Contract Law and its Applications

This assignment delves into the complexities of European contract law. It examines key concepts, principles, and legislation shaping contract formation, enforcement, and interpretation within the European Union. The analysis considers diverse perspectives on good faith, consumer rights, and the impact of technology on contractual relationships. Additionally, it explores the influence of international conventions and comparative legal frameworks on European contract law.

ASPECTS OF
CONTRACT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1. Importance of the essential elements required for the formation of a valid contract..............1
2. Impact of different types of contract.......................................................................................2
3. Terms in contracts with reference to their meaning and effect...............................................3
TASK 2............................................................................................................................................3
4. Elements of contract in given business scenario.....................................................................3
5. Law on terms in different contracts by explaining..................................................................4
6. Evaluation of different terms as per given case scenario........................................................5
TASK 3............................................................................................................................................5
7. Contrasting contractual liability with tort liability..................................................................5
8. Nature of liability in Negligence.............................................................................................7
9. Explaining that a business can be vicariously liable...............................................................7
10. Elements of the tort of negligence and defences in different business situations.................8
11. Elements of vicarious liability in given business situations..................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Around the world, there are different type of laws that are being followed by the
countries and it is essential to make sure that all type of rules and regulations are followed.
Contract can be determined as the process in which two or more parties get along with certain set
of conditions and this for the aim to get benefit for all the parties involved (Heine and Kerber,
2002). All the condition or terms included in the contract should be satisfied or else it is
enforceable by law. In accordance with the present report, it is based of different case scenarios.
More specifically, it covers different type of contract in which individuals can get into. Further, it
covers different type of terms applied in law and use of exemption clause in contract. Lastly, it
also includes nature of liability in Negligence.
TASK 1
1. Importance of the essential elements required for the formation of a valid contract
In order to form a legal contract, there are different type of elements that need to be
fulfilled (Middlemiss, 2011). When these elements are not satisfied, then it can be termed as a
valid contract. With this respect, below given are the importance of essential elements for
contract:
Offer: This can be determined as the expression of interest that is developed for the
contractual obligation that is helpful enough to describe conditions and terms in a contract.
Further, it is the intention of legal compliance and contractual liability. There are conditions in
which negotiation take place in the offer that is provided by the party (Zimmermann and
Whittaker, 2000). The party that provides offer to other is known as the offerer. This element can
be understood with the help from the case of Harvey v Facey [1983] . It is essential for the
offerer to show intention for forming a contract.
Acceptance: This shows the interest and willingness of the other party for the offer made
to them. In order words, it can be stated as the expression for all the terms and conditions that are
included in contract (Danzig and Watson, 2004). In accordance with the English Law, it is
important that counter offer should be made before the contract is accepted by the offeree. In
order to understand this element, Felthouse v Bindley [1862] is one of the examples. As per this
case, Nephew did not show intention to buy the horse and so no contract was formed.
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Legal intention: Parties who accept the contract should be free of any type of mental or
physical pressure. The contract formed under such circumstances can not be considered to be a
legal contract. In order words, contract that is formed with illegal activities or actions can not be
determined to be valid contract. Offeree should be mentally and physical stable before they get
into a contract (Bonell and Lando, 2013). With this respect, Balvour v Balvor [1919 ] is one of
the case in which emotional bounding was developed towards the wife but there was not any
type of intention shown and so not contract was formed.
Consideration: As per this element, all the parties under contract should get benefited
under contract that they have formed. This is helpful enough to develop a relationship in which
individuals get mutually get benefited.
2. Impact of different types of contract
There are different type of contract in which parties can form. All these contract have
their own set of benefits. With this respect, below given are type of contracts:
Bilateral contract: This can be determined as the contract that is formed among parties
with the help of mutual exchange of promises and it also enables to develop contractual liability.
Both non compliance of actions and requirement of parties enables to develop a valid contract
and also enables to obtain legal obligation (Hall, Howells and Watson, 2012). In accordance with
the case of Brogden v Metropolitian Railway [1877], it can be determined that performance
related obligation is formed when offer and acceptance is made in a contract. When any of the
promises that are set by parties are not satisfied, then damages need to be paid to innocent party.
Collateral contract: In this type of contract, in which another contract is made in
consideration of other contract. In this context, it is important to promise contractual obligation
in the contract (Backstrom and Cooper, 2014). With this respect, case that can state this type is of
Shankilin PierLtd v Detel Products [1951].
Unilateral contract: As per this contract one of the party need to carry out contractual
obligation and other parties can act in accordance with their needs. The offerer will make offer in
public and anyone can make accept it. With this process, revocation can be made any point of
time before it is completed (Kwock, James and Tsui, 2013 ). One of the cases that enable to
understand this type of contract is Carlil v Carbolic Smoke Ball Company [1893]. As per this
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contract, firm promised to reward the individuals who gets caught with the flu even after
masking use of their product. Offer can not be revoked when it is offered.
3. Terms in contracts with reference to their meaning and effect
In a contract there are different type of terms that are included and all these conditions
need to be satisfied. These are considered to be the statements that enable to state the obligation
of parties that has to be fulfilled. With this respect, there are three different type of terms and
they are as follows:
Exclusion clause: This is a type of term that is included by the parties with an aim to
mitigate the liability in conditions when they are not able to fulfil their performance (Trosborg,
2015). This clause can be only be termed valid when they are properly inserted in contract at the
time of relief.
Implied terms: As per this type of term, it is generally not included in the contract but
these are highly important and play significant role. These type of terms are imposted by statute
or courts. It is essential to make sure that all the parties act effectively (Cui, Ge and Jing, 2013).
Main aim of this act is to make sure that all type of unfair practices can be stooped and interest of
parties in contract can be maintained.
Expressed terms: All the parties understand contractual deed include these type of terms
and it is developed through mutual concern. Moreover, this can also be regarded as promise that
needs to be fulfilled by the parties under contract. In contract expressed terms need to be
satisfied (Byrd and Hruschka, 2012). Parties which are not able to satisfy these terms, then they
have to pay for damages which is caused to innocent parties.
TASK 2
4. Elements of contract in given business scenario
As per the mentioned case, Ivan saw a HND Law book that was displayed on the shop of
Toder. Ivan develops interest to buy that book and for this purpose, he takes it to the shopkeeper
and gives him ₤50 for the book. Toder looks at the book and say that it was already being sold to
some other person that is Carl and shopkeeper forgot to take the book off from display shelf.
In accordance with the above mentioned case, it can be stated that display made by the
Toder is a type of offer that was made by him. Further, this can be also be stated to be open
invitation to the individuals who visit to the book shop. In this context, Ivan shows the book
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displayed and showed his interest towards it and as a acceptance, he offered Toder with ₤50 for
the book. But the book was already being sold to Carl and shopkeeper forgot to remove the book
from the shelf.
The shows that the legal contract was already formed among Toder and Carl due to
which Ivan was not able to get into the contract. The offer was made and acceptance was already
shown by other party (Ibrahim and Stone, 2015). In this context, Ivan do not have the legal right
to claim for the damages and he becomes third party and he can not sue Toder for the same.
Further, examination of implied innominate term is also considered. Thus, it can be stated that
there is no legal contract that can be formed between Ivan and Toder. Ivan could have sued the
shopkeeper if the book was not already sold and Toder have denied to sell the book.
5. Law on terms in different contracts by explaining
Contractual terms enables to develop remedy, there are cases in which injury is caused to
the innocent party when a party under contract does not follow the terms and conditions (Ewa
and Grzegorz, 2014). In accordance with the English Law, three type of terms are included and
they all are important for the contract and they are given below:
Conditions: It is considered to be the most stipulated contract. There are conditions in
which the whole contract can get breached when any of the party does not follow the conditions
that are mentioned in contract (Chan, Yeung and Huang, 2014). The party that has caused
damage to other party need to pay for the same. When this is not done, then it has negative
impact over the business.
Warranties: This term has another name and that is ancillary terms. These are the type of
terms that are included in the contract and when these are not satisfied, then innocent party has
the right to claim for the damaages that are caused to them. This is can be understood with the
help of example from the case of Bettini v Gye 1876 QBD 183
Innominate terms: This type of terms were included when the case of Hong Kong Fir
Shipping v Kawasaki Kisen Kaisha [1962] 2 QB 26 occurred. This was the time when
innominate terms were included in the contracts. More specifically, this type of terms are applied
when bifurcation can not be done in conditions and warranties (Collins, Gómez and Roppo,
2013). Claim can be made by innocent party when other party fails to fulfil these terms. With
this respect, it can be stated that these terms needs to be considered and it should be followed.
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6. Evaluation of different terms as per given case scenario
In accordance with the case, John who went to park that is looked after by local council.
There was notice that states that for hiring a chair, individuals have to pay 50p per hour. Money
was paid by John and in return he got the chair and a ticket. When John made use of the chair
given, it collapsed under him and he got injured badly. When he complained, the attendant point
that on the ticket which stated that any damaged caused due to use of hired equipment will not be
considered as liability.
When John bought the chair, then he was given a ticket. The type of term that were
included in the ticket was exclusion clause (McManis and Garrison, 2015). It is important for the
firm to make sure that customer are provided with high quality services. 50P that was paid by
John should have returned him with proper quality of product which would have eliminated the
damage caused to him.
It is important for the park authority to make sure that all the services and products that
are being provided by them are of high quality and it is properly maintained. Guest should be
satisfied with the services that are delivered to them (Heine and Kerber, 2002). The type of
exclusion terms that are being added in the ticket are type of terms that are added in order to
protect defendants for the reason of non performance. As per the given case, the damage caused
to John can not be minimised through the exclusion clause that was added in the ticked. For the
reason of adding clause in the ticket can be considered illegal and it can also not be accepted. In
this context, it can be stated that the clause should not have been added in the ticket. Thus, it can
be stated that the authorities of park is liable to pay for the damages that are caused to John.
TASK 3
7. Contrasting contractual liability with tort liability
Tort liability can be determined as an concept that is helpful to make proper analysis of
the harm which is caused to the party under contract. The damage is caused to the party due to
negligence that is made by other party (Middlemiss, 2011). On the other hand, contractual
liability occurs when parties do not fulfil the liabilities related to contact. With this respect,
below given are the difference between these two concepts:
Tort Liability Differences Contractual Liability
This falls under civil law and it Relation This type of liability arises
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is treated as a law. It is a type
of negligence in which parties
need to make sure that all the
responsibilities are effectively
followed (Zimmermann and
Whittaker, 2000). In
accordance with the case of
Donoghue v Stevenson, it is
identified that when there is
negligence by an company,
then it results in faulty ginger
beer products and this causes
damage when it is consumed.
when the parties have mutual
consent in order to perform
contractual obligation and the
terms are developed by mutual
discussion.
All the obligations made are
universal and they are not at
all mutually accepted by the
parties.
Nature of obligation These can be determined as the
terms of contract and it enables
to make it well defined in
contractual liability (Danzig
and Watson, 2004).
There is an opportunity for the
party when they are able to
prove that the damage is
caused due to negligence.
Reason of occurrence This type of condition arise
when defendant is not able to
comply for the contractual
liability, then claimant can
claim for the damages.
Physical, mental and financial
claims can be made for the
damages caused to claimant
when other party neglect their
responsibilities (Bonell and
Lando, 2013).
Basis of damages When the performance is not
done properly, then it leads to
breach of contract.
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8. Nature of liability in Negligence
Negligence can be determined as the act that is caused when a party ignore to perform
their set of roles or responsibilities due to which other party get negatively affected. This type of
situation arise when individuals do not pay proper care (Hall, Howells and Watson, 2012). There
are different set of factors through which negligence can be applied are as follows:
Breach of duty: In accordance with this factor, it can be stated that when the party do not
follow the part of duty that they need to be followed, then it causes damage to the other party.
Causation: As per this factor that causes due to which damage is caused, it could have
been avoided is the party due to which damage has caused have taken proper care and proper
measures were taken in order to avoid the issue (Backstrom and Cooper, 2014).
Duty of care: With the factor, it can be stated that damage is caused due to negligence
that is made in standard duty of care that should have taken by the party. This can be understood
with the help from the case of Donoghue v Stevenson
As per the case of Donoghue v Stevenson, an individual ordered the product that is
developed by the firm. Ginger beer was ordered. When she consumed the beer half of it, it was
identified that there is a snail insider it (Kwock, James and Tsui, 2013). This caused physical
injury to the customer. In accordance with the legal consideration, cited firm is liable for the
damages that were caused to her. This type of situation raised due to negligence of the company.
9. Explaining that a business can be vicariously liable
Vicarious liability is a type of tort liability, in accordance with this liability actions of one
party causes issues or damage to other party. It is applicable for both employee and employer. In
order words, when any type of wrongful act is performed by the employees, then it has negative
impact over the firm (Trosborg, 2015). There are different condition in which this type of
liability can be applied and they are as follows:
 Employer has the main power in order to control over the performance of employees. The
relationship that employer and employees have is shared by the other parties that are
involved in the contract. In order to test the same court related with the law, it includes
test like integration, control, and economic text (Cui, Ge and Jing, 2013). In this context,
for the same account the action are considered and taken. One of the example for the
same is Linster and other v Helsey Hall Ltd [2001]
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 When the act of negligence is performed by the employees during the time of
employment act, then the firm will be liable (Byrd and Hruschka, 2012). However, the
act is performed not with the concern of company, then it is not the concern for the firm.
In such condition, vicarious liability can be not be applied to the party.
 Within the organization, employer has the power to control all the actions that are
performed by employees and when actions are performed when it is stated by the
employer to be performed, then vicarious liability can be applied (Ibrahim and Stone,
2015).
10. Elements of the tort of negligence and defences in different business situations
In accordance with the case, it can be stated that David was driving at the speed of 35
MPH at the zone were 25 MPH speed should be driven. A boy who was 9 years old who
happened to run into the street in order to chase the ball. In order to save the child, David turned
on to other lane and hit the telephone pole and the pole which snaps into two pieces hit Kevin (9
year old boy) who was still on the street. This caused Kevin serious injury.
At the initial stage itself, David broken the rule and that was to drive at the speed of 25
MPH but he was driving at 35 MPH. This was the reason due to which he was not able to control
the vehicle. As a result, David when hit on the pole in order to save Kevin but due to the pole
which broke into two pieces when and hit Kevin and this caused him to get permanent injury. In
this vicarious liability will be applied as David was on employment work and so the firm for
which David is working will be liable (Ewa and Grzegorz, 2014).
There are different type of factors due to which tort liability has caused. Factors are as
follows:
Breach of duty: There was breach of contract as David drove over the speed limed which
he was supposed to drive (Chan, Yeung and Huang, 2014).
Causation: David hit the pole and this caused the pole to get snapped and hit Kevin and it
caused him to get permanent injury.
Duty of care: It is the duty of David to make sure that he maintain the speed limit that
was 25 MPH which was not done.
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11. Elements of vicarious liability in given business situations
As per the case, Roger who works as a dishwasher at Regent hotel. Colin who is a head
chef one found Roger unconscious with a frying pan. He is serious injured and is refusing to go
to a hospital.
In the case both are the employees working at Regent hotel. Due to issues among these
employees caused physical abuse and this was under the course of employment. In this issue, one
of the employees got seriously injured and was refusing going to hospital.
In this case, vicarious liability is applied, there are different factors due to this liability is
applied and factors are as follows:
 Both the employees shares employee and employer relationship .
 The tort liability took place during the course of employment.
 The act performed by both the employees was not acceptable and there are condition in
which they can sue Colin. In addition to this, Roger has the right to claim for the damages
that are caused to him.
CONCLUSION
There are different type of terms and conditions that are included in the contract and all
of them should be followed. Further, there are many parties that can get into a contract. When
these are not followed, then the damage which is caused to innocent party should be given by the
party due to which damage is caused. Further, the intention of the offer should be clear and there
should be any type of illegal activity involved or else it can not be termed to be valid contract.
The offeree should have mental and physical fit in order to get into a contract.
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REFERENCES
Books and Journals
Backstrom, M. and Cooper, D. M., 2014. ‘Hiring a Nashville sensation’: using narrative learning
to develop the problem solving skills of contract law students. Journal of the Australasian
Law Teachers Association. 7(1&2). pp.51-61.
Bonell, M. J. and Lando, O., 2013. Future prospects of the unification of contract law in Europe
and worldwide a dialogue between Michael Joachim Bonell and Ole Lando on the occasion
of the seminar in honour of Ole Lando held in Copenhagen on 29 August 2012. Uniform
Law Review-Revue de droit uniforme. pp.uns002.
Byrd, B. S. and Hruschka, J., 2012. Kant's Doctrine of right. Cambridge University Press.
Chan, W., Yeung, S. and Huang, J., 2014. New Employment Contract Law: Focuses and
Implications for Hoteliers. International Journal of Hospitality & Tourism
Administration. 15(3). pp.298-313.
Collins, H., Gómez, F. and Roppo, V., 2013. European Review of Contract Law.
Cui, F., Ge, Y. and Jing, F., 2013. The effects of the Labor Contract Law on the Chinese labor
market. Journal of Empirical Legal Studies. 10(3). pp.462-483.
Danzig, R. and Watson, G. R., 2004. The capability problem in contract law: further readings
on well-known cases. Foundation Press.
Ewa, L. and Grzegorz, M., 2014. Polish copyright contract law and its current development–
from license towards lease. Przegląd Naukowo-Metodyczny „Edukacja dla
Bezpieczeństwa”. 7(1 (22)). pp.189-197.
Hall, E., Howells, G. and Watson, J., 2012. The Consumer Rights Directive–An Assessment of
its Contribution to the Development of European Consumer Contract Law. European
Review of Contract Law. 8(2). pp.139-166.
Heine, K. and Kerber, W., 2002. European Corporate Laws, Regulatory Competition & Path
Dependence. European Journal of Law and Economics. 13. pp. 43–71.
Ibrahim, S. and Stone, R., 2015. Harmonisation of European Contract Law through an Optional
Instrument: Principles and Practical Implications. Nottingham LJ. 24. pp.19.
Kwock, B., James, M. X. and Tsui, A. S. C., 2013. Doing business in China: What is the use of
having a contract? The rule of law and guanxi when doing business in China. Journal of
Business Studies Quarterly. 4(4). pp.56.
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McManis, C. R. and Garrison, B., 2015. The enforceability of mass-market e-commerce licenses
and social networking agreements: Is copyright or contract law the new lex
specialis?. Chapters, pp.30-48.
Middlemiss, S., 2011. The psychological contract and implied contractual terms: Synchronous or
asynchronous models?. International Journal of Law and Management. 53(1). pp.32-50.
Trosborg, A., 2015. An analysis of legal speech acts in English Contract Law.'It is hereby
performed'. HERMES-Journal of Language and Communication in Business. 4(6). pp.65-
90.
Zimmermann, R. and Whittaker, S. eds., 2000. Good faith in European contract law (Vol. 2).
Cambridge: Cambridge University Press.
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