Taking Care of Actions: A Study of Vicarious Liability

The assignment discusses the concept of vicarious liability, where a business is responsible for the negligent actions of its employees. The two conditions that must be satisfied are: (1) the defaulting party has the status of an employee at the time of the negligent action; and (2) the negligent action occurred in the course of employment. The owner of Vintage Vehicles Museum will not be held liable as the negligence was caused by a friend, not an employee. Additionally, the Occupier's Liability Act requires occupiers to take care of visitors to prevent damages. The report concludes that parties must take care of their actions and fulfill their obligations in an appropriate manner to discharge contractual liability.

Aspects of
contract

TABLE OF CONTENTS
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
1.1 Importance of essential elements of the contract...................................................................3
1.2 Main types of contract along with their impact.....................................................................3
2.1 Applicability of essential elements of contract in given case scenario..................................4
D2 Promissory Estoppel..............................................................................................................4
Task 2...............................................................................................................................................5
1.3/2.2 Analysis of contractual terms along with its applicability in given case situations........5
2.3 Evaluation of impact of expressed and implied terms using the above case.........................5
M1................................................................................................................................................6
D1.................................................................................................................................................6
Task 3...............................................................................................................................................6
4.1 Advise to Brad for applicability of negligence law along with available defenses...............6
3.1 Contrast of nature of liability in contract with tort................................................................7
3.2 Importance of case of Donoghue V Stevenson in development of concept of duty of care..7
M2................................................................................................................................................7
Task 4...............................................................................................................................................8
4.2 Applicability of principles of negligence...............................................................................8
3.3 Vicarious liability of business................................................................................................8
D3.................................................................................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10
2

INTRODUCTION
Contract and negligence law is part of civil legislation. This law is developed to promote
fairness in action of parties in situation of both presence and absence of contractual relationship.
For this purpose, standard guidelines had been described in English law which are required to be
complied by all individuals. Present project report is focused on description of these guidelines
in order to provide appropriate recommendations in given case scenarios.
TASK 1
1.1 Importance of essential elements of the contract
Contract is an enforceable agreement in which two parties are legal obliged to fulfill the
promises made by them. A contract is said to be valid if it is supported by following elements-
1. Offer- An offer is a proposal given by one party to specific person or to general public to
enter into legal relationship. Offer given by party should be specific and legally valid.
◦ Invitation to treat will not be considered as offer because it is merely an invite
given by party to show their interest in formation of legal relationship (Edwards,
Edwards and Wells, 2008). In addition to this response of invitation is an offer in
which primary party is free to accept or reject it. In the given case situation Bill
had given invitation to treat to the general public for the sell of printing press.
Offer is important because it describes initial terms of the contract. Due to this aspect,
offer is required to be specific and certain. In addition to this, it must not include terms for
completion of impossible or unethical task.
2. Acceptance- It can be termed as consent given by the offeree on the offer made by
offeror. It should not be supported by any modification else it will have legal status as
counter offer. Only offeree is entitled to provide acceptance. Acceptance is important for
contractual relationship because it creates agreement between parties. Further, without
acceptance of party agreement cannot be formed.
3. Consideration- Agreement should be formed in against of some beneficial value. This
value is not required to be at arm length price but it must be supported by mutual consent
(Warren, 2012). Consideration is vital in contractual relationship as it creates mutual
benefit for both the parties. Furthermore, promise without consideration is null and void.
3

4. Intention- Contracting parties should intend to create legal agreement in order to fulfill
their promise. Presence of intention in contract is significant because all agreements are
not considered for binding contract and same is not enforceable by court of law.
1.2 Main types of contract along with their impact
Parties can enter into contractual relationship with different types of contract. Description
of different types of contact along with their impact is as follows-
Oral contract
Meaning
Oral contracts are created on the basis of verbal communication by parties. These
agreements are supported by trust and faith.
Impact
This agreement is informal and uncertain in nature because there is absence of evidence
of contractual terms (Gillies, 2004). In situation of dispute interpretation is made by court in
accordance with the situation which may be unfair in some situations.
Written contract
Meaning
Written contracts are supported by contract deed. It is formal and specific agreement as
parties had described terms and conditions in appropriate manner.
Impact
In situation of contradiction this deed is considered to provide relief. In some business
agreements it is essential to select written contract. Example of this agreement is purchase of
tangible asset.
Distance contract
Meaning
Distance contract is made in situation where parties are not present at similar place for
determination of contractual terms.
Impact
In this agreement postal rule is applicable to determine its validity. As per this rule,
contractual relationship exists only if acceptance is communicated to the party by whom offer
was provided (Rosly, 2010).
4

2.1 Applicability of essential elements of contract in given case scenario
Bill and Cathy
In the given case situation initial offer was given by Cathy on the invitation to treat given
by Bill for the purchase of printing press in £80,000. However, on this counter offer was given
by Bill for the sale in £90,000 which was not accepted by Cathy. In this case situation there is no
contract between parties as there is absence of acceptance. It is because with the providing of
counter offer cancels previous offer between parties. In this case counter offer was given by Bill
by which offer of Cathy is canceled due to which he is not entitled to provide offer on same
(Padhi, 2012).
Bill and Liza
In the given case situation, postal rule will be applicable as there is distance contract
between parties. In accordance with this rule, contract between parties is said to be valid if letter
of acceptance of Liza is delivered to Bill in reasonable time. By considering the case scenario, it
can be said that Liza had posted the letter in reasonable time period thus agreement between
parties is enforceable by law.
D2 Promissory Estoppel
It is a doctrine according to which in specific circumstances a person is prevented to
going back on their promise because it is not supported by appropriate consideration. This
doctrine was developed with the case of Central London Property Trust Ltd v High Trees Ltd
[1947] KB 130. In this case, defendant was prevented to going back on their previous promise in
order to accept the lower rent contempt to the fact that promise was not supported by
consideration.
TASK 2
1.3/2.2 Analysis of contractual terms along with its applicability in given case situations
Terms of the contract are clauses inserted to describe obligations of parties in order to
enforce them to fulfill their promise in an appropriate manner. These terms can be either
expressed or implied in nature. Description of these terms is enumerated below-
Expressed terms
5

These contractual terms are inserted by the mutual consent of contracting parties. There
are three types of expressed terms i.e. conditions, warranties and innominate terms. Description
of these terms is enumerated below:
 Condition: These are the primary terms which is center to the objectives of contract. In
situation of non-satisfaction of condition, innocent party is entitled to breach entire
contract.
 Warranties: On the other hand, warranties are ancillary terms inserted to specify
obligations of parties (Rush and Ottley, 2006). In the situation of breach of warranties
claimant is liable to make claim of damages only. Innominate terms: In situation where terms cannot be bifurcated into conditions and
warranties then it is considered as innominate terms where damages are provided by
considering impact of breach.
Implied terms
These terms are inserted by legislation and custom in order to protect interest of weaker
party and promote fairness in commercial contract (Nysten-Haarala, Lee and Lehto, 2010).
These terms are assumed to part of the contract as it is expressly described. In situation where
these terms are not satisfied then party is required to provide reasonable damages.
Case study
In the initial case claim of Joyce DiDonato will be unsuccessful because condition was
breach by her and Royal Albert Hall Company is entitled for breach of contract (Poussard v
Spiers (1876) 1 QBD 410). However, in situation she had breach only warranties thus another
company is not in position to repudiate the entire contract.
2.3 Evaluation of impact of expressed and implied terms using the above case
In situation of contradiction of expressed and implied terms in contractual scenario then
implied terms will prevail. It is because, parties are required to insert contractual terms in
accordance with the legislation (Tomprou and Nikolaou, 2011). Further, if there is contradiction
in terms then expressed terms will not be considered as part of the contract.
Case study 1 based on expressed terms
6

In accordance with the given case scenario, party will not be entitled for the remedy for
the non-satisfaction of contractual terms. It is because, terms of the contract does not imply
certain meaning.
Case study 2 based on implied terms
In the given case study, claim made by claimant regarding bill of work and cost of seed
spent on the field as was customary in farming tenancies is valid. It is because, completion of
tenancy agreement was not pre-determined and he had provided his efforts on the land. Due to
this aspect, he is entitled to make claim for the compensation for his work.
M1
In this case, inserted exclusion clause by City Cars Rentals is valid because they had
laminated the document of limitation of liability in order to attract attention of customers. This
aspect shows that company had inserted exclusion clause in a proper manner. Further, occurred
loss to the defendant is covered in inserted clause. All the conditions are satisfied and by
applying assumption of absence of negligence city car rental will not be liable to pay damages.
D1
Described statement is not completely justified because exclusion clause is considered for
relief only if it is inserted in a proper manner. It is not essential to be described at the time of
formation of contract but it must be inserted prior to its applicability (Watt, 2007). In accordance
with the case scenario, Thompson v LMS Railway [1930] 1 KB 41 exclusion clause will be valid
if reasonable notice for the insertion of exclusion clause is provided even after formation of
contract. Spurling v Bradshaw [1956] 1 WLR 461 states that exclusion clause can also be
incorporated on the basis of previous dealings. For this aspect Section 11 of reasonable test of
Unfair Contract Terms Act 1977 can be considered. Reasonableness of term is judged as per the
circumstances of contemplation of parties. This test is applicable by considering situation in
which contract was formed not in which event of damages had been occurred. Burden of proof
relies on the party seeking to its benefits. This section is supported by provisions of Schedule 2
by which court can provide better decisions.
7

TASK 3
4.1 Advise to Brad for applicability of negligence law along with available defenses
To,
Brad
Subject: Advise for applicability of negligence law along with available defenses
Applicability of elements of negligence in the present case is as follows:
 Duty of care: By considering present case situation, Albert has duty to provide relevant
information of the client (Brad) so he can make viable decisions.
 Breach of duty: Due to his careless attitude, accountant had provided wrong information
to the Brad. This aspect shows breach of duty on the part of Albert.
 Causation: Element of causation is satisfied because due to this negligent misstatement
Brad had agreed on tenancy agreement and faced economic losses
Thus, In the given case situation, Brad is entitled to claim for damages on accountant.
In negligence individual is entitled for defense in following situations to relinquish obligation for
damages
1. Volenti non fit injuria- Claimant put themselves voluntarily in situation where there is
risk of injury (Smith v Charles Baker & Sons [1891] AC 325).
2. Ex turpi causa- Act of defendant is justified in eyes of law (Lane v Holloway [1967] 3
WLR 1003).
3. Contributory negligence- Claimant is also responsible for the act of negligence (Gough
(an infant) v Thorns [1966] 1 WLR 1387).
3.1 Contrast of nature of liability in contract with tort
Liability in contract and tort are both part of civil law. Objectives of both the obligations
is to provide compensation to the injured party for the default act. However, there are certain
differences between both the liabilities, description of which is as follows-
Basis of difference Contractual liability Tort liability
Reason of occurrence It arises because contracting parties
are not able to satisfy the promise
It arises in situation where
parties are not able to
8

made by them in a proper way. accomplish their standard duty.
Relationship Parties enter into contractual
relationship with their mutual will.
Relationship in tort is imposed
by legislation (Elliot and
Quinn, 2009).
Determination of
Damages
Damages are provided by
considering contractual deed. In
contractual liability damages are
provided to bring claimant in
position where satisfactory
performance is provided by
defendant.
Damage will vary as per the
situation and injury of
claimant. In negligence,
damages are provide to make
claimant in position if act of
negligence is not conducted by
the defendant.
3.2 Importance of case of Donoghue V Stevenson in development of concept of duty of care
Duty of care can be defined as standard responsibility of individual that should be taken
by them in order to prevent risk of injury. Ii is a standard in the law of negligence according to
which individual is liable for the standard performance. Duty of standard care is imposed on the
basis of situation. In the case of Donoghue V Stevenson, ideal example of duty of care was
established. In accordance with this case, manufacturer is required to take care of operational
activities in order to prevent injury of consumers (Jennings, 2010). He was held liable because
decomposed snail emerged from the drink of defendant. By considering this case, neighbor
principle was developed in this case by Lord Atkin. In accordance with this case, individual
should love their neighbors (related parties) and should take care they are not adversely affected
with their actions.
M2
In accordance with the approach of strict liability, obligation is imposed without finding
their fault. For this liability, claimant is just required to prove that tort was occurred and
defendant is responsible for the same. In the case of Rylands v Fletcher [1868] UKHL
1,defendant was owner of mill. He had constructed reservoir over a disused mine. Due to this act
claimant had suffered from extensive damages. Further, court held that defendant is strictly liable
9

to provide damages as they had made non-natural use of land. In this case scenario, causation
was not established because act of negligence was determined as defendant had made non-
natural use of land.
TASK 4
4.2 Applicability of principles of negligence
In the given case situation Bill has duty to drive in proper manner in order to prevent risk
of injury of his companion. Due to his negligence injury was occurred to the boy. This act shows
breach of duty by which injury is occurred to the related party. By considering this aspect, Bill
will be liable to provide damages for his negligent action (Introduction to Tort Law, 2012). Cited
case study also satisfies the provisions of Salmond test which states that a tort will be committed
in the course of employment if it is either a wrongful act authorized by the master, or an
unauthorized mode of doing some act authorized by the master. In this case employer fails to
impose restriction on recruitment of minor thus they will be liable under provisions of vicarious
liability. Further, by applicability of integration test it can be said that there is relationship of
employer and employee in the case thus provision of vicarious liability can be successfully
applied.
XYZ diaries has obligation to ensure that suitable candidates has been selected for the
work practices. They were aware of the fact of engagement of minor for employment act still
they had nothing done about it. Thus, they will be vicariously to provide damages for the same.
In the given case scenario owner will be held liable for the action of his friend as they
have relationship of principal and agent. It is because, friend was working on the behalf of
employer. Henceforth, he was in controlling position and will be held liable for the act of
negligence.
3.3 Vicarious liability of business
In accordance with the approach of vicarious liabilities, an individual will be held
responsible for the tortuous act of the tortfeasor. Tortfeasor is an individual engaged in act of
negligence. This controlling power creates join liability on individual according to which
controlling party is required to take care of actions of parties controlled by them. On the basis of
this provision business is responsible for the negligent action of employees (Kelly and et.al.,
10

2013). Such obligation will be transferred in situation where following two conditions are
satisfied-
1. Defaulty party has status of employee while negligent action was occurred. This
aspect is satisfied by the applicability of integration test. Applicability of this test
determines relationship of tortfeasor and defendant liable under provisions of
vicarious liability.
2. Negligent action was occurred in course of employment. This aspect is satisfied
by the applicability of Salmon test which states that wrongful act either be
authorized by the master or they have recommended an unauthorized mode of
doing some act authorized by the master.
However, employer will not be held liable in situation where employee had occurred negligence
after working hours or they are involved in criminal actions (Employer Vicarious Liability,
2013). In the given case situation negligence was occurred by friend not by employee thus owner
of Vintage Vehicles Museum will not be responsible for the same.
D3
In accordance with the Occupier’s liability Act, an occupier is responsible to take care of
visitors in order to prevent situation of their damages (Hollingsworth, 2014). By taking
appropriate actions such as insertion of exclusion clause or warning notice they can prevent their
obligation. Further, they are required to company provisions of Health and Safety Act.
CONCLUSION
In accordance with the present report, it can be concluded that parties are required to take
care of their actions in order to relinquish risk of injury. Further, they should fulfill their
obligations in an appropriate manner to discharge contractual liability through performance. In
situation where they failed to do so, they will be liable to provide damages for the same in order
to compensate the injury of innocent party.
11

REFERENCES
Books and journals
Adams, A., 2010. Law For Business Students. 6th ed. Pearson Education Ltd.
Edwards, S. J., Edwards, L. L. and Wells, K. P., 2008. Tort Law for Legal Assistants. Cengage
Learning publication.
Elliot, C. and Quinn, F., 2009. Tort Law. Longman.
Gillies, P., 2004. Business Law. Federation Press.
Jennings, M., 2010. Business: it’s Legal. Cengage
Kelly, D. and et.al., 2013. Business Law. Taylor & Francis.
Nysten-Haarala, S., Lee, N. and Lehto, J., 2010. Flexibility in contract terms and contracting
processes. International Journal of Managing Projects in Business. 3(3). pp.462 – 478.
Padhi, K. P., 2012.Legal Aspects of Business. PHI Learning Pvt. Ltd.
Rosly, A. S., 2010. Shariah parameters reconsidered. International Journal of contract law. 3(2).
pp.132-146.
Rush, J. and Ottley, M., 2006. Business Law. Cengage.
Tomprou, M. and Nikolaou, I., 2011. A model of psychological contract creation upon
organizational entry. Career Development International. 16(4). pp.342–363.
Warren, J. M. C., 2012. Law and the Built Environment. Property Management. 30(2). pp.209-
210.
Watt, R. 2007. What Can the Economics of Intellectual Property Learn from the Economics of
Insurance. Review of Law and Economics. 3(3) pp. 102-116.
Online
Employer Vicarious Liability. 2013. [Online]. Available Through:
<http://www.oxbridgenotes.co.uk/notes/oxbridge/2013/tort-law-notes/samples/employer-
vicarious-liability>. [Accessed on 28th September 2015].
Hollingsworth, G., 2014. Vicarious liability lawyers. [Online]. Available through:
<http://www.legalmatch.com/law-library/article/vicarious-liability-lawyers.html>
[Accessed on 28th September 2015].
Introduction to Tort Law. 2012. [Online]. Available through: <
http://2012books.lardbucket.org/books/the-legal-environment-and-government-
regulation-of-business/s10-introduction-to-tort-law.html >. [Accessed on 28th September
2015].
12