Pre-action considerations and steps - Parties and causes of action

Learning Outcomes

This article details the essential pre-action considerations regarding the identification of parties and the establishment of causes of action in civil disputes. After studying this material, you should be able to accurately identify the legal status of potential litigants (individuals, sole traders, partnerships, limited liability partnerships, and companies) and outline the core elements required for common causes of action, specifically breach of contract and negligence. This understanding is important for analysing factual scenarios and selecting the correct options in SQE1-style multiple-choice questions.

SQE1 Syllabus

For SQE1, you must understand the practical importance of correctly identifying potential parties and establishing viable causes of action before commencing litigation. Assessment questions may require you to determine the correct defendant based on their legal structure or to identify the essential components of a cause of action within a given scenario.

When revising this topic, ensure you focus on:

  • Identifying the distinct legal characteristics of different business structures (individuals, sole traders, partnerships, LLPs, limited companies) relevant to litigation.
  • Understanding the practical consequences of incorrectly identifying a party.
  • Defining the concept of a 'cause of action'.
  • Recognising the fundamental elements necessary to establish common causes of action in contract and tort.
  • Applying this knowledge to factual scenarios to assess the viability and correct formulation of a potential claim.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

  1. Your client wishes to sue 'Dave's Deliveries' for breach of contract. Enquiries reveal Dave Smith runs the business alone from his home address. How should the defendant be identified on the claim form?
    1. Dave's Deliveries
    2. Dave Smith
    3. Dave's Deliveries Ltd
    4. Dave Smith trading as Dave's Deliveries
  2. Which of the following is NOT an essential element for establishing a cause of action for breach of contract?
    1. Existence of a valid contract between the parties.
    2. Breach of a specific term of the contract by the defendant.
    3. Intention by the defendant to cause loss to the claimant.
    4. Loss or damage suffered by the claimant as a result of the breach.
  3. A customer is injured by a faulty electrical product purchased from 'GadgetStore Ltd', a private limited company. Who is the primary legal entity the customer should sue?
    1. The manager of the GadgetStore Ltd branch.
    2. The manufacturer of the electrical product.
    3. GadgetStore Ltd.
    4. The director responsible for product safety at GadgetStore Ltd.

Introduction

Before initiating court proceedings, a solicitor must undertake important preliminary work. This involves ensuring that the potential claim is valid and correctly structured. Two fundamental aspects of this pre-action stage are: first, identifying the correct legal entities involved in the dispute (the parties); and second, establishing the legal basis for the claim (the cause of action). Errors at this early stage can lead to wasted costs, procedural difficulties, or even the complete failure of a claim. Therefore, accurate identification and analysis are essential for successful litigation.

Identifying the Parties

A fundamental pre-action step is to determine precisely who has the right to sue (the potential claimant) and who should be sued (the potential defendant). Parties must be correctly identified according to their legal status, as this impacts how proceedings are started, served, and how any judgment is enforced.

Key Term: Legal Entity
An individual or organisation recognised by law as having legal rights and obligations, including the capacity to sue and be sued.

It is essential to distinguish between different types of legal entities:

Individuals

A natural person sues and is sued in their full name (e.g., Jane Doe). If an individual conducts business under a trading name (a sole trader), they are still sued in their own name, noting the trading style.

Key Term: Sole Trader
An individual who owns and runs their own business, which is not incorporated. Legally, the business and the owner are indistinct.

Proceedings against a sole trader, such as David Chen trading as 'FastFix Solutions', should name the defendant as 'David Chen trading as FastFix Solutions'. The liability rests with the individual owner.

Partnerships

A traditional partnership, governed by the Partnership Act 1890, is a relationship between two or more persons carrying on business together with a view to profit. It is unincorporated.

Key Term: Partnership (General)
A business structure defined by the Partnership Act 1890 where two or more persons run a business in common for profit. It lacks separate legal personality.

Partnerships can sue or be sued in the firm's name (e.g., 'Smith & Jones (A Firm)') or by naming the individual partners. Partners typically face unlimited personal liability for the firm's debts, meaning personal assets are at risk.

Limited Liability Partnerships (LLPs)

Created under the Limited Liability Partnerships Act 2000, LLPs are incorporated bodies with separate legal personality.

Key Term: Limited Liability Partnership (LLP)
An incorporated business structure offering limited liability to its members, registered under the Limited Liability Partnerships Act 2000.

LLPs sue and are sued in their registered name (e.g., 'City Consultants LLP'). Members' liability is generally limited to their investment, protecting their personal assets.

Limited Companies

Companies incorporated under the Companies Act 2006 possess separate legal personality, distinct from their shareholders (owners) and directors (managers).

Key Term: Limited Company
An incorporated business registered under the Companies Act 2006, which is legally separate from its owners (shareholders) and managers (directors). Liability is typically limited.

Companies sue and are sued in their registered name (e.g., 'Innovate Solutions Ltd' or 'Global Plc'). Shareholders' liability is usually limited to any amount unpaid on their shares. Importantly, it is the company itself, not its directors or employees, that is liable for the company's contractual obligations or torts committed in its name.

Consequences of Incorrect Identification

Naming the wrong defendant can be fatal to a claim. For instance, suing a director for a company's breach of contract will fail because the company is the separate legal entity that entered into the contract. Similarly, suing a trading name like 'FastFix Solutions' instead of 'David Chen trading as FastFix Solutions' might cause enforcement issues. Verifying the correct legal status (e.g., via Companies House for companies/LLPs or by checking invoices/letterheads) is essential.

Worked Example 1.1

Your client, TechServices Ltd, contracted with a business called 'Apex Consulting' to develop bespoke software. The software delivered is faulty, causing significant financial loss. Your client believes 'Apex Consulting' is run by two individuals, Sarah Brown and Ben Carter, but is unsure of their exact business structure. How should you advise your client regarding identifying the potential defendant?

Answer: You should advise TechServices Ltd that further investigation is necessary. 'Apex Consulting' could be a trading name for Sarah Brown and/or Ben Carter as sole traders, a general partnership ('Sarah Brown and Ben Carter trading as Apex Consulting' or 'Apex Consulting (A Firm)'), an LLP ('Apex Consulting LLP'), or even a limited company ('Apex Consulting Ltd'). You need to determine the correct legal entity before issuing proceedings. Checking invoices, correspondence, or potentially Companies House (for LLPs/Ltd companies) would be necessary steps. Suing the wrong entity could lead to the claim failing or being significantly delayed.

Establishing the Cause(s) of Action

Alongside identifying the parties, the solicitor must analyse the facts to determine the legal basis of the potential claim.

Key Term: Cause of Action
The complete set of facts necessary to give rise to a right to sue. It constitutes the legal grounds upon which a claim is based.

A potential claim must be founded upon a recognised cause of action. This involves identifying the specific legal elements required and ensuring the facts support each element.

Common Causes of Action

For SQE1, you should be familiar with the core elements of common causes of action, particularly in contract and tort.

Breach of Contract

To establish a claim for breach of contract, the claimant must typically prove:

  1. Existence of a valid contract: Offer, acceptance, consideration, and intention to create legal relations.
  2. Relevant term(s): Identification of the specific express or implied term(s) allegedly breached.
  3. Breach: Demonstration that the defendant failed to comply with the term(s).
  4. Causation: Proof that the breach caused the claimant's loss.
  5. Loss: Evidence of the loss or damage suffered, which must not be too remote.

Negligence (Tort)

To establish a claim in negligence, the claimant must typically prove:

  1. Duty of care: The defendant owed the claimant a legal duty of care.
  2. Breach: The defendant breached that duty by falling below the required standard of care.
  3. Causation: The defendant's breach caused the claimant's damage (both factual and legal causation).
  4. Damage: The claimant suffered legally recognised damage (e.g., personal injury, property damage, some types of financial loss) that is not too remote.

Multiple Causes of Action

It is common for a single set of facts to support multiple causes of action.

Worked Example 1.2

Maria hired QuickBuild Ltd to construct a conservatory. The contract specified completion by 1st June. QuickBuild Ltd finished on 30th June. Due to the delay, Maria missed the summer season for enjoying the conservatory and claims distress. Additionally, some roof panels leak when it rains heavily. What potential causes of action might Maria have?

Answer: Maria potentially has claims for breach of contract against QuickBuild Ltd:

  1. Breach of express term (completion date): Failure to complete by the agreed date of 1st June is a breach. Damages might cover quantifiable losses due to the delay (though damages for distress/loss of enjoyment are harder to claim in contract unless a key object of the contract was pleasure).
  2. Breach of implied term (quality/workmanship): There's an implied term (e.g., under the Consumer Rights Act 2015 if Maria is a consumer, or Supply of Goods and Services Act 1982 if not) that the work will be carried out with reasonable care and skill and materials will be of satisfactory quality. The leaking roof suggests a breach. Damages would cover the cost of repairs and any consequential damage caused by the leaks.

A claim in negligence might also be possible regarding the defective roof if it caused property damage, but the contractual claim is usually more direct against the contracting party.

Case Analysis: Pre-Action Essential

Thorough case analysis is fundamental before proceedings are considered. This involves:

  1. Fact Gathering: Obtaining a full account from the client, supported by documents.
  2. Identifying Parties: Confirming the correct legal entities.
  3. Identifying Causes of Action: Determining the legal basis for the claim(s) by matching facts to the required elements.
  4. Assessing Merits: Evaluating the strength of the evidence for each element and considering potential defences.
  5. Considering Remedies: Assessing the likely recoverable damages or other remedies.

This analysis determines if litigation is viable and informs the content of pre-action correspondence and, ultimately, the statements of case.

Key Point Checklist

This article has covered the following key knowledge points:

  • Correctly identifying the legal status of potential claimants and defendants (individuals, sole traders, partnerships, LLPs, limited companies) is essential before commencing proceedings.
  • Each entity type has distinct characteristics regarding legal personality, liability, and how they sue or are sued.
  • Failure to name the correct party can result in the claim being struck out or facing enforcement difficulties.
  • A cause of action provides the legal basis for a claim and consists of specific elements that must be proved.
  • Common causes of action include breach of contract and negligence, each with distinct required elements.
  • A single set of facts can potentially give rise to multiple causes of action.
  • Thorough pre-action case analysis involves identifying parties, establishing causes of action, assessing evidence, and considering remedies and defences.

Key Terms and Concepts

  • Legal Entity
  • Sole Trader
  • Partnership (General)
  • Limited Liability Partnership (LLP)
  • Limited Company
  • Cause of Action
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Pleased to share that I have successfully passed the SQE1 exam on 1st attempt. With SQE2 exempted, I’m now one step closer to getting enrolled as a Solicitor of England and Wales! Would like to thank my seniors, colleagues, mentors and friends for all the support during this grueling journey. This is one of the most difficult bar exams in the world to undertake, especially alongside a full time job! So happy to help out any aspirant who may be reading this message! I had prepared from the University of Law SQE Manuals and the AI powered MCQ bank from PastPaperHero.

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