Aspects of Contract and Negligence for Businesses

This assignment speculates the basic aspects related to the contracts, which helps in analyzing its effect on the organizational operations.

Running Head: ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESSES
STUDENT NAME:
STUDENT ID:
SUBJECT CODE:
ASSIGNMENT NAME: ASPECTS OF CONTRACT AND
NEGLIGENCE FOR BUSINESSES

ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESSES 2
Table of Content
Introduction......................................................................................................................................3
Task 1: An insight into contract formation......................................................................................3
1.1 Contractual elements.................................................................................................................3
1.2 Different contractual impacts....................................................................................................4
1.3 Meaning and effect of the contractual terms.............................................................................4
Task 2: Application of elements of contracts in the business situations........................................5
2.1 Application of the contract elements in the given business scenarios.....................................5
2.2 Application of the legal terminology in the provided contracts................................................7
2.3 Evaluation of the effects of the provided terminology in the given contracts...........................8
Task 3: The principles of liability in negligence in business functionalities...................................9
3.1 Contrast liability in tort with contractual liability.....................................................................9
3.2 Explain the nature of liability in negligence............................................................................10
3.3 Explain how a business can be vicariously liable....................................................................11
Task 4: Be able to apply principles of liability in negligence in business situations....................12
4.1 Apply the elements of the tort of negligence and defences in different business situations...12
4.2 Apply the elements of vicarious liability in given business situations....................................12
Conclusion.....................................................................................................................................13
Reference List................................................................................................................................14

ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESSES 3
Introduction
Contracts form a central doctrine in terms of partnership between two persons or organisations.
Compliance to the levied terms and conditions enhances this partnership. Viewing it from
another perspective, breach of contract destroys the stability between the two parties. This action
establishes negativity to the contract and spoils its true essence. This assignment speculates the
basic aspects related to the contracts, which helps in analysing its effect on the organisational
operations.
Task 1: An insight into contract formation
1.1 Contractual elements
A contract is formed of certain elements, absence of which turns it into an invalid one.
Adherence to these elements would help Peter to build his career as a self-employed building
contractor (Clarke and Lancaster, 2013, p.222).
Agreement is one of the essential components for a contract to be a valid one. In this element, an
offer is proposed by a party, which is accepted by the opposite party. The earlier sentence
projects two important subparts of agreement, that is, offer and acceptance (Schulze and
Staudenmayer, 2016, p.29). The acceptance of the proposed offer leads to the agreement between
the two parties. Viewing it from another perspective, agreement projects the adherence to the
ethics of the contract. In case of breach of contracts, the opposition party possesses full right to
expose disagreement to the proposed offer. This sentence bear’s resemblance with the
understanding of Peter that he can be sued for any kind of damages that might arise during the
tenure of the contracts.
One of the other elements is consideration. Consistency within the proposed guarantees makes
this element into a worthy one (Callea et al. 2014, p.400). This contractual element proves useful
for Peter is he encounters breaches of contract regarding his property, cash and other
administrative losses.
Capacity is one of the other crucial components in terms of a valid contract. The parties
possessing adequate understanding of the terms, conditions and liabilities are benefitted through
this element. This understanding provides them the access to enter into contracts with their
partners. This element might not be of any help for Peter at the initial stage, however, achieving
adequate understanding about the dynamics of contracts would aid him in engaging into
contracts with builders or property dealers (Davis et al. 2016, p.730).

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Consent holds equal importance in the formation of a valid contract. Without the consent of the
statutory bodies of law, no persons can enter into a contract. This condition is applicable for the
parties involved in the contract. Finding the adoption of illegal means by any of the parties turns
the contract into an invalid one. This action needs courtly intervention into the contract and
results in cancellation of the contract. Upon encountering any such means undertaken by the
opposition party, the other party possess full right to reject the proposed offer. This action
possesses two connotations (Ralston and Weber, 2014, p.253). One it projects the understanding
of the opposite party regarding the terms and conditions of the contracts. On the other hand, it
reflects the conscious attitude towards remaining true to the ethics of the contract.
Exposure of consent to the proposed offer enhances the clarity of the parties towards the terms
and conditions of the contracts. This motive establishes authenticity into the execution of the
contracts.
1.2 Different contractual impacts
Performance of every task with efficiency results in the achievement of positive results. On the
contrary, expose of lackadaisical attitude compels an individual to get negative outcomes. The
same can be applied to the activity of contracts. Presence of variety within the contracts
simultaneously possesses various effects (Kirichenko, 2016, p.175).
Contracts are mainly of two types, bilateral and unilateral. The name unilateral itself projects the
presence of one single entity. In this type of contracts, the terms and conditions levied by the
court is abided by the person intending to indulge into the contract. This type of contracts needs
the understanding and capability of the promissory to fulfil every criteria of the contracts.
Entering into these types of contracts after attaining adequate experience would prove helpful for
persons such as Peter.
In case of bilateral contracts, there are two parties, who are bound to abide by the terms and
conditions of the contracts (Mateescu, 2015, p.255). Breaches of contracts put the blame on the
culprit party and provide the opportunity to the victim party to file suit against the opposition
party. Presence of two parties strengthens the base of the contract and qualifies it as a valid one.
1.3 Meaning and effect of the contractual terms
Compliance to the regulation of a contract results in the fulfilment of the contractual needs. This
action reflects the true essence of the contractual term, condition. Deviation from these condition
compels the statutory body of law to interfere into these contracts and declare it as an invalid

ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESSES 5
one. As compared to conditions, warranty possesses less importance (Fargion, 2016, p.47).
However, breach of warranty period provides the opposition party to file claims for lost honour.
This comparison places conditions prior to warranty.
Another contractual element is intermediate terms. Assessment of the outcome of a contract,
based on these terms is difficult. However, performance of both the parties at the initial stages
might help the statutory bodies to estimate the outcome. Presence of breaches during the tenure
of the contract ceases its successful completion (Kirichenko, 2016, p.175). Along with this, it
provides the victim party with the right to file a suit against the encounter loss and damages. This
sentence possesses flexibility in terms of restoring the lost reputation of the victim party.
Summation contracts prove helpful for commercial purposes. Effective adherence to the terms
and conditions results in the efficient execution of the business activities. Along with this, it also
preserves the rights of the consumers as well as the employees and organisational personnel as a
whole (Mateescu, 2015, p.255).
Task 2: Application of elements of contracts in the business situations
2.1 Application of the contract elements in the given business scenarios
In the law of contract, the forwarded offer of contract and the incidence of acceptance are both
relative to the conventionality of acknowledgement. The elements of proposing an offer and the
factuality of acceptance incorporate the entire process of offering, accepting the terms and
conditions of the offer and corresponding between the involved legal parties and the stakeholders
(Boundy, 2016).
In the provided case scenario, it can be observed that the primary phase of the formulation of any
contract is acquiring shape. In the provided case situation, Miss Carole had opted to acquire
furniture for her student apartment and she had selected the online classified advertisement
agency “Gumtree” and had contacted the agency through the utilisation of the available online
contact number through electronic mail and had expressed her interest in purchasing the offer of
a brown leather couch for a price of £600.
The case of Miss Caroe is based on the determination that the online advertisement has been
formulated and posed for the sale of the furniture, in this case the couch, by the owner of the
object (Hargreaves and Price,2015). This same advertisement could be identified as the offer of
intention to represent the decision of putting the object up for sale and it is thus not possible to
be comprehended only as the notification concerning the offer to sale. The advertisement is in

ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESSES 6
the format of the formulation of an invitation to expected reception of offer in this regard. When
Miss Carol would be approaching the seller, the online advertisement reference could be
provided as the classification of the offer that has been made for the same price as had been
advertised for (Hiles and Hon, 2016). The same has to be accepted by the seller to formulate the
legal basis of the contract. If the contractual terms are not accepted then no formal constitution of
the legal contract could be made possible. Thus it could be observed with legal certainty that no
contract has been formed and the contract formulation completely is reliant upon the acceptance
of the initial terms could be determined (Gergen, 2013).
In the provided second case scenario, the Mr. Preston had made the offer of providing the
designated contract of £150,000 to the IT Company George, Smith & Fogarty, Inc. on 13th of
April, 2015. The included terms and conditions regarding the promise of offering the contract to
the IT organisation involved the conditionality of hiring the son of Mr. Preston, Devi as an
employee to the business organisation. The promissory note contained in the letter was
formulated on the date of 13th of April while it was unbanned to Mr. Preston that his son Devi
had been selected at the It organisation prior to that formulation of the promissory letter on 12th
of April, 2015.
The case study implies that the IT firm had launched a hiring spree cyber security experts and
this was the reason that Devi had applied to be interviewed by the Human Resource Organisation
department of the IT organisation and he had qualified for the job profile that he had applied for
at the first time (Stim, 2016). The offer of joining the IT organisation had been accepted by Devi
on 12th April 2015 and he had also made sure that his well reputed and influential father, Mr.
Preston should not remain in the loop of knowledge regarding the hiring process and this was the
reason that Mr. Preston did not know of the fact that Devi had already joined the aforementioned
IT organisation. The offer of the provision of the contract to the IT company was made by Mr.
Preston on the specificity of the pretext of the conditionality of hiring his son, which, according
to the provided case conditionality, had not been known to the father that his son had already
joined the IT organisation, the George, Smith & Fogarty, Inc. the day prior to the day of the
formulation of the offer letter. So, it could be determined from the legal standpoint that no tort of
breach of any contract or confidence could be detected in this case as no contract has been
created between the father and the IT Company (Pathak, 2013).

ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESSES 7
2.2 Application of the legal terminology in the provided contracts
In the provided case scenario, the situation could be analysed that the restaurant had asked the
couple to deposit their overcoats at the reception while they were going to reach their pre-booked
table. The couple had handed over their coats at the reception and received the acknowledgement
receipt that had the exclusivity clause imprinted at the back of it (Fried, 2015). By the declaration
of the authorities of the restaurant, the owners of the restaurants had abjured any responsibility of
safekeeping of any valuable material that would have been left accidentally with the clothing.
The reception of the restaurant had provided the couple with the ticket that mentioned that after
they had checked it, the restaurant would never accept the responsibility of any loss occurring
from the presence of any valuable possession that could have been left with the coats at the
reception. In this case, the wallet of the person was accidentally left with the coat and that was
discovered to be missing from the clothing after the couple had finished their dinner and had
come to take their depositions back at the restaurant (Babu, 2017). In this case, the responsibility
of the loss of the wallet was not undertaken by the restaurant. The clause that has been
mentioned in the case study and which was also mentioned at the back of the acknowledgement
receipt is the clause associated with exclusion. In this case scenario, the contract that was created
between the couple and the restaurant was the booking of the table and the additional exclusivity
clause had never been mentioned at the specific point of the formulation of the contract which is
enforceable by law (Monaghan, 2015). In this respect, it could be observed that the clause of
exclusion could never be valid as it was included after the creation of the contract. In this case
also the responsibility was incumbent on the party who came up with the exclusion clause to
have informed officially the other party about the existence of the same. This did not take place.
So it is not valid for the restaurant to include and utilise the exclusion clause and the
responsibility of the loss of the wallet would have to be accepted by the restaurant (Meiners,
Ringleb and Edwards, 2014).
In case of the next case study, it could be determined from the provided case study that the
involved parties are legally associated to the terms and conditions of the tenancy agreement. The
improvement and fixation of the property premises had caused the expenditure of some hefty
amount of money to the tenant and the terms and conditions which are implied in the agreements
associated with tenancy make the parties of the agreement, specially the landlord, legally liable

ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESSES 8
to reimburse the amount that has been spent on the improvement of the entire premises. In the
provided case scenario, the previous landlord had made the promise that in return to occurrence
of expenses on part of the tenant, the rent of the property would be kept low for the period of five
years. With the death of the previous landlord and the coming of the new landlord, the contract
terms got altered and the new landlord had increased the rent amount disregarding the promise
made by the previous landlord to the tenant. Under such conditions, from a legal perspective it
would be possible to promulgate that the tenant would be legally entitled to claim the amount
that has been spent by him and would be able to terminate the lease as it is not anymore the one
that had been agreed to while the creation of the agreement on tenancy. Under the new
conditions the landlord would have to formulate a new lease or would have to renew the old one
as the previous one had gotten terminated with the demise of the previous landowner
(McKendrick, 2014).
2.3 Evaluation of the effects of the provided terminology in the given contracts
According to the provided case scenario, it could be assessed that the insurance provider
company had provided a formal document regarding the terms and conditions of the policy to the
insurance recipient. Under the specific legal promulgations regarding such contracts, this
document would be definitely considered as the invitation to offer. This document, as and when
it was filled and sent back to the insurance provider, could be considered to be the finalisation of
the offer that had been accepted by the interested party (Hazard, Hodes and Jarvis, 2014). It is
evident from the provided case study that the offer had been accepted by the policy company and
this would have made this initial offer into a valid policy statement. The policy documents had
contained the necessary conditions and warranties as well. One such term was the previous claim
of theft or loss of the vehicle made by the owner within the previous five years. It was not
adhered to by the insurance policy recipient as the relevant information was not provided to the
insurer and this term or inquest was answered with falsehood. As the term is directly related with
the policy standards, so it is considered to be a determining condition regarding the policy as
well. This term has been utilised as a misleading and misrepresented one by the owner of the
motor vehicle and for this reason, the insurance provider is liable to void the contract regarding
the policy.

ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESSES 9
The provided case study exhibits that the insurance company issued the policy statement as an
invitation to offer. It was done to permit the interested parties to forward the offer by filling up of
the statement policy form which could then be reverted back to the company. The policyholder
had responded falsely to two of the questions. The term regarding the previous claim that was
associated with the consideration of theft and regarding the authenticity of the vehicle part are
always considered as the policy terms which had been falsely responded to. This determines that
the terms that had been violated are both conditions and warranties. The condition is related to
that of the previous claim as it is directly related (Armour et al. 2017). The term which is related
with the originality and authentication of the parts could be considered to be that of the
warranty. The misrepresentation is associated regarding the original nature as it had been
concealed to falsify the claim and mislead the insurance provider. If the same could have been
formulated as the terms of a contract then it would have been legalised as formal contractual
agreement and the term would have been associated with it. The breach has occurred with the
misrepresentation of both of the terms. It could thus be specified that the company would be able
to claim for the damages on the breach of warranty and void the contract for the breach of the
condition.
Task 3: The principles of liability in negligence in business functionalities
3.1 Contrast liability in tort with contractual liability
The factor of liability that could arise under the implications of any legal contract is always
different from the aspects of the tortuous law. The reason could be identified as the tort
conditions do not permit anyone to establish or prove the wrong that the aggrieved party has
supposedly suffered but only the establishment of the occurrence of the wrong is permitted and
could be thus established. This has been evident in the provided case studies as well.
The laws associated with that of the tort and that of the contracts imply a strict liability
architecture where the creation of the liability which is legally discernable would have to be
fulfilled by the person who would be committing the breach of the contract or confidence, mostly
without having any specific and prior knowledge of it. Under the terms and conditions of the
Civil Liability Law, the element of performance of any infringement of legal entitlements would
be considered the same through the circumstances and the liability features may constantly vary
according to the variables associated with such conditions (Owen, 2014). The difference that
could be identified as present between the mostly two categories of liability is that the liability

ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESSES
10
that arises under the contract with the inclusion of the specific parties and in such cases the
arising liability would always be incumbent on the society. The liability under the contractual
agreements and laws is always determined based on the amount considered and the liability
under the tort is always determined by the decision of the law courts. The breach of any right
under the contract is the right of the personnel but the right that is breached under the tort
conditions are not so. The legal contracts permit the involved stakeholders and the parties to
discuss the terms and the conditions regarding the breach of the confidence or the legal
agreements but under the tort conditions no such discussion is undertaken by any of the involved
parties or stakeholders. The liability which arises under the contractual agreements is always
decided to be based on the elements which are fundamental to the formation of the contract but
in case of the liability that arises out of the tort conditions, this determination is performed based
on the elements of the committing of the wrongful act. Finally the liability that arises out of the
contractual agreements is always predetermined but in case of the liability that arises under the
tort conditions this is decided by the situational constraints and circumstantial imperatives
(MacCormick and Summers, 2016).
3.2 Explain the nature of liability in negligence
The tort associated with that of negligence is committed out of the breach of the duty that had
been in presence already in the society. The duty of care is required to be undertaken when a
person is in the process of performing any specific act that could be, under the usual
circumstances, be detrimental or dangerous to the safety of the others who could be present
around the place where this act could be under progression. The propensity of occurrence of risk
of damage to property or to people necessitates the implementation of the duty of care. If the
duty of care is either not undertaken due to the wilful negligence, unmindfulness, ignorance or
forgetfulness of the involved responsible people then the legal repercussions regarding the
breach of the duty of care shall be evoked.
The breach would have to be serious enough to affect the involved people by causing damage
severe enough to be comprehended in monetary terms or through the physical or psychological
loss suffered by others associated with the situation. This type of liability could be recognized as
the tort of negligence identified under the tort law.
As an example of the incidence of the liability of negligence that can arise, the case of Donoghue
vs. Stevenson could be highlighted. The liability of the manufacturer had been established in that

ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESSES
11
case. It was demonstrated in the court of arbitration that as the manufacturer had provided a
product to the market segment under which it had been performing, it was the liability of the
manufacturer to ensure that the interested and the necessary parties could avail the product
properly and the responsibility squarely lay on the manufacturer. In this regard, it could be
observed that the liability for the consumers actually involves the entire market chain of product
propagation. The occurrence of breach of duty of care on part of the manufacturer entails for the
consumer or the customer to claim for the reimbursement of damages. It is determined that the
liability as it would arise would be validated if it could contain the element of any proper
negligence.The harm caused by the effect of negligence would have to be direct in nature to
derive the actual liability under the tort conditions.
3.3 Explain how a business can be vicariously liable
The liability that arises under the tort considerations can differ in nature as it may not be
considered incumbent upon the person that had committed it. If the person who had perpetrated
the act had not benefited in any manner from the performance of such an act then it would never
be, on part of the person to be liable for the act. The person who could be the beneficiary of the
effects of the wrongful act would be charged with the vicarious liability. The reason behind such
consideration would be the fact that the person who had perpetrated the act and the person who
had benefitted from it are not the same. The vicarious liability could be most effortlessly found
in the cases of the employee and employer professional relationships. The vicarious liability
becomes incumbent on the employer as the employer is the one who benefits from the
performance of the employee.
The notion of vicarious liability also implies that under the Health and Safety at Work Act, every
employer would be held liable for the responsibility of conforming to the legal guidelines to
make the workplace a healthy one to work and to safeguard the wellbeing of the employees.
For this purpose the employer has to ensure the availability of the medical amenities, has to
arrange the proper drinking water and facilities of sanitation in the work premises to ensure the
health and safety of the employees.

ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESSES
12
Task 4: Be able to apply principles of liability in negligence in business
situations
4.1 Apply the elements of the tort of negligence and defences in different
business situations
According to the provided case study, it could be deduced and understood that the patient, Mr.
Brown, was suffering from serious chest pains. This had made him to approach the hospital for
reception of the necessary treatment. The doctor on duty was responsible to treat him properly
but did not have the necessary time for it. The subsequent pain killer which had been prescribed
by him was available easily. The patient suffered fatality the next day out of pneumonia. The
doctor who had been on duty and had prescribed the medicine to Mr. Brown was the employee at
the hospital. As the patient had approached the hospital, the institution of medicine had become
responsible for the wellbeing of the patient as a concerted and unified unit. The doctor could be
identified as a professional who was in possession of the specific knowledge regarding
medication. This actually implies that the doctor was entrusted with the specific responsibility
and the duty to undertake the duty of care which was independent from the responsibility of the
hospital. It brings the liability of dual responsibility on the doctor as being a doctor and a hospital
employee. The cause of death as it has been specified in the case study is not directly related
with any dereliction of responsibility or of negligence that could have emerged on part of the
doctor. In this regard, the doctor would be held responsible for the negligence of the professional
responsibility towards his patients and the hospital would be liable for the negligence to the
patient as it had been caused while the employee of the hospital, the doctor, was performing the
official duties according to the vicarious liability conditions.
4.2 Apply the elements of vicarious liability in given business situations
The driver in this case study is the employee of the company and it was his entrusted duty to
receive the client from the airport and despite this responsibility that was entrusted to him by his
employees, he had neglected the duty of care to ensure the health and safety of the passenger that
he had gone to the airport to receive and had got drunk in the process and this was the cause of
the accident in the first place.
Thereby, it could be determined that the driver made a deliberate decision to create risk factors
for his passenger. It was not something that the employer had made the choice regarding the
effects of the acts of the driver. It would be considered to be a clear case of vicarious liability as

ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESSES
13
the damage had been caused while doing the professional duty provided to the driver by the
employer company. The company is liable for the losses that had taken place due to the accident.
The provided case scenario explains that the duty to ensure the health and safety of the
employees and the associated people had been delegated to another company by the
Supermarket. As the accidental injury involves the acts of an employee of the Supermarket then
it is determinable that the original employer is the Supermarket and the entity has the direct
performance influence regarding the working schedules and the job profiles in the premises of
the working area. Therefore, the supermarket will be held vicariously liable towards the injuries
that had been caused to the employee and the principle reason behind such a consideration lies in
the fact that it had occurred during the performance of the provided official responsibilities by
both the employees of the same Supermarket.
Conclusion
The creation of any contract demands the presence of the founding elements. These important
elements are invaluable to provide the standardisation of the contract. The elements are included
to ensure the validation of the contract in the legal format and it becomes more important when
the breach of contract occurs due to any reason and the elements of the contract formulation
ensure that the breach of contract could be evaluated and proved in terms of the breach of the
conditions and the terms of the contract. Such breaches are covered by the Civil Legalities such
as the liability of tort conditions.

ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESSES
14
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