University of Salford: Legal Aspects of Business - Assignment 1 Report

This report is a comprehensive analysis of key legal principles relevant to business operations. It begins with an examination of contract law, defining offers, invitations to treat, and the differences between them, supported by the case of Carlill v Carbolic Smoke Ball Co. The report then delves into the nuances of contract terms, differentiating between conditions, warranties, and innominate terms, with references to relevant case law such as Poussard v Spiers and Bettini v Gye. Furthermore, the report explores the concept of vicarious liability, outlining circumstances where an employer can be held responsible for the actions of their employees, including job-related accidents, negligent hiring, and harassment. Finally, the report discusses the doctrine of judicial precedent, explaining its advantages and disadvantages, and its role in shaping legal outcomes. The report is structured as a memo to a line manager, addressing specific research questions and providing a detailed overview of these crucial legal aspects.

Legal aspect of business
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Legal aspect of business 1
Contents
MEMO................................................................................................................................2
Question 1..........................................................................................................................3
Offer................................................................................................................................3
Invitation to treat.............................................................................................................3
Difference between offer and invitation to treat.............................................................3
Carlill v Carbolic Smoke Ball co [1893] 1 QB 256..........................................................4
Question 2..........................................................................................................................5
Conditions.......................................................................................................................5
Warranties......................................................................................................................6
Innominate terms............................................................................................................6
Question 3..........................................................................................................................8
Question 4..........................................................................................................................9
The doctrine of Judicial Precedent.................................................................................9
Advantages and disadvantages...................................................................................10
Disadvantages..............................................................................................................10
References.......................................................................................................................12

MEMO: law research 2
MEMO
To, Date: 16 April 2020
Amanda Jones,
Line Manager
Sub:- Law research report
Ref:- research reported requested in an e-mail dated 12th April 2020
Dear Amanda,
I have read your referred e-mail and understood that you want to take an active part in
the meeting with corporate lawyers scheduled next week. I have researched into four
questions that have been asked by you and prepared my report accordingly. Further, I
am attaching my report as Annexure 1 along with this Memo letter.
This is to hope that you would this letter and the attached report in order.
Thanking you
Yours faithfully

MEMO: law research 3
Question 1
Offer
Offer is a mandatory element of a valid contract that can be understood as a promise of
one party that he makes to another in exchange for another party's performance. Under
the decision of “Harvey v Facey [1893] UKPC 1”, it was given that an offer needs to
carry an intention to be bound on the part of the offeror (Merkin and Saintier, 2019).
Invitation to treat
Same as an offer, one other term also exists in the common law of contract that is an
invitation to treat. An offer and invitation to treat seem similar but they are not. Both of
these terms have different implementations. An “invitation to treat” simply refers to the
invites for an offer. It means it is a first step, which further attracts the offer.
“Difference between offer and invitation to treat”
The major differences between these two terms are mentioned below:-
 Acceptance: A person cannot accept an invitation to treat but can accept an offer
 Objective: The offer has a motive to enter into a contract and on the different
side; the motive of invitation to treat is to receive the offer and to negotiate the
terms that create the basis for the formation of the contract.
 Essential for an agreement: An offer needs to exist in each of the contracts;
however the existence of "invitation to treat" is not mandatory in each case. It
may and may not be present. It means a party may directly make an offer to
another without waiting for an invitation to treat.

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 Objectivity: The last major difference between these two terms is that an offer
turns into an agreement as soon as receive an acceptance and an invitation to
treat turns into an offer as soon as it receives responses from the parties to
whom it was made.
“Carlill v Carbolic Smoke Ball co [1893] 1 QB 256”
This is an important case that is related to offer and an invitation to treat and makes the
difference between these terms more clearly. In this case the defendant, “Carbolic
Smoke Ball” co-published an advertisement where it claimed that a reward of £100 will
be granted to a person who would contact influenza even after consuming smoke ball
produced by the defendant three times a day for two weeks following the instructions
mentioned on the pack. The claimant became entitled to reward as she caught the flu
after consuming smoke ball. Later on, the defendant denied paying the reward stating
that the advertisement was an "invitation to treat" rather than an offer as it was made to
the world and lacked the intention to be bound. In the decision of the case, a new base
of distinction between an offer and "invitation to treat" has been drawn and was given
that the advertisement generally amounts to an “invitation to treat”, but the subjective
advertisement of the case was a unilateral offer which could be accepted by merely
fulfilling a condition mentioned in the same.
Question 2
A contract term refers to the matter and statements decided between the parties after a
due course of negotiation. Many types of terms are there and under what category, a
particular term falls need to be decided as to check the remedy and course of action

MEMO: law research 5
available at the time of the breach. In this part of the report, different types of
contractual terms will be discussed with examples of relevant case laws. There are
three types of such terms namely conditions, warranties, and innominate terms.
Conditions
A condition may be referred to as major terms that are essential for the execution of a
contract and goes into the root of the same. Breach of a condition in a contract leads to
serious consequences as it usually makes the contract as of no value for the innocent
party. “Poussard v Spiers (1876) 1 QBD 410” is one of the important English law cases
which is related to breach of condition. Here the defendant entered into a contract with
the claimant according to which she was required to perform for three months as an
opera singer for the claimant. Later on, the defendant became ill and could not perform
the first four nights. It was a breach of condition as the defendant's performance was the
essential for the performance of the contract and the claimant set aside the contract
(Jones, 2017).
Remedies: - In case of breach of condition, the innocent party may repudiate the
contract and can also ask for the damages.
Warranties
A minor term of the contract that is not central to the formation of the contract, refers to
warranty. Breach of a warranty is not as serious as a condition as without fulfillment of
warranties too, a contract can be performed, however not in a decided manner. In the
case of “Bettini v Gye (1876) QBD 183”, the person entered into a contract with the
claimant to perform as an opera singer for three months. He missed rehearsals for 6

MEMO: law research 6
days and as a result, he was replaced by the employer. It was decided in the case that
attending rehearsals was only a warranty as it did not go to the root of the contract and
therefore the employer had no entitlement to repudiate the contract.
Remedies: - The innocent party is entitled to ask for damages in case of breach of
warranty but cannot cancel the contract.
Innominate terms
When a term cannot be classified clearly as a condition or a warranty and has features
of both of them, the same is refers to an innominate term. It means it depends on the
context that whether the innocent party would win or not. The concept of the innominate
term has been established in the case of “Hong Kong Fir Shipping v Kawasaki Kisen
Kaisha [1962] 2 QB 26 Court of Appeal”. In this case, it was decided between the
parties that a ship, which was chartered for 2 years to the defendant, will remain
seaworthy during this period, however later on the engine of the ship started giving
problems and ship remain out of service for a total of 15 weeks. It was given that while
determining the remedies court needs to check the impact of the breach to the innocent
party (Gullifer and Vogenauer, 2015).
Remedies:- The breach of an innominate term entitles the innocent party for repudiation
of the contract if it is as serious as deprives the innocent party a complete benefit of the
contract in a substantial manner, otherwise, only damages can be asked for.

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Question 3
In general, a person is liable for his/her doings; however, there is a concept of vicarious
liability according to which the liability of an employer may be fixed for the actions
committed by his/her employees or subordinates as well. The rationale behind this
concept is that an employee act as an agent of the employer and therefore being in the
capacity of the principal employer has certain liabilities to the third party for the acts
conducted by the employee. In such a situation, employees are not liable themselves.
The vicarious liability principle also applies in those situations where the employer does
not play any physical role in the harm. There are many circumstances where an
employer is likely to be held vicariously liable for the acts of the employee, which are
explained as under:-
 Job-related accident:- This is a very general area of employment where the
liability of an employer may be fixed for the conduct of employees. If an
employee injures another one during the performance of a job while remaining in
the scope of his/her duty, then the employer may be held vicariously liable for
such an accident
 Negligent retention or hiring:-Not similar to the job-related misconduct, the
employer can also be held liable for the negligent hiring or retention liability that
arises from actions conducted by an employee outside of the scope of
employment (hg.org, 2020). For instance criminal liability of such employees. The
rationale behind this is that the employer been negligent and careless in hiring a
criminal as an employee where he can possess a risk to others.

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 Harassment: - This is another important area that is very general in
employments. Cases related to the harassment of one employee by another are
being a common issue at workplaces at present. Workplace laws prevent
harassment of employees based on race, color, sex religion or any other basis.
An employer is vicariously liable for the act of harassment done by his employee
where the conduct is serious in nature and is likely to result in a “tangible
employment action.” However, there are certain exceptions to the application of
vicarious liability principles in cases of harassment. For instance, the employer
may not be held liable for the harassment committed by the employee if it is
proved that the employer has taken all the reasonable steps to prevent the event
and the victim employee failed to report the issue to the management in an
unreasonable manner.
Question 4
“The doctrine of Judicial Precedent”
“The doctrine of judicial precedent” is based on “stare decisis” (e-lawresources.co.uk,
2020). In general, the doctrine states that if once a point of law is determined in a case
then the same law must apply in all the subsequent cases. This can be understood as
an example. For instance, the case of “Donoghue v Stevenson [1932] AC 562” is a
significant case of Tort Law where it was determined that a manufacturer owes a
standard of care to its customer. This was a legal point that was established in this case
and set a binding precedent. Since then in all the similar cases, the court refers to the
decision of Donoghue and applies the same legal point.

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Advantages and disadvantages
There are many advantages as well as disadvantages of this doctrine, which are further
discussed below:-
Advantages
 The doctrine offers access of predictability and consistency to the legal system:-
It ensures that the cases will be settled out in the same manner as used in past
cases and one many have an idea of likely outcome in advance.
 It offers some measure of flexibility to judicial system:- Judicial precedent set
some standards which applies to the same cases but in addition to this, it also
provides some flexibility to judges where they can set aside these precedents
and can give decision accordingly if facts and situation of case demand so.
 It saves the time of courts: - This is one of the major benefits of the doctrine of
judicial precedent where it provides readily available answers and solutions to
issues that also been there in earlier cases. Judges have to spend less time in
deliberation.
Apart from others, some other advantages of this doctrine are also there such as it
focuses on fairness as well as also reduces the chances of errors.
Disadvantages
 Increases complexity:- Judicial precedents increase complexity in the legal
system where courts have to understand the decision of which courts are binding
on them. The situation becomes more crucial in case of a decision given by
appeal courts.

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 Uncertainty till final decision:- Judicial precedent only gives an idea about likely
outcome but parties remain uncertain about the decision until the final judgment
as it is not always mandatory that courts will provide a decision as per earlier
precedents (connectusfund.org, 2020).
 It looks backward: - Such precedent always looks into the past cases and tries to
apply the same judgment in future cases. These are opposite to statutory laws,
which look ahead. It means if a judge has been on a mistake in past cases, there
is the chance that wrong judgment maybe pass in future cases as well.
In conjunction with the above, the doctrine also put unnecessary restrictions into the
law.

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References
Bettini v Gye (1876) QBD 183
Carlill v Carbolic Smoke Ball co [1893] 1 QB 256
connectusfund.org. (2020) 16 Advantages and Disadvantages of Judicial Precedent.
[online] Available from: https://connectusfund.org/6-advantages-and-disadvantages-of-
judicial-precedent [Accessed on 16/04/2020]
Donoghue v Stevenson[1932] AC 562
e-lawresources.co.uk. (2020) Judicial precedent. [online] Available from: http://www.e-
lawresources.co.uk/Judicial-precedent.php [Accessed on 16/04/2020]
Gullifer, L., and Vogenauer, S. (2015) English and European Perspectives on Contract
and Commercial Law: Essays in Honour of Hugh Beale. Oregon: Bloomsbury
Publishing.
Harvey v Facey [1893] UKPC 1
hg.org. (2020) When Can an Employer be Found Liable for an Act of an Employee?
[online] Available from: https://www.hg.org/legal-articles/when-can-an-employer-be-
found-liable-for-an-act-of-an-employee-34389 [Accessed on 16/04/2020]
Hong Kong Fir Shipping v Kawasaki Kisen Kaisha [1962] 2 QB 26 Court of Appeal
Jones, L. (2017) Introduction to Business Law. UK: Oxford University Press.