Unit 5 Aspects of Contract and Negligence

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ASPECTS OF CONTRACT AND NEGLIGENCE
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UNIT 5
Contract & Negligence
1.1
The elements of contract law are an inevitable feature of common law, which follows the system
of precedent (Poole 2010). A contract is an official agreement between two or more parties,
which can be written or oral. It does not necessarily have to be formal. The idea of a contract is
ASPECTS OF CONTRACT AND NEGLIGENCE
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not just for ‘one off’ contracts, and can be long-term relationships or comprised of hundreds of
individual contracts (Poole 2010).Not all agreements are contracts, in order for there to be a
contract that is enforceable by law the agreement must meet the following elements or criteria:
Offer – In order for a contract to be valid an acceptable there must be an offer, without one
neither party is legally bound. It is an expression to be legally bound on certain terms, without
further negotiation. There must be two or more parties involved and the person being offered
must know what is being offered to them and also what the person offering expects to get in
return. This must be distinguished from an invitation to treat, which is an expression of
willingness to negotiate.
Acceptance – Once an offer has been made there must be acceptance on the offered terms from
the other party. There would not be a contract until both parties have agreed upon the terms,
rules and regulations. Negotiations must be finalised, with acceptance being made verbally or
written. They must have agreed upon the same terms in the same sense. Postal acceptances are
made when the letter is posted, not received.
Consideration – In order for the contract to be legally valid there must be an exchange, in which
something is given back in return for something. E.g. if you were to buy a TV from the shop, you
enter into contract for purchasing the TV with the consideration being the money you pay for it.
Intention – There must be the intention by both parties to be have relations of a legal nature.
Certainty – The terms, rules and regulations of the contract must be stated clearly, obviously and
understood by all parties involved.
Capacity – All parties involved must be capable to enter into the contract legally. Both of the
parties must be competent enough to be involved in contract. Miners, people with mental
difficulties and people being misrepresented are examples of parties that would be considered
incapable of being contracted by law.
Lawful Object – The purpose of the contract must be stated and must be legal. For example it
cannot be fraudulent or against the law.
1.2
A unilateral contract is one in which the offeror makes an offer that can only accepted by
performing a stated act. This is different to a bilateral contract in which all parties involved
exchange mutual promises. Unilateral contracts are most commonly rewards, E.g. if you get a
‘hole in one’ in a golf course then you enter into a contract to win a free round.
A simple contract is one in which the evidence is in writing or made orally, but is not under seal
or of record. Contracts of this nature are frequently entered into without proper thought or
deliberation and therefore there must be a good cause, consideration or motive for it to be
legally bound. A speciality contract is different, since it is signed, sealed and delivered and where
both parties keep a written copy of the agreement, such as when an individual borrows a
mortgage from a bank. This is considered as more formal and constitutes higher dignity than
simple contracts, making it more enforceable by law.
ASPECTS OF CONTRACT AND NEGLIGENCE
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Verbal contracts can be made when terms have been offered or agreed by means of spoken
communication between two or more parties. This is enforceable unless it is fraudulent. Some
contracts however cannot be made verbally; many must be made in writing, such as mortgages.
In written contracts, terms are documented and written, making it easier to understand, settle
disputes and follow. Contracts can be made in certain cases without any documentation. In
implied contracts responsibilities arise from an agreement that is not expressed in writing or
orally. This is where the contract is assumed to be formed, such as a customer assuming
warranty for certain purchases.
1.3
The terms involved in a contract set out the responsibilities or duties of each party under the
agreement. The terms will either be express terms or implied terms. Different types of terms
hold different levels of importance.
The most significant terms in an agreement are the conditions. These are the terms to which the
contract must strictly follow and if they are broken the contract becomes void. A voidable
contract remains a valid contract until the party who has right to complain takes steps to have it
set aside (Poole 2010 p.20). If one party breaks the conditions, then the harmed party decides
whether to terminate the contract or to carry on with the agreement anyway.
A warranty is a term that is less fundamental to the contract than the conditions. If broken, the
harmed party can claim harms or damages but will not be able to revoke the contract that was
made. If a condition is false or if any of the conditions are breached then the wronged party will
treat the contract as voidable. Terms can be implied even though they are not written formally,
such as ones that are implied by law, fact or custom (McKendric 2011). Sometimes it is hard to
distinguish whether a term is a condition or a warranty, and a term may be intermediate.
2
There was a legal contract in place since the sales assistant offered the laptop through the form,
which Carol accepted by filling the form out. The terms and conditions were stated explicitly on
the forms for Carl to sign and even though Carol chose not to read them there was still a legally
binding contract when she signed the form.
Even though in the terms and conditions ‘ARBOS’ stated the explicit condition that they accept no
liability for the replacement or repair of faulty products, Carol may be able to argue that she
assumed a short-term warranty would have existed as an implied term. Since she did not read
the terms and conditions fully when she first signed the contract, and since has not had much
time to read them in her spare time, this means that there may not be certainty, an essential
element of a contract. Since for a contract to have certainty it would mean that both parties fully
understand the conditions of the agreement.
Carol would have assumed that there was a warranty on the laptop, especially for as short a
period of time as a week, when she signed the terms and conditions, meaning that the week
warranty was an implied term. This implied term would be contractual since it is fairly obvious
to both parties. The court can rule the implied term as being a significant component of the
contract even though ‘ARBOS’ did not state it in their terms of conditions. Both parties need to
understand the conditions of the contract in order for it to be legally binding. Since Carol did not
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