Aspects of Contract and Business - Elements of Valid Contract

Aspects of Contract and
Business

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Importance of elements to form a valid contract..................................................................1
1.2 Impact of different types of contract.....................................................................................2
1.3 Terms in contract with reference to their meaning and effect...............................................3
TASK 2............................................................................................................................................5
2.1 Applying the elements of contract........................................................................................5
2.2 Applying the law on terms in different contracts..................................................................6
2.3 Evaluating the affect of different terms................................................................................7
TASK 3............................................................................................................................................8
3.1 Contrasting liability in tort and contractual liability.............................................................8
3.2 Nature of liability in negligence............................................................................................9
3.3 Explaining how business can be a vicariously liable .........................................................10
TASK 4..........................................................................................................................................11
4.1 Elements of tort of negligence ...........................................................................................11
4.2 Elements of vicarious liability ...........................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
A contract is basically called as a legally enforced document by law with some valid and
lawful consideration of binding the involving parties into it. It is thereby with a mutual set of
consent among both the parties where there are several predefined clauses of an agreement
between them. However, the stated clauses are being defined with a mutual deliberation of both
the parties with a sole discretion of determining the actual format of their contract (Andrews,
2015). It herby defines the assorted stipulations of an agreement with certainly dissimilar
constituents for each. The below report is with a similar demonstration of articulating a
prerequisite format of a contract with a prior existence of their varied sort of elements, terms and
their distinction formations. Negligence is yet another major constraint of a contract with an
equivalently countering effect on the parties. Therefore, the present report together concludes
some crucial requisition of duly eliminating this peculiar factor of neglecting a contract with
fewer case studies to briefly comprehend its essentialist role.
TASK 1
1.1 Importance of elements to form a valid contract
A legal contract attains a valid formation only after a prior inclusion of certain mandate
elements in it. Such components comprise with some definite specifications of their own that
primarily initiates the constitution of an agreement, as described below:
 Offer and Acceptance- An offer is however considered as a foremost element of initiating
the valid formation of a contract into which an offer enacts as a primary element of an
agreement. An offerer here makes a considerable offer to some interested parties with a
specific time period of accepting it (Iacobucci and Trebilcock, 2016). An offer can
however be dissolved at some major circumstances where-
1. Either an offerer dies before the acceptance of the offer.
2. The specified time of accepting an offer gets over.
3. The accepting party duly rejects the offer.
For example, one can duly refer to the case of Thornton v Shoe Lane Parking [1971]
where their was a prior inclusion of an “offer” made by the machine which was duly “accepted”
by the person who then inserted the money into it.
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 Invitation- It is generally seen as an offer of sale by the vendors into shops where their
offer is duly opened for the entire public. It is thereby with a slight distinguished
condition as compared to an offer. An invitation hereby has another facet where a
merchant has some prior right of negotiating the offer made by an interested party.
 Consideration- A consideration is yet another crucial element which plays a major role of
exhibiting the mutual consent of its involved parties. It can however be concluded either
as some dealing of monetary funds or an exchange of thoughts, etc. It thereby depends
upon the offerer to set a prior consideration of his offer with its illustrated
acknowledgement to the agreed party (Tan, 2015). An agreed party is thence assumed to
accept their inclusion into the contract. One can duly refer to the case of Re McArdle
[1951] to acquire a precise comprehension of consideration. A consideration together
comprises with its five major rules, as specified below-
◦ A consideration made in past does not hold any present validity.
◦ A consideration should possess a real and legitimate value.
◦ A consideration should not be imposed on the promiser where they acquire a judicial
restraint of executing it. Such sort of consideration is not assumed to be a valid
consideration into the eyes of law.
◦ A consideration should not conflict with any legal deliberations where they are in turn
supposed to hold an illegal reflection.
◦ A valid consideration is not required to be competent in nature. Capacity- Capacity is referred to the competent ability of both the involved parties to take
part into a contract with a prior mutual consent among them. It is due to a major cause of
having some other sort of obligations to handle the mentally incompetent participants for
involving them into a valid contract. Intention to create legal term- It is regarded to be the most essential determination of
both the involved parties where they should priorly possess an optimistic intention of
involving into a contract with its all predefined specifications (Wills and Napier-Munn,
2015). The case of Balfour v Balfour [1919] can be remarked to clearly acknowledge
about this foremost element of legal intention among the solicitous parties of an
agreement.
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 Privity- It is referred to the basic right of the participants of an agreement where only the
involved parties have a prior right of claiming the suspected party on breaching any
predefined stipulations of their contract. It is therefore with no such existence of any third
party into it is crucially defined as another essential element of privity.
1.2 Impact of different types of contract
A contract can be formed in assorted structures with their distinct roles and obligations,
as described below:
 Written contract- A written contract is the most recommended form into which all the
conditions and clauses are priorly mentioned into the contract. It is therefore considered
to be the most effectual format of an agreement which largely comes at the retrieval
period to sough out any raised concern or conflicts among the involved parties of a
contract. An employment letter is the best example of a written contract with all its
prerequisite clauses for the employees. For example, one can consider a case of ESSO
PETROLEUM V MARDON (1976) where their was a written formation of agreement
among the involved parties that was later evoked at the time of resolving the raised
concern of the parties in court (Tennant, Garmory and Winsch, 2015).
 Face to face contract- The oral or verbal formation of a contract is yet another facet of a
valid contract into which the involved parties are duly liable to consider each other's
mandate presence at the time of structuring the essential clauses of their agreement. A
face to face contract is however taken into consideration when at times their arise some
sort of urgency in constructing a contract. Therefore, it is important for both parties to
mutually acknowledge about the mandate clauses of one other's in such formation of an
agreement. A face to face contract therefore represents an oral formation of the contract
into which the involved parties are equivalently responsible for precisely declaring their
major stipulations to each other.
 Unilateral and Bilateral contract-- A unilateral contract is basically a single sided
contract with a prior involvement of an offerer into it. An offerer here addresses a
considerable and open offer to the entire public and on whose acceptance, there exists a
unilateral contract among them (Kaveny, 2015). A bilateral contract on other hand is a
two sided contract with an equivalent involvement of two or more interested parties in it.
It therefore consists of an offer by one party which is intentionally made to address some
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