A Detailed Report on Aspects of Contract and Negligence for Business

This report provides a comprehensive overview of contract and negligence aspects relevant to businesses. It begins with an introduction to the legal framework and the importance of understanding these concepts. The report then delves into the essential elements of a valid contract, including...Read More

Aspects of Contract
and Negligence for
Business

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1................................................................................................................................................1
1.2................................................................................................................................................2
1.3................................................................................................................................................3
TASK 2............................................................................................................................................4
2.1................................................................................................................................................4
2.2................................................................................................................................................4
2.3................................................................................................................................................5
TASK 3............................................................................................................................................6
3.1................................................................................................................................................6
3.2................................................................................................................................................7
3.3................................................................................................................................................8
TASK 4............................................................................................................................................8
4.1................................................................................................................................................8
4.2................................................................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Laws are formed in order to preserve the rights of every citizens and it also acts a
guidelines for the people to apply diverse sections in varied circumstances. Aspects of contract
and negligence is a comprehensive study which present a clear idea to the businessperson so as
to be aware about all the acts and sections. The report covers elements of a valid contract that are
essentially needed so as to preserve the rights of innocent parties. Main purpose of the study is to
present a clear understanding to the readers about varied kinds of acts, laws and terms. It also
covers several kinds of contracts such as unilateral and bilateral. In addition to the above,
exclusion clause along with the implied and express terms have been demonstrated specifically
(DiMatteo, 2012).
TASK 1
1.1
A contract can only be termed as valid if all the essential elements are present in the
agreement. Each and every term has certain importance in its own place and creates an invalid
contract if these are absent in the respective case. Some of these have been enumerated
hereunder: Offer and Acceptance: In order to term an agreement as a legal contract then there must
be a presence of both offer and acceptance. A proposal is made and the another person
agrees by it then it can be termed as a valid contract. This can be seen in the Brogden v
Metropolitan Railway wherein the aggrieved party supplied coal to a rail company
without any sort of written agreement between the two. Later on it was analysed that both
the parties felt the need to make a legal contract by posting the terms and conditions of
the contract in a written document (Falk, Huffman and Macleod, 2015). Thereafter,
certain amendments were made by the defendant and the same was posted in the file.
From the particular case it can be concluded that there is an acceptance made by
defendant's due to the offer proposed by claimant. Therefore, it is a valid contract. Free Consent: this means that the offer and acceptance made by the parties are free from
all sorts of undue influences. This means that the contract cannot be deemed as valid if
any of the parties are misrepresenting the terms of contract, assaulting the other member.
It shall be free from all sorts of coercion, fraud, mistake, etc. Case References Bisset v
Wilkinson (Fried, 2015).
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 Intention to create legal agreement: This element was introduced so as to make sure that
uneven and unimportant cases are not brought before the judiciary. Not every offer and
acceptance can be deemed as a valid contract some are social or domestic agreements as
well. Citing example from the Jones v Padavatton case wherein the mother promises her
daughter to sacrifice her job and pursue his further studies. She even promises to pay her
200 dollar per month so as to meet her expenses as well as a rewards in regards to the
sacrifice made by her (Gilbert and Vargo, 2014). Later on after the marriage of her
daughter, the lady fails to pay the requisite amount. The case was bought in front of the
court, and the judgement made by the judiciary was that this was clearly a domestic
agreement so there was not intention of the the mother to create a legal agreement. Lawful object: An object shall be lawful in the eyes of the law so as to make a legal
contract. For instance, a landlord does not have the right to avail rent in the case if the
house has went for auction or prosecution.
 Capacity of the parties: The person whosoever are forming or entering into a valid
contract must be above the age group of 18 years. A minor does not have any right to
form a legal contract. Likewise, a lunatic, person with unsound mind are also not in the
capacity to form a valid contract (Gray, 2010).
1.2
There are several kinds of contract as per the English Law wherein each of them possess
a consequent impact on the binding parties. Some of which have been highlighted underneath: Unilateral Contract: A contract wherein one party promises to pay nominal
consideration to the another can be termed as a unilateral contract. Both the parties are
obliged to perform their duty but the amount of consideration is not sure to be presented.
The impact of such type of contract is that the defendant does not have any right to
terminate the contract, once the claimant start performing its duties (Bell, 2011). Citing
example from the Carlil v Carbolic Smoke ball Company, wherein the small ball
enterprise promises to pay a some of 100 pound to the person who inhales the toxic of the
smoke ball and causes flu from it. This act was performed by Carlil after as per the
instructions printed in the newspaper advertisement. It can be termed as a unilateral
contract whereby one party promises to pay a dual consideration to the another on
performance of certain act.
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 Bilateral Contract: When both the parties intent to agree by the terms and conditions of
the contract by one of them sacrificing some amount of consideration and the other one
promises to loose the possession of some goods or services can be deemed as a bilateral
contract. The effect of such kinds of contract on the binding party is that they shall be
held liable if they fails to perform the terms and conditions of the particular contract.
Stating example from the Butler Machine Tool v Ex-Cell-O Corporation wherein the
claimant wishes to purchase a machine from the defendant's and for that purpose he wrote
a telegram to the Butler (Goldberg and Zipursky, 2007). He then replied with a price
quotation of 75535 pounds along with the copy of terms and conditions of selling the
machine. The claimant without reviewing draft a letter to Butler asking to purchase the
equipment. This is an example of Bilateral contract wherein both parties agrees to
sacrifice a certain amount of money in order to avail the goods and services.
1.3
A contract is formed by demonstrating various terms and conditions before the another
party. These have consequent impact on the binding parties which have enumerated in the
following para: Implied terms: There are several terms and clause that has not been described and
presented at time of formation of a contract. However, these are implied by the law and
are imperative in their own place. There are three forms of implied terms; these are
implied by law, custom or in fact. As it can be seen clearly in the case of Sales of goods
act 1974 wherein a similar case has been analysed such as Hutton v Waren. Nonetheless,
the parties are obliged to perform the terms as present by the court. This is undertaken so
as to provide justice to the people (Ole Lando and Commission on European Contract
Law, 2003). Express terms: When the binding parties agrees to include certain clauses in their
agreement at the times of its formation then it is called as express contract. The effects of
such terms and conditions on the binding parties are that it may lead to revocation of
contract is the terms are significant or compensation by the defendant is these are not the
major clause. These are termed as conditions and warranties respectively and breach of
the the same can cause loss to the binding parties. Case reference: Poussard v Spiers 1876
(Whincup, 2006).
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 Exclusion clause: It is commonly known as exemption clause wherein the parties
exclude or transfer the amount of liability by including certain conditions in the initial
contract. Generally these tactics are used by the companies so as to escape from the
liability. It can only be deemed valid if the exclusion clause has already clearly been
demonstrated to the innocent (Andrews, 2016).
TASK 2
2.1
In order to form a valid contract it is essential to have a all the essential elements of a
valid contract present in the agreement. Reviewing the current case scenario wherein Todor's
presented a book in the display for sale at 50 pound. This is an invitation to treat by the
bookseller. Ivan after reviewing the display advert went to Todor and offers him to sell the
respective book present in the display screen. The bookseller refuses to accept his offer and
states that the book has already been sold to another person yesterday namely Carl. This can be
deemed as the proposed offer has been rejected by the bookseller and no contract can be formed
when the other person does not intent to create a legal agreement between the two. Ivan is
insisting to sell him the book which is totally incorrect as per the English law.
From the above, it can be analysed that there is not valid contract between the binding
parties because all the essential element of a valid contract are no present in the case. There is an
offer made by the Ivan along with that a sufficient consideration can also been analysed. But
Todor the bookseller has not accepted the current offer and claims that he has sold the book to
carol which means that the lawful object is missing (Bercovitz and Tyler, 2014). Though both
the parties are in capacity to form a legal contract but due to the absence of element of intention
to create a legal agreement, it cannot be termed as valid.
2.2
There are certain another terms and clauses that binds the parties to perform their duties
and task as per the contract. These have consequent impact on the both the parties which have
been discussed underneath: Conditions: These are the main clause of the agreements and revocation of the same
leads to breach of contract. It holds major importance in the agreements and the party
who disburse or fail to perform the respective clause then it leads to compensation by him
(Cartwright, 2014). The innocent possess even the right to repudiate the contract on the
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non fulfilment of the conditions. Citing example from the Poussard v Spies case wherein
the company hired an opera singer to perform for the evening night for which a three
months training was provided to her. The singer got ill four days before the lead night
and the head of the company replaced her with another singer. The company has the right
to revoke the contract due to the non performance of the conditions by the Madame
Poussard (Davies, 2016). Warranties: These are minor clause of the contract, breach of which does not give rise to
termination of contract. Though the innocent party has the right to claim for the damages
for the amount of loss suffered by him. Stating information from another case scenario of
Betrni v Gye wherein the aggrieved party promises to perform as an opera singer but got
ill for 6 days and she was unable to attend the rehearsals. Gye hired a new singer
claiming that she was unable to perform her duty. The court held that the defendant does
not have any right to breach the contract due to the non fulfilment of warranties. After
she could have recovered from the illness and could have performed on the main night
for which she was hired.
 Innominate terms: These are those clause and terms that have not be classified either as
conditions nor as warranties (Fisher and Kalbaugh, 2012). When these are revoked by
any of the two parties then the court decides upon whether the requisite terms are the
main clause or the minor article. However, the decisions are binding on the amount of
loss incurred by the innocent. If these has caused a huge loss to the aggrieved then it will
lead to defined as conditions and vice versa if the loss is minimal. Case Reference: Hong
Kong Fir Shipping v Kawasaki Kisen Kaisha 1962.
2.3
As discussed above distinct terms and clause have different impacts on the binding
parties depending upon the type of situation. The current scenario presents that John went to park
wherein he purchased a ticket to sit on the bench present in the garden for one hour at 50 pounds.
Later on it was discovered that he fell down the chair which caused him injuries and all his
clothes were damaged and dirty (Gifford and Robinette, 2014). He went to the ticket provider
asking to refund back the money and also claims for compensation from the council. The
attendant showed him the ticket which has an exemption clause present in it. It demonstrates that
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“No liability shall be born by the council in case of any damages or injuries occurred due to the
failure of the equipments present in the park.
From the above case it can be analysed that there were exclusion clause present in the
current clause which states that it is not the responsibility of the park council to bear any sort of
liability that is likely to arise by failure of the equipment (Jain, 2015). Exemption clause is used
by the park authorities as means of escaping from the liability. It is a means of conditions
presented in the contract. Moreover, it can also be analysed that these clause are a means of
transferring the liability to the another party. In addition to the above, the terms printed at the
back of the ticket are small in size and cannot be easily read. Therefore, the said party have the
right to claim for the damages from the park as it is a means of cheap tactic used by the part
authoritative and also the clause was not clearly demonstrated to the John.
TASK 3
3.1
Contractual and tort liabilities are two distinct laws that describes the impact and the
amount of obligation that needs to be born by requisite parties. The same has been clearly
interpreted in the following table:
Basis of
Comparison
Contractual Liability Tort Liability
Meaning It can be occurred when one of the
two parties repudiated the conditions
of the contract which caused loss to
the other (McKendrick, 2014).
Negligence on part of the
legitimate leads to damage, injury
or harm to the innocent can be
defined under tort liability.
Relationship Both the binding parties are in a legal
relationship due to formation of
contract by agreeing upon to the
terms and conditions.
Both the parties are unaware of
each other and a relationship
developed between the two by the
court.
Damages The legitimate is entitled to pay the
exact amount as the innocent has
derived the loss. Or it can even lead
to revocation of contract.
The amount of damages caused or
harm incurred to the health, life or
injuries to the aggrieved need to
be paid back by the defendant
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(Perry, 2016).
Obligation The amount of liability is decided
already in advance when the
contracts have been formed.
The obligation is not decided in
beforehand as the respective
parties did not intent into enter
into a legal relation. Moreover, the
court is authorized to decided he
amount of liability to be born in
regards to the negligence
(Srinivasan, 2014).
Case Reference Monarch Stemship Co Ltd v
Karlshamns Oljefabriker whereby
both the parties entered into a
contract which caused contractual
liability (Porter, 2013).
Donoghue v Stevenson wherein
carelessness on part of the
manufacturer caused injury to Mrs
Donoghue.
3.2
Tort liability is likely to arise due to the minimum amount of care that is accepted to be
taken by every individual. In order to avail the requisite damages from the from the defendant
then the complainer must be in a position to prove the three clause which are governed under the
head nature of negligence. These have been demonstrated hereunder: Duty of care: It is essential to prove in front of the court that the defendant's owned a
reasonable duty of care to the legitimate. This can be proved by taking into consideration
three points that is the damage cause to the complainer is foreseeable and it cannot be
neglected. Furthermore, a person cannot be held liable for the acts of a 3rd party.
Thereafter, the claimant needs to prove a relation of proximity which defines that their
was a close relationship between both the parties at times of accident or occurrence of
incident (Sherwin, 2015). Stating example from the Caparo test wherein the defendant
owed a duty of care to the claimant. Breach of duty of care: In order to be successful in claiming the compensation for tort
liability, the plaintiff must provide a considerable evidence which describes that the
defendant failed to provide a reasonable care of duty which caused damage to him. For
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instance in the case of a doctor or car driver, certain skills are required while pursuing
their job; failure of which leads to breach of duty. Case Reference: Vaughan v Menlove
1837
 Damages to Plaintiff: It is not sufficient to prove that the defendant's fails to provide a
reasonable care but the claimant shall have suffered an real loss, harm, damage or injury.
Moreover, it also needs to be acknowledged that the loss incurred was not too remote.
Case References: The Wagon Mound no 1 1961.
3.3
Vicarious Liability can be defined as an enactment wherein the employers or the business
person are held responsible for any act or misconduct pursued by its employees. In many cases,
the managers and other super authoritative are unaware about any such actions happening in the
organization but in such circumstances the employers are given power to prove that they are
innocent. Therefore, the business person must make efforts to remove the uneven act that may be
persistently been carried in the company (Twigg-Flesner, 2013). The company cannot be held
liable in those case wherein the employers have taken considerable actions to stop the acts that is
prevailing the organization. In addition to the above, some of the misconduct that have been
carried by the employees and for which the business person can be held responsible constitutes
of discrimination act, inequality between the member, assaulting the workers and many more.
The act is likely to apply only one those cases wherein there is an employer employee
relationship between the two person. The worker must have committed a tort in course of the
employment. This can be clearly demonstrated from the case of Lister v Hesley wherein the ward
women sexually assaulted the children in the Hostel. For this purpose the head authority of the
company is held responsible (Kadu, 2016).
TASK 4
4.1
Tort of negligence is an act wherein a person fails to fulfil a reasonable amount of care
that is expected from being a responsible citizen of United Kingdom. The current scenario
depicts that David was driving his car at 35 MPH on a street lane of 25 MPH. Some children's
were playing on the road and in order to protect them David swerves into another lane hitting the
telephone pole owned and managed buy a local TeleCo. The pole broke into two part and fell on
the kelvin and he got injured.
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From the above description it can be stated that the David owed a duty of care to the
aggrieved party and due to his failure on part of not maintaining the reasonable care it lead to
injury and harm to the another. Therefore, tort liability can successfully applied in the present
case and the defendant is liable to pay the requisite amount of damages to the telecom company
as well as the injuries that is incurred to the kelvin. David shall not have drove at a high speed
and negligence on his part lead to harm to the others (Types of Contracts, 2012).
4.2
An act wherein the employers or the business if held liable for the actions conducted by
its employees can be deemed as vicarious liability. The current scenario dictates that Colin was
fed up with the continuous ill-natured characteristics of his dishwasher named Roger. One day
after getting irritated, he knocked him down with a frying pan and Roger got unconscious.
From the above scenario it can be said that vicarious liability can successfully be applied
in this case. This is so because there is an employee employer relationship between the Roger
and Colin. Furthermore, the act has occurred in the employment course which means that Regent
College can be held liable for the deeds of its staff members. Although, the chef offered him to
take Roger to the Hospital for curing the injuries but this does not means that the businessperson
can escape from the obligation (Clarke, 2015). They are liable to pay the dishwasher requisite
amount of compensation for the amount of damages incurred by him.
CONCLUSION
The overall study depicts several aspects of contract and negligence for businesses by
demonstrating essential elements of contract. It can be stated that all the underpinning elements
are relevant to form a valid contract. This has been applied in different situations and the impact
on the binding parties. The report covers several terms and clauses and their consequent effects
in diverse situations. A clear distinction has also been made between the tort and contractual
liabilities along with the nature of negligence. It can be said that carelessness on part of one
person cause harm and loss to the other (DiMatteo, 2012).
9

REFERENCES
Books and Journals
Andrews, N., 2016. Sources and General Principles of English Contract Law. In Arbitration and
Contract Law (pp. 165-175). Springer International Publishing.
Bell, T. W. 2011. Graduated Consent in Contract and Tort Law: Toward a Theory of
Justification. Case Western Reserve Law Review. 61(1).
Bercovitz, J. E. and Tyler, B. B., 2014. Who I Am and How I Contract: The Effect of
Contractors’ Roles on the Evolution of Contract Structure in University–Industry
Research Agreements. Organization Science. 25(6). pp.1840-1859.
Cartwright, J., 2014. Contract law: An introduction to the English law of contract for the civil
lawyer. A&C Black.
Davies, P. S., 2016. JC Smith's the Law of Contract. Oxford University Press.
DiMatteo, A. L., 2012. False dichotomies in commercial contract interpretation. Journal of
International Trade Law and Policy. 11(1). pp.27-43.
Falk, A., Huffman, D. and Macleod, W. B., 2015. Institutions and Contract Enforcement. Journal
of Labor Economics. 33(3). pp. 571-590.
Fisher, J. A. and Kalbaugh, C. A., 2012. United States private-sector physicians and
pharmaceutical contract research: A qualitative study. PLoS Med. 9(7). p.e1001271.
Fried, C., 2015. Contract as promise: A theory of contractual obligation. Oxford University
Press.
Gifford, D. G. and Robinette, C. J., 2014. Apportioning Liability in Maryland Tort Cases: Time
to End Contributory Negligence and Joint and Several Liability. Maryland Law Review.
73. pp.2013-61.
Gilbert, R. R. and Vargo, J. J., 2014. Swimming Pools and Aquatic Injuries. Products Liability
Practice Guide. 6.
Goldberg, J. C. and Zipursky, B. C., 2007. Tort Law and Moral Luck. Cornell Law Review. 92.
pp. 07-15.
Gray, J., 2010. Legal commentary. Journal of Financial Regulation and Compliance. 18(3). pp.
293-300.
Jain, S. K., 2015. Introduction. In Economic Analysis of Liability Rules (pp. 1-22). Springer
India.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).
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law. Kluwer Law International.
Perry, C., 2016. Good Faith in English and US Contract Law: Divergent Theories, Practical
Similarities. Business Law International. 17(1). pp.27.
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Porter, E. G., 2013. Tort Liability in the Age of the Helicopter Parent. Alabama Law Review.
64(3). pp.533-87.
Sherwin, E. L., 2015. Formal Elements in Contract and Fiduciary Law.Available at SSRN.
Srinivasan, S., 2014. Hidden Aspects of a Cloud Computing Contract. InCloud Computing
Basics (pp. 119-139). Springer New York.
Twigg-Flesner, C., 2013. The Europeanisation of contract law: current controversies in law.
Routledge.
Whincup, M. H., 2006. Contract law and practice: the English system with Scottish,
Commonwealth, and Continental comparisons. Kluwer law international.
Online
Clarke, P. 2015. Contract and Tort Law. [Online]. Available through:
<http://www.legislation.gov.uk/ukpga/1984/3/data.pdf>. [Accessed on 15th November
2016].
Kadu, D., 2016. Ten Essential elements of a valid contract – Essay. [Online]. Available through:
<http://www.shareyouressays.com/92086/ten-essential-elements-of-a-valid-contract-
essay>. [Accessed on 15th November 2016].
Types of Contracts. 2012. [Online]. Available through:
<http://www.lawsofbusiness.com/2013/08/types-of-contracts.html>. [Accessed on 15th
November 2016].
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