This assignment delves into various aspects of legal studies and business law. It examines concepts from Tort Law & Economics, Contract Law (including negotiation and the psychological contract), and Business Law with a focus on vicarious liability. The assignment also explores relevant case studies and legal commentary.
Aspects of contract and negligence in businesses
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Table of Contents INTRODUCTION...........................................................................................................................1 TASK 1............................................................................................................................................1 1.1 Importance of essential elements required for the formation of valid contract....................1 1.2 Impact of different types of contract.....................................................................................2 1.3 Analysing the contractual terms with their effects................................................................3 TASK 2............................................................................................................................................4 2.1 Applying the elements of contract in given case scenario....................................................4 2.2 Examining the consequences of classifying terms of contract..............................................4 2.3 Evaluating the effect of different terms of law in give case situation...................................5 TASK 3............................................................................................................................................6 3.1 Contrasting contractual liability with tort liability................................................................6 3.2 Explaining the nature of liability in Negligence...................................................................7 3.3 Analysing how a business can be vicariously liable.............................................................8 TASK 4............................................................................................................................................9 4.1 Applying the elements of tort of negligence and defences in the give case situation...........9 4.2 Applying the elements of vicarious liability in a given business situation.........................10 CONCLUSION..............................................................................................................................10 REFERENCES..............................................................................................................................11 Books and Journals...................................................................................................................11 Online........................................................................................................................................12
INTRODUCTION In the present era of globalisation and hyper competition, complexity in business activities tends to show a rapid increase in the vital corporate environment. Therefore, it becomes a mandatory aspect for every business entity to effectively comply with the legal and regulatory framework in order to avoid government intervention in a significant way. Doing this helps the business organisation to gain customer loyalty and trust and assist the company to acquire the leading heights of success impressively (Cameron, 2015). Also, it becomes essential for every individual to get in total compliance with the regulatory framework which will provide them with an exotic right to claim for their damages in a systematic and appropriate manner. With this context, the present report highlights the crucial aspects of contract and negligence in business scenario. The report will throw light on various practical business situations and the applicability of the legal provisions in such circumstances. TASK 1 1.1 Importance of essential elements required for the formation of valid contract A contract is defined as a voluntary, legal and deliberate agreement which binds two or parties in a regulatory and judicial framework. A contract may be either implied or expressed in terms and conditions and generally deals with sale or lease, tenancy or employment. A contractual relationship is crucially identified when there exist an offer, an acceptance to the said offer along with a valuable and legal consideration (Gray, 2010). Considering this fact, the essential elements required for the formation of a valid contract are explained as follows-Offer and Acceptance-It is one of the most important element required for the formation of a valid contract. In order to develop a valid contract, there must exist a lawful offer which substantially give rise to a lawful acceptance in a significant way. It reflects that the parties involved in the contract must clearly and systematically comply with the subject matter as per the terms and conditions mentioned in the agreement.Lawful consideration-Consideration can be described as the value for something in return.In order to form a valid legal contract, there must exist the crucial element of lawful consideration. An agreement becomes enforceable only when both the parties to the contract agrees to give something in return for the value. The consideration required 1
to form a valid contract should not be illegal, unlawful, opposed to public norms. It needs to be highly legal and ethical in accordance with the government rules and policies.Free consent of parties-It is essential to have the free consent of parties in a manner that both the parties agrees to the terms and conditions on their own grounds and there exist no pressure to enter into the contract against their own willingness (Clarke, 2015). If an agreement is highly induced by fraud misrepresentation or coercion, it is said to have no free consent and it results in turning the contract void and null. Capacity to contract-The person entering into the contract should be eligible for performing his/her duties and responsibilities in a significant way. It means that the party to the contract must attain the age of majority, must not posses any disqualifications from any other law and should have a sound and peace mind (Faure, 2009). Lunatics, minors, intoxicated persons and unsound people does not have the capacity to enter into the contract. 1.2 Impact of different types of contract Contracts are formed on the grounds of various terms and conditions. The major types of contract and their impact is discussed as follows- Contracts on the basis of formationExpress contracts- Under such contracts, there exist a clear picture of the terms and conditions of the agreement as proposed by the offerer. These contracts can either be in verbal or written mode. It reflects definite norms that is required to be accepted by the offeree in a significant and appropriate way that expressly demonstrates his/her consent to the given conditions and terms.Implied contracts- These contracts involves obligations which arises from a mutual contract with a promise to fulfil the responsibilities effectively. Such contracts are not expressed in written or oral terms but are clearly implied by the court of law in a significant way (Ahmad, 2012). Quasi contracts- Contract formed by virtue of law are called as Quasi contracts. In case of these contracts, there exist no offer and acceptance, hence no contractual relationship takes place between the parties. The importance of this contract reflects its applicability in case when there exist the supply of necessary items during the worst situations or when expenses of one person are borne by the other. 2
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Contracts on the basis of nature of considerationBilateral contract- These contracts are developed on the grounds of mutual exchange of considerations and promises in order to create a contractual obligation in a systematic and appropriate way. In such contracts, the parties involved should need to get in total compliance with the terms and conditions of the contract (Emerson, 2009). Failure of such compliance would make the responsible partner liable for all the damages. Unilateral contract-Such contracts are developed by creating an offer that can be accepted only by the conduct of activities by the other party in a significant way. Unilateral contracts are formed by expressing the offer clearly, the acceptance of which is based on the performance of the offer. In case of these contracts, the offer can be revoked at anytime before the completion of the offer. 1.3 Analysing the contractual terms with their effects The key contractual terms which assist an individual or a business entity to perform his/her contractual obligations in an effective way are explained as follows-Express terms- These terms are made in either written or verbal mode. Express terms are specifically mentioned in the contract stating clear terms and conditions to the offeree. It lays a significant impact on the performance of responsibilities and duties of the offeree. Failure of compliance to such terms will result the responsible party to become liable for all the damages and injuries in a significant way.Implied terms- These terms are not expressed in either verbal or written means. It reflects the mandatory conduct of duties and responsibilities by the parties in accordance with their act of performance (Jennings and Twomey, 2010). Implied terms are legally expressed by the court of law and tends to develop a contractual obligation between the parties. Exclusion Clause-It is one of the least important term in a contract that tends to confine or restrict the legal rights of the parties involved in an agreement.Therefore, the government is trying to bring amendments to such clause in order to reduce the benefits of unfair advantages which the parties are gaining. 3
TASK 2 2.1 Applying the elements of contract in given case scenario Case scenario Ivan wants to buy a HND Law book which he saw on the display shelf of the Todor's bookshop. He went to the shop to buy that particular book at the offered price of₤50but he was refused saying that the book has already been sold to Carl and that he had forgotten to remove the book from the display shelf. Listening this, Ivan got upset and insisted Tordor to sell the book to him. Applicability of legal provisions From the above case scenario, it can be said that the bookseller Torder generates an open invitation for the purchasers to buy the book at the offered price. Considering such invitation, Ivan entered the shop to purchase the book at₤50. However, such open invitation comes to an end when Torder informs Ivan that the book has already been sold to Carl. Therefore, Torder is not all liable to sell the book to Ivan. Decision With regard to the present case scenario, the following decisions are generated- Since there exist a contractual relationship between Torder and Carl, therefore, the shopkeeper is crucially responsible for selling the books to Carl as per the terms and conditions of the contract. There exist no contractual obligation between the shopkeeper, Torder and the purchaser Ivan, thus, Torder posses no liability to sell the book to Ivan and that Ivan have no legal right to sue the shopkeepr for his damages (Cartwright, 2011). If Carl fails to comply with his performance and did not come to collect his book, there exist a breach of contract and in such case Torder gains the right to sell the book to Ivan in an appropriate and systematic way. 2.2 Examining the consequences of classifying terms of contract Classifying the contractual terms is essential for an effective conduct of business activities. It benefits the organisations to create a strong base for performance variable and contractual liabilities. The terms of contract are classified on the grounds of following points- 4
Condition-It is one of the most important and significant term of contract. It plays a vital role towards the direction of carrying out the performance in context with the essential purpose of the agreement (Goldberg and Zipursky, 2007). Failure of not complying with the conditions of the agreement will entitle the harmed party to reject the contract and claim for his/her damages in a significant way. Also, the harmed party may select to continue with the contract instead of rejecting it and recover the damages and harms systematically.Warranties- It is considered as the least important term in a contract. In this case, there exist no breach of contract. Non compliance of the terms of warranties will result the injured party to claim for his damages but will not five him the right to repudiate the agreement. Intermediate terms- Also called as innominate terms. These terms are neither conditions nor warranties. Such terms are flexible and are included in a contract to favour the legal parties in a significant and systematic way. Intermediate terms are accessible on the grounds of the results of a breach of terms. If the breach results in causing severe damages and loss, then in such case the harmed party is entitled to reject the contract. Contrary to this, if the breach results in causing minor damages and loss, the injured party in such case will be able to compensate for his/her damages to the extent of harm caused to him (Forstenlechner. and Lettice, 2008). 2.3 Evaluating the effect of different terms of law in give case situation Case scenario John went into a local park managed and governed by local councillor and authorities. There he saw a notice stating that chairs can be hired for 50p per hour. Seeing this notice, he went to the ticket counter and paid 50p and got a chair. After some time, the chair got collapsed and injured him badly and damaged his clothes. John went to the local authorities to file a complaint but he was refused showing the exemption Clausen mentioned in the ticket which stated that no liability was accepted by the authorities for any damage or injury caused by the failure of any hired equipment. Applicability of the legal provision From the above case scenario, it can be said that the provision of exemption clause is applicable in a significant way. Exemption clause states that a party gets excluded from his/her 5
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liability if the concerned partner mentions an exemption clause in his contract. However, the use of such clause is unfair and may lead to create significant loss to the other party (Warren, 2012). With regard to the present case, it was the vital responsibility of the local authorities to provide safe and secure equipments to its customers, failure of which results the party to become liable for all such damages (Vytopil, 2012). Including an exemption clause does not violate the rules and responsibilities of the local authorities to deliver safe equipments to the consumers, therefore, the authorities becomes liable to compensate for the damages caused to John. Decision Besides incorporating an exemption clause in the ticket, the local councillor still posses the right to provide safe and secure equipments to its customers. By providing damaged chair to John, the authorities become liable to compensate for the damages caused to him in a significant way and also John has the right to sue them and claim for the damages in an appropriate and systematic way. TASK 3 3.1 Contrasting contractual liability with tort liability Contractual liability takes place when there exist a non compliance of the terms and conditions of the contract and the injured party posses a definite right to claim for the damages or sue the other party in a significant way (McKendrick, 2014). Tort liability, on the other hand is a part of criminal law and arises when harm to one party is caused due to the negligence or carelessness of the other party. The crucial difference between the contractual liability and tort liability is explained in the following tabular manner- BasisContractual liabilityTort liability Relationship between the legal parties Thereexistamutual relationship between both the parties and such relationship is highlyandspecifically governedbytheagreement entered. In case of Tort liability, there existnocontractual relationshipbetweenthe parties and the relationship is directly imposed by the court of law. Nature of liabilityHere the parties are crucially requiredtogetintotal Here the defendant is required to act in accordance with his 6
compliance with the terms and conditions of the contract in significant way. standarddutyofcareinan appropriateandsystematic way. Remoteness and causationIf there occurs a loss due to the normalconsequencesofthe breach, then the defendant will be crucially liable. However, if the damages are not a normal consequencesofthebreach, thenthedefendantwillbe responsibleonlyifhewas awareoftheunusual situations. Here the negligence on the part ofdefendantwillresultin causing damages and harm to claimant in a significant way (DeGeest,2012).Such damagesmusthavebeena predictable result of the failure of standard care of duty. Measure of damagesUnder contractual liability, the responsible party is liable to compensate for the extent of damages and loss caused to the injured party. UnderTortliability,the defendant is liable to put the claimant in the position which he would have been had the negligence not performed. Basis of damagesThenon-complianceofthe termsandconditionswill resultinbreachofcontract thereby making contract void and null. Because of the negligence of the defendant, he is liable to borne the damages related to financial and physical injuries causedtotheclaimantina significant way. 3.2 Explaining the nature of liability in Negligence Negligence can be described as an act of carelessness and ignorance by one of the party which causes damages, loss and injuries to other party in a significant way. It reflects the carefree attitude of a person which otherwise could be controlled and managed effectively. The nature of liability of negligence is based on the listed factors- 7
Standard duty of care- It states the fact that there must exist an ethical support to standard of reasonable care in the course of performing any activities that could predictably or unpredictably harm others. The element of negligence liability analyses the fact that the loss caused to the other party is due to the ignorance and carefree behaviour of the responsible party as he fails to follow his standard duty of care in a systematic and suitable manner (Bell, 2011). The case law ofDonoghue v Stevensonclearly states that because of the negligence of the standard duty of care, the company was crucially liable to compensate for the severe damages it caused to Mrs. Stevenson by serving her a decomposed bottle of ginger beer.Breach of duty- This element of liability in negligence states that the damages and losses are caused to the third party because of the breach of standard duty of care. This results the third party to face the harm because of the carefree attitude of the responsible party thereby leading the concerned party to claim for the damages and loss it caused to the injured party in an appropriate and legal way. Causation- This element reflects that the reasons for damages and losses was due to the negligent actions and activities of the defendant and the harm could have been debarred if the defendant had laid its concern over following his standard duty of care in a significant and effective way (Zoll, 2012). 3.3 Analysing how a business can be vicariously liable Vicarious liability is a significant element of Tort liability and is described as the one where the acts and activities of one party results in causing significant damages to the other party. This liability applies within the organisational structure where there exist a strong employee-employer relationship. It states the liability of the employer for the wrongful acts done by his employee which results in causing severe loss to the third party. A business can be held vicariously liable on the following grounds-There must exist a strong employee employer relationship within the organisational structure- This factor reflects the fact that the employer must posses significant control over the activities and acts of his employees within the workplace (Marsh, 2011). To test this fact, the judicial court lays its concern over applying integration test, control test along with economic test to analyse the employee-employer relationship within an organisation. 8
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The authority of employer to manage the activities of his employee- According to this fact, the employer should crucially possess the inherent power and authority to manage the overall activities of its workforce in a significant way. For this, the employers and the supervisions develop effective rules and policies which governs its workforce effectively. The actions of employee on the course of his employment- It is the most important element for stating the firm to be held responsible for vicarious liability. This states that the employer must possess full knowledge of the overall acts and activities performed by his employee in a systematic and appropriate way (Heine and Kerber, 2002). Also, only if the employee causes damage to the third party in the course of his employment, then only the business can be held vicariously liable, otherwise there exist no scope for stating the organisation to become vicariously responsible. TASK 4 4.1 Applying the elements of tort of negligence and defences in the give case situation Case Scenario David was driving recklessly at a speed of 35 MPH in 25MPH zone where there were children playing. Suddenly a child, Kevin, ran into the street to catch his soccer ball. David in order to protect the child, ran into other lane and got struck with a telephone pole managed by TeleCo so badly. He got severe injuries thereby resulting the pole to crush into two pieces, one of which hits Kevin and resulted in getting severe and permanent injuries to him. Applicability of legal provisions The applicability of Tort liability applies in the following manner-Standard duty of care- David's standard duty of care was to drive at a speed of 25 MPH in 25 MPH zone area.Breach of duty- David was driving with a carefree attitude at a speed of 35 MPH in 25 MPH zone area which reflects his negligence of his standard duty of care and resulted in breach of his duty in a significant way (Middlemiss, 2011).Causation- Because of the negligence of his standard duty of care, David resulted in causingseveredamagestoKevinandTeleCo.Therefore,hebecomesliableto compensate for the extent of damages caused to them. Decision 9
From the above case scenario, it can be said that there applies the concept of tort liability in a significant way. As per this concept, this liability takes place when the negligent behaviour of one party results in causing severe damages and injuries to other party. With regard to the present case situation, it was due to the ignorance and negligence of David's standard duty of care, which resulted in causing permanent injuries to Kevin as well as significant monetary loss to TeleCo. Therefore, in such case David becomes liable to compensate for the same in an appropriate and legal manner. 4.2 Applying the elements of vicarious liability in a given business situation Case scenario Colin, the head chef of Regent Hotel is frustrated with the attitude and anger of one of his employee named Roger. One day, in frustration with the Roger's attitude, Colin knocks him with a frying pan which led Roger unconscious. Seeing this Colin ran to took him to hospital but Roger denied hoping to sue Colin and bring a claim in vicarious liability against Regent Hotel. Applicability of legal provisions The hotel is held vicariously liable on the grounds that there existed a strong employee- employer relationship between Roger and Colin. Also, Colin was having direct control over the activities of Roger in a significant way (Hollingsworth, 2014). Decision From the above case scenario, it can be said that Roger can not bring claim for vicarious liability because Colin fulfilled his duty by insisting him to ran into hospital. Furthermore, Roger can not sue Colin because here Regent Hotel is liable to compensate for the damages caused to his employee in an appropriate and significant way. CONCLUSION The above report helped to gain deep understanding about the vital aspects of contract and negligence in business. The study helped in applying the theoretical concepts of law in different practicalsituationswhich helped in getting insightunderstandingaboutvarious elements of law effectively. 10
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Middlemiss, S., 2011. The psychological contract and implied contractual terms: Synchronous or asynchronous models?. International Journal of Law and Management. 53(1). pp.32-50. Vytopil, L., 2012. Contractual control and labour-related CSR norms in the supply chain: Dutch best practices.Utrecht L. Rev..8.pp.155. Warren, J. M. C., 2012. Law and the Built Environment.Property Management. 30(2). pp.209- 210. Zoll, F., 2012. The binding power of the contract: Protection of performance in the system of the Common European Sales Law.Journal of International Trade Law and Policy. 11(3). pp.259 – 265. Online Clarke, P. 2015.Contract and Tort Law.[Online]. Available through: <http://www.legislation.gov.uk/ukpga/1984/3/data.pdf>. [Accessed on 11thMay 2016]. Hollingsworth,G.,2014.Vicariousliabilitylawyers.[Online].Availablethrough: <http://www.legalmatch.com/law-library/article/vicarious-liability-lawyers.html>. [Accessed on 11thMay 2016]. 12