Comprehensive Report: Contract and Negligence in Business Law

This report provides a comprehensive overview of contract and negligence law within a business context. It begins by defining the essential elements of a valid contract, including offer, acceptance, intention, and consideration, supported by relevant case law such as Harvey v Facey and Felthouse v Bindley. The report then explores different types of contracts, including unilateral, bilateral, collateral, and electronic contracts, with case examples like Carlil v Carbolic Smoke Ball and Brogden v Metropolitan Railway. It analyzes contract terms, differentiating between expressed, implied, and innominate terms, and examining conditions, warranties, and exclusion clauses. The report further contrasts contract and tort liability, explaining negligence and employer's liability, including vicarious liability, with examples. Finally, it applies the elements of negligence and vicarious liability to various business situations, providing a detailed analysis of legal principles. The report utilizes case studies to illustrate key concepts and legal principles.

Aspects of Contract and
Negligence for Business
1

Table of Contents
Introduction .....................................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Importance of the essential elements required for the formation of a valid contract with
cases.............................................................................................................................................3
clearly cited to support the elements...........................................................................................3
1.2 Discuss the impact of different types of contract...................................................................4
1.3 Explain this statement andanalyse terms in contracts with reference to their meaning and
effect............................................................................................................................................5
TASK 2............................................................................................................................................6
2.1 impact of different types of contract and analyse terms in contracts with reference to their
meaning and effect.......................................................................................................................6
2.2 Apply the law on terms in different contracts........................................................................7
2.3 Evaluate the effect of different terms in given contracts.......................................................8
TASK 3............................................................................................................................................9
3.1 Contrast liability between contract and tort liability..............................................................9
3.2 Explanation of scenario with reference to nature of liability in negligence and employers’
....................................................................................................................................................10
Liability......................................................................................................................................10
3.3 Vicariously liability of business sin the case of Roger, Colin and Ben ..............................10
TASK 4..........................................................................................................................................11
4.1 Apply the elements of the tort of negligence and defences in different business situations
....................................................................................................................................................11
4.2 Elements of vicarious liability in given business situations...............................................11
Conclusion ....................................................................................................................................11
REFERENCES .............................................................................................................................13
2

Introduction
Law is particularly refers to a system of rules which is enforced by the social institutions
to protect the rights of individuals as well as to punish individuals that are commencing illegal
conduct (Kelly and et.al., 2013). The present report is going to deal with the different aspects of
Contract and Negligence for Business and defines the importance of the essential elements that
are needed to form a valid contract. The assignment represents the difference between contract
and tort liability and represents the various scenarios with reference to the nature of liability in
negligence and employers’ liability.
TASK 1
1.1 Importance of the essential elements required for the formation of a valid contract with cases
clearly cited to support the elements
Contract is a legal agreement that is made between two parties in which both are entitled
to perform their duties and are obliged to provide satisfactory performance. The formation of
valid contract is based on certain elements that are described in the following points:
Offer
Offer is known to be a proposal that is made to a person by another person. There are two
types of offers one is general and another one is to specific party. The offer is made to the
parties for seeking their intention to come into a contract or not. The consent of one party is
important for a valid contract. Nonetheless, it is to be considered invitation to treat that is not an
offer (Mermann, 2000). The case held between Harvey v Facey [1893] UKPC 1, it was seen that
the contract was not valid as the offerer had not shown his intention for the confirmation of the
lowest price for the contract (Four Essential Elements of a Contract, 2014).
Acceptance
Acceptance is an essential element of a contract that represents the concept of a party
towards the offer made by offerer to offerree (Milner, 2011). It is mandatory to communicate
with the offerer party for the consent of offeree. The case of Felthouse v Bindley [1862] EWHC
CP J35 is the best example in which the contract was void just due to unclear acceptance from
the second party.
Intention
3

This is the major criteria of making a contract valid on the contract grounds. For a valid
contract, this is important that all the parties must intend to create a legal relationship for
completion of a contract and preforming legal obligations. Nonetheless, this is not accepted in
case of charitable agreements. To clearly define this element, case of Balfour v Balfour [1919] 2
KB 571 is used as an example in which it was found that the contract was purely social and
domestic agreement hence , the parties were not legally bounded.
Consideration
According to the aspect of English contract law, consideration is the monetary value that
is to be as an exchange of promises. This is mandatory that promisee and other party must get
benefit from it. The case titled with Re McArdle (1951) stated that past consideration is not a
ground of a valid contract. Such kind of consideration is seen valid when it will be preceded by
a request.
1.2 Discuss the impact of different types of contract
According to the English Law, contracts are of different types and have their different
obligations on the parties. Various kinds of contract with reference of specific case are defined in
the following points.
Unilateral contract: In this kind of contract, offerree makes promises to complete but
the other party of the contract is free to decide whether it want to perform duties or not.
However, this is mandatory to revoke the offer prior to completion of performance. Carlil V
Carbolic Smoke ball 1893 can be referred for cleaning the concept of such cases in which
defendant was obliged to perform revocation of contract as there was not reasonable time.
Bilateral contract : This contract defines the agreement in which both the parties promise
for performing the obligations. However, if any party is found to not performing their duties,
then one party can claim for damages and innocent party become entitled to pay damages. The
case of Brogden v Metropolitan Railway (1877) is to be considered for the explanation of
Bilateral contract.
Collateral contract: This kind of contract is such in which consideration is provided
through other contracts. Collateral contracts are only considered valid if there are supported
promises to perform the obligations. The case Barry B Davies, was a collateral contract between
auctioneer and buyer in which consideration was not provided on the basis of contract. Further,
4

Shanklin pier Ltd v Detel Products 1951 is also a common case which is associated with
collateral contract.
Electronic contract : Electronic contract is a form of distance contract as in this contract
the parties are communicated by online sources I.e various trading websites. To explain the
norms of distance contract, the case of Golden Ocean Group Ltd v Salgaocar Mining Industries
PVT Ltd [2012] is mostly referred. In such case, it was considered that the deed of contract is
valid on the grounds of electronic signature.
1.3 Explain this statement andanalyse terms in contracts with reference to their meaning and
effect
There are different terms on the ground of a contract can be valid such as expressed,
implied and innominate terms. On the basis of impact of breach, the terms are explained in the
following points :
Expressed terms
Terms that are expressed and clearly described by both the parties at the time of making
contract are known as expressed terms. The parties are bounded to perform their duties on the
basis of such terms and non-completion of such terms lead to discharge of the contract. Nicolene
V Simmonds 1953 case defines the applicability of expressed terms and presents that vague
statement is not considered as a contractual term (Partington, 2013).
Implied terms
Terms which are not expressly described at the time of making contract but are implied
in the general situation are known as implied terms. Such terms are inserted by the court of law.
The case of Hutton v Warren 1836 states the applicability of such norms in which the farmer was
entitled for additional allowance for his extra work, beside, it was not mentioned in the contract
(Rosly, 2010).
5

Innominate terms
The origination of Innominate terms was done in the case of Hong Kong Fir Shipping
v Kawasaki Kisen Kaisha [1962]. Such term is applied in the case situation in which any
condition or warranty cannot be bifurcated. As per the application of such terms, it can be said
that parties are entitled for the refusal of contract in case they disadvantaged from full benefit.
Condition and warranties
Condition and warranties are the major terms of a contract, in which conditions are the
root of contract while warranties are subsidiary the the objectives of a contract. In the case of In
Poussard V Spiers 1876, the breach of condition was treated in which the defendant was entitled
to terminate the because of breach of condition. Court of law held the action valid because
conditions of the contact were not satisfied (Slapper and Kelly, 2013). However, the breach of
warranty lead to pay for damages by a party. In the case of Bettini V Gye 1876 it was found that
employer is not entitled to repudiate contract on the basis of breach of warranty.
Exclusion clauses
The above mentioned terms are in inserted deed of contract so that the liability to provide
damages can be exposed of imposed as upper to onerous situations. In the case of Chapleton V
Barry, 1940. the use of exclusion clause was made for the purpose of providing relief to the
council from damages.
TASK 2
2.1 impact of different types of contract and analyse terms in contracts with reference to their
meaning and effect
The case held between Ivan and Todor can be solved and decision can be made by
referring the case of Patridge V Crittenden 1968, in which no contractual relationship between
Ivan and Todor is decided. As per the evidence of case Todor's intention was not to make offer
but it was a invitation to treat. The same kind of decision was taken in the above cited case in
this case Ivan was not entitled to get money as in Fisher V Bell case where defendant has given
advertisement but not sold as court decided that it was not offer but was a invitation treat.
6

 Invitation offer- Within the given case scenario the book was displayed and it was a
invitation to treat not a offer by Todor. However, in this case offer for purchase was
given to Ivan. Acceptance-The evidence of case shows that Todor was entitled to either accept or refuse
the offer which is given by Ivan because the invitation to treat has not grounds for
imposing acceptance (Four Essential Elements of a Contract, 2014). Not valid on the grounds of written and verbal contract- The case was not formed on the
grounds of written and verbal as there was not any deed or expressed terms between the
parties. Hence, absence of formation of deed was found in the case.
 Terms- There was a expressed term impale to the case as price of the book was
expressed term. In addition, there was a condition to sell book at agreed price.
2.2 Apply the law on terms in different contracts
The case of Carlil V Carbolic Smoke ball 1893 , is refereed to make a decision over the
case of Adam and Brain. As per the mentioned case, defendant made a unilateral offer to provide
a reward to individual who will complete a task represented by Smoke ball company. But the
rewards further cancelled and court has stated that revocation is valid if it is given prior to the
completion of offer. The applied law and terms in the case of Adam and Brian are shown in the
following points :
Unilateral contract- The creation of unilateral contracts are applied in the case where
general offer is made and individual has to provide acceptance. The present case shows that
Adam had given unilateral offer while informing reward to person crossing the English Channel
first (Hall, 2003).
Intention- In the case, Adam has shown his intention to make a legal relationship and
provide intention for contractual relationship by announcing reward to person who will perform
obligation.
Offer and acceptance- The Adam made a offer by providing advertisement. It was
consider to be a offer on the grounds of Carlil V Carbolic Smoke ball case. Further, Brain has
accepted the case
7

Expressed term- There was a expressed term to the case as price is going to be paid to the
party for satisfactory performance.
Condition- There was a condition to cross the English Channel first.
On the basis Carlil V Carbolic Smoke ball 1893 case, it can be said that revocation of
offer made by Adam can not be valid a because Brain stated performing his obligation without
knowing about second advertisement. Hence, Adam is found liable to pay damages made to
Brain (Adams, 2010).
2.3 Evaluate the effect of different terms in given contracts
The case held between Barry and the local council is not seen valid on the ground of the
case results of Chapleton V Barry 1940. In the case court has clarified that ticket for seat is a
receipt and the terms mentioned on the ticket are not the part of contract (Hall, 2003).
The effects of different terms in respect with the case of Barry and the local council are
shown below :
Bilateral contract- As per the given case scenario, bilateral contract was found between
Barry and local council.
Written contract : This case was based on the ground of written contract as Barry
purchased ticket and council gave receipt. In was found that, the parties were intended to
perform promises which was formation of contract. formation of contract.
Condition- The price paid for the seat and the definite time for availing services of chair
was the condition. However, it was found that conditions were not informed properly to the
customers by the council (Rosly, 2010).
Exclusion clause- The exclusion clause was the term that is defined to the backside of
ticket.
The decision over case of Barry and Local council can be made through taking reference
of Chapleton V Barry 1940 and it can be said that Barry was entitled for money from local
council due to the fault of Local council as it was mentioned that terms and conditions were not
incorporated in the ticket.
8

TASK 3
3.1 Contrast liability between contract and tort liability
The valid difference between contract and tort liability is discussed in the following points :
Basis of difference Contractual liability Tort liability
Reason of occurrence It occurs when terms of contract are
not satisfied
Refer : Scammell & Nephew v.
Ouston [1941] AC 251
The trot liability came into existence
when a party fails perform duty and
innocent party is injured just because of it
(Kelly and et.al., 2013)
Relationship between
parties
There can be found legal relationship
between parties
The relationship between parties is
imposed by law
Barnett v Chelsea & Kensington Hospital
[1969] 1 QB 428
Basis of damages The damages are mentioned as per
the deed made between parties
(Jennings, 2010)
According to the damages because of
negligence
Reference of case : Henderson v Merrett
Syndicates [1995] 2 AC 145
Case reference In the case of Avery v Bowden
(1855), the damages paid to the
parties due to they denied
performing contractual terms.
In the case of Donoghue V Stevenson,
damages were provided as manufacturer
of drink has neglected his duty to provide
care to the party and the innocent part
was injured.
3.2 Explanation of scenario with reference to nature of liability in negligence and employers’
Liability
To take a valid decision over the case mentioned between Ben and Roger, the act Safety
at Work Act 1974 and Personal Protective Equipment regulations 2002 can be refereed, on the
9

other hand the Donoghue V Stevenson 1932 case is going to be refereed for taking decision over
the case.
The following principles are to be satisfied for make a successful claim of negligence:
Duty of care- In the case, it was stated that standard duty of individuals is to provide a
effective care to the parties for which principle of neighbour love is consider. In the case
damage was seen to the innocent part due to negligent advice of defendant (McKendrick, 2012).
Breach of duty of care- Defendant has not consider and fulfil his duty that-way
provisions of negligence were imposed .
In the case herewith, Ben was having a duty to provide appropriate working environment
to the guests as the provision of Occupier's Liability Act have been occurred in the situation.
They should see that no possible injury is made to visitors because of operational activities
(Miller,2011). It was also seen that Roger was not provided with gloves and the carelessness is
considered to breach of duty of Ben. As the principles of negligence are not satisfied hence, Ben
is not entitled to provide damages.
3.3 Vicariously liability of business sin the case of Roger, Colin and Ben
As per the provisions of vicarious liability, employer or the controlling party is seen
liable for the negligent actions of employees toward third party of parties influenced by them.
However, the applicability of doctrine of Low is seen for controlling party to prevent the
possibility of negligence that can lead to injury for innocent party. The case of Lister v Hesley
Hall Ltd [2001] UKHL 22 can be referred in the case. Nonetheless, for the criminal activities of
employees, employer is not responsible (Hollingsworth, 2014). In the present case, employer is
judged to be liable for the negligent act of Colin as he was having duty to ensure that physical
violence is not made to subordinates. But, Colin is found in guilt as he was not entitled to hit any
person. Hence, Colin and employer are liable to provide damages to Roger for his injury.
TASK 4
4.1 Apply the elements of the tort of negligence and defences in different business situations
The elements of the tort of negligence and defences along with the benefits are defined in
the following points: Contributory negligence- When claimant has contributed for negligent action
10

 Volenti non fit injuria- When claimant has put themselves voluntary in a position of got
injury.
 Ex turpi causa- When negligent action is not unjust by Law (Employer Vicarious
Liability. 2013)
As per the case scenario, Mark jumped in a pool with knowing the fact that its is riskier
to use pool from 7.00 pm to 7.00 am as there was no attended there. He was also found ignoring
warning which is provided by the hotel. His sunglasses were damaged during swimming. In this
case the provisions of Occupier's Act are applicable. Nonetheless, amendment made in the
provision are decided the variation in applicability of provision. Hence , Mark is not benefited to
claim damages.
4.2 Elements of vicarious liability in given business situations
The provisions of Occupiers Liability Act 1957 are seen in the present case and on the
basis of principle of such case Regent hotel is not found to be liable for providing damages to
the third party. As the damages can only be claimed for a injury made to a person not for
property injury. As previous warnings were made to Mark by hotel hence, benefit of defence of
volenti non fit injuries can be considered (Rush and Ottley, 2006).
As per cases of Tomlinson v Congleton Borough Council 2003 and British Railways
Board v Herrington [1972] AC 877 can be taken into consider for making effective decision on
the present case. The management of hotel was to appoint a person at pool to stop guests at the
restricted time. However, they have taken care for the warning signpost but they forgot to switch
on lights. The hotel is not liable to pay damages to Mark.
Conclusion
The above report described the element of contract that make a contract valid.
Furthermore, various cases related to vicariously liability, offer, acceptance, contractual terms
are explained along with representing the elements of the tort of negligence and defences in
different business situations.
11

REFERENCES
Adams, A., 2010. Law For Business Students. 6th ed. Pearson Education Ltd.
Hall, C. J., 2003, The contractual nature of social law. Managerial Law. 45(3/4), pp. 23-107.
Jennings, M., 2010. Business: it’s Legal. Cengage
Kelly, D. and et.al., 2013. Business Law. Taylor & Francis.
McKendrick, E., 2012. Contract Law; Text, Cases, and Materials. Oxford University Press.
Mermann, R., 2000. Good Faith in European Contract Law. Cambridge University Press.
Miller, R., 2011. Modern Principles of Business Law. Cengage.
Milner, A., 2011. Contract interpretation: potential for relaxing the exclusionary rule.
International Journal of Law in the Built Environment. 3(3). pp. 205-221.
Partington, M., 2013. The psychological contract and implied contractual terms: Synchronous or
asynchronous models?. International Journal of Law and Management. 53(1). pp.32-50.
Rosly, A. S., 2010. Shariah parameters reconsidered. International Journal of Islamic and
Middle Eastern Finance and Management. 3(2). pp.132-146.
Rush, J. and Ottley, M., 2006. Business Law. Cengage.
Slapper, G. and Kelly, D., 2013. Business Law. Taylor & Francis.
Online
Employer Vicarious Liability. 2013. [Online]. Available through:
<http://www.oxbridgenotes.co.uk/notes/oxbridge/2013/tort-law-notes/samples/employer-
vicarious-liability>. [Accessed on 19rd December 2015].
Four Essential Elements of a Contract, 2014. [Online]. Available Through: <
http://www.smallbusiness.wa.gov.au/four-essential-elements-of-a-contract/>. [Accessed
on 19rd December 2015].
Hollingsworth, G., 2014. Vicarious liability lawyers. [Online]. Available through:
<http://www.legalmatch.com/law-library/article/vicarious-liability-lawyers.html>
[Accessed on 19rd December 2015].
12

13