Comprehensive Report on Contract and Negligence in Business Law

This report provides a comprehensive overview of contract and negligence within a business context. It begins by identifying and explaining the four essential elements of a valid contract, discusses different contract types and their implications under English law, and analyzes the impact of contractual terms and conditions. The report then explores several case scenarios, applying the principles of contract law and examining issues like breach of warranty, implied terms, and exclusion clauses. Furthermore, it contrasts liability in negligence and contract, emphasizing the importance of the Donoghue v Stevenson case in establishing the 'duty of care' and 'neighbour principle'. The report also delves into vicarious liability and provides analyses of additional case scenarios involving negligence, including defenses and the responsibilities of parties involved. Overall, the report offers a detailed examination of the interplay between contract and negligence in various business situations.

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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Identification and explanation of four elements of a valid contract......................................3
1.2 Discussing different types of contract and its impact in English Law...................................3
1.3 Analysing the terms and condition of a contract and their effects as well............................4
TASK 2............................................................................................................................................4
2.1 Case Scenario.........................................................................................................................4
TASK 3............................................................................................................................................5
2.2 Case Scenario.........................................................................................................................5
TASK 4............................................................................................................................................5
2.3 Case Scenario.........................................................................................................................5
TASK 5............................................................................................................................................6
3.1 Contrasting the liability in negligence and liability in a contract..........................................6
TASK 6............................................................................................................................................6
3.2 Importance of Donoghue v Stevenson 1932 in the development of the concept of 'duty of
care' and the 'neighbour principle' along with the rationale of case.............................................6
TASK 7............................................................................................................................................7
3.3 Case Scenario.........................................................................................................................7
TASK 8............................................................................................................................................7
4.1 Case Scenario.........................................................................................................................7
TASK 9............................................................................................................................................7
4.2 Case Scenario.........................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
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INTRODUCTION
An agreement whether written or spoken when get enforceable by law then it becomes a
contract. All the parties involved in this contract forms the contractual relationship. In a business
situation, parties enter into contracts in order to maintain faith in each other. Moreover, tort in
negligence occurs when any business organization fails to take reasonable care which they are
require to take and this leads to the breach of duty and for this they become liable to pay the
damages to the injured party. This report is mainly focused on the aspects of contract and
negligence in business situation. Further, this report covers the understanding of essential
elements of a valid contract and application of those in business situation. Further, principle of
liability in negligence has been discussed and the application of same in a business scenario.
TASK 1
1.1 Identification and explanation of four elements of a valid contract
In order to make the contract valid, it should be made sure that all the 4 essential
elements get fulfil. First element is offer where offerer require to give a valid offer to the other
parties by speaking, writing, giving advertisement or through internet. Acceptance occurs when
the offeree conveys his/her response through message, phone call, email, etc. through the
fulfilment of these elements (Taylor, 2011). Further, for making contract valid then there should
be a consideration which is an exchange of promise that is every party must get the benefit out of
the contract and the last is intention of a party to enter in a legal relationship. It is because, in a
business situation, parties do the deal for a business purpose and not for a social purpose. Thus, if
the parties enter into a legal relationship sharing the consideration then the contract becomes
valid.
1.2 Discussing different types of contract and its impact in English Law
Contracts can be formed through different manner and they have distinct impact on the
formation. Firstly, there are verbal contract which can be formed only by speaking. The express
and implied terms does not get documented instead they are agreed upon by face-to-face meeting
or through telephone calls. If there is a breach of such contract then evidence could not be
availed for proving the breach. Furthermore, second type of contract is written contract where
express and implied terms are mentioned in a written agreement (Mor, 2014). This kind of
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contract does not create conflicts because this is available in a form of written format which can
be shown in the court at the time of breach.
Moreover, third kind of contract is on-line where contracts are formed using internet.
Mainly, such contracts are formed between seller and customers during the on-line shopping.
However, due to the long distance, confusion arises between both the parties which increases the
chances of breach. Lastly, the contract by deed refers to as the land contract between the buyer
and seller about the real property (Sam Middlemiss, 2011). There is an involvement of legal deed
between buyer and seller. As per the sales act there is a transfer of ownership of land and along
with the possession ancillary rights also get transferred to the owner. After the transfer of
ownership, owner becomes liable for any act and mishappening.
1.3 Analysing the terms and condition of a contract and their effects as well
The contractual statements that give rise to a contractual obligations is known as terms of
contract. There are mainly three types of terms. Firstly express terms are there which are inserted
in a contract by the mutual consent of parties while forming a deed. This term is bifurcated in
conditions, warranties and innominate terms where conditions is a major term of contract and the
breach of which leads to the termination of contract (Turner, 2014). After that warranties are the
minor terms and if they get broken then innocent party could claim for the damages. Whereas,
innominate terms are neither conditions nor warranties instead they are intermediate terms.
On the other hand, second term is implied term which are imposed by statute, custom and
court and they are neither entered by the parties in a contract. Breach of which enforce obligation
of payment of damages. Lastly, exclusion is a term which act as reduction in liability where one
party can include this in order to mitigate their liability against the other party. These can be
considered valid only if it is appropriately incorporated (Mor, 2014).
TASK 2
2.1 Case Scenario
a) It is the duty of contractor to guide their workers in order to carry out the working in an
appropriate manner. Further, the obligations of the contract has not been fulfilled which means
that contractor is held liable for the breach of warranty (Ndekugri and Rycroft, 2014).
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b) As per the Sales of Goods Act, it is implied in the contract that a seller must provide effective
quality good to their buyers (Oman, 2012). Therefore, there is a breach of implied term which
means that buyer can claim for the damages occurred.
TASK 3
2.2 Case Scenario
Express Term: In this case, it was expressed in the deed that contract must be completed by 20th
October 2012. if there is a breach of condition then damages will be claimed as $175 per day
penalty.
Exclusion Clause: The contractor reduced his liability by including the exclusion clause that is
liquidates damages should be deducted from the total amount payable due the contractor under
the given contract.
If these terms will not be fulfilled then parties will have to face the losses and due to non-
fulfilment of contractual term third party will also get delayed in the fulfilment of their
obligations (Fried, 2015).
TASK 4
2.3 Case Scenario
ABC Ltd. entered into a contract with the London supplies and agreed to purchase 30
cars which provides that they would be immediately roadworthy in the UK.
1. If all the cars supplied were illegal in UK then the contract is void ab intio that is its is
invalid from the beginning as the object is illegal. Therefore, breach of condition is there
and for this aspect innocent party is entitled to terminate the contract and can claim
damages as well.
2. In this scenario, engines required modification which will take 5 minutes per car. Thus, it
can be interpreted that there is a breach of warranties and buyer can claim only damages
as the time taken is very little (Turner, 2014).
3. If the engine adjustments would take 3 months per car then ABC Ltd. has to face a huge
loss. Thus, it is a breach of condition so company can repudiate the contract and can
claim the damages incurred.
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TASK 5
3.1 Contrasting the liability in negligence and liability in a contract
Negligence liability arise because one party fails to take the reasonable care which they
are require to take and due to which they are required to pay off the damages to the injured party.
However, when one party does not fulfill the obligations of contractual deed and due to which
other party get suffered then the liability contract arise. Furthermore, in negligence liability,
relationship between the parties are imposed by the court of law whereas, in contractual liability,
there was an existing relationship between them because they bound themselves by their own
will (Bayles and Chapman, 2012). The negligence liability can be best understood with the case
of Donoghue v Stevenson 1932 and that of contractual liability can be cited by Gibbs M. Smith v
United States Fidelity & Guaranty Co., 949 P2d 337 (Utah 1997). There is a difference between
individual's liability in negligence contract with that of business's liability for the same. It is
because in case of individual, the person is alone liable for their action but in business scenario,
if any employee do wrongful act then whole business or employer is held responsible.
TASK 6
3.2 Importance of Donoghue v Stevenson 1932 in the development of the concept of 'duty of
care' and the 'neighbour principle' along with the rationale of case
The case of Donoghue v Stevenson played a major role in the development of concept of
duty of care in negligence law. One day Mrs. Donoghue went to the cafe with her friend. She
ordered ginger beer and ice-cream. The bottle was opaque so the content was not visible. Further,
she drank some beer from the bottle and after that pour some over the ice-cream. Whilst pouring
she saw a decomposed snail came out of the bottle. For this aspect, she sued the Stevenson, a
manufacturer of ginger beer because she had a severe stomach ache after drinking contaminated
beer and she was hospitalized for the same.
For this purpose, decision was held and Lord Atkinson took the decision. During the
case, he developed the concept of duty of care in which he explained that every business owe the
duty of care towards its customers. For this, they are required to take reasonable care while
carrying out their duty so that other party does not get harm due to the wrongful act by the
manufacturer. Further, the judge also evolved the concept of neighbour principles where he
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advised that a people must take reasonable care not to injure others who can foreseeably affected
by their action. Further, the decision was made that every business owes the duty of care towards
its vusto9mers and other parties directly or indirectly linked with them (Pitel, Neyers and
Chamberlain, 2013).
TASK 7
3.3 Case Scenario
As per the given case, Top tooling plc is held vicariously liable to Frozone Ltd. It is
because, Jenny the owner of Top tooling allowed Peter to fix the mistake of Frozone. Due to the
wrongful act by Peter, the company can claim against the same firm (Sherwin, 2011). Further,
Top tooling plc cannot be held liable for the pedestrian as they did not allow Peter to go for the
game. This was his own negligent mistake and thu8s, he himself is liable for the injury caused to
pedestrian.
TASK 8
4.1 Case Scenario
a) As per the case, Smith feel down from a wooded fence where he got serious injury. For this
Smith claimed for the damages against the owner of holiday park. However, as per the case of
Nettleship v Weston [1971] 3 WLR 370, owner can take the defence under the volenti non it
injuria because the trespassers knew that harm exist still he limbed over the fence. Therefore,
Smith got injured due to this own negligence and owner cannot be held liable for the same
(Cardi, Penfield and Yoon, 2012).
b) In this case, Allen got hurt due to the obstacle in the swimming pool. Further, the council at
harbour knew about the hurdle and also they knew that every evening Allen visit for the
swimming. Therefore, there was a tort of negligence by council and they are responsible for the
harm occurred to trespassers.
TASK 9
4.2 Case Scenario
a) According to case, Bill hired a 14 year old boy to help him during the milk delivery. XYZ
Dairies was aware about the same but did not do anything about it. When the boy got injured due
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to negligent driving of Bill then boy could sue Bill for the tort of negligence as he did not took a
reasonable care and the negligence could be proved through damages caused and remoteness of
injury. Further, XYZ dairies could be held vicariously liable for the wrongful act of their
employee Bill. Firstly he hired minor and secondly he hurt the boy by not taking reasonable care.
b) As per the case, when museum owner asked his friend to drive a car then there was a
formation of principle and agent relationship. Thus, negligent driving of the friend hit the car of
Mrs. Smith which shows that driver performed wrongful act and therefore, museum owner will
be held liable for the wrongful act of his agent (Goodwin, 2010).
CONCLUSION
Conclusively it can be said that essential elements are important to include in order to
make the contract valid. Further, the terms and types of contract have distinctive impact and it is
advised to the businesses that to enter into written contract so that evidence could be shown.
Further, business are required to take reasonable care in order to avoid the tort in negligence.
Moreover, in depth knowledge of defences in negligence may help the organization to mitigate
the liability of negligence.
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REFERENCES
Journals and Books
Bayles, M. E. and Chapman, B., 2012. Justice, Rights, and Tort Law. Springer Science &
Business Media.
Cardi, W. J., Penfield, R. D. and Yoon, A. H., 2012. Does Tort Law Deter Individuals? A
Behavioral Science Study. Journal of Empirical Legal Studies. 9(3). pp.567-603.
Fried, C., 2015. Contract as promise: A theory of contractual obligation. Oxford University
Press, USA.
Goodwin, M., 2010. A view from the cradle: Tort law and the private regulation of assisted
reproduction. Emory Law Journal. 59. pp.10-68.
Mor, S., 2014. The dialectics of wrongful life and wrongful birth claims in Israel: A disability
critique, in Austin Sarat Studies in Law, Politics, and Society. Emerald Group
Publishing Limited. pp.113 – 146.
Ndekugri, I. and Rycroft, M., 2014. JCT98 Building Contract: Law and Administration.
Routledge.
Oman, N. B., 2012. Markets as a Moral Foundation for Contract Law. Iowa Law Review. 98.
Pitel, S., Neyers, J. and Chamberlain, E., 2013. Tort Law: Challenging Orthodoxy. Bloomsbury
Publishing.
Sam 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.
Sherwin, E., 2011. Interpreting Tort Law. Fla. St. UL Rev.. 39. p.227.
Turner, C., 2014. Unlocking Contract Law. Routledge.
Online
Taylor, A., 2011. Offer and acceptance online. [Online] Available through:
<http://www.seqlegal.com/blog/offer-and-acceptance-online>. [Accessed on 19th March
2016].
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