Aspects of Contract and Negligence for Business

This report delves into the critical aspects of contract and negligence within a business context. It outlines the essential elements required to form a valid contract, differentiates between various types of contracts, and discusses the implications of tort and contractual liabilities. The report also highlights the significance of vicarious liability in business operations and provides case studies to illustrate these concepts. Overall, it serves as a comprehensive guide for understanding the legal frameworks that govern business agreements and responsibilities.

Aspects of Contract and Negligence
for Business

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1................................................................................................................................................3
1.2................................................................................................................................................4
1.3................................................................................................................................................5
TASK 2............................................................................................................................................5
2.1................................................................................................................................................5
2.2................................................................................................................................................6
2.3................................................................................................................................................7
TASK 3............................................................................................................................................7
3.1................................................................................................................................................7
3.2................................................................................................................................................8
3.3................................................................................................................................................9
TASK 4 ...........................................................................................................................................9
4.1................................................................................................................................................9
4.2..............................................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Agreements and contracts are essential elements of any business organisation. These two
plays a significant role in the organisation and impacts the business operations of every company
these days. All the agreements are not contracts but all the contracts are agreements. The
difference between agreements and contracts is the enforceability of law. Agreements become
contracts only when they have legal enforceability (Adger 2013). In this report the researcher has
focused on the factors such as elements that makes a contract valid, different types of contract,
liability in tort and negligence and provide various recommendations in different case scenarios.
TASK 1
1.1
Contracts are essential part of any business organisation. The contracts should be legally
enforceable by the law of government. Contract is a promise between two parties to do
something for each other. The enforceability of law in the contract ensures the parties are liable
to perform their duties and rights in the contract. The following are the essential elements to
form a valid contract: Offer and Acceptance: The primary and much needed element to form a contract is offer
and acceptance between the parties. There should be a proper offer by one party and other
party needs to accept that offer in time (Alvarez, 2013). If the offer and acceptance
requires some liabilities, terms and conditions of the contract, it needs to be fulfilled in
time. Improper communication of offer and acceptance has lead to misunderstanding
between the two parties in the case of Harey v Facey. Free Consent: A legal contract requires free consent from both the parties. The consent
should not be affected by any of the following factors such as coercion, undue influence,
fraud, misrepresentation and mistake. If the consent of any party is affected by any of
these factors, the contract will be called as voidable contract and hence it can not be
enforceable by the law. Mutual Consent: The two parties involved in a contract should have an intention to
create legal relationship. Both the parties must be intended to enter into legal binding
agreement (Austin and Maier, 2013). If there is mutual consent in the agreement, the
contract will be deemed as a valid contract. Bisset v Wilkinson is the example for mutual

consent where there was misrepresentation of information happened regarding the details
and statements between the parties. Consideration: Consideration is promise of giving something in return to other party.
Contracts without consideration can not be considered as a valid contract. Consider can
be anything, but it should be real and lawful. The contracts without consideration can not
be enforceable by law. In the case of Chappell v Nestle there was a contract without
consideration and hence it was declared as void contract.
 Competency: The parties of the contract must be competent to enter into a contract. A
minor, Person of unsound mind and legally disallowed person can not enter into a
contract. If these people enters into a contract, the contract becomes invalid (Austin and
Wang 2015).
1.2
The parties of a contract have different relationship according to the type of the contract.
The following are the main types of a contract:
 Express Contracts: The contracts in which the parties of the contract states the
terms and conditions of the contract are called as express contracts. These terms
and conditions of the contracts can be orally or in written form as well. The
exchange of promises are also considered as express contracts.
 Implied Contracts: The implied contracts are non verbal contracts which are
neither spoken nor written. These types of contracts are made up of a mutual
agreement or intention of promise between the parties involved in a contract
(Bevacqua, 2013).
 Unilateral Contract: Unilateral contracts are generally one sided contracts in
which the offerer makes an open promise to a group of people. It is one sided
contract because only the offerer knows the terms and conditions of the contract.
 Bilateral Contract: Bilateral contracts are normal contracts in which one party
offers something for consideration to the other party and other party accepts that
offer.
 Deed Contracts: Deed contracts are always in for of written contract. Generally
these contracts are legally enforceable by the law of government (Boame and

Solace 2014). All the terms and conditions of the contract are clearly mentioned
in this type of contract and hence and hence the evidence lasts for a longer period.
1.3
The contractual terms are the provisions that are important to form a valid contract. These
terms of the contract includes commitments, obligations, rights, duties and responsibilities in the
contract. The terms of a contract can be expressed or implied as well. Expressed terms are are
stated specifically or expressly either orally or in written form. Both the parties agreed on the
express terms and the implied terms are not expressed and exist without being stated or written
down in the contract (Boschetti and Righetti, 2013). The following are the terms that are
necessary to form a contract:
Conditions: The conditions are the basic principle reason for an agreement. A party of a contract
will be harmed if there is a break in the condition. It is the most important term of a contract. The
parties of a contract required to perform the conditions. One party is entitled to terminate the
contract if other party fails to perform the contract. The first party can also sue the other and get
the required compensation from court.
Warranties: Warranties are promise or assurance given by one party to other in a written form.
These warranties are minor terms of a contract. If a warranty is breached the innocent party can
not end the contract, but it can claim for damages (Boutigny and Saini 2013).
In-nominate Terms: The in-nominate terms are neither warranties nor conditions. These terms
are useful at the time of breach of a contract. It questions whether the innocent party is
underprivileged of substantially the whole benefit of the contract.
Exclusion clause: These clauses are generally in written form. The exclusion clause excludes
one party of the contract from certain liabilities and limit the liabilities of one party. These
exclusion clauses has to be legal.
TASK 2
2.1
In the given case scenario, there are two parties one is Evan and other is Todor. Evan is a
customer who went into the Todor's shop to purchase a book. In the shop he sees a HND law
book and wants to purchase it (Budzak and Jacquemin, 2016). That book was on display for sale
for £50.00. When Ivan took that book to the counter for payment, the Todor told him that the
book he wanted to buy was the only copy and was already sold to other customer yesterday.

Hence, Todor didn't sell that book to Evan. In this case there were many of the elements that are
required to form a contract were present. There was a real and legal consideration for the book
offered by the company. Mutual consent was also there where both the parties were intended to
create a legal relationship (Carroll, 2013). However, there was no offer from the side of the book
store. It was an invitation to offer which is acceptable by any people. In this case Ivan offers
company to buy the book but the book store denied his offer. Hence, in absence of acceptance
the agreement can not be enforceable by the law and it can not form a contract. But in this case
the book shop should have removed the book from display to avoid confusion and
misrepresentation.
2.2
In order to classify the terms of the contract it is important to know their meaning first.
The following are the consequences of the classifying terms:
Conditions: Conditions are the basic principle reason for an agreement. If there is a break in the
condition, one party of the contract will be harmed because of the break. In the case of Poussard
v Spiers (1876) Madame Poussard entered into a contract to perform as an opera singer for three
months. She became ill five days before the opening night and was not able to perform the first
four nights. Spiers then replaced her with another opera singer. Madame Poussard was in breach
of condition and Spiers were entitled to end the contract. She missed the opening night which
was the most important performance as all the critics and publicity would be based on that night
(Cruz and Marques, 2013).
Warranty: Warranties are promise or assurance given by one party to other in a written form.
These warranties are minor terms of a contract. In the case of Bettini v Gye (1876), in that
contract Bettini agreed to perform as an opera singer for 3 months. He missed 6 day rehearsals
due to illness. The employer despoiled him and replaced him with another opera singer. In this
case the employer was not entitled to end the contract with Bettini because he was in breach of
warranty. Employer can not terminate the contract just because he has missed the rehearsals, it
can not ho to the root of the contract (Daughety and Reinganum, 2014).
In-nominate Terms: The in-nominate terms are neither warranties nor conditions. These terms
are useful at the time of breach of a contract. In the case of Hong Kong Fir Shipping v Kawasaki
Kisen Kaisha [1962], the defendants were liable for wrongful repudiation and the court has
introduced the in-nominate term approach. In that contract there was a breach of condition where

the contract period did not substantially deprive the defendants of whole benefit and therefore
they were not entitled to repudiate the contract (Dong and Ren 2012).
2.3
In the given case there were two parties, one was John and other was the local council. In
this scenario John went to a park that was managed by the local council. John took the ticket
from parking attendant worth 50p per hour and gets the chair. John damaged badly due to
collapse of the chair under him. His clothes were also damaged due to that incident. Later he
went to the council for getting right amount of compensation. The attendant points out towards
the exclusion clause mentioned on the ticket which he has bought. It was mentioned on the ticket
that No liability is accepted for any damage or injury caused by the failure of any hired
equipment (Dove and Joly 2014).
Exclusion clause is an important term in any contract that needs to be read by John.
These exclusion clauses excludes one party of the contract from certain liabilities and limit the
liabilities of one party. In this case the council is that party who is excluded from certain
liabilities and limits. In this case John is not entitled to ask for compensation and the park council
is not entitled to give him any kind of compensation. John was required to read the exclusion
clause mentioned on the ticket. But the council should have defined that clause in detail to their
customers (Eijk, 2014).
TASK 3
3.1
Tort liabilities and contractual liabilities are two contrasting terms that are used and
implied in different cases. The contractual liability arises in case where parties fails to comply by
all the duties and conditions of it. Whereas, tort liability arises at the time of negligence from one
party and it causes damage or harm to the other party.
Contractual liability arises due to breach of terms of a contract that is formed by the
assent from both parties and the relationship between the parties is formed due to contractual
agreement between the said parties On the other hand tort liability is imposed by the law of
government due to non performance of the duty that the person is liable to perform. In
contractual liabilities there is no contractual relationship and it is likely to imposed by the law of
government (Frame, 2012)

In contractual liability, at the time of breach of condition or warranties, the loss or
damages needs to be born by the aggrieved party and the defendant is required to compensate by
the defendant. On the other side in tort liabilities, the suspects needs to paid the compensation to
the claimant for the loss such as property damages, injury or any harm.
In case of Baltimore and Ohio RRV Goodman there was breach of conditions and
warranties on part of the defendant gave rise to the contractual liabilities between the party. On
the other hand the case of Vaughan v Menlove where the defendant needed to perform a
reasonable duty of care to save the haystack from causing fire (Fu and Lee 2014). The legitimate
fails to abide by the general law which caused loss to the claimant.
Apart from above mentioned differences there are some similarities between the contractual
liabilities and tort liabilities. Both contractual and tort liabilities are legal and valid and also
categorised by the civil law. In both liabilities, the defendant is liable to pay compensation to the
aggrieved party for damages and injuries and the remedies are used in regards for the
compensation amount rather suing the suspect.
3.2
Liability in Negligence: Negligence is a breach of a duty and failure to take care of something.
For example if a person cause an accident and injures someone badly or damage their vehicle
due to driving at unsafe speed then the other person can sue that person for negligence.
Liabilities in negligence focuses on the situations where one party suffers from losses such as
personal injuries, physical damage to property etc (Goldman and Rocholl 2013). It includes
theses following factors:
Duty of care: In many cases the relationship between the plaintiff and defendant creates a legal
duty. It is required to see whether the defendant owed the plaintiff a legal duty of care. For
example there is a legal duty of a doctor to take care of his patients and provide them quality
services. Caparo industries plc v Dickman is the case where there was negligence on part of the
auditors by providing wrong information to the claimant. This has lead to loss incurred by the
Caparo.
Breach of Duty: To claim of negligence the claimant needs to give proper evidence that there
was a breach of duty of care from the side of defendant. The court need to see whether the
defendant breach his duty by doing or not doing something that an average person would do

under same the circumstances. The case of Vaughan v Menlove is the example of breach of duty
(Goldman and Rocholl 2013).
Damage to the claimant: The plaintiff can only be compensated if he has suffered from actual
loss such as injury, damage of property due to action of other person. The plaintiff needs to
prove these following elements to claim for compensation:
 The harm was due to breach of duty by defendant
 The harm was not too far from the breach.
3.3
Vicarious Liabilities: Vicarious liability is a situation where one person held responsible for
actions taken by some other person. This type of liability arises mostly in cases of employment
where there is a relation of employer and employee. The employer can be held liable for
omission and action of employee at the workplace.
The whole organisation can be held liable for the action taken by any of its employee at
the workplace. If there is any kind of harassment, discrimination regarding age, gender, sex, race,
colour, religion done by any of the staff member, the whole organisation become vicariously
liable. Employer can be held liable for supervisors and manager's behaviour and actions. The
employers of any organisations are required to provide extensive and ongoing training for
supervisors and managers. It protects the organisation from illegal and unlawful acts in the
workplace. The supervisory training helps in preventing incidents that increase the employer's
liability for supervisors' actions (Goodwin and Hungerford, 2015). The employer needs to hold
supervisors and mangers accountable for maintaining departments that are free from
discrimination and harassment. The employee's awareness needs to be created because the
actions taken by the employees can impose liabilities of the employers. Unlawful and illegal
actions of employees can be controlled by proper monitoring and supervising their activities.
Employer needs to terminate those employees who impacts the business environment badly with
their unacceptable behaviour at workplace.
TASK 4
4.1
In the given case scenario there were two parties, one is David and other is the telephone
company. As per the case, David was driving above the mentioned limit and met with an

accident. The reason behind the accident was a nine year child Kevin, who runs into the street
while chasing a soccer ball. David hits a telephone pole while saving that child and the pole was
crashed into two parts. Even Kevin was injured badly with that accident. It is a case of
negligence where the tort of negligence was from the side of Kevin itself. Kevin was driving at
the speed of 35 MPH which was 10 MPH more that the described limit. The four basic elements
of negligence are presence of duty of care, breach of duty, causations and damages. These
elements are required to be present for claiming the compensation (Grenier and Lowe 2015).
There are three defences to a negligence action. In first action, the claimant voluntarily agrees to
undertake the legal risk of harm at his own expense and it is a complete defence to an action.
Second is contributory negligence in which the claimant’s fault has contributed to their damage
and the damages awarded are reduced in proportion to their fault. In the last action there is a bad
cause and no action arises. In the given case scenario David is not entitled to claim any
compensation because of tort of negligence.
4.2
In the given case scenario there are two parties involved, one is Colin and other is Roger.
Both the parties involved in this case works for a hotel named Regent hotel. Colin is a head chef
and Roger is a dishwasher in the hotel. As per the case, Colin fed up with roger due to his
attitude and anger and hence he knocks Roger with a frying pan. Due to this action Roger got
injured badly and refused to go to hospital for some treatment. It is a case of vicarious liability,
where one person held responsible for actions taken by some other person. In this given case
Roger has all the rights to sue Colin directly for the injuries and in addition to that Roger can
also claim from the Regent hotel for the actions taken by Roger (Grenier and Lowe 2015).
The vicarious liability one party of a contract held responsible for omission and action
taken by other parties. In this given case Roger can claim for compensation against the injuries
from the hotel management due to action of it's staff member. The law of vicarious liability gives
rights to the person who is injured at workplace at the time of work and the whole organisation
can be held responsible for the misconduct done by any of it's staff members. Therefore, Roger is
entitled to get right compensation from the hotel management due to wrong behaviour of Colin,
one of the employee of the hotel.
Roger have also rights to sue Colin directly due to wrong behaviour at the workplace.
The employees are required to perform as per the ethics and not to harm others at the workplace.

Colin knocks Roger due to his attitude and anger was not the right way. He should have talk to
the hotel management about Roger's behaviour at the workplace. The management will be
entitled to take right decision in that case. The whole management suffered due to the wrong
action taken by Colin (Graham and King 2014).
To prevent these kinds of situations at the workplace, the management needs to take right
decisions at the right time. They need to terminate those employees who affects the performance
or harm others during working at workplace. The employer of the organisation needs to monitor
and supervise the works of their sub-ordinates on timely basis to avoid these kinds of situations
in the future as well.
CONCLUSION
The above report states all the aspects of the contract in business context. In this research
report, the researcher was able to define the essential elements to form a valid contract. The
different types of contract such as expressed, implied, deed contracts were defined in detailed
way by giving suitable case examples for that. The different terms in contracts has also analysed.
A broad distinction is also made between the tort and contractual liability along with the nature
of obligations in negligence (Goodwin and Hungerford, 2015). The impact of vicarious liability
on a business have also been identified. The researcher has also provided some recommendations
in different case scenarios. At the end readers also get an understanding of several new terms
such as vicarious liability, also skills and knowledge needed to apply the same in different
situations as given.

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