “offers”, and whether it is possible of “acceptance”, or if they are simply “invitations to treat”(ITT). It is not always easy to distinguish between offers and ITT but it is necessary to make the distinction.

In order to constitute an offer, the communication used must provide adequate and precise in terms of the main the “terms and conditions” and price. These terms may be stated verbally, in literacy or by conduct and essentially requires a definite acceptance for a binding agreement to be formed. Whereas an ITT may be a restriction to negotiating terms that are lacking to be an offer, usually prolongs the bargaining process.

Looking at Oliver’s dealings with Jose’s Apparel Ltd (JAL), in this case Oliver is arguing that there is a contract, based on the initially quoted sale price on the advertisement. Although it states a definite “sale price”, there is no specific method of communication indicated nor is the sale item subjected to an external inspection. Also, there is no use of words that implicitly demonstrates intent associated with an intention to be bound (“as a matter of sincerity”) nor was there information about a given reward (“£100″) mentiond as in Carlill v Carbolic Smoke Ball co.[1893] If a reward is given for the performance of a specified act, that advertisement will constitute a unilateral offer along with an acceptance when the action is made. Since JAL’s advertisement does not include a statement of clear intent, it is just an advertisement as a way of attracting interest for economic benefits

Furthermore, when Oliver saw the advertisement, and responds by going down to the shop, his action may be regarded as making an offer to buy the item at the sale price. However, at this stage JAL would be free to accept or decline Oliver’s offer. Since there is no evidence that JAL has communicated to their acceptance, no contract can yet exist. If JAL realised that a mistake had been made with regard to the price quoted, JAL could have withdrawn and not proceed with the final stage of the offer. The seller can be subjected to criminal penalties under s.20(1) of the Consumer Protection Act 1987 where JAL gives a misleading indication as to the price at which the goods are available for sale, but that does not assist the buyer with his civil action.

Likewise, JAL may be liable under S.1 of the Trade Description Act (TDA) 1968 for a strict liability offence of applying a false trade description to any goods as prices were not altered in relation to the sale prices. Also, JAL could be charged under S.11 (2) TDA for displaying a misleading price notice. This was evident in Tesco Supermarkets Ltd. V Nattrass [1972].

Moreover, business seller would preferably fix its customers to avoid being overwhelmed with buyers that could not be fulfilled from existing stock. A classic example is Partridge v Crittenden [1968]. The advertisement states: “framble finch cocks and hens 25 shillings each”. According to the Protection Of Birds Act 1954, it is illegal to offer such birds for sale. However, it was held the advertisement was simply an ITT. The defendant was acquitted, as the assumption was that the seller only had a limited stock supply, thus it was impossible to be bound to everyone who responded to the advert. This constitute offers to buy, but the seller would be free to accept or decline the offer. Thus, it is sensible to relate “business sense” in JAL’S case. A contrast can be seen in Lefkowitz v Great Minneapolis Surplus Stores [1957]. The advertisement states: “3 brand new fur coats, worth to $100. First come first served. $1 each.” This was held to be an offer as a limited quantity of the specified goods was stated explicitly. Hence, a performance of the act will signify the acceptance. In the case of JAL, it seems to be similar to Partridge v Crittenden instead of Lefkowitz. The advertisement for JAL hence seems to be viewed as ITT rather than offer, as interpreting such an advertisement as an offer would mean that the seller might find himself unable to supply everyone who responded (the “limited stocks” argument).

Adding on, it appears that there is only a slight difference between displaying goods in a shop-window, which courts have normally considered to be an ITT (Fisher v Bell [1961] and Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953]) and an advertisement. In Fisher v Bell, the shopkeeper was charged for displaying illegal flick-knife for sale. However on appeal, it was held that a shop-window display is simply an ITT, hence it was insufficient to create a criminal liability under the Restriction of Offensive Weapons Act 1959, section 1(1).

The reasoning points above prove that JAL’s advertisement is an ITT. The fact that no clear stated terms and conditions such as the method of communication used, quantity supplied and guarantee of purchase suggests that the advert lack the certainty mandatory of an offer; leading an analogy with the details of Harvey v Facey [1893] would reinforce this argument. Even though, the sale price and sale item was included on the advertisement, this is insufficient to prove that the advertisement constitutes an offer.