Contract Law and Business Practice

The provided assignment details appear to be from a past paper or solved assignment related to contract law and business practice. The resources listed include textbooks, online articles, and case studies that cover topics such as contract formation, breach of contract, and remedies. The assignment likely requires students to apply their knowledge of contract law to real-world business scenarios, possibly through the analysis of case studies or the application of legal principles to hypothetical business situations.

Table of Contents
INTRODUCTION...........................................................................................................................1
REFERENCES ...............................................................................................................................2
Books and journals.................................................................................................................2

INTRODUCTION
The report will concentrate on the elements of contract act of UK. The contract act comprises the
laws for the contract to exist in the country. The report will focus on the elements that are needed
for a contract to be legal or binding by the law (Hughes, Champion, and Murdoch, 2015).
Moreover, the report will include the kinds of contract. The elements to prove negligence of duty
will be discussed in the report. Also, the report includes a discussion on vicarious liabilities.
TASK 1
A. Elements required for a valid contract, or legally binding contracts.
A contract is considered to be valid when it is enforceable by law. In order for a contract
to be legally binding, it must constitute certain elements. These elements are significant and
mandatory for a contract to be binding.
 Offer and acceptance: An offer must be made by one party to another in order to create a
binding contract. An offer is made by the offerer to offeree regarding a deal, which has to
be accepted by the offeree for the contract to be binding and valid. When the offeree
accepts the terms and condition of offer, it is said to a legal contract.
 Consideration: A contract in order to be legally valid should involve consideration. An
offer made by the offerer to the offeree must contain a valid consideration for the services
or performance given by them. Consideration must have value to the party. In a contract
consideration is given in exchange for another consideration (McKendrick, 2014).
 Intention to create legal relation: It is important for the parties to have an intention to
create a legal relation. After the offer has been made and duly accepted by offeree, the
parties must also have an intention to form a contract, as an acceptance cannot be
subjugated to be a legally binding contract.
 Certainty: Another main element for contract to be valid is certainty. A contract is
regarded as a valid contract when the terms and condition of the contract are certain. A
clear stating of the terms of contract is important for it to legal and also the parties must
understand the term given. If the contracts are not certain, it is no longer valid.
 Capacity: Capacity to contract is wide term, a contract is regarded as legal only when the
parties to contract are in a legal capacity to make a contract (Besley and Persson, 2010).
A person is considered as not in the capacity on the basis of following factors:
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◦ Minor: A contract is regarded as void-ab-initio or invalid from the start when one
party to the contract is minor. Minor is a person who is below 18 years of age. A
contract made with minor is not legally binding.
◦ Insane person: A person who is suffering from insanity or does not have a sound
mind is considered to be not in a capacity to make contract (Main Elements
Constituting A Valid Contract 2017). A contract made with such a person is not
legally binding.
B. Different kind of contract and their strengths and weaknesses
 Bilateral contract: Bilateral is contract in which both the parties to contract promise to do
a specific job in lieu of the other party to performance their task. For example, A
promises to buy a Car from 'B' for £10 and 'B' promises to sell car only to A for £10. In
case of breach of contract by any one of the party (QC, 2010), the other party reserves
the right to sue.
◦ Strength: This kind of contract gives right to both the parties to sue, in case of any
party breaching the contract.
 Unilateral contract: In this kind of contract one of the party to contract, offerer, makes a
promise to other party, offeree, to give consideration on performance of a task. But the
offeree does not make any promise to perform the task, then it is known as unilateral
contract (Main Elements Constituting A Valid Contract 2017). For example: John
promises Carter to give him £200 on delivery of a certain good, but Carter has made no
promise to deliver such a good.
◦ Strength: This kind of contract gives the right to offeree to sue the offerer in case of
denial on payment of consideration on the delivery of performance.
◦ Weaknesses: Under this kind of contract the offerer has no right to sue the offeree in
case of non delivery of performance.
 Express contract: An express contract is the one in which the terms of contract are stated
either orally or in writing and is understood by the parties (Knapp, Crystal, and Prince,
2016). For example, A contract made by A and 'B' regarding the sale of 'B''s car for £10
and both them agree for the considerations to be exchanged.
◦ Strengths: There is a mutual understanding between the parties regarding the
purchase and sell of the car.
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 Implied contract: An implied contract is the which the parties to contract are seemingly
intended to be involved in the contract without any verbal or written agreement being
made. There is no discussion of terms and conditions of contract, but the terms are
silently understood by the parties. For example, on a visit made to doctor for sickness, the
visitor gets into a contract with the doctor to pay him fees after the services received. No
verbal terms regarding the fees is discussed among them but it is silently understood by
the parties.
 Void contract: A void contract is the agreement which lacks the element of being a valid
contract. It is not legally enforceable by law (Kötz, 2017). For example, A contract to sell
weapons to a person without license is void, as selling weapons to a person without
license is illegal.
◦ Strengths: The parties to void agreement are legally not binding to each other.
◦ Weaknesses: Parties to this kind of contract do not access any rights to sue each other
in case of breach of contract.
 Voidable contract: A voidable contract is an agreement in which one of the parties to
contract has the right to null the contract. In case of contract by coercion,
misrepresentation and undue influence. The contract is voidable at the hand of the
suffering party. For instance, 'A' sells his property to ''B'' for £20000 by telling him it was
2000 Sq. ft. of land. But in reality it was 1800 sq. ft. only. 'B' has a right to abort the
contract on grounds of misrepresentation by A.
◦ Strength: It gives a right to the party suffering from the contract to abort it.
◦ Weakness: If the party who is suffering from the contract does not come forward, it is
accepted as a valid contract and is enforceable by law.
C. Analyse the following terms
 Condition: Conditions are the significant and main part of the contract. The important
terms that impact the contract are known as conditions. In the case of breach of a
contract, conditions come in consideration, i.e. a contract is said to be breached on
breaking of condition stated in the contract. When a condition of contract is breached by
a party then the innocent party has following option. Innocent party may refuse to
perform contract and claim damages or they may complete the contract and sue for
damages (Poussard v Spiers. 2017). In a case (Poussard v Spiers (1876) 1 QBD 410)
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Madame Poussard and Spiers entered into a contract to perform for 3 months as opera
singer. She fell sick and did not perform for starting 4 nights. Spiers hired a different
singer for the show. Spiers was entitled to end the contract as Madame Poussard was in
breach of condition.
 Warranty: Warranty is not a significant part of contract. It is not essential for the contract.
In case of breaking of warranty without highly important consequences. Breaking of
warranty is considered when a promise is broken by either of the party. The innocent in
case of breach in warranty can sue for damages incurred, but does not posses the right to
terminate the contract. In the case of Bettini v Gye (1876), Bettini and Gye got into a
contract to employee Bettini for 3 months as an opera singer. He caught illness and had to
miss 6 day of rehearsal. Gye replaced him with a different singer (Bettini v Gye 1876).
There was a breach in warranty and therefore employer was not entitled to end the
contract.
 Innominate terms: These are terms which can be classified into major or minor
consequences, which depends on the seriousness of the breach. When the breach in the
contract is serious then it will be considered as breach of condition by the court and it
will have major consequence (Van Kogelenberg, 2014). On the other hand if the breach is
not grave then it is regarded as warranty and it is has minor consequences. In case of
Hong Kong fir shipping v Kawasaki Kisen Kaisha (1962), the defendants entered into a
contract with the other party on charter of a ship for two years. The agreement terms
involved that the ship is seaworthy for 2 years to time. The ship started to function
defective due to which 20 weeks were lost by the defendants (Hong Kong Fir Shipping v
Kawasaki Kisen Kaisha. 2017). They considered it as the breach of condition and
terminated the contract whereas the other party disagreed. The court used the innominate
terms to for assessment of situation and give the judgement. It was seen that if the breach
deprived the party from full benefit of the contract, if it was right then it was a condition
of breach of condition. It was found that 20 week out of 2 years was not a very big time,
the benefit of the contract was availed and the defendant had no right for termination of
contract.
Understanding the principle of liability in negligence
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A. Difference between contrasts liability in tort and contractual liability
Contrasts liability in tort and contractual liability has certain difference between them.
The main difference between these two is that in case of contrast liability in tort anyone can
claim a remedy whereas in contractual liability the right to claim remedy is reserved for party to
contracts only. In the case of contrasts liability in tort the duties are fixed by the law whereas in
contractual liability the duties are fixed by the parties to contract.
B. Key elements that must be proven in order for a negligence claim to be successful
 Relationship between the parties: In a formation of a contract, a relationship is formed
between the parties (Posner, 2014). A contract is formed with mutual consent of the
parties which agree to exchange consideration with each other. The relationship is formed
and governed by the law. In case of providing negligence claim it is highly important to
prove the relationship between the two parties to conflict in the contract.
 Nature of obligation: In a relationship formed by formation of contract, the nature of
obligation is evaluated by the terms provided in the contract. These obligations are
accepted by the parties by entering into the contract. Nature of obligation that the terms
of contract must be proven in order to prove the negligence claim.
 Causation and remoteness of damage: this issue concerns that the extent to which the
defendant is liable for the happening of the chain of events created by breach of contract.
This law assumes the liability of the defending party to the loss or damage bared by the
claiming party (Gergen, 2013). The amount of damage on the basis of the damage created
due to breach of contract by the defending party.
In the Donoghue v Stevenson (1932) case, Donoghue consumed a bottle of ginger beer which
was purchased by her friend for her. She later found out that the bottle had a decomposing snail
in it which lead to her falling ill. She was diagnosed with gastroenteritis. She sued Mr. David
Stevenson, the manufacturer of ginger beer for negligence claim. Donoghue could not be
Stevenson for the breach of contract, as there was legal contract between her and Stevenson
because it was her friend not her who bought the beer. Her lawyers claimed against the breach of
duty of care to his consumers and damage caused by negligence. In her appeal to House of
Lords, it was found the Stevenson was liable for the health of his consumers.
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C. Explain vicarious liability
Generally a person is liable for the wrongs committed by him only. But in certain
situation one person can be made liable for the damage caused by other person due to existence
of a relationship between them (Wan, 2010). The concerning law is called Doctrine of vicarious
liability. It is also called as imputed negligence. The relationship between the two persons create
is used to claim the damages for the negligence caused by one person.
In the case of LAUNCHBURY v. MORGANS (1972), a car was bought by the wife, which was
registered in her name. It was called as our car by husband and wife. The car was duly used by
them both. They had a deal that in case of incapacity of the husband to drive, he will ask his
friend or call her to drive it. One day the husband visited drinking places with his friends and
after the last place they visited, he asked his friend to drive the car (Morgans Appellant And
Launchbury And Others Respondents. 2017). They gave lift to 3 respondents on the street and
due to the negligence of the friend, they met with an accident. Husband and friend died in the
action and the three respondents got injured. Who sued the wife in her personal capacity and as
administer of husband's estate. The judgement was given against the wife in lieu of vicarious
liability.
TASK 3
A. Elements of Tort of negligence and defences to the scenario
 Duty: The defendant must owe some sort of duty to the plaintiff. The duty arises when
the law recognises when there is existence of contract between the defendant and
plaintiff. It is determined by the judge of the court whether the company owes duty to the
plaintiff or not.
 Breach of duty: the liability for negligence arises there is breach in the duty to care about
the consumers. The issue of breach of duty is judged by the jury and they determine the
breach in duty to be present (Schwartz, and Rowe, 2010).
 Cause of fact: The plaintiff is liable to prove to the court that damage was caused to him
by the actions of the defendant. The negligence is proved when the damage bared by the
plaintiff is proved to be caused by the actions of defendant.
 Proximate cause: this concept relates to the scope of defendant's responsibility in a
negligence case. The defendant is a case of negligence is only liable when he could have
foreseen the harms that may be caused by his actions. Which means that the defendant's
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is not liable for the damage caused to the plaintiff by the cause which could not have
been seen by the defendant.
In case of Lewis slipping on the water on the floor of McDonald's and breaking his right ankle,
McDonald's is liable to pay to Lewis in the case of negligence liability raised due to the
negligence of its employees which caused the harm to Lewis. However Lewis will have to prove
in court that he has incurred damages due to the negligence of McDonald's employees.
B. Apply vicarious liabilities to the following case scenario:
In the given scenario Ahmed, who is a delivery Van driver for the Parcel force, was
carrying out deliveries for the company. During his detour of delivery he decided to meet his
sick uncle. And while the time he was leaving his uncle's house he crashes into a parked BMW
due to his negligence (IMPERIAL CHEMICAL INDUSTRIES LTD V SHATWELL: HL 6 JUL
1964). The owner of BMW sues the company to pay claims of damage incurred to him in lieu
of vicarious liabilities due to the negligence of the driver of company. In such a situation the case
will be judged in favour of company as the driver was visiting his uncle when the accident
happened which was clear disobeying of the company.
CONCLUSION
The report concludes that for a contract to be valid it must include certain elements such
as offer, acceptance, consideration. In case of breach in condition of the contract, the innocent
party can either terminate the contract and claim damages or complete the task and claim
damages. Whereas, in case of condition of breach of warranty the innocent party has the right to
claim just damages. In vicarious liability the person who shares a relationship with the damaging
causing person may also be held responsible for the damaged caused to the party.
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REFERENCES
Books and journals
Besley, T. and Persson, T., 2010. State capacity, conflict, and
development. Econometrica, 78(1), pp.1-34.
Gergen, M.P., 2013. Negligent misrepresentation as contract.
Hughes, W., Champion, R. and Murdoch, J., 2015. Construction contracts: law and
management. Routledge.
Knapp, C.L., Crystal, N.M. and Prince, H.G., 2016. Problems in Contract Law: cases and
materials. Wolters Kluwer Law & Business.
Kötz, H., 2017. European contract law. Oxford University Press.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).
Posner, R.A., 2014. Economic analysis of law. Wolters Kluwer Law & Business.
QC, R.W.S., 2010. Construction Contracts: law and practice (p. 210). Oxford University Press,
New York.
Schwartz, V.E. and Rowe, E.F., 2010. Comparative negligence. LexisNexis.
Van Kogelenberg, M., 2014. Deliberate Breach of Contract and Consequences for Remedies:
Exploration of a Neglected Area in the Law of Contract. Maastricht Journal of European
and Comparative Law. 21(1). pp.141-161.
Wan, K.S., 2010. Monopolistic Gatekeepers' Vicarious Liability For Copyright
Infringement. Regent UL Rev., 23. p.65.
Online
Bettini v Gye (1876). [Online]. Available through: <http://e-lawresources.co.uk/Bettini-v-
Gye.php> . [Accessed on 7 October 2017]
The Main Types Of Contracts. 2017. [Online]. Available through
<https://www.lawteacher.net/free-law-essays/commercial-law/the-main-types-of-contracts-
commercial-law-essay.php>. [Accessed on 7 October 2017]
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Main Elements Constituting A Valid Contract 2017. [Online]. Available through
<https://www.lawteacher.net/free-law-essays/contract-law/main-elements-constituting-a-valid-
contract-contract-law-essay.php>. [Accessed on 7 October 2017]
Conditions, warranties and innominate terms. 2017. [Online]. Available through <http://e-
lawresources.co.uk/Conditions%2C-warranties-and-innominate-terms.php>. [Accessed on 7
October 2017]
Hong Kong Fir Shipping v Kawasaki Kisen Kaisha. 2017. [Online]. Available through <http://e-
lawresources.co.uk/Hong-Kong-Fir-Shipping-v-Kawasaki-Kisen-Kaisha.php>. [Accessed on 7
October 2017]
Poussard v Spiers. 2017. [Online]. Available through <http://e-lawresources.co.uk/Poussard-v-
Spiers.php>. [Accessed on 7 October 2017]
Morgans Appellant And Launchbury And Others Respondents. 2017. [Online]. Available
through <https://www.lawteacher.net/cases/vicarious-liability-cases.php>. [Accessed on 7
October 2017]
IMPERIAL CHEMICAL INDUSTRIES LTD V SHATWELL: HL 6 JUL 1964. [Online].
Available through <http://swarb.co.uk/imperial-chemical-industries-ltd-v-shatwell-hl-6-jul-
1964/>. [Accessed on 7 October 2017]
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