Contract Law and Business Negligence

The provided report is a comprehensive analysis of contract law, business negligence, and liability. It discusses the essential aspects of contracts, including the elements necessary to make a contract valid. The report also explores business negligence in the context of contract law, highlighting the conditions where a business may be held liable for its actions. Furthermore, it explains vicarious liability, which holds a master responsible for the actions of their servant if those actions cause harm to outsiders while performing official duties.

Aspects of Contract
and Negligence for
Business
Table of Contents

INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Explain significance of vital elements necessary for creation of a valid contract along with
case examples..............................................................................................................................1
1.2 Discuss the impact of various kinds of contract....................................................................2
1.3 Analyse term in contract with reference to their meaning and effect...................................2
TASK 2............................................................................................................................................3
2.1 Apply the elements of contract in given business scenario ..................................................3
2.2 Apply the law on terms in different contracts by explaining................................................4
2.3 Evaluate the effect of different terms of law.........................................................................4
TASK 3............................................................................................................................................5
3.1 Contrast liability in tort with contractual liability. Support your answer with refernce to
cases and clear explanation of legal principles...........................................................................5
3.2 Explain the nature of liability in Negligence........................................................................5
3.3 Explain how business can be vicariously liable....................................................................6
TASK 4............................................................................................................................................7
4.1 Apply the elements of the tort of negligence and defences in different business situations.7
4.2 Apply the elements of vicarious liability in given business situations.................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
A contract is an agreement between two parties formed to create legal obligation and
which is enforceable by law. It is formed to complete a transaction by legally binding the parties
involved. There are terms and conditions along with a consideration which is to be paid as per
the contract (Stim, 2016). On the other hand, negligence occurs when a person has failed to
exercise ethical rules or care in particular situations. The report includes elements of a valid
contract, its impact, meaning of various terms and application of the components in different
circumstances. In addition to this, liability in tort, nature of liability in negligence and application
of principles of liability in negligence to several events.
TASK 1
1.1 Explain significance of vital elements necessary for creation of a valid contract along with
case examples
A valid contract can be formed when essential elements are taken into consideration in
forming it. Elements of a valid contract along with its importance are as follows:
 Offer- It is defined as a promise which is made by one party and communicated to other
in order to form a valid contract. There are two parties viz. Offeror and offeree (Harvey v
Facey (1893). Without an offer, no contract can be formed.
 Acceptance- There should be an acceptance which means that offer made by offeror
must be accepted by offeree. Acceptance can be made orally or in writing (Payn v Case
(1789). In other words, there should be an approval of offeree for the terms incorporated
in contract. It is important from the point of view of law.
 Capacity- The parties to contract must be legally competent to enter into a contract. In
other words, the parties must have attained majority i.e. must be a person of 18 years.
Furthermore, the person should not be of unsound mind. A minor cannot execute or
become a party in the contract (Bellamy, 2013).
 Intention to create legal relations- This element states that parties would go to courts in
disputes or conflicts so as to be legally enforced. There will be lawsuit against a contract
in absence of legal intention (Balfour v Balfour (1919). Without this element, terms of
contract can be legally bound.
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 Consideration- A contract is incomplete without a consideration. It is an exchange
which would be made between promisee and promissor. It works as a foundation for the
whole contract (Foakes v Beer (1884).
1.2 Discuss the impact of various kinds of contract
A contract can be of many types which is necessary to understand. These are as follows:
1. Written contracts- In this type of contracts, terms and conditions are mentioned in
writing. Written contracts provide enhanced reliability as compared to verbal contracts.
The information and details are provided more clearly and precisely. Businesses should
execute written contracts as it reduces risks which may create difficulties for it. These ca
be shown in courts to resolve disputes (Rhee, 2012).
2. Verbal contracts- In this contract, not a single promise or term is included in written
form. It can easily be made with words which do not require any written proof. However,
the level of uncertainty is high which leads to disputes regarding rights and obligations of
parties involved. Some agreements may also be partially verbal. These contracts lack in
evidential value which makes it difficult to prove a case in the courts.
3. Standard form contracts- The other name is pre-contracts wherein terms are provided
in advance with inconsiderable negotiation between parties. There are very few details
which are mentioned on a blank sheet. Generally, they are one-sided documents which
works in favour of the person who has created it. The terms of the contract becomes
compulsory to follow if a sign it put without even reading it.
4. Period contracts- This type of contract is very famous within contractors or hirer where
the contractor is liable to carry the work so specified in the contract on a timely basis. It
is usually used in building or construction industry. It is also known as “period trade
contracts”. Contract is executed each time the hirer offers work to the contractor and the
contractor accepts it (Johnson, 2013).
1.3 Analyse term in contract with reference to their meaning and effect
Agreement- In the legal sense, a promise along with a set of promises which is necessary
for each other. For making a contract, there has to be an agreement. An agreement can be
enforced at court to get justice for breach.
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Promise- This means a proposal made by one person to another which becomes a a
promise on acceptance. The consent should be given carefully after obtaining the right meaning
of the words included in the promise. These can be enforced from which can bind the parties.
Enforceable by law- When the promises in an agreement when accepted becomes a
contract which is enforceable by law. This means that legal obligations become binding which
can be taken into courts for seeking justice if there occurs any breach.
There are many other terms the meaning of which should be known so that each word can
be put in the right place in order to establish right meaning. Some other terms which are used in a
contract includes a warranty which is meant by performance of a particular clause which is
contained in the contract. Along with this, condition is also a term which is important to know as
it holds great importance and must be mentioned in a contract (Ricks, 2012).
TASK 2
2.1 Apply the elements of contract in given business scenario
The case involves two important facts which are offer which is accepted by a person and
invitation to offer. In an offer, a party (offeror) states the terms or promises to the other party
(offeree) with an intention to get it accepted so that terms can be completed with their
compliance. It is followed by an acceptance which is given by offeree which acts a confirmation.
However, if no acceptance is made to the terms of offer, then it is a mere invitation to offer. In
this, a person invites offer from general public by through advertisements, tenders, auctions,
display etc. The main aim is that an individual from the public will make a counter offer and on
accepting such offer, a contractual relationship will be formed (Ruychev, 2018).
This is purely a case of invitation to offer in which Ivan made an offer to Todor to buy
HND law book for £50. This offer was made by seeing the display on which this book was
displayed. On the making the payment, Todor denied the offer by stating that this is the only
copy he is left with which is also sold to a person named as Carl yesterday. Thus, a contract is
not created because the offer by Ivan was not accepted by Todor. This is the main element to
form a valid contract, hence, this is merely an invitation to offer which is built only when the
counter offer is accepted. Todor hold every right to deny the offer as payment has not been
made. Also, there is no breach of terms and conditions because Todor can put the book on
display to attract customers.
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2.2 Apply the law on terms in different contracts by explaining
Before making a contract for executing it, meaning of each term should be understood to
know their effect. The same are:
Condition- A contract is formed by containing number of conditions which are the
essence of it. They are important as a contract in absence of conditions can not operate
successfully. Furthermore, a breach in condition will amount to a offence of civil nature for
which a case can be filed by the party who has suffered loss or damages from such breach. The
plaintiff can sue the defaulter (Poussard v Spiers & Pond (1876).
Warranty- This is something which is provided on the performance of a product or
doing of specified act. A contract is absolutely valid even if there it does not contain any
warranty. In non-performance of a warranty, it is assumed that only plaintiff has suffered from
damages (Bettini v Gye (1876). Warranties are mainly used in commercial situations and there
should be independence or no force for entering a warranty.
In nominate- This is something which cannot be included in the ambit of a condition or
warranty but which derives its meaning as per the circumstances if they have been breached.
Similarly, its effect is also ascertained with the situations.
2.3 Evaluate the effect of different terms of law
Conditions are considered the roots of a contract which govern the parties to carry their
activities according to a contract. A condition may be limited to a certain extent by inserting an
exclusion clause. This clause is included to work as a restriction or limitation. Every such clause
must receive the consent of both parties (Stoica and Bostan, 2015). This is the reason why it is
necessary for parties to go through each terms and conditions in detail and understand their
meaning before putting a sign. In this case, it was clearly mentioned on the ticket that the
organization is not responsible for any damage or injury caused by the failure of any hired
equipment. By putting these words, the entity having control of giving chairs on hire has limited
its liability. It was the fault of John, that he has made default by not reading all the details
carefully before taking the chair on hire. An exemption clause need the approval of both the
parties and in this case the consent was given by John by paying 50p for one hour. It made the
contract valid and binding.
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In this case, John can not file a case against the council as they have clearly shown the
words which have meaning expressed clearly. Though, John has suffered from severe injuries
also, his clothes were damaged but no case can be filed because of exemption clause.
TASK 3
3.1 Contrast liability in tort with contractual liability
Tort liability different from a contractual liability on the basis of nature of duty. In
former, duties in torts are fixed by law and in latter, duties are determined by contracts which
create a contractual relationship. The main difference between these two are as follows:
1. The nature of tort is civil law however, liability is generally provided in un-liquiated
nature. On the other hand, in case of contract, the liability which is imposed is usually
liquidated in nature. Furthermore, the imposition is already determined on the basis of
terms of contracts (Knapp, Crystal and Prince, 2019).
2. Tort liability is applied on a person in case of failure to adhere to duties which have been
provided legally. On the contrary, a defendant in a contract is imposed with liability when
he/she fails to comply with contractual duty.
3. For determining the liability in case of tort, normal law of the land according to situations
are applied. But in case of ascertaining liability in a contract, the terms of contract are
taken into account.
4. There must be some fault by the defendant in his legal duties in order to impose tort
liability. In other words, it can be said to be a fault based liability. In case of a contract,
contractual obligations must be fulfilled. In case even a single obligation is not complied
with, the law of contract will be applied for the imposition of liability to the parties. It is
strict based liability.
5. A party can only seek damages in case of a breach of tort. This is totally opposite for
contracts. In a case a contractual duty is breached, then damages as well as specific
performance can be sought. In some case, contract can also be rescinded.
3.2 Explain the nature of liability in Negligence
Negligence refers to showing carelessness in conduct of an activity. This can be occur
either by omission or commission. The harm caused by negligence is not done knowingly. In
other words, outcome occurred is not intentional. In case of a negligence, there could be severe
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imposition which can be avoided by proving the duty of care that defendant owed. Along with
this, there should be a breach in such duty of care and it caused damage to claimant. There was a
benchmark case of Donohue v Stevenson (1932) in which it was held that the manufacturing of
products should be such that, no customer is harmed from those harms which have been
predicted. Hence, the duty of care was on the manufacturer and the burden of proof was on those
who had suffered harm.
There should be a particular situation for instituting actions provide no harm should be
given to plaintiff. Claimant can be successful in negligence case only when there are enough
evidence to prove it. The court in which a case for negligence is filed will check the acts of
defendant to examine the reasonable care. If it fails to meet the expected level, then negligence
will be deemed to have been committed. Standard against which it is measured will be that a
normal person will require to apply.
Apart from this, a compensation for the loss, injury, damage or harm can by sought by
claimant by proving two things which are that breach of duty has caused harm and harm was not
too remote from the breach.
3.3 Explain how business can be vicariously liable
Vicarious liability can be defined as a legal concept in which an individual is put under
the burden of liability for the actions of another person. This type of liability is imposed where
employer-employee relationship exists. Under vicarious liability, employer is held responsible
for giving answers for the actions of servant. Employee should abide the requirements so put by
employer. Some of the elements of vicarious liability are as follows:
 This type of liability is applied on the relationship of master-servant, employer-employee.
The employee works for the employer, hence, employee is actually doing the work of his
employer (Lewis and Morris, 2012).
 Servant should is accustomed to act as per his master. In other words, the instructions or
commands given by employer should be followed for carrying out activities.
 Servant must act while in the employment. If a person is not in employment, then such
liability can not be imposed. Hence, it is an important element.
 The actions of servant must cause harm to an individual who is not in the employment in
the same organization. In other words, the other person should be an outsider.
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 The actions are not personal in nature. Any activity having a feature of personal activity
then it should not be considered.
 Servant is not held liable for his own acts from which a harm has been caused. In such
situation, the master is liable for the acts of his servant.
TASK 4
4.1 Apply the elements of the tort of negligence and defences in different business situations
Law of negligence provides that if a person has caused harm from his actions due to
negligence then no further harm should be provided to plaintiff if his neighbour and loss which
has been forecasted earlier. A defendant will be considered to have caused negligence if the
plaintiff has suffered from loss and it is not that remote. However, the defendant has the gets the
chance to prove that the loss which has occurred due to the default on the part of plaintiff. The
actions of plaintiff were wrong enough to make him suffer loss. In such a scenario, a valid
justification can be built in favour of defendant that no negligence has been caused by him. In
this way, defendant can reduce his liability up to the extent of the negligence caused by plaintiff
himself because of his own actions (Loucks, 2014). In the given case, David was driving at a
speed which exceeded the permitted speed. This imbalanced the vehicle due to which David hit a
telephone pole causing serious and permanent injury. Furthermore, there was a kid Kevin on
which this pole fell down making him unconscious and causing permanent injuries (Oliphant,
2012).
This was a complete negligence on the part of David as he was driving at wrong speed.
He should have been controlled the speed and avoided driving at such high speed. Furthermore,
he also neglected the board of on which the speed was displayed. This injuries suffered by Kevin
as well the loss suffered by TeleCo are of serious nature. In this case, David can not avoid his
liability because he is at fault. Hence, no liability can be avoided because the negligence was on
the David.
4.2 Apply the elements of vicarious liability in given business situations
In the law of vicarious liability, relationship amid the parties must be of master-servant,
employer-employee and the servant should be acting as per the commands of the master and in
employment course which has caused damage to an outsider and the actions of the servant are
not personal in nature. In the law of vicarious liability, any obligation can be imposed upon the
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master for the actions of his servant provided the loss which is caused by the servant to any
outsider should be while perfuming his official duties (Cornford, 2016). If a loss is caused by the
servant but he is not acting within the scope of his employment then such loss is not to be made
good by the company Colonial Mutual Live Assurance Society v The Producers and Citizens Co-
operative Assurance Co of Australia (1931). In this case, Roger was employed with Regent Hotel
and Colin was head chef there who lost his temper because of the attitude and anger of roger. So
one day he hit Roger from a frying pan which made him suffer injuries. In this case, Roger can
bring a suit against Regent Hotel for the actions of Colin because this given scenario has fulfilled
all the elements of vicarious liability.
CONCLUSION
From the above report, it has been concluded that contract is an agreement which is done
between two or more parties. it has been observed that there are numerous aspects of a contract
which are necessary to be fulfilled and followed by all the parties in order to make that contract
valid. In above report, various aspects are considered which are helpful in understanding of an
agreement and contract. A business organisation comes under various contracts to fulfill their
operational course. The above report empathizes on conditions where negligence for business in
context of contract is studied.
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REFERENCES
Books & Journals:
Stim, R., 2016. Contracts: The Essential Business Desk Reference. Nolo.
Bellamy, J., 2013. Exclusion and Limitation Clauses in Business Contracts.
Rhee, R.J., 2012. The Tort Foundation of Duty of Care and Business Judgment. Notre Dame L.
Rev. 88. p.1139.
Johnson, L., 2013. Unsettledness Delaware Corporate Law: Business Judgment Rule, Corporate
Purpose. Del. J. Corp. L. 38. p.405.
Ruychev, K., 2018. Aspects of Contract and Negligence for Business. GRIN Verlag.
Ricks, V., 2012. Assent is not an Element of Contract Formation. U. Kan. L. Rev. 61 p.591.
Stoica, A. and Bostan, I., 2015. The relative conditions for the valid conclusion of a contract,
under the New Civil Code. Acta Universitatis George Bacovia. Juridica. 4(2). pp.511-
530.
Knapp, C.L., Crystal, N.M. and Prince, H.G., 2019. Problems in Contract Law: cases and
materials. Wolters Kluwer.
Lewis, R. and Morris, A., 2012. Tort law culture: Image and reality. Journal of Law and Society.
39(4). pp.562-592.
Loucks, T.G., 2014. Travelers beware: tort liability in the sharing economy. Wash. JL Tech. &
Arts. 10 p.329.
Cornford, T., 2016. Towards a public law of tort. Routledge.
Oliphant, K., 2012. Cultures of tort law in Europe.
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