Aspects of Contract and Negligence for Business

ASPECTS OF CONTRACT
AND NEGLIGENCE FOR
BUSINESS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Elements of Contract.............................................................................................................1
1.2 Types of Contract..................................................................................................................2
1.3 Terms of Contract.................................................................................................................3
TASK 2............................................................................................................................................5
2.1 Case Scenario........................................................................................................................5
2.2 Case Scenario........................................................................................................................6
2.3 Different terms in contract....................................................................................................7
TASK 3............................................................................................................................................7
3.1 Contractual Liability and Tortious Liability.........................................................................7
3.2 Principle of Negligence ........................................................................................................8
3.3 Doctrine of Vicarious Liability.............................................................................................8
TASK 4............................................................................................................................................9
4.1 Case Scenario........................................................................................................................9
4.2 Case Scenario........................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
A contractual relation is based on agreements which are enforceable in nature. Every
business organization prefers to develop relations which could be governed by Law of contract.
This enables them to develop unambiguous relations with different stakeholders, and ascertain
specific rights and duties to govern long term relations. It is important to note that all agreements
between parties cannot be enforced in the court of law, unlike the contracts. Hence, in order to
make an agreement into a valid contract, it shall be comprised of all the essential elements of the
contract. In pursuance to the same, present report purports to elaborate on significance of all the
elements, implications of each of the terms and the manner of formation of a valid contractual
relation. Further, Law of Tort also finds application in a business scenario. These are various
interactions which may not be bound by law of contract, but have the consequence of injuring a
third party. In such cases different torts shall cover the act to make the wrong person liable for
his/her actions. The principle of Negligence and the doctrine of Vicarious Liability are the two
most important and widely applicable concepts, especially in a business scenario.
TASK 1
1.1 Elements of Contract
Contract is a very important agreement with the promises which has many element for
validating it. Contract must be voluntarily signed by the parties without any influence from the
other parties (O'malley, 2012). Both the parties must have legal requirements to fulfil all the
conditions written in the document. There are various elements which need to formulate a valid
contract between the parties:-
 Offer: An offer is an intention of the first party showing to the another party to do or not
to do something which has legal obligation. Offer communicated to the another party for
taking the consent of other party. Another party can give his acceptance or reject the
proposal given by the offerer. In the case of Harvey v Facey [1893] AC 552 privy council
held that there was no contract concluded between the parties (Marks, Marks and
Jackson, 2013.). Thus there was no evidence of intention that the telegram sent by face
was to be an offer.
 Acceptance: it is defined as an unconditional assent, communicated by the offeree to the
offeror to all the terms of the offer with the intention of accepting. When the offeror
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receives the communication, the contract becomes effective (Can silence amount to
acceptance of a contract?, 2012).
 Consideration: It means something in return and any other benefits to the person which
must be valuable and lawful. First party may offer a monetary compensation to the
person who may accept the proposal. In Re McArdle (1951) held that the promise to
make payment came after the consideration had been performed therefore the promise to
make payment was not binding (Cross and Miller, 2011). Past consideration is not valid.
 Free consent: Both parties should give their consent which cannot be influenced by any
person and consent must be free from any influence also. Acceptance must be given to
the same thing and with the same sense to constitute a valid contract.
 Capacity: The law prescribe certain qualification to becomes a competent person to enter
into a contract. The person must attain the age of maturity and at the time of making
contract has sound mind for the lawful contract. The person who is disqualified by the
law and unsound mind cannot enter into contract.
 Lawful object: Court can reject any agreement if it has unlawful clause and object which
are contrary to the law (Cibinic, Nash and Nagle, 2006). It one party has doing fraud in
the subject of the contract and involves any injury to other person then it will not
considered as the valid contract.
For making a valid contract these are the element which need to follow by the parties and
validate their contract. If parties to the agreement fail to satisfy the legal requirements of a
contract then it becomes void.
1.2 Types of Contract
A Contract is a legally binding agreement which is enforceable by law. Parties in the
valid contracts gain rights and responsibilities and if there is any dispute between them the court
will make sure the parties follow rights and liabilities. There are many contract that individuals
making for completing their promises. In this case Ramsgate Victoria Hotel v Montefoire (1866)
LR 1 Ex 109 the offer was no longer open as due to the nature of the subject matter of the
contract the offer lapsed after a reasonable period of time (Miller and Cross, 2012). Therefore
there was no contract and the claimant's action for specific performance was unsuccessful.
 Valid contract: This agreement is enforceable by law which fulfil all the requirements of
a contract. All the conditions of a contract must be legal and valid enforceable by law.
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