Legal Aspects of Consumer Behaviour: Contract and Liability Report

This report provides a comprehensive overview of contract law, essential elements, and various contract types. It begins by defining a contract and outlining the critical components required for validity, such as offer and acceptance, intention to create legal relations, consideration, and capacity. The report then examines different contract types, including express, implied, valid, void, unilateral, and bilateral contracts, and discusses the problems associated with each. Furthermore, it highlights the importance of specific terms within a contract, such as exclusion clauses, conditions, warranties, and express and implied terms, and their impact on contractual dealings. The report also contrasts liability in tort with contractual liability, explains negligence, and emphasizes the significance of vicarious liability for business organizations, illustrating these concepts with relevant examples. The report concludes by summarizing the key elements of a valid contract and their importance, as well as the various types of contracts and terms used, along with the elements of vicarious liability and tort of negligence in different business scenarios.

Consumer Behaviour

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Essential elements required for the formation of a valid contract....................................1
1.2 Different types of contract and possible problems associated with them........................2
1.3 Importance of different terms in a contract......................................................................2
TASK 2............................................................................................................................................4
2.1 Contrast liability in tort with contractual liability............................................................4
2.3 Importance of vicariously liability to business organisations..........................................5
TASK 3 ...........................................................................................................................................6
3.1 Essentials elements of a valid contract and its importance..............................................6
3.2 Different types of contract and terms used in it with their impact...................................7
3.3 Elements of vicarious liability and tort of negligence with different business scenarios 8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Contract is an oral or written agreement between two or more than two parties having
legal binding and enforceable by law. It is a branch of obligations concerning all rights and
duties of parties involved in the contract. Every contract gives rise to legal obligation of parties
involved in it due to having various terms (Andrews, 2015). Contracts can be either bilateral or
unilateral. Bilateral contracts take place in business environment in which both parties do
promise with each other to fulfil their duties or responsibilities. In situation when one party fails
to fulfil his duty then contract breaches and come to an end. Present report is based on essential
and important elements which make a contract valid or enforceable by law. Terms used in a
contract and their effect on the its dealings are mentioned in this report. Along with this,
vicariously liability of an individual is also described here.
TASK 1
1.1 Essential elements required for the formation of a valid contract
A contract is an agreement between two or more than two parties for any kind of dealing
enforceable by law. Dealings which does not have ability to be enforceable by law cannot be a
contract. All businesses or other types of dealings which have ability to be enforceable by law
come under the contract. Parties can create contract either verbally or by writing.
Following are the essential elements of a valid contract:
 Offer and acceptance: Offer is the starting point of a legal contract. In this, one party
offers the other to act in a way for attainment of objectives. Party which shows
willingness to other individuals or one who makes the contract is known as offeror and
the other person and another party to whom offer is made is called offeree. So, offer must
be there or should be communicated with other party in a legal contract. After the offer,
second thing which must be there in a contract is acceptance of other party (Vogenauer,
2013). When an offer is offered to other party then his acceptance made it a contract. For
example X offer Y to buy his pen and Y give his acceptance to buy his pen.
 Intention to create legal relations: Legal intention behind and agreement make it a
contract. . For this, every party is responsible to use a legal obligation and should adopt a
legal remedy in breach of any condition.
 Consideration: Consideration means exchange of monetary amount between two parties
or it means that something should be given or done on the behalf of offeror.
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Consideration must be something valuable and it is supplied by the offeror in return of
offer. For example X will sell his pen to Y in exchange of some considertaion.
 Capacity: Capacity means both the parties who are entering into the contract should have
competence to make or enter into a legal or valid contract (Patterson, 2010). Competence
means both parties entered into contract must be major i.e. above 18 years with sound
mind.
 Privity of contract: It means that both parties entering into a contract should have right to
sue against each other. .
1.2 Different types of contract and possible problems associated with them
There are different types of contract and each one has some problems associated which are stated
as below:
 Express and implied contract: Under express contract, offer and acceptance are made in
words either oral or written. In opposite situation, when parties do not do such formal
expression on offer and acceptance then it is known as implied contract.
 Valid contract: A contract between two people of sound mind and enforceable by law is
known as valid contract. One can say that a contract fulfilling all requirements of a
contract is known as valid contract.
 Void contract: Ceasing its enforceability by law, a contract becomes void. After that, a
contract lose its legal existence.
 Unilateral and Bilateral contract: Under unilateral contract, only one party assumes his
obligation in the contract. Opposite to it, in bilateral contract, two parties perform their
duties.
Different types of contracts affect the activities of dealing in different ways. Results and
effectiveness; all these depend on the type of contract (Whittaker, 2011). In express contract,
both parties promise each other to perform their duties or obligation which clear duties and
responsibilities of both parties. In implied contract, roles and duties of parties are not clear.
1.3 Importance of different terms in a contract
When two parties or more than two parties enter into a contract then there are some
specific terms which they use.
Following are the main terms which are used in a contract:
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 Exclusion clause: Under this clause, party is excluded from his/her responsibility under
the contract. Exclusion clause is divided into following:
 True exclusion clause
 Limitations exclusion clause
 Time exclusion clause
 Conditions: Conditions are one of the most important terms of any contract. Parties
before entering into a contract must have their conditions. All parties are obligated to
fulfil the stated conditions in contract (Margalit, 2013). If any party fails to fulfil his/her
responsibility or breach the condition than contract will become void. So, for maintaining
the enforceability by law and legal existence of contract, both parties are responsible to
comply with the stated conditions.
 Warranties: Warranty is a special condition which much be fulfil by one or more party
otherwise contract will come to an end. For example: If A purchase a moil phone from B
and B promises him to exchange the phone within 6 months if a technical problem rise in
it. .
 Excluding and limiting terms: It is one of the common laws or practices of inserting,
excluding or limiting terms in the contract.
 Express terms: Under this, all express terms of the contract are included. For example X
make a contract with Z to sell his car under this this is express term that X will sell his car
while Z will purchase the same.
 Implied terms: Implied terms include that all subjects or objects included in contract must
be legal. These are that conditions of a contract which must be fulfilled by every party
but not described..
All these are the main terms used in a contract and all these affect the contract in various
ways. All these terms play an important role in every contract as they described the roles and
responsibilities of each party included in contract. Absence of these terms affect the legality of
contract. So both the parties included in the contract should clear or define their important terms.
.
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TASK 2
2.1 Contrast liability in tort with contractual liability
 Contrast liability in Tort: Tort is an act or common law that unfair cause an individual to
suffer any kind of loss or suffer results in a legal liability of the person who commits the
tortious act. Person who commit the act called tortfeasor. Sometimes, crimes also come
under the title of tort (Serrat, 2011). Person who commits anything wrong sue in the
court and also given instruction by the court or legal authority to not do perform the same
in future. Party who suffered by damage get a compensation from other individual.
 Contract liability: Contract liability arise when two parties are involved in the contract
binds together. It is based on the damage suffered by one party.
Main difference between these are as follows:
 Source of interest and duty: Interest and duty in tort are created by law whether in other
hand in contract law, duty and interest are created by agreement between parties involved
in the contract.
 Nature of duty: In contracts, duty of not to violate the interest of another person is remain
only towards the parties involved in contract and not to strangers whether in tort it remain
in the hand towards persons generally not to any particular individual.
 Nature of remedy: In liability of tort, damages are unliquidated or in the opposite of this,
damages are liquidated in contract liability and can be claimed where specific in the
contract (Porat, 2012).
 Others: In contract, damages which occurred are of compensatory nature where on the
other hand, civil court takes the decision
 2.2 Nature of liability in negligence
Negligence: When one parson harm other person accidently without having any wrong
intention is known as negligence. It also come under tort. Main elements of negligence are as
follows:
 Committed tort:
 Without any intention:
 Accidently:
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Main of this is to compensate the individual who suffer from any damage, loss or by negligence
of someone. Any party or individual who files a suit against a person for getting compensation
has liable to prove following things:
 Individual breach his or her duty of care.
 That person suffer form a loss or damage.
Person who is liable for negligence is responsible to compensate to the person to whom
he or she cause damage (Hunter, H., 2017). Duty of care must be present in every action
or activity of a person. For example: Any manufacture who is making final goods for customers
is responsible to to make products under the duty of care and use good material during the
process. Like the same an employers also under the duty of care of its employees.
 Injury: If it is proved that person suffer from the damage than he can file a suit against the
claimant and can get compensation.
2.3 Importance of vicariously liability to business organisations
Vicarious liability is a complex concept as in this, one person is liable for the wrong
committed or done by third person. Principal is held responsible for any mistake done by an
agent working under him. For example, employer is liable for the actions or decision of his
employees taken at the workplace (Merkin, 2010). Superior is always responsible for any wrong
act or decision done by his or her subordinate. Following are the main and essential elements of
vicariously liability:
Main function of sponsored bodies includes the following:
 Vicarious
 Liability
In some situations, employers or top authority does not even know that they are liable or
responsible under the tort of negligence during the course of their employment.
Vicarious liability occurs when any wrong behave is done or committed by a person. In case
where duty of care exists, the person or business is held responsible for that committed mistake.
For example: in a business, company is held responsible for the employees, contractors or any
other person who is using the facilities of business.
For example: If top management harassed his or her subordinate then court will help top
manager for harassing the workers (Schwenzer, Hachem and Kee, 2012). Manager will be
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responsible for the vicarious liable. Employers also become liable or responsible for any action
done against third part, clients or anyone. For this, employers can take preventing step for
stopping any kind of wrong act or action. Following things can be done by the employer:
 Training can be given to the workers.
 Employer should provide equal growth opportunities to all his or her employees.
 Discrimination should be avoided.
TASK 3
3.1 Essentials elements of a valid contract and its importance
Main elements which make a contract valid includes the following:
 Express and implied terms: When two or more than two parties entered into a contract
then there are some rights and duties of both the parties and all those are known as the
terms of contract (Beale and et. al., 2010). From the same, some of them are expressed
while others are implied.According to law: all these express terms should be written in a
document and should be given or handed over to the workers within one month of
starting of work.
Some of the terms are expressed while others are implied (Decock, 2013). These terms
are not stated expressly but are known to both the parties and are in the favour of them. Implied
terms in an employment contract include basic rights of employees such as equal pay, duty of
care of employer and many more. One of the main and important implied condition is mutual
trust and confidence among all parties.
 Exclusion clause: It is a clause describing that one party involved in contract is not liable
for occurring of some event or certain happening. For example: if a person join a gym for
losing weight that owner of the gym is not responsible if any injury occur to the
individual during exercise. Clauses are when are properly included in the contract. If
parties sign a contract including detail about clause than this affect the contract.
 Effect of terms on contract: Term can be defined as a any provision forma part of a legal
contract. Each and every term included in the contract give rise to legal obligation of two
parties and breach of terms give rise to legal action by a party (Gallagher and et. al.,
2015). In contract, all terms are not expressly included as some of them are implied also.
Terms can be of two types i.e.
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 Express or
 Implied
 Breach of contract: Breach of contract means when contract comes to an end by non
performing the duties of other party (Hillman, 2012). It occurs when one party fails to
fulfil his or her described moral duties or obligation or fail to communicate relevant
changes happen or he or she is now no more able to perform his duties.
 Remedies: In case of breach of contract, parties can use several remedies for example one
party can compensate to other for damages occurred.
3.2 Different types of contract and terms used in it with their impact
Mainly there are two types of contract:
 Bilateral contracts: A bilateral is one of the main and popular contract. Under this, all
parties included in the contract promise with each other to fulfil his or her duty in the
contract. For example: in contract of selling a car A promises to B to buy the car and B
promises to sell the same and promise to pay the fixed amount according to the deal or
transaction.
 Unilateral contract: This type of contract is different from bilateral contract under this
one party make the promise from other to fulfil his duty or task (McKendrick, 2014). For
example under a contact one party promises other to pay a reward to the party when other
part find his or her lost goods. It is comes under the unilateral contract.
Agreement, consideration, capacity to contract, lawful purpose all are the essentials elements to
make a contract legal. Every contract whether it is unilateral or bilateral must fulfil the duty of
care. It means all activities done in the favour of other party. For example manufacture should
follow the duty of care while making products for large number of customers (Knapp, Crystal
and Prince, 2016). In case of breach of contract various remedies can be used by the parties for
example compensation for damages and many more. There must be some consideration between
two parties to make the contract legal or enforceable by law.
 Duty of care: Duty of care means every party involved in the contract complete his or her
activities with duty of care or with the objective of not to harm others.
 Breach of contract: When a contract form or made there are certain situations formed by
both parties and if parties fail to fulfil the that condition than contract comes to an end
this is called breach of contract.
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3.3 Elements of vicarious liability and tort of negligence with different business scenarios
Employment right act 1996 ensures the right and other issues of employee in the
company. Thus a firm must obey and check various aspects of law to avoid any kind of problem
that can be arisen from the ignorance of the provisions made in this Act. Companies must be
conscious about these provisions. These provisions are important for the employee as well as
employer. This act suggest employee to make written contract with employer at the time of
recruitment process. This act also suggest that this written contract has to be supplied within 8
weeks of start of employment.
To make monthly payments on time and provide employees with training and other related
facilities.
As per section 86 employer must give prior notice to the employee before terminating the
contract of employment.
Section 98(2) gives the employer right to dismiss but that must be on some logical grounds.
Section 135 suggest the employee about his right to redundancy payment. Qualifying period for
redundancy is 2 years.
Section 182 ensures to compensate the employee when employer became bankrupt.
The employees are not always as per the employee demands or his expectations in these
situations employer has a right to dismiss his employee but dismissal must be on the grounds of:
 Insufficient capability: Suppose if the employee is lacking in capability for which it has
been hired for (Schooner, 2011).
 Misconduct of employee: suppose if any employee has not followed any norms, rules and
regulation of the company or have broken the model code of conduct.
 legal condition and situation: any legal matter that came across the employer about the
employee.
 Redundancy: If the employer feels that employee is no longer useful to the organisation
then his/her termination can be done.
CONCLUSION
From the above information, it can be concluded that contract is an agreement in between
two or more parties to fulfil their basic rights and duties in exchange of some considerations.
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Offer and acceptance are the two basic elements which give rise to a contract. Parties can enter
into a bilateral or unilateral contract. There are some basic and important elements which are
very necessary to form a legal contract. Contract liability of tort is also included in this report
which describe the liability of one person to another. It has also been assessed that nature of
negligence says that when a person does something accidently without having intention to harm,
other is responsible to compensate the damaged party. Overall, to increase the effectiveness of
contract and activities involved in it, all terms of contract should be expressed and all parties
who are taking part in it must have the ability according to the law.
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REFERENCES
Books and Journals
Andrews, N., 2015. Contract law. Cambridge University Press.
Beale and et. al., 2010. Cases, materials and text on contract law. Hart.
Decock, W., 2013. Theologians and Contract Law: The Moral Transformation of the Ius
Commune (ca. 1500-1650). M. Nijhoff Publishers.
Friedman, L. M., 2011. Contract law in America: a social and economic case study. Quid Pro
Books.
Gallagher and et. al., 2015. China’s 2008 Labor Contractbhavesha Law: Implementation and
implications for China’s workers. Human Relations. 68(2). pp.197-235.
Hillman, R. A., 2012. The richness of contract law: an analysis and critique of contemporary
theories of contract law (Vol. 28). Springer Science & Business Media.
Hunter, H., 2017. Modern Law of Contracts.
Knapp, C. L., Crystal, N. M. and Prince, H. G., 2016. Problems in Contract Law: cases and
materials. Wolters Kluwer Law & Business.
Margalit, Y., 2013. In defense of surrogacy agreements: a modern contract law perspective. Wm.
& Mary J. Women & L.20. p.423.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).
Merkin, R., 2010. Colinvaux and Merkin's insurance contract law. Sweet & Maxwell.
Patterson, D. ed., 2010. A companion to philosophy of law and legal theory. John Wiley & Sons.
Schwenzer, I., Hachem, P. and Kee, C., 2012. Global sales and contract law. Oxford University
Press.
Serrat, J. M. B., 2011. Quality of hotel service and consumer protection: A European contract
law approach. Tourism Management. 32(2). pp.277-287.
Vogenauer, S., 2013. Regulatory competition through choice of contract law and choice of forum
in Europe: Theory and evidence. Eur. Rev. Private L. 21. p.13.
Whittaker, S., 2011. The optional instrument of European contract law and freedom of contract.
European Review of Contract Law. 7(3). pp.371-398.
Online
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What Is Vicarious Liability. 2017. [Online]. Available through:
<https://www.lawteacher.net/free-law-essays/contract-law/what-is-vicarious-liability-
contract-law-essay.php>. [Accessed on 27th July 2017].
Vicarious Liability And Employer Employee Relationship. 2017. [Online]. Available through:
<https://www.lawteacher.net/free-law-essays/employment-law/vicarious-liability-and-
employer-employee-relationship-employment-law-essay.php>. [Accessed on 27th July
2017].
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