Report on Aspects of Contract and Negligence in Business Law

This report delves into the fundamental aspects of contract and negligence within the realm of business law. It begins by defining contracts and outlining the essential elements required for their formation, emphasizing the significance of offer, acceptance, capacity, and consideration. The report differentiates between unilateral and bilateral contracts, as well as expressed and implied contracts, providing a clear understanding of various contract types. Furthermore, it highlights the importance of specific terms such as conditions and warranties, explaining their roles and legal implications. The report then presents a case study involving a bookshop scenario, analyzing the application of contract law principles, particularly the concept of 'invitation to treat.' The discussion extends to the importance of conditions and warranties in contractual agreements, as well as a detailed exploration of contractual and tort liability, and concludes with an overview of vicarious liability in business contexts.

ASPECTS OF CONTRACT AND
NEGLIGENCE IN BUSINESS
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Table of Contents
INTRODUCTION ...............................................................................................................................3
TASK 1.................................................................................................................................................3
1.1....................................................................................................................................................3
1.2....................................................................................................................................................4
1.3....................................................................................................................................................5
TASK 2 ................................................................................................................................................6
2.1....................................................................................................................................................6
2.2 ...................................................................................................................................................6
2.3....................................................................................................................................................7
TASK 3 ................................................................................................................................................7
3.1....................................................................................................................................................7
3.2....................................................................................................................................................8
3.3....................................................................................................................................................8
TASK 4.................................................................................................................................................9
4.1....................................................................................................................................................9
4.2....................................................................................................................................................9
CONCLUSION ...................................................................................................................................9
REFERENCES...................................................................................................................................11
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INTRODUCTION
The contract is defined as a written or verbal agreement made among two or more parties and is
binding by law (Keele and Pearse, 2012). While making contracts, voluntary initiatives are taken by
parties for entering into an agreement with each other. It is critical that parties entering into a
contract should have the capacity for entering into a contract. Some specific elements needed to be
included while writing a contract and it is also required that all the legal and formal requirements
should be completed before entering into the contract. The present report describes significance of
essential elements that are included while making a contract with each other. In addition to this
evaluation of different terms that are mentioned in the report. Moreover, difference between
contractual liability and tort liability has been explained. Furthermore, significance of vicarious
liability in the context of business situations has been explained in the report.
TASK 1
1.1
Elements of the contract include various factors that are needed to be included while making
agreements with other parties. It is vital that all the essential elements of contract should be present
in the contract so that agreements should be prepared in a legal and unlawful manner (Hiltunen,
2012). Whenever there is the need to sign agreements it is better if assistance from a legal advisor
should be taken so that better agreements should be signed. Various elements that are needed to be
included while making contracts are as described-
OFFER : - It is vital to mention offer for formulation of legally binding contract. When a party
express will for entering into a contract than it is considered as an offer (Vago, 2015). When
expression of interest is shown to another party for entering into an agreement than it is described as
an offer. It has been refereed from the case of Smith v. Hughes it has been referred that offer is
defined as an element of expression of willingness for determining terms of the contract. Various
methods can be used for giving an offer to a party, and sometimes parties give a verbal offer, and
written offers are also given by parties. It is vital that all the elements of contract should be included
a contract for making it valid and acceptable. It is assertive that offeror should describe in detail all
the terms and condition to offeree while showing willingness for entering into an agreement.
ACCEPTANCE: - while making agreements a party shows expression of interest to another part
for entering into a contract (Jones and Sufrin, 2014). Willingness shown by a part of getting agree
on terms and conditions of the contract is defined as acceptance. It has been concluded from the
case of Felthouse v Bindley It can be concluded that it is critical that acceptance must be
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communicated in a proper manner. A contract can be declared as valid if the offeree shows
willingness for entering into a contract. Communication of acceptance is necessary, and it is vital
that it should be done in an appropriate manner. Offer must be acceptable to the individual to whom
the offer has been made. It supports in making a legal and valid contract, and proper agreements are
signed between different parties that are involved in making a contract.
CAPACITY: - It is vital that all the parties entering into a contract should be of sound mind and
should have a capacity for entering into the contract. A [person facing criminal offence is also
considered as legally ineligible for entering into a contract. It has been concluded from the case of
Queensland Titanium Mines Pty Ltd v Chalk [1975] AC 520, PC, [1975] 2 WLR 1. that a person
who is a minor can not be declared as eligible for signing a contract. In addition to this person of
unsound mind is also not eligible for doing an agreement and drunkards people also are not eligible
for signing a contract and it is considered as invalid (Smets and Jarzabkowski, 2013). People who
are bankrupts and facing criminal charges are also not eligible and lacks the capacity for entering
into a valid contract, and it is vital that all the parties that are entering for signing a contract should
do proper background checking before making a valid contract.
CONSIDERATION: - It is considered as a major significant element that is needed to be mentioned
while making contracts. It is defined as a promise made for paying a specific worth or value for
entering into a contract (Peaucelle and Guthrie, 2015). All the parties involved in entering into a
contract should agree on terms and condition that are needed to be included while making a
contract. It is defined as the exchange of one thing for a value of another. While making contracts
parties offer some values and worth in exchange for signing a contract and it is required that proper
agreements should be made for mentioning all the terms that are included for that. As per the case
of Re Casey's Patent (1892)
It has been observed that it is assertive to pay subsequent promises that have been made in the
contract. It is critical that written documents should be prepared and all the terms of consideration
should be properly declared tonne both the parties.
1.2
It is assertive for adopting a systematic and legal procedure while entering into a contract so
that agreements should be signed in an appropriate and legal manner. Diverse type of contracts and
their impacts are as described-
Unilateral contract: - unilateral contracts are formed when promises are made by a single party only
for entering into a contract. Other parties who are involved in signing a contract are not included for
making an agreement with each other (Pistor, 2013.). Promises are rendered by a single party only
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offeror who renders some promises enters into forming a legally enforceable contract. Carlill v
Carbolic Smoke Ball Co it has been observed that a unilateral contract is created when a party offers
for doing something in exchange for making a contract. It is not vital that acceptance should be
communicated by all the parties that are involved in signing a unilateral contract. A unilateral
contract can be changed into a bilateral contract if the exchange of ideas and promises should be
done between two parties.
Bilateral contract: - in this type of contract each party makes some promises and values for entering
into a contract. Exchanges of ideas and promises are done while making a contract (MacCormick,
and Weinberger, 2013). It is also known as two-sided agreement as there are two promises that are
made under it. Under the bilateral contract, some promises are made by the parties that are involved
in signing agreements with one another.
Expressed contract: - expressed contract are formed by written or by speaking in a verbal manner
and due to that contracts are formed in a systematic manner (Gutteridge, 2015). These type of
contracts are formed by words spoken or written. Under expressed contracts, there are expression
and conversations mentioned under the contract.
Implied contract: - the contracts under which no expressions are mentioned are known as implied
contracts (Garner, 2013). These contracts are formed when surrounding conditions and situations
impose a legal liability on an individual.
1.3
It is critical to mention some specific and important terms while signing a contract and it is vital to
mention those terms in an organised manner. Diverse terms that are needed to be included while
making a contract are as described.
Conditions: - There are explained as fundamental stipulations of a contract, and it is included under
the prerequisites that are needed to be included in a contract (Milsom, 2014). Some particular
provisions are needed to be included while writing a contract and so it is essential that terms for
conditions should be included in the contract. If any party breaches conditions of contract than legal
actions can be claimed for voiding the contract. According to guidelines mentioned in the case
Burgess v Wickham (1836) B&S 669, it has been observed that conditions should be mentioned in
the case and all the parties must accept all the conditions mentioned in the case.
Warranties: - These are additional stipulation terms that are needed to be mentioned while making a
contract. Under warranty, assurance is given by one part to another for entering into a contract
(Hillman, 2012). If any party violates and breaches the warranty than legal actions can be claimed
against such party and these type of claims are made for damages of the breach. If a violation of
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warranty is done than conditions of the contract are not violated. As per the case of Schuler v
Wickman Machine Tools [1974] AC 235, it has been observed that claims can be made by
warranties that are mentioned in contracts.
TASK 2
2.1
As per the case scenario mentioned Ivan goes for Todor's bookshop, and there he found a book as
HND law book. The book was kept on display for the purpose of sale, and Ivan showed his
intention for purchasing the books. Ivans takes the final decision for purchasing the book on the
price which was mentioned on display. Ivans takes the book to the counter for paying for it and
owner of the shop mentions that this is the only copy with him and this book has been sold to some
other person on yesterday. The person who purchased the book was named as CARL. The owner
gives excused that he forgot to remove the book from the display and due to it its mistakenly being
shown into the display counter. In clear words owner refuses to sell the book to the Ivans. In the
present case scenario, elements of the contract are present and when the book is kept for display
than it is the element of an offer. As per the guidelines mentioned in the case of Harvey v. Facey I,
has been referred that goods that are placed for display comes in the categories of invitation to treat
and it can not be considered as an offer that is made in the contract. In the present case also it was a
pre-offer communication, and it can not be considered as an offer made for entering into a valid
contract.
2.2
Different terms that are mentioned while making contracts are as described
CONDITIONS: - these terms are specifically mentioned in the contract, and each party which signs
agreements comes under obligation to following it (Habermas, 2015). Legal obligations of parties
and individuals are defined as conditions, and it is vital that these should be appropriately
mentioned while writing a contract. A party's contractual duties get affected when conditions are
mentioned in the contract (Strong, 2014). Conditions can be general or specific, and it is critical to
mention proper specifications that conditions are general or specific. General conditions are
imposed on every individual whereas specific conditions are peculiar for a particular contract.
Conditions may occur before formation of contract, during the contract and after the completion of
contractual duty. Agreements that are made in legally binding manner includes all the conditions
that are set between different parties. If any part breaches conditions of contract than legal actions
can be claimed against such party which voids the conditions of contract. As per the case of
Poussard v Spiers (1876) 1 QBD 410 it has been referred that legal actions can be claimed if any
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party gets involved in breaching the conditions of contract then legal actions can be taken by
innocent party.
WARRANTIES :- these are explained as written guarantees which are mentioned while making an
agreement (Sidgwick, 2012). Parties can claim for damages if liabilities can be breached by a party
involved. However it is essential to mention that all the terms of warranties have been mentioned in
the contract.
INNOMINATE TERMS :- these are terms which can not be included in the category of warranty
and conditions (Chen-Wishart, 2012). Innominate terms cant be warranty and conditions and there
is need to be specific while mentioning innominate terms in the contract. According to the case of
Poussard v Spiers (1876) 1 QBD 410 It has been concluded that these are less significant terms of
a contract and no legal actions can be taken on the basis of that.
2.3
Mentioned case scenario describes that John goes into a park that is managed and maintained by
local council officers (Aust, 2013). Under the park a notice was mentioned in which it was
mentioned that chairs are available for hire at the rate of 50p per hour. John takes the decision for
paying for the chairs, and he was given a ticket by the parking attendant, and he gets a chair. A
critical incident happens, and chair collapses under him, and he gets injured badly, and clothes of
John also gets damaged. John took crucial steps and went for complaining about the broken chairs.
He claims for compensation, but the management of the council refuses for it by giving excuses
under liability. It was described to John that it is clearly mentioned on the tickets that no liability is
accepted for any damage or injury that has been caused to the clients. Management completely and
clearly refused for any damage caused by the failure of equipment. As per the case scenario
administration of the park can not move away from their vicarious liability. Damages and injury to
John have been caused due to a failure of equipment and so it becomes the responsibility of park to
pay the compensation to the john. It has been referred from the case of Chapelton v Barry UDC
[1940] 1 KB 532 that a party can not move away from their liabilities by making use of slips and
written articles.
TASK 3
3.1
 Contractual liability is defined as an obligation imposed when two or more parties get
involved in signing a contract with each other.
 If any party voids the terms and conditions that are mentioned in the contract, then legal
actions can be claimed against such party (Twigg-Flesner, 2013).
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 In contractual liability, all the parties and individuals who make agreement are known to
each other. However in tort liability obligations are imposed by state, and it is vital that
responsibilities of a person should be duly completed by him (Hart and Bulloch, 2012).
 Tort liability involves parties that are unknown to each other, and if any party involves in
doing civic wrong, then it comes in the category of tort liability. It is a liability which is
imposed by the state (Walras, 2013).
 It has been referred from the case of Dick Bentley Productions Ltd v Harold Smith (Motors)
Ltd it has been concluded that in the language of criminal law if any party is found guilty of
a crime than legal punishments can be given by the state for the wrong committed by the
party.
3.2
Negligence is defined as civic wrong made due to which harms and damages are caused to an
individual or a party involved (McKendrick, 2014). An innocent party who gets damaged and
harmed deserve rights to claim legal action against the [party who is accountable for causing
damages. If situations occur when parties are failing for paying their responsibilities than legal
actions can be claimed against such parties (Haigh, 2015). If there is, the non-contractual
relationship between parties than cases of negligence are applied to them. It is vital that for proving
the case of negligence there should be proximity between defendant and claimant. According to the
case of Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd it has been concluded that in
the language of criminal law if any party is found guilty of the crime than legal punishments can be
given by the state for the wrong committed by the party. According to the case of Smoldon v
Whitworth & Nolan [1997] PIQR P133, CA it has been referred that compensations need to be paid
by the party if any harm and damage has been caused due to the negligence of party. Legal actions
can be claimed by the innocent party, and it is vital that proper evidence should be provided for
proving the claims against the plaintiff.
3.3
Staff members of an organisation are most significant assets that support in accomplishing the
desired objectives of business (Hobbes, 2013). It is vital that management of the organization
should take significant initiatives for managing the manpower in an effective manner. If any
damage or injury is caused due to mistakes of any staff member, it comes in the category of
vicarious liability. Employer of the organisation is liable for the mistakes and wrongdoing
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committed by staff members of the organisation (Vicarious liability. 2016).
Under vicarious liability employee of the corporation is held accountable for wrongdoing
committed by their staff members (Pateman, 2014). According to the case of vicarious liability, the
employer is always accountable for civic wrongdoing made by their staff members. As per the case
of Bazley v Curry, it has been concluded that it is the vicarious liability of employer of the
organisation for pay for the damages caused due to the mistakes of their staff members.
TASK 4
4.1
It has been mentioned in the given case scenario that David was driving his vehicle at the speed of
35 MPH in 25 MPH across a four lane street. Few children were playing across the street and one
nine-year-old child naming Kevin runs into the street chasing a soccer ball. David tried to save the
child, and for that, he swerves into another lane with the objective to save the child. In the whole
activity, he hit the telephone pole and got seriously injured in that procedure. The telephone through
which David injured was owned by a local company. The telephone poll snaps into two pieces and
hits Devin who was standing in the street. In this case of the tort of negligence and defences in
different business situations. Haynes v Harwood [1935] 1 KB 146, CA case describes that it
becomes the liability of individuals if any accident and damages have been caused due to
negligence caused by them.
Advice: - Under tort liability, David and telephone poll company are responsible for the accident
happen, and they are accountable for paying compensation for the damages sustained by Kevin. In
this case, Kevin can take assistance and claim legal claim against the people who are accountable
for causing this damages. Telephone company need to situate telephone poles at appropriate
locations so that no harm and damages are sustained by people due to it. It is vital that location
should be selected by conducting a proper survey and it will support for avoiding accidents that can
cause damages. It is also needed that People like David who drive their vehicles should maintain
their limit while driving and it will aid in avoiding bad accidents and situations that cause harm and
damages to people. It is assertive that people should understand their responsibility towards other
people and it will help for avoiding negligence. David should not drive the vehicle at higher speed,
and local phone company also needs to situate telephone poles at appropriate places.
4.2
According to the given case scenario, it has been explained that Colin who was head of a
restaurant. He was feeding up the employee Roger. He was working as the dish washer in the
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organisation. It was observed one day by Colin that Roger was unconscious with a frying pan.
Roger was injured in that incident, and he suffered serious injuries. Roger was severely injured, and
as a result, he got more injured. In this situation, Roger decided to bring a claim in vicarious
liability against Regent hotel for colin's actions. In this case, Roger has rights to sue Colin for the
injuries. As per the vicarious liability employee of the organisation is liable for any harm and
damages caused to the staff members of the organisation. As per the case of Lister v Hesley Hall
Ltd [2001] it has been concluded that employee of the firm is accountable for damages caused to
the staff members. Roger deserves the right to take legal action against the owner of the restaurant
for injuries sustained by him.
CONCLUSION
The present report concluded that it is vital to mention elements of contracts while signing an
agreement with other parties. The offer, acceptance, capacity and consideration are most significant
elements that aid in making a valid and legal contract. In addition to this under vicarious liability
employee of the organisation is held responsible for wrongdoing committed by their staff members.
Contractual liabilities are imposed when any party breaches the conditions of contract whereas
under tort liabilities obligations are imposed by the state.
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