Detailed Report on Contract Law, Elements, and Liability Aspects

This report provides a comprehensive overview of contract law, encompassing the essential elements of a valid contract such as offer, acceptance, consideration, and legal intention. It delves into various types of contracts, including written, face-to-face, valid, void, and unilateral/bilateral contracts, examining their implications for business organizations. The report further analyzes key terms used in contracts, such as breach of contract, exclusion clauses, express terms, and guarantees, providing a framework for understanding contractual obligations. Through a case study, the report applies these elements to a business context, illustrating the practical application of contract law principles. Additionally, the report explores the concepts of tort and negligence, contrasting contractual liability with tortious liability and examining vicarious liability. The report includes discussions on the elements of the tort of negligence, defenses, and vicarious liability, culminating in a detailed understanding of contract law and its related legal concepts.

ASPECTS
OF
CONTRACT

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1 ...........................................................................................................................................4
1.1 Elements of valid contract ....................................................................................................4
1.2 Impact of different types of contract.....................................................................................5
1.3 Analysis of terms used in contract ......................................................................................6
TASK 2 ...........................................................................................................................................7
2.1 Application of elements of contract in the business context.................................................7
2.2 Analysis of consequences of classified terms .....................................................................7
2.3 Effects of terms of laws in contract.......................................................................................8
TASK 3 ...........................................................................................................................................9
3.1 Contrast liability in tort with contractual liability.................................................................9
3.2 Nature of liability in Negligence.........................................................................................10
3.3 How a business can be Vicariously Liable.........................................................................11
TASK 4 .........................................................................................................................................11
4.1 Elements of tort of negligence and defences ......................................................................11
4.2 Elements of Vicarious liability............................................................................................12
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
In present era, the business organizations enter into contract into various contractual
parties. These requires various contracts, agreements deeds etc. contract is a document which is
signed by both the parties to make a professional relationship. A valid contract is one which
contains all the particulars of valid contract. It contains all the essentials that are required to be in
contract so as to give it a legal effect. In this competitive world, it is necessary for the companies
to have a proper knowledge about valid contract and its aspects (Inghammar, 2010). The
business organisation should consider all the requirements as laid down in the agreement. In this
present report various essentials of valid contract like offer, acceptance and legal intention has
been mentioned. The main motive behind this unit is to identify the necessary parts of the
contract as well as their binding effect on the parties to the contract. In this report, the statements
are also supported with various case laws and their judgements. Further more, the concepts of
Tort and Negligence also been discussed.
TASK 1
1.1 Elements of valid contract
It is necessary that a agreement formed between the contractual parties should contain all
elements of a valid contract. It is very important for a business organization as it enters into
various contracts with another business parties, so legal persons should make sure that the
contract framed should be lawful and valid in the eyes of law. The elements are as:

 Offer: a contract is considered to be a valid contract if a proper offer has been given by
one party to another party. Offer is a term which means a proposal by one party to
another party to create a legal binding effect on both the parties. There are 3 elements in
offer: offer, offerer, offeree (Isaksson and et. al., 2010). According to the decided case
law: Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256, it has been decided that the Mrs
Carlill was entitled to reward as advert has made an offer of a unilateral contract on
which Mrs Carlill has accepted all the conditions. So, there should be a valid offer made
by an offerer to another party. Acceptance: a valid contract must be followed by a effectual acceptance. It means a
willingness by another party to accept or to agree to all the terms and conditions proposed
by an offerer. Lawful consideration: in a valid contact or agreement, there should be a legitimate
consideration. Consideration has been defined as an acts or a promise or value which is
termed as consideration made by promiser to promisee. Free consent: it is an essential element of a valid contract. It means that for constituting a
valid agreement or contract between two parties , they have to agree at a common point,

which is termed as free consent. It has also been assessed that free consent should not be
affected by coercion, undue influence, fraud etc. (Koffman and Macdonald, 2010).
 Competency of parties: according to the provisions of law, persons under the age of “18”
are not allowed to enter into any kind of contract as they are termed as 'minor'. person should be
competent enough to enter into a contract. It should not be of unsound mind and not disqualified
from law time being in force.
 Intention to create legal relationships: for constituting a contract between two or more
parties it is required to create an intention for transacting any lawful business.
1.2 Impact of different types of contract
There are many types of contract in the given context of law. These types of contracts
have their own impact on the business organizations. The various types of contract has been
discussed as :
 Written contract: It refers to that contract which is written in nature. It means those
contracts which are framed in a formal written way. It has the most binding legal effect
as it is in written form. The business organizations who are in the contract should frame
all terms and conditions in the contract so to avoid any conflicts. It is signed by both the
parties to the contract. According to the decided case law : L'Estrange v F Graucob
Ltd [1934] 2 KB 394, it was held that the plaintiff is bind by all the terms and conditions
mentioned in the contract as it is a written contract.
 Face to face contract : It is the contract which is made verbally between the parties to
the contract (Korthals Altes and Taşan-Kok, 2010). These contracts are formed by the
legal persons by words of mouth. They transact all the conditions and terms of agreement
in a verbal form.
 Valid contract: A valid contract is one which is enforceable in the eyes of law. It
consists of all the particulars of contract that makes it legal and binding on both the
parties. In other words we can say that, a valid contract is one which fulfils all the
requirements of legal and lawful contract that has been imposed by the law for the time
being in force.
 Void contract: A void contract refers to that contract which is invalid and unlawful from
its nature. In case it ceases to be enforceable by law, then it would be considered as
invalid or void contract.

 Unilateral or Bilateral contract: Bilateral contract are the one in which each party to the
contract takes an obligation by promising about something to another party to the
contract. While, unilateral contract is the one in which only one party makes an
obligation to another party (Kreitner, 2011).
1.3 Analysis of terms used in contract
In a valid contract, there are many terms used to express the terms and conditions of a
valid contract. Before entering into the contract, parties willing to establish legal relations are
entitled to use various distinctive terms and conditions. These terms can be expressed or inferred
in the nature of contract. These are important for the implementation of contract. The different
terms that has been used in agreement are as:
1. Breach of contract: Breach of contract means if any of the party has not performed its
functions or abide by the terms and conditions mentioned in document, then it is said to
be the failure of contract by that party. Also, if parties to the contract has expressly
written regarding the liability to the damages to be borne by the guilty party (Levan and
et. al., 2011).
2. Exclusion clause : It is the clause in which damages are set by the breaching parties in
the contract. Or it can be said that, breaching party are entitled to pay for the damages
caused on their part. Further more, according to the law, it should be mentioned while
framing the contract by both the parties.
3. Express terms: These terms are written or verbally expressed between both the parties.
These terms are expressive in nature (Lan, Pickles and Zhu, 2015). Express terms means
all the pre-requisite conditions should be mentioned expressly and should be
communicated properly between the parties. It has been advised that parties to the
contract should expressly include all the terms in the contract so as to avoid any conflicts
and issues that are likely to to arise in near future.
4. Guarantee: In this term, principle debtor has been assured by guarantor, in the case of the
failure. It means that guarantor will pay in case of non performance of any task by the
principle debtor. The guarantor can also sue the principle debtor in case of non- reciept
of amount by him to guarantor.

TASK 2
2.1 Application of elements of contract in the business context
In accordance to the provisions of the Contract Act, a valid contract is consist of all the
essential requirements. It should contain appropriate offer which is being followed by legal
acceptance. In the context of given scenario, Ian a student, went to a bookshop to purchase some
books. The name of bookshop is Todor's bookshop. There he saw a HND Law book, which was
kept as display . Ivan was desirous of purchasing that book. He offered 50 pounds to Todor and
offered him to sell the book to him. But, todor told him that he has already sold that book to Carl
yesterday. Also, the book has been kept as copy for display as he has the any copy left for the
purpose of display (Hillman, 2012). Although Ivan insisted him to sell the book to him but he
was not ready. In accordance to the rules and regulations in the law, a valid contract is consist of
all the essential requirements which make it a lawful agreement. These include a proper offer and
acceptance. In this given context, Ivan made a proper offer to Todor for purchasing a book. But
only offer does not made a contract legal. There should also be a valid acceptance. In this case,
Todor has not accepted the offer of Ivan, so it cannot be proofed as a valid contract. A valid and
legal contract should contain proper offer and acceptance between both the parties. In this case,
offer as made, but acceptance was not given by other party, so it can not be marked as a lawful
agreement (Inghammar, 2010). There is no need to form a contract between Ivan and Todor as
there is no relationship between them, as offer has not been accomplished by Todor.
So, from this given case, it has been concluded that there should be a valid offer with
acceptance given along with a legal intention to establish a legal contractual relationship
between the parties.
2.2 Analysis of consequences of classified terms
There are different terms of contract which can be either conditions or warranties. It vary
according to the nature of contract that has been formed (Grundmann, 2011). There are different
terms In the contract which are as follows:
 A Warranty: it is the minor term or in other words it is not central to the existence to the
main contract. Also, it can be said that in case if any party to the contract breaches any
warranty stated clearly in agreement, then the innocent party would be entitled to claim

the damages from the defendant party (Koffman, and Macdonald, 2010). But plaintiff
will not end the contractual relationship between them. According to the decide case law
of : Bettini v Gye (1876) QBD 183, it was been held that Bettini breached the warranty
so its employer replaced him with another singer but not to terminate the contract.
 A Condition : it is the major and foremost important term in the nature of a contract. It
is the root or base of any legal contract. It is different from the term warranty. In this
case if any party fails to perform any duty or breach the conditions of an agreement
between them then in that case, innocent party can terminate or repudiate the whole
contract and also he is entitled to claim damages from another party (Ernita Joaquin and
Greitens, 2012).
 Innominate terms: this term has been approached by the parties to the contract. It
basically aim to not classify any terms as conditions and warranties, but it focus on
whether the innocent party has been deprived of the whole benefit of the party or not. N
case if the guiltless party was considerably disadvantaged of the whole benefit , they will
be able to treat the contract as terminated. According to the decided case law: Hong
Kong Fir Shipping v Kawasaki Kisen Kaisha [1962] 2 QB 26, it has been held that the
defendants in the said case were held liable or unlawful repudiation.
2.3 Effects of terms of laws in contract
In the given case law, John goes to park which is under the responsibility of local council.
Then John saw a notice board hanged on the board which stated that chairs for hire for 50p per
hour. John paid the money and got the chair. In some time, he fell down as his chair collapses
and he got hurt. Also it damaged his clothes too (Dietz, 2012). When John complained about his
injury then, the attendant of local council showed him the notice in which was written that no
liability will be entertained in respect of any injury and damage caused to any person due to
equipment failure. In this clause exemption clause has been applied. According to that clause it
has been said that the party which has formed the contract has excluded himself from the
liability. So, it enable the another party to take undue advantage of this clause. It can case harm
to another party (Levan and et. al., 2011). The exemption clause is not treated as legal as it is
boosting up one party to take advantage in an unfair manner. In this case, John can claim the
damages happened to him by the act of equipments.

TASK 3
3.1 Contrast liability in tort with contractual liability
Any person or business enterprise or its activities are regulated by law and its rules and
regulations (Combs Jr and McClung, 2016). Arguments between the parties are resolved
according to the provisions of law. Contractual and tortious liability are considered to be an
important part of the common law.
Liability in Tort Contractual Liability
 It is an act in which some one injures
another party to the contract in a
particular way.
 For this, the injured party can claim the
damages from the defendant.
 Tort liability is considered as a
common law for civil wrong. In the
context of business organizations, one
business concern to the contract claims
for the damages done by another party.
 It refers to the in case of tortious
liability, the source of interest and the
duty are created by law (Korthals Altes
and Taşan-Kok, 2010). Also, the
damages are of unvalidated nature.
 According to the decided case law of
Vaughan v Menlove (1837) 3 Bing NC
467, the judgement was given by the
court of appeal that the defendant 's
best judgement was not enough and
appropriate. It has to be judged by the
standard of a sensible man.
 Contractual liability is a term which
means the agreements binds the parties
to the contract in a legal manner.
 It means that in any case, the persons in
the contractual relationship has not
fulfilled the terms and conditions then,
they will be held answerable for rupture
of contract.
 It is necessary that plaintiff and
defendant should be in the contractual
relationship.
 In contractual liability the breach is
only made of the terms and conditions
that are stated in the contract expressly.
Also, if any of the part is not able to
fulfil the conditions then damages can
be claimed (Conway, Guest and
Trenberth, 2011) .
 According to the case law of Condon v
Basi[1985] 1 WLR 866, the court of
appeal has decided that defendant has
breached a duty of care as the tackle
was careless even with the standards

were prescribed to him by the local
league player.
3.2 Nature of liability in Negligence
Negligence is an act of avoiding a certain situation even by foreseeing by a person, if its
consequences are neither in demand nor are substantially certain. Negligence means the harm
caused but not intentionally. So, in order to be successful for obtaining claim from the
defendant, the plaintiff or claimant must prove the following:
 That the defendant has owe him a duty to care.
 The defendant has done the breach of that duty. Damage has been caused to the claimant by the breach of duty of defendant
▪ Duty of Care: this concept means to take care of the legal duty. It has been
defined in the eyes of law (Brodie, 2011). It means that in case the defendant is
not able to take care of the duty which has been owed to him then he is liable
for the damages caused by him to the claimant. Also, if the defendant has not
taken care of the duty, it is said to be the breach of duty by him. As per the
decided case law of Caparo Industries pIc v Dickman [1990] 2 AC 605 , it has
been held in the judgement made that no duty of care was owed by suspect.
There was no propinquity between Capro and its auditors .
▪ Breach of duty of care : it is the another requirement for gaining a claim
against defendant by plaintiff. In this claimant is supposed to prove the
negligence that has been caused by defendant, to him . Complainant must have a
proper evidence against another party. In case he is successful in proving that
the defendant is responsible for damages caused to him, then he will be
entitled for compensation (Brun and Moretto, 2012). The court will identify
whether the mistake is on part of defendant or not.
▪ Damage to the claimant: damage to the claimant can be only compensated only
in the case when harm caused by defendant is actual loss , injury as a
consequence of other.

3.3 How a business can be Vicariously Liable
Vicarious liability means the liability of damages that has been caused by one person
from another person. It is legal concept in which one person affects the right of another person
but the liability falls on the person who is not related to that incident. In the context of business,
if an employee has committed any wrongful act, then it's employee will be held liable for the act
of employee. Vicarious liability most commonly occurs in an act of employee employer
relationship. It is the liability that has been assigned to a employer or any of other principal for
the acts of his agent's or employee in the course of employment or other duty (Blomme, Van
Rheed and Tromp, 2010). According to he decided case law of Cox v Ministry of Justice, it has
been held that the court has dismissed the MoJ's appeal and also declared that they were
vicariously liable for the prisoner's negligent actions. The court has also held that vicarious
liability cannot be head off by any kind of arguments about the status of employment of an
individual who has committed the act. Also, the vicarious liability. There are numerous situations
in which a party to the contract may be charged with vicarious liability. This kid of liability can
be implanted in a situation where a duty of care that has been imposed on employer has been
rifted, but plaintiff is not able to identify which employee has breached it (Kreitner, 2011).
This is a situation that arose vicarious liability in which employer have to pay for the
torts committee by employee. It occurs due to lack of proper communication and connectivity
channels between them.
In the following situations, employer will be held responsible for the acts done by
employee are as:
 Employer and employee have professional relationships.
 Employee has committed tort in course of its employment.
TASK 4
4.1 Elements of tort of negligence and defences
There are different elements of torts and negligences. Negligence is that term in which
defendant has breached the duty f care that has been owed to him. As per the given case scenario,
David is driving at the rate of 35 MPH in the lane in which it has been prescribed to drive at 25
MPH zone down a four lane street (Appleman, Appleman and Holmes, 2015). Suddenly, Kevin
ran down chasing its soccer ball. David without paying attention to Kevin turned into an another

lane to avoid him and in that whole process, he hits the telephone pole and seriously got hurt.
The telephone pole was being owned by local telephone company namely TeleCo. The pole
was snapped into two pieces causing loss to the cited company. In this case, it was David who is
liable for the damages caused by him to Kevin and TelCo. According to the provisions of
law,the person who is acknowledged to take care of duty that has been owed to him, then, he is
liable to the loss caused by him to the claimants (Lan, Pickles and Zhu, 2015). In this scenario,
David should have been take care of its duty and should drive at a nominal speed. Negligence
has bee caused on his part. It was foreseeable by David that if he lost his control on the speed it
could cause severe injuries to him as well as others. According to the points in negligence,
defendant is liable to compensate the injured persons. David is liable for the damages to Kevin
and Telephone company.
4.2 Elements of Vicarious liability
Vicarious liability means that liability in which one person is held responsible for the
acts of another person for the wrongful acts committed. In the context of business organization,
the employer is held liable for the deeds done by its employee. In the given case, Colin , the head
of the Regent hotel was fed up with his dishwasher namely, Roger. He got frustrated by his anger
and attitude in the premises of hotel (Ali and Kumar, 2015). One day Colin bashed Roger with a
frying pan. Due to this Roger was seriously injured. He claimed that the Colin was responsible
under the vicarious liability in which employer is held responsible for the acts of its employees.
In conformity with the provisions of vicarious liability, employer is held liable for acts
committed by its employees. So as in this case, Colin is under obligation to compensate Roger
for his injury. Also, according to the law, employer and employee should be in contractual
relationship. In this context, Colin and Roger are in employment relationship.
CONCLUSION
From this above report it can be said that there are many elements which a contract need
to make it self legal and valid. Also, the concepts of offer, free consent, acceptance have been
discussed. Along with this, various forms of contracts are also mentioned which have impact on
the business organisation. In further, concepts of liability in Tort and vicarious liability along
with contractual liability has also been discussed.