Liability for Payment of Damage: Analysis and Application

The provided content appears to be a collection of academic articles and book excerpts related to business law. The topics covered include the payment of damages, contractual terms, vicarious liability, and legal aspects of various industries such as telemedicine. The references are primarily drawn from peer-reviewed journals, books, and online resources.

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TABLE OF CONTENTS
Introduction .....................................................................................................................................3
Task 1...............................................................................................................................................3
1.1 Description of importance of essential elements required for the formation of valid
contract.........................................................................................................................................3
1.2 Impact of different types of contract......................................................................................4
1.3 Analysis of contractual terms with reference to their meaning and effect............................5
Task 2...............................................................................................................................................7
2.1 Applicability of law in different contracts ............................................................................7
2.2 Applicability of contractual terms in different business situations........................................8
2.3 Evaluation of effect of different term in given business situation ........................................9
Task 3.............................................................................................................................................10
3.1 Contrast liability in tort with the contractual liability..........................................................10
3.2 Explanation of nature of liability in negligence...................................................................11
3.3 Explanation of vicarious liability of business......................................................................11
Task 4.............................................................................................................................................12
4.1 Applicability of principles of liability in negligence in different business situations.........12
4.2 Applicability of principles of vicarious liability in the given business situations...............13
Conclusion ....................................................................................................................................14
References......................................................................................................................................15
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INTRODUCTION
English legislation had developed contract and negligence law to describe the standard
rights and duties of parties. Objective of this legislation is to ensure prevention of unfair acts and
to protect interest of public. Described norms by contract and negligence legislation are
applicable in all the civil situations whether parties are in contractual relationship or not (Adams,
2010). Present report focuses on description and evaluation of significant provisions of contract
and negligence law. For this aspect, essential elements of contract will be explained along with
its different terms and forms. In addition to this, vital principles of negligence law will be
discussed to understand the obligations of individuals in situation where there is absence of
contractual relationship. Described provisions will be applied in the given business scenario to
provide appropriate recommendations to resolve the dispute between parties. In order to justify
provided recommendations previous case precedents will be used.
TASK 1
1.1 Description of importance of essential elements required for the formation of valid contract
Agreement created by individual is considered to be legally enforceable if all the
essential elements are present in it. By considering this fact, in English law it has been stated that
all contracts are agreement but all agreements cannot be treated as the contract (Bagley and
Dauchy, 2011). For the formation of valid contract following elements are required to be present
in it:
Element Description and importance
Offer It can be defined as a proposal given by one party for entering into the
agreement. Offer must be valid, certain and lawful. It can be provided
to specific person or the general public. However, it must not be
invitation to treat because it has distinct legal aspect. Invitation is
merely a way of showing willingness for negotiation and in this other
parties are invited to provide offer (Bagley and Dauchy, 2011). This
aspect is clarified in the case of Pharmaceutical Society of Great
Britain v Boots Cash Chemists (Southern) Ltd (1953). In this case,
court stated response of invitation is offer.
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Acceptance Acceptance is a consent provided by the party to whom offer was
made. In accordance with the case facts of Ardente v. Horan states
that condition is said to be valid only if it is not supported by any
conditions or modifications (Bledose, 2010). Further, conditional
acceptance is treated as a counter offer through which previous offer
is canceled.
Consideration In legal terms, consideration can be defined as a benefit for which
contract is created by the parties. As per the case of Thomas v
Thomas) (1842) 2 QB 851, consideration must be of some value
(Elements of Law of Contracts, 2012). However, it is not required to
be at arm length price but it must be supported by the consent of
parties.
Intention Parties entering into contract must intend to form a legal enforceable
relationship to fulfill the promise made by them in a justifiable
manner. It is not required to be stated in an express way. However,
case of Jones v Padavatton [1969] 1 WLR 328 shows that this
element is not assumed in domestic and charitable agreements.
1.2 Impact of different types of contract
Parties entering into contract can choose suitable contractual form to create legal
enforceable relationship. Each contractual form has contrasting impact on the performance of
parties. Explanation of different types of contract with their meaning and effect is as follows:
Face to face contract
In this form of contract, individuals are present at similar place for the description of
contractual terms and conditions. Further, offerree is required to provide quick acceptance else
offer is said to be lapsed (Zoll, 2012). These contracts are conducted in a verbal manner and are
informal in nature. Due to absence of written deed, situational approach is applied by court to
resolve dispute between parties. Example of this form of contract is purchase of groceries from a
local retail store.
Distance contract
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Distance contract is formed between parties when they are not present at the common
place for determining contractual terms (Bagley and Dauchy, 2011). In these contracts, terms are
decided through mailing or telephonic conversation between parties. Further, postal rule is
applicable by court of law to decide existence of the contractual relationship (Gray, 2010). In
accordance with this rule, contract is said to exist between parties only if acceptance is
communicated to the party by whom offer was made. Example of distance contract is purchasing
by customers through trading websites.
Written contract
Written contracts are considered to be most standard form of contract because it is
specific and formal in nature. In these contracts, deed is prepared by the parties to describe
performance that will be provided for the discharge of obligations in a satisfactory manner. This
deed works as legal evidence by court of law in situation of dispute between parties. Further,
remedy to the aggrieved party is also provided by considering this deed to compensate their
injury (Tikkanen and Kaleva, 2011). Example of written contract is to sell of immovable
property by one party to another. For this contract, deed will be prepared by parties for the
transfer of ownership with other specific terms.
By conduct contract
By conduct contract is also known as implied contract. These contracts are formed
through conduct instead of describing agreement in the written or in a verbal manner. After the
completion of performance by one party, this contract will impose obligation on another party
for fulfilling their promise (Stanberry, 2015). Example of by conduct contract is consumption of
services of restaurant by the customer. In this contract, customer has legal obligation to pay for
the provided services by the management of the restaurant.
1.3 Analysis of contractual terms with reference to their meaning and effect
Contractual terms are provisions that raise obligation of parties to provide satisfactory
performance. Breach of these terms can lead to the situation of litigation due to which parties are
required to comply with these terms in an appropriable manner. Contractual terms can be either
expressed by parties or implied by the legislation. Description of these terms is as follows:
Expressed terms
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These terms are inserted in contractual deed by the mutual consent of parties to the
contract (Tikkanen and Kaleva, 2011). Objective of these terms is to specify performance that is
required to be provided by the parties. Expressed terms can be classified in following sub terms: Conditions: Conditions of the contract are primary stipulation that is directly related to
the root of contract. Case facts of Poussard v Spiers (1876) 1 QBD 410 states that breach
of condition is treated as a breach of contract thus if these terms are not satisfied then
injured party is in the position to repudiate the contract by claiming damages. Warranties: In comparison to the contract, warranties are less imperative in nature. Due
to this aspect, contract is not relinquished with the breach of warranties (Conditions,
warranties & innominate terms, n.d. ). According to the case facts of Bettini v Gye 1876
QBD 183, where faulty party is not in the position to satisfy these terms by their
performance, then innocent party is entitled to claim damages. Innominate terms: Concept of innominate terms has been introduced with the case of
Hong Kong Fir Shipping v Kawasaki Kisen Kaisha [1962] 2 QB 26. In accordance with
the approach, contractual terms are not required to be bifurcated in conditions and
warranties to provide damages (Tikkanen and Kaleva, 2011). Instead of this,
compensation of party must be based on the fact that they are substantially deprived from
the entire benefit or not through the breach of term by faulty party.
Implied terms
Courts are reluctant for the implication of implied in the contractual relationship of
parties. These terms are assumed to part of the contractual deed to ensure fairness and prevention
of unfair terms in contract (Collingsworth, 2006). Insertion of these terms is to protect interest of
weaker party. Implied terms can be cited in following manner: Implied by custom Implied in fact Implied at law
Exclusion clause
Exclusion clause reduces the obligation of contracting parties in situation where they are
not in the position to deliver satisfactory performance to discharge their contractual duties. These
terms are considered to be fair and valid only if it is incorporated in a proper way and loss
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occurred to party is covered in the described terms (Palmer, 2014). However, in situation where
these terms are in contradiction with the legislation then it will not be considered effective to
provide relief to the party relying on it for the purpose of eradication of obligation.
TASK 2
2.1 Applicability of law in different contracts
Business scenario 1
Issue
In the given situation, Miss Kaur had travelled too far for the purchase of antique pen in
an auction. However, she was not able to bid because section of pen selling was cancelled in
auction. Further, she saw similar pen with the shopkeeper but she was not satisfied with the price
thus she asks for some time to make final decision. Shopkeeper agrees on the same but later he
sold the pen to the another customer. As a consequence, she wants to sue auctioneer and
shopkeeper for breach of their promise.
Legal provisions
Provisions of English contract law states that auction is invitation to offer thus no party
can force auctioneer for the completion of promise. However, if selling party had promised to
wait for some time so buyer can make their decision then they have legal obligation to stay
abided by their promise (Tikkanen and Kaleva, 2011). In situation where they do act as per the
promise made then will be obliged to pay damages.
Advice
In the described case, both auctioneer and shopkeeper had provided invitation to
customers for the purchase of antique pen. However, later shopkeeper had provided counter offer
which is open for acceptance till lunch break. On the basis of described provision Miss Kaur
cannot claim damages from auctioneer but she is entitled to claim damages from shopkeeper as
he had not waited for her till the completion of lunch break and sold that pen to the another
customer.
Business scenario 2
Issue
As per the described case, Charles had purchased grade 1 building in order to convert it
guests house. For this aspect, he entered into contract with Murphy with consideration of
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£50,000 and initial payment of £20,000 was made. However, later Murphy stated that he is not
able to complete work on time until additional £10,000 is paid. After a bit argument, Charles
agreed for same but later he refused for additional payment.
Legal provisions
Parties to the contract are required to satisfy contractual terms in a proper manner.
Further, cited consideration in agreement is required to paid whether there it is at arm length
price or not (Collingsworth, 2006). Validity of contract is only judged on the basis of fairness
that it is supported by the consent or not.
Advice
In accordance with the described legal provisions, Charles is obliged to make additional
payment on which he agreed for the completion of work.
Business scenario 3
Issue
According to the described case aspects, Mia had started business as self employed
builder. In order to help him, Hakim (brother of Mia) asked him to repair bathroom and roof for
£2,000. Meanwhile, his friend Jane also asked him to do work for her business for £2,000. After
completion of work, both parties denied of the payment.
Legal provisions
Agreement is said to be enforceable by contracting parties only if they had intention to
create legal relationship (Nysten-Haarala, Lee and Lehto, 2010). However, this element is not
expressly stated and assumed to be part of the contract. However, this assumption is not
applicable in domestic contract.
Advice
In the described case, Hakim had formed agreement to help his brother and he does not
have intention to create legal relationship for the completion of promise. Thus, he cannot be
forced for the payment of damages. However, Jane has intention to create contractual
relationship as she had clearly stated that work is to be done for business. Thus, she will be liable
to pay for the work provided by Mia.
2.2 Applicability of contractual terms in different business situations
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Draft of contract of sale of land
Purchasing party Selling party
Mr. Ajit Mrs. Bob
Mrs. Bob (seller) is transferring her property near country-yard of Denmark in £50000 to Ajit.
Terms of their contract is as follows-
Expressed terms
1. Consideration for the purchase of land is required to be paid through account payee
cheque of £50000.
2. All authorities and obligation will be transferred to Mr. Ajit after this deal.
Implied terms
1. In the cited contract, implied described in land law will be applicable in order to assure
fair conduct.
Exclusion clause
1. No liability will be accepted by Bob regarding property or related subject matter after
the sale of Land to the Mr. John.
Mr. Ajit Mrs. Bob
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2.3 Evaluation of effect of different term in given business situation
Business scenario 4
Issue
According to the described business situation, X had appointed Miss Y as research
assistant by using written contract. Contractual terms includes that she is required to dress
smartly and trousers will not be allowed in any situation. Further, she has to work for necessary
hours for the completion of provided assignment. However, she was not able to comply these
terms even after making justifiable attempt. As a consequence, X humiliated her and terminate
the employment contract.
Legal provisions
According to the provisions of English contract law, an individual is required to satisfy
contractual term in an appropriable way. Further, breach of these terms could lead to the
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imposition of obligation for payment of damages (Nysten-Haarala, Lee and Lehto, 2010).
However, entire agreement cannot be terminated if minor terms are not satisfied.
Advice
In the described scenario, Miss Y had performed in the best possible manner in order to
comply with the contractual terms however still she not gets succeeded due to unavoidable
reason. Thus, employer is not entitled to repudiate entire contract and implied terms do not make
him entitled to humiliate their employees. Thus, he is liable to pay damages to compensate the
injury of Miss Y.
TASK 3
3.1 Contrast liability in tort with the contractual liability
Liability in tort and contract are governed by provisions described under civil law. Main
purpose of these provisions is to provide compensation for the injury occurred to the innocent
party. Despite of these similarities there are certain differences between contract and tort
liabilities. Description of these differences is enumerated below:
Basis of difference Tort liability Contractual liability
Reason of occurrence Tort liability is raised in
situation where injury is
occurred to party due to
negligent conduct of
tortfeasor.
Liability in contract is imposed
in situation party had suffered
from losses because of non-
satisfactory performance by
faulty party.
Relationship between parties In tort, parties are stranger
prior to the conduct of
negligence (Contract and Tort
Law, 2014). Thus, in this
relationship is imposed by law.
Contract is formed by the
mutual consent of contracting
parties thus they have existing
relationship among them.
Basis of damages In tort, remedy provided by
court of law varies in each
situation as there is standard
form of negligent conduct.
In contract damages are
provided as per the deed
formed by parties initially for
the compensation of the injury
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of the aggrieved party (Cross
and Miller, 2011).
Cases In the case of Donoghue V
Stevenson, damages were paid
due to the act of negligence on
the part of defendant. In this
case relationship was imposed
by court of law as parties were
stranger to each other.
In the case of Schuler v
Wickman Tools [1974] AC
235, claim of damages was
held successful because
contracting parties had not
satisfied terms of contract. In
this case damages are provided
as per the deed and there was
existing relationship between
parties.
3.2 Explanation of nature of liability in negligence
Negligence is situation in which individual fails to take care of their standard duties and
due to which injury is occurred to the innocent party. In order to attain compensation for the act
of negligence following principles are required to be satisfied by the claimant (this principles are
supported by the case of Donoghue v Stevenson): Duty of care: Defendant should be in obligation to perform in a proper way in order to
reduce the risk of injury to the parties related to them (Mullis and Oliphant, 2011). In the
case of Donoghue V Stevenson, defendant was manufacturer of beer thus they owe
standard duty to care in production process to deliver better products to customers. Breach of duty: Duty of care must be breached by the defendant by occurrence of act of
negligence. In the cited case, snail was emerged in the drink of customer due to
negligence of defendant. This aspect shows breach of duty by the defendant (Nysten-
Haarala, Lee and Lehto, 2010).
 Causation: In accordance with this element, main reason of damages should be act of
negligence. Further, they must not contribute in it (Miller, 2011). In the described case
claimant suffered from the physical injuries due to negligence of defendant.
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3.3 Explanation of vicarious liability of business
Vicarious liability is covered in provisions of negligence according to which individual is
held liable for the tortuous action of another party (Middlemiss, 2011). This liability is imposed
because liable person had influential relationship with the tortfeasor and they were in position to
control their actions. By considering this aspect, employer is held liable for the actions of their
employees if negligence is committed by them in course of employment and tortfeasor has status
of employee (Employer Vicarious Liability, 2013). Thus, employers are required to take care of
actions of their employees by providing them appropriable guidelines and monitoring their
performance.
TASK 4
4.1 Applicability of principles of liability in negligence in different business situations
Business scenario 5
Issue
According to provide case scenario, oil was spilled on the water because of the negligent
conduct of Sydney harbour oil. Further, spilled oil was drifted where owner of wharf was
engaged in utilization of assets for fire work. Meanwhile, a spark fell on piece of cotton on the
spilled oil and consequently injury was occurred to the employees.
Legal provisions
Employer of the Sydney harbour oil has obligation to take care of their actions while oil
for the prevention of potential risk of injury. However, spilled oil shows breach of duty of the
part of the defendant. As a consequence, owner of wharf was injured as fire was occurred as
spark felt on piece of cotton on the spilled oil. Occurred injury was foreseeable in nature.
Advice
In the described situation all the provisions of negligence are satisfied thus owner of
Sydney harbour oil will be obliged to pay damages to owner of Wharf in order to compensate
their injury.
Business scenario 6
Issue
As per the described case situation, Bell was working as an employee under Shell. Bell
had already lost his sight of one eye. Employer had not issued the protective goggles to workers
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due to minor risk of injury and as a consequently Bell had lost his another eyesight also in
accident at workplace.
Legal provisions
Employer is liable to provide safe work environment to the employees. For this aspect,
they should make arrangements for the situation where there is risk of injury (Bagley and
Dauchy, 2011). However, this duty was breached by Shell as he had not provided protected
goggles to their employees and due to his negligence Bell got permanently blind.
Advice
In accordance with the principles of negligence, Shell will required to compensate for
the injury occurred to Bell in accident occurred at the workplace due to his misconduct.
4.2 Applicability of principles of vicarious liability in the given business situations
Business scenario 7
Issue
In accordance with the cited case situation, warden (Alf) of Safe Care Homes ltd has been
accused for the act of sexual abuse. Due to this aspect, parents and guardian of children of care
home are very angry and they had sued the business under provisions of vicarious liability.
Legal provisions
Employer has obligation to ensure that their employees are not engaged in activities such
as harassment, victimization and discrimination at work place (Employer Vicarious Liability,
2013). If they failed to provide such assurance, then they will also be held liable for the
misconduct of their employees.
Advice
As per the described provisions, employer of Alf can be sued under the provisions of
vicarious liability. It is because; misconduct was occurred in course of employment and
employer was in position to prevent it.
Business scenario 8
Issue
According to the cited case scenario, pump attendant (Amos Bridge) was involved in the
misconduct with the customers at the work place. Further, Amos hit the customer as he had
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threatened to report him to his managers. Consequently, claim was made by customer on
employer as per provisions of vicarious liability.
Legal provisions
Employer has duty to guide their employees to respect their customers and not to get
involved in arguments with them (Employer Vicarious Liability, 2013). Further, physical
violence should be avoided by them at work place.
Advice
In accordance with the provided case facts, employer will be liable for the misconduct of
employees as they failed to guide them in a proper way and due to this injury is occurred to the
customers.
CONCLUSION
In accordance with the present study conclusion can be drawn that provisions of contract
and negligence law impose obligation on parties to act in proper manner for the prevention of
injury of related parties. In situation where parties fail to comply with their responsibilities then
they are required to pay damages in order to compensate the injury of innocent party. Obligation
for payment of damages can be eradicated by defendant if they are able to satisfy the conditions
of available defenses cited in the respective legislation. Individuals are also required to take care
of actions of parties who are influenced or controlled by them in order to reduce possibility of
negligent conduct. However, in situation where failed to do they will be held vicariously liable
for the payment of damage.
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REFERENCES
Books and journals
Adams, A., 2010. Law For Business Students. 6th ed. Pearson Education Lt.
Bagley, C. E. and Dauchy, C. R., 2011. The Entrepreneur’s Guide to Business Law. Cengage.
Bledose, A., 2010. Business law for Business Men. BiblioBazaar.
Collingsworth, T., 2006. Beyond public relations: bringing the rule of law to corporate codes of
conduct in the global economy. Corporate Governance. 6 (3). pp.250 – 260.
Cross, F. B. and Miller, R.L., 2011. The Legal Environment of Business: Text and Cases:
Ethical: Text and Cases : Ethical, Regulatory, Global, and Corporate Issues. Cengage
Learning.
Gray, J., 2010. Legal commentary. Journal of Financial Regulation and Compliance. 18(3).
pp.293-300.
Middlemiss, S., 2011. The psychological contract and implied contractual terms: Synchronous or
asynchronous models?. International Journal of Law and Management. 53(1). pp.32-50.
Miller, R., 2011. Modern Principles of Business Law. Cengage.
Mullis, A. and Oliphant, K., 2011. Torts. Palgrave Macmillan.
Nysten-Haarala, S., Lee, N. and Lehto, J., 2010. Flexibility in contract terms and contracting
processes. International Journal of Managing Projects in Business. 3(3). pp.462 – 478.
Palmer, C. R., 2014. Common law environmental protection: the future of private nuisance, Part
I. International Journal of Law in the Built Environment, 6 (1/2). pp.21 – 42.
Stanberry, B., 2015. Legal and ethical aspects of telemedicine. Journal of telemedicine and
telecare. 12(4). pp.166-175.
Tikkanen, I. and Kaleva, H., 2011. Contract award procedures and award criteria in the catering
services in Finland. British Food Journal. 113(8). pp.952-964.
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.
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