Aspects of Contract Law Case Study

This document presents a comprehensive case study on various aspects of contract law, including the formation of contracts, types of contracts, contractual terms, and the legal implications of breaches. It also delves into tort law, focusing on negligence and vicarious liability. The study analyzes several case scenarios, applying relevant legal principles and precedents to determine the rights and liabilities of the involved parties. The document also includes a detailed discussion on the differences between contractual and tortious liabilities, and the defenses available in cases of negligence. The analysis is supported by references to various legal sources and case laws.

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Contents
Task 1:......................................................................................................................................................2
1.1........................................................................................................................................................2
1.2........................................................................................................................................................4
1.3........................................................................................................................................................5
Task 2:......................................................................................................................................................6
2.1........................................................................................................................................................6
2.2 &2.3...............................................................................................................................................6
Task 3:......................................................................................................................................................7
3.1........................................................................................................................................................7
3.2........................................................................................................................................................8
3.3........................................................................................................................................................8
Task 4:......................................................................................................................................................9
4.1........................................................................................................................................................9
4.2......................................................................................................................................................10
References:.............................................................................................................................................11
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Task 1:
1.1
A contract can be presented as an agreement resulting to emergence of obligations
that can be enforced by the legal principles of contract law. Therefore According to English
contract law ‘All the categories of agreement can be termed as contract if the associated
parties have given their consent for the same. However, this also needs to have lawful
consideration so that the purpose can be met.’ A legal contract is formed between two or
more involved parties who bear the legal capacity to enter into a valid contract. In this
context it can be sated that individuals who are below the age of 18 years cannot bind in a
contract as they are not legally entitled for entering into a contract. Apart from this the
mentally challenged individuals incapable of making their own independent decisions or
individuals with evidences of narcotic abuse are also restrained for having the legal capacity
to form a contract (Andrews, 2011).
A legal validated contract demand certain elements or certain conditions that must be
fulfilled by the agreement and hence need to be enforceable by the legal principles of contract
law. To begin with offer and acceptance to the offer are the major initiation required for a
contract to be developed. In this case, meeting of minds is also essential depicting the consent
of the parties to enter into a contract. The case of Balfour versus Balfour (1919) can be cited
that reflected that fact that agreement made between husband and wife are not generally
contracts as parties do not intent to be legally bound by the said agreement. Furthermore
intention to bind to the terms and conditions of a contract formed is also essential. A contract
established on the basis of a fraudulent activity, mistake, misinterpretation and undue
influence is not acceptable legally. The other key elements significant for forming a valid
contract comprise of lawful consideration, certainty, possibility of performance, legality and
proper documentation of the contractual terms and conditions.
Lawful consideration with respect to a contract formation process can be explained as
an agreement to do something that is enforceable by law (Elliott and Quinn, 2007). Moreover
the legality of the object with respect to contract formation is the object for which agreement
has been developed. The possibility of performance in this context can be described as that
fact that the said agreement must be capable of being performed. Last but not the least, a
legally validated contract should be well documented specifying the contractual terms and
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conditions relevant to the said contract. Therefore the basic general principles applicable for
governing all contracts are freedom of contract wherein the parties own the liberty to bargain,
sanctity of contract and privity of contract. The latter indicate that only parties involved in a
negotiation with respect to contract formation are entitled to sue or can be sue for breach in
contract (Cartwright, 2007).
There exist a number of variants reflecting the domain of categories of contracts.
Hence a contract can be bilateral unilateral, simple, void or can also be categorised as a
contract formed through face to face communication or by distant selling approach. The key
difference between a bilateral contract and a unilateral contract is the former include both
parties who are bound to oblige to the contractual terms and conditions while the latter
consider the obligations of only one party to bound to contractual obligations and offer made
in such case is normally made to the world at large (Elliott and Quinn, 2007). Both the types
of contract although enforceable by law but in case of unilateral contract, it is enforceable
when someone opts to begin fulfilling the act demanded by the promisor while a bilateral
contract is enforceable from the get-go; wherein both the involved parties are bound to fulfil
the promises made. The case of Carlill versus Carbolic Smoke Ball Co (1893) is an example
of a 'unilateral contract'. The case of Hyde versus Wrench [1840] can be reviewed for
understanding the legal consequences with respect to a bilateral contract
(Australiancontractlaw.com, 2016).
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Deed is also regarded as a category of promise wherein parties promises to pay for
each other as per the agreed situation. The parties are also required to show greater indication
regarding the fulfilment of the contract needs. Hence deed previously known as ‘evidence’ is
a legal instrument in writing that passes or confirms an interest, right or property that is
signed, attested and delivered and in sealed. Deed in contract is generally found to be
associated with property transfer issues (Smith, 2007). On the contract a simple contract is a
contract signed or orally established between the parties rather than contract made under seal.
The presence of valid contractual considerations along with both expressed and implied terms
are part of a simple contract that is mandatory for the involved parties to remain obliged.
Hence the key difference between a deed and a simple contract is in case of the former
considerations are not needed. The execution of deeds is in accordance to the Property Law
Act (1974) of Australia while a simple contract can be enforced under the English contract
law (Claytonutz.com, 2016).
1.2
A contract can be formed both verbally and through documentation. In case of verbal
contract, the entire contract is formed on the basis of mutual faith between the parties and in
such contracts, not documentation of contractual terms and conditions is evident. In contrast
to this, a written contract comprise of properly written contractual terms and conditions with
full signature of the parties. Important to note, in contrast to a verbal contract, a well drafted
written contract is capable of minimising the risk of ambiguity and the risk of developing
disputes within the involved parties (Ruff, 2014). However, although certain advantages of a
written contract are lacking in a verbal contract, but the parties action following a verbal
contract can be evaluated by the judiciary body in order to assist in forming the full extent of
terms agreed. The case of Texaco versus Pennzoil indicated that an oral contract developed in
presence of proper witness is enforceable by law (Casebriefs.com, 2016).
A contract established with clear communication of offer and acceptance to the offer
through face to face communication is distinct from a contract developed by distant selling
approach. In this case, contract can also be formed on the basis of direct communication,
meeting of minds is easily achieved and a contract formed in much faster compared to that by
distant selling approach. On the contrary the concept of distant selling with respect to
contract formation includes the use of electronic media or telephonic conversation (Ruff,
2014). Exchange of emails is also a part of distant selling which is absent in contract formed
through face to face communication. Moreover the Consumer Protection (Distance Selling)
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Regulations 2000 are applicable for distant selling that cannot be implemented on face to face
contract formation process. However in both the modes of contract formation process, postal
rule cannot be implemented. The case of Couturier versus Hastie [1856] is an example of
contract formed by face to face communication. Distant selling is an approach for business
expansion. This approach of contract formation reflects real life situations in retail businesses
selling goods and service to the customers distantly located (InBrief.co.uk, 2016).
1.3
The contents in a legal validated contract are also known as re terms or clauses of the
said contract and it is mandatory for a simple contract bear contractual terms. Expressed and
implied terms are the two variants of contractual terms and the former in explicitly expressed
or documented with the said contract. On the other hand implied contractual terms are not
documented within a contract. Such terms are put into the contract by the court or the
statutory guidelines. However with respect to a contractual term the statement made during
the process of negotiation is very crucial. Such statement can be identified as an express
term, a representation and also viewed as a part of collateral contract (Cartwright, 2007). The
case of Esso petroleum versus Mardon (1976) can be cited in this respect. Famous case ‘The
Moorcock (1889)’ introduced business efficacy test applicable for evaluation of implied
terms (Austen-Baker, 2011). Terms implied by custom, in fact and al law are the major
categories of implied terms. In context of discussion it can be further added that contractual
terms can also be presented in form of conditions, warranties and or innominate terms.
Innominate terms are midway between a warranty and a condition. The case of Hong Kong
Fir Shipping can be reviewed in this context. Essential to convey that a breach in contractual
condition enable the innocent party to terminate the contract and claim for compensation
while warranty being not central to a contract made enable the injured party to claim for
compensation but is not capable of terminating the said contract (Austen-Baker, 2011). The
case of Poussard versus Spiers (1876) is an example depicting the legal aspects of contractual
condition. The legal aspect of warranty is explained in the case of Bettini versus Gye (1876)
(swarb.co.uk, 2016).
Another significant aspect related with the legal implication of contract law is the
exclusion clause that can be identified as contractual term restricting the rights of the parties
to the contract. True exclusion clause, limitation clause, and time exclusion clause are some
of the categories of exclusion clause. However application of an exclusion clause in legal
valid provided the clause has been properly incorporated within the said contract and is not
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contrary to law (Andrews, 2011). The case of Thornton versus Shoe Lane Parking Ltd (1971)
can be cited that indicated communication of the exclusion clause is highlight important.
Furthermore the exclusion clause has to be legal.
Limitation clause being a variant of exclusion clause finds its application in placing a
limit on the amount that can be claimed for a breach in contract regardless of the actual loss
or damages suffered. Important to add incorporation of exclusion clause being pivotal with
respect to applicability of this clause should be incorporated either by signature, by notice or
by previous course of dealing (Lawhandbook.sa.gov.au, 2016). The case of Mc. Cutcheon
versus David MacBraye Ltd is a case example in this aspect. The case of Olley versus
Marlborough court (1949) can be reviewed that exemplified incorporation of unfair terms in
contract (swarb.co.uk, 2016).
Task 2:
2.1
The depicted case scenario of task 2 (2.1) has presented a situation where in a
unilateral contract was made from the side of City Car Dealers. In this case understanding the
lines quoted as advertisement do not reflect an advertisement but a clear intention to bind into
the contract. As the given case scenario do not reflect an invitation to offer, the claimant has
right to obtain what was promised by the City Car Dealers. In support of this it can be further
stated that the lines although presented as an advertisement strongly reflected a condition that
on fulfilment, the concerned candidate shall be awarded. Furthermore, in case of unilateral
contract there is no requirement of communication from the offeree’s side as the acceptance
to the said offer is through full performance (Peel and Treitel, 2011). This particular case can
be aligned with case details of Carlill versus Carbolic Smoke Ball Co. (1893) wherein the
case decision was in favour of Mrs. Carlill who has entitled for reward as the advertisement
constituted an offer of a unilateral contract. Therefore referring to the legal implications as
observed in this particular case, it can be inferred that often a unilateral contract may turn out
to be legal and binding contract wherein the offer was clearly notified and accepted with its
subsequent considerations and bona fide without prejudice (E-lawresources.co.uk, 2016).
2.2 &2.3
Consumer Rights Act has replaced the Sale of Goods Act with effect from 1st October,
2015. According to this act the goods for sale should be as described, satisfactory quality and
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fit for purpose. Also the goods or products sold must match with the sample kept at the
concerned store or should essentially have a description brochure (Jasper, 2007). However it
is to be noted that exceptions to the requirement of satisfactory quality are if a defect is
evident. Referring to the given case scenario, Eric is definitely entitled to claim for
compensation for the damages or injury suffered as a result of faulty brake in his newly
purchased vehicle. Furthermore with although the contract terms and conditions were signed
stating no liability shall be taken by the car seller if any accident occur, on with respect to
implied terms, it is implied that the car sold is of satisfactory quality without a faulty brake
system.
However it is important for the claimant Eric to prove his claim with respect to the
malfunctioned brake system in the car that he recently purchased. Therefore on the
concluding ground it can be stated that Eric who is the claimant in the given case although
has signed the contract paper agreeing on the expressed contractual terms and conditions has
right to claim for compensation. His claim for compensation is further strengthened by the
fact that the seller or the defendant of this case, Rani should easily foresee that damages or
injury may is incident while running a car with a faulty brake system. Hence the damage
caused is not remotes and the negligent claim is established. Also the degree of risk can be
evaluated while making a negligent claim by the claimant (Horsey and Rackley, 2011). As
the severity of injury suffered was high, Eric should be rightly compensated by Rani. The
case of Haley versus London Electricity can be reviewed in this respect (E-
lawresources.co.uk, 2016).
Task 3:
3.1
According to the legal principles of tort law a tort is presented as a wrongful action
that subsequently cause damage or injury to another. Breach in duty is one of the key
indications that a tort has been committed. However a sharp contrast exists between tort
liability and contractual liability. Considering tortious liability it is important to mention that
a tort being a civil wrong enable the injured party to sue the accused and compensation can
be claimed for an injunction can be placed against repetition. On the contrary in case of
contractual liability, it is essential for a contractual relation between the defendant and the
claimant to exist. Furthermore contractual liability can be viewed as a result of agreement
while contractual liabilities are the result of law. The damages suffered as a result of breach
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in contract are identified as expectation loss while tort damages are compensatory (McBride
and Bagshaw, 2005). The case of Thake versus Maurice can be cited as exemplified the
contractual liabilities (swarb.co.uk, 2016). The popular case of Kasturilal Ralia Ram versus
The State of Uttar Pradesh (1965) can be reviewed that exemplified the legal aspects
emergent as a result of tortious liabilities.
3.2
The concept of negligence can be viewed as the failure to impart reasonable care
while executing a duty or a responsibility with consequences like damage or harm to the
other party. The case of Donoghue versus Stevenson (1932) can be cited that introduced the
concept of neighbour’s principle in this context (lawgovpol.com, 2016). Furthermore for the
purpose of establishing a negligent claim it is requisite for the parties to prove the duty of
care existed and the defendant owned a duty of care. Importantly it has to be established that
a breach in duty if care has been incident and subsequent damage or injury has occurred
(Abele, 2003). The case of Pokura versus Wabash Ry. Co (1934) can be cited that established
the fact that the plaintiff‘s negligence is determined by the facts and a reasonable person
standard. Additionally, it has to be established that with respect to remoteness of damage, the
damage caused was foreseeable. Hence breach of duty is evident to be based on the standard
of care that is expected from a reasonable individual (Swan, Reiter and Bala, 2006). The case
of Roe versus Mins of Health can be reviewed that exemplified the aspects of standard care
with respect to duty of care (E-lawresources.co.uk, 2016). On the contrary the case of Paris
versus Stepney (1951) indicated that if a claimant need more than usual care, the standard of
care need to be higher. The case of Ward versus Tesco Stores Ltd (1976) can be cited
wherein the burden of proof was reversed and placed on the defendant in place of the
claimant (swarb.co.uk, 2016). A negligent claim cannot be established if it is proved that the
loss was remote if no specific cause that can be identified or unforeseeable. In this context the
case of Overseas Tankship (UK) versus Morts Dock Engineering (1961) popularly known as
the Wagon Mound case is a good example (Casebriefs.com, 2016). However defences to
negligence comprise of contributory negligence, Volenti non fit injura or Voluntary
acceptance of risk and implementation of exclusion clauses.
3.3
A tort or a wrongful action can be intentional or negligent or may bear strict liability
or fault based. However, the commonly evident forms of torts are trespass, nuisance,
defamation, deceit, passing off and vicariously liability. The concept of vicariously liability
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can be cited as an example of strict liability and is in accordance to the common law doctrine
of ‘Respondeat Superior’ wherein an employer of an organization can be held accountable for
the tort committed by his employees (Brodie, 2010). Every business organizations are
conscious regarding the consequences of vicariously liability as the employer is responsible
to compensate the damages cause if proved. However in order to correctly held an employer
vicariously responsible it is mandatory to investigate whether the defendant is an employee of
the concerned organization and the tort committed was incident in course of his employer
tenure and was a part of the defendant’s professional duty. In case of independent contractors
or self employed individuals the legal implication of vicarious liability cannot be applied.
As the legal implications in this context are complicated three major tests have
emerged. The control test, the integration test and the economic reality test are the
investigative procedure applicable in this context (BAGLEY, 2012). The case of Yewens
versus Noaks (1886) was the origin of the control test while the case of Cassidy versus
Ministry of Health introduced the integration test. The case of Ready Mixed Concrete versus
Ministry of Pensions (1968) was the founder of the economic reality test
(http://www.accaglobal.com, 2016). Hence vicarious liability is applicable over the employer
particularly in employer-sponsor events like seminars, conferences and training workshops,
work related social function and in business trips. The case of Leslie versus Graham (2002)
exemplified the employer vicarious liability due to the incident of sexual harassment
involving two employees attending a conference (Humanrights.gov.au, 2016). Therefore in
order to eliminate the chances of an employer to be held vicariously responsible it is essential
for business organizations to prohibit workplace discrimination and harassment. Formulation
of workplace discrimination and harassment policy are important in this context.
Task 4:
4.1
Learning from the situation provided with the case scenario of task 4 the legal
implications with respect to vicariously liability on the employer or the restaurant owner can
be applied. In this case, it is justified for the injured party (Emma and Danis) to make a
negligent claim as they owned a duty if care from the restaurant and also a breach in duty of
care is evident. Furthermore the severe food poisoning suffered by the claimant strongly
indicates an injury has been caused. Additionally with respect to remoteness of damage, it
can be easily established that the chef who prepared food using expired food stuff could
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easily foresee the adverse consequences that the customers might face in this respect. The
case of Caparo versus Dickman can be cited that mentioned the application of Caparo test in
order to evaluate whether the damage caused was foreseeable (Brodie, 2010). Furthermore
the case of Martin versus Herzig can be reviewed that highlighted statutory violation and duty
of care. In this case, the restaurant owner can be held vicariously responsible for the
negligent act of his employee (chef, George) because it is evident that the individual who
committed this tort was an employee of this restaurant and the tort was committed in course
of the employment tenure also the tort is a part of George’s professional duty. However for
better assessment of the given case the jury is likely to perform control test, integration test
and economic reality test (Giliker, 2010). The case of Limpus versus London General
Omnibus Company can be included in this areas; since employer was held vicariously
responsible for the reckless driving of its driver that resulted to a road accident (European
Encyclopedia of Law (BETA), 2016). The case of Glasgow Corporation versus Taylor (1992)
can be cited that highlighted the significance of probability of injury in context of negligent
claim (swarb.co.uk, 2016).
4.2
However, considering the possible defences that the restaurant company, it can be
stated that the tort committed by the chef was intention and hence the restaurant owner has
legal rights to sue the chef. Furthermore in alignment with the legal implications of
contributory negligence claim, the concerned restaurant owner is legally entitled to claim
compensation from the accused in order to cover up some portions of the loss suffered by the
restaurant. The case of Sayers versus Harlow can be cited in this context (E-
lawresources.co.uk, 2016).
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