Contract Law and Business Applications

This assignment delves into the realm of contract law and its practical applications in various business scenarios. It examines diverse topics such as outsourcing agreements, service level agreements (SLAs), risk management in contracts, and the role of ethical considerations in contractual relationships. The assignment encourages critical analysis of legal principles through real-world examples and case studies, providing valuable insights into the complexities of contract law within a contemporary business context.

Aspects of Contracts
and Negligence for
Business

Table of Contents
INTRODUCTION..............................................................................................................................3
TASK 1 ........................................................................................................................................... 4
1.1 Various elements of a valid and legally binding contract ...................................................4
1.2 Discuss the impact of different types of contract................................................................5
1.3 Analyses of terms used in contract .....................................................................................7
3.1 Compare and contrast liability in tort and contractual liability...........................................8
3.2 Key elements used in negligence claim to be successful.....................................................9
3.3 How and Why a business can be vicariously liable............................................................10
TASK 2 ......................................................................................................................................... 11
2.1 Application of different relevant elements of a valid contract..........................................11
2.2 Case scenario.....................................................................................................................12
2.3 Evaluate any effects of implied terms that may b applicable in scenario..........................13
TASK 3 ......................................................................................................................................... 14
4.1 Application of elements of tort and negligence................................................................14
4.2 Application of rule of vicarious liability in given case........................................................15
CONCLUSION................................................................................................................................16
REFERENCES................................................................................................................................. 18

INTRODUCTION
According to the law of The Contract act, it has been said that there are many aspects
which are required to be make an agreement a legal document. A valid contract is one which
consist of all the essentials of a valid contract. While transacting a business transaction,
companies execute various legal agreements with different business parties. It is advised that
all the agreed conditions between both the parties to the contract should be conveyed properly
and appropriately so that there should not be any conflicts between them (Ang, 2013). So, the
legal consultants of the companies make sure that there should be a legal contract between
both the parties. In this present report, various elements of valid contract has been evaluated.
It includes offer, acceptance, free consent etc. Also, concepts of Tort and Negligence law has
been discussed in this present report. Law of contract also demonstrates various legal terms. It
involves, innominate terms, express terms, conditions and warranties. In this present
assignment, it has been showed that there are many parts of duty of negligence.
TASK 1
1.1 Various elements of a valid and legally binding contract
To construct a valid contract, it is necessary that there must be all legal and essential
particulars in an agreement (Brown and Clinton, 2010). A contract is a written agreement
which is enforceable by law for the time being in force. Various elements of a legal contract has
been written in this present report, submitted to ETGS Legal consultant:

 Offer and acceptance : There must be a valid and lawful offer and acceptance in the
valid contract. It means one part , called offerer, makes an offer which should be
accepted by another party to make it a legally binding offer (Harroch, 2011). Also, there
is a difference between a valid offer and an invitation to treat. According to the decided
case law: Harvey v Facey [1893] AC 552, it has been held that there is no valid contract
between Harvey and Facey as latter did not answer directly about whether he would sell
the pen or not. Also, there was no evidence regarding an intention whether telegram
sent by Facey is an offer.
 Intention to create a legal relationship: It is an another concept which reveals that
there must be an intention behind transaction any business transaction. According to
the decided case law of : Jones v Padavatton [1969] 1 WLR 328, it was held that there
was no binding and legal agreement between both of them (Gergen, 2013). It was a
domestic agreement in which there was no intention to create a legal contract.
 Consideration: To transact through a legal contract it is necessary that there must be a
lawful consideration in it. Consideration is the price paid for the promise of other party.
In other words, in this aspect, price is exchanged in the exchange of promise.
 Capacity:According to the valid contract, it is necessary that parties to the contract must
be competent enough to enter into contract. A person who is minor, unsound mind and
lunatic person are prohibited by law to form a valid contract.

 Free consent: If any of the parties to the contract does not agree any of the condition or
warranty of contract, then it is not legal in the eyes of law (Hiles and Hon, 2016). There
should be consent of both the parties to make it as a legal one.
1.2 Discuss the impact of different types of contract.
There are different types of contract which are used by different parties to the contract.
It includes face to face contract, written contract, distance selling contract etc.
 Face to face contract: This is a traditional form of contract which means the parties to
the contract frames an agreement on the basis of words of mouth and in verbal form.
In this type of contract the parties must be physically present so as to form contract.
Strengths:
◦ No force, no fraud or any undue influence between both the parties.
◦ Easy to understand the terms and conditions of contract.
Weakness:
◦ In the case of conflict, it is negative as terms are not in written form.
According to the decided case law of : Cundy v Lindsay (1877–78) LR 3 App Cas 459, it
was held that there was no legal and binding agreement or contract between them (Idowu,
Capaldi and Zu, 2013). Title could not be passed to Rogue and Cundy as well. They were
strained to return the goods back.
 Distance selling contract: in this contract, it includes that the parties to the contract
forms contract online.
Strength:
◦ This contract is easy and economical, as all the transactions are held through online
procedure.
◦ The buyer has variety of choices for goods and services.
Weakness:
◦ The parties under this contract cannot make enquiry about goods and services.
◦ The party also has right to terminate contract.

 Written contract: In this contract, the parties to the contract has laid the terms and
conditions in the written form (Joint and Baker, 2011). The terms and conditions
relating to an agreement are exchanged in a written manner.
Strength:
◦ This is the most efficient and advantageous because it avoids every types and kinds
of conflicts because it is in written statement.
◦ It helps the parties to solve the disputes in a more better and amicable manner.
According to the decided case law of : WOOD V. BOYNTON (1885), it was been
held that the parties to the said respective contract has transacted their business in the written
form (Latimer, 2012). It is beneficial for them because it does not create any issues and conflicts
as all the conditions are pre decided and stated as well.
1.3 Analyses of terms used in contract
The persons in the contractual relationship, are enchained to perform In accordance
with the terms and conditions of the contract. If any of the parties breaches the contract, then
other party has the right to sue the first party. The different terms are used are as:
 Condition: A condition is a major term which has been use by the contractual parties of
legal agreement. If any of the condition is breached then the plaintiff s entitled to claim
the damages and also to repudiate the contract. Condition term in contract consist of
all predetermined and pre agreed terms and stipulations which are necessary for
operating of a lawful written statement. According to the decided case law of :
Poussard v Spiers (1876) 1 QBD 410, it was been held that, Madame poussard was in
breach of condition or terms of contract, entered with Spiers. Latter was entitled to
breach the contract.
 Warranty: A warranty is a term which is not as much important as compared with
condition (Means, 2014). If any of the person in an agreement breaks warranty then,
claimant party can demand damages in against of the breaches done by other party.
According to the case law of : Bettini v Gye (1876) QBD 183, it was decided that Bettini
who was in breach of contract, it does not mean that employer can end the contract.

Missing rehearsals dis not results in breach of warranties. However, Gye can claim
damages from Bettini.
 Innominate terms: innominate term are those terms in contract which does not
signifies itself as conditions or warranties but it looks for being classified in that
approach in which it can give effect to the provision, whether the guiltless party was
disadvantaged of substantially the whole benefit of the contract . In case plaintiff is
deprived of all advantages then it can lead him to claim the damages and end contract
also. According to the decided case law: Schuler v Wickman Tools [1974] AC 235, it was
held that the plaintiff is entitled to claim the damages from defendant.
3.1 Compare and contrast liability in tort and contractual liability.
Contractual and tortious liability analysis is a core part under common law of contract.
Law of tort and contractual liability are the different parts of law (Miller, 2013).
Tort is an act in which one party injures other party in such a way that blistered person
can sue the other party for damages. A negligent or civil party is not arising out of contract or a
civil wrong. It includes battery , defamation or negligence.
On the other hand, contractual liability is that liability in which contractual agreements
between persons or merchants is governed(O'malley, 2012). Contractual liability defines
responsibilities and liabilities of both the parties. Contract laws may address various
proceedings for sale of goods and services.
Contractual liability Tortious liability
 In this, breaches of duties laid down in
the contract takes place.
 Issue of consent is must in the
contract. Parties cannot enter into
contract without consent of each
other.
 Also, the purpose of award In this
context is to restore the persons in
contract to their position before the
 In this, breaches of some sort of duties
takes place.
 Issue of consent is not necessary in the
tortious liability.
 The damages are claimed or rewarded
to compensate the victim or plaintiff or
injured party for loss occurred.
 In tortious liability, privity is not

breach occurs (Ortmeier, 2012).
 In contractual liability, privity is needed
or concerned.
 In the aspect of contractual liability,
amount of damages are determined by
conditions of the parties to the
contract.
 According to the decide case law of :
Esso Petroleum v Mardon [1976] QB
801, it was been held that the
respective parties are in contractual
liabilities and both have inferred each
other's responsibilities and liabilities in
contract formed.
required.
 In tort liability, damages caused are
not limited nor they are capable of
being indicated with precision.
 According to the held case namely:
BALTIMORE AND OHIO R.R. V.
GOODMAN, 275 U.S. 66 (1927), it was
been held that duty of care does not
apply to the cases that are clear legal
standards and also it suggests that
plaintiff was responsible for the claim .
3.2 Key elements used in negligence claim to be successful
In the provision of tort law, if any person harms a person with out any intention then it
is called as negligence. The landmark case of Donoghue v Donoghue has been decided in this
concept. In this said case, Mrs Donoghue went to a cafe with a friend (Revak, 2011). She had a
opaque bottle of ginger beer with ice – cream. Due to translucency, the content in the bottle
was not visible. Then she found a snail in the bottle when she poured it on ice cream. She
suffered from personal injuries. She claimed damages from manufacturer of ginger beer. It was
held that claim of Mrs Donoghue was successful.
In regard to the concept of negligence, there are three elements, that must be proven
by claimant so as to achieve the damages: The defendant owed them a duty of care:- It is the first element in negligence. It is
concerned about the relationship of claimant defendant in such an aspect that the
defendant has to take care of his duty to avoid any injury. For an example, in aforesaid

case of Donoghue v Donoghue, the cafe owner had the duty of care for plaintiff, which
he did not fulfil. So Mrs Donoghue has a right to sue for damages. The defendant was in breach of that duty:- In this case, the plaintiff has to prove that
damages has been caused to him by defendant due to its negligence. Only in that case,
plaintiff can claim compensation from him. Once it has been proved by claimant that
defendant owed a duty of acre, then complainant also, has to prove that defendant
ruptured the duty of care.
 The breach of duty caused damage:- In this case it has been held that for exhibiting
causation in tort law, the plaintiff has to prove that the damage is done on part of
defendant. Litigant is liable for the breach of duty and also for counterbalance (Stempel,
2010). In the afore said case, the manufacturer of ginger beer is held liable to
compensate Mrs Donoghue.
3.3 How and Why a business can be vicariously liable.
Vicarious liability is the liability In which one person is held under the susceptibility for
an act or an omission for another party. This liability only occurs in the relationship between
employer and employee. There must be a prerequisite relationship between employer and
employee. More over, employer is held liable for the acts done by its employee during course
of employment. Various case laws are been star -marked in aspect that business is held liable
for the acts done by its employee or worker. According to the decided case law of : Rose v
Plenty [1976] 1 WLR 141, it was held that Mr plenty was held liable for the acts done by its
employee namely, Leslie Rose. Latter has appointed 13 years old boy for delivery of milk and
other works. In this case it was held that conduct of rounds man was within his course of
occupation and the employers are held accordingly, so appeal was accepted.
In vicious liability the employer is responsible for the acts done by its employee. For
avoidance of the vicarious liability the employer is required to take the following steps:
 employer should give equal chances with out any discrimination.
 Gives progressive commitment to its employees (Sweet and Schneier, 2012).
 He should prohibited the discriminatory activities which are held at company.

According to another case law of Mattis v Pollock [2003] 1 WLR 2158, it was concluded
that stabbing of Mr Mattis by Mr Cranston represented the unfortunate and unpleasant
incident. At the time when Mr Mattis was stabbed then in that case, Mr Pollock's responsibility
for the acts done by Cranston has not been finished so , Mr Pollock was held liable for the acts
done by his employee that is Mr Cranston (Tworek, 2010). The appeal was allowed in this
prospect.
This liability only occurs at the time when there is a discrimination and harassment
occurs in the work place of a company. This means that employer is vicariously held liable for
actions of its employees in case of non compliance by him with reasonable steps to forbid the
secernment.
TASK 2
2.1 Application of different relevant elements of a valid contract.
(I) A contract can be defined as an agreement between two parties that can be enforced
in the court of law. An agreement must contain essential elements of a contract namely
consideration, offer, legal capacity, acceptance, contractual intentions for the formation of a
valid contract (Van Huyssteen, Van der Merwe and Maxwell, 2010). In the absence of any of
these elements, the contract would not be considered valid.
In the given case, display of jewellery by GBJ Ltd. is an invitation to offer and not an
offer. It was held in the case of Pharmaceutical Society of Great Britain v Boots, 1953 that
display of goods is an invitation to offer and the customer makes an offer to purchase such
goods and it depends on the seller whether to accept the offer or not. As per the facts of the
case, Julie wore an expensive necklace displayed by GBJ Ltd. and broke it.
Therefore, in the given case, Julie would be liable to compensate GBJ Ltd. as display of
jewellery is a mere invitation to offer and not an offer. It had not given acceptance to Julie for
her intention to buy the necklace that she has broken, so no contract exits between Julie and
GBJ Ltd.
▪ It was held in the case of Carlill v Carbolic Smoke Ball Co., 1893 that an
advertisement can amount to offer. In the present scenario, GBJ Ltd made an

advertisement that if a customer purchases a product from the shop whose
serial number contains specific digits then, he would be entitled to enter into a
raffle for winning £5000 (Martin, 2010). But there was condition attached to it
that the winner is required to provide the invoice and shopping bag with the
shop logo as an evidence of purchase. Both Mary and Tina entered the raffle but
the company denied to pay the price on the grounds that the conditions of offer
were not fulfilled.
Therefore, the contention of GBJ Ltd. is correct as conditions are central to the existence of a
contract and in case of breach of conditions, party can rescind the contract as per the case of
Poussard v Spiers, 1876.
2.2 Case scenario
 An exclusion clause is inserted into a document with the intention to limit or restrict the
liabilities of one of the parties. It is important to mention the fact of incorporation of
exclusion clause by giving reasonable notice to the other party. But as per the provisions
of the Unfair Contract Terms Act, 1977, a person cannot restrict or exclude his liabilities
in negligence for death or personal injury acting in the normal course of business (Heled,
2010). Therefore, in the given scenario, the company would be liable for the injuries
caused to Jack due to its negligence. As the company had not given reasonable notice to
Jack regarding inclusion of exclusion and moreover, the clause that excludes the liability
of a party in case of negligence causing death or personal injury is not valid.
 According to the Sale of Goods Act, 1979, the goods sold by seller must be as per
description, fit for the purpose for which they are bought and satisfactory quality
(Sullivan, 2011). In the given case, Patricia purchased a dress from an online shop
named Boohoo but one of the term stated that the size or colour of the item can be
changed by the company.
The term stated by the company is not valid because as per Sale of Goods Act, 1979, it is must
that the goods sold match the sample provided by the company.

2.3 Evaluate any effects of implied terms that may b applicable in scenario.
Implied terms are those terms in which terms and conditions of the
contract are not mentioned. These terms are not expressly mentioned in the contact it has
been evaluated that while transacting any business transaction, there are certain terms and
conditions which are not stated in contract while framing it. These terms are referred as
implied terms.
In the given case scenario, James who has booked a room in hotel namely, Express inn,
for attending an exam. He slept with a thought of staying awake through out night for the
revision purpose and when he woke up he gone through a sticker that reads “ Lights must be
switched off After 12 midnight regardless”. In this aspect it has been implied that lights will be
switched off by the person if he is thinking to sleep. “Implied terms” are those terms which
enable the parties to the contract to consider those terms which are applied in the contract.
Also, in this case, it Is expressly also mentioned that after 12 midnight, the light should be
switched off. It is the example of “Express terms”. This terms are expressly mentioned or stated
in the contract by both of the parties to the contract. There are various terms implied by
common law in the context of contract. These terms are: Terms implied through custom:- When a particular term is predominant in a trade then
the courts may imply a condition in an agreement of the same type in that trade Terms implied in fact:- those factors which are implied while implementation of
contract.
 Term implied at law:- the court may connote a term in law in contract of a defined type
(Wong and Deubert, 2010).
According to the decided case law: Hutton v Warren [1836] EWHC Exch J61, court has
been implied a term that is related with the tenancy which is provided for compensation for the
work and expenses that has undertaken in the context of grown crops. In this case, this term
has been referred as implied term as it was a common practice for farming tenancies to
contain such clause.

TASK 3
4.1 Application of elements of tort and negligence.
There are many diverse elements of negligence which are concerned with an obligation
that an offended party demonstrates the four variables by a “dominance of proof”.
 The defendant owed an obligation to the offended party.
 The litigant abused that obligation.
 As a result, of respondent 's misdemeanour of that duty, the plaintiff has
suffered damage or loss; and
 the damage was a sensibly predictable result of the litigant's activity or inaction.
In this given case scenario, Lewis went to Mc Donald's for lunch. There he slipped on
some water and injured and also broke his left ankle. In this case, Lewis want to claim the
damages from the management of the said cafe. Tort is a civil law in which one person injures
the other person to the contract (Brown and Clinton, 2010). Also, tort liability is that liability In
which one arty to the contract breaches the statute and cause harm to other individual and his
rights. Tort is legal wrong. In the given case scenario, Lewis slipped on water and broke his right
ankle. So, he is liable to claim the damages from the management. As, it was the negligence of
the management of Mc Donald's that they had not take care of their duty to protect the
customers and guests. Since the duty that has been owed to the management of Mc Donald's ,
they has breached the duty of care. So, according to the elements of negligence that says that
 There must be duty owed to defendant;
 There must be breach of that duty by the defendant; and
 Also, it should be proved by claimant that damage has been caused by defendant.
In respect of the three elements of negligence it has been concluded that Lewis can claim the
damages from Mc Donald's , that breaches the duty of care assigned to them.
According to the decide case law of: Vaughan v Menlove (1837) 3 Bing NC 467, it was
been held that by the court that best judgement used by defendant is not enough and it has to
be judged by the standards of a reasonable man or statute.

4.2 Application of rule of vicarious liability in given case.
Vicarious liability means that situation when a person is became liable and responsible
for the mistake and omission of another person (Gergen, 2013). In simple terms if a employer
became liable for the action which is committed by its employee without knowingly then it
totally refers to the vicarious liability.
It is also treated as the employer liability. Sometimes employees did some activities which they
do not know that such activities are wrong and acceptable. Hence, this is described as the
vicarious liability. Following is a example which defines this term more clearly.
The given case is a perfect example of vicarious liability because that accident is took place at
that time when Ahmed is on duty. He crashes the BMW at the time when he was again doing
delivery of parcel (Yusoff and et. al., 2012). Vicarious liability means when an employer is liable
for the employee any unlawful activity. According to the given scenario it is clearly stated that
organisation is liable for that accident because accident occurs when delivery boy delivers the
parcel.
Whole incidents responsibility is relates with firm not with delivery boy. Compensation
have to be made by the firm not by ahmed. If ahmed did this at the time when he was not on
duty then whole liability was relates to the person not with entity. But here, this accident is
occur due to ahmed foolishness.
He went to his uncle home because he is sick and neglects the delivery on time.
But after when he was leaving house he found that he was already late for delivery and for this
concern he took such step.
CONCLUSION
It can be articulated from this assignment that a contract is a legally enforceable
agreement between two parties. The essential elements of contract including offer,
consideration, legal capacity, acceptance and intention to create legal relationship must be
present for formation of a valid contract. Moreover, tort is the act of wrong done by one party
which causes injury or loss to other party. The law of tort seeks to provide remedies to the
bonafide party in case of any loss or damage is caused due to wrong or negligent actions of

others. Further, vicarious liabilty means that an employer can be held liable for the negligent
actions of employees done in the normal course of employment.

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