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The Shapes and Patterns of Law

When I speak to young lawyers, I often say that the law has a shape. I sometimes say that the law is a series of patterns. Fractals.

The purpose of law is to regulate the relationships between individuals, groups of individuals and the state. The law is descriptive inasmuch as it defines certain inalienable rights, as well as the manner in which obligations between persons arise. It sets out rules regarding which arrangements are permissible and which are not. Importantly, it also describes how a person goes about securing a right, retaining a right enforcing a right or vindicating a right.

Getting back to the shape of law, any piece of legislation follows a similar pattern: an introduction, which entails the preamble, the definitions and the interpretation clause, then the establishment provisions follow. After that, the provisions relating to substantive rights, obligations and duties are set out. After that the provisions relating to the administration of the substantive rights, and the manner in which a breach of those rights are treated, and how a person would go about seeking a remedy. This is the same structure one would see in a written agreement. Patterns. Shapes.

In the same way, common law rules also have their patterns. So, when one thinks about trusts, one encounters a dynamic relationship between, firstly, the trustee, secondly the trust assets held for the benefit of the beneficiary, who is the third element of the triangle. Trustee. Property. Beneficiary.

This triangular relationship can be imposed in a number of analogous examples:

Trustee                    Trust Assets                                          Beneficiary
Director                   Company assets                                Shareholders
Executor                  Deceased estate                               Heirs
Executive                Machinery of state                             Citizens
Fund manager       Collective investment fund                Investors

In each of these cases, the person under the Trustee column is placed in possession or given the power over the Trust Assets for the benefit of the persons in the Beneficiary column. It is understood, whether explicitly or implicitly, that the Trustees shall deal with the Trust Assets not in their own interests, but in the interests of the Beneficiaries.

And in each of those cases, the rules that regulate the manner in which directors and executors, for example, deal with company assets and deceased estates follow a similar pattern. Similarly, the remedies that companies and shareholders and heirs have in relation to directors' and executors' misconduct are comparable.

So it may be that a lawyer specialises in company law. That does not mean that that lawyer will be unable to understand the way that fund managers discharge their duties in relation to collective investment funds. The trick is to understand the shapes and patterns of law.

Another example of patterns in law relate to the way that capacity and authority may be understood. In certain circumstances, minors do not have the capacity to conclude binding contracts. We say that a minor person is contractus incapax. Similarly, in certain circumstances companies may not have the capacity to enter into certain transactions. We say that such a company is subject to restrictive conditions which is denoted by the expression "RF".

In relation to authority, it may be the case that a minor has capacity or that a company is not subject to restrictive conditions, but that minor or the company in question needs to be authorised to enter into a contract or take part in a particular transaction.

If a minor was to conclude a binding agreement, he could only do so with his guardian's consent. If the minor purports to enter into a contract without that consent, the guardian may, in certain circumstances ratify the conclusion of the contract, whereupon it becomes fully binding.

Similarly, a company may not give effect to a fundamental transaction, without the authority of its shareholders. In the ordinary course, the agreement giving effect to the fundamental transaction will be implemented is concluded. However, the implementation of the terms of the agreement is subject to the approval by the shareholders in general meeting. This approval constitutes the ratification of the agreement, after which the agreement becomes binding and effective.

So, the more I think about the practice of law, the more I understand and begin to appreciate the foundations of legal reasoning. Without an appreciation for the law of persons, the law of contract, the law of things or the law relating to trusts, one would never be able to be a good company lawyer. For company law generally is a patchwork quilt, which draws upon the principles and rules of all law that went before it.

Once you understand triangle and fully appreciate it, you will then be able to understand a pyramid. Once you have mastered pyramids, you may only then begin to understand an icosahedron and other geodesic structures. It follows that a person will never appreciate or understand an icosahedron, unless that person understands a basic triangle.

And so it is with law.

Adam Pike
Author: Adam Pike
Adam Pike holds BA, LLB and LLM degrees from the University of Cape Town. His LLM, attained from the School of Advanced Legal Studies at the University of Cape Town, focused on commercial and corporate law, particularly corporate governance and securities. Adam specialises in the implementation of corporate actions and transactions.

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