Contract Law and Negligence in Business

This assignment delves into the fundamental concepts of contract law, highlighting essential elements for a legally binding agreement. It further explores the distinction between contractual obligations and negligence within a business context. The report also analyzes the doctrine of vicarious liability, explaining how it can make third parties responsible for claims arising from the actions of another party.

Aspect of Contract and
negligence Act

Table of Contents
INTRODUCTION......................................................................................................................1
TASK 1......................................................................................................................................1
AC 1.1 Essential elements for the formation of legal contract.........................................1
AC 1.2 Impact of different types of contract....................................................................2
AC 2.1 Advice to InXs......................................................................................................2
AC 1.3, 2.3 Terms of contract...........................................................................................2
AC 2.2 Advice to InXs Ltd. for the validation of exclusion clause..................................3
TASK 2......................................................................................................................................3
AC 3.1 Difference between obligation and negligence....................................................3
AC 2.2 Elements that required to present claimant for negligence..................................4
AC 4.1 Advice to Fiona for claiming her injuries............................................................4
AC 4.2 Defences for Country Pine Ltd.............................................................................4
AC 3.3 Doctrine of vicarious liability...............................................................................5
AC 4.2 Advice CP for the damages caused by Jeason.....................................................5
CONCLUSION..........................................................................................................................5
REFERENCES...........................................................................................................................6

INTRODUCTION
Contract is a legal agreement between two or more persons which is enforceable by
law. In this legal agreement, both the parties have legal rights towards each other. The report
describes the essential elements such as offer, acceptance, consideration and intention to
create legal relationships between parties that are required to form a legal contract.
Moreover, the report will discuss different types of contract, contractual liability, liability in
negligence and vicariously liabilities. Furthermore, the types of contract terms are also
discussed in this report.
TASK 1
AC 1.1 Essential elements for the formation of legal contract
The essential elements of the contract are explained below:
Offer and Acceptance: Offer is an expression or willingness of a person to enter into a
contract on certain terms. The person who makes offer to another person is called offeror.
However, if the mentioned terms are agreed by the offeree it is called as acceptance (August,
Mayer and Bixby, 2009).
As per the given scenario, InXs ltd. has asked Country pipe Ltd to send a quotation
price for dining tables, chairs and barstools. CP Quoted a figure of 45000£ but InXs replied
that they will pay 42000£ to them. Therefore, they will send a contract form to CP which will
be considered as an offer. The CP accepted the offer orally not in written as they did not sign
the contract. Thus, it is clear that in this contract both the parties agreed on same terms and
same price and form a legal agreement.
Consideration: All the agreements do not form any legal contract because despite
from the agreement there are some additional elements which are required to create a legal
contract (Schaffer and et. al., 2011). Consideration is one of them that are considered as
something in return.
As per the given scenario, Inxs Ltd. consideration is about dining tables, chairs and
barstools. However, CP’s consideration is to receive the prices for the given products.
Free consent: Consent of the parties will not be made up of any fraud, mistake or
misrepresentation (Miller, 2012). As per the given scenario, Country pine Ltd. give free
consent to InXs.
Legal relation: The parties must have an intention to create legal relationship with each
other (Mondal, 2014). In the given scenario, Country Pine Ltd and Inxs Ltd. have an intention
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to establish legal relationship in which if one party distort the contract than the other party
may take any legal action.
AC 1.2 Impact of different types of contract
 Bilateral contract: It is a two sided contract in which both the parties are obliged to
perform the act (Bagley and Dauchy, 2011). In context to given business scenario, the
bilateral contract is about delivering goods and making payment. Country Pine Ltd.
has to deliver the goods to InXs Ltd. However, after receiving the goods InXs Ltd. has
to make invoice payment to 43100£. The party cannot be claimed for high prices
charged as price variation clause is already involved in the contract. In which it is in
written that prices will be increased by 5% if the raw material price will get increase.
Therefore, the impact of these contracts is that parties are legally obliged and in case
of any default the other party may sue the defaulter party.
 Unilateral contract: It involves promise that is made by only one party of the
contract. The other party of the contract is completely free to accept the offer (Mann
and Roberts, 2013). In context to given scenario, Country pine Ltd. quote the prices is
a Unilateral Contract as the prices may be accepted or rejected by InXs Ltd. Further,
the prices at 42000£ was offered by InXs ltd also will be identified as a unilateral
contract. The reason behind that is Country Pine Ltd. is not legally obliged to accept
this price. Therefore, the impact of these is that both the parties are not legally
obliged.
AC 2.1 Advice to InXs
In Context to given business scenario, the contract made between InXs Ltd. and
Country Pine Ltd. is a legal contract as it includes all the necessary elements of an contract.
InXs offered to CP at a price of 42000£ at which the goods is delivered by CP Ltd. Moreover.
Company secretary receive the goods at 43100£ after signing the contract. InXs Ltd. queried
for charged prices for the goods as it is higher than price offered. But in the written contract,
there was a mentioned clause that prices will be increased by 5% due to increase in the pr ices
of raw material. Therefore, CP Ltd. contracts prevail on InXs Ltd as it is a legal contract.
Moreover, as per the cited scenario, InXs discovered damages in dining tables which causes
instability. Moreover, a number of barstools cannot accommodate customer weights and
become dangerous. Henceforth, InXs inquired for these damages and said Country pine to
repair it. However, according to the contract terms, CP is not liable for any kind of damages.
The reason behind this is CP already mentioned that no liability will be accepted for any
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damages after furniture delivery. Thus, CP is not legally obliged to provide repairing services
to InXs. In other words, contract terms will prevail on InXs Ltd.
AC 1.3, 2.3 Terms of contract
 Express terms: This kind of terms are stated orally or written by the parties at the
time of formation of contract. These terms are made through mutual consent of both
the parties (Latimer, 2012). As per the given scenario, the type of furniture, price,
delivery date and description of furniture will be included in the contract as express
terms.
 Implied terms: These terms are not mentioned in the contract at the time of contract
formation. It may be of two kinds implied in fact or in law so as to protect the party’s
interest. The objective of these terms is to prevent unfair and illegal business
practices. In the given scenario, the implied terms for CP Ltd. are to deliver required
quantity of goods to InXs. On Contrary, InXs Ltd. is required to make payments for
the delivered goods.
AC 2.2 Advice to InXs Ltd. for the validation of exclusion clause
Exclusion clause: It is a contract term which restricts the rights of the parties of a
contract. It should be legal and included in the contract for legal proof. It is also termed as
unfair terms because from this clause, the party is intended to exclude their liability that may
be arise from the contract. Unfair Contract Terms Act 1977 gives protection against such
clauses.
In context to given business scenario, Country Pine Ltd. clearly provide all the terms
of the contract to InXs Ltd. Further, the contract is signed by both the employee and
Company Secretary. There are two exclusion clause made by CP Ltd. about the pricing policy
and damages. According to the Unfair Contract Terms Act, if the exclusion clause is
mentioned in the contract and signed by the other party then the party will not have any
liability. Therefore, it can be said that CP Ltd. is not liable against InXs ltd. for damages
whether InXs Ltd is aware of the terms or not. Further, InXs Ltd. is required to make
payment of 43100£ to CP Ltd.
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TASK 2
AC 3.1 Difference between obligation and negligence
 Obligation: It is determined according to the terms of the contract. By entering into
any contract both the parties are legally obliged to perform all the contractual terms. It
is created through the mutual consent of both the parties.
 Negligence: It is a term that includes carelessness or breach of an obligation. It is
based on the non contractual relationship within the parties. It is arises due to not
performing the duty of taking reasonable care towards the other person (Chandler,
2008). Further, it is imposed to the parties by legislation. Defendant will only liable in
that case when it create any loss to the other party. The case of Wegan Mound, 1961
the defendant negligently put the oil to the surface to spill into Sydney Harbour.
AC 2.2 Elements that required to present claimant for negligence
There are certain elements that are required to claim for negligence against the defendant:
 Duty: For claiming for the negligence it is important than defendant owed a duty
towards the claimant (Rao, 2009).
 Breach of duty: Another important element is that defendant breaches his duty by
any act or omissions. The loss to the claimant must arise due to failure or omissions of
the defendant.
 Factual Causation: Claimant require to proof that the injury is arisen due to
defendant negligence (Uddin, 2015). In case of Bolton V. Stone, 1951 the House of
Lords declared that defendant was not negligent as the damage was not foreseeable
consequence of his conduct.
 Damages: Negligence of the party should cause damage to the plaintiff (Goldberg,
Sebok and Zipursky, 2008). If it was not happened than defendant cannot claim for
compensate.
AC 4.1 Advice to Fiona for claiming her injuries
All the commercial establishments have the legal duty of care towards their
customers. Therefore they have to provide safe or hazard free environment to all the visitors.
It includes the wet floor signs which may create injury to the customers. If the business fails
to perform these duties; then it will be considered as breach of duty of care. In the given
business scenario, Fiona visited the CP Showroom for purchasing some beds for her bed and
breakfast business and got slipped on some water resulted broke her leg. The company did
not provide safe environment to the customers resulted in breach their duties of care.
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Therefore, Fiona can claim for her injuries as all the elements of negligence are covered in
this case. CP Showroom will be liable to compensate for the loss occurred (Lunney and
Oliphant, 2008). Along with it, Occupiers liability Act, 1957 establishes provision of duty of
care for all the visitors. According to this act, the entire commercial establishment have
uniform duty to care their customers through providing safe environment. Thus, it became
clear that this act impose legal obligation to Country pine Ltd to compensate for Fiona's
injuries.
AC 4.2 Defences for Country Pine Ltd.
In this case the management of the company clearly provide the guidelines to not to
remove the safety guards. However, in order to meeting the customer orders deadline on time
Bob removes the safety guards to remove the blockage. Therefore, the company will not be
considered negligent because it did not owed any responsibility for risk of loss towards their
employees. Bob remove the safety guards at his own responsibility. Thus, CP Showroom can
take defence benefits. This in turn, CP Showroom is not liable to compensate for Bob injuries
(Bayern, 2010). Moreover, contributory negligence Vrs Volenti act says that injured party is
own liable for his or her negligence. The reason behind claimant party injuries is they did not
follow legal standards from unreasonable risk which causes harm to them. The act described
that injured party’s act or omission will be of negligent nature and cause injury to them. Thus,
claimant party will be own responsible for their injuries and defendant parties have no
obligations. Therefore, it can be concluded that CP Ltd. will not be liable for Bob's injuries.
The reason behind this is company already mention the guidelines to not remove the safety
guards but although Bob do not follow these guidelines and cause harm to him.
AC 3.3 Doctrine of vicarious liability
Vicarious liability is also termed as imputed negligence. It imposed liability to the
third party for provide damages for the course or actions that are made by negligent party due
to some special relationship. The doctrine is applied for husband and wife relationships,
employer and employee relationship and agency relationship. Under the employer employee
relationship the doctrine makes employer responsible for the employee's negligence.
AC 4.2 Advice CP for the damages caused by Jeason
In the given scenario, the car is driven at very high speed in order to meet the
deadlines and deliver the consignment on time. Therefore, a child was stepped out and also
crashed into a shop causing damages. According to the vicarious liability act the employer
will be liable for the negligent behaviour of employees within the scope of employment.
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Therefore, CP Showroom will be liable for the damages that are caused by Jeason to the child
and the shop. The reason behind such liability is that Jeason is negligent as if he did not drive
the car at high speed than the damages can be avoided. Thus, all the elements of tort of
negligence arisen and the damages are the results of Jeason failures in performing the duty of
care. According to Liser and Hesley Hall case, Lord steyn confirmed that any tort of
employees which have been connected with their employment purpose will impose liability
to the employers. Henceforth, it can be said that for CP showroom is legally abided to
compensate for the damages to the child and the shop which has been caused by his employee
Jeason.
CONCLUSION
On the basis of presented report, it can be concluded that an agreement that involves
all the necessary elements will be identified as a legal contract. Further, the report described
that obligations and negligence are different from each other as obligations are the
contractual terms. However, negligence is non contractual terms. Further, the report
described that doctrine of vicarious liability make third party liable towards the claimant due
to some influential relationship with the defendant party.
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REFERENCES
Books and journals
August, R., Mayer, D. and Bixby, M., 2009. International Business Law: text, cases and
readings. Pearson education.
Bagley, C.E. and Dauchy, C.E., 2011. The entrepreneur’s guide to business law. Cengage
Learning.
Bayern, S.J., 2010. The Limits of Formal Economics in Tort Law: The Puzzle of Negligence.
Brooklyn Law Review. 75. p. 707.
Chandler, J.A., 2008. Negligence liability for breaches of data security. Banking and Finance
Law Review, Forthcoming.
Goldberg, J.C., Sebok, A.J. and Zipursky, B.C., 2008. Tort Law: Responsibilities and
Redress. Aspen Publishers.
Latimer, P., 2012. Australian Business Law 2012. CCH Australia Limited.
Lunney, M. and Oliphant, K., 2008. Tort law: text and materials. Oxford University Press.
Mann, R. and Roberts, B., 2013. Business law and the regulation of business. Cengage
Learning.
Miller, R., 2012. Business Law Today, Standard: Text & Summarized Cases. Cengage
learning.
Rao, S.J., 2009. Medical negligence liability under the consumer protection act: A review of
judicial perspective. Indian journal of urology: IJU: journal of the Urological Society
of India. 25(3). p.361.
Schaffer, R. and et. al., 2011. International business law and its environment. Cengage
Learning.
Online
Mondal, B., 2014. Ten essential elements of valid contract. [Online]. Available through:
<http://www.shareyouressays.com/92086/ten-essential-elements-of-a-valid-contract-
essay>. [Accessed on 19th December 2015].
Uddin, M., 2015. Aspect of Contract and Negligence for Business[Online]. Available
through:<http://www.lawteacher.net/free-law-essays/contract-law/aspect-of-contract-
and-negligence-for-business-contract-law-essay.php> [Accessed on 19h December
2015].
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