Contract and Negligence Report

ASPECTS OF CONTRACT AND NEGLIGENCE FOR
BUSINESS
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Table of contents
Introduction........................................................................................................... 3
LO 1: The elements of a valid contract in a business context................................3
1.1 Importance of the elements required for the formation of a valid contract.....3
1.2 The impact of different types of contract.........................................................4
1.3 Analysing the terms in contracts.....................................................................5
LO 2: Applying the elements of contract in business situations.............................5
2.1 Elements of contract applicable.......................................................................5
2.2 Applying law on terms in different contracts...................................................6
2.3 The effect of different law of terms and exemption clause in contracts..........7
LO 3: Principles of liability in negligence in business activities..............................8
3.1 Contrasting liability in tort with contractual liability........................................8
3.2 The nature of Liability in Negligence...............................................................8
3.3 How a business can be vicariously liable.........................................................9
LO 4: Applying principles of liability in negligence in business situations............10
4.1 Applying the elements of the tort of negligence and defences......................10
4.2 Applying the elements of vicarious liability...................................................10
Conclusion........................................................................................................... 11
Reference List...................................................................................................... 12
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Introduction
Over the time, as the business organisations evolved and expanded, they incorporated
legislations to protect the business interests. Due to the obligations and complications in the
verbal contract, most of the business organisations have put interested in legalising the
agreements in the form of a contract. The written version of any contract not only safeguards
the interest of the parties involved but also acts as a defensive shield for the plaintiff. The
legislations regarding negligence in business context became equally vital to resolve damage
control situations. The following report will look into the various aspects of contract and
negligence in the business context and outline the effective measures involving the
legislation.
LO 1: The elements of a valid contract in a business context
1.1 Importance of the elements required for the formation of a valid contract
A contract in the business context is referred to an agreement or a promise that binds two or
more parties regarding a common subject of interest. The elements give validity to the
contract, making it legally justified and there lies the significance of the elements. The
elements are offer and acceptance, consideration, legal capacity, consent and the intention to
create legal relations.
Offer and acceptance: An agreement is being constituted if a party offers any product or
service and another party accepts the offer with every terms and condition. The offer does not
require to be made to a specific person, but it can include the whole world. On the other hand,
the acceptance takes place, when any interested party reciprocates to that offer using an act or
a statement. According to the decided case law of Harvey v Facey [1893] Ac 442 Privy
council, it has been held that there was no contract established in between Harvey and Facey
as latter did not answer and respond to his offer. There was no proof and binding legal
relationship along with no intention to create legal relationship exists there in .
Consideration: Consideration is referred to exercising a right that results in the benefit of the
accepting party. Evidently, the benefit, be it monetary or something valuable, will lead the
offering party face a loss to construct the agreement. However, considerations must not
contain any illegal terms.
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Legal capacity: Any party with legal incapability cannot make a contractual agreement with
another party. Legal capacity of any party to make some factors and those determine a
contract are – (a) the parties must not suffer from mental disability (b) parties of minor age
group. (c) Bankrupt parties (d) parties are making an agreement on behalf of any organisation
without any consent (e) imprisoned parties.
Consent: Both the parties must enter into a legal contract with proper knowledge of what
they are entering into this. The agreement in a legal contract will be void if the parties make
an agreement based on the mistake, false statement, pressure or unconsciousness.
Intention to create legal relations: The parties involving in a business contract must intend
to create a legal relation through the contract. However, this element cannot be valid in all the
courses.
1.2 The impact of different types of contract
The contracts are made based on the formation, nature of consideration, execution and
validity. Based on the formation policy, the contract can be alienated into three divisions that
are express contracts, quasi-contracts and implied contract. Express contracts refer to the
contracts where both the parties had conversations regarding the agreement of the contract.
For instance, X has offered to sell his car, and Y expressed his consent in buying that with
expression. As per Geistfeld (2011, p.53), an implied contract refers to a contract where none
of the parties has been vocal about the contract by any means. For instance, X, being a train
passenger may have an implied contract with the driver of the train regarding the safety of X.
According to the case law of Marks and Spencer plc v BNP Paribas Securities Services Trust
Company (Jersey) Ltd and another[2015] UKSC 72,it has been held that there was no
existence of term relating to providing lease for rent purpose. So the tenant was successful in
this case.
Bilateral and unilateral are the most popular types of contracts that are formed by nature of
consideration. The bilateral contract is being formed when both the parties agree to a specific
term of consideration. For instance, party A and party B agrees to the point that A will
provide with a specific service to B on a particular day with the condition that B has to pay
for the service on that very day. On the other hand, unilateral contract occurs when the
considerations are moved to a specific direction.
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