Business Law Report: Contract and Negligence for Business Analysis

This report provides a comprehensive analysis of business law, focusing on the aspects of contract and negligence. It begins by outlining the essential elements of a valid contract, including offer and acceptance, intention to create legal relations, lawful consideration, competency of parties, free consent, lawful object, and certainty of meaning. The report then differentiates between various types of contracts, such as unilateral, bilateral, oral, and written contracts, along with the terms incorporated within a valid contract (express, implied, innominate, condition, and warranty). The analysis extends to applying contract elements in given business scenarios, exemplified by a case involving the sale of a product. Furthermore, the report elucidates the differences between contract and tort liability, emphasizing the 'duty of care' and the 'neighbour principle' in the tort of negligence, as well as the concept of vicarious liability. These tort-negligence elements are then applied to practical business scenarios, alongside an exploration of vicarious liability. The report concludes with a discussion on the breach of contract conditions and the legality of exemption clauses, providing a well-rounded understanding of contract and negligence within a business context.

Aspects of Contract and
Negligence for Business

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
1.1 Essential elements of valid contract......................................................................................1
1.2 Types of contracts.................................................................................................................2
1.3 terms incorporated within a valid contract............................................................................2
TASK 2............................................................................................................................................3
2.1 and 2.2 Applying contract elements in given business scenarios.........................................3
2.3 Report to Mr Michael Hair....................................................................................................4
TASK 3............................................................................................................................................5
3.1 Differences between contract and tort liability.....................................................................5
3.2 “Duty of care” and neighbour principle in tort of negligence...............................................6
3.3 Vicarious liability for wrongs in a business..........................................................................6
TASK 4............................................................................................................................................7
4.1 Applying tort-negligence elements in given business scenario............................................7
4.2 Applying vicarious liability elements in given business scenarios.......................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Without the proper implementation of law, a state couldn't survive in the current situation
faced by it. Peace is able to be maintained via its aid thereby imposing control upon wrongdoers
as well as criminals. Business is also another field related to law that aids in smooth regulating of
the economy (Ashcroft, Ashcroft and Patterson, 2016). In order to cover the aspects of business
laws, discussion will be done upon various elements of valid contract. Furthermore, application
of these elements in different business situations will be discussed. Light will also be thrown
upon various principles of liability involved in negligence within business activities. In the end
these liability principles will be applied to various business situations.
TASK 1
1.1 Essential elements of valid contract
A valid contract is said to be a legal agreement between two parties in accordance with
providing a product/service within a business. In order for making a contract a valid one,
following elements will be included :
 Proper offer and acceptance : A valid contract involves the creation of an offer by one
party and it should be acceptable by another one (Revak, 2011). Freddy originally
advertised to sale the high definition TV for £145. No offer was provided by him when
Layla responded to the advertisement. On the other hand Layla was only agreeable to
buy it for £125 to which Freddy was not agreeable. But Layla's not responding for long
time made Freddy sold the TV at £125 since no other offer was available with him.
 Intention for creating legal relationships : Both the parties involved in contract must
have the common intention of pursuing court of law, if other party fails to stay abide b y
their promise. Social agreements do not impose a need for going to court but in case of
commercial ones, intention for going to court is presumed (Beatty and Samuelson, 2012).
In context to the scenario, there was no such binding contract between Freddy and Layla.
Freddy in the end agreed to sell the TV for £125 since he had no intention for creating
legal relations with Layla.
 Lawful considerations : A party needs to provide valuable assets to another one for
indulging them within the contract. These assets could be price oriented as well. Layla
was only willing to buy TV for £125. Since no other option was available with Freddy he
had to agree to sell TV for £125.
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 Parties competent : All the involved parties within a contract should be competent. If
any incompetent party is found then that particular contract becomes void. Both Freddy
and Layla were competent.
 Free consent : The parties involved in contract agree upon the same clause within
contract. Both Freedy and Layla agreed the TV will be sold for £125. So both possessed a
free consent.
 Lawful object : An object involved within agreement must be valid. Freddy agreed to
the sell the TV for £125 to Layla. This agreement is lawful since the object is also lawful.
 Certainty meaning : The agreement's meaning should be certain (Reddy and
Rampersad, 2012). Freddy agreed to sell the TV for £125 to Layla. This is valid
agreement because of the certainty of the price.
1.2 Types of contracts
 Unilateral contracts : Only one of the two involved two parties within a contract can
formulate a promise. The performance of this contract will be indicated by the acceptance
shown towards offer.
 Bilateral contract : Both the involved parties within a contract are legally bounded for
adhering the contracts-terms & conditions & accordingly perform or avoid a particular
task or act.
 Oral contracts : There occurs instances when parties associated to a particular contract
orally agree to stay abide by the terms & conditions of it (Burnham, 2014). These type of
contracts are less legal since the complexity involved in proving them. However, these
can be made enforceable by law.
 Written contracts : In these, terms and conditions of contract are pre-decided by parties
before formulating them in written way on the paper. Also, this is considered as legally
binding one.
1.3 terms incorporated within a valid contract
 Express terms : The written format of contract should clearly mention these terms. Both
the involved parties should be having a knowledge about those terms & are therefore to
be bounded by them. These could be legally enforced.
 Implied terms : They are not as such clearly mentioned in the contract. The intention of
the party towards contract is depicted by it.
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 Innominate terms : The terms that cannot be differentiated as condition or warranty fall
under it. Breach encountering will be impact of such situation. Damages will be claimed
if simple breach is encountered (Rhee, 2013). Otherwise, complex one will cause the
contract to terminate.
 Condition : If breaching of a condition, in context to contract, is done then, contract will
further get terminated since it accounts to be the core part of valid-contract.
 Warranty : It assures about a particular service/product that it is free of any sort of
defects (Cross and Miller, 2011). If breach is encountered in case of warranty then, on the
basis of damages occurred, demanding will be done.
TASK 2
2.1 and 2.2 Applying contract elements in given business scenarios
Bella UK produced a brand new product “Miracle Oil” shampoo claiming to assure
rapid hair-growth. They advertised their product by sending out flyers which stated that 10
boxes will be sold out for price of 5. To this offer Hair 4 U was attracted and made an order of
10 boxes of Miracle Oil.
Offer : Bella UK advertised for their “Miracle Oil” by sending out flyers and made a valid offer
of selling 10 boxes at the price of 5.
Acceptance : The mode in which the offer was to be accepted was an action because if another
party agrees to take offer then will be directly making an order of 10 boxes.
Consideration : Bella UK is selling a total of 10 boxes of price 5 which is legally lawful
consideration by aid of monetary-value.
Intention for legal-relationship creation : Since this is a unilateral contract, it will legally bind
both Bella UK and Hair 4 U and also it is enforceable legal way.
Parties competent : Bot Bella UK and Hair 4 U are competent.
Free consent : Hair 4 U agreed to buy 10 boxes at price of 5 so both parties agree upon the
same clause.
Lawful object:Since both the companies are fictitious there is no surety regarding the effects of
Miracle Oil.
Certainty meaning : The price of the 10 boxes of Miracle Oil was certain and clearly
understandable by other party that is Hair 4 U.
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Purchase agreement
Party 1 : Bella UK
Party 2 : Hair 4 U
On the basis of following position:
Express terms : Party 1 will agree to sell their 10 boxes of Miracle Oil at the price of 5 without
holding the responsibility of any sort of adverse effects. Party 2 will agree to purchase the 10
boxes at price of 5 with involvement of risk in context to the product.
Implied terms : Bella UK is a fictitious company so there is no surety about the impacts that the
Miracle Oil will be having. So it should be clearly understood by the third party that no surety
of success regarding the product is there. Hair 4 U could not legally enforce law upon Bella UK
since its offer is clearly mentioning that seller will not b e responsible for adverse effects.
Exclusion clause : Since Bella UK will not be responsible about the encountering of adverse
effects in context with Miracle Oil, Hair 4 U cannot claim those effects if encountered.
Second Party : Hair 4 U
Full name : Mr Michael Signature : Date :
First Party : Bella UK
Full name : Bellas Signature : Date :
2.3 Report to Mr Michael Hair
To : Mr Michael Hair
RE : Report on key terms
a.) Breach of a condition :
Each of the parties involved within the con tract has to stay obliged as per the contract.
The obligations of the party will be determined conditions of the contract. So, referring to the
current case, act of negligence has been encountered. Bella UK is small fictitious company. So
there is no surety about the features of its new product Miracle Oil. Also, in its advertised offer,
it clearly mentioned that if any sort of adverse effects are encountered in case of the particular
product, seller will not be responsible for them. So, if Hair 4 U in case are not happy with
results and pursue court, the contract with Bella UK will get terminated directly since it has
breached its mentioned condition.
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b.) Legality of exemption clause :
The exemption clause limits or excludes the third party's liability within an agreement of
contract. Another party could take unfair advantage by making use of these exemption clause
which might turn out to be disadvantage for other party. The inclusion of exemption clause
provides an advantage that a party cannot be sued by another one in case of any damages or any
sort of negligence. So, Bella UK has made use of this clause and as per it, if any sort of adverse
effects are encountered then, it will have no responsibility towards the damages. So, Hair 4 U
cannot sue Bella UK regarding this.
Sincerely,
TASK 3
3.1 Differences between contract and tort liability
Contractual liability occurs when either of the party is failing to carry their duties as per
the terms & conditions of contract. The tort liability is regarded as the obligation made by one
party towards the victim (Krishnan, 2013). This is the outcome of an in jury or any sort of civil
wrong. Despite the fact that both aim towards the common motto, a degree of contrast exists
among these two.
Particularly laying focus upon civil wrongs, general viewpoint is provided by tort
liability. The providing is done to both the parties incorporated within a business. This is
achieved by the aid of systematic approach provided by tort liability. Violating the rights in
context with organization from highly tempered individuals led to the rising of the tort-liability
system. In addition to this the damaging of contract from the decisions of party also led to the
rising of tort liability.
On the other hand, contractual liability is the base of providing safety towards the
obligations made by one business party. When a party accepts the liabilities of another party's
agreement then, that particular party or individual is said to have achieved contractual liability.
This requires most importantly a written documentation in context to the same. When a party
has signed the con tract then, in future as well provision in context to the carried acts is there.
Overall torts takes in consideration paying for all wrong acts, damages or loss occurred to
body-part or organization and violating the legal-rights as well (Mayer, 2011). However,
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contractual liabilities takes in consideration all those liability that too in written, of a party
contract in accordance with the property that has been injured.
3.2 “Duty of care” and neighbour principle in tort of negligence
Donoghue v Stevenson case : This case was also kn own as the 'snail in bottle case' (Pathak,
2013). A bottle of ginger beer was served to Ms Donoghue whose purchasing was done from one
of her friend. A decomposing snail was found out in that bottle. Since the was not transparent
enough so most of it had already been consumed by Ms Donoghue because of which she later
fell very sick. This further led to taking of legal action against Mr Stevenson seeking out
damages of £500. Many legal procedures were carried including Donoghue and Stevenson
challenging each others actions. Finally, Stevenson was asked to remain responsible for the
individual consuming his products. The death of Stevenson before final hearing led to the
reduction in amount that was paid to Donoghue.
“Duty of care principle” : Manufactures should hold the responsibility that is duty of care
towards customers who intake their products (Meiners, Ringleb and Edwards, 2014). This was
established by the case. As per opinions given by the judge of case Lord Atkin, the manufacturer
of products, which are sold to customers from him, need to be in their original form and also he
has to take a reasonable care of them in-taking the products.
“ Neighbour principle” : This proved to be quite controversial since it led to the arising of
question regarding the individuals who might be affected by negligent acts of another. To
address this it was formulated that individuals should take care in order for avoiding the acts
which could have possibility to provide an injury to their neighbour.
3.3 Vicarious liability for wrongs in a business
Wrongs or omissions done from employees could possibly affect the sales and profits of
business. The efficiency and passion towards duty from employees is the basis of success in a
business. So, if employees commit any sort of wrong the business is directly held vicariously
liable for such omissions (Middlemiss, 2011).
As per the case, Bob despite the prohibitions from Norfolk farms, hires 13 year old Matt
to help him sell milk on Wednesdays. But accidentally helping him, Matt injures Bob while
reversing his van.
(a) Since Matt is below 18 years of age, as per the law, he cannot be hired or made to work for
other person. Definitely, Matt can sue Bob for the injury occurred to him.
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(b) It was the responsibility of Norfolk Farms to take care and have an eye upon each and every
activity of their employees. Their negligence led to such a mistake which damaged or injured the
little 13 year old Matt. So, Norfolk farms can be hold vicarious liable for the situation.
TASK 4
4.1 Applying tort-negligence elements in given business scenario
To Brad,
I have written this letter to you in order for providing an advise regarding Charles. First
of all you yourself should have assisted Charles when he was examining or inspecting the
financial situation of Albert. But since you had other important things to do, this could possibly
be not your mistake. Charles proved to be very careless regarding Albert and that he had
already investigated properly about Albert's debts you would not have been in current situation.
So regarding the carelessness you can recover your losses from Charles. It was his
responsibility of evaluating and observing the financial situation of Albert. And he definitely
failed to do so. This was an act of negligence. So, he can be made to pay for losses.
Sincerely,
4.2 Applying vicarious liability elements in given business scenarios
(a) As per the given business scenario, troublesome behaviour of drunk customer with barman
and throwing of bar's property by him, led to a rift with Graham. All the actions of Graham have
to be taken care of by Macho Man Plc. Instead of Graham ejecting the customer, Macho Man Plc
could have informed the police directly who would have taken care of matter. But they thought
of handling this alone by Graham which led to breaking of arm of the customer. So definitely
Macho Man can be hold liable for actions of Graham.
However, same would not be the case if company had prohibited Graham for
manhandling troublesome customers. Then, Macho Man could not be hold liable since they
punished Graham by prohibiting him from the bar.
(b) As per the given scenario, despite the off-day by Links Ltd. Carla took company's car for
dropping Lucy to railway. This was the first violation. The company's car cannot be used for any
other purpose except work related to it. Secondly, she delivered parcels despite an off-day was
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there. So these violations definitely make Carla vicariously liable for the damages caused to
George's car during accident.
Also, Links Ltd negligence in context to Carla led to such an act. Had they kept an eye
upon their car used by Carla, they would have kn own about these violations. So Links Ltd can
be hold liable for the damage occurred.
CONCLUSION
Protection from unethical practices is provided by a legal framework. To smoothly run a
business applying of various elements of tort-negligence as well as vicarious liability needs to be
done. These prove influential for a business firm to stay abide by the particular legal framework
imposed. Also, make a contract successful it needs to b e made valid from every aspects so that
both the involved parties stay abide by the terms and condition of it thereby ensuring proper
maintenance of law & order.
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REFERENCES
BOOKS AND JOURNALS
Ashcroft, J. D., Ashcroft, K. and Patterson, M., 2016. Cengage Advantage Books: Law for
Business. Cengage Learning.
Beatty, J. F. and Samuelson, S. S., 2012. Cengage Advantage Books: Introduction to Business
Law. Cengage Learning.
Burnham, S. J., 2014. Are You Free to Contract away from Your Right to Bring a Negligence
Claim. Chi.-Kent L. Rev. 89, p.379.
Cross, F. B. and Miller, R. L., 2011. The Legal Environment of Business: Text and Cases:
Ethical, Regulatory, Global, and Corporate Issues. Cengage Learning.
Krishnan, A., 2013. War as Business: technological change and military service contracting.
Ashgate Publishing, Ltd..
Mayer, D., 2011. Legal loopholes, business ethics, and corporate legal strategy: A reply to
professor Ostas. American Business Law Journal. 48(4). pp.713-763.
Meiners, R. E., Ringleb, A. H. and Edwards, F. L., 2014. The legal environment of business.
Cengage Learning.
Middlemiss, S., 2011. The psychological contract and implied contractual terms: Synchronous or
asynchronous models?. International Journal of Law and Management. 53(1). pp.32-50.
Pathak, A., 2013. Legal Aspects of Business. Tata McGraw-Hill Education.
Reddy, K. and Rampersad, R., 2012. Ethical business practices: The consumer protection act and
socio-economic transformation in South Africa. African Journal of Business
Management. 6(25). p.7403.
Revak, H., 2011. Corporate codes of conduct: binding contract or ideal publicity. Hastings
LJ. 63. p.1645.
Rhee, R. J., 2013. The Tort Foundation of Duty of Care and Business Judgment.
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