Overview of Irish Law

Structure

The course comprises of five modules as follows:

Module 1) The Irish Legal System

Module 2) Contract law

Module 3) Negligence and Law of Tort

Module 4) Business Organisations

Module 5) Financial difficulties.

Module 1: The Irish Legal System

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Overview of Module 1
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Sources of Law
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Court System
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Civil & Criminal Law
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Summary
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Module 2: Contract Law
Module 2: Contract Law
Prerequisites: Module 1: The Irish Legal System
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Overview of Module 2
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What is a valid contract?
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Enforcement of a contract
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Terms of a contract
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Termination of a contract
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Summary-5
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Module 3: Negligence and Law of Tort
Module 3: Negligence and Law of Tort
Prerequisites: Module 2: Contract Law
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Overview of Module 3
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The Law of Tort & the Tort of Negligence
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Remedies
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Civil Liability & Courts Act 2004
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Personal Injuries Assessment Board
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Summary
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Quiz
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Modules 1 to 3 Quiz
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Module 4: Business Organisations
Module 4: Business Organisations
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Overview of Module 4
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 Sole Traders
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Agency
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Partnerships
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Companies
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Summary-4
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Module 5: Liquidation, Receivership,
Examinership & Bankruptcy
Module 5: Liquidation, Receivership, Examinership & Bankruptcy
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Overview of Module 5
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Liquidation
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Receiverships
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Examinerships
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Bankruptcy
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Summary-2
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Certificate of Completion
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Overview of Module 1
Overview

This module examines basic elements of the Irish legal system, including the source
s of law.

Learning objectives

• Understand how the Irish legal system operates, particularly the sources of law
, including the important place of the Constitution.

• Garner knowledge of the Irish court system, the appeal structure and hierarchy
of courts.

Sources of Law
There are a number of different sources of law in Ireland. Importantly, Ireland is a
common law system and has many similarities to English law; the main differences
between the systems came into force under the 1922 and 1937 Constitutions.

The sources of law in Ireland are:

• Constitution/Bunreacht na hÉireann
• Statues and legislation
• Case law
• European Union law
• International law

Constitution/Bunreacht na hÉireann
The Constitution regulates the structure and function of the principal organs of
government as well as regulating the relationship of these organs to each other and
those persons residing in the State. The Constitution deals with the organs of the
State such as the President, the Council of State, the Attorney General, the
Taoiseach (Prime Minister) as well as the government. Importantly, it also regulates
the courts. The Constitution is the core source of law in Ireland. As the primary
source of law, as well as having a higher status within the jurisdiction, the
Constitution sets out how legislation is passed. Any law that is found not to comply
with the Constitution by the Supreme Court or High Court will be declared invalid.
The President has the power under Article 26 of the Constitution to refer a Bill,
before it becomes law, to the Supreme Court to decide upon its constitutionality.

Statutes and legislation

Under Article 15.2 of the Constitution the Oireachtas (Parliament) has the sole
lawmaking power within the State. Acts of the Oireachtas are introduced through
both houses of the Oireachtas, the Dáil (lower house of parliament) and the Seanad
(upper house of parliament), each year. While the oldest statutes in force in Ireland
were made by the English authorities and are still law today, many have been
reformed and repealed. Each statute introduced in the Oireachtas must be
compatible with the Constitution

Regulatory orders or statutory instruments are known as secondary legislation. This

is regulated under the Statutory Instrument Act of 1947. This passes delegated
power to a Minister, local authority or other body under a Bill for a specific purpose.
European Union Directives are often introduced into law in this manner. Statutory
Instruments are laid before one or both Houses of the Oireachtas for a period of time
to ensure awareness of any changes and to allow objections to be raised.

Case law
Case law, or the common law, is a system of law derived from the courts and its
decisions. It has built up over many centuries and has evolved and developed. Case
law is based upon a number of core principles. First is the principle of stare decisis,
the doctrine that requires lower courts to follow the decisions of superior courts
where the facts of the case are the same or similar. Naturally, two cases will never
be exactly the same but this limits the discretion of the judiciary. This doctrine is also
based upon the hierarchy of courts system and may be referred to as the doctrine of
precedent. A precedent may be binding or persuasive. The authoritative element of a
judgment that will be binding is known as the ratio decidendi and must be
followed. Other elements of the judgment, which will not be binding, are known
as obiter dictum and are not necessarily followed by lower courts. This system allows
superior courts to overrule or distinguish a particular case and not follow the
judgment of a lower court or a court at the same level. The highest court in Ireland is
the Supreme Court and this binds all lower courts, though the effect of joining the
European Union and the Council of Europe means that both the European Court of
Justice and the European Court of Human Rights also now have an impact upon
case law.

European Union law

Ireland became a member of the European Economic Community, as it was then
known, in 1973. This has meant that the Constitution has been somewhat
supplanted in certain areas as the highest source of law in Ireland. The law of the
European Union has direct application in many areas of Irish law. Article 19 of the
Constitution incorporates the various EU treaties into Irish law. The secondary law of
the European Union, regulations, directly apply in Ireland without action from the
Oireachtas to introduce legislation. Directives, on the other hand, are introduced
through the Oireachtas, usually through statutory instruments but also through
legislation. Decisions, recommendations and opinions must also be introduced into
Irish law by the Oireachtas. This has meant that there is now a common body of law
that can be relied upon by all citizens of the European Union in all member states.

International law
Article 29 of the Constitution established the position of international law in Irish law.
Article 29.6 requires all treaties to be put before the Oireachtas before they become
part of domestic law. For example, the European Convention on Human Rights and
Fundamental Freedoms (1950) was introduced into Irish law through legislation. This
gives a right of appeal to persons residing in Ireland to the European Court of
Human Rights in Strasbourg. Article 29.3 states that Ireland accepts the general
principals of international law, though this is not generally enforceable through Irish
courts.

Court System
The Irish court system as it stands today was first established under the Courts of
Justice Act 1924, though it is now also organised under the 1937 Constitution.
Article 34 states that justice will be administered by courts established by law and
should generally be administered in public. It is based on a hierarchical system, the
Supreme Court being the highest, followed by the High Court, the Circuit Court and
the District Court. There are a number of other administrative courts that deal with
specialised areas of the law, such as the Employment Appeals Tribunal, An Bord
Pleanála (Planning Board) and the Labour Court.

The District Court

The District Court is the lowest court and under the Courts and Court Officers
(Amendment) Act 2007 It is divided into 23 districts, each with one appointed judge,
though in a number of instances, due to the volume of cases, there may be more
than one. The District Court’s civil jurisdiction covers matters up to €15,00 and also
grants dance and liquor licenses. Its criminal jurisdiction covers summary offences
and some indictable cases of a minor nature.

The Circuit Court

The Circuit Court is divided into eight circuits, with at least one judge — more for
busier courts — permanently assigned to each circuit. Civil cases up to €75,000 may
be heard in the Circuit Court, though this figure may be amended by the parties. In
criminal cases, the Circuit Court covers indictable offences and has a jury. It is also
the court of appeal for both civil and criminal cases from the District Court.

The High Court

The High Court has jurisdiction over all matters to come before the courts. This
includes matters arising out of the Constitution. A jury sits on certain civil cases and
in criminal cases where a plea of not guilty has been entered. It is also the court of
appeal from the District and Circuit Courts. For criminal cases the Court sits as the
Court of Criminal Appeal. The Special Criminal Court was set up under the Offences
Against the State Act, 1939 and sits with no jury.

The Supreme Court

The Supreme Court is the highest court in the system and is the court of appeal for
any cases that originated in the High Court and cases from both the District and
Circuit Courts. The Chief Justice plus seven other judges sit on the Court and the
President of the High Court is an ex officio member. The President may send a Bill to
the Supreme Court to test its constitutionality before signing it into law.
Civil & Criminal Law
The distinction between the civil and criminal law system is one of the central
aspects of the Irish legal system. The differences between the two are based on who
brings the proceedings, the standard of proof and the consequences of a decision by
the Court. Some deeds may lead to both a civil and criminal action being taken.

Summary
• There are a number of sources of law in Ireland, including the Constitution
, statutes and legislation, case law, EU law and International Law.

• The Constitution is the core source of law in the State. It also sets up the s
tructures for governance of the State.

• Legislation is passed through both Houses of the Oireachtas, the Dáil and
the Seanad.

• Statutory Instruments or secondary legislation is delegated legislation that

is introduced by a government Minister or other public body.

• Case law is based on binding judicial precedent and ithe hierarchy of cour
ts.

• The law of the European Union has direct application in Ireland through tr
eaties, regulations, directives, decision, opinions and recommendations.

• Under Article 29 of the Constitution, international law may form part of Iris
h law.

• The court system is regulated by the Constitution and the Courts and Cou
rt Officers Acts.

• The court system is hierarchical, with the District Court at the lowest level
followed by the Circuit Court, the High Court and the Supreme Court.

• The law is divided between criminal and civil law.

Overview of Module 2
Overview

This module examines the core characteristics of Irish contract law, including offer,
acceptance, intention to create legal relations and consideration.

The contents of the contract and how they are interpreted are examined, looking at b
oth express and implied terms. Exclusion clauses are also discussed.

The module then examines how a contract may be terminated and explores the
consequences of a breach of the terms of a contract, including the remedies involved
.

Learning objectives

• Understand when an agreement is a contract and the consequences of this.

• Recognise the terms of a contract, both express and implied, including exclusi
on clauses.

• Understand how contracts are brought to an end and the consequences of this
.

What is a valid contract?

A contract involves a voluntary relationship between two or more people. For a
contract to be recognised by law and enforceable before the courts it must have
three elements: first, there must be an agreement between the parties; second, there
must be intention to create legal relations; and third, consideration must have passed
between the parties.

Agreement
An idea central to all contracts is that all parties must intend to enter into a contract.
Offer and acceptance must mirror each other.

Invitation to treat and offer

Invitation to treat is the initial contact between the parties to the contract. It is not a
manifestation of an intention to be bound. An invitation to treat is a statement that is
not intended to bind the party making it in any contract. An offer is a promise to do or
refrain from doing something in the future. An offer may be made to one person, a
group or to the world at large, expressly or by conduct, though it presupposes at
least two people. Also, under the Sale of Goods Act 1893, S. 58(2), a sale by auction
is complete when the auctioneer announces its completion, by the fall of a hammer,
or in another customary manner. Statements of intention, opinion, hopes and
expectations are usually treated as neither offers nor invitations to treat.
Termination of an offer
An offer is terminated under several circumstances, including where there is a
counter-offer, revocation, rejection of the offer, where there has been a lapse of time,
or through death. If the offeree changes the terms of the original offer even slightly,
this is a counter-offer, the original offer. Offers may lapse after a specific period of
time, or may be revoked any time before acceptance.

Acceptance
On the assumption that there is an offer made, acceptance occurs when there is an
unequivocal acceptance of the terms of the offer. It results in the binding of both
parties to the contract.

There must be indication of this acceptance; this may be done either expressly or
through the conduct of the parties. To be a valid acceptance it must first correspond
with the offer and be given in response to the offer. This must be communicated to
the offeror. There must be two elements: the fact of acceptance and communication
of acceptance.

The offer itself may stipulate the manner necessary to communicate the acceptance.
In Entores v. Miles Far East the court stated that a contract is complete when the
acceptance is received by the offeror and the contract is made at the place where
the acceptance is received. There is a separate rule of communication of acceptance
for post, unless otherwise stated, it becomes valid from the date of postage.

Intention to create legal relations

In many situations the parties do not intend to create a legal relationship. There must
be intention to create legal relations between the parties. There are two strong
presumptions: first, that in social and domestic agreement, parties do not intend to
create legal relations and, second, that in commercial agreement, parties intend to
create legal relations

Consideration
Within the Irish jurisdiction only those contracts either made in deed or supported by
some consideration are enforceable. Contracts made under seal are enforceable
without consideration; they are usually referred to as covenants. Consideration is
basically an act, forbearance or promise by one party to a contract that constitutes
the price for which they buy the promise of the other.

There are four principals of consideration:

1. Consideration may be executory or executed but must not be past.

2. Consideration must move from the promise.

3. Consideration need not be adequate but it must be sufficient.

4. Valuable consideration is required.

Consideration may be executory or executed but must not be past. This means that
the promise was done at the request of the promisor and the understanding of the
parties when it was completed was that it would be recompensed; also, the promise
to pay for it would, had it been made in advance, have been legally enforceable.

Consideration must move from the promisee. Therefore, a person cannot enforce a
promise made to them if the consideration for it came wholly from some other
person.

Consideration need not be adequate but it must be sufficient. Courts will not
investigate the adequacy of consideration. This means that the law of contract is not
concerned with the question of whether a particular contract is more favourable to
one side than to the other. Valuable consideration is required.

Enforcement of a contract
For a variety of reasons there are times when a contract may be deemed void,
voidable or unenforceable.

Void and voidable contrasts

Some contracts are void as they infringe upon public policy; if it is just a portion of
the contract, this may be severed and the remainder of the contract stands. If the
contract is illegal it will be entirely void.

Void and voidable contracts may be divided into three broad categories:

• Contracts to oust the jurisdiction of the Court

• Contracts prejudicial to the status of marriage
• Contracts in restraint of trade

There are some categories of people the law seeks to protect from improvident
transactions that, due to their youth or other reason such as a disability, it would not
be ethical to enforce.

These areas operate in contract law where when undue influence, duress or
unconscionability is used, the Court believes that free-will has been removed and
thus consent also therefore the contract becomes unenforceable. There are two
main examples of this, duress and undue influence.

With few exceptions, such as in the law of insurance, there is no general duty of
good faith in contract law during the negotiation of contracts. However, there is a
duty not to make false statements.

For the court to consider misrepresentation to be present there must be an

unambiguous false statement of existing fact made to the complainant. This induces
the complainant to enter into the contract, and is material to the contract.

The legal consequences of a mistake that affects contractual relationships, as well

as the type of remedy available, depend on the nature of the mistake that is shown
to have occurred.

Privity of contract
Privity deals with who can enforce a contract and who is bound by it. Rights arising
out of a contract can be enforced or relied upon by parties to a contract. Third parties
can neither enforce any rights nor have any rights imposed upon them. There are so
many exceptions to this rule that it is rarely now enforced. The exceptions include:

• Agency
• Equity and trusts
• Statutory exceptions
• Contracts dealing with land

Terms of a contract
All contracts are bound by certain requirements, which vary according to the content
of the contract. There are also established rules as to how terms in a contract should
be read.

Express terms
Not every statement made by the parties will form part of the contract; for example,
statements made during preliminary negotiations or in advertising materials will not
be included. Express terms may be written or oral. For express terms there is a
distinction between mere representation and warranty. Mere representation has no
contractual effect while a warranty is a term that has contractual effect.

Exclusion clauses
Exclusion clauses are terms in a contract that attempt to restrict or exclude entirely
the liability of one of the parties or both. The Sale of Goods and Supply of Services
Act 1980, S. 46, limits the use of exclusion clauses in those contracts covered by the
statute. The courts are unwilling to enforce very broad exclusion clauses that limit all
liability.

Implied terms
The vast majority of terms will be contained in a written contract or be expressed in
some form or another. But it is possible that some terms were overlooked or left out.
The Court adds some terms by implication into the contract.

Implied terms come from four sources:

1. Custom
2. Judges, by law or by fact
3. Statute
4. The Constitution
Termination of a contract
Discharge of contract brings about the termination of the contract. It may take place
through performance, express agreement or frustration, or through breach of a
contract.

When both parties have performed their contractual obligations completely as

outlined in the contract, the contract is said to be discharged or extinguished. If a
contract can be divided into sections, then part performance may occur. In these
circumstances the Court may treat one section as completed and allow a party to
recover for the incomplete aspects only. The doctrine of substantial performance
states that once a contract is completed as completely as a reasonable person could
in the same circumstances a party is only liable for the contract price.

A contract may be brought to an end through agreement. This may be done through
conditions in the contract, waiver of the contract, release of one of the parties from
their obligations or when parties to a contract substitute the original contract with an
entirely new one.

Frustration deals with the termination of a contract as a result of a supervening and

unforeseen event that either renders its performance impossible or illegal, or
prevents its main purpose from being achieved. It is a very narrow doctrine and its
effect is the discharge of the contract by operation of law. This would include
incidences such as the destruction of the subject matter, death and incapacity,
unavailability, failure of a particular resource or the method of performance being
made impossible. The courts will not recognise self-induced frustration, where it is
the fault of one of the parties that the contract cannot be performed. A contract may
become illegal due to supervening events such as a change in the law.

Breach of contract
Breach of contract occurs when there is an actual failure by one of the parties to the
contract to perform their obligations under the contract.

A party may breach a contract if:

• when before the contract has been performed (that is, anticipatory breach),
there is intention of failure to perform, either through renunciation or impossibility
• when performance is actually due, there is a failure to perform

The party not in breach of their contractual obligations may:

• treat the contract as discharged or

• waive this right to repudiate the contract and then recover damages for any
loss.

These remedies are mutually exclusive and there are also separate rules under
the Sale of Goods and Supply of Services Acts for contracts falling within its remit.
Also, the right to terminate does not arise in every situation and may be restricted by
the existence of a warranty.

Consequences of breach
If there is a breach of the contract not all clauses of the contract will be inoperative.
Future obligations may still be relevant in the assessment of damages. Also, some
obligations only become valid after failure to perform primary obligations. The
innocent party must act promptly and decisively to make use of the remedies and
clauses that are still available to them under the contract.

Remedies for breach of contract

Under the Statute of Limitations Act, 1957, the right to sue for a breach of a simple
contract is statute barred after 6 years from the date the cause of action arose. If the
contract was under deed this is extended to 12 years. If it includes an action for
personal injuries it must take place within 3 years. These may be extended in the
case of minors or other contractual disability.

In the case of a breach a party may be entitled to:

• damages
• rescission
• specific performance
• injunction
• quantum meruit.

Damages put the injured party back into the monetary position they would have been
in had the contract been performed. The amount of damages will vary depending on
whether it is a breach of a condition or a warranty.

Rescission terminates the rights and obligations of both parties and may be used in
the case of a breach of a condition. It is operative from the time of the rescission not
from the time of contract.

Specific performance is where the Court order the contracting parties to complete
their contractual duties. Both injunctions and specific performance are equitable
remedies and are thus discretionary .Quantum meruit is an order from the court that
grants to the injured party money for the work done or services provided in
performing the contract.
Summary-5
• A valid contract must include an agreement, consideration and intention to
create legal relations.

• A counter-offer terminates the original offer. An offer may also be terminat

ed due to lapse of time.

• Acceptance must mirror the offer made; if it varies then it is a counter-offer

.

• There must the fact of acceptance and communication of acceptance. The

postal rule is an exception to the general rule of communication.

• In family situations there is a presumption against intention to create legal

relations; in commercial situations there is a presumption in
favour.

• Consideration may be executory or executed but must generally not be

past.

• Consideration must be sufficient but need not be adequate. This does not
include love or affection.

• A contract can be void, voidable or unenforceable.

• Terms may be express or implied. Terms may be implied through law,

custom, constitution or by the Court.

• Exclusion clauses are terms in a contract that attempt to restrict or

exclude altogether the liability of one of the parties or both.

• A contract may be terminated through performance, through an express

agreement, frustration or through breach of contract.

• In the case of a breach, a party may be entitled to damages, rescission,

specific performance, injunction or quantum meruit.
Overview of Module 3
Overview

The law of tort deals with civil wrongs committed by individuals or organisations. This
module focuses on central aspects of the law of tort, such as negligence and the rem
edies available, for a general understanding of liability and its consequences.

The module considers aspects of liability, the defences available and the concept of
duty of care.

It also considers the Civil Liability and Courts Act 2004 and the Personal Injuries Ass
essment Board Act 2003.

Learning objectives

• Understand tort as a civil action.

• Understand what a duty of care is and how breach of this duty may occur.

• Knowledge of the importance of loss and how the Court will assess damages.

• Recognise the defences available in various circumstances.

• Understand how professional liability is incurred.

• Knowledge of the actions that must be taken by the parties prior to a case com
ing before the courts.

• Understand how the Personal Injuries Assessment Board operates.

The Law of Tort & the Tort of

Negligence
The Law of Tort
Tort, where a right recognised by law is infringed upon by the defendant and damage
has been caused to the plaintiff, is a civil wrong that usually results in unliquidated
damages. Unliquidated damages are decided by the Court. Tort includes a range of
areas such as physical injury either with intention or due to negligence or intrusion on
another’s land or goods, which is better known as trespass to land, goods or nuisance.
Tort also includes defamation claims. Loss is not always essential.

The Tort of Negligence

Negligence is the most common tort action. It occurs where there is failure by the
defendant to exercise the level of care that is due to the plaintiff. If this failure causes
a loss to the person to whom the care is owed this will result in the Court finding
against the defendant.

The duty of care arises in various circumstances. Only where a person could
reasonably foresee that their actions would cause injury or loss due to their actions
are they liable.

The plaintiff must prove three elements:

1. The defendant owed the plaintiff a legal duty of care.
2. The defendant has breached this duty of care.
3. The plaintiff has suffered a loss, damage or injury due to the defendant’s
breach.
The Court must decide, breach of a duty of care.

Res ipsa loquitur

Generally, the burden of proof rests upon the plaintiff except when the res ipsa
loquitur rule applies. In these circumstances, a presumption of negligence may be
asserted as there is no other obvious cause of the incident. In this situation it is up to
the defendant to prove that reasonable care has been taken.

Res ipsa loquitur may arise in three circumstances:

1. The defendant is the only person in control of the situation.
2. The damage is of a nature that it could only have been caused by some
negligence of the defendant.
3. The defendant has some knowledge which the plaintiff does not.
One of the essential elements of negligence is that the plaintiff must show damage,
loss or injury. The law requires that the damage, loss or injury be caused largely by
the defendant and be foreseeable, that the harm be closely related to the negligent
act and that the plaintiff has suffered some physical injury to their property, their
person or suffered an economic loss.

Contributory negligence
If the Court finds that the plaintiff is also guilty of negligence that contributed to the
harm, then the defendant will not be found liable for all of the loss. Under the Civil
Liability Act, 1961 the damages recoverable will be reduced in proportion to the
plaintiff’s contribution.
Professional negligence
In the circumstances where it is a professional or a skilled person undertaking the
action, the question is whether the care and skill expected from a member of that
profession or trade has been taken.

Liability
Vicarious liability
The general rule in tort is that a person is only liable for their own actions; however,
the exception is vicarious liability. Here, a person may be held liable when they
authorise another person, expressly or impliedly, to take action. If this action causes
harm, injury or damage to another then the authorising person will be held liable.

Occupiers’ liability
Regardless of any legal relationship between them, an occupier will be required to
exercise a duty of care towards persons who enter their premises. This is governed
by both common law and statute. The Occupiers’ Liability Act 1995 establishes. Three
different circumstances where a duty of care is due:
1. A visitor who enters on invitation, or with the permission of the occupier,
by virtue of an express or implied term in a contract, or as of right.
2. A recreational visitor, a person who enters without any charge, with or
without the permission of the occupier whether with implied consent or
otherwise.
3. A trespasser (a person who is not in either category 1 or 2).
Under Section 3 of the Act there is a duty of care such as the occupier will be liable
for any injury or damage to the visitor or their property due to any danger existing on
the property. Occupiers are not liable under Section 4 for those who enter the
premises for the purpose of committing a crime or who commit a crime while there
unless the Court, in the interests of justice, decides otherwise.

Strict liability
In circumstances where strict liability is imposed, the defendant need not have acted
negligently or intentionally for the Court to impose liability. The rule in Rylands v.
Fletcher states that anything unnatural that escapes from the boundaries of the
defendant’s land, the defendant will be liable for.

Remedies
The two main types of remedies available for a tort action are damages and
injunctions.

Damages
Tort damages are unliquidated.

Damages are usually divided into the following five main categories:
1. Real damages/compensatory damages: The aim of real damages is to
compensate the plaintiff for any loss, damage or injury suffered, including any future
loss that may be incurred by the plaintiff.

2. Exemplary damages: If the court awards a sum beyond the amount necessary
to compensate for any loss, damage or injury in order to punish the defendant for
their tortious action, this is exemplary damages.

3. Nominal damages: If there has been a tort committed where no real damage
has been suffered by the plaintiff, the court will award a small sum to the plaintiff.

4. General damages cover compensation for pain and suffering resulting from
injuries sustained by the claimant.

5. Special damages cover areas such as loss of earnings, medical expenses, out-
of-pocket expenses and vehicle-damage costs. In serious cases there may also be
future loss of earnings, future expenses, etc.

Injunctions

An injunction is an equitable, and thus discretionary, remedy. Injunctions may require

a party to refrain from an action; this is a prohibitory injunction. An injunction that
requires a party to take some action is known as a mandatory injunction.

An interlocutory injunction is used by the Court to maintain the status quo. A

perpetual injunction is usually granted at the end of action either in a mandatory or
prohibitory form. Generally, the courts will not grant an injunction if the party seeking
the injunction has exacerbated the action or is not acting “equitably.” If damages
would be an adequate remedy, the Court is also unlikely to grant an injunction

Civil Liability & Courts Act 2004

The Civil Liability and Courts Act 2004 requires the following actions to be taken in
civil cases generally, but more particularly with regard to tort actions involving
personal injuries:

• The plaintiff must serve a letter of claim to the defendant within two months or
as soon as practicable thereafter, of the event that gives rise to the claim.
• In most incidents you need to make your claim within 2 years of the accident.
• A personal injuries summons must be used for all claims and it must give facts
as to the circumstances of the claim, any legal wrongdoing that is alleged and any
medical effects of the injury.
• At the defendant’s request the plaintiff must provide details of any other
personal injuries claims that they have been involved in prior to this instance.
• The plaintiff must also swear a verifying affidavit in regard to all the facts
presented.
Both parties are now required to make formal offers of settlement prior to the trial,
copies of which are lodged with the Court. The Act has also introduced alternative
dispute resolution into tort actions.

Personal Injuries Assessment

Board
The Personal Injuries Assessment Board (PIAB) was established under the Personal
Injuries Assessment Board Act 2003. The PIAB is an independent government body
that assesses the amount of compensation due to a person who has suffered a
personal injury. The PIAB deals with compensation claims for victims of workplace,
motor and public liability accidents.

Generally the PIAB assesses the amount of compensation due to an injured party and
works faster and costs less than a traditional court action. However, it operates only
where the legal issues are not going to be disputed and, therefore, the Defendant
party is not contesting liability. If either of the parties are not satisfied with the
outcome of the PIAB assessment they are free to begin a court action, but only after
sending their claim first to the PIAB.

The Personal Injuries Assessment Board (Amendment) Act 2007 increased the pressure
on claimants to accept the Injuries Board awards and introduced cost penalties in the
event of a claimant refusing an Injuries Board award and being awarded the same or
less by the courts.

Summary
• Tort is a civil wrong.

• Negligence is the most common tort action. It occurs where there is failure
by the defendant to exercise the level of care that the law states is due to the pla
intiff.

• There are three elements of the duty of care: the defendant owed the plai
ntiff a legal duty of care; the defendant has breached that duty; and the plaintiff
has suffered a loss, damage or injury.

• Res ipsa loquitur may arise in three circumstances: where the defendant
is the only person in control of the situation; where the damage is of a nature that it
could only have been caused by some negligence of the defendant; and where t
he defendant has some knowledge that the plaintiff does not.

• Contributory negligence occurs if the Court finds that the plaintiff is also g
 uilty of negligence that contributed to the harm.

• Where the defendant is a professional or skilled person, the question is

whether they have acted with the care and skill expected from a member of that pro
fession or trade.

• There are various forms of liability including vicarious liability, occupiers’ li

ability and strict liability.

• There are two main remedies available: damages and injunctions.

• Damages may be real, exemplary, nominal, general or special.

• Injunctions may be prohibitory, mandatory, interlocutory or perpetual.

• The Civil Liability and Courts Act 2004 requires both the plaintiff and defen
dant to take certain actions before commencing a tort action.

• The Personal Injuries Assessment Board is a government body that asses

ses cases of workplace, motor and public liability and attempts to settle these cl
aims to prevent
them from becoming court actions.

Score for this attempt: 10 out of 10

Submitted 15 Dec at 12:41
This attempt took 7 minutes.

Question 1
1 / 1 pts
Which of the following is not a source of law in Ireland?

Legislation

Case law

Irish Constitution

Correct!

English law
Question 2
1 / 1 pts
Stare decisis means that when the facts are similar

lower courts do not follow the decisions of superior courts.

Correct!

lower courts follow the decisions of superior courts.

Courts do not have to examine what other courts do.

higher courts follow the decisions of lower courts.

Question 3
1 / 1 pts
EU regulations have

are merely recommendations.

have no effect.

require secondary legislation to be enforced.

Correct!

direct effect.

Question 4
1 / 1 pts
Which of the following is the highest court in Ireland?

Circuit Court
Correct!

Supreme Court

High Court

District Court

Question 5
1 / 1 pts
In contract law acceptance must do which one of the following?

Make minor adjustments to the original offer.

Correct!

Mirror the original offer.

Vary from the original offer.

Mirror the invitation to treat.

Question 6
1 / 1 pts
If a counter-offer is made, which of the following is accurate?

The original offer may be reused at any point.

The original offer is now an invitation to treat.

The original offer is treated as accepted.

Correct!

The original offer is no longer valid.

Question 7
1 / 1 pts
Which of the following statements is false?

Consideration may be executory or executed but must not be past.

Correct!

Valuable consideration is not required.

Consideration must move from the promisee.

Consideration need not be adequate but it must be sufficient.

Question 8
1 / 1 pts
Which of the following does not form a part of misrepresentation?
Correct!

Is not material to the contract

Made to the complainant.

Induces the complainant to enter into the contract.

An unambiguous false statement of existing fact.

Question 9
1 / 1 pts
Unliquidated damages are decided by which one of the following?
Correct!

The court.

The parties.

An independent body.

The court and the parties.

Question 10
1 / 1 pts
Which of the following is Contributory Negligence?

The plaintiff is found to be entirely negligent.

The plaintiff is found not to be negligent.

Correct!

The plaintiff and the defendant are negligent.

The defendant is negligent.

Quiz score: 10 out of 10

Overview of Module 4
Overview

This module examines the forms of business operating in Ireland. This includes sole
traders, agency relationships, partnerships and company law. Companies, as the mo
st regulated of any of these categories, will be explored in depth, including how comp
anies are formed and the rules under which they operate.

Learning objectives

• Ability to identify the form of business under examination and the core differen
ces in how businesses operate.

• Knowledge of the various statues and legislation that form the basis for the law
in this area.

• Understand the authority of each category to bind their businesses into contrac
ts and other legal consequences.

Sole Traders
Sole traders own their businesses and are fully liable for all the assets and debts of
the business. The sole trader is not be liable for corporate tax. They will, however, be
required to comply with employment as well as and health and safety law.

A sole trader has three core legal obligations:

1. Under the Registration of Business Names Act 1963 the sole trader must
register their trading name if trade is not carried out under their given name.

2. The sole trader is legally obliged to register as a sole trader with the Revenue
Commissioners.

3. The sole trader will be operating their business concern with full personal
liability and responsibility for any and all outstanding debts, charges, fines and/or
litigation matters that the business may incur.

Agency
Agency is a contractual relationship that arises when one person (called an agent)
has the legal authority, either express or implied, to bind another person (called a
principal) into contracts on their behalf.
The agent need not possess full legal capacity (they could, for example, be a minor);
however, the principal must have capacity to enter into the contract.

There are three main types of agents:

1. General agent: A general agent has implied authority to enter into a contract on
behalf of a principal that is normally within the business, profession or trade in which
they are acting.

2. Special agent: A special agent will have the authority to enter into contracts
relating only to one specific purpose.

3. Universal agent: A universal agent has unlimited authority to enter into any kind
of contract on the principal’s behalf. A universal agent is often also given a power of
attorney.

To form an agency relationship there must be intent.

1. Agreement between principal and agent:

• Express authority
• Implied authority
• Necessity.

2. Operation of law — Ratification

Ratification occurs if a principal ratifies a contract after the agent has completed it.

• the agent must purport to act for the principal

• the principal must have been in existence when the unauthorised contract was
made
• the principal must have the capacity to enter into contract
• the principal must accept the contract within a reasonable period of time

Duties and rights of an agent

As the agent is put in a relative position of power the law curtails the types of
arrangements into which the agent can bind the principal:

• Unless acting free of charge, the agent must carry out the agreed tasks as the
principal prescribes.
• The agent is required to exercise the skill and care expected of someone
acting in that trade or profession. If acting free of charge then they must act to the
standard of a person managing their own affairs.
• The agent must make a full disclosure to the principal of all transactions and
accounts when requested and ensure the principal’s funds are separate from all
others.
• An agent cannot delegate their authority without the express or implied
authority of the principal, though they may request their own employees to undertake
certain tasks.
• An agent cannot accept any sum of money or make an agreement to do
business with a particular person without the permission of the principal.
• An agent cannot disclose or misuse any confidential information.

The agent has the right to be paid an agreed commission for their work. The agent is
entitled to be indemnified for any loss, liabilities or expenses accruing during the time
the agent is acting on behalf of the principal

Termination of agency

Termination of the agent/principal relationship occurs either through the acts of the
parties or through the operation of law.

If the agency relationship is for a period of time, it will end automatically at the end of
this period. If the agency relationship is to involve one particular transaction, the
relationship will also end when this is completed. The parties can also bring the
transaction to an end by agreement. If the principal seeks to bring the relationship to
an end unilaterally there are some restrictions. Agency is also terminated if the
death, insanity or bankruptcy of either the principal or the agent occurs. Frustration
will also bring an end to the agency.
Partnerships
Under section 1 of the Partnership Act 1890 a partnership is “a relationship which
subsists between persons carrying on a business in common with a view to profit.”
Section 45 defines a business as every trade, occupation or profession.
Formation of a partnership
A partnership is where a minimum of two persons conduct business with a view to
making a profit. It must consist of at least two persons and a normal maximum of 20.

• The number of partners in a banking partnership is restricted to 10 (section 1436

Companies Act 2014).
• No partnership consisting of more than 20 persons may be legally formed for the
purpose of carrying on any business that has for its object the acquisition of gain
by the partnership or by the individual members thereof (section 1435 Companies
Act 2014).
• The above restriction does not apply to partnerships of qualified accountants or
solicitors. Neither does it apply to partnerships set up for the purposes of carrying
on or promoting the business of thoroughbred horse breeding.

There are no formalities to establish a partnership. It can be formed expressly or

impliedly through the conduct of the parties. A partnership contract usually contains
details on the place and nature of the partnership, the duration and commencement
of the partnership, the admission and expulsion of partners, the dissolution of the
partnership, the powers and duties of the partners, how profits and losses are to be
divided and how disputes will be solved.
Limited partnership
The Limited Partnership Act 1907 facilitates the creation of a partnership in which
some members have limited liability for the debts of the firm. Their liability is limited
to the extent of the amount of capital contributed by them to the partnership. As
with a general partnership, a limited partnership is not a separate legal entity. A
limited partnership must consist of at least one general partner and one limited
partner. The partnership should consist of a maximum of 20 persons.

• A banking partnership has a maximum limit of 10 persons

• An investment and loan finance partnership (Section 1435(1)(c)(iv) Companies Act
2014) has an upper limit of 50 persons applies.
Third parties and the partnership
Every partner is considered to be an agent of the partnership firm and of the other
partners. Under section 5 of the Partnership Act 1890, a partner can bind all the
other partners unless they are acting outside of their authority in the partner
relationship and the third party they are dealing with is aware that the partner does
not possess authority.

Apparent authority enables a partner to carry out certain transactions within the
scope of the business that are not expressed in the partnership arrangement. This
does not include executing a deed, guaranteeing a loan, submitting to dispute
resolution or similar acts.
Liability of the partners
Each partner in the firm is jointly liable for all the debts and obligations of the firm
that are incurred in the course of the firm’s transactions. All the partners will be
jointly personably liable for any action taken against the partnership as a whole.
However, if the action is against only some of the partners, only those partners party
to the transaction will be liable. The firm will be liable in the case of misapplication
of funds by one of the partners when the partner is acting within the scope of actual
or apparent authority.
Liability of Limited Partners
The general partner(s) is/are liable for all the debts and obligations of the firm. The
limited partners contribute a stated amount of capital to the firm and are not liable
for the debts of the partnership beyond the amount contributed. A limited
partnership must be registered with the CRO and in accordance with the 1907 Act;
otherwise the partnership is a general partnership which is governed by the
Partnership Act 1890 and by common law. If a limited partnership is not registered
as required by the 1907 Act, the limited partner(s) is/are deemed by law to be
general partner(s) and so are liable for all the debts and obligations of the firm.
Relations within the firm

The partnership contract usually deals with the relationship between the parties;
however, in its absence the Partnership Act 1890 stands in default.
Dissolution of the partnership

The partnership contract may make provision for the dissolution of the partnership.
The Partnership Act 1890 contains default provisions including a number categories of
dissolution. Including:

• if a partnership is for a period of time, if and when this time lapses

• if the partnership was created for a specific purpose, once this particular
transaction is completed
• the death or bankruptcy of one of the partners
• by order of the Court
Under section 35 of the Partnership Act 1890 a Court may order a partnership to be
dissolved:

• if a partner willingly and persistently breaks the partnership agreements

• if a partner is shown to have become a lunatic or permanently insane
• if a partner has become permanently incapable of carrying out the duties under
the partnership agreement
• if a partner is found guilty of conduct that is damaging to the carrying on of the
business of the firm
• if the business can only be carried on at a loss
• if the Court believes that in the circumstances it is just and equitable to do so.
Companies
The Companies Act 2014 commenced on the 1st June, 2014. The 2014 Act repealed
the Companies Acts 1963-2009 and all statutory instruments.
Formation of a company

There are a number of types of company that can be registered under the 2014 Act.
Limited

• Private company limited by shares (LTD): The members’ liability, if the company is
wound up, is limited to the amount, if any, unpaid on the shares they hold. The
maximum number of members is 149. A LTD company does not have a
memorandum of association. A LTD company can have one director if required. (If
it has one director only, it must have a separate secretary). A LTD company has no
objects stated in its constitution.
• Designated Activity Company limited by shares (DAC): The members’ liability, if
the company is wound up, is limited to the amount, if any, unpaid on the shares
they hold. The maximum number of members is 149. A DAC company does have
a memorandum of association in its constitution specifying its objects. A DAC
company must have at least two directors.
• Designated Activity Company limited by guarantee (DAC): As this is a private
company, the maximum number of members is 149. The members have liability
under two headings; firstly, the amount, if any, that is unpaid on the shares they
hold, and secondly, the amount they have undertaken to contribute to the assets
of the company, in the event that it is wound up, being not less than €1. Such a
company under the new Act is a Designated Activity Company and has specific
objects set out in its constitution. A DAC company must have at least two
directors.
• Private Unlimited Company (ULC): In an unlimited company, there is no limit on
the liability of the members. Recourse may be had by creditors to the
shareholders in respect of liabilities that may be owed by the company which the
company had failed to discharge.

88% of all Irish Companies are Private Limited Companies, as such they will be
registered as either LTD or DAC.
Separate legal personality

Separate legal personality enables a company, and not its members, to make
contracts, own property and sue and be sued as a legal person.
Lifting the veil of incorporation

In instances where it would be unjust to allow individuals to hide behind separate

legal personality the veil of incorporation is lifted. The Companies Act 2014 outlines
the situations in which this will happen. The Court may examine whether a company
is being solely used to escape legal obligations and liabilities or is acting for another
company.
Constitution

This document sets out the conditions upon which the company is granted
incorporation and the rules under which the company proposes to regulate its affairs.
The constitution is described in the Schedules to the Companies Act 2014 and must
contain provisions dealing with certain matters.

• The company’s name

• What type of a company it is
• Certain provisions relating to share capital division and allotment
• The number of shares (which shall not be less than one)taken by each of the
subscribers to the constitution
• If the company adopts supplemental regulations, those regulations

The name clause is the company’s chosen title. Where the company is registered as
LTD “limited”, “ltd” “teoranta” or “teo” must also form part of the name. A DAC must
have “designated activity company”, “dac”, “cuideachta ghníomhaíochta ainmnithe” or
“cga” as part of its name. Public limited companies must contain “public limited
company”, “plc”, “cuideachta phoiblí theoranta.” Or “cpt”
An LTD should state that it is a company limited by shares under the 2014 Act and
does not require an objects clause. A DAC does have an objects clause, this sets out
the aims of the company and thus limits its capacity to enter contracts. If a company
enters a contract outside its aims it will have acted beyond its capacity. A third party
may still enforce the contract if they were unaware that the company was acting
beyond its authority. Third Parties are entitled to assume that any contract entered
into by a company was done so in accordance with its own rules and need not make
any inquiries in that regard.
The share capital clause states the amount of proposed share capital and its division
into different classes.
Shares

Shares are the interest which members hold in a company.

• Ordinary shares: These entitle members to their full rights, including the right to
vote at the annual general meeting and to receive a dividend, though the latter is
not guaranteed.
• Preference shares: These do not carry any voting rights but members will receive
a fixed percentage dividend each year, given out in priority to those with ordinary
shares. They also have priority in the case of company being wound up.

Allotment of shares

Subscribers to the constitution are the original shareholders; other shareholders may
receive shares after this by taking an allotment from the company or through transfer
of other members.
Share capital

The following terms indicate different aspects of share capital:

 • Authorised/nominal share capital — the total amount that is set in the
memorandum of association
• Issued share capital — the portion that has been given out to members
• Paid-up share capital — the total amount that has been paid by members for
shares
• Called-up share capital — what has been issued and what members are required
to pay
• Uncalled-up share capital — the amount issued that members are not required to
pay
• Reserved share capital — uncalled-up share capital that has been decided by
special resolution will not be paid up unless the company is wound up.

Directors

Directors have a number of rights and responsibilities regarding the company.

The Companies –Act 2014 require every LTD to have one director. However, if it has
one director only, it must have a separate secretary. A DAC must have two directors.
Their appointment is dealt with in the constitution
Certain individuals are barred from holding directorships including directors of
companies struck off the register of companies or individuals found guilty under
the 2014 Act of certain offences.
Directors Duties are set out in Part 5 of the 2014 Act. Directors, auditors, company
secretaries and officers can be both civilly and criminally liable under the 2014 Act. A
director has limited power to act on behalf of a company. Directors act as agents of
the company. They also are fiduciaries (s.229 2014 Act), which mean they owe a
special duty of care to the company. Directors have a duty to ensure the 2014 Act is
complied with and to protect investors, shareholders, customers and creditors.
Directors must consent to s.150 of the 2014 Act acknowledging their legal duties and
obligations under the 2014 Act, statutes and common law.

Summary-4
• Sole traders do not have to register as businesses unless they intend to o
perate under a different name to their own.

• Sole traders are not liable for corporate tax and are personally liable for all
debts.

• Agency is based upon a contractual relationship between the agent and pr

incipal.

• Agents may be general, special or universal and their ability to bind the pri
ncipal is based upon what kind of agent they are.

• An agency relationship may be created expressly or impliedly.

• Agency relationships may be terminated through the acts of the parties, la

pse of time, completion of object, death, insanity or bankruptcy.

• Partnerships come under the Partnership Act 1890; there are no formal ar
rangements for the creation of the agency relationship.

• A partnership contract usually outlines how the partnership will operate.

• Each partner in the company is jointly liable for the debts of the company.

• The Limited Partnership Act 1907 permits a partner to submit a sum of mo

ney for the duration of the partnership. This limited partner will only be liable to t
he amount of that sum and must not take part in the running of the partnership.

• Company law is covered under the Companies Act 2014.

• Companies have their own separate legal personality that grants them limi
ted liability. Shareholders will be liable only to the amount that they have not pai
d up on their shares.

• Companies must be registered. The constitution includes the company’s n

ame, what type of a company it is, certain provisions relating to share capital divi
sion and allotment, the number of shares (which shall not be less than one)take
n by each of the subscribers to the constitution, if the company adopts suppleme
ntal regulations, those regulations.

• Shares are the interest that members hold in a company and are divided i
nto ordinary and preference shares.

• Companies are managed by directors who have distinct duties as regards

the company.
Overview of Module 5
Overview

This module examines what happens when a company can no longer meet its debts
and is in financial difficulties or is being wound up.

Insolvency, liquidation, receiverships, and examinerships and their effects are discus
sed.

This module also looks at the effects of bringing a company to an end.

Learning objectives

• Understand the different means of dealing with an insolvent company and

attempts to rescue a company.

• Have knowledge of the differences between the processes.

• Understand the role of the liquidator, the receiver, and the examiner.

• Know how the assets of a company will be distributed.

Liquidation
A company will continue into perpetuity regardless of a change in directors or
ownership of shares. Liquidation occurs when a company closes and its assets need
to be distributed among the members and creditors.
There are three types of liquidation:

• Members’ Voluntary - The members of the company

• Creditors’ Voluntary – The Committee of Inspection. Where no committee has
been appointed the liquidator reports to each of the creditors of whom he is
aware and who have been intimated to him as being creditors.
• Court Liquidation – Treated in the same manner as a Creditors’ Voluntary

The distinction between the three types is quite straightforward. A members’

voluntary liquidation is a liquidation where the company is solvent and done by
members only. A creditors’ voluntary liquidation is where the company is insolvent, and
the members resolve to liquidate the company on notice to the creditors.
Thirdly, Court Liquidations are where a creditor, member, director or subscriber
applies to the Court to have a company wound up and a liquidator of their
nomination appointed
Subject to Chapter 8 Part 11 of the Companies Act 2014 a liquidator must be a
qualified person- members of a prescribed accountancy body or other professional
body recognised by the Irish Auditing and Accounting Supervisory Authority (IAASA),
a solicitor, a person qualified in another EEA state or a person with two years’
experience in the relevant area and approved by the relevant body
A liquidator takes possession of the company’s assets and realises them. Any surplus
is distributed amongst the members of the company in accordance with their rights as
shareholders.
Under section 56 of the Company Law Enforcement Act 2001, the liquidator must
prepare a report for the Director of Corporate Enforcement regarding each of the
directors of the company stating that they acted “honestly and responsibly”, this
excuses them from prosecution. The liquidator must produce a book of accounts and
any information that the Director of Corporate Enforcement requires about the
liquidation. Similar provisions exist in the Companies Act 2014.

Receiverships
A receiver takes control over charged assets and sells them to discharge the debts
of the company. If a company cannot meet its debts, a receiver is appointed either
by the Court or under the terms of a deed of debenture.
Circumstances where a receiver may be appointed include: a principal sum has
been left unpaid for a period of time; the company has failed to pay an instalment or
interest; a failure of a condition of a debenture deed; a receiver has been appointed
to other assets belonging to the company or the company has ceased or will cease
to do business.
The following persons may not act as receivers:
• a body corporate
• an undischarged bankrupt
• any person who has been or is an officer, servant or auditor of the company
in the previous 12 months
• any parent, spouse, brother, sister or child of an officer
• any partner or employee of an officer or servant of the company
• any person who is disqualified from acting as a receiver of the company’s
holding or subsidiary, company or a subsidiary of its holding company
A receiver appointed by the Court is an officer of the Court and takes all instructions
from the Court. If the receiver is appointed by a debenture holder, they will be an
agent of the debenture holder or the company.
The duties of a receiver are normally set out in the instrument under the terms of
which he/she is appointed and are also set out in Part 8 of the Companies Act
2014.The receiver must carry out the following duties:
• Exercise care in disposing of the company’s property.
• Apply the proceeds of sale in accordance with the law.
• Follow all the notification requirements set out in the law.
• Report any misconduct.
• Cooperate with the Director of Corporate Enforcement.
If the charge under which a receiver is appointed is invalid, then the receiver may
become liable for any acts or omissions undertaken, though the Court may decide
not to hold the receiver liable if they act within the debenture. A company that is in
receivership does not always also end up in liquidation.

Examinerships
Companies that are in financial difficulties but may be viable come under the system
of examinership established under the Companies Act 2014. An examiner is
appointed by the High Court unless the company is a small company in which
circumstances the application is made in the Circuit Court. A change in the definition
of “small company” has expanded the number of companies for whom this process is
now available. Any petition for examinership must be accompanied by a report from
an independent accountant detailing the funding necessary during the period of
examinership, along with the identity of the company directors and other officers of
the company. Other details include other companies that the directors are involved
with as officers; the debts, assets, and liabilities of the company; details of the
expected funding that will be required; and other matters that the accountant
considers relevant.
The Court requires that any petition for examinership must be made with the utmost
good faith. The petition to the Court for examinership may be made by the company,
the directors, and creditors or members who represent at least 1/10 of the paid-up
capital.
Under the 70-day period of examinership:

• A receiver may not be appointed.

• No guarantees by third parties on behalf of the company can be enforced.
• Resolution for the winding up of the company may not be passed.
• Legal proceedings may not be put into effect against the company’s assets
without the consent of the examiner.
• Fixed or floating charges against the company’s property may not be realised
without the consent of the examiner.
• Goods in the company’s possession under hire-purchase agreements may not be
repossessed without the consent of the examiner.

An examiner may appoint a committee of creditors to assist them in the performance

of their duties. An examiner may also convene and set the agenda for meetings of
the board of directors or a general meeting of members. The examiner presents to
the Court a report detailing the assets, debts, and liabilities of the company. The
examiner sets out proposals for the future of the company, a scheme of
arrangement. If the Court approves these proposals, they will be implemented;
however, if the Court rejects them and regards the company as unviable, it will order
the company to be wound up.

Bankruptcy
Irish bankruptcy law is covered by the Bankruptcy Act 1988 (As Amended).
Either a debtor or a creditor may petition the High Court to have the debtor
adjudicated bankrupt. One of the main prerequisites to bringing the petition is that
there is liquidated debt of more than €1,900 owing. Once a debtor is adjudicated
bankrupt, all the bankrupt’s assets are vested, including their family home and all of
their stocks and shares, in an Official Assignee.
The Official Assignee, under the Court’s supervision, will realise the bankrupt’s assets
and distribute assets among creditors. The Court takes account of the bankrupt’s
family responsibilities and of their personal situation.
The legal effects

• All the debtor’s assets and property vests automatically in the Official Assignee.
The Bankruptcy Act 1988 allows the bankrupt to retain articles of clothing,
household furniture, bedding, tools or equipment of the bankrupt’s trade or
occupation or other necessaries for the bankrupt, their spouse, children, and
dependent relatives residing with them, as they may select, not exceeding in value
€12,000 or such further amount as the Court, on an application by the bankrupt,
may allow.
• The bankrupt must disclose to the Official Assignee any property acquired after
being adjudicated bankrupt.
• Some of the bankrupt’s post may be redirected to the Official Assignee.
• It is a criminal offence for the bankrupt to act as an officer of, or directly or
indirectly take part or be concerned in, the promotion, formation or management
of any Irish company or even of any foreign company that has an established
place of business in Ireland without the permission of the court.
• The bankrupt cannot obtain credit worth over €650without disclosing their status
as a bankrupt.
• After 3 years the bankruptcy may be discharged.
• The bankrupt commits an offence if they do not disclose all their property to the
Court, or if they conceal any part of their estate or obtain by false representation
any property or credit.

Creditor rights

Creditors are divided into two categories:

• preferential claims
• non-preferential claims

Preferential claims, as a generality, include rates, taxes, and social insurance

contributions. It should be noted that the costs of the bankruptcy rank in priority to
other claims.
Third-party rights

These are quite limited; this is relevant for property held by the bankrupt as a trustee
as well as limitations on the Official Assignee’s powers in relation to copyright.
Personal Insolvency Act 2012
Three new debt resolution mechanisms were introduced under the Personal
Insolvency Act 2012 Links to an external site. for people who cannot afford to pay
their personal and mortgage debts. The Insolvency Service of Ireland (ISI) Links to an
external site. administers these debt resolution processes.

• A Debt Relief Notice (DRN) to allow for the write-off of debt (generally
unsecured and in some cases secured) up to €20,000, subject to a 3-year
supervision period during which creditors will not be able to pursue the debts.
• A Debt Settlement Arrangement (DSA) for the agreed settlement
of unsecureddebt, with no limit involved, normally over 5 years. Creditors making
up 65% of the total debt must agree.
• A Personal Insolvency Arrangement (PIA) for the agreed settlement
of secureddebt up to €3 million (though this cap can be increased)
and unsecured debt, with no limit involved, normally over 6 years. It is a voluntary
arrangement and must get the support of creditors – both secured and unsecured
– representing at least 65% of your total debt. In addition, over 50% of your
secured creditors and 50% of unsecured creditors must vote in favour.
Summary-5
• A company can continue into perpetuity.

• Liquidation brings the company to an end and distributes the assets amon
g creditors and members.

• Liquidation may be voluntary or compulsory. When it is compulsory, the Hi

gh Court will appoint a liquidator.

• When liquidation occurs, a report must be prepared by the liquidator for th

e Director of Corporate Enforcement.

• A receiver takes control over charged assets and sells them to discharge t
he debts of the company.

• A receiver may be court appointed under the terms of debenture.

• Examiners are appointed to companies that are in financial difficulties whe

n there may be a reasonable expectation that the company may be viable.

• The examiner presents a report to the High Court or Circuit Court with rec
ommendations for making the company viable.

• Bankruptcy law deals with individuals who are unable to pay their creditor
s.

• An Official Assignee is appointed by the Court and deals with the bankrupt
’s assets to pay creditors.

• Personal Insolvency provides a possible alternative to Bankruptcy.