An In-Depth Analysis of Contract Law: Elements and Types

This report provides a detailed analysis of contract law, covering the essential elements required for the formation of a valid contract, including offer, acceptance, and consideration. It explores various types of contracts, such as face-to-face, written, and distance selling contracts, and discusses ...Read More

Aspects of Contract

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1................................................................................................................................................3
1.2................................................................................................................................................4
1.3................................................................................................................................................5
TASK 2............................................................................................................................................5
2.1................................................................................................................................................5
2.2................................................................................................................................................6
2.3................................................................................................................................................7
TASK 3............................................................................................................................................7
3.1................................................................................................................................................7
3.2................................................................................................................................................8
3.3................................................................................................................................................9
TASK 4..........................................................................................................................................10
4.1..............................................................................................................................................10
4.2..............................................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES .............................................................................................................................12

INTRODUCTION
There are many business organisation and companies which have been facing problems
towards carrying out their business. It is a clear fact that there are many business organisation in
the world which have various business activities to carry on. (Clarke, Lancaster ,2013)These
activities shall include transfer of basic assets, making deal with other companies, creating
contract between the parties and to safeguard such activities government has certain regulations
and norms which shall govern all the regulatory actions regarding business activity. The
following project will give a brief discussion on formation of a valid contract and how it shall be
carried out by various other industries. The project will cover all the basic aspects of contract and
demonstrate its importance in business world.
TASK 1
1.1
When the parties possess the intention to enter into a contract, it is very important
for them to form a valid contract. For the formation of a valid contract it is essential that all the
key elements shall be included,(Slišković Penezić, 2016.) it is because in the absence of any
essential key element, the contract which have been formed by party hall became invalid by rule
of law. There are few principle which shall be included in the formation of a valid contract and
those are:-
Presence of Parties- it is important aspect while in the formation of a contract that there shall be
2 or more parties to be present in a contract. A single individual cannot make a valid contract
with himself, so it is important that while any contract shall be made there will always be 2 or
more parties presentation
Offer- the first key principle towards the formation of a contract is that one party should make
offer to another party over a lawful object. If a party is interested in creating a contract within
then he must make an offer to another party
Acceptance- when the offer has been made by one party then, if the another shall accept the
offer if deems fit. To enter into a valid contract it is important to accept the offer which has been
made.
Consideration over lawful object- when the offer has been accepted by one party, a consideration
shall be created by both the parties over a lawful object. Consideration is an important aspect of

contract formation, without which contract cannot be considered valid(Appleman, Appleman,
Holmes, 2015)
Agreement- with all the key essential mentioned above, an agreement has been made between
the parties in which parties shall be bind over legal obligation to follow the contract. If such
contract shall not be followed then it shall result into legal obligation to both or either of the
parties
CASE LAW: Balfour V. Balfour
1.2
There are various kinds of contract which have been formed by the parties. It it really
important to form various kind of contract as they have different impact on execution ,
depending upon the situation. The contract has been formed according to situation or the need of
party hence the various kinds of contract are:-
Face to Face contract:
when the contract has been formed between the parties in person that shall be accounted as face
to face contract. The impact of a face to face contract is very strong. In such contract a
transparency has been maintained as well as there shall be accountability by which all the
necessary key elements shall be highlighted and if any doubt arise between the parties then it will
became easy to clarify it.
Written Contract:
when the contract has been formed in written form that is all the activities related to contract has
been carried out in written documents. (Chomsky, 2014.)The impact of a written contract is very
strong on the parties as well as in eyes of court of law. When a contract has been carried out in a
written form it became a concrete evidence in eyes of law. Hence a proof can be created by
making a written contract
Distance Selling contract:
the contract which have been carried out at distance between the parties it shall be denoted as
distance selling contract. Such contract are either carried out on telephone or on the phone. The
impact of such contract is weak as there shall be no accountability and transparency in this kind
of contract.
Hence these are some of the essential types of contract which have been formed between the
parties.(Qi, Chau, 2015.)

CASE LAW:Dunlop Pneumatic Tyre Company v New Garage & Motor co [1915] AC 79.
1.3
When any contract has been formed, certain essential terms has been used. These terms
are essential to be use while in the formation of a contract because without these terms it is
impossible to make any contract valid and effective. (Srinivasan, 2014.)These terms shall raise
legal obligation on the parties and even protect the rights and duties of the parties towards the
contract. When the contract has been formed there are two kinds of terms which has been used
that is implied terms and express terms. Implied terms are those which has been included by
statute or the government. For an example while forming any contract a condition has always
been mentioned in a contract. It is important to insert a condition in a contract in order to raise
any kind of legal obligation while there is a breach of contract. In the same manner consideration
is one of the implied term in a contract which shall be treated as an essential term of contract. On
the other hand there are some terms of contract which shall be expressed by the parties
competent to contract. For an example if any of the party wants to add some special provision to
contract then it shall be termed as expressed terms. It is important in forming a contract that all
the important terms shall be included. If the terms has not been included then the contract shall
not be considered as a valid contract. When the contract is not valid in nature then no legal
liabilities towards the party can arise. (Griffith, Zhao, 2015.)Contract terms has a very powerful
effect in the formation of a valid contract because when all the necessary terms has not been
included in a contract then it shall be termed as a incomplete contract which is not considerable
in the eyes of law as well the parties competent to contract cannot raise any rights and duties
against the contract, so it is very important to include all the necessary terms in contract.
CASE LAW:Re Moore and Landauer [1921] 2 KB 519
TASK 2
2.1
In the given scenario, a valid contract has been formed between the parties. All the key
elements are present in the scenario by which it can be seen that there was a formation of oral
contract in between the parties. In the present case it has been seen that Ivan goes to a bookshop
to purchase a HND law book which was on the display. (Flodgren, Runesson, 2015.)It has been
clearly seen that an offer to sale has been made by the shopkeeper to sale the book. The offer

which has been made is offer to world which is a acceptable term in contract. Ivan entered to
shop in order to purchase the book which shall imply the next essential element to contract that is
acceptance, Ivan has accepted the offer to sale which has been made by the shopkeeper. The
another important essential element in the formation of contract is consideration, that a promise
which has been made by the party to enter into a contract which shall provide them profit out of
it. It has been seen that a valid consideration has been made by the shopkeeper to make the sale
of the product and a consideration has been seen by Ivan to buy book. As it has been seen in this
case that there are no further elements followed by shopkeeper so, (Freedland, Prassl, et.al.,
2016.)a valid contract has not been formed between both the parties as the book which has been
asked by Ivan was already sold and hence the next step to contract has not been performed by
party so there was no formation of valid contract between the parties. One of the most essential
element to formation of a contract is making an agreement by which a contract can be signed, but
in this case no agreement has been signed between the parties because the book has been already
sold and Ivan was not able to purchase it so the activity of sale and purchase has not been taken
place in this business scenario.
CASE LAW: Panchaud Freres SA v Establissments General Grain Co [1970] 1 Lloyd's Rep 53.
2.2
There are various kinds of terms which have been used in formation of a contract. It is
very important to use these terms in contract to make the contract valid and effective. The major
terms which have been used in formation of contract are:-
A condition in contract- there are certain conditions which has been mentioned in a contract on
which the parties have been obliged to perform. There are certain duties which are raised out of
the conditioned in contract.(Buchan, 2013) It is necessary to put conditions in a contract so that
the parties have an obligation to perform the legal duty arising out of contract.
A warranty in contract- when a contract has been made or perform between parties there are
certain warranties which have been given by the parties. A warranty has various meanings but it
generally denotes a guarantee or promise which shall provide assurance by one party to another
party arising out of fact. It is essential to show warranty by one party to another in a formation of
a contract as it will arise an assurance to party by which a trust has been made by the parties
Innominate Terms- conditions and warranties which have been included in a contract shall be
termed as innominate terms. It is important to put innominate terms in a contract so that

necessary loopholes shall be filled. these are those terms which shall be not be described either
under conditions or warranties. There are certain terms which has been included in contract but
doest not titled as any condition to contract or warranty to contract these are known a innominate
terms. For an example the term 'lawful' object shall be treated as a innominate terms as it has not
been covered under condition or warranty.(Chakrabarty, 2015.)
Hence these are some of the essential terms which are important to include in a formation of a
contract.
CASE LAW: Woodar Investment v Wimpey Construction [1980] 1 WLR 277.
2.3
An exemption clause to a contract means when a party has been excluded from any kind
of liability. When a contract has been formed between the parties, various terms has been used of
which exemption clause is the one in which either of the party has been excluded from
performing any act or he has been excluded from any kind of liability. It has been seen in
various cases that on the will of the party or at any special demand of the case, exemption clause
has been included. (Longo, Zappatore, Bochicchio, 2015)Generally when such clause has been
added to a contract it shall always exclude the liability from arising. In the present scenario, a
clear example of exemption clause has been given. In this case it has been explained that John is
person who went to a park which has been managed by the local authorities, the park states that
'chair for hire'. While John bought a ticket, an exemption has been mentioned in the ticket that is
“no liability is accepted for any damage or injury caused by the failure of hired of equipments”.
It has been seen in this case that the ticket has mentioned an exemption clause in the ticket which
have clearly mentioned about the no liability clause. The ticket clearly states that there shall be
no liability on the authority if any person falls for damages or injury by any equipment in the
park. (Silverstein, 2015)It has been clearly seen that the exemption clause which have been
mentioned in the ticket was clearly visible to any party who shall be availing these services
hence it is clear that the exemption clause shall prevail over everybody. The case had clearly
shown that exemption clause by the parties has only included when either of the party has an
intention to exempt the liability from contract.
CASE LAW: Re Shipton, Anderson and Harrison Brothers [1915] 3 KB 676.

TASK 3
3.1
Tort emphasis mainly on the 'actionable wrongs'. (Beaton, Sims ,2016.)It governs the
civil liability of one person with another, as opposed to the liabilities and responsibilities laid in
contract. Tort extend the legal remedy to the person who got injured by the breach of the contract
and need the remedy for it. While the contractual liability arises when there is contract executed
between the parties and later any issues arises between the parties that one is not fulfilling any
terms or condition or any other promise he made while accepting or making the contract. CASE
LAW:Home Office v Dorset Yacht [1970] HL.
Tort includes the civil liability of the person, and its a general duty of person whereas in
contract the duty towards the specific person or persons those agreed and and signed the contract.
In Contract the people are abide because of the contract they have made and so the contractual
liability arises automatically and also the tortious liability arises as it is a general civil law for the
people when there is any breach by any party. For illustration there is Mr. A which contracted
with Mr. B that Mr. A will supply the raw material to Mr. B within thirty days and the condition
was also agreed by the Mr. A that in case he failed to supply on time he will refund the advance
with stipulated interest in contract later Mr. A failed to supply on agreed time and as he took
advance also from Mr. B, so Mr. B can file the suit against Mr. A as per the law of tort for the
injury or damage occurred and as per the terms of contract he will be liable to pay the advance
amount with the interest. Therefore the liability in tort is general and will be applicable on breach
of contract case simultaneously liability of contract will also be applicable.
CASE LAW: Blake V Galloway
3.2
Negligence is the act of someone where there is presence of duty of care and he breached
the the duty owned by him to another and this act or breach directly causes the injury to another
person or party in result proving monetary losses.
The injured person can file the suit against the person who neglect the care in the presence of his
duty owned by him and this breach caused the claimant injury or arises monetary loss. The
claimant shall be required to prove some elements to the court of law they are follows:-
The defendant owned a duty of care towards the claimant
The defendant breached that duty and

Claimant suffered loss or damage due to this breach.
This negligence will be treated in law of tort and tortious liability will be arisen on the defendant
as the result of negligence in duty though there is no contract present between the parties still the
negligent person will be liable to compensate the claimant for the loss or damage occurred to him
as per the act of tort.(Hall, 2015.) Law of tort will also be applicable in the case of negligence
and which gives the rights to the injured or damaged party to file the suit against the defendant
for possible compensation and for the justice as the tort law mainly for the civil wrong and to
help the people in society who injured by the other.
Hence the damaged party or person as a claimant can file the suit against the another party as per
the act because the negligence is another part which include in the civil wrong and so it can be
compensated .
CASE LAW:Newman & others v United Kingdom Medical Research Council (1996) CA.
3.3
The doctrine of Vicarious liability is the term which is incorporated with two elements
which are vicarious and another is liability. The vicarious means experienced by watching or
reading somebody else to do something instead doing by own whereas the liability means the act
or something for which the person is legally responsible to do that. The vicarious liability is not
tort but it has been describe in the law of tort and it means the one person is responsible for the
torts of another person who is working under him. (Agren, Landin, 2013.)Vicarious liability
plays the major role in rendering the defense out of negligence there the employee can defence
himself by this doctrine of vicarious liability. We can consider the employer and employee
relationship in which the employer shall be liable for all the acts of his employee in the due
course of the employment, which are commands of the employer and so employer shall be held
responsible for it, the same is applicable in the business also the employers are solely responsible
for the acts of the employees. The liabilities of the employer in the business are as follows:
-The employer or business shall be held responsible for the acts done by the employee and also
business will be responsible and liable for all the suits and proceedings.
-In case faults are proved against the business in the court then he shall be liable to compensate
the claimant or plaintiff.
The basic elements of vicarious liability are:

Course of employment: The employer and employee relationship is must. The wrongful act is
done by the employee in the due course of employment because no act shall be included when it
has been done after the resignation of that person from the employment.
Master and Servant relationship: there is always be this relationship between the master and the
servant. It prevails the duty that servant is doing under the command of the master.
Commitment of Civil wrong: Also that concerned act which has been done by the servant or
employee must be in nature of civil wrong in the eyes of the law then it shall be held in doctrine
of vicarious liability.
CASE LAW: Lister V Hesley Hall Ltd.
So as per the above discussion the business will held responsible for all the acts of the employees
done by them in the due course of the employment.
CASE LAW: Weller v Foot and Mouth Disease Research Institute [1966] 1 QB 569, QBD.
TASK 4
4.1
The term negligence can be understood as when a person commits any breach in duty to
care then it shall amount to negligence by the party. In tort to negligence, a party owns a duty to
care towards another party and when such duty has been breached by either of the party it shall
amount to negligence. For the tort of negligence it is necessary that breach of duty shall occur. In
the given case it has been seen that a breach of duty to care has been occurred. In this case it has
been seen that, David was driving his car on 35 MPH in 25 MPH zone down four lane street
where there are children playing. This was the first negligence which has been committed by
David as he possess the duty to care of driving at of below on street where there are children
playing. It can be reasonably seen that by speeding so high and driving on the lane where the
children are playing could give harm or injury. (Yan, 2015.)Another negligence which has been
committed on the part of David was that he hit the telephone pole by which it split into two parts
and one of the part injured a child Kevin playing on street. It has been seen that a serious and
permanent injury has been caused to Kevin due to the negligence which have been performed by
David. It can be clearly seen that negligence has been committed on the part of David which
have resulted into damages to another party. There was duty to care against Kevin which has
been breach by David. For the commitment of negligence it is important that there shall be duty
to care towards the party and breach in such duty shall result into damages by party. Hence in

this case it can be clearly seen that there was negligence on the part of defendant. But these shall
be no possible defence against it as the negligence has been carried out by the individual only.
CASE LAW:Hawley v Luminar Leisure Ltd & Ors [2006] EWCA Civ 18 (24 January 2006).
4.2
Doctrine of vicarious liability states that a master shall be held liable for the act done by
his servant during the course of employment. Vicarious liability states that when any wrong has
been committed between two parties then those parties shall share the master servant relation in
between them. There shall be breach of duty by servant or there shall be any civil wrong by
servant during the course of employment then it shall amount ton doctrine of vicarious liability.
In the given scenario it has been seen that Colin is the head chef of a famous hotel. Roger is a
person who works under him as dishwasher. One day Colin knocks Roger down with frying pan
that shall resulted into severe injury.(Hann, 2016.) In this case vicarious liability shall apply if
Roger sue hotel for damages as chef shall be considered as servant of hotel and in this liability a
master shall be held liable for the act committed by his servant in the course of employment.
Roger can bring action against hotel for the act done by Colin. Roger can also sue Colin directly
for injuries under any criminal law as well as under law of tort.
CASE LAW: Brazier v Dolphin Fairway Ltd. [2005] EWCA Civ 1469 (04 November 2005).
CONCLUSION
The following project have concluded about the various effect of contract on business
activity. Various procedure has been mention with regard to formation of a valid contract as well
as use of terms in contract. The another part which have been highlighted by this project was of
differentiation between a liability of tort and contractual liability. The project has also discussed
about negligence in tort and vicarious liability and it application on various cases.

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