Comprehensive Report: Contracts and Negligence in Business Context

This report provides a detailed analysis of contracts and negligence within a business context. It begins by outlining the essential elements required for a valid contract, including offer, acceptance, and consideration, and discusses the impact of different contract types such as face-to-face, written, and distance selling. The report then delves into the analysis of contract terms, including conditions, warranties, innominate terms, and exemption clauses. Through case studies, the report applies the elements of contract law, examining scenarios related to agreement and consideration, and explores the application of law on terms, particularly exclusion clauses and implied terms. Furthermore, the report elucidates the similarities and differences between liability in tort and contractual liability, focusing on negligence, vicarious liability, and their implications in business. Real-world case scenarios are used to apply the elements of negligence and vicarious liability, offering a comprehensive understanding of legal responsibilities and defenses in business operations.

Aspects of Contracts and
Negligence for Business

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Importance of the essential elements required for the formation of a valid contract............1
1.2 Impact of different types of contract.....................................................................................1
Face to face.................................................................................................................................1
Written contract...........................................................................................................................1
Distance selling (telephone, internet)..........................................................................................1
1.3 Analysing the terms in contracts with reference to their meaning and effect.......................2
Condition.....................................................................................................................................2
Warranty......................................................................................................................................2
Innominate terms.........................................................................................................................2
Exemption clauses (including legality).......................................................................................2
TASK 2............................................................................................................................................2
2.1 Applying the elements of contract in the given business scenarios......................................2
Case 1 Agreement–......................................................................................................................2
Case 2 Consideration–..................................................................................................................2
2.2 Apply the law on terms in the following contracts...............................................................3
Case 3 Exclusion clause– .............................................................................................................3
Case 4 Implied term–...................................................................................................................4

2.3 Evaluate the effect of different terms in the given contracts................................................4
Case 5..........................................................................................................................................4
Case 6..........................................................................................................................................4
TASK 3............................................................................................................................................5
3.1 Similarities and differences between liability in tort and contractual liability using an
example.......................................................................................................................................5
3.2 The way in which liability for negligence can arise and the conditions needed to be met
for a claimant to successfully prove negligence.........................................................................5
3.3 Meaning of vicarious liability and how a business can become vicariously liable giving
example.......................................................................................................................................6
TASK 4............................................................................................................................................7
4.1 Applying the elements of the tort of negligence and defences in the given business
scenarios......................................................................................................................................7
Case 7..........................................................................................................................................7
a) When can the hospital be held responsible for negligence.....................................................7
b) When can the hospital not be held responsible for negligence...............................................7
4.2 Apply the elements of vicarious liability in given business situations.................................7
Case 8..........................................................................................................................................7
Case 9..........................................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Contracts are an indispensable part of each and every business where it is equally
implicated in the life of individuals. It is with a need base consideration of being agreed to
certain measurable terms of a contract whose clauses are mutually determined by the persons
referring to get into a contractual term. It is thereby important for them to have a legal incursion
in their agreed clause to judicially get into an agreement (Akintoye, Renukappa and Lal, 2012).
This will not only assist them to resolve any later consequences of disputes among the
individuals intervened in an agreed contract but will also aid them to legally resolve the matter in
a directional way.
The below report has hereby enlightened some similar prospectives of a valid contractual
agreement by focussing upon a conferred case script of Peter Abraham. Into which, the
individual is hereby referring to commence a start up business of building constructor where he
will be representing as a self employed contractor to undertake individual contracts from the
prospected clients (Chesbrough, 2013). This report has thereby edified some considerable factors
to get into a contractual element that possess all requisite formulations. It has together elucidated
yet another incompatible mean for not abiding by the framed clauses of an agreement that is
legally stipulated over its participant bodies termed as negligence.
TASK 1
1.1 Importance of the essential elements required for the formation of a valid contract
Organization which want to start its business must know various elements of contract
which need to included in at the time of entering into a valid contract. Further there are some
business agreement which need to which need to signed before starting new business. According
to the given scenario, Peter Abraham is planning to start a new venture and for this purpose it is
necessary for peter to understand various elements of contract which are as follows;
 Offer: offer is very important element of valid contract because in it one party make offer
to other party. The party who make offer to other party is known as offrer. Offer is
known as term which is described as legal intention of one party for inviting other party
for contract. As per the case of Carlill v CrbolicSmoke Ball co(1893) it is clear that thay
offer is different from invitation to treat.
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 Acceptance: Acceptance it also important element of contract in which other party
accept the offer. Both the party ofrer and ofree sign the contract by agreeing all terms and
condition of contract (Ueda, 2012). At the time when other party accept with terms and
condition of contract than it known as acceptance of contract. It is important for party to
accept the offer if it want to enter into a contract. From the example of case ButleR
Machine Tool v Ex-cell-o corporation it can be stated at the time of acceptance of offer it
agree with all the terms and condition made by offrer.
 Consideration: consideration is another element of contract which Peter Abraham must
know at the time of entering into any legal contract. It is very helpful for Peter to run its
business legally and successfully. Consideration is known as promise or value which is
made by one party for pay to other party who accept the contract. Along with this if any
party breach the rule of contract then other party have right to take legal action against
another party. From the case of Re Mcardle (1951) it is clear that a consideration must be
sufficient and present at the time of entering into contract.
 Capacity; a person can only enter into a contract if it is capable for signing the contract.
It is necessary that person who is singing the contract must be above the 18 year old
mentally and physically fit (Warren, 2012). As per the given scenario Peter Abraham
need to make sure that other party who is entering into a contract is above the age of 18
and mentally fit. For instance, in case of Crown Lands Comrs V page (1960) it refer that
person who is below 18 years old is not declare capable for entering into contract.
1.2 Impact of different types of contract
According to the given scenario it is clear that peter Abraham is a new entrepreneur, so it
should know different type of contract and its impact. For this there are different type of contract
which are discussed below
 Face to face; In face to face contract both the party sit together and agree the terms and
condition of contract. There are some positive impact of contract that is if any confusion
created than it can be solved at a time. There is less chance of getting cheated by another
party. Peter Abraham can make face to face contract with another party so that it can
easily make clear terms and condition of contract before entering into legal contract.
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Written contract; written contract is that in which both the party enter with terms and condition
which are written and signed them by agreeing them. Peter Abraham can sign contract with
its stakeholder (Business, 2013). This written contract have some positive benefit on Peter
Abraham that is if another party breach the contract then it can easily sue him in court.
Along with this consideration is also included in written contract which give proper
evidence of other party promise.
Distance selling (telephone, internet): Distance contract it that in which both the parties sign the
contract on telephone or internet. For making contract with different supplier who are
sitting in different geographical area Peter Abraham can use this distance selling contract
method for making contract. There are some negative impact of this contract that confusion
can be created and in case if due to some circumstance another party unable to sign
contract then contract may be cancel.
1.3 Analysing the terms in contracts with reference to their meaning and effect
There are various terms which are included at the time of making contract. There are some
terms with reference to its meaning are discussed below:
Condition; Condition is very important in contract because at the time of making contract some
condition are put by both the party (Chesbrough, 2013). All the condition are properly
mentioned into a contract and it is also necessary that both party accept the terms and
condition of contract.
Importance of contract can be noticed by the case if Pousssard V Spiiers (1876). In a contract if
any party breach the condition then other party have right to take legal action and claim in front
of court.
Warranty; Warranty is also a important term of contract at the time of making contract. If any
party in contract breach the warranty then other party can only claim in court but not
breach the contract.
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Innominate terms
Innominate term is not much important term in contract as compare to warranty and condition
(Key, 2013.). Along with this, this term not much useful in contract if any party breach term and
condition then it is difficult for the firm to claim in contract for damage.
Exemption clauses (including legality) : Exemption clause is that which is properly mentioned
into a contract. Further it is necessary that all terms must be enter into contract so that
claim for damage can be get to party who suffer from defendant action. But their are some
of parties who avoid exemption clause so that it cannot be claimed by other party on
breaching the terms and condition of contract.
TASK 2
2.1 Applying the elements of contract in the given business scenarios
Case 1 Agreement–
It is on referring to the conferred case script of an agreement where an individual named
Carol was residing in an unfurnished apartment and being a scholar was hereby looking for some
budgeted furniture. In accordance to which, Carol hereby found an apt advertisement on
espousing an online advertisement site called Gumtree. This advertisement was in regard to sell a
good conditioned brown colour leather couch for a consideration amount of £600 where it was
also specified to be a brand new lounge (Oliveira, Ruiz and Conejo, 2013). Its owner has also
bestowed a photograph along with the contact details in which Carol expressed her interest
through mail. However, it doesn't showcase any sort of agreement among carol and the owner of
the lounge where she hereby reacted towards an invitation of sale. This has also depicted a
unilateral contract by the couch owner that demands for some other essential elements of a valid
contractual agreement.
A factual case-let of Carllil v. Carbolic Smoke Ball Co. (1893) can be referred to
strengthen the understanding of an agreement.
Case 2 Consideration–
It is on referring to the given case study over here where the facts have clearly regarded
the measures of yet another essential element of a contractual agreement named consideration.
Wherein, both the parties called the offerer and acceptor are apparent to deal with some sort of
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consideration in it. Thus, on contemplating the presented example of Devi who is seeking a
position of Cyber security in a renowned IT firm named Fogarty, Inc. Being the son of a famed
father who can influence the owners of Fogarty, Inc., Devi did not wanted any sort of
intervention in his hiring procedures (Key, 2013). Hence did not informed anything to his father
regarding his application in that particular firm and got an offer of acceptance on 12th of April,
2015.
With an unknowing consent, his father George with a dubious outlook of his selection
has offered a sum of amount £150,000 as a mean of designating his son. The letter was obtained
by one of the owner named George who then desired to implement it against Preston that cannot
be done on a non active contract where Devi is entirely unaware of it. Additionally, as per the
constituent of privity in a contract, Preston has no rights to interfere into the agreement among
the liable set of participants that depicts only the employers of the aforesaid venture and Devi as
their employee. A factual case-let of Re Mc Ardle (1951) can be referred to strengthen the
understanding of consideration in a contract.
2.2 Apply the law on terms in the following contracts
Case 3 Exclusion clause–
It is on refereeing to the bestowed case script of exclusion clause where a likely body of
seller or manufacturer are apparent to exclude some of their responsibilities while serving their
respective set of clients and users. The present case has inferred an analogous situation in which
a couple has booked a dinner table for them in a well known restaurant of London. On reaching
there, the man handed over his coat to the doorkeeper that carried his wallet with a sum of
amount £500 inside (Elliot and Quinn, 2009). The man has unintentionally left is wallet in the
coat and remembered it at the time of making payment of the bill.
However, on asking the door guard for the coat and searching wallet in it, it was clearly
missing from there. On further interrogating the hotel authorities for the same, they mentioned
about the note that was handed over to the man while entering the restaurant. It was with a clear
mentioning of not being responsible for any purloined valuables of their upcoming customers.
However, it was a wrong act on the part of the restaurant officials where they are required to
make a clear explication of any such exclusion clause that was not being attempted by them in
the recent case scenario by depicting their faulty measure in it.
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A factual case script of Parker v. SE Railway Co. (1877) is evident to make a clear
interpretation of exclusion clause.
Case 4 Implied term–
Aaron is rightfully entitled to receive a compensation as promised by his warehouse
owner Zehphra. It is basically in accordance to the stipulated clause of an implicit term in a
contract that was later denied by a subsequent owner named Yeti who has later inherited the
warehouse of Zehphra after his decease (Business, 2013). However, Zehphra has previously
promised Aaron that till next 5 years, he will not rise the rent of his warehouse because Aaron
has repaired the despaired warehouse and carried the required expenses for the same. As s result
to which, now Aaron is now eligible either for a recompense for the same or an increase rent
should not be paid to Yeti by him. A factual case let of Shirlaw v. Sourthern Foundries (1939)
can be referred to comprehend the realistic concept of implied term.
2.3 Evaluate the effect of different terms in the given contracts
Case 5
The insurer has rightly voided the applied the policy from its initial date where the
applicant has hereby made some justifiable mistakes. It was with a prior intent of falsifying the
interrogated queries of the insurer that was later detected after further interrogations (Key
Aspects Of The Law Of Contract And The Tort Of Negligence, 2016). In correspondence to
which, the applicant was evident to claim a stolen case within his former motor policy. It was
thereby referred to be his prime responsibility to disclose the same at the rime the insurer
intended to acknowledge the same from him. As a result to which, the insurer has justifiably
voided the insurance policy from its very beginning date.
Case 6
The insurer in this referred case law has unjustifiably voided the insurance policy of the
applicant right from its beginning date. It is mainly due to an misinterpreted context of the lady
who was not aware of the changes made by her husband in the vehicle for whose renewal she has
applied (Warren, 2012). Wherein, after conducting further investigations, the insurer came to
know that there together exits two vital claims in the preceding five years. As a result to which,
the insurer has hereby cancelled the insurance from its initial date with an undue consent of the
women who has wrongly answered to his interrogated queries.
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TASK 3
3.1 Similarities and differences between liability in tort and contractual liability using an
example
Negligence in a contractual term is referred to be a foremost concern for the involved
participants of a contractual agreement. This not only tends to create a pessimistic state of
dispute among them but together results in certain atrocious consequences at the end. This
situation mainly arises at the time when any of the involved party of a contract breaches any of
their stipulated terms where such violation in the standardised norms are of two types (Elliot and
Quinn, 2009). These are liability in tort and contractual liability with some major points of
sameness and dissimilarities among them. It is where both these acts are in charge of civil
possession where the civil court is entitled to take approving decisions to resolve a conflicted
context.
However, on referring to the points of distinction among both these activities, it is
evident that a contractual liability can exists only when the active participants are duly involved
in an agreement. Whereas, tort liability do not has any such responsibility of being into a
contractual term and is applied on each and every individual. Apart from which, the element of
privity in a contract does not allow any third party to interfere in the framed set of agreement
with another concept of tort where it can be asserted by any vigilant observant where it simply
means to rupture the elementary rights of a human. A factual case-law of Donoghue v Stevenson
[1932] can be referred to understand the realistic measures of tort liability.
3.2 The way in which liability for negligence can arise and the conditions needed to be met for a
claimant to successfully prove negligence
This section is basically to discourse upon a liable consent of the claimant while ensuring
their own liability towards the contract where they have assuringly avoided to make any
negligence (Twomey and Jennings, 2010). It is with a fundamental sense of taking appropriate
actions against a defendant by proving one's own responsible approach towards adhering to the
set criterion of the agreement. In context to which, there exists total three such components as
delineated below by referring to a factual case instance of Donoghue v Stevenson [1932]- Foreseeability- It is foremost concern of the involved participants of a contract where
they are hereby required to envision the lateral impact of neglecting one's responsibility.
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Wherein, the present case has clearly identified a prime accountability of the
manufacturer of the drink named Stevenson whose carelessness is evident to impact upon
the consumers. Duty of care- It is where the claimant is also required to make a sensible approach
towards using the product where in the present referred scenario, Mrs Donoghue has
suitably consumed the acquired beverage (Key, 2013). Apart from which, there together
existed yet another principle responsibility of the manufacturer to produce likely
commodities that no tend to make any ill effect on the users. Breach of duty- It is yet another irresponsible measure where as per the referred case
script, the manufacturer has clearly violated his duties of producing a consumable good
for the customer. Due to which, Mrs Donoghue has hereby found a rotten snail coming
out of her drink after consuming it more than half.
 Damages- This is in correspondence to refer the entitled indemnity suffered by the
claimant where Mrs Donoghue has faced some terrible health issues for the above
careless act of the manufacturer where she is also liable to get likely compensation for it
(Oliveira, Ruiz and Conejo, 2013).
3.3 Meaning of vicarious liability and how a business can become vicariously liable giving
example
There are two major rules of vicarious liability that depicts some leading elements of
supervising and control. It is basically in context to define the existence of vicarious liability in
the terms of business where it is usually foreseen in employee- employer relationship in a
business corporation. It is therefore in accordance to its defined principles where it necessitates
the employers to continually monitor the carried activities of their respective set of employees
(Business, 2013). It is however with a fundamental concern of formulating certain controlling
measures to destruct any atrocious consequence of risks that in turn indicate them as a
vicariously liable entity. It is where this term vicarious liability is specifically in context to depict
the workplace relationships of an employee and employer. Herein, an employer is always
believed to be responsible party for any deterrent act of their employees and vice versa.
However, it is with a pre-established cause in which, the carried act is required to occur at the
active working hours of both organisational bodies. It can be clearly understood by referring to a
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