Contract Law and Business Applications

This assignment delves into the fundamental concepts of contract law and examines its practical relevance in diverse business contexts. It covers topics such as formation, breach, remedies, and special considerations related to corporate liability and franchise agreements. The analysis draws upon legal texts, scholarly articles, and case studies to illustrate the complexities and nuances of contract law within a business environment.

Aspects of contract and
negligence act

Table of Contents
INTRODUCTION ..........................................................................................................................1
1.1 Essential elements of valid contract......................................................................................1
1.2 Impact of different type of contract......................................................................................2
1.3 Terms of contract..................................................................................................................2
2.1 Elements of the contract in the given scenario......................................................................3
2.2 Law of term in the given scenario.........................................................................................3
2.3 Effect of different terms in the given contract. ....................................................................4
Task 2 ..............................................................................................................................................5
3.1 Difference between contractual liability and liability in tort................................................5
3.2 Nature of liability in negligence............................................................................................5
3.3 How a business can be vicariously liable..............................................................................6
4.1,4.2 Elements of tort of negligence and vicarious liability in the given situation..................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

INTRODUCTION
A contract is a legal agreement between two or more entities or parties in order to share
something between both along with developing a contractual relationship. “All contracts can be
agreements but all agreements cannot be contract. The present report depicts about the various
essential elements that are required to form a valid contract. It includes offer also called
proposal, acceptance, free consent and intention to create legal relation for the contract. In this
report, impact of different types of contract and terms of contract are discussed. Further, various
case studies are also solved out by taking into consideration the various elements, terms of
contract and various types of liabilities (i.e. liability in tort, contractual liability, liability in
negligence). At last, various elements of vicarious liability are also discussed.
TASK 1
1.1 Essential elements of valid contract.
There are various types of elements which are required for the formation of a valid
contract. Some of the important elements are described here as follows:-
Offer: It is an act of offering something to the other person in order to sale or purchase the
thing. Offer can be made for the both tangible and intangible things (Ayres, 2012). If, offer
offered by the offeror is accepted by another person than in that case, offeror is bound by a
contract. It does not includes requests for proposals, expression of interest and letter of intent.
Further, it will be lapse if it is withdrawn before the acceptance.
Case study- Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 Court of Appeal.
According to the case Carbolic Smoke ball Company placed a add in there newspaper to reward
a person a sum of … if he /she will catch the influenza by using these ball three to four times of a
day. Thus, in lieu of which Mrs. Carlill caught the influenza after which she claim a reward from
the company which Smoke Company refused. Thus, before using the ball Mrs. Carlill should
show her intention to accept the contract.
Acceptance: It is an act of accepting proposal from the second party that is offered by the
first party. An acceptance can be in a written or oral form. Once an offer is accepted by the
acceptor than in that case a legal contract is formed. Moreover, if some modified terms of offer
are accepted by the second party then it will not formed any legal contract. It will be considered
as other proposal.
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Case study- Brogden v Metropolitan Railway (1877) 2 App. Cas. 666. According to the
case Brogden sent an agreement to the Metropolitan railway to supply the coal. In lieu of which
Metropolitan Railway drew a draft and send it to the Brogden. Brogden again sent it back to the
railway company by filling up the some blanks which defendant has simply filled without
showing this intention to accept the contract. Therefore, in this case a valid contract has been
formed without any communication of the acceptance.
Free consent: Consent is said to be free when it is made up of without any mistake,
fraud, misrepresentation and so on. If, any of the above element is present at the time of
formation of the contract than in that case a contract cannot be said as a valid contract (Barnett,
2011). A contract is said to be free when it is made away from any fraud.
Intention to create a legal relation: To create a valid contract, there must be intention of
both the parties to create legal relation. A contract is said to be valid/legal when offer and
acceptance are made by both parties with the availability of legal intention in order to form a
valid contract. In most of the contract, where parties are related to each other they do not want to
create a legal relation. Thus, it will not be considered as an legal contract.
Case study- Balfour v Balfour [1919] 2 KB 571. According to the case study husband
make an agreement to pay a sum of payment to his wife every month. Since, the husband was
leaving overseas. But after some time husband stop sending the money to her. Therefore,
according to the case a contract cannot be said as a legal contract. It is only the social and
domestic contract between couples.
1.2 Impact of different type of contract.
Bilateral contract: - Bilateral contract is the contract in which both the parties are obliged
to perform the act in an equal manner (Bisso and Choi, 2008). In other words, it can be said that
bilateral contract is the exchange of mutual trust and correlative promises between the parties
that are obliged to perform the particular act.
Case study- Butler Machine tool v Ex-cell_O Corporation [1979]. According to the case
Ex-Cell-O placed an agreement in front of the Butler to purchase a machine for £75,535 which
was accepted by the Butler. In lieu of which Ex-Cell-O prepared a contract which include a
clause that if rate changes after 10 months then also he will purchased at the same price. Which
Bulter signed without reading it? Afterwards when order to placed Butler claims an extra sum of
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money due to change in the rates which Ex-Cell-O refuses. Therefore, a written contract is said
to be a valid contract.
Impact- In case of bilateral contract, both the parties is obliged to perform the act of
contract. If any one party tries to make any fraud than in that case other party is liable to sue the
fraud party.
Unilateral contract: - Unilateral contract is the contract in which only one party is obliged
to perform all the tasks and other party is completely free to decide whether it should follow the
terms and conditions of the contract or not (Uddin, 2015).
Case study- Harvey v Facey [1893] AC 552 Privy Council. According to the case Harvey
send a telegram to the Facey for the sell of Bumper Hall Pen. In lieu of which Facey mentioned
the lowest price of the pen will be £900. But he did not show this intention to sell the pen at
£900.
Impact- Unilateral contract is the contract that can be canceled at any time before the
maturity of the contract. But, a contract can be canceled when the acceptor of the contract has
started to perform the act.
Collateral contract: Collateral contract is the contract which is made up between the two
parties in order to protect the original contract made between them (Bolton and Dewatripont,
2005). Main aim of making this type of contract is to protect business relationship from the fraud
of another party.
Impact- The statement of contract prepared between the parties should be in a promissory
form otherwise the contract prepared will be said to be indefinable.
1.3 Terms of contract.
Express term: Express terms are the terms or provisions that are included in the contract
at the time of its formation (Chalmers, Davies and Monti, 2010). This term can be presented in
the oral or written manner at the time of making contract.
Case- According to the case of Poussard v Spiers [1876] 1 QBD 410 a guiltless party is
liable to reject the contract if the terms and condition are not followed properly. Or it can be said
that guiltless party can reject the whole contract if he is not satisfied.
Implied term: Implied terms are the provisions or terms that are not expressed or included
in the contract at the time of its formation. But at the same time, it is included in the body of the
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contract. Thus, in other words, it can be said that these terms are included in the body of the
contract but are not expressed at the time of its formation.
Case- According to the case of Hutton v Warren [1836] EWHC Exch J61, if any implied
term is not satisfied by the parities entered into the contract than in that case a contract is said to
be void from the starting.
In nominate term: In nominate terms are not the terms which can be said as a condition
nor it can be said as a warranty (Cimino, 2010). Change of these terms mainly depends upon the
situation of the contract.
2.1 Elements of the contract in the given scenario.
The given scenario says that Ivan went into the bookshop in order to purchase a book.
He saw a HND Business book and took it to Todor, the owner of the shop. But at the same time,
Todor refuses to sale book to Ivan for £50. Todor says that he has already sold out this book to
Carl, but he forgot to remove book from the display and it was the last piece left out with him.
Therefore, in lieu of scenario, it can be said that there is an offer from the Ivan side but no
acceptance from the Todor side. Thus, it can be said that a valid contract can be formed in this
case because both the elements of valid contract (i.e. offer and acceptance) are not present.
Moreover, in this case, Todor is entitled to refuse to sell the book to Ivan. Invitation offer- In this case, offer has been made from the Ivan side to Todor in order to
sell a HND Business book for £50. Acceptance- According to this scenario, there was no acceptance from the Todor side for the
offer of selling book that is offered by Ivan. Written contract- There was no written contract made up in between Ivan and Todor. Condition and Warranty - According to this case, no situations of condition and warranty
arise.
 Express term- According to this case, no condition of express term is arisen because there is
no mutual agreement made up between both the parties (Cullinane and Dundon, 2006).
2.2 Law of term in the given scenario.
According to the given scenario, Adam advertises an advertisement in the newspaper to
reward a price of £1000 to the first person who is able to swim across the English Channel (i.e.
From Dover to Calais). In lieu of advertisement placed by the Adam; Brain has started
swimming from Dover to Calaris on the same day. But, on the next day, Adam again placed
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another advertisement which indicates that offer made by him has been canceled. But
unknowingly about the advertisement Brain has completed the race. In lieu of which, Brain
claims the amount of price but the Adam refuses to pay. Thus, according to the given scenario,
Brain is entitled to claim the price of the reward. Thus, from the following case it can be
concluded that it is the case of unilateral contract. Offer- According to the above case, it can be said that offer has been made from the
Adam side to reward the person who is able to swim from Dover to Calais. Acceptance- From the above case, it can be concluded that acceptance was there from the
Brain side for the offer made by Adam which he withdraws next day. Unilateral contract- According to the above scenario, it can be said that it is a case of
unilateral contract. A unilateral contract is the contract which cannot be canceled, if
another party has started to perform it (Jorge and Kandongo, 2015). Legal intention- Adam does not have any legal intention to cheat Brain. He canceled the
contract unknowingly. Thus, it was the brain’s mistake that he should first clarify
everything with Adam before started swimming.
 Express term- According to the above case, no situations of expressed term exist.
Because the contract has not been made up with the mutual understanding of both the
parties.
2.3 Effect of different terms in the given contract.
According to the given scenario it can see that Barry went into the park there he saw the
notice placed by the local council; which states that chairs can be hired for 50p per hour. Seeing
to which Barry pays 50p to the council and took the ticket. But when he sat on the chair; chair
collapsed and Barry was injured. In lieu of which Barry claim the sum of compensation.
Therefore, from the above case it can be concluded that local council in not entitled to pay for
the damage caused to Barry. Because it was the Barry mistake that he hasn’t read the information
provided by the council at the back side of the ticket, that 'No liability is accepted for the damage
or injury caused by the failure of any hired equipment.
 Exclusion clause- Exclusion clause is the clause which is mentioned on the ticket to
provide various necessary information to the purchaser (King Jr, 2005). Thus, in this case
clause was mentioned at the back side of the ticket but it was the Barry mistake that he
hasn’t read the clause mentioned.
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 Bilateral contract- According to this case bilateral contract has been made between both
the parties with mutual concern.
 Express term- According to the given scenario the condition of express term arises
because the contract is made between both the parities with mutual trust and
understanding (Wong and Deubert, 2010).
 Condition- In the given scenario no situation of condition arises between the two.
Task 2
3.1 Difference between contractual liability and liability in tort.
Basis Contractual liability Liability in tort
Objective In this case an individual is
intent to compensate the
individual at the place where
actual contract has been
performed (Laufer, 2008).
In this case an individual is
intent to compensate the
individual at the place where
negligence has been made.
Damage caused In this case basis of damage is
decided according to the deed
made between the parties.
In this case basis of damage is
decided by the damage caused
to the innocent party.
Relationship In case of contractual liability
relationship is made up by the
mutual understanding of the
parties.
In this case relationship is
made up by the law after the
occurrence of negligent act
(Madajewicz, 2011).
Related case Mansfield v Weetabix [1997]
CA. According to the case
driver of the lorry suffers from
the lack of glucose in the
brain. But drive was unaware
about the effects. In lieu of
which he damages the shop of
C. Therefore, according to the
Chester v Afshar
[2005].According to the case
defendant party has warned the
claimant party about the risk of
syndrome that can occur to the
claimant after the operation
has been made. Therefore,
claimant ignored his
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various laws it can be said that
driver is not at all liable to pay
a sum of compensation to the
C for the damage caused to
him. Because driver was
completely unaware about the
drawbacks of the diseases.
instruction and was ready for
the operation after which
syndrome has started
occurring. Thus it can be said
that it is the situations of
liability in tort/negligence.
Therefore, claimant is no
longer liable to claim a sum of
compensation from the
defendant.
3.2 Nature of liability in negligence.
According to the given scenario it can be seen that Roger, the dishwasher has
complained that he is facing the skin problem faced by him due to the reason of washing up the
utensils for long period of time to the Ben (the owner of the hotel). But Ben on the hand has
taken all the necessary safety measures into consideration. He has provided rubber gloves to each
and every employee in order to protect themselves from the skin infections. But, it was the Roger
mistake that he is not wearing the gloves provided by the Ben. Therefore, it can be said that it is
the case of liability in negligence. Liability in negligence can be said as the breach of duty due
to which an injury or loss is caused to the person (Poblete and Spulber, 2012). In other words, it
can also be said as the failure of an individual to perform this duty which he usually performs. It
can also be said as the negligence of duty of the employer or owner of the company towards its
employee. Therefore, according to the Employee liability act; it is the duty of every employer to
see that no employee is harmed. Employer is also liable to provide a healthy working
environment to the employee (Prasad and et.al, 2007). Thus, according to the above case it can
be concluded that it is case of liability in negligence and not of the employee liability act.
Therefore, Ben is not liable to pay any sum of compensation to the Roger for the damage caused
to him. Because it was the Roger mistake that he has not considered all the safety measures
provided by the Ben against the safety of every employee. Thus, at last it can be said that Ben is
not liable towards the non-delegable duty of care. Because it was the Roger mistake, Ben has
considered all necessary measure for the safety of his employers.
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3.3 How a business can be vicariously liable.
According to the given scenario it could be seen that Colin, the head chef of the hotel hit
the Roger with the frying pan. Due to which Roger was severely injured, as a result of which he
refuses to go to the hospital for the treatment. Therefore, in lieu of which Roger claim a sum of
compensation from the Ben, the owner of the hotel for the damage caused to him. Thus,
according to the vicariously liability act, Ben is liable to pay a sum of compensation to the Roger
for the damage caused to him by the Colin. Because according to the act it is the duty of
employer to see that no employee is hurt or injured during the working hours at the work place.
Vicariously liability is the legal impression to assign the compensation to the injured person
who did not cause any mistake but he has a relationship with the person who has performed the
negligence act (Shavell, 2007). Thus, according to the act it can say that Ben is liable to pay
compensation to the Roger and at the same time Roger is also liable to sue the Colin.
4.1, 4.2 Elements of tort of negligence and vicarious liability in the given situation
Following are the essential elements of the negligence which can be considered by the
suspected party.
Justification: - It states that no suspected party is liable to pay any compensation to the
injured person. If suspected party is able to justify himself that injure caused to the person was
not his mistake (Shiffrin, 2007). It was the injured party mistake.
Necessity: - It states that no employer is liable to pay compensation to the employee; if
employee performs any immoral act and in lieu of which he has been injured.
Illegal: - It states that every injured party is liable to claim a sum of compensation from
the defendant party if any damage or injure is caused to him due to the unlawful act performed
by the defendant party.
The following case study interprets about the insusceptible behavior of the visitor
towards the hotel staff. According to the following scenario, Regent hotel management has
placed a notice near the swimming pool that ' pool will be closed from 7.00 pm to 7.00am. No
entry to the visitors; dangerous when unattended. But Mark avoids the instruction mentioned on
the notice board. In lieu of which Mark jump into the pool and he was injured and his designer
sunglass were broken because there was no water in the pool. Thus, visitor file a case again the
hotel management for the damage caused to him.
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Therefore, according to the Occupier's Liability Act, 1957 Mark is liable to pay a sum of
compensation from the hotel management for the damage caused to him. On the other hand, it
can be said that Regent hotel management is liable to pay a sum of compensation to the Mark.
Because, according to Occupier's Liability Act, 1957 every employer is liable to pay a sum of
compensation to the employee for the damage caused to him, no matter it was the employer
mistake or employee himself mistake (Song and Hwong, 2012). In other words, it can be said
that this act works for the betterment of the employee. Thus, according to the act every time
employer is no liable to pay compensation.
Similarly, according to the Occupier's Liability act, 1984 every employer is not liable to
pay a compensation to the employee for the damage caused to him. Because, Occupier's Liability
Act, 1984 was formed in order to protect the employer against the fraud practice made by the
employee (Weissmann, 2007). This act says no employer is liable to pay a sum of compensation
to the employee if the damage caused to him by his own mistake. In other words, it can be said
that this act was formed for the betterment of the employee.
Thus, at last it can be said that according to the Occupier's Liability Act, 1954 Mark is liable to
claim compensation from the hotel management. But according to the Occupier's Liability Act,
1984 mark is no longer liable to pay a sum of compensation because it was his own mistake.
Henceforth, after considering the various elements of vicariously liability and liability in
tort in lieu of the given scenario it can be interpreted that it Regent hotel management is not at all
liable to claim a compensation for the damage caused to the Mark. Instead Hotel management
can claim for the compensation from Mark for the damage caused to them.
Conclusion
From the following report it could be emphasis that availability of the essential is
necessary for the formation of a valid contract. The report described that a contract in which
offer is given by one person and then it is accepted by other party with having free consent is
considered as a legal contract. In this report various types of contract and terms are discussed. In
this report various case studies are also solved by considering the various elements and terms of
the contract. In the report elements of liability in tort, contractual liability and vicariously
liability are discussed. At last elements of various liabilities are used in order to solve various
cases.
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References
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Barnett, R.E., 2011. Contracts is Not Promise; Contract is Consent. Suffolk UL Rev. 45 pp.647.
Bisso, J.C. and Choi, A.H., 2008. Optimal agency contracts: The effect of vicarious liability and
judicial error. International Review of Law and Economics. 28(3). pp.166-174.
Bolton, P. and Dewatripont, M., 2005. Contract theory. MIT press.
Chalmers, D., Davies, G. and Monti, G., 2010. European Union law: cases and materials.
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Cimino, C., 2010. Virtue and Contract Law. Oregon Law Review.
Cullinane, N. and Dundon, T., 2006. The psychological contract: A critical review. International
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Jorge, A. and Kandongo, E., 2015. Contract management and law of contract.
King Jr, J.H., 2005. Limiting the Vicarious Liability of Franchisors for the Torts of their
Franchisees. Wash. & Lee L. Rev. 62. pp.417.
Laufer, W.S., 2008. Corporate bodies and guilty minds: The failure of corporate criminal
liability. University of Chicago Press.
Madajewicz, M., 2011. Joint liability versus individual liability in credit contracts. Journal of
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Poblete, J. and Spulber, D., 2012. The form of incentive contracts: agency with moral hazard,
risk neutrality, and limited liability. The RAND Journal of Economics. 43(2). pp.215-234.
Prasad, K.V. and et.al., 2007. A study on the socio-economic characteristics of contract and non-
contract broiler farmers. Indian Journal of Poultry Science. 42(2). pp.179-182.
Shavell, S., 2007. Liability for accidents. Handbook of law and economics. 1. pp.139-182.
Shiffrin, S.V., 2007. The divergence of contract and promise. Harvard Law Review. pp.708-753.
Song, X. and Hwong, B., 2012, September. Categorizing requirements for a contract-based
system integration project. In Requirements Engineering Conference (RE), 2012 20th IEEE
International (pp. 279-284). IEEE.
Weissmann, A., 2007. New Approach to Corporate Criminal Liability, A. Am. Crim. L. Rev. 44.
pp.1319.
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Wong, G.M. and Deubert, C., 2010. The Legal & Business Aspects of Disability Insurance in
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Uddin, M., 2015. Aspect of Contract and Negligence for Business[Online]. Available
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