Contract Law Essentials

This assignment delves into the fundamental principles of contract law. It examines the essential requirements for a legally binding contract, such as offer, acceptance, consideration, intention to create legal relations, capacity, legality of purpose, and certainty of terms. Students are expected to demonstrate their understanding of these elements by analyzing various examples and scenarios.

ACNB
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TABLE OF CONTENTS
Introduction......................................................................................................................................4
Task 1...............................................................................................................................................4
1.1 Importance of various elements for formation of contract....................................................4
1.2 Impact of different forms of contract.....................................................................................5
1.3 Analyse terms of contract in accordance with their meaning and effect...............................6
Task 2...............................................................................................................................................8
2.1 Application of elements of contract in the business scenario...............................................8
2.2 Implications of law on terms in the case scenario................................................................9
2.3 Effects of different terms of contract...................................................................................10
Task 3.............................................................................................................................................11
3.1 Similarities and differences between tort in liability and contractual liability....................11
3.2 Nature of liability for negligence.........................................................................................11
3.3 Explain the vicarious liability .............................................................................................13
Task 4Austin, C. M., Wang 2015..................................................................................................14
4.1 Elements of tort of negligence and defense.........................................................................14
4.2 Elements of vicarious liability in case scenario...................................................................15
Conclusion.....................................................................................................................................16
References......................................................................................................................................17
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INTRODUCTION
In order to meet the sustainable aspects business firm must consider proper understanding
in respect to diverse elements that are essential for participation in contract. In current
conditions, organizations are facing number of issues that impact business negatively. As same
the law framed by government impacts effectively on business and social aspects. With an
assistance of this, determination of right and wrong aspects can be accomplished with reference
to environment. Business transactions are greatly associated with contractual aspects. For better
opportunities in the market, consideration of legal aspects is significant.
It has been noticed that management must consider terms and conditions of contract as
significant aspect so that valid contract can be framed. With an improved focus on terms and
conditions, better safeguarding can be provided so that rights and duties can be accomplished in
legal manner. In present study, introduction of key values regarding contracts and negligence
will be considered as key aspect. It means the learning about essential elements can be attained
in desired way. Classification of key factors can be as offer, acceptance, consideration, condition,
etc. which are required for the formation of a valid contract. In addition to this, it can be said that
teh conditions, warranty, exclusion and innovative clauses are key essential factors so report will
also focus on these aspects and their contribution in contract. By having understanding about
these aspects the nature of obligation will also be evaluted. Along with this, learning about
different sides of contracting parties will also boost the process. With an assistance of report,
diverse legal issues can be overcome.
TASK 1
1.1
As per detailed study, it can be said that contract is formal term that defines the key
aspects of legal agreement which is signed by two or more parties. Parties can be individual as
well as organization and they must consider legal binding agreement before entering into
activity. It also decides the liabilities and obligation on the parties as per reference of mutual
understanding during agreement formation. In regard to case of Peter Abraham, it can be said
that Peter is attracted towards setting out a business of contractor building. In this respect, he
need to understand key elements of contract in effective manner so that valid contract can be
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framed with clients in significant manner (Rafsanjany and Asgarkhany 2016). Key elements of
contract can be classified as offer and acceptance, parties must be competent, lawful
consideration, lawful object, intention to create legal relationship, privity of contract, trust
exception, property exception, assignments of contract and third party insurance exception. In
addition to offer and acceptance, it can be said that the valid contract can not be framed by
avoidance of these elements. It also indicates that both parties are willing to take part in activity
and ready to make a contract. Competency also need to be considered as critical aspect because it
allows to ensure that the parties involved in contract eligible to have contracting. If individual is
below 18 years then contract will not be considered as valid one. It will be referred as part of
crime or illegal action which may create legal issue for parties.
Lawful consideration is also one of significant element that allows to meet key goals and
objectives. It is also referred as element that provide something in return (Shimizu 2013). if
lawful consideration is not present in the act then it will be referred as void contract. In present
case, Peter will gain specific amount in return for providing services. In building contract pay
and other returns must be mentioned in appropriate manner. Along with this, object exist on the
contract must be categorized as lawful factor. It is also necessary to make sure about impossible
and forbidden aspects so that valid contract can be framed. For example, contract to search a
treasure with a help of magic will not be considered as valid contract. Intention of parties to
create a valid contract is also essential because it focuses on relationship between both parties
(Sawada and Kondo 2016). In present case, Peter Abraham must have aware in regard to legal
values that are associated with the social and domestic nature of contract. It is because only legal
aspects are considered as critical aspect. At last, privity of contract indicate that if individual is
not allowed to obligate rights and duties that are designed under the contract (Rezvani and
Amerinia 2016). It is a factor that allows to ensure about the relationship between parties. It
promotes the validity of the contract in ethical manner.
1.2
It has been noticed that legal values of contract can be diversified in different ways as per
consideration of nature of contract and expectations of contracting parties (Rafsanjany and
Asgarkhany 2016). It can be formed in writing, orally and through distance mode. As in the
present case, Peter Abraham has made decision to estalish self as contractor so that self
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recognistion can be buit. For the same, he needs to take participation in agreements with number
of clients so that objective can be accomplishe. Contract can be framed with parties like
government authorities, suppliers and other construction companies. Following is the
classification of contract that must be understand in appropriate manner.
Written contract- It is a kind of contract that allows members to have agreement
formation in written form. Along with this, it can be said that the legal values are being presented
with the help of written document. It is significant to make sure that both parties are agreed on
terms and conditions in written form. (Rabus and Boll 2016). All necessary points should be
included in the contract in order to avoid any future consequences. It is a type of contract which
is signed between offeror and offeree by having cosideration of non-verbal communication. In
this, terms and conditions are also framed in specific manner. If any one of party has not agreed
in written form then contract will not be considered as legal aspect. This kind of contract also
reduces the risk of contract in diverse manner. However, contract is also benefical to present
evidences in respect to legal arrangement.
Face to face contract / oral contract- It is referred as legal agreement which is signed
among members with an assistance of verbal face to face communication. It is significant for
both parties to present during the formation of contract. Words of mouth and written
communication are considered as valid legal values that are present in contract (Popescu 2015).
It indicates that if any of one member is missing then overall outcome can be influenced. It is
because presence of both parties is significant in order to meet the objectives. In regard to
present case, it is not possible to have oral contract because self construction contracts demand
for evidence in written form. It has been identified that risk in the contract is high because lack
of evidences is present in the contract. As per the reference of Peter Abraham, face to face
contract between client and self employer is only possible if proper knowledge in respect to
client needs is being accomplished. Mutual understanding between both parties is also significant
for better consideration of legal values.
Distance selling- It is a contract which is framed on long distance basis. It is a contract in
which physical absence of both parties is allowed. Befor signing an agreement the bussinesses
need to interact with another party so that issues can be overcome in desired way. However, the
interaction between members can be from any kind of communication tool. Along with this, use
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of social media tools is also benefical for parties as it allows to have communication between
two parties. With the help of internet and social media sites long distance contrafts can be framed
in appropriate manner.
1.3
As per the detailed study, it can be said that contracts are considered as combination of
diverse terms that plays a key role in contracts. Meaning and impact of terms must be present
effectively in the formation so that contracting parties can have better understanding about it
(Piotto and Bedin 2007). In addition to this, following aspects are key motive that allows to
build valid contract.
Conditions- It is referred as key aspect that allows to have direct term of contract. It also
has direct impact on the overall performance of both parties. In addition to this, it can be said that
it is a fundamental term which plays a key role in meeting standards of valid contract. It is an act
or event that affects the performance of parties. The breach of condition by one party rescinds
the whole contract and aggrieved get the compensation amount.It has been identified that the
conditions can be classified in diverse manner. Classification of key aspects can be as precedent
to contract, condition concurrent to contract and condition subsequent to the contract (Odeh and
Al-Najdawi 2013). As per the consideration of present study, Peter Abraham can add on the
condition that once his buidling contrustion get completed, he will be able to pay the amount of
loan. It is referred as act that is concerned under mutual consent of both parties so that better
protection can be presented to the contract. If it is concerned to case of Possard v Spiers, it has
been noticed that contract condition is breached. In given case Madame Poussard was not abloe
to perform activities becuase she was feeling ill.
Warranty- It is considered as a guarantee or promise which is presented from an
individual to another another person who is involved in a contract (Mooi and Gilliland 2013). It
is similar to the indemnity and insurance contract where one party promises to another to save
frome future losses or damages. It is a factual guarantee which is mainly applied in conditions so
that legal values can be promoted in desired way. It is also necessary to make sure that the
promise provided to party is accurate. Brach of warranty may lead to legal issues that may
impact overall outcome in negative manner.
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Innominate terms- It is a term which is mainly stands between condition and warranty.
It can not be referred as section of condition or warranty so parties must ensure about it in
effective manner (McKay and Parekh 2016). It is considered as indirect factor that plays a key
role in sucess of the contract. If any kind of breach is being identified then legal issues may be
faced in amount of loss. However, innocent party will hold claim against the damage so that
substantial benefits can be attained.
Exemption clause- It is a term which restict parties to perform activities that may harm
another party (López‐Duarte and Vidal‐Suárez 2015). It is considered as key aspect which is
referred as provision that allows to meet key values so that one party can be protected in ethical
manner from any kind of damage.
TASK 2
2.1
Case 1
In the given case, there was an unfurnished apartment of Carol. She saw a classified
advertisement of brown leather couch worth £600. She approached to the advertiser named
Gumtree which is an online furniture sale website. The whole information regarding the price,
contact detail and the photo of couch was given (Magashi and Haruna 2016). In order to
purchase that couch, Carol emailed on the given contact . As per the given case, there was an
invitation to offer made by Gumtree on the internet as the company placed their product,
advertises for the same and Carol has shown her interest to puchase thier product. It is a case of
unilateral contract where the seller offers a huge audience to buy the product and any person can
accept that offer. Carol has emailed the company to buy that couch by accepting all terms and
conditions of the contract. The performance of contract from her side was completed. When both
the parties of the contract has accepted the terms and conditions of the contract, then it becomes
a legal contract (Legros and Newman 2014). The same type of case happens with Carlill v
Carbolic, where importance of essential elements required in the formation of a contract can be
undertaken.
Case 2
In the given case, 'Devi' the son of Preston was seeking for a new job for the post of
cyber security in IT firm named Smith and Fogarty, Inc (Klussmann and Klooster 2014). Devi
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did not want any interference of his father in case of his employment. He wanted that job as per
his capabilities. The company has decided to hire Devi and called him on 12 April. Devi
accepted the job offer but his father was unaware about this situation. Therefore, Mr. Preston
offered £150,000 through an Email to the company for hiring his son. According to the present
case, Mr. Preston was illegaly trying to give bribe to the company. The consideration in the
given case was illegal therefore the contract can not be enforceable by law. The act of Preston is
illegal in nature and liable to pay penalty to both the parties government as well as the victim.
The act of giving is one of the seioius offense done by Mr preston which is liable to
imprisonment (Hu and Sun 2016). As per the bribery act 2010 the penalties for committing a
crime of bribery is liable for 10 years imprisonment along with unlimited fine and confiscation
of property of defaulters.
2.2
Case 3
In present case scenario, A couple booked a table and went to the restaurent in London.
At the entrance the man handed over this jacket to the perter. In return porter gave a receipt to
the man, on the receipt it was mentioned that all the valuable belongins should be removed and
the hotel management would not be liable in case of missing or stolen things. After having
dinner when he was about to pay the bill, he realised that he has forgot his wallet in the pocket of
that jacket. When he got his jacket he realised that the cash from the wallet was stolen and after
that incident he claimed against the hotel for that stolen amount (Hedjazi and Ahmed-Nacer
2013). The hotel management did not accept his claim and denied to pay the amount by stating
that the exlusion clause was being mentioned on the receipt. In this case there was responibility
of the man to read the exclusion clause and take care of his belongings himself. However, the
hotel management should also need to communicate that exlusion clause in proper manner.
Therefore the hotel management is liable to give compensation for the loss of stolen money.
Case 4
Inthe given case, there was a tenant named Aaron and the landlord named Zehphra
(Grenier and Lowe 2015). Zehphra rented a warehouse to Aaron. The warehouse was vacant for
a long time so it requires rennovations and Aaron spent some money for rennovating the
warehouse. In return Zehphra promised Aaron that she will not increase the rent for next 5 years.
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Later on when Zehphra died, Yeti got the property in inheritance. Yeti immediately increase the
rent amount. Aaron denied to pay the incresed rent by stating about that promise. Therefore, Yeti
terminated the tenancy. As, it was an implied term, also Aaron didn't had any legal contract with
the landlord. When Yeti repudiated the contract, he was not liable to claim for losses and
damages as it was just a promise (Graham and King 2014). Aaron would not be entitled for any
compensatory amount and other benefits. Furthermore, with this case example of Hutton v
Warre, the concept of implied terms can be undertaken.
2.3
Case 5
In the present case study, there was a contract of insurance between a policyholder and
insurance company. The policy holder applied for his motor insurance.Through the form, insurer
asked questions to policyholder regarding motor car accident. He asked whether the policy
holder has made any claim of loss or theft of car in last 5 years. The policyholder denied by
simply saying no to the insurer. later on, when his car got stolen then insurer came to know that
the policyhoder has already made claim for his stolen car during that period. After knowing the
fact, the insurer terminate the contract denied to compensate (Goodwin and Hungerford 2015.).
the policy holder has lied about the fact and therefore it cause to forfeiture of contract. The
policyhoder is liable to share all the right things in order to avoid futher future complexities. The
case of Poussard v Spiers is the best example of the breach of condition.
Case 6
In the given case, the insurer asked policy holder about the car whether it was modified
earlier or not (Goldman and Rocholl 2013). Insurer also asked whether the driver was involved
previously with any accidents. The policyholder's answer was no in both the cases.Later on
insurer came to know that car has been modified earlier, fitted with spoilers, alloy wheels and
chrome wheel arches. Also, in previous 5 years the husband of policyholder has made two
claims. After knowing this fact, the insurer terminated the policy. But, the lady was unaware
about the fact, she didn't know that all modifications are already fitted and original (Fu and Lee
2014). According to case study, insurer is entitled to claim for his losses as well as for time, but
he can not terminate the policy, as lady was unaware about the situation. To prevent form any
misunderstandings the lady should provide all the relevant information to the insurer.
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TASK 3
3.1
Contractual liability can be defined as an assumed liability on the behalf of other via
contract. This liability is by default included in the general liability policy (Frame 2012).
Contrary to this, when an individual fail to execute duty of care assigned to him/her, then it leads
to tort liability. In this context, following are the differences and similarities among tort liability
and contractual liability:
Basis Tort Liability Contractual Liability
Concept Illegal actions of employee in an
organization give existence to tort
liabilities.
Failure of all legal acts and
legislation of contract law arises the
need of contractual liabilities (Eijk
2014).
Relationship There is an relationship between
both parties to contract established
by the court of law (Dong and Ren
2012).
There is no existence of forced
liability but existence of mutual
consent between both the parties to
contract.
Nature of
obligations
Parties are liable to fulfill their
duties and obligations as per the
terms of contract.
According to terms of contract,
parties are entitled to fulfill their
obligations.
Losses and damages Damages are decided by the court. Damages are countable; if
defendant breaches the contract
then compensatory payment is
entitled to him/her.
Case law Examples BALTIMORE AND OHIO R.R. V
GOODMAN
AVERY v BOWDEN
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3.2
An act of failure from complying with the legislative duties of any party while meeting
with specific obligation of the agreement is referred to Negligence (Daughety and Reinganum
2014). In this, one party get suffers due to the action of another party. However, while claiming
for compensation, claimant need to conclude varied elements of negligence of another party. The
settlement claim is considered only if sufferer party can prove the act of negligence without any
complexities. In this context, following are the essential elements of negligence:
ELEMENTS DESCRIPTION
DUTY OF CARE This is one of the crucial aspects of negligence in which
responsibilities and duties are hold whose care need to be taken by
other party (Cruz and Marques 2013). Parties that are into contract
possess the duty of care for opposite party in the case of negligence.
However, compensation is only done if such act is proved easily. In
addition to it, duty of care can be demanded in case if either of the
party suffers losses or damages from the act of negligence.
BREACH OF
DUTY
At the time of breach of duty, claimant will be liable for the act of
negligence (Carroll 2013). Upon proving by the suffered party,
compensation for the same will be demanded.
CAUSE OF
DAMAGES AND
INJURIES
Further, compensation for damages and injuries will also be attained
by opposite part to suffered party due to breach of duty of care.
REMOTENESS It is obligatory that damages must be of predictable nature which is
been caused by claimant (Budzak and Jacquemin 2016). In this case,
solutions will only be imparted for remote damages and losses.
Defences
Declining in liability can be witnessed by making huge defences. It is essential that one
can safeguard himself from getting damage of injury. In this context, varied defences are
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available as per English Law. In this context, one defence is of Volenti Non Fit Injuria in which
claimant himself leads to risky situation which causes injury. In this scenario, the individual is
not liable to claim for compensation. Another is Contributory Negligence, where both parties are
equally accountable for the damages. In this, individual’s act of negligence leads to damage or
injury (Boutigny and Saini 2013). In addition to it, third defence is Ex turpi causa, where party
can only claim for damages which there is legal act of negligence.
3.3
The actions of one party is borne by another person whether it can be positive or negative
which totally depends on a tough business situations is the nature of vicarious liability (Boschetti
and Righetti 2013). In business context the a worker may commit mistakes in nature of crimes
such as riotous behaviour by breaking rules of thye business, making fraud, misconduct with an
employer and all other colleagues , involved in malicious activities are borne by its employer.
The The disturbance is created due to the crime committed by on worker will ruin the overall
coordination at the workplace. Following are different factors which are involved in an enterprise
which forms various basis on the which vicarious liability has been judged are:
 Legal employment relationship- For maintenace of proper employment contract there
should be legal relationship employer and its employee at the workplace. An enterprise
can use different tests in order to ascertain the relationship among them. Various tools
that can be used to assess their accuracy in relationships are integration, control and
economic approach. The efficiency of the relationships are assessed by the court to find
the culprit in order to punish them (Boame and Solace 2014.). Further, with the help of
the case law example of Cassidy v Ministry of Health, the implication of vicarious
liability on business can be easily understood.
 Commitment of offense during Employment- While signing employment contract all
the responsibilities of th employee shouyld be clearly mentioned in the agreement.
Actions of the employees should be committed within the course of employment. The
employer held responsible for every action of the employees within the business
premises. Further, by considering the case law of Century Insurance co. Ltd v Northern
Ireland Road Transport Board, implication of the concept of vicarious liability can be
understood.
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 Employee awareness- Campaigns can be organized by an enterprise to aware workers to
avoid all the illegal activities at workplace and promote all the legal actions (Bevacqua
2013). Maintaining personal interactions with all the employees to avoid all the boredness
towards the work by encouraging them to increase their overall brand image of an
enterprise. Damages caused should be proved- The benefit to an innocent part will not be provided
without the caused done by the culprit has been proved. The decisions in the court is
based on the legal eviodence provided by the party against the defaulter.
TASK 4
4.1
Case 7
The given case scenario states that, Mr. Brown went to Goodmayes hospital as they are
suffering from severe chest pain and breathing problem. While entering the hospital, one of the
nurse of hospital saw him and asked its complaint and call the doctor who is on duty in the
hospital. On telephone, the nurse explained the problem and the doctor prescribed pain killer
medicines to relieve their pain without diagnosing its problem personally (Austin and Wang
2015). After one day of this incident Mr Brown died at their home due to Pneumonia which was
caused from toxic mould in their house.
a) According to te present case, the action taken by the doctor is not appropriate as tprescribing
tablkest just on phone is not good as they are pertsonally present in the hospital and it is their
duty to diagnose its patients. The chest pain and brething problems in Old age is not for common
reasons it can be for many reasons. The doctor is responsible for the death of the oerson due to
negligence of proper treatment.
b) From other persepectives, the doctors are not held responsible as this pneumonia can be due to
Toxic mould in the house of Mr brown. By prescribing medicines the doctor has completed ikts
obligations towards the patient and they are not held responsible.
4.2
Case 8
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According to the present case study, the executive chauffeur company sent its driver to
receive the client from the airport. The driver drink two few glasses of alchohol while waiting for
its clients at the airport. The car got crashed with lamp post while returning from airport to the
hotel and due the mistake of the driver both the parties get severely injured (Alvarez 2013). The
police has investigated the whole matter and find out that this accident is due to the carelessness
of the driver due to exceeding its speed limit and over drunk. The client claims compensation for
the loss of amount and loss of damages to their health to the accident from chauffeur company.
As per the stated legislations of vicarious liability, th employer is liable for every action of its
employee and needs to compensate its negligence. Hence, the chauffeur company owner is liable
to compensate all the loss held by the client.
After compensating the client the business can file suit against the driver due to various
reasons such as misuse of the property of the company, exceeding speed of the car, drink and
drive, breaking business policies. The company can suspend th employee from the job by cutting
all its work pay.
Case 9
In the cited case study above, An employee whose name is John works at Essex
organization was accidentally slipped off while loading pallet in the truck. Due to this accident
may workers get suffered as this pallet fell over him as well on other workers and all got injured.
This accident may lead to heavy injury of a worker which needs immediate surgery and they
demand compensation from employer. The claim of the worker is correct as the employer is
liable to compensate the loss suffered by the employee as this injury takes place within the
business premises of Essex (Adger, W. N., Quinn 2013). Further, the pallets have not been
transported to other party yet, that is the reason the owner is liable to compensate the employees.
It is the responsibility of an employee to take care about the health and safety of all its employees
at the workplace.
CONCLUSION
It can be summarized from the current project report that every business should have
clear understanding of all the basic contract laws. Contractual parties should comply with all the
standard guidelines imposed by the government related to the business transactions. As per the
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report, it has been observed that legal assistance is required by the business in order to operate its
business successfully by considering all the rules and regulations that may affect an enterprise's
performance. The laws are framed flexible in case of aggrieved party to punish the culprit to
warn them not to commit the fraud. The different case laws given above in the current projects
report is used to define the significance of the laws. Case laws are defined with different
categories of law to analyze the importance of all the liabilities of the business for the action of
its employee.
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