Contract Law Analysis: Elements, Liabilities, and Case Studies

This report, prepared by a student, analyzes key aspects of contract law. It begins with an introduction to the essential elements of a valid contract, including offer, acceptance, and intention to create legal relations, and explores different types of contracts such as oral, written, unilateral, and bilateral ...Read More

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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Important of essential elements............................................................................................3
1.2 Impact of different types of contract.....................................................................................4
1.3 Analyzing contract terms......................................................................................................5
TASK 2............................................................................................................................................5
2.1 Essential elements of a valid contract ..................................................................................5
2.2 Law on terms in different contracts .....................................................................................6
2.3 Effect of different terms in given contract ...........................................................................6
TASK 3............................................................................................................................................7
3.1 Difference in liability in tort with contractual liability.........................................................7
3.2 Nature of liability in negligence...........................................................................................8
3.3 manner in which business can be Vicarious liable...............................................................9
TASK 4..........................................................................................................................................10
4.1 Elements of tort of negligence and defeence......................................................................10
4.2 Elements of vicarious liability ...........................................................................................10
CONCLUSION.............................................................................................................................11
REFERENCES..............................................................................................................................12
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INTRODUCTION
An agreement is the activity that is undertaken by two or more parties so that they form a
legal relationship among each other. However, there are different factors that are involved in a
legal contract such as agreement which involves offer and acceptance, intention to create legal
obligation, consideration etc. so that best legal relationship can be developed among parties.
Further, there are different terms implemented within contract such as implied, expressed,
unilateral and bilateral so that contract can be enforceable under English law (Levy, Golden and
Sacks, 2015). Here, being appointed as a legal adviser of XYZ Ltd different essential elements
need to be considered in order to form a valid contract. Additionally, in relation to such elements
vicarious liability, contractual liability and tort negligence are also being discussed.
TASK 1
1.1 Important of essential elements
Following are the major elements required in order to form a valid contract-
 Offer- [Carlill v Carbolic Smoke Ball Company [1893] 1 Q B 256]. According to the
English Law offer can be stated as a promise made by one party to another in exchange
for some consideration to perform the contract. However, till the offer is not accepted by
the offeree, offeror can revoke or terminate it by certain valid conditions. For instance,
when an grocery shop owner displays grocery in order to sell them it is a kind of offer he
is providing to consumers to buy the same (De Geest, 2012).
 Acceptance- Brogden v Metropolitan Rail Company [1877]. However, an offer is made
by the party the next thing that arises is acceptance of the offer. Here, both the parties are
required to agree upon the conditions so that contract can be carried out effectively.
Furthermore, it is significant for the offeree to understand the terms and conditions
present in the offer before making an acceptance. It is essential for both the parties to be
of sound mind in order to form a valid contract. For instance, through considering the
above example, it can be assessed that the person who accepts the offer of grocery owner
to purchase the grocery is the acceptor of the offer.
 Intention to create legal relationship- [Balfour v Balfour (1919)]. It is a crucial element
to be obtained by both the parties entering into the contract to form a legal relationship.
With the help of such law if any of the party revokes or breaches the contract then they
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are punishable under the court of law. Also, if parties are not able to form a legal
relationship then the contract is not enforceable legally.
 Certainty- [Taylor v Portington]. It is the term that helps in ensuring the parties that the
offer made should be certain and thus do not contain any uncertain factors while making
the contract. However, availability of such elements within contract does not considered
to be a valid contract (Porter, 2013).
1.2 Impact of different types of contract
Following are the different types of contract-
 Oral and written contract- Both these terms are required to formulate a valid contract.
Within oral contract it states that it is verbal form of contract which is not written but
agreed orally. However, it is equally important as written contract\ in the eyes of law. But
sometimes it is difficult for the party to prove within court due to lack of evidence.
While, written contract stated all the terms and conditions in written form. It is essential
for both the parties to agree upon the terms and condition as they have to sign the
contract. For instance, in case of dispute it is easy to prove in the court of law and thus
helps as a evidence in writing (Alexander and Alexander, 2011).
 Distance and face to face contract- It can be stated that both these terms helps in
forming a valid contract. Distance contract can be stated as the type of contract in which
parties are not present physically and contract is made through electronic form i.e. e-mail
of telephone. For instance online shopping can be a example of distance contract. On the
other hand face to face contract take place when both the parties agree mutually upon the
terms and conditions of the contract and thus sign the contact.
 Unilateral contract- Within such type of contract only one individual is mandatory to
undertake the terms and conditions that are involved in order to form a legal contact.
However, such contract can be revoked at the time when the contract is not accepted by
the other party. Such contract can be canceled till the time any other party has started
performing upon the contract (Shapiro and Smith, 2011).
 Bilateral contract- Further, such type of contract involves two parties in order to enter
into a valid contract and need to follow varied terms and conditions of the contract.
While, the impact of such contract states that once the offer and acceptance has been
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made by the parties in that case it is the liability of both the parties to perform the
contract.
1.3 Analyzing contract terms
Following are the terms that are present within the valid contract-
 Expressed terms- These are the terms that are available in the contract and both the
parties should agree upon the terms and conditions so that a valid contract can be formed.
It involves conditions, warranties and innominate terms. Expressed terms are always
stated within the contract to both the parties before signing the contact deed. For instance,
if any of the conditions are not fulfilled by the parties then the contract is termed as
breach of the agreement and thus party is liable to pay the harm or damages to other party
(Liming, 2011).
 Implied- Such terms are implied within the contract by the court of law and it is an
additional clause which is introduced by law at the time of forming the contract. Both the
parties do not have any control over such terms as these are implied terms.
 Innominate- Hong Kong Fir Shipping v kawasaki Kisen kaisha [1962]. These are the
terms that does not involve warranty or conditions. However, such terms depends upon
the actions of the injured party.
TASK 2
2.1 Essential elements of a valid contract
Case
The given case scenario mentions that William who is the managing director of East End
Airways (EEA) advertised to sell the airbus 320. Harry, the Chief Executive
Officer of West Aviation Ltd. says that he would buy the airbus but unfortunately he is out of
town and will see after 5 days. On other side William said that he is in urgency and if another
buyer comes then he will sale the bus. Harry then confessed that he will pay £100,000 in
advance for not selling the bus and William agrees on the same.
Applicability of legal provisions and decision
From the above case it can be seen that both offer and acceptance were there in contact.
Further, Harry made the counter offer in order to protect the current offer and relatively it was
accepted by the William as well. The elements of contract were prior present and contract has
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taken place. Further, the validity of the act relies and agreement took place (What are warranties,
conditions and innominate terms? 2012).
2.2 Law on terms in different contracts
Case
From the case point of view Mr. Peter the owner took his bike for repair at his favourite
bike shop. He presented the same bike to the shop assistant and received a docket on which it
was written that “all goods accepted only subject to terms and conditions displayed”. By seeing
that particular message, Mr. Peter has asked regarding the same to the shop assistant. In return,
assistant stated that not to worry and it is just related to the price change for new bikes. After
this, Peter left and was unable to see the most important message because of the carelessness of
shop assistant. Just a day before, when Peter went to grab the bike he found that his bike was
thrown away in basement with unclaimed bikes.
Applicability of legal provisions
Exclusive clause is the clauses which are usually written down and speaks only regarding
the one part of the contract and it is not responsible for certain happenings. Further, these clauses
are valid until and unless they have been properly included in the contract and are eventually not
contrary to the law. However, for properly included in the contract, the clause cannot be tackled
after the contract has been made. Further, if there is a signed contract containing the clause then
it will surely have the effect of including it (Fried, 2015).
Decision
By considering the above case scenario it can be concluded that Peter is liable to claim
for a sum of compensation for a damage caused to him. Moreover, he has talked to the assistant
regarding that notice but it was avoided by him. Although, Peter was not able to see another
important message due to the prior carelessness of assistant and by considering the scenario, it is
evident that it was a implied term where contract is not formed due to the prior understanding of
both the parties. Moreover, he can claim for the damages if he wishes too because his bike was
thrown into basement due to carelessness of the staff members.
2.3 Effect of different terms in given contract
Case
According to the case scenario, Best cars Ltd has contracted with the Car World and they
have together agreed to purchase 30 cars on a condition that they need to be immediately ready
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to run on the roads of UK. Therefore, by considering the scenario in nominate terms, the
following statements has been examined.
Applicability of legal provisions
Innominate contract can be seen in this clause because it states that it has an effect on
other party either directly or indirectly.
Decision
 The car supplied by Car World were claimed illegal and no amount of modification can
make these cars as legal Therefore, in this case The Best Cars Ltd. are completely liable
for claiming compensation for the loss suffered by them. The term implemented here will
be Void-ab-initio as contract been void from the very beginning (McMullen, 2011).
 In the second case, the engine of the car are required to be adjusted with an aim to
conform the EU environment law and the adjustment will take only less than or equal to
5 minutes. Thus, by applying the concept of nominate terms, it is evaluated that contract
cannot be canceled and no damages can be claimed.
 In the third case scenario, Best Cars Ltd can claim for the damages because the
adjustment will take at least 3 months. However, they cannot cancel the contract.
Because in order to conform that the engine supplied are prefect by EU environmental
law. Therefore the validity of contract will exist.
TASK 3
3.1 Difference in liability in tort with contractual liability
Axis Contractual Liability Tort Liability
Definition With signing of contract,
parties associated in this ratify
to perform in accordance with
the terms and conditions.
Contractual liability occurs
when either of the party fails
to act accordingly which is
referred as the breach of
Tort liability arises when
either of the party violates the
terms and conditions due to
deliberate actions or
negligence in duty.
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contract (Alexander and
Alexander, 2011).
Imposition of obligation Obligation issued on the
parties are with less degree of
strictness in which condition is
laid in front of them with
respect to the choice of
acceptance. It states that
parties are liberal to opt about
if they want to stay in
agreement or not.
In contrast, with the
contractual liability, tort
liability is imposed by law.
This type of liability is
mandatory in nature imposed
with no choices' given.
Restriction The stated liability is confined
to the parties who have
breached the contract with
respect to the terms and
conditions only (Kelley, 2011).
Moreover, the domain of tort
liability is wide. It covers all
the members of the parties
associated with the cause.
Decision making Decisions with respect to the
rectification is taken on the
basis of terms and conditions
decided by both the parties
with the mutual consent.
In this type of contract,
specifications laid in the
formal document are not kept
in consideration when
decisions are taken. All the
judgements made are made by
the court of law as per its
account.
3.2 Nature of liability in negligence
Nature of liability in case of negligence is stated by the tortuous act. According to this, if
one of the party associated breach the law due to its carelessness and which affect the other party
in manner of harming significantly, the mentioned act will be covered under the act of
negligence of standard duty of care (Shapiro and Smith, 2011). There are some fundamental
principles associated with it which creates the base that decides the implementation of act.
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Duty of care: As per the rules and regulations laid down by government and other judicial
organisation, each individual is entitled with the obligation of extending minimum and standard
amount of care and safety the other party of individual. These rules are laid for all the parties
associated in the contract. In the terms and conditions mentioned in the contract clearly states
this clause and precisely describes the extent in which its has to be actioned by all the concerned
parties.
Breach of duty: Duty of care is the mandatory act which is to be performed by all the parties. In
any case, If it gets violated in the manner when victim claims that the other has harmed due to
the negligence or intentional actions in providing lack of required care and safety, the act is
subject to tortuous liability (Liming, 2011). This process is referred as the breach of duty from
the part of victim and claimant.
Causation: If the claimant of victim proves that injury occurred to him it due to the negligence
of breach of duty of care extended by the part party, he is subject to the punishment which is
decided by the court of law.
3.3 manner in which business can be Vicarious liable
In general context, vicariously liability lies when in the contract of formal agreement, the
actions of one party has implication on the situation of other associated of concerned party. In a
business, there are two basis components that are employer and employee (Fried, 2015). With
respect to the tort law, it can be stated that the work done of any kind of action performed by the
employees lay impact on the employers condition.
There are certain elements on the basis of which the extent of vicarious liability on part of
business is determined (McMullen, 2011).
This event is process from both of the sides that is employer to employee and employee
to employer. Employment: It is the term which connects both the components' employer who hires and
employee who work. There is relational construct build between both of them under the
situation of which all the actions are performed. Authority: Employer is entitled to command the actions of employee as per the
agreement signed between both the parties (Vytopil, 2012). It states certain terms and
conditions signed by both with mutual consent. As per the agreement, the employer who
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has hired the person can control the action in certain limitations without breaching the
duty.
 Actions of employee: Further, on the part of employee, actions performed by him is
under the scope and domain agreed in the contract of employment. It can not be
extended.
TASK 4
4.1 Elements of tort of negligence and defeence
I) As per the case, it can be stated that Mark has climbed over the fence and fell down thus he
alone is responsible for such act and not the owner of the holiday park. Mark should not climb
the fence without knowing the suspect of the fence. Here, considering one of the elements of tort
liabilities i.e. necessity. As per this, it is essential for the suspected party to pay the compensation
to the claimant party if accident has happened due to carelessness of the claimant party. While, if
it is the fault of the defendant party then compensation is provided to them only. Thus, it can be
stated that Mark is not entitled to claim for the damages as he is alone responsible for the act.
However, owner of the holiday park has already placed a fence into a wooden area in order to
protect the visitors from any harm or damage (Levy, Golden and Sacks, 2015).
II) Through second case it can be stated that Council owes the duty of care towards Allen
because they knew about the underwater obstruction. Also, council knew in advance that Allen
possess the habit of swimming in the harbor during the summer. Thus, through applying such
element of Volenti-non fit injuria council is liable to pay the damages to Allen for the injury
caused to him.
III) It can be assessed that both Mark and Council are responsible for the legal responsibilities as
Mark should not climb on the fence and council should place a notice as they knew about the
underwater obstruction (Vytopil, 2012).
4.2 Elements of vicarious liability
Vicarious liability is a part of tort law and whether the firm or individual will be treated
as vicariously liable for their enactment if following elements are present:
 Their need to be an employer and employee relationship between the parties.
 Injury need to be caused to employee within the course of employment.
Case
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As per the case Mrs. Williams ask one of his friend to drive a vintage bus to Barnstable
in Devon. Further, the friend drove the car in a bad manner and collides with Mrs. William's car.
Decision
As per the element of vicarious liabilities, it is evaluated that the mistake was of the friend and
owner of Vintage Vehicle Museum has to pay the damages because no matter it was treated that
friend was in the course of employment whether there exists no relationship as employer
employee. But the car was of Mrs. Williams and she will be liable for the same.
CONCLUSION
From the above report it is inferred that formation of a valid contract availability of offer
and acceptance is much more important and without that a contract cannot come into existence
This report also showcase the elements of vicariously liability, contractual liabilities and
liabilities in tort and the same has been implemented in different cases as given in the case study.
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REFERENCES
Books and Journals
Alexander, K. and Alexander, M. D., 2011. American public school law. Cengage Learning.
De Geest, G., 2012. Who should be immune from tort liability?. The Journal of Legal
Studies. 41(2). pp.291-319.
Fried, C., 2015. Contract as promise: A theory of contractual obligation. Oxford University
Press, USA.
Kelley, J.E., 2011. Seeking justice for pollution victims in China: why china should amend the
tort liability law to allow punitive damages in environmental tort cases. Seattle UL
Rev.. 35. p.527.
Levy, N. M., Golden, M. M. and Sacks, L., 2015. General Principles of Liability and Immunity
of Public Entities and Employees (Vol. 5). California Torts.
Liming, W., 2011. Definitional Distinction of Tort Liability Law and Contract Law [J]. China
Legal Science. 3. p.013.
McMullen, J., 2011. Balancing the right to manage with dignity at work.Perspectives. 15(1).
pp.3-6.
Porter, E. G., 2013. Tort Liability in the Age of the Helicopter Parent. Alabama Law
Review. 64(3). pp.533-87.
Shapiro, D. L. and Smith, S. R., 2011. Malpractice in psychology: A practical resource for
clinicians. American Psychological Association.
Vytopil, L., 2012. Contractual control and labour-related CSR norms in the supply chain: Dutch
best practices. Utrecht L. Rev.. 8. p.155.
Online
What are warranties, conditions and innominate terms? 2012. [Online]. Available through:
<http://singaporelegaladvice.com/law-articles/what-are-warranties-conditions-and-
innominate-terms/> [Accessed on 5th March 2016].
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