Business Law: Contract and Negligence Analysis with Case Studies

This report provides a comprehensive analysis of contract and negligence within a business context. It begins by outlining the essential elements of a valid contract, including offer and acceptance, capacity of parties, lawful consideration, and legal intention, and explores the impact of different contract types like face-to-face, written, and distance selling contracts. The report then delves into specific contract terms such as conditions, warranties, innominate terms, and exemption clauses, examining their effects and implications. Through case studies, the report applies the elements of contract law to real-world scenarios, analyzing issues of consideration and exclusion clauses. Furthermore, it explores the similarities and differences between tort and contractual liability, detailing liability for negligence and vicarious liability. The report also outlines the elements of the tort of negligence and vicarious liability, providing a thorough understanding of these critical legal concepts in business operations. The report uses cases to illustrate the application of these principles.

Aspects of Contract and Negligence in
Business
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TABLE OF CONTENTS
INTRODUCTION................................................................................................................................3
Task 1....................................................................................................................................................3
1.1 Essential Element.......................................................................................................................3
1.2 Impact of Varied types of Contract............................................................................................4
1.3 proper analysation on the various terms of contract and their effects.......................................4
Task 2....................................................................................................................................................5
2.1 Applying Element of Contract...................................................................................................5
2.3 Effect of Different Term............................................................................................................7
Task 3....................................................................................................................................................8
3.1 Similarity and Differences between Tort and Contractual Liability..........................................8
3.2 Liability for Negligence.............................................................................................................9
3.3 Vicarious Liability...................................................................................................................10
Task 4..................................................................................................................................................10
4.1 Elements of Tort of Negligence...............................................................................................10
4.2 Elements of Vicarious Liability...............................................................................................11
CONCLUSION...................................................................................................................................11
REFERENCES...................................................................................................................................13
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INTRODUCTION
Its important for each and every kind of firm to acquire knowledge safeguarding aspects of
contracts. As it helps the organisation to place itself or to position itself in the market. It is very
important for organisation to make contract in legitimate manner as only when the contract or
agreement between the parties will be considered as a valid one (Contract Law, 2007). In order to
create contract in legitimate manner, it is essential to have knowledge about both the parties with
respect to various feature of vicarious, negligence and occupies liability. In order to create a
deliberate or voluntary relationship it necessary to fulfil all such formalities or requirements
(Andrews, 2016). Also when company starts its contract in legal nature it helps it in fulfilling all
roles and responsibilities towards each other. The report is based on the different scenarios, where in
first scenarios the report focuses on understanding the importance of essential elements of a valid
contract. Under this report will also discuss about the different types of contract. In second scenario
above discussed elements will be place in different business situations with the help of cases or
statutes (Bercovitz and Tyler, 2014). Third scenario is of Vocational Scenario, in which various
differences and similarity of liability in tort with contractual liability will be explained.
TASK 1
1.1 Essential Element
All agreements are not contract but al contracts are agreement. Agreement is made between tow
parties and it can be oral or in written form. Following are some essential elements which are to be
considered by both of the parties.
1. Offer and acceptance: Offer can be define as it is developing by a party to the other party
in order to create a contract with them. While making contract both parties are required to
make lawful offer and acceptance of contracts. The offer is required to provide other party
with a lawful offer and the other party is also required to accept the offer in lawful manner.
In other words both parties are required to have a common consent and understanding at the
time of making contract with other (CHENG and Yang, 2010).
2. Capacity of parties: To form a valid contract, it is also essential to know about the working
capacity capabilities of the both parties. which are entering into a contract. In order to
undertake contract between two parties it is very essential that both parties should have the
capacity to accomplish the contract. That means the any of the party member should not be
minor, mentally challenged etc person. If any member in any of the party is mentally
challenged or is in or that is less than 18 year old that the contra will become void (Four
Essential Elements of a Contract, 2015).
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3. Lawful consideration: Consideration can be refereed as something in “return”. In section
2(d) defined as the desire of the promiser, the promiser or any kind of another person has
abstained from doing something or promise to not to do than such act is known as
consideration of promise. In the affected person can file suit for lawful consideration.
4. Legal intention: The contract must create a legal obligation, besides acceptance and offer.
That is both parties are required to sue against other if the other party had not kept the
promise or had done any kind of fraudulent activity (Davey, 2012).
1.2 Impact of Varied types of Contract
Various types of contract places different effect on the parties. Various types of contracts are
as follows:
 Face to face: Here, parties who are ready to enter in a contract are present in physical form
to make the agreement void. Under such type of contract both parties sit together and agrees
upto the term and condition face to face. It has a positive impact as sometimes words plays a
vital role in understanding the values and conditions of the other party the from writing. But
also with the contract such as as face to face contract the chances fraud increase. As at that
time he innocent party has no proof against the defendant party as all terms and conditions
were mentioned orally (Geistfeld, 2011). Such types of contracts are generally made
between the relatives, friends etc.
 Written contract: in written contract, every kind of term and condition are being discussed
in the format in given manner. Such types of contracts are considered to be best because it
reduces the chance of any fraudulent activity. And if any of the party dares to breach the
contract the innocent party can sue upon the defendant party as it has the proof in written
(Hillman, 2010).
 Distance selling: Under distance selling contract, contracts made with the help of business
entities by calling on video, telephone and fax, etc. In the other words, parties who are
entering into the contract are not physically present at the time of formation of contract.
Usually, this set of contracts is made by individual that belongs to different region or
country. In such contract, parties need to rely upon electronic equipment to perform the
duties with context to contract. However, if damages to contract instrument is done then it
may lead to delay in performing the duty (Jeffries Jr., 2013).
1.3 proper analysation on the various terms of contract and their effects.
Conditions: Condition is a requirement or event that is required to be performed by both parties
before accomplishment of contract. Condition has a direct link with the objective of contract. In
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case of any breach in conditions from either side of party than the contract will get terminated. If
there is any kind of violation in condition that it will be termed as the violation in warranty. In case
of any breach conducted by any party the party is liable to pay or repudiate the innocent party all
damages incurred (Levy, Golden and Sacks, 2015).
Warranty: Warranty is a kind of assurance that the offerer gives to offeree at the time of making
contract and is based on the facts those are genuine. It is being assumed as subsidiary arrangements
within context of contract. In case, if either of the party breach the contract, then innocent party
possess a right to claim damages caused. As well as violation of voluntary does not affect the
condition. In case of breach of warranty, the innocent or aggrieved party is only liable to claim for
the damages (Lauridsen, 2015).
Innominate terms: It is a contractual term under which the innocent party is have right to claim or
demand for the remedies as well as can terminate the contract (What are warranties, conditions and
innominate terms?, 2012). This can be referred to intermediate term i.e. either condition or
warranty. Considering the case of Hong Kong Fir Shipping vs Kawasaki Kisen Kaisha in 1962,
whereby court stated to both parties that compensation that been delivered in case of Innominate
term is exactly to condition and warranty in the case when defendant party fails to meet the
contractual term (Davies, 2016).
Exemption clauses: An exemption clause is an agreement in a contract that stipulates that a party is
limited or excluded from liability. Exemption clauses can be used unfairly which may disadvantage
a party. Therefore, there have been changes to the law to create more fairness and to limit the use of
clauses (Fisher and Kalbaugh, 2012). If a court decides if an exemption clause is enforceable, they
will look at the agreement and whether there is more money involved. Sometimes courts may not
enforce emption clauses if a clause has been placed but there has been no money involved in the
agreement.
TASK 2
2.1 Applying Element of Contract
Case 1: Agreement DEscr
An agreement creating obligations enforceable by law. The basic elements of a contract sre
mutual assent, consideration, capacity, and legality. In some states, the element of consideration can
be satisfied by a valid substitute. In this given case- Carol, who saw an online advertisement one
day which has placed by Gumtree along with the picture, e-mail id and other information about the
couch. He decided to purchase that couch and mailed to Gumtree. (Coleman, 2010).
Main Body- there are some legal elements which are necessary to make an agreement between two
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or more parties, elements are such as legal binding of offer, mutual assent, acceptance, legality and
lawful consideration. In this case contract is made between Carol and seller but both the parties still
not completes all the requirements of the agreement. Here Gumtree invited all the people for
purchasing the couch. In this case Gumtree has the right to either accept or reject the proposal
which is send by the Carol to purchase the couch. So, in this there is no any lawful considerations
are fulfilled as well as there is no any legality is comes into the picture, here no any legal formalities
and conditions are fulfilled so it is not an agreement. (Anson and et.al., 2010).
Conclusion: In this there is contract is not taken any place between both the parties because there is
no any response or acceptance from the Gumtree side to the Carol, so it’s a void contract.
Case 2 : Consideration
Both parties to the contract must provide consideration if they wish to sue on the contract.
For ex., if promiser promises to mow the lawn of another, Promisee, promiser's promise will only
be enforceable by Promisee as a contract if Promisee has provided consideration. In the given case
there is Devi, son of Peterson, was looking for the job of cyber security position in the big IT firm
namely Smith & Fogarty, Incorporation. The Devi not want that his father interferes in his own
decision to do job and make bright future. Devi is selected in that firm where the owner is George,
sent him an offer to hire on 12th April, 2015. The offer letter was accepted by Devi. He joined from
13th April but at that day George got the mail from Peterson, where he said that he will give some of
the amount if he gives this job to his son. George cannot apply this promise in the real-life spite
firm willing to enforce it. Here Peterson is giving sum of amount which will be as a bribe, which is
completely in against to the law, it not comes into the legal considerations. Moreover, legal
consideration act as a key element of making a valid contract. Based on this, it can be state that
George cannot enforce the stated promises because of offering of illegal consideration.
2.2 Applying Law
Case 3: Exclusion Clause
An exemption clause is an agreement in a contract that stipulates that a party is limited or
excluded from liability. Exemption clauses can be used unfairly which may disadvantage a party.
Therefore, there have been changes to the law to create more fairness and to limit the use of clauses.
In this case A couple went to the restaurant for dinner while entering the man handed over its
overcoat which consists of cash. Also, the person given the men a receipt which have the exclusion
cause at the back of it, where it was written that the restaurant is not responsible for any kind of
missing or stolen any items (Gallagher and et.al., 2013). When the man makes the payment than he
realizes that he is forgotten his wallet. He went to the entrance but as per the rules that restaurant is
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not responsible for any theft, So the restaurant refuses to rely on exclusion clause. The man asked
for stolen amount but restaurant refuses for that. For this type of cases the restaurant has to take
responsibilities of guests safety. Here according to this case the restaurant is liable to give
compensation to the couple for the loss of the amount, suffered by them (Gifford and Robinette,
2014).
Case 4: Implied term
Business contracts are often very lengthy. A contract drafter normally attempts to cover all
of the terms and provisions of the agreement. Implied terms are words or provisions that a court
assumes were intended to be include in a contract. This means that the terms are not expressly
stated in the contract. As per the given scenario, Zehphra had given a warehouse to Aaron which
was closed from past few year and was in need of improvements (Jain, 2015). Hence Aaron
immediately decided to do improvements in the warehouse. The property of Zehphra is inherited to
Yeti. Zehphra makes the condition with Aaron that he will not increase the rent for upcoming five
years but after one year the Zehphra is died. Now the landlord for Aaron becomes Yeti. Yeti is
increase the rent of warehouse but he not accepting the terms and conditions of the contract. Aaron
demands for the amount which he invested in improvement of the warehouse. Yeti refuses for this
amount also and not notice to the contract (Andrews, 2016). On the basis of this tenant that is Aaron
has no right to demand for the compensation regarding the improvement which he made initially
without taking the prior permission of the landlord. After this it conclude that, it can be said that
Aaron is not entitled to get compensation. So, this is implied contract where after make the contract
buyer get not any compensation from the seller.
2.3 Effect of Different Term
Case 5:
Insurance companies can void the policies anytime if there found any wrong information
provided by insurance taker to the company as according to the given case. It is cited in the case
situation that the policyholder applied for the motor insurance and provided with the form which he
needs to fill for getting policy (Lawful consideration, 2011). The policyholder was proposing that
he has not involved in any vehical accident from last 5 year ad did not make any clams. For this
context the company had identified that the policyholder already had made claim on car during the
previous five years. In this, policyholder served false information to the insurance company which
might be considered as breach of duty. From the Judgement case of Poussand V Spiers(1876) it can
be referred that it is can be said that it is the duties of policyholders to perform their activities as
according to the set terms and condition of the contract and company. Hence, by taking into account
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this aspect it can be said that policyholder breaches the condition of the contract. In this, situations
the insurance companies are having full right to reject the Set contract and even sometmes asy for
the compensation. Hence, the insurer can void the policy from the start date. Besides this, insurance
company also has right to reject the claim of policyholder (Avraham and Schanzenbach, 2010).
Case 6
It is cited in the case scenario that policyholder had answered ''No'' in relation to the two
questions which are mentioned in the proposal form. Thus, policyholder said that they had not
altered or modified from the makers' specification during the last five years. During the
investigation insurance company found that there are two changes made by the policyholder in the
car, whereas while before he stated that there are no accident or loss in any part of the car from last
year. In this, policyholder argued that she bought the car along with all the modifications
(Cartwright, 2014). In this, she assumed that all the parts of car were original. Further, policyholder
said that she was unaware from the claims made by her husband in the before times. In this, by
taking account the judgement of the case of Bettinni V Gye it can be referred that from initial days
the insurance company is having full rights to cancel the policy.
TASK 3
3.1 Similarity and Differences between Tort and Contractual Liability
According to English Law, requirement of liability explains in order to ensure that parties of
both sides should complete their duties in effective manner by meeting all conditions of agreements
(Cranmer, 2011). Similarities and differences of tort liability and contractual liability which is as
follows:
Table 1 similarities and difference between Tort and Contractual liability
Basis Tort Liability Contractual Liability
Relationship
between the Parties
Parties of both side build
relationships after negligence of
terms.
Parties develop relation in terms of
contract after mutual permission.
Nature of
Obligation
Require to complete duties of care. Both the parties perform duties
according to terms and conditions
of contracts.
Causation and
Remoteness
Needed to verify causation because in
case of rejection, it leads to the loss to
Defendant is responsible for
breaching of contract (Bercovitz
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claimant (Law of contact and Tort of
negligence, 2016).
and Tyler, 2014).
Claim for damages Claim by innocent part over
tortfeasor to give compensations.
Claimed by the departed parties and
it has to be given by the defendant
party.
Case Example Donoghue v Stevenson Avery v Bowden (1855)
3.2 Liability for Negligence
Negligence by the company can be referred as the non-accomplishment of desired care, it
may also results in the injury and the lost to the second person. By properly analysing the level of
hazard it is employer's responsibility to make proper arrangement for the safety purpose (CHENG
and Yang, 2010). According to the Negligence Act, if the employer are unable or fails to comply the
health and safety aspects then they would be accountable to provide compensation to the injured
parties. In this, plaintiff must satisfy all the below mentioned aspects for getting compensation are
as follows:
Duty of care: According to this, competent parties have responsibility to make adherence
with the standard duty of care. Case of Donoghue v Stevenson entails that it the responsibility of the
business unit to comply with the standard care while performing the activities and functions. In this,
on the failure of business unit in relation to the standard duty claimant can demand for the
compensation (Coleman, 2010).
Breach of duty: If defendant party breaches the duty of care which he/she owes towards the
plaintiff, then these defendant parties are likely to provide compensation to the damaged and injured
parties.
Factual causation: Employer would liable to give compensation to the claimant if loss is
suffered by him due to the cause of defendant party.
Remoteness of damages: If loss would be foreseeable to the defendant party then he will be
liable for giving compensation to the claimant (Anson and et.al., 2010).
In the case of Donoghue v Stevenson health issues were suffered by the lady because snail
was in the bottle of bear. In this, due to failure of beer manufacturer Donoghue was suffered from
the health problems. Hence, according to the Negligence Act manufacturer can't resist to give the
compensation amount to the lady (Davey, 2012). (Vicarious Liability, 2016)
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3.3 Vicarious Liability
Vicarious liability can be referred as the situation in which employer are accountable to held
in unfavourable act by the third person. At work the employer are liable to take action against any
any of the illegal activity by the employees. Moreover, during the time of employment it is
employer's duty to manage and control the activities of the employees. In the business organization,
employer has power to mitigate the unethical behaviour at workplace by framing the strict rules and
regulations. It creates fear factor among the employees that employer will punish them in they
perform wrongful act. Hence, employer is vicariously liable towards the third person if injury is
suffered by him due to the tort of their personnel. For instance: In the case of Regent Hotel
employer was held vicariously liable for the undesirable act of Roger (Fisher and Kalbaugh, 2012).
Moreover, in this case, Roger hit Colin with the frying pan during the course of employment. In
this, Colin was critically injured and refuses to go to the hospital. In this, employer would be liable
for giving compensation to the Colin for the injury which he went through because of the company.
Moreover, Ben who is the owner of Regent hotel can make control on the unethical behaviour of the
personnel by developing code of conduct or practices. Thus, Ben is entitled to serve Colin by the
compensation to extend the injury which is suffered by Colin because of him. (Gifford and
Robinette, 2014).
TASK 4
4.1 Elements of Tort of Negligence
CASE 7
As according to the provided case study it has determined that Mr. Brown was not feeling well and
having issues concerning to Chest pain and breathing problem, so he visited to Good Mayes
Hospital. Firstly the nurse investigated the condition of Mr. Brown and then she calls seniour doctor
for his treatment (Davies, 2016). In the context, the negligence and various different situations are
as follows:
(a) If a doctor examines condition of Mr Brown and according to it, he suggests some pain killers
medicines to him then survival of Mr Brown will become increase. But, respective doctor did not
take its responsibility seriously them hospital will be accountable for the negligent actions of doctor
because hospital has recruited him for deliver good treatments to the patients (Geistfeld, 2011).
(b) The hospital cannot be supposed to answerable in the case of failure of doctor to verify actual
disease and death of Mr. Brown. The hospital is not responsible for to accomplish the claim because
of the reason, the pneumonia parasite was found in at his home. It is not the duty of the hospital to
take care of these situations of Clients mistake (Gallagher and et.al., 2013).
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4.2 Elements of Vicarious Liability
CASE 8
According to the given case study, Chauffeur Company's driver had drunk alcohol before
going to pick the clients from the Airport. After returning from airport, due to intoxication, driver
has crashed the car with lamp post and it has injured both client and driver very badly. In this
regards, customer has claimed over the organization and it has determined that venture has
vicariously responsible for the mistakes of their employee (Hillman, 2010). Due to the negligence
of driver, company has to pay compensation for the damages to the client. Vicarious liability
satisfied customer because employee of firm was under the employment condition and tortfeasor of
Organisation.
CASE 9
According to this case Mr. Jones was the worker in supermarket as a delivery boy. Once
while loading pallets in the truck, he slipped on the tail and falls, this leads to give him injury. This
accident and damage was very serious and needed good surgery (Jeffries Jr, 2013). He has sent to
rehabilitation under the physiotherapist for few months. For this incident, a colleague of Mr. Jones
wanted to take legal action against the supermarket regarding the damages because of accident. On
this, company argued that for the accident, another health and safety organization has responsible
because the following function has outsourced to outside firm (Lauridsen, 2015). As pee the
vicarious liability act, employer is accountable for taking care of employees from the accidents and
other hazards. If any case, owner of company is not complete his duty then he is liable for paying
all kind of damages. On the basis of the given case study, Mr. Jones slipped on the tall gate at the
time of loading of pallets in truck and due to this, another colleague become injured. So, in this
complex and serious situation, injured party claim for compensations because he is suffering from
major injuries. Hence, it can be said that supermarket is not liable for any kind of compensation to
the claimant (Levy, Golden and Sacks, 2015). Along with this, he has to claim for damages then he
should take actions against another company who appoints for health and safety of employees by
supermarket. For this, Occupier’s Liability Act 1984 applicable for physical damages claims by
claimant.
CONCLUSION
From this report, it can be concluded that before signing and having a contract, both sides
have to ensure and know about all important elements of agreements to make it valid contract.
Enlightening the case of Mr. Peter Abraham where he wants to form a relating contract and deal
with his customers and potential suppliers, it has determined that parities should understand the
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potential impacts of different terms on agreement. Along with this, it has important clearly know
about the consequences of various elements of contract. Apart from this, negligent situation occur
when the company has not taken any kind of responsibilities at the time of running of business
activities. In addition to this, it has also summarized that businesses have accountable for vicarious
liabilities.
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