Negligence and Vicarious Liability in Contract Law

This assignment delves into the complexities of negligence and vicarious liability within the context of contract law. It examines how employers can be held vicariously liable for negligent acts committed by their employees during the course of their employment. The discussion emphasizes the legal duty owed by employers to ensure their employees' actions do not result in harm, and the consequences of failing to fulfill this duty. The assignment utilizes legal cases and principles to illustrate these concepts.

ACNB

TABLE OF CONTENTS
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
1 Explanation of significance of essential elements required for formation of valid contract....3
2 Discussion on impact of different types of contract.................................................................4
3 Analysis of contractual terms with reference to their meaning and effect...............................5
4 Case scenario of Ivan and Todor..............................................................................................6
5 Consequences of classification of terms...................................................................................6
6 Case scenario of John and local council...................................................................................7
Task 2...............................................................................................................................................7
1 Contrast liability in tort with contractual liability with suitable case references......................7
2 Nature of liability in negligence...............................................................................................8
3 Vicarious liability of business...................................................................................................9
4 Case scenario of David and Company TeleCo.........................................................................9
5 Case scenario of Colin and Regent Hotel...............................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
2

INTRODUCTION
Legislation of contract and negligence is covered under the provisions of civil law.
Objective of both the legislation is to ensure fair conduct by parties in order to reduce the
possibility of injury. In order to attain this objective, standard norms are prescribed by the
legislation which are mandatory to be complied by all the parties (Adams, 2010). Present study is
focused on description of legal norms described under the contract and tort law. Described legal
provisions will be linked to the given case scenario in order to provide justified
recommendations to the parties. Further, case scenario will be linked to previous case precedents
for better understanding.
TASK 1
1 Explanation of significance of essential elements required for formation of valid contract
All contracts are agreement but all agreements cannot be considered as valid contract
because of the absence of its essential elements. By considering this aspect, parties are required
to incorporate all the essential elements in the agreement for the formation of valid contract
(DiMatteo, 2012). Description of the importance of essential elements required for the formation
of valid contract is enumerated as below: Offer: Offer is an initial point from where a proposal gets formal introduction for the
formation of legally binding contract. It can be termed as an expression by one party to
another for refrain doing or not doing a particular task (McKendrick, 2012). Offer must
be communicated and it can be revoked any time prior to its acceptance. It must be
specific and lawful. According to the case of Harvey v Facey [1893] UKPC 1, agreement
between parties was not enforceable because offeror had provided uncertain offer by
using term, the lowest price. Acceptance: An offer is said to be agreement if it is accepted by the person to whom it
was made. Acceptance signifies the assent provided by offerree; thus it is essence of
contract (Milner, 2011). Acceptance must be unconditional and not be supported by
modification else it will be considered as a counter offer. In case of Hyde v Wrench
(1840) 49 ER 132, contract was not valid by court of law because offerree had made
conditional acceptance.
3

 Intention: Parties to the contract must have intention for the formation of lawful
agreement for the accomplishment of promise made by them. In situation of the absence
of intention, agreement will not be enforceable. By considering this element, domestic
and charitable agreements do not have legal enforceability (Zoll, 2012). This factor was
also considered in case decision of Jones v Padavatton [1969] 1 WLR 328. Consideration: In legal terms, consideration refers to the something to be done at the
promise made by promiser. According to English law, consideration is required to be
sufficient but it is mandatory to be adequate (Contract consideration, 2015). This aspect
was applied in case of Chappell v Nestle [1960] AC 87. In this case, court concluded that
they are interested in bargaining capacity of parties. Thus, validity will only be
considered by its fairness.
 Privity: Privity is a legal doctrine according to which third party is not in position to
make claim of damages on the behalf of contractual parties (Mann, 2002). For this aspect,
case of Dunlop Tyre Co V Selfridge can be considered. In this case, claim of damages by
claimant was not considered because he was not direct party to the contract.
2 Discussion on impact of different types of contract
Unilateral contract
This contract is created by offer and accepted by the performance. This contract is
formed as express offer by one party which can be accepted through performance by any
individual. Impact: In such contracts, no individual is entitled for performance. However, if
performance is provided by individual, then offeror will be obliged for the completion of
their promise (Plimpton, 2007). Case: In the case Carlil v Carbolic Smoke Ball, defendant was held liable to accomplish
promise on the performance provided by claimant.
Bilateral contract
Bilateral contracts are formed by mutual exchange of promises by the parties. All the
contracting parties are required to provide performance to discharge contract by performance. Impact: Faulty party will be held liable for breach if they fail to satisfy contractual terms
(Rush and Ottley, 2006).
4

 Case: In case of Oscar Chess v Williams [1957] 1 WLR 370, contract was formed
through making promise by both the parties. Thus, both have obligation to provide
satisfactory performance.
Collateral contract
In collateral contract, consideration of agreement is provided by another agreement. Impact: These contracts are not considered legally enforceable if they are not supported
with the proper promise (Slapper and Kelly, 2011). Case: In accordance with the case facts of Barry B Davies, there was existence of
collateral contract because consideration was given by the way of another contract.
Electronic contract
Electronic contract is a form of distance contract in which parties are not present at
similar place. These contracts are formed by electronic means such as mail or commercial
websites. Impact: These contracts are governed by the provisions of distance selling regulations.
 Case: Example of electronic contract is Golden Ocean Group Ltd v Salgaocar Mining
Industries PVT Ltd [2012]. In this contract, DSR was applicable for the assessment of its
validity and fairness.
3 Analysis of contractual terms with reference to their meaning and effect
Contractual terms are statements inserted into agreement to ensure standard performance
by parties. Terms in contract can be bifurcated into expressed and implied terms. Description of
these terms is as follows:
Expressed terms
Expressed terms are stated by parties with their mutual consent. These terms can be in
either written or verbal manner (Abiola, 2005). According to the case study, Nicolene V
Simmonds 1953, expressed terms must be specific and clear else it will not be considered as part
of contractual deed.
Implied terms
Contractual terms can be implied by customs, statue and courts. Objective of implied
terms is to provide effect to the obvious intention of parties (Raz, 2010). These terms are
5

assumed to be part of the contract. In accordance with the case of Liverpool City Council v Irwin
[1977] AC 239, these terms protect interest of weaker party.
Excluding and limiting terms
These terms are inserted by contracting parties in order to reduce obligation that can be
raised from non-compliance of contractual terms. Exclusion clause is said to be valid if it is
properly incorporated and loss is covered in clause.
4 Case scenario of Ivan and Todor Invitation offer- Invitation to treat can be termed as an expression of willingness for the
negotiation process. It does not have legal status of offer (Raz, 2010). In the given case
situation, displayed book is invitation by Todor to the customers. Here, offer is given by
Ivan to the Todor for the purchase. Written contract- These contracts are supported by written deed in which contractual
terms and conditions are described. Due to absence of deed in the present case, there is
oral agreement between parties. Acceptance- Todor is free to accept or reject the offer provided by Ivan. In this case,
Todor had not accepted the offer because book was already sold to another customer
(Taylor, 2011). Expressed terms- In accordance with the provided case facts, expressed terms are the
conditions stated by bookseller.
 Condition- In provided case, price of book is condition of the contract.
In accordance with the case facts Patridge V Crittenden 1968, Ivan and Todor do not
have contractual relationship. It is because, offer given by Todor is not accepted by Ivan.
5 Consequences of classification of terms
Classification of terms defines remedy available to the innocent party for the breach
occurred by faulty party. Consequence of classification of terms is enumerated as below: Condition: It is primary stipulation of the contractual agreement which states core terms
of the contract. Breach of condition is considered as breach of contract (Stanberry, 2006).
According to the case of Poussard V Spiers 1876, if faulty party fails to do so, then
innocent party will be entitled for the breach of contract.
6

 Warranty: Warranties are secondary stipulations which clarify contractual obligation.
Breach of warranties only provides entitlement for the claim of damages (Milner, 2011).
As per the case of Bettini V Gye 1876, innocent party will be still obliged for the
completion of promise made by them.
 Innominate terms: In this term, those statements are covered which neither can be
considered as condition nor as warranty (Twerski, 2006). In accordance with the case of
Hong Kong Fir Shipping v Kawasaki Kisen Kaisha [1962], damages for breach of
innominate terms are provided by considering the impact on benefit of innocent party.
6 Case scenario of John and local council Written or bilateral contract- According to the provided case description, contracting
parties had formed written bilateral contract. Both the individuals had make promise for
the formation of contract. It was supported through provided ticket by local council. Condition- As per the provided case scenario, condition of the contract is charges taken
by local council for their hire services (Adams, 2010). Expressed term- Described condition is expressed terms of the contract.
 Exclusion clause- Statement cited on the backside of ticket provided by local council is
exclusion clause. Inserted clause by local council is not valid by considering case facts of
Chapleton V Barry. As per this case, ticket is merely a receipt and terms inserted on it
will not be part of the contract.
According to the above described facts, council will be held obliged for the payment of
damages to the John for the occurred injury.
TASK 2
1 Contrast liability in tort with contractual liability with suitable case references
Liability provision is developed in law to provide remedy to the innocent party for the
injury occurred due to non-satisfactory performance of faulty party. Both the liabilities are
governed by the provisions of civil law. Despite of these similarities, there are certain differences
between contact and tort liability. Description of these differences is as follows:
Basis of difference Contractual liability Tort liability
Reason of occurrence Contractual liability is Liability in tort is imposed on
7

imposed on individual if they
are not in position to satisfy
contractual terms with their
performance.
individual if they fail to take
care of their general duties and
due to which, injury is
occurred to innocent party
(Adams, 2010).
Relationship between parties In contract liability, there is
existing relationship between
contracting parties as
agreement was formed by their
mutual consent (Taylor, 2011).
In tort, relationship is imposed
by court of law because parties
are stranger to one another.
Basis of damages Damages in contractual
liability are provided as per the
terms and conditions of
contract.
Damages in tort are provided
on the basis of injury of the
innocent party (DiMatteo,
2012).
Case reference In accordance with the case
facts of Avery v Bowden
(1855), damages were
provided as per the contractual
agreement created by parties.
In accordance with the case
facts of Donoghue V
Stevenson, damages were
provided by considering injury
of claimant.
2 Nature of liability in negligence
Negligence can be termed as tortuous action in which defendant fails to take care of
standard duties which are expected from a reasonable person in similar situation. Claim of
negligence is successful in court if claimant is able to satisfy the following principles: Duty of care: It is obligation imposed by law on all the individuals to take reasonable
care while conducting actions that have potential to cause injury to the innocent party.
For determination of existence of duty of care, neighbour described by Lord Atkin in
Donoghue v Stevenson is applied. In accordance with this test, individual is required to
take care of action that can cause injury to the parties affected by their actions (Twerski,
2006).
8

 Breach of duty: Breach of duty exists in negligence where defendant is not in position to
fulfil the duty described by law. With the establishment of breach of duty, defendant is
liable for act of negligence (Slapper and Kelly, 2011). In accordance with the case of
Vaughan v Menlove (1837) 3 Bing. N.C. 467, objective test is applied to determine its
existence. In this case, defendant was judged by considering standard of reasonable
person. Causation: Claimant is required to show that loss is occurred due to negligence of
defendant. Causation is tort law that is satisfied but for test (Plimpton, 2007). This test
was developed in case of Barnett v Chelsea & Kensington Hospital [1969] 1 QB 428. In
this case, court had stated that defendant must be primary cause for damages in order to
make successful claim of negligence.
 Forseeability: Damages of the claimant must not be too remote for the claim of remedy.
It must be foreseeable from the act occurred by defendant (Rush and Ottley, 2006). For
this aspect, case of Re Polemis & Furness Withy & Company ltd. [1921]3 KB 560 can be
considered.
3 Vicarious liability of business
Vicarious liability can be termed as obligations imposed on individual for the wrong
committed by another person. This obligation is imposed because liable person was in position to
the control the actions of wrongdoer. In addition to this, if they had acted responsibly then
negligence action can be prevented (Abiola, 2005). General examples of vicarious liability are
relationship of master and servant, partnership between agent and principal etc.
By considering this approach, business is said to be vicariously liable in practice of
agency, employment and partnership. In such relationship, businesses are held obliged for the
negligence occurred on the side of employee, partner or agent. However, for the transfer of this
obligation, following conditions are required to be satisfied: Controlling relationship: Business should be in position to control the actions of
individuals.
 Negligence should be occurred in course of employment: Act of negligence must be
occurred during business hours. It is because; after completion of business hours,
controlling power is not effective (Mann, 2002).
9

In accordance with the case of Lister v Hesley Hall Ltd [2001] UKHL 22, business was
held vicariously liable because of the act of sexual harassment by warden. It was the duty of
business to monitor the actions of employees to prevent harassment, victimization and
discrimination at work place but they failed to satisfy it. Due to this aspect, they were held
obliged for the payment of damages.
4 Case scenario of David and Company TeleCo
Defendant will not be held liable for the payment of damages if they are in position to
avail one of the following defences: Contributory negligence- Provision of this defence was applicable if negligence had
been occurred by the contribution of both claimant and defendant (Nettleship v
Weston [1971] 3 WLR 370). Volenti non fit injuria- Provision of volenti non fit injuria is applied where claimant puts
themselves in a situation where there is potential risk of injury on their own willingness
and they are aware of risk (Revill v Newbery [1996] 2 WLR 239).
 Ex turpi causa- Benefit of this defence is provided to the defendant if act of negligence
conducted by them is justified in eyes of law (Stanberry, 2006). For this aspect, case of
Davies v Swan Motor co [1949] 2 KB 291 can be referred.
In the given case situation, injury was occurred to David and Kevin due to telephone pole
of company Teleco. In the described case, injury was occurred due to negligence of Kevin as it
was his responsibility to drive at standard speed for the prevention of accident. However, this
duty was breached by his carelessness driving. Further, there was also duty of Company to use
qualitative materials and make proper arrangements for emergencies. However, they were also
not satisfied their duty and consequently, injury was occurred to David and Kevin. In this case,
company will not be liable to pay damages to the David because they were eligible for the
defence of contributory negligence. It is because, injury of claimant was occurred due to
negligence of himself thus he will not be entitled to make claim for remedy. Further, both
company TeleCo and David will be liable to pay damages to the Kevin for the injury occurred to
him due to their negligence.
10

5 Case scenario of Colin and Regent Hotel
Considering the present scenario of Colin and Roger hotel, there is existence of vicarious
liability. It is obligation of business to provide guidance to employees so that they should not get
engaged in unethical practices such as physical abuse. However, Regent hotel failed to do so as
Colin hit Roger from the frying pan. As a consequence, they will be held vicariously liable for
the payment of damages to the injured party. Further, in this act, both the conditions are satisfied
that act is conducted in course of employment and negligent party has status of employee. Thus,
Roger can make successful claim of vicarious liability on Colin.
Alternative to this, Roger can also bring direct claim on the Colin by considering the act
of negligence. It is because, Colin has standard duty to not use physical violence. Act of hitting
Roger with frying pan shows breach of duty on his part. Further, due to negligence of Colin,
injury is occurred to the Roger. Above described provisions show that all the points of
negligence are satisfied in the given scenario; thus Colin is entitled to make direct claim of
negligence.
CONCLUSION
Present study highlights the provisions of contract and negligence law. In accordance
with this study, conclusion can be drawn that parties are required to comply all the legal and
contractual terms in a proper manner else they will be obliged for the payment of damages. In
absence of contractual relationship, law of negligence will be applicable. This law ensures
omission of act that can cause injury to the innocent party. As per the provisions of vicarious
liability, employers are required to take care about the actions of their employees for the
prevention of act of negligence. In situation, when they fails to do so, then they will be held
vicariously liable for the payment of damages.
11

REFERENCES
Books and journals
Abiola, S., 2005. Introduction to Business Law in Nigeria. Lagos: Malthouse Press Ltd.
Adams, A., 2010. Insurance contract law and regulation and competition in the UK insurance
industry: The missing link. Journal of Financial Regulation and Compliance. 8(2).
pp.140–150.
DiMatteo, A. L., 2012. False dichotomies in commercial contract interpretation. Journal of
International Trade Law and Policy. 11(1). pp.27-43.
Mann, K., 2002. Punitive Civil Sanctions: The Middleground between Criminal and Civil Law.
The Yale Law Journal. 101(8). pp.1975-1873.
McKendrick, E., 2012. Contract Law: Text, Cases, and Materials. Oxford University Press.
Milner, A., 2011. Contract interpretation: potential for relaxing the exclusionary rule.
International Journal of Law in the Built Environment. 3(3). pp. 205-221.
Plimpton, L., 2007. Business Contracts: Turn Any Business Contract to Your Advantage.
Entrepreneur Press.
Raz, J., 2010. Responsibility and the negligence standard. Oxford Journal of Legal Studies.
30(1). pp.1-18.
Rush, J., and Ottley, M. 2006. Business Law. Cengage Learning EMEA.
Slapper, G., Kelly, D., 2011. The English Legal System. Taylor & Francis.
Stanberry, B., 2006. Legal and ethical aspects of telelaw. Journal of telemedicine and telecare.
12(4). pp.166-175.
Twerski, A. D., 2006. Chasing the Illusory Pot of Gold at the End of the Rainbow: Negligence
and Strict Liability in Design Defect Litigation. Marq. L. Rev. 7. pp.90.
Zoll, F., 2012. The binding power of the contract: Protection of performance in the system of the
Common European Sales Law. Journal of International Trade Law and Policy. 11(3).
pp.259 – 265.
Online
Contract consideration. 2015. [Online] Available through:
<http://e-lawresources.co.uk/Consideration.php>. [Accessed on 15th February 2016].
Taylor, A., 2011. Offer and acceptance online. [Online] Available through:
<http://www.seqlegal.com/blog/offer-and-acceptance-online>. [Accessed on 15th
February 2016].
12