Analysis of Contracts and Negligence in Business Law (Module Report)

This report provides a detailed analysis of contracts and negligence within the context of business law. It begins by outlining the essential elements of a valid contract, including offer and acceptance, consideration, and free consent, and explores different types of contracts prevalent in the UK, such as face-to-face, distance selling, written, and oral contracts. The report also delves into the various terms included in a valid contract, differentiating between express, implied, and innominate terms, as well as conditions and warranties. Through case studies, the report applies these contractual terms and relevant laws, such as the distinction between an offer and an invitation to treat, using case law examples. Furthermore, it examines the differences between contract and tort liability, focusing on negligence and vicarious liability within a business context. The report concludes by applying the elements of tort and negligence, specifically vicarious liability, to real-world business scenarios, providing a comprehensive understanding of legal responsibilities in business operations.

Aspects of contracts and
negligence for business

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Essential elements of valid contract......................................................................................1
1.2 Main types of contract entered in UK...................................................................................2
1.3 Different terms included in valid contract............................................................................3
TASK 2............................................................................................................................................4
2.1 Applying various terms of contract.......................................................................................4
2.2 Applying law on terms..........................................................................................................4
2.3 Effect of various terms..........................................................................................................5
TASK 3............................................................................................................................................6
3.1 Difference between contract and tort liability.......................................................................6
3.2 Nature of liability in negligence............................................................................................6
3.3 Vicarious liability in business firm.......................................................................................7
TASK 4............................................................................................................................................8
4.1 Elements of tort and negligence............................................................................................8
4.2 Applying the elements of vicarious liability.........................................................................8
a)..................................................................................................................................................9
b).................................................................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
In order to form a valid contract it is essential for both the parties involved within the
contract to have certain essential elements such as offer and acceptance, consideration, free
consent etc. All these elements are crucial and thus helps in forming a mutual agreement between
parties so that valid contract could be created (Chidananda and et. al., 2014). Any agreement
enforceable under law and involves all the elements helps in forming a legal contract. However,
it involves various essential elements in regard to form a valid contract. Further, in order to form
a contract it is essential for both the parties to have free consent and neither of them should be
minor then only the contract is valid. Present report discusses different case scenarios and thus
provide valid offer to each other because if the contract is not valid than it is not acceptable
under the law. Further, there are certain elements of Tort law and negligence in which one party
is liable for the damages caused by other party.
TASK 1
1.1 Essential elements of valid contract
Valid contract is one which involves both the parties to enter into the contract with full
consent and form legal relationship with each other. All the legal contracts are enforceable under
law and thus helps in forming legal relationship so that desired results could be attained.
Following are the different essential elements of valid contract such as- Offer and acceptance- It is one of the main element of valid contract and thus one party
needs to give offer and other should accept the same which help in forming legal
relationship (Johnson, 2015). However, if any of the party do not agree upon the said
terms and conditions within contract then it is unlawful. Contract will be considered as
lawful only when it will be accepted by another party and give their consent so that it is
treated as lawful. As per the case of Pharmaceutical Society of Great Britain v
Boots [1953] 1 QB 401. it evaluated that products placed on shelf were not an offer but
an invitation to treat. However, customers influence towards the goods and make an offer
to purchase the same. Thus, when the offer made is accepted by the seller than it is
termed as valid contract. In the present case, Freddy offers to sale high definition LED
and advertise on social media to sell it for Pound 145. Layla reacted to the offer and
wishes to buy it for Pound 125. However, Freddy conveyed that he would only accept the
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offer for Pound 145. Thus, after hearing so, Layla do not responded later no other buyer
turned up and then Freddy conveyed that he is ready to sell it for Pound 125. Thus, here
no valid agreement has been formed because when Layla was ready to purchase LED,
Freddy was not willing to sell at that amount. Thus, no valid offer and acceptance is
made. Therefore, it proves to be an invalid contract (Kodilinye, 2014). Consideration- It is another essential element of valid contract which is essential for part
who accepts the offer should provide to the party who offered contract. While, if there is
no consideration then the contract is termed as void (Koppelman, 2014). Contractual capacity of partners- It can be assessed that the capacity of parties who enter
within the contract should be competent enough so that they can make their own decision
about right or wrong. However, minor, drunkard or person not of sound mind are not
eligible to enter into the contract. Therefore, parties of sound mind and competent are
eligible to form a valid contract (Lub and et. al., 2012).
 Free consent- Here, both the parties need to agree upon the terms and conditions within
the contract and thus it helps them to establish a valid agreement. However, if any of the
party is forced to enter in the contract then it is not termed as lawful contract. As per the
case, Freddy did not agree to sell LED at lower price mentioned by Layla and thus there
is no consent made between the parties (McKendrick, 2014).
1.2 Main types of contract entered in UK
It involves different types of contract formed within businesses and individuals in UK so
that contractual relationship could be formed among them. These are as follows- Face to face contract- Such type of contract requires both the parties to be present at the
time of forming the contract. Also, such contract is carried out within verbal form and
obtains consent of every party in order to make legal relationship (Miceli, 2014). All the
terms and conditions involved within contract are informed to individuals and thus carry
out contract deals when agreeing upon the terms and conditions. Distance selling contract- In this type of contract, offeror and offeree are far away from
each other. Therefore, they make contract or communicate through various form such as
telephone, social media, fax or e-mail etc (Distance contract. 2015). Thus, in the given
case also, Freddy is making contract through social media and offering the product to
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different customers across world. However, in this type of contract, buying and selling is
done within two parties that are away from each other. Written contract- Further, such type of contract involves both the parties to be present at
the time of contract and thus all the rules and regulations could be presented in written
form. Through such way it helps in solving any disputes or issues in court of law if either
of the party disagree to continue with the offer. As contractual relationship has been
formed by the consent of the both the parties then they are not liable to deny later after
signing the contract (Nollkamper, 2010). Hence, it is used as evidence in the court of law
and judgement should be given in favour of innocent party.
 Oral contract- Such type of contract is made orally and thus it is less reliable in the court
of law as later at the time of dispute among the parties such type of contract is not treated
as valid contract. Therefore, parties who are forming oral contracts are not in any legal
relationship and therefore they not enforceable under law (Padhi, 2014).
1.3 Different terms included in valid contract
In order to form valid contract there are different terms and conditions involved within it
so that best results can be carried out. Following are the different terms involved in order to carry
out valid contract- Express terms- Such terms are expressed within the contract and thus it needs to be
included by the parties at the time of forming legal relationship. However, with the help
of such contract, it helps both the parties to become aware regarding different terms and
conditions involved within agreement. Such contract has been carried out through oral or
written form (Plimpton, 2005). Implied terms- While, such term is already implied within the contract by the court of
law. However, these need not to be expressed but involved in the part of valid contract.
Also, such terms are involved within the contract from mutual consent and thus make
intention of promise which is reasonable in nature (Potter, 2014). Innominate terms- Such terms are involved within the contract and are applicable by the
court of law upon the parties involved within the agreement. The innominate terms looks
to the effect of the breach and questions whether the innocent party to the breach was
deprived to obtain benefit of contract. However, the innocent part obtains the whole
benefit and thus able to treat the contract at the end (Sudbury and Wilson, 2015).
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 Conditions and warranty- Condition is effective term within the contract that is involved
within the root of the contract. However, if the condition is breached then the innocent
party is entitled to end the contract and also claim damages for the same. While,
warranties are considered as minor terms that are not central to the existence of the
contract. However, if the warranty is breached by then the innocent party may claim
damages but could not end the agreement (What are warranties, conditions and
innominate terms? 2012).
TASK 2
2.1 Applying various terms of contract
As per the case, it describes that Bella, UK is the company that produces various beauty
products. However, the company decided to advertise using flyers and attract customers towars
“Miracle oil” that claims rapid hair growth. Through referring to the advertisement, it has been
written that ten boxes will be sold at the price of 5. Hence, it was offered as a limited offer to
consumers (Witting, 2015). Through reviewing the advertisement, another firm which is local
small business “Hair 4U” decided to take an advantage and place the order to buy 10 boxes.
Hence, as per the case, Bella UK advertises regarding its product through flyers and offer them
special discounted price. However, it would be considered as the invitation to treat and not an
offer.
Also, the willing party here. “Hair4U” made an offer to purchase 10 boxes at the price of
5. Now, it is up to the company whether they wish to accept of reject the offer. However, offer is
considered as the term made by the party that is willing to purchase or enter into contractual
relationship with another party (Zhang, 2012). Thus, it is one of the essential element within
valid contract. It can be stated that there is different between offer and invitation to treat. As in
this case, Bella, UK makes invitation to treat not given as offer. As per the case law, Partridge v
Crittenden (1968) 2 All ER 421, it can be evaluated that the defendant part was quashed as there
was only invitation to treat not an offer. However, it has been decided by the law that statutory
legislation been applied and thus allow competent parties to enter within contract.
2.2 Applying law on terms
There are various law terms involved in regard to carry out the contract-
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 Express terms- Such terms need to be expressly mentioned in the contract by the parties
in order to avoid any conflict that is likely to be arise in near future. Here, Bella UK
expressly advertises through flyers that 'Miracle Oil” could be purchased at discounted
price. Here, offer has been made through advertisement conveying that product is being
offered at special rate for limited time period. However, it has been expressed that
product offered involves different terms and conditions (Hovenkamp, 2014). Implied terms- Further, such term involves the implied terms that are directly involved by
the court of law. It also identifies that at the time when any good is transferred by one
party to another then the risk related to that products are being transferred to that party.
Such terms are not required to be mentioned within the contract and thus they are
understood by the parties to involve them within contract. As per the case, purchasing
'Miracle Oil” by 'Hair 4U' risk has already been transferred to the later party who
purchased the product (Jacobi and Weiss, 2013).
 Exclusion clause- Moreover, such terms are mentioned by the party who wishes to sell
their products and services. However, it needs to clearly mentioned that firm needs to
clearly go through their policies and thus enable buyer to purchase the product. As per the
case, Bella UK states that they are not responsible for any adverse results (Johnson,
2013). Thus seller company excludes itself from any type of harm of danger caused to
other party.
2.3 Effect of various terms
Following are the effect of different terms upon parties-
a) Breach of condition- It is considered as the legal term that implies that if any of the party
harms conditions of warranties within contract then it is considered as breach of contract.
However, it is the legal term that binds agreement and thus it is not agreed upon by any of the
parties as it affects them. Thus, as per the regulations of contract act, here defendant party will
compensate to the party who has got injuries or harm. As per the present case, it involves two
parties (Karagonlar, Eisenberger and Aselage, 2015) Bella UK and Hair 4 U. However, the latter
party has decided to purchase the product from former party. Therefore, it has been analysed that
Hair 4 U makes an offer to purchase 10 boxes at the stated price of 5 as given in advertisement.
Then, if the seller companies does not perform the actions as per the stated conditions, it would
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termed as breach of condition and Hair 4 U is eligible to sue as well as claim damages for
breaching contract.
b) Legality of the exemption clause- Further, it is another term i.e. exclusion clause in which
one party excludes or restrict itself from any type of damages. Therefore, in the legal clause it
has been mentioned clearly that parties involved within the contract need to carry out the same so
that best results could be attained. Thus, seller party has been excluded itself from the liability
for occurring any adverse effect on shampoo (Wernette Jr and Rogers, 2014).
TASK 3
3.1 Difference between contract and tort liability
Tort liability is considered as the harm which is caused by one party to another in terms
of breaching the statute as well as right to individual. Hence, it is termed as civil wrong. While,
contractual liability is the term in which defendant part is liable for paying damages to another
person. Contract is termed as the agreement which is enforceable in the eyes of law. Further,
contractual liability is stated as criminal offence and thus in that the liable party is required to
compensate the other party through carrying out particular remedies (Wernette Jr and Rogers,
2014). Further, in terms of tort, injured party files a suit in civil court and thus takes appropriate
action so that defendant could be punished. While, tort liability is not at all dependent upon the
contract between the persons while contractual liability is dependent upon agreement if it is valid
contract. In order to carry out tort action could be taken by any private individual. Contracting
liabilities are the major outcomes of agreement within parties while tort liability are the end
results of law. For instance, MR. A makes an contract with Mr. B to purchase mobile phone for
Pound 10000 and thus fails to render product then as per the contract, he is liable to Mr. A. In the
same case, Mr. B is liable in case of non payment of amount stated of mobile phone to Mr. A.
3.2 Nature of liability in negligence
Negligence is termed as the liability in order to carry out wrong act without any intention
to harm the other party. However, if plaintiff proves that damage has been caused to him due to
defendant, then plaintiff is liable to claim the compensation from the party. Thus, the loss could
be in any form such as financial status or personal relationship (Middlemiss, 2010). Following
are the different essential elements that are necessary for liability in negligence that have to be
proved by plaintiff in regard to become successful in negligence claim such as-
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 Here, it could be evaluated that the defendant party owed them a “duty of care” which
means that party is liable to take care of the duty or action that he was supposed to
perform. However, there are certain situations in which law reliazes that giving rise to
certain duty of care. Defendant party is liable to compensate plaintiff if it has been found
any default caused to them (Kuznetsov, 2013).
 Further, if the defendant was in “breach of that duty” which means that breach of duty is
the liability in negligence that occurs in the case of non performance of acts as per the set
standards. Also, it has been proved that defendant owed plaintiff party that they need to
carry out duty of care as the claimant must show that defendant was in breach of duty.
Vaughan v Menlove (1837) 3 Bing NC 467, as per this case the judgement was held that
defendant party was not appropriate and therefore, it should be evaluated by the standard
of reasonable man (Meiners, Ringleb and Edwards, 2014).
 Breach of duty caused “harm or injury” to plaintiff party and thus obtains the duty to
prove that injury caused to him is caused by defendant party. Then only plaintiff is liable
for damages (Adamson and Morrison, 2011).
3.3 Vicarious liability in business firm
Vicarious liability is considered as the concept that helps employees to held liable for the
acts performed by plaintiff within his course of employment. However, such liability could only
be occurred at the time when there is any contractual relationship made within employee and
employer. As per the given case, Bob is not liable to hire Matt and thus he does it illegally who is
teenager and also asked him to keep it as secret. However, it resulted into an accident, and thus
Matt was badly injured (Clauwaert and Schomann, 2012). Thus, Norfolk is vicariously liable for
the acts done by Bob as there is an employee-employer relationship between them and also Bob
is performing the acts which is related to their employment.
a) Matt can sue Bob only upon the behalf of his guardian as appointed by court of law because
he is a teenager. Because of such provision, minor is not liable to sue any person caused harm to
them. He can file the case on behalf of guardian appointed by court of law (Wernette Jr and
Rogers, 2014).
b) Norfolk farms can be held vicariously liable for the acts carried out by Bob. Thus, here,
employer is held liable for his acts performed by workers in the premises and hit Matt.
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TASK 4
4.1 Elements of tort and negligence
It can be assessed that elements of tort and negligence are considered as interrelated to
each other. Thus, in such case, defendant is held liable for the injury caused by him to another
person. It involves various elements involved in tort by which one party causes harm to another
party and for those elements complainant can demand indemnity from defendant. There are
different elements such as defamation, intentional torts and torts of negligence. As per the given
case, it evaluates that Albert has decided to rend out a flat by Brad (Zhang, 2012). After
obtaining all the details to the accountant namely Charles and he unintentional provided wrong
details of some other client and said that he has high income and savings without reviewing the
correct file. On actual, Albert was in bad financial condition and is overdraft by several banks
and several number of times.
To,
Brad
Through reviewing the given case, Brad can claim damages in the form of compensation from
Charles. Because it was his duty to take care of the duty owed to him. However, if one party do
not take proper care of the duty then it is concerned as breach of duty and defendant is liable for
damages paid by him to plaintiff. Here, Charles breached a duty of care owed to him and enable
Brad to claim compensation from him (Hovenkamp, 2014).
4.2 Applying the elements of vicarious liability
The term vicarious liability is basically referred to be a combination of two elementary
words named vicarious and liability. It is where the significance of both these phases largely
differs from one another and creates a distinct meaning on getting merged. However, vicarious is
meant to obverse the someone's activity by either feeling or experiencing it with another context
of liability where it is simply referred to the state of bring responsible for some sort of act
(Adamson and Morrison 2011). It is therefore on combining both these terms, their exists a
united term called vicarious liability which is a concept of imposing a strict obligation on an
individual who do not possess any sort of primary liability towards any faulty execution of
another individual. This in turn is evident to compel a secondary responsibility on the individual
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where vicarious liability is basically applied where there exists some sort of relationship among
the individuals. This is for instance to refer to the employee- employer relationship as given in
the below defined cases.
a)
It is on referring to the present case scenario of a night club owned by Macho Men plc in
UK where one of their employees named Graham designated as doorman was informed about an
overly drunk consumer. Wherein, the customer was also arguing with their deputed barman and
damaging the club's property by throwing out things (Meiners, Ringleb and Edwards, 2014). As
a result to which, Graham as a part of his duty attempted to eject the client out of the bar and
have accidentally broken his arm. In context to which, Macho Men is duly liable for the actions
of Graham despite of the fact where he has been appointed to handle such troublesome
customers. It is basically to an applicable element of vicarious liability entitled as employee-
employer relationship where Graham has attempted this act during his active hours of working
and at his workplace premises.
b)
It is on referring to the recent case script of Carla who is employed with Links Ltd. As a
courier agent and is liable to deliver parcels. However, one fine day of her week off, she decided
to deliver some parcels on her own and after delivering first package, she accidentally hit a car
that was driven by a person named George (Clauwaert and Schomann, 2012). In context to
which, Carla can be personally held responsible for this act with no liability on Links Ltd where
she was willingly working on her off day. As a result to which, her organisation cannot be held
responsible for it with no contemplation of being vicariously liable for the same.
CONCLUSION
The above report have summarised some significant aspects of a contractual agreement
by outlining the indispensable elements of such contracts to give it a legitimate existence.
Another part of this report has defined various instances for applying the preceding elements in
factual business situations. Wherein, the subsequent part of this report have demonstrated yet
another facet of such contractual agreements where these are often neglected by the parties and
results into negative outcomes. With reference to which, the eventual part of this report has
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