The Legal System and Sources of Law in the UK
This domain tests how law is made, ranked and applied in the UK, and the procedural rules - above all limitation - that decide whether an insurance dispute can be litigated at all. Questions typically ask you to name the source of a rule, apply precedent, or spot that a claim is time-barred.
Sources and hierarchy
- Primary legislation: Acts of Parliament (FSMA 2000, Insurance Act 2015). Secondary legislation: statutory instruments, including regulator rulebooks made under delegated powers.
- Assimilated (retained EU) law, reshaped by the Retained EU Law (Revocation and Reform) Act 2023; it no longer automatically outranks later domestic statute.
- Common law (judge-made) and equity (trusts, fiduciary duties, rescission, injunctions). Where the two conflict, equity prevails.
- Custom and usage must be certain, notorious and reasonable. Textbooks, and obiter dicta, are persuasive only.
Precedent and the courts
Only the ratio decidendi binds; obiter dicta do not. The civil hierarchy runs Supreme Court, Court of Appeal, High Court, County Court. A High Court decision does not bind another High Court judge, though it is highly persuasive. Scotland and Northern Ireland are separate legal systems: their courts are not bound by English authority, and Scottish law has no doctrine of consideration.
Civil versus criminal
Insurance disputes are civil. The claimant proves the case on the balance of probabilities; the criminal standard is beyond reasonable doubt.
Limitation
Limitation Act 1980: six years for simple contract and tort, twelve years for deeds, three years for personal injury. Time runs from the breach, not from the casualty or from the date the insurer declines.
Worked example
A property policy obliges the insurer to pay within 30 days of the loss being agreed. Fire occurs 1 January 2022; the adjusted figure is agreed on 1 June 2022; payment falls due 1 July 2022. Breach therefore occurs on 2 July 2022 and the six-year period expires on 1 July 2028 - not six years after the fire. If the insured also alleges unreasonable delay under the implied term inserted by the Enterprise Act 2016, that separate cause of action accrues only once a reasonable payment period has elapsed, which may be later still.
Traps that cost marks
- Confusing the Supreme Court with the European Court of Human Rights, which is not part of the domestic hierarchy.
- Treating obiter dicta or a High Court judgment as binding.
- Applying English precedent automatically to Scottish or Northern Irish cases.
- Running limitation from the date of loss rather than the date of breach.
- Describing regulator rulebooks as statutes: they are made under statutory powers but are not Acts.