Analysis of Contract and Negligence in a Business Context

This report provides a comprehensive overview of business contracts and negligence, crucial aspects of business law. It explores the essential elements required for contract formation, including offer, acceptance, and consideration, while also examining different types of contracts such as express, implied, bilateral, and unilateral contracts. The report delves into contract terms, including acceptance, breach, arbitration, conditions, and guarantees, and analyzes the consequences of breaching these terms. Furthermore, it addresses the elements of tort of negligence, vicarious liability, and the defenses available in business scenarios. Through case examples, the report illustrates how these legal concepts apply in practice, offering valuable insights for students and professionals in the field of business.

Aspects of Contract and
Negligence for Business

Table of Contents
Aspects of Contract and Negligence for Business...........................................................................1
INTRODUCTION...........................................................................................................................3
Task1................................................................................................................................................3
1 Essential element required for the formation of a valid contract........................................3
2 Impact of different types of contract:..................................................................................4
3 Terms in contracts with references......................................................................................5
Task2................................................................................................................................................6
4 Elements of contract in business scenario:..........................................................................6
5 Consequences of different contract term:............................................................................7
6 Effect of term of law and exemption clause in contracts:...................................................7
Task3................................................................................................................................................8
7 Contrast liability in clause with Contractual liability..........................................................8
8 Nature of liability in negligence:.........................................................................................9
9 Vicarious liability in the business:......................................................................................9
Task4..............................................................................................................................................10
10 Element of tort of negligence and defences in this business situation:..........................10
11 Element of vicarious liability:.........................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
Books and Journals...............................................................................................................12

INTRODUCTION
This report is here to explain that parties making a contract by understanding of rules, and
conditions of a business. There must be a clear and defined idea of the laws and regulations of
Contract before making it. Parties making agreement by enforcement of law to make a valid
contract. Report gives an idea about elements of contract like offer, acceptance, consideration.
Contract has many terms and conditions which need to clearly mention in the document and
must be followed by the parties. In a business if any tort committed by employees in the course
of employment rule of negligence applied. Employer is liable for any misconduct by one party
due to his negligence in the business (Zamore, 2016). There is a liability of the employer for all
the misconduct act done by the employee in his workplace. This report gives an idea about the
negligence occur in the business. Negligence is occurred by one party then the other party will be
liable for the his act. Under a business the defence available for negligence where the defendant
can prove his defence by the evidences in the court.
Task1
1 Essential element required for the formation of a valid contract
Contract making an agreement for purchase and sale of the product and availing services
by following the conditions in a business. Parties can make a contract verbally or in writing by
their act and behave to make a valid contract (O'malley, 2012). One party proposes an offer to
other party and it becomes complete when the acceptance received by the offeror in the same
sense. In order to make a contract there must be a valid consideration by following all the rules
to complete the object. There are various elements of a contract to validate the conditions in a
very effective way-
 Offer: A party giving an offer to another person for a particular transaction to make a
contract. It will be valid for the time before the offeror revoke or cancel it. There is the
time limit mentioned in the document to accept the offer if not, in a reasonable time. Here
is an example where a company gives an offer to the party to purchase 1000Tables at a
price of $2,00,000 , that is an offer by the company.
 Acceptance: After giving the acceptance by the person to whom the offer is given it will
create a contract between them (Pathak, 2013). Acceptance made in writing or verbally
by confirming all the conditions of the contract. To accept a offer there is two method:

a) Postal rule- Acceptance can be by way of post and contract is deemed to be created at
the time of posting the letter.
b) Receipt rule- after receiving the message of acceptance by the offeror it creates a valid
contract.
 Intention to create legal relations: Parties are going to make a contract which they have
the intention to form a legally binding contract. Jones v Padavatton [1969] 1 WLR 328
The agreement was purely a domestic agreement which raises a presumption that the
parties do not intend to be legally bound by the agreement. There was no evidence to
rebut this presumption.
 Consideration: It is the amount received by the seller in order to provide goods and
services in the business (Cross and Miller,2011). Money can be in rupees or in kind and
no need to adequate it can be less or more.
 Capacity: A person who has not attained the age of eighteen and unsound mind cannot
make a valid contract in the eye of law.
2 Impact of different types of contract:
Contract is a legally binding document which are enforceable by the law to make various
transactions of the goods and services. In a business there are various types of contract which
may provide rights and obligations between the parties (Conrad, 2011).
 Express Contracts: At the time of creating a contract parties mention the terms in writing
or orally. There is express approval given by the parties to the offer by giving his consent
on the conditions.
 Implied Contracts: there is an mutual agreement between the persons to agree on a offer
which is not expressly in words. They are bounding with the terms of the contract which
creates an implied act.
 Bilateral Contracts: Parties performing a conduct by exchange of mutual promises. It is a
two sided contract because there is promises between the parties for sufficient
consideration (Hiles and Hon, 2016).
 Unilateral Contracts: It involves a promise made by a single party to legally enforceable
contract. Offeror who makes the promise is the only who is legally bound to complete
this. Offeree may not be sue in the court because he did not make any promises if party
refrain from doing something.

 Void and Voidable Contracts: Void contract has no legal right on the upon the parties and
no legal promise created by the promises (Marks, Marks and Jackson, 2013). If there is
any misrepresentation of facts and violation of law shows in conduct of the parties then
any one of them can cancel the contract that is voidable contract.
 Unconscionable Contracts: These contract results from exploitation of customer who are
not aware with the best price available in the market. Party who has not mentally aware
with the facts seek for relief against the seller in court.
 Executed and Executory Contracts: Party has nothing remains to be done by the party
include executed contract. In another hand an executory contract is one where some act
or obligation remains to be performed by the party according to the conditions.
3 Terms in contracts with references
Contract is a necessary part of the business between the parties to make many
transactions with employees, suppliers, customers and with other businesses. There are various
terms in the business contract which are explained here-
Acceptance- After giving approval to the offer it will be binding on both the parties by making
contract. Offer can be revoke before accepting once giving consent on this it will binding on both
the parties.
Breach of contract- If any of the party is failing to comply with any of the conditions it will make
whole contract void (Wong and Deubert, 2010). Parties may provide the compensation if there is
any damage occur on his part.
Arbitration- Parties are going to agree to appoint a third party to solving their disputes in the
business and it will binding on both the parties. It is an act of conduct which is out of the court
settlement.
Conditions- it is very important part of the contract which must be followed by both the parties
in order to complete the contract. If any condition is breaches then party have the option to
choose to continue with the contract or claim for injury.
Guarantee- A person giving a guarantee in favour of debt of another person if the debtors fails to
pay the amount. The guarantor can sue the debtor if he is not paying the amount in contrast of
indemnity.
Employee contract- It is a written agreement between the employer and employee to control their
working conditions and must be followed by both of them (Gergen, 2013).

Going concern- It is an accounting aspect which need to follow by all the businesses to continue
to trade with uses of their asset and liabilities.
Express terms- This can be in written or verbal which is clearly mention in the contract under the
business structure.
Implied terms- this term is not actually mentioned in the document by it is implied by the law or
custom. Liverpool City Council v Irwin [1977] AC 239 The courts did imply a term. The implied
term arose as a legal incident in contracts of a defined type between landlord and tenant that the
landlord was to take reasonable care to maintain the common parts. However, there was no
breach of this duty.
Liquidation: Where business want to wind up and no longer to continue in the market even if he
is solvent and if becomes insolvent then realise the asset and liabilities.
Task2
4 Elements of contract in business scenario:
Under a contract there is elements which are using to make the valid contract. An offer
and giving acceptance to this offer in the same sense making a valid contract. A party making an
offer for a particular purpose to transaction with the another party (Stempel, 2010). Another
party giving his consent to the offer and accept the services which he provides form a valid
contract. Here in a scenario Ivan goes into the bookshop and wants to purchase a HND Law book
which was on display for sale. Todor is the owner of this shop and offering the books which
shows on display for purchasing by customer. A contract is not completed only by giving offer to
anyone rather than to accept by offeree for the same. As Ivan take this book to the counter to pay
the amount Todor tells him that the copy of book is his only and he has already sold it to Carl,
forgot to remove from display. To make a contarct there must be an express offer given by the
offeror but in this case Todor is not willing to offer this HND Law book because he already sold
this to Carl. There is no need to make any contract because no offer made by Todor to accept this
(Revak, 2011). If parties already promise for this book then after he will deny to sale then it may
damage to another party.

5 Consequences of different contract term:
Every contract have key terms in the contract through which parties can expressly agreed
in writing or orally. Each term gives a contractual obligation to the parties to forming the part of
contract. If there is any breach of the terms of the contract it give rise to litigation between the
parties.
 A Condition: Condition is a term which need to follow by the parties to make a valid
contract. Breach of terms may discharge the party from the contract (Yusoff and et. al.,
2012). A person who breaks the conditions further has no right to continue the contract,
other party has the option to choose to terminate it by claiming damages or rectifying it.
Sale of Goods Act, 1979 provides the condition relates to quality and title of the product.
The Mihalis Angelos [1970] 3 WLR 601in this case court held that the expected ready to
load clause was a condition despite the fact it had caused no loss to the defendant. The
classification as a condition was said to be because of the need for commercial certainty
in shipping contracts.
 A Warranty: It is less important term and other party has no right to breach the contract
because of breaking the warranty of the contract. It does not go to the root of the contract.
 An innominate term: This concept depends upon the happening of the events where
remedy depends upon the breach of the terms (Ang, 2013). If breach is serious then only
party can terminate the contract otherwise not. Lombard North Central v Butterworth
[1987] QB 527 court stated that the term relating to prompt payment was a condition. The
parties by their agreement had demonstrated that prompt payment was an essential term
and the consequence of breach was clearly set out. Nicholls LJ stated that even one late
payment would entitle the lessor to terminate irrespective of the effect of the breach.
6 Effect of term of law and exemption clause in contracts:
Exemption clause: It is a clause in an agreement that a party limited or excluded from the
liability. It may disadvantage a party that can be used unfairly by any party. In the case of
Houghton v Trafalgar Insurance (1954) there was ambiguity in the exemption clause. The
insurers in this case had a clause in their policy which caused ambiguity, they stated, ‘any load’,
the court decided that the insurance company could not be exempt from liability (Chetwin,
2011).

In the given case John goes into the park and sees a notice that “Chair for hire for 50p per
hour”. John avail the service and get the chair to sit in park. Later on, Chair collapses under him,
injuring him badly and damaging his clothes. John complains for the injury he has suffered and
claim for compensation (Miller, 2013). There is an exemption clause on the ticket which shows
“No liability is accepted for any damage and injury cause by the failure of any hired equipment.”
other party must have the knowledge of the terms of the clause. There is many stages to decide
by the court if exemption clause is enforceable. Court will decide that they will John will get
compensation or not because this clause was unfair or unreasonable.
Task3
7 Contrast liability in clause with Contractual liability
Contract liability: A contract is legally binding agreement with the consent of the parties
for one another. Parties made a transaction of goods and services by making the verbal or written
contract (Moomjian, 2012). If there is any breach of the condition of the contract then party is
liable for breaching it. If any of the party who is not following his duties to complete a
transaction then another party can claim for compensation. By entering into the contract both the
parties bound to follow the all the conditions based on mutual consent. Merritt v Merritt [1970] 1
WLR 1211 The agreement was binding. The Court of Appeal distinguished the case of Balfour v
Balfour on the grounds that the parties were separated. Where spouses have separated it is
generally considered that they do intend to be bound by their agreements. The written agreement
signed was further evidence of an intention to be bound.
Contrast liability: Where a person doing an activity which can create harm or injury to
other person tort of law governs here (Bishop, 2014). Tort involves an obligation of the person
who has caused the prejudice to another, through an illegal action to repair the injury caused.
Person may be held liable even if they did not act intentionally tort law to compensate the
damages. Bourhill v Young [1943] AC 92 court held that no duty of care was owed by the
defendant to the claimant. There was not sufficient proximity between the claimant and
defendant when the incident occurred.

8 Nature of liability in negligence:
Negligence is an act done by carelessness which may cause harm to another person, not
intentionally. A person who wants to prove the claim there is need to clear many act of the
person-
a) There should be breach of the duty by a person.
b) There must be the duty of care in his action.
c) The breach of the liability caused damage to the claimant.
If a person fails to take care the legal duty he will be liable for the damage occur in order
to negligence (Rancourt, 2011). Defendant must pay the compensatory amount to the claimant if
he got injured by his act. The person who suffered from damage and if there is relationship
between him and accident then he will be liable a duty.
Claimant must have the evidence that there was a breach of duty care and he caused the
damage to him. A person who have a particular skill and if there is any failure of judgement then
directly it will not consider a case of negligence.
If he has suffered any loss or injury or damage and he will success to prove them then his
loss should be compensated (Ghazali, 2011). Harm should have the connection with the breach
of duty to claim for damages.
9 Vicarious liability in the business:
It is a event where someone is held liable for the actions of the other person. In the course
of employment, Employer is liable for any negligence conducted by the employee at the business
premise. Employer is liable only when the two conditions exist in the business-
1.Relationship exist between the employer and employee: Court will need to identify the
connection of the employee and employer (Wilkinson-Ryan and Hoffman,2010). There is need
to prove the situation by using many test-
 The control test: Employer may control employee by way of performing his duty.
 The integration test: Where employee has many skills in the organisation then employer
cannot control him.
 The economic test: there are various factors to be taken where he is performing his work
in his benefit.
2. The employee's tort is committed in the course of employment: Where a person perform his
duty by committing a tort then employer is not liable for his act if he was an independent

contractor. If there is any negligence occur and employer fails to supervise as an independent
then he is liable to harm arises. At the workplace any tort committed by the worker, employer
will only liable for his act. Even though the act of employees conduct a wrongful act while they
are not in the course of employment employer still can be held responsible for the vicarious
liability (Middlemiss, 2011). It involves to dealing in an effective environment, equal policy and
resolving the problems.
Task4
10 Element of tort of negligence and defences in this business situation:
In this case David is driving 35MPH in 25MPH Zone where there are children playing.
Kevin, a nine year old child runs into the street that time David while driving sewers into the
other lane to avoid Kevin and in the process he hits a telephone pole and is seriously injured. The
telephone pole owned by the TeleCo, snaps into two pieces and hits Kevin, who is still in the
street and resulting him permanently injured.
On analysing the facts of this scenario, David owe the duty of care because he is driving
by over speed and it involves negligence on his part. David must be held for the duty of care to
Kevin and TeleCo because it would be affected by the consequences of an accident and failure
to control the balance and hit a telephone pole and Kevin also. It is foreseeable that when
someone when someone is speeding they might lose control and damage would result from that
loss of control (Rhee, 2013). David owed duty of care but he had breach it and it caused harm to
Kevin therefore David had to take responsible for the Kevin's damages
There can be a contributory negligence occurs because TeleCo is also negligent on his
part. Company knew that telephone poles would be placed along the sides of roads and a car
might hit a pole with sufficient force as to down. Since Kevin has shown damages and Teleco
will probably find negligent and also liable for his injury.
11 Element of vicarious liability:
In this case Colin is the head chef of Regent hotel is knocks Roger unconscious with a
frying pan. It result Roger is severally injured and refusing to go to hospital. Colin is the head of
the chef at hotel and he manages and control the operations of the hotel and fed up with Roger of
his attitude and anger. Under this circumstances, Roger bring a claim in vicarious liability

against Regent hotel for Colin's actions. Employer is liable what he has does with his worker or
by anyone in relation to employment.
In this situation there is the case held on the place of employment and it creates vicarious
liability where employer is liable (Prum, and Del Percio, 2011). If any wrongful act done in the
workplace and it occurs damage or injury to any person then employer is liable for his act. This
doctrine makes the employer responsible for lack of care on the part of his worker which relates
to those to whom employer owes a duty of care. According to the principle of vicarious liability
person must be in relationship with the employment at the time of conduct. Regent hotel is held
liable with the act done by Roger which results serious injury to him.
CONCLUSION
From the above report it has been observed that parties making a valid contract by
following all the terms and conditions of the contract and makes bound each other to do their
task. In a business parties making transactions with the supplier and following the policies of
their business. Business following the terms of the contract that can be express and implied also.
Business deals with many statutory guidelines by meeting all the criteria of the employment.
Tort law governs where the a person causes harm to another person by his act of negligence. A
person can show his defence in negligence where the both the parties are equally liable in the act.
The principle of vicarious liability is applicable where employer is liable for the misconduct act
done by the employee in the course of employment. Any wrong act done by a person at his
workplace, court will decide to compensate the claim of the injured person or not.

REFERENCES
Books and Journals
Zamore, J.D., 2016. Interference with Lawful Business (Vol. 2). Business Torts.
O'malley, P., 2012. Risk, uncertainty and government. Routledge.
Pathak, A., 2013. Legal Aspects of Business. Tata McGraw-Hill Education.
Cross, F.B. and Miller, R.L., 2011. The Legal Environment of Business: Text and Cases: Ethical,
Regulatory, Global, and Corporate Issues. Cengage Learning.
Conrad, M., 2011. The business of sports: A primer for journalists. Routledge.
Hiles, A. and Hon, F.B.C.I., 2016. E-Business Service Level Agreements: Strategies for Service
Providers, E-Commerce and Outsourcing. Rothstein Publishing.
Marks, R.J., Marks, R.J. and Jackson, R.E., 2013. Aspects of civil engineering contract
procedure. Elsevier.
Wong, G.M. and Deubert, C., 2010. The Legal & Business Aspects of Disability Insurance in
Professional and College Sports.
Gergen, M.P., 2013. Negligent Misrepresentation as Contract.
Stempel, J.W., 2010. The Insurance Policy as Social Instrument and Social Institution.
Revak, H., 2011. Corporate codes of conduct: binding contract or ideal publicity. Hastings LJ.
63, p.1645.
Yusoff, S.S.A. and et. al., 2012. Corporate responsibility via Malaysian contract law, a concern
for consumer protection. Pertanika Journal of Social Sciences and Humanities. 20(1),
pp.227-38.