Contract Law Report

This report provides a comprehensive analysis of a contract law case study involving Salvatore, the owner of MotorRus garage. It examines various types of contracts, including express, unilateral, bilateral, and distance contracts, and details the essential elements required for a legally binding contract: offer, acceptance, valid consideration, and intention to create legal relations. The report applies these elements to different business scenarios within the case study, analyzing whether contracts were formed and the implications of contractual terms. Furthermore, it delves into concepts of negligence and vicarious liability, exploring the employer's liability for the actions of their employees. Specific scenarios involving accidents, faulty repairs, and property damage are analyzed in the context of vicarious liability and occupiers' liability acts. The report concludes by summarizing the legal implications of each scenario and highlighting the responsibilities of Salvatore and MotorRus in various situations.

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Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
1. Standard form of contract which is suitable to the smaller garages........................................1
2. Stating the elements which are required to create legal relationship......................................3
3. Applying elements of contract in different business situation................................................4
4. Applying contractual terms in the different business scenario...............................................5
TASK 2............................................................................................................................................6
TASK 3............................................................................................................................................8
TASK 4 .........................................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Offer, acceptance, valid consideration and intention for the creation of legal obligations
are the main aspects of contract. All the parties to a contract must fulfill all these elements while
making a lawful relationship. Moreover, contract is voluntary, deliberate and legal binding which
takes place between two or more competent parties. There are mainly two types of contract
including written and oral contract which competent parties prefer to make with an intention to
create a legal relationship (Ayres, 2012). Different contracts place varied impact upon both the
parties. Thus, competent parties need to be taken into consideration all the implications and
remedies while making contract. In addition to this, company has liability to make proper health
and safety arrangements for their employees which prevent accident. Further, as per the laws and
legislation, employer is liable to pay remedy for the undesirable act which is performed by their
employees.
The present report is based upon the case scenario of Salvatore who is an owner of
garage such as MotorRus. In this report, different types of contracts will be discussed. In addition
to this, it will also shed light on the offer and acceptance aspects which are required to form a
legal contract. It will also examine different terms of contract as well as develop understanding
about the concept of negligence and vicarious liability.
TASK 1
On the basis of cited case scenario, owner of the company namely Salvatore is not able to
make effectual business decisions due to his old age. Thus, Motor RUS has appointed skilled
personnel who is able to give better advice to the business entity.
1. Standard form of contract which is suitable to the smaller garages
According to the given case study, Salvatore wants to invest in Spare parts upto £7,500
with the intention to selling it to the potential customers. Nevertheless, he is facing problem in
identifying the most suitable type of contract which he needs to undertake. There are different
types of contracts which garage company can undertake which help them in providing
information about the spare parts to both the existing as well as potential customers. These
contracts are:
 Express contract: The contracts that are explicitly created and need to be entered into are
termed as express contracts. In these kinds of contracts, it is essential to explicitly cite all
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terms and conditions for both the parties. Further, parties are liable by all terms that are
stated into the contract (Friedman, 2011). However, the liability in case of breach of
contract depends on type of the contract. It may be defined as those which may make
either in oral or written form.
a. Oral contract: In oral contract, all the terms and conditions are discussed by the parties through
verbal means such as telephone etc. In this, both offer and acceptance take place in oral form. In
case of any disputes, judiciary party is unable to give fair judgment or decisions due to absence
of any evidence (Furmston, Cheshire and Fifoot, 2012). It is through verbal agreement between
parties that the contract has been established. Further, trust is considered to be an important
factor in case of oral contract. It is difficult for any parties to establish evidence in case of breach
of contract.
b. Written contract: Under this, all the terms and conditions which are agreed by the competent
parties are mentioned in the written format. It is the most effectual contract which offers relief to
the claimant in against to the defendant party if any dispute arises between them. Moreover, in
written contract, innocent party has proof which he can represent in front of judiciary. Thus,
written contract provides assistance to the innocent part if defendant party makes any default in
his performance (McKendrick, 2014). In these kinds of contracts, it is easy for parties to
establish evidence. The written proof is developed at the time of signing of contract. The
agreement entered into contains all kinds of clauses to be abided by law. In case of breach of
contract, the liability can easily be established on the basis of written terms and agreements. It
can be therefore said that the written contracts prove to be more viable in nature on the basis of
legal regulations. It is essential for parties to understand all legal terms and conditions before
entering into any kind of written contract.
 Unilateral contract: In unilateral contract, one party makes promise to another party that
he will perform certain act or duty within the specified time period. It is also known as
one sided contract because one party makes promise to another without taking consent of
him. In this situation, offeror is obliged to perform the duty when offeree performs
according to the promise which is made by other party. It can be termed as a contract
where single party has made some offer (Beale and et.al., 2010). However, it is not
necessary that another party has accepted the offer. Unilateral contract is majorly
established majorly by businesses when they offer some discounts and privileges.
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 Bilateral contract: In this, both the parties give their mutual consent in relation to the
terms and conditions of contract. Thus, as per the Mattie v Hopper, offeror and offeree
both had legal obligation to perform their duties. If, one party makes default in his
performance then other party has right to make sue upon him for compensation.
 Distance contract: Under this, terms and conditions of the contract are finalized by both
the parties through e-mail, telephone etc (Anson and et.al., 2010). It is made by the
competent parties without any face to face interactions.
As per the given case, Salvatore needs to make distance contract which proves to be more
beneficial for him. For this, MotorRus requires to make website through which it is able to
provide information about the cars and other accessories to the large number of customers. By
presenting the picture of assets along with the prices, corporation is able to attract more buyers
who seek to buy such elements. In addition this, organization needs to make focus upon the
formation of written contract. Moreover, written contracts are highly effective as compared to
oral from. Thus, it is one of the best ways through which business unit can make standard
contract. According to the case of Brogden v Metropolitan Railway (1877), parties to a contract
can form legal bindings with each other by taking into consideration any means of
communication.
2. Stating the elements which are required to create legal relationship
According to the laws and legislations, there are mainly four elements which parties must
meet to convert agreement into a valid contract. Moreover, contract is said to be valid only when
competent parties will follow all these essentials. It includes following aspects which are as
follows:
 Offer: When one party represents his or her willingness in relation to buy or sale of
assets in front of another party then it is considered as offer. There are mainly two parties
which are involved in offer namely offeror and offeree. In this, party who gives offer in
front of another is known as offeror, whereas another party is known as offeree to whom
offer is given. Offer is significantly differed from an invitation to offer in which one party
or seller requests buyer to make offer in front of him or her (Hillman, 2012). According
to the case of Fisher v Bell, goods are displayed by the owner at the shop with the price
labels.
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 Acceptance: When one party give his consent on the terms and condition which is offered
to him by the another party then it is recognized as acceptance. On the basis of the case of
Brogden v. Metropolitan railway Co. (1877) acceptance may be in either or oral form.
 Valid consideration: It is one of the most essential element which is closely associated
with the valid contract. For the legal binding, there must be legal consideration between
the parties to a contract (Steele, 2012). As per the laws and legislation, consideration
should be in the monetary form in order to make a valid contract (Lawful consideration,
2011). Love and betting are also considered as legal consideration as per the case of
Thomas v Thomas (1842).
 Intention to form a legal bindings: a valid contract is required to both the parties have
intention to enter in legal relationship (Four Essential Elements of a Contract, 2016).
According to this, both the parties needs to have an intention to perform each term and
condition of the contract (McIvor, 2010). As per the case of Balfour v Balfour (1919)
agreements which are created at domestic level are not considered as valid contract.
3. Applying elements of contract in different business situation
On the basis of case scenario Salvatore invested £7,500 in spare or car parts. Salvatore
purchased such parts from auction and he wanted to sell this parts at god rate. For this, Salvatore
and his son Markus either send out e-mail or telephone to to existing and potential customers.
Thus, it is recognized as an invitation to offer in which Salvatore and Markus invites other tio
make offer themselves in relation to the purchasing of parts. For the valid contract offer and
acceptance are essentially required.
a). In the first case Salvatore received call from Danny who said that that he will come today
onwards. Danny also told that he will come before the business closed. Nevertheless, he did not
come in the office of Salvatore. Thus, there is both an invitation to offer and an offer between the
parties to a contract but there is no acceptance from other side. In this, offer is made by Danny
but Salvatore did no give his acceptance. Moreover, Danny did not come to office of Salvatore to
make a contract. Thus, there is no contract takes place between both the parties.
B). According to case scenario, Markus received e-mail from the Suzie who is the employee Odf
safe garage. He told that his firm in interested in spare parts and they will transfer the whole
amount approximately £7,500 in the account of MotorRus by 3pm. Nevertheless, due to the
technical errors or low maintenance Markus did not see the e-mail until 3.30pm. Thus, there is an
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offer, legal consideration and intention of legal binding between the parties bur there is an
absence of acceptance from the side of Markus because he did not see the e-mail. In order to
enforceable the agreement into contract by law there must be present all these element. Due to
the lack of acceptance there is no contract between Markus and Suzie.
C). On the basis of this case scenario, there is an offer but no acceptance is given by Salvatore. In
this, secretary of Salvatore gave him cheque of £8000 which they received from European Spare
Parts. This firm send cheque with the intention to purchase the spare parts. Nevertheless, owner
of MotorRus returned this cheque to European Spare parts. Thus, in this case offer is made by
European parts but it is not accepted by MotorRus. Hence, there is no contract between Eurpoean
spare parts and MotorRus.
d). The contract is taken place between Markus and the people who is in contact with him.
Markus had accepted £7500 in cash from the person from whom offer is made to him. In this,
person gave offer to Markup with the intention to the purchase of spare parts. In this, Markus
accepted the offer and thereby decided to sell the spare parts to him. In this, all the essentials of
valid contracts are present so it is enforceable by law.
4. Applying contractual terms in the different business scenario
As per the cited case scenario, buyer of the spare parts claimed that some of which are
rusty. On the basis of this aspect buyer demanded for refund. Innominate terms of the contract
are highly associated with this situation. Condition as well as warranty are the main parts of
innominate terms. In condition, innocent part has right to repudiate the contract or make sue
upon the defendant party for the compensation. On the contrary to this, in warranty claimant
party can only claim for the compensation but they cannot repudiate the contract (Shah, 2014). In
this, if parts which are sold by MotorRus only differs in color then buyer has no right to breach
the contract. In this, MotorRus has liability to give compensation to the buyer for the loss which
is suffered by him.
On the contrary to this, if parts of the car are not in accordance with the contract then
buyer has right to breach the contract. In addition to this, he can also claim for the compensation.
Thus, according to the innominate terms if parts are rusty then Salvatore is liable to refund the
money to the buyer. Nevertheless, if only color of the part is changed then company does not
require to return back money to the buyer.
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TASK 2
A] In the given case scenario Mrs. Pratt gives his car at Salvatore's garage for paint because his
car was damage due to the accident. Owner of the Salvatore's told one the person to paint the car
in metallic black color who has come for the purpose training for some time period. The trainee
simply spray the wrong paint on the car. Mrs. Pratt wants his car to be in metallic black color but
the trainee painted it in some different color. Apart from this the employer working there does
not even thought to check whether the trainee is doing this work properly or not. And when Mrs.
Pratt came back to pick up her car she was surprised by seeing the car, the car was not according
to her desired. Thus, in lieu of which she claim for a compensation for the damage caused to her
car. Therefore, according to the law employer of Salvatore garage is fully liable to claim for a
sum of compensation for a damages caused to this car.
B] As per the given case Mr and Mrs. Cooper are not liable to claim for a sum of money of
£5000. According to this case, Mr and Mrs Copper went to a showroom in order to purchase a
car where on display it was written the car will be sold in the same condition with a warranty of
3 months. Mr and Mrs Copper like the car and purchase the same by making the actual payment.
But before the two days of expiry of warranty period some problem arises in the car. Mr and
Mrs Copper took the car to the showroom for repair where some minor problems occur and was
sought out by the owner of the Showroom. But the four day later of the completion of the
warranty period some problem again arises in the car and when Mr and Mrs copper took the car
to some other garage where they were told that the car is having some major problem and to
resolve it £5000 are required.
Therefore, in lieu of which Mr. and Mrs. Copper went to the previous showroom and
claim for a sum of compensation from the owner of the Showroom. But, as per the law Mr. and
Mrs. Copper are not liable to claim for a compensation for a damage caused to them. Because
the warranty period was expire before there claim. When they claim before the expiry of the
warranty there problem was resolved by the owner of the showroom without charging any extra
fees. But now the warranty period has been finished. Thus, it is a case of express term, where
contract was formed by mutual trust and cohesive understanding between the Mr and Mrs
Copper and Owner of the showroom.
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C] According to the given case Computer design company took the upstairs portion from
Salvatore's showroom on rental basis. But when Salvatore's return back to his work on Monday
he found that there was no electricity in the showroom because all the cables were laid in a
messy way by computer designing company due to which electricity supply was cut off
everywhere in the showroom. Due to which Salvatore's suffered a huge loss. Because, when he
complain the computer designing company for the same Salvatore's was told that the work is
very delicate and required a expert electrician to repair the same who will arrive after four days.
Thus, due to the mistake of Computer designing Company; Salvatore's suffered a loss which is
not affordable by him. Hence, in lieu of which Salvatore's is completely liable to claim for a
sum of compensation from the company for the loss he suffered due to shut off of electricity for
four days.
D] As per the fourth scenario suffering of Salvatore's continue when Mr Dodsworth arrive to
this garage. He has repair the car of Mr. Dodsworth in a wrong way. Salvatore's has repaired the
car in a careless manner. He place a wrong parts and the wires have been crossed in one another
in a wrong way. Due to which windscreen wipers button was controlling the radio and indicators
button switches were handling the wipers. Moreover, as per the given scenario Mr. Dodsworth is
completely liable to claim for a sum of compensation form Salvatore's for the carelessness done
by him. Because an offer and acceptance has been made by both the parties and if both these
elements are present then in that case a valid contract has been formed.
E] According to the given case a proper offer has not been made by the Salvatore's . He has not
mentioned a selling price of the car. Salvatore's put this offer when he sees that he will be able
to generate more amount of profit by selling a car because this one of the competitors Defender
Land Rover was under a case which they cannot sell out its products. Shakeel and Ahmed both
were ready to purchase the car. Shakeel said that he will pay the same price offered by
Salvatore's whereas Ahmed told that he will pay the double price for the same.
Apart from this Salvatore's told both of them that who will come first tonight at 7pm he
will sold the car to him. In lieu of this David was ready to pay the asking price. But Salvatore's
refuses to pay and told David that he had buyers already. Thus, as per the law a valid comtract
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cannot be offered because terms and conditions that are required to be meet up at the time of
offering something to anybody.
TASK 3
The given case clearly reflects that Salvatore has number of drivers for making delivery.
Unfortunately, daughter of Salvatore illed and he went to Spain. During this, Salvatore had given
responsibility to his son in relation to the taking care of business aspects.
a. Vicarious liability act
Vicarious liability is the situation in which one person is liable or responsible for
damages caused by other persons. In businesses, the act provide right to the employers to
maintain control over the employees and impose obligations to the employers for employees
conduct (Dickinson and Nicholson, 2015). There is a contractual relationship between the
employer and workers so that they have full rights to manage their personnel efficiently. They
can construct policies and design working rules and regulations to regulate working practices of
the employees. Moreover, it provide benefits to restrict undesired actions which impact
organization adversely. As per the vicarious liability legislation, employer will be held
accountable for the losses arisen by the employees actions towards third party (Levy, Golden,
and Sacks, 2015).
As per the cited scenario, Salvatore has a number of drivers who move vehicles around
sometimes for delivering and ensure availability of proper space within the complex. Due to
daughter's illness, Salvatore has been called up in Spain urgently. After some time, when he
returned to the organization he finds some difficulties in firm. According to the scenario, when
one of the driver was reversing the car, it has been collided with the petrol canister due to lack of
his attention. This crashed with the canister has been resulted in small fire on the premises.
Furthermore, one of the visitor who came into the premises was forgot his or her bag near that
fire incident which contained some important documents. Fire incident has been destroyed some
of the important documents of the customer and arise loss. Now, Salvatore is finding himself in a
trouble to determine whether he is liable or not towards the losses caused by his driver.
Present scenario indicates that employer employee relationship is exists between
Salvatore and his driver (Morgan, 2015). It is because at the time of hiring, contractual
agreement has been made between Salvatore and the driver who caused fire in the premises.
Thus, first condition of vicarious liability has been satisfied. Another, loss was arisen under the
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general course of business operations as it has been resulted when driver is doing her duty of
moving car around the floor. Thus, all the terms and conditions of vicarious liability act have
been satisfied for the given case (Stevenson, Rowbotham and Lowther, 2015). So that it can be
said that Salvatore will be obliged to compensate to customer for the loss of important
documents caused by his driver's action.
On contrary to it, another aspect of the scenario stated that customer belonging's bag
contained valuable miniature painting and the fire incident arise loss of this valuable things.
Now, the customer make sue on the Salvatore for compensate to himself. In this case, as per the
vicarious liability act, Salvatore is not liable and accountable for the suffered loss faced by the
customer (Smale, Gustafson and Gounko, 2015). It is because Driver did not know that customer
bag contain any valuable kinds. Therefore, driver will not obliged to make sure that customer's
things will be safe and he is not liable for preventing it from any undesired loss (Smit, 2016).
Henceforth, the decision is that no liability can be imposed on Salvatore for the losses suffered
by the customer.
b. One day driver of MotorRus drove very rashly because he was in hurry. Due to his rash
driving, car of the MotorRus collapsed with the other vehicle. This accident may cause of neck
and back injury to Sarah. According to the vicarious liability act Salvatore is liable to give
compensation to the Sarah. Moreover, in vicarious liability employer is held responsible for the
undesirable act of their employees. Due to employer-employee relationship MotoRus is liable for
the damages which is suffered by innocent party. Moreover, employer has power to exert control
upon the illegal activities of their employees by introducing high penalty system for such kind of
act. Through this, garage company can easily prevent accidents and thereby improve their image
in the mind of existing as well as potential customers.
Along with it, after the six months Sarah is not able to leaver the house due to the back or
neck injury. Sarah claimed that due to this aspect she is unable to take care of her children in an
effective manner. Thus, as per the vicarious liability act company is also liable to the extent to
which loss of the innocent party is foreseeable. Thus, in this company is liable to compensate
only the extent to which loss is suffered by her due to injury in terms medical expenditure. Thus,
Sarah is not able to make sue upon MotorRus after the six months on the basis of taking care of
her children.
c. Occupiers liability act
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Occupiers liability act, 1957 established the provisions of uniform or common duty of
care for all the visitors. Thus, as per this provision, it is the duty of the workshop to provide
hazard free environment and remove all the hurdles (Plimmer, 2016). As per the contract,
occupier is the person who occupies the premises, hence, it may be different from the owners. As
per the terms and conditions of this legislation, occupiers have duty to care their visitors and
ensure that customers will be reasonably safe in premises. The provisions of the Occupier
liability act, 1957 impose legal obligations to the occupiers to compensate for the arisen losses
which can be prevented by themselves (Lee and et.al., 2016). As per the cited scenario, it was the
weekend and generally workshop does not open after 11 a.m. Yet, it was 3pm and there are
number of families who are visiting into the showroom. Due to some emergency, the workshop
manager has been called away and the remaining workers have been left to lock up at 11. In the
given case, Little Johny who was 8 years old visited into the showroom with his parents for
purchasing vehicle. At the sudden time, when Johny's parents are looking at a vehicle and make
some inquiries about the vehicle from the sales representative, little Johny wanders away.
Suddenly, there is a panic situation running around with everyone because Little Johny fallen
into the inspection pit and sustained some serious injuries to him. According to the present
scenario, someone has left the door of the workshop open and forgot to lock it at 11A.M but still
there is a marked sign board of 'No Entry' at the entry gate. Now, Johny's parents make sue on
the workshop manager that company did not provided safe or hazard free environment to the
visitors so arisen injuries has to be compensate by the showroom owner.
Now, Salvatore wants to determine that he will be accountable or not towards the
customer for the John's injuries. Thus, the decisions is he will not be liable for compensating to
the customer (Bennett, 2011). The reason behind this decision is although, the showroom was
opened and sales representative and other employees was forgot to close it. But still, No Entry
signboard has been marked at the visitors entry gate. Therefore, it is the understandable that
visitors should not be entered into the showroom for their any kind of purpose at that time
(Young, 2010). So, it became clear that Salvatore can not be legally obliged for compensating to
the customer. His family is own liable for the caused injuries to the Little Johny as he was a
minor child.
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