Business Law 07087 Assignment

This report provides a comprehensive analysis of aspects of contract and negligence for business, specifically addressing inquiries related to a business's legal obligations. It details the essential elements of a valid contract (offer, acceptance, consideration, intention to create legal relations, capacity), differentiating between unilateral and bilateral contracts and the importance of written agreements versus oral contracts. The report further explores express and implied terms, including conditions and warranties, and the implications of breach of contract. A significant portion is dedicated to explaining the differences between contractual and tortious liability, focusing on negligence and occupier's liability, including relevant case law. Finally, the report addresses vicarious liability, providing advice on a company's responsibility for the actions of its employees and offering guidance on handling incidents involving injury or damage.

ASPECTS OF CONTRACT AND
NEGLIGENCE FOR BUSINESS
BUSINESS LAW
07087

CONTENTS
PAGE
TASK 1 3
TASK2 6
TASK 3 7
TASK 4 11
TASK 1

BRODGEN, CALLS & FIELDS LLP
Fountain Court, 119 Grange Road, Middleborough TS1 2XA
Tel: Email: [e-mail]
5th September 2014
The Managing Director
Practically Anything Ltd
Wings field House,
2 Edgware Road,
Portsmouth PO1 4TF
Dear Sir,
INQUIRIES ON LAW OF CONTRACT
Your meeting with the undersigned on the 4th September 2014 refers.
We acknowledge receipt of your letter dated 3rd September 2014 requesting for a legal opinion
on your intended business relationship with Silverstream Ltd for the purchase of Steel Plates.
You may recall that at the meeting you informed us that you were engaged in general
merchandise, and recently Silverstream Ltd offered your company a large quantity of steel plate
for sale, so as a result you needed us to put you through the several aspects of the law of contract
relevant to your growing business, in view of your relative inexperience in such affairs.
I commend your prudence in making this very important inquiries and instructing our firm in this
regard. Your initiative will eventually save your company avoidable disputes and expenses in
litigation.
The essential elements that would be required for a contract to exist between two or more
persons, whether individuals or companies, are about five;
(a). an offer is a promise made by one party to another with the intent that it shall become
binding on the party making it as soon as it is accepted by the party to whom it is addressed. The
one making the offer is known as the offeror.

(b). an acceptance is the unequivocal response to an offer, in which the offeree (the one receiving
the offer) makes known his concurrence to the terms of the offer as communicated by the
offeror. The acceptance must be absolute,
Unqualified, and unconditional and must be communicated to the offeror within a reasonable
time.
A conditional acceptance is unacceptable in law and is treated as a counter offer (a new offer),
thereby nullifying the offer communicated by the offeror. The effect is that the tables are then
turned and the first offeror is then at liberty to accept the counter offer, or withdraw from the
negotiations.
(c). Consideration is a key factor for a contract to be binding on the parties. It is the price for the
promise made. In this instance, the consideration is the price to be agreed in exchange for the
delivery of the purchased steel plates. Where there is no consideration, the contract is
unenforceable.
(d). an intention to create legal relations. This is the intention between two or more people to be
bound by promises made in a commercial context. Generally, where an agreement is made in a
commercial context the law presumes that the parties intend to be bound by the agreement. As a
result, when Silverstream Ltd offered you the steel plates, the law presumes that they intended to
be bound by that offer, if you accept.
On the contrary, there is generally a presumption that for promises made within a family or
among friends, parties do not intend to be legally bound. For instance, if you were to promise to
pay your brother £25 for every hour he goes to the gym in order to get him to lose, he cannot
enforce your promise by an action in court even if he does go to the gym.
(e). a clear capacity by both parties to enter into legal relations. Parties to a contract must have
legal capacity to be bound by the promises they have made.
These five elements must all co-exist for the constitution of a valid enforceable contract.
However, these elements are not exhaustive as you may by your own election with the
concurrence of your clients, direct that certain elements be introduced into your contract which is
peculiar to the contract.
There are two types of contract that would apply to a business like Practically Anything Ltd. are
as follows:-

Unilateral contract:- Unilateral contract are the contracts in which only one party is
liable to perform the act of the contract (Pull, 2002). And on the other hand another party is
completely free to decide whether it should the act of contract or not.
Impact: - This contract that can be canceled at any time. But if any party started performing the
act than in that case both the parties are obliged to perform the act of the contract. Moreover, if a
written contract has been made between Mr Phipps and Silverstream for the exchange of steel
plates than both the parties are liable to perform the contract only if any one party has started
performing the act or cancellation of the contract creates a loss to any party.
Bilateral contract:- Bilateral contract are the contract in which both the parties are
equally liable to perform the act of the contract in lieu of another party (Rush and Ottley, 2006).
These contract are prepared with the mutual and correlative understanding among both the
parties.
Impact: - In this case both the parties are liable to perform the act of the contract. But if any one
party is not able to perform the act than in that case another party is completely liable to sue the
another party. Thus, in other words it could be said that Mr Phipps is completely liable to sue the
Silverstream Ltd.; if it is not able to perform the act of exchanging the steel plate.
Contracts may either be oral or written, but certain contracts are specifically required by law to
be writing including; guarantees and agreements for sale of land. However, since this contract is
for sale of goods then it is not mandatory that it be in writing, as long as both companies are
clear on the terms of the contract, so you need to be careful not to make oral commitments.
Moreover, we advise that you insist that your agreements be in writing in order to avoid the
danger of misconceptions and ambiguity which oral contracts are prone to. The written contract
will state clearly and specify the terms agreed for ; The sale, for instance; time of delivery, terms
of payment and actual design specifications for the steel plate.
A contract under seal or deed is a formal legal document signed, witnessed and delivered to
affect a transfer of land. However, simple contracts are other agreements other than formal
contracts required to be under seal. They may be oral, or in writing or may be implied from the
conduct of the contracting parties.
Written contracts are indeed most advisable because the agreed terms of the contract are clearly
spelt out therein. There are two types of contract terms; express terms and implied terms.
Express terms of a contract are those terms that have been specifically agreed and stated in the
contract document, while implied terms are not expressly stated but are be implied by law or the
custom of the trade.

A simple contract will suffice(Satisfy) for the sale of the steel plates, but as we have already
advised, you should always insist on written agreements. In fact, we shall draw up a sample of
contract which we shall dispatch to you for your perusal Tuesday next.
Express term: - Express terms of a contract are those terms that have been specifically
agreed and stated in the contract document. Express warranty is a guarantee that the product will
meet in certain level in terms of quality and reliability. This warranty can be expressed in written
and oral form (Whincup, 2008). Effects of express term on contract; an innocent party in this
case is not liable to sue the defendant party against the wrong practice undertaken by him which
in turn cause damage and injury.
Implied terms: - Implied terms of a contract are those terms that are not expressly stated
but are being implied by law or the custom of the trade. Implied warranty is kind of claim made
by another party in lieu of the damage caused to them. Effects of implied terms on contract; a
misunderstanding can take place between both the parties because these terms are not expressed
at the formation of the contract (Pull, 2002). Thus, in this case the innocent party is liable to sue
the defendant party against the damage and injury caused.
In nominate terms: - In nominate terms are not the terms which cannot be considered as
the warranties nor it can be considered as the condition. Condition is the major term of the
contract which goes to the root of the contract. If condition has been broken than in that innocent
party is liable to claim the compensation for the damage caused to him or he can cancel the
contract. Likewise Warranties is the minor term of the contract which does not affects the
existence of the contract. In this case an innocent party is liable to claim the compensation but he
cannot cancel the contract (Bagley and Dauchy, 2011). Effects of in nominate terms on the
contract; if the situation of warranties arises than in that innocent is party is liable to only claim a
sum of compensation for the damage caused to him but cannot cancel the contract. Likewise, if
situation of condition arises than in that case innocent party is liable to cancel the contract.
Written contracts are indeed most advisable because the agreed terms of the contract are clearly
spelt out therein. There are two types of contract terms; express terms and implied terms.
Express terms of a contract are those terms that have been specifically agreed and stated in the
contract document, while implied terms are not expressly stated but are be implied by law or the
custom of the trade.

For instances, for implied terms, every contract for sale of goods in England and Wales,
necessarily include by operation of law the following clauses, whether the parties expressly
stated so or not; that
 The seller has a right to sell the goods.
 The goods to be sold correspond to the description.
 The goods are of merchantable quality.
 The goods are fit for the purpose for which they were purchased.
 Those goods correspond with sample.
These are obligations of the seller which cannot be excluded from any contract of sale, even by
the agreement of the seller and buyer.
Nonetheless, the express terms of a contract, which include conditions and warranties, do not
attract the same consequence. This is so because while a breach of the former may lead to a
discharge of the contract, a breach of the latter could result only in a claim for damages.
If you intend to take up the offer made by Silverstream Ltd, we suggest you put in a written
acceptance which we could draft for you at your earliest convenience.
We trust we have been able to deal with all the issues raised in your letter, and hope you will not
hesitate to revert should you require any further clarifications. You may reach the undersigned
by telephone or reach us by email so we may schedule an appointment.
We appreciate your confidence in our firm and look forward to assisting you with the requisite
counsel to grow your business to the heights you have envisioned.
Thank you.
Yours faithfully,
Arthur Brodgen
Task 2
BRODGEN, CALLS & FIELDS LLP
Fountain Court, 119 Grange Road, Middleborough TS1 2XA
Tel: Email: [e-mail]

5th September 2014
To: Mr Phipps.
From: BRODGEN, CALLS & FIELDS LLP
Date: 29th April, 2014
Re: Advise to Mr Phipps.
In reply to the
Standard form contracts are agreements between two parties, where the terms and conditions of
the contract are set by one of the parties, usually in per-printed forms. These contracts have the
potential to reduce the cost of doing business by eliminating the need to negotiate the many
details of a contract for each instance a product is sold. The invoice is a good example of a
standard from contract.
Exclusion clause is a term in the contract which intend to eliminate one entity from the
liability or limit of the other entity in specific conditions, circumstances or situations. An
exclusion clause is an express term of a contract which seeks to restrict the rights of parties to the
contract (Hernandez, 2010). These terms are a regular feature of standard form contracts.
Exclusion clauses generally have the effect of recognizing a potential breach of contract by a
party, often the seller, and then absolve the seller of the liability for breach.
For example:- a party selling goods to another party can include the exclusion clause by
eliminating the seller's liability for the loss of profit or for consequential loss.
How exclusion clause work has been explained by taking into consideration the case of
'Curtis v chemical Cleaning Co [1951] 1 KB 805. According to this case the plaintiff took a
wedding dress to be cleaned, where he has signed a piece of paper headed ' Receipt'. The receipt
contains the clause of excluding liability “for any damage howsoever arising”. But when the
dress was returned back it was badly stained. Thus, in lieu of exclusion clause the cleaners
cannot escape the liability for the damage caused to the material of the dress. Because, the scope
of the contract has been misrepresented by the defendant's assistant.
However, when selling to individual customers, the potency of the exclusion clause has been
greatly limited by the intervention of Parliament. By relevant provisions of the Unfair Contract

Terms Act 1977, implied terms as to title cannot be excluded at all; while implied terms as to
description, quality or sample of goods cannot be excluded against a consumer. A consumer is
defined by Section 12 of the Act to be one who seeks to buy goods that are of a type ordinarily
supplied for private use or consumption.
The rights and obligations of the public/entities involved in a contract are defined by two
terms (i.e. implied term and express term). Express terms are those terms which have been
expected or agreed by both the entities. These terms are included at the formation of contract of
the contract in both oral and written form. These terms does not inevitably represent all the
relevant terms of the agreement. In certain circumstances these terms are implied by the court on
the parties involved in the contract in order to give efficacy to the agreement. The main type of
express term which applies to general public are rate of pay, hours of work, disciplinary rules
and grievance procedure (Mondal, 2014). On the other hand, implied terms are the provisions
and clause that court normally assumes that they are intended to be included in a contract. In
simple words, it could be said that these term are not stated in the contract. The use of these
terms is very common because there are several ways that court undertakes to use the implied
term. Each of the use of this term is based on the public policy. These terms can be implied by
the law when there is a legislative act that directly addresses the issue.
When goods are to be sold to the general public, the terms that will be relevant include; that
The seller has a right to sell the goods.
The goods to be sold correspond to the description.
The goods are of merchantable quality.
The goods are fit for the purpose for which they were purchased.
The goods correspond with sample.
A breach of contract is the failure to perform any term of a contract without a legal basis.
Where the goods subject of the sale are specific or are of a special significance or value like a
diamond ring, the party in breach may be sued for specific performance of the contract and an
order of court obtained compelling him to perform, or he may elect to sue for damages.
Breach of contract is a legal cause of action in which a binding agreement is not honored
by one or more of the parties by non-performance or interference of the contract by the other
party performance. Breach of contract is the most common cause of law suits for damages and
specific performance of the contract ordered by the government. The condition of breach of
contract arises when one party of the contract fails to perform some or all its obligations related
to the contract. Some of the remedies caused for breach of contract are as follows:-

Damages: - if the contract specifies the account need to be paid by the defendant party if
any damage is caused to another party. These can be termed as the liquidated damages. This type
of clause is normally included in the contract formed by the manufacturing and building
industries where penalty for late completion is very common.
Repudiation: - if the party to the contract breaches the condition than in that case
innocent party is able to repudiate the contract. The innocent party can terminate the contract or
can claim a sum of compensation for the damage or injury caused to him.
Mitigation: - in this an innocent party is not liable to recover the amount of loss faced by
him even by taking reasonable steps. This is sometimes expressed as the duty to mitigate. It is a
action for an agreed sum and not for the damages caused.
Thank you.
Yours faithfully,
Arthur Brodgen
3a) Differences between Contractual liability and Tortious liability.
 Contractual liability flows from the creation of a contract between two or more
parties, whereas Tortious liability stems from negligence of a duty of care to
person(s) with no contractual liability. Eg. parties may enter into a contract to clean
windows, they each owe the other a contractual liability to carry out the task and
pay for the service; a third party passer-by who has no relations with either one of
them can however successful sue for damage caused where for instance due to
improper maintenance of the premises a window frame, or in another instance
where the ladder used by the window washman, falls on him. Indeed the window
washman should also be able to make a claim in tort if the window frame or some
other part of the house falls on him,
 Contractual liability is limited to contractual parties, but any 3rd party may claim
for injury caused as a result of tortious liability.
 Parties enjoy greater freedom in determining the scope and limits of contractual
liability; tortious liability on the other hand is as stipulated by law. Hence in
contractual liability parties may indeed determine the upper limits of financial

recompense for injuries suffered, whereas in torts the law determines such liability
as it thinks is proper in the circumstance, and may even award
punitive/exemplary damages where circumstances so require. As a general rule,
punitive damages are excluded in contracts and damages agreed are usually a
genuine reflection of the actual loss/damage suffered.
 In contractual liablity damages awarded is to place the hammed party in the
position they would have been if the contract was fulfilled. Under contractual
liability damages receivable by the plaintiff would include compensation for
damages as well as expected earnings, whereas in tortious liability it is usually only
for injury.
3b) Nature of liability in negligence, including basic aspects of occupier’s liability.
 Liability in negligence arises where one party owes a duty of care, and is liable for
damages which occur as a result of defects which he knows or should have known
existed for items which were under his care and control. In other words it could be said
that liability in negligence is the failure of duty by an individual person which in turn
cause damage or injury to the another person. For example: - owner of Silverstreams
failed to inform Mr. Charles about the injury which could occur at the time of using steel
plate for the first time. Than in that case Mr. Charles is liable to liable to claim a sum of
compensation from the owner of the Silverstream according to the Employee Liability
Act.
 Occupier’s liability concerns the duty of care which occupiers (owners or lessors) of real
property owe visitors or trespassers. The former is regulated by Occupiers’ Liability Act
1957, whilst the latter is regulated by Occupiers’ Liability Act 1984. Occupier's liability
act 1957 was developed in order to safeguard the interest of the employee and visitors.
According to this act if any damage is caused to the visitor than in that case opposite
party or owner is liable to pay the pay the sum of compensation even if there was no
mistake of the owner. Due to which owner and employer have started facing loss
conditions. Thus in order to overcome this problem another act was developed in 1984.
This act is the refrain of the Occupier's Liability Act, 1957. Occupier's Liability Act,
1984 was developed in order to safeguard the interest of employer and owner. According
to this act owner is liable to pay the visitor only in the condition if it is actually there
mistake. Accordant to the act both the parties are liable to claim a sum of compensation
from the opposite party.

 Occupier Liability act 1957 were developed to protect the interest of the individual
against the personal injury and against the tort of negligence. Later on the Occupier
Liability act 1957 was modified and Occupier Liability act 1984 was formed. This act
protects the individual against the property injury, personal injury and tort of negligence.
Taking into consideration the case of Lowery v Walker [1911] AC 10 House of Lords
Occupier liability act has been explained. According to this case the claimant was injured
by a horse at the time of taking short cut across the defendant's field. The land was
habitually used by the members of the public as a short cut for many years. Knowing to
this defendant has taken no steps to prevent the people coming from the land. At the same
time the defendant was aware that the horse was dangerous. Thus, according to the
Occupier liability act the defendant was liable to pay compensation to the claimant.
For example: - Mr. Carl went to the swimming in the hotel at night ignoring the notice
displayed by the hotel management. In lieu of which he claim a sum of compensation
from the hotel management for the damage caused to him. Thus, according to Occupier's
Liability Act, 1957 hotel management is liable to pay a compensation even it was not
there mistake. Likewise according to Occupier's Liability Act, 1984 hotel management is
not at all liable to pay compensation to Mr. Carl.
 They both principally cover liability for accidents caused by dangerous or defective
condition of premises. The duty of care which an occupier owes is that expected of a
“reasonable occupier”, which is same as that in common law negligence standard of care.
 A greater degree of care is expected where visitors are children, their accompaniment by
an adult would seem to lower the degree of care, and similarly specialist visitors should
appreciate and guard against any special risk ordinary incident to the exercise of the skill
(hence lowering the occupier’s duty of care).
 The occupier requirement of care and control is excluded where the damage is caused by
independent contractors the occupier will not be liable except he was not reasonable in
employing them, didn’t ensure they were sufficiently competent, or didn’t properly
supervise their work.
 An occupier would have to issue an effective warning which must be specific, identify
the nature of danger and be understandable to the visitors; the warning must thus enable
them to be reasonably safe.
A much lower duty of care is owed trespassers.
3c) Vicarious liability of a company for damages caused during its legal activities