Business Law: Contract and Negligence in Business Scenarios

This report delves into the critical aspects of contract law and negligence within a business context. It begins by outlining the essential elements required for the formation of a valid contract, such as offer and acceptance, legal relationships, capacity, lawful considerations, lawful objects, free consent, and legal formalities. The report then examines the impact of different contract types, including written, oral, face-to-face, and distance contracts. It analyzes various contract terms, including express, implied, and innominate terms, and applies these elements to a given business scenario involving a book purchase. The consequences of classifying terms, such as conditions, warranties, and innominate terms, are also discussed. The report further contrasts contractual liability with tort liability, explaining the nature of liability in negligence and vicarious liability, and applying these concepts to different business situations within a case scenario involving a park and a hired chair. The analysis provides a comprehensive overview of contract and negligence principles and their practical application in business environments.

Aspects of Contract and Negligence for
Business

TABLE OF CONTENTS
Introduction......................................................................................................................................1
Task 1...............................................................................................................................................1
1. Importance of essential elements required for the formation of a valid contract....................1
2. Impact of different types of contract.......................................................................................2
3. Analysis of the terms in contract with reference to their meaning and effect.........................3
4. Application of elements of contract in given business scenario..............................................3
5. Consequences of classifying terms..........................................................................................4
6. Case scenario...........................................................................................................................4
Task 2...............................................................................................................................................5
1. Contrast liability in tort with contractual liability and clear explanation of legal principle...5
2. Explaining the nature of liability in Negligence......................................................................5
3. Explaining how a business can be vicariously liable...............................................................6
4. Application of the elements of the tort of negligence and defences in different business
situations of case Scenario...........................................................................................................6
5. Application of the elements of vicarious liability in given business situations of case
Scenario.......................................................................................................................................7
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

INTRODUCTION
Aspect of contract plays an important role in the current business scenario. A contract can
be defined as an agreement between two or more parties which binds them legally and they have
to carry out the duties assigned. It can be developed in different forms that are written and oral.
Current research project is based on the aspect of contract and negligence. It will focus on
different elements which are required for developing a contract. Along with this, study will apply
these elements in different cases and business scenarios (Hylton, Lin and Chu, 2015). Further, it
will also focus on different principles of liability in negligence in business activities. For
analysing the given cases in an effective manner, study will apply all these liabilities in case
scenarios. Therefore, different tort liabilities and their application in business are also described
in the following paragraphs of research.
TASK 1
1. Importance of essential elements required for the formation of a valid contract
There are number of elements which are required for developing a new and valid contract
between two parties. For example, a standard case Balfour vs. Balfour, 1919 could not be
considered as a valid contract because there was no presence of the required elements which are
described as under:
 Offer and acceptance: Lawful offer from one party is required for developing a valid
contract. It is necessary for making lawful acceptance of another party. Without
consideration of these elements, a contract cannot be considered to be valid and known as
a simple agreement (Laurence, 2016).
 Legal relationship: For showing official concerns and responsibilities, both parties need
to develop legal relations in between them. Social and family relation is not considered as
important elements in a valid contract. In case of Balfour vs. Balfour 1919, both parties
have social association with each other. So, it is not considered to be a valid contract.
 Capacity of both parties: For completing the contract in a lawful manner, both parties
need to be capable enough to perform it. So, this is also known as an essential element for
a valid contract.
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 Lawful considerations: Both the parties of a valid contract need to be agreed on all
considerations and absence of this element results in making contract to be invalid
(Hylton and Lin, 2013).
 Lawful objects: A valid contract must be based on legal and convincing purpose, only
then it will be considered as a valid contract.
 Free consent: According to this element, both parties need to be agreed on same things in
the same sense. Any kind of fraud, influence, mis-presentation and mistakes should not
be a part of valid contract.
 Legal formalities: A valid contract requires many legal formalities such as registration,
license, etc. Thus; both parties need to fulfil all these formalities at the time of developing
contract (Kenkel, 2011).
2. Impact of different types of contracts
As per the English law, there are different types of contracts which can be developed by
the parties as per their requirements and situation. Impact of these types of contract is described
as under:
 Written contract: As per the English law, both parties write their promises, roles and
responsibilities on a paper as a proof of agreement and it is known as written contract.
These types of contract are required for any kind of long term and important agreement
between two or more parties. In case of any circumstance, both parties can take
appropriate actions against each other on the basis of written agreement. Generally, these
types of contracts are formulated by both parties at the time of buying land, automobile
and buildings (Lohse and Murphy, 2013).
 Oral contract: Verbal communication is the most important channel for developing oral
contract between two or more parties. In this type of contract, both parties can write their
promises on paper but it is not necessary in each and every case. For example, purchasing
of goods and services on retail shop is a verbal contract.
 Face to face contract: In this type of contract, presence of both the parties is necessary.
Mutual concern, trust and understanding are the major attributes which create a base for
face to face contract. This kind of contract is formulated at the time of purchasing
products from the grocery shop.
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 Distance contract: It can be understood with an example like; online selling and
purchasing of goods is known as distance contract in which presence of both parties is
not necessary. Email and telephonic conversations are also included in the ways by which
both parties can develop distance contract (Spreng, Stevens and Schacter, 2013).
3. Analysis of the terms in contract with reference to their meaning and effect
There are some specific terms which have their direct impact on the valid contract and
these are express, implied and innominate terms. Meaning and effects of these terms are
described as under:
 Express term: This term can be defined as conditions on which both parties are agreed on
same time in same sense. Permission of both parties is required for including these terms
in contract and there is not a legal force on the parties to get agree on these terms. Valid
contract must include a clear description of these terms. At the time of requirements, both
parties need to fulfil their roles and responsibilities. These terms can be considered by
court at the time of any kind of disputes and while taking any decision (Brandimarte,
Acquisti and Loewenstein, 2013).
 Implied term: Court applies some basic terms which are required for specific contract
and are known as implied terms. Both parties need to follow these terms. Resolving
issues and avoiding conflicting situations are the major reasons behind inclusion of
implied term in a valid contract. Warranty is known as an implied contract which is
generally used by sellers and customers at the time of purchasing goods and services.
 Innominate term: As per the English law, innominate term can be defined as
intermediate conditions. Generally, warranty is not a part of innominate term. Innominate
terms are based on the breach of contract and effects of incident (Graafland and Schijven,
2014).
4. Application of elements of contract in given business scenario
According to the given case study, Ivan was an individual who came to a book shop of
Todor for buying a book of HND law which was placed in display of the shop by Todor only.
But, when Ivan took the book and wanted to pay the specific payment to Todor, he refused to sell
this book to Ivan because it was already sold to Carl but Todor forgot to remove this book from
display. In this case, there is specific offer of seller to sell this book to customers because it was
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placed in display. So, offer and expectance is present in this contract. But, there was no legal
formalities between Ivan and Todor regarding buying and selling of the book such as purchase
payment, bill, etc. (Kaldjian and et.al, 2013). So, it is not considered to be a valid contract. Along
with this, free consent and lawful considerations were also not presence in the valid contract. So,
by considering all the essential elements, Todor can refuse to sell this book to Ivan.
A legal and valid contract comprises of express, implied and innominate terms but as per
the given information, contract between Ivan and Todor was not valid. So, these terms cannot be
defined in an effective manner. This contract was not considered by both parties so; these terms
cannot affect the situation (Shavell, 2013).
5. Consequences of classifying terms
Before entering into a valid contract, both parties are needed to be aware about all
consequences of classifying terms. Further, some important consequences of these terms are
described as under:
 A condition: According to the English law, there are some prime specifications which
should be fulfilled by respective parties at the time of developing a valid contract.
Sometimes conditions help in determining the major purpose and reason behind the
formation of contract. In case of breach of contract, parties can do claim for money for
damage or loss suffered on the basis of conditions present in the valid contract.
Therefore, it is a superior duty of both parties to fulfil all conditions in an effective
manner (Loth, 2016).
 A Warranty: It is also one of the important classifying terms. Warranty can be offered by
one party to another at the time of buying any specific goods and services. It includes
pacific conditions also. In case of breach of warranty, liable person needs to compensate
the damage and loss of innocent party in terms of monetary and non-monetary manner.
 An Innominate term: These terms are flexible in nature and it is one of the major
characteristics of innominate terms. So, parties prefer to include these terms at the time of
developing any valid contract. It is not served as conditions or warranty (Lim and et.al,
2013).
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6. Case scenario
Given scenario has reflected that John went to a park which is managed by the local
council. John has hired a chair with the payment of 50p per hour and received a ticket on the
behalf of purchase. But after considering the case, John was sitting on the chair and that was
collapsed due to which individual was injured. Due to this reason, John was injured and his
cloths were also damaged. John complained for the same with respect to money. But, local
council was refused to give that money on the basis of a point which was written on ticket. This
clause has stated that “No liability is accepted for any damage or injury caused by the failure of
any hired equipment” (Cassese and et.al, 2013).
Analysis of the case has reflected that John and local council have introduced a valid
contract because all essential elements were present in their contract. For example, a valid offer
and acceptance, legal formalities, etc. So, both parties have a valid contract and on the basis of
this contract, John can claim local council for his damage and physical injury.. So, he can claim
for money for his loss and injury and local council cannot refuse to give money (Zarb and et.al,
2013).
TASK 2
1. Contrast liability in tort with contractual liability and clear explanation of legal principle
There are number of attributes which are present in contractual liability which every
party in the contract is required to consider. These include meaning, type and nature of damage
and impact of that loss. Contractual liability can be developed on the basis of mutual concern and
understanding between both parties. But, on the other hand, tort liabilities are enforced by tort
law and both parties are needed to be agreed for the same. On the other hand, in contract
liability, both parties need to complete their roles and responsibilities which are included in the
contract (Spreng and et.al, 2013). But, in contrast, in case of tort liabilities, both parties are
required to attain all the standards of care which have introduced by professionals. In case of
contract liability, breach of duty is the major reason behind any kind of loss of the innocent
party. In contrast, negligence is known as a reason behind the physical and monetary injury of
innocent person. Money is the major solution which is used by liable party to compensate the
loss of innocent party in case on contract liability. But in tort liability, responsible person cannot
compensate all types of damages by paying money (Chase, 2015).
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2. Explaining the nature of liability in Negligence
Negligence liability is the major part of tort law and in case if any person who is not
capable enough to complete his duties and responsibilities. There are some specific principles
and nature of negligence liability such as duty of care, remoteness of damage and type and
impact of damage on innocent party. As per the principle of duty of care, everyone should assure
about the safety and security of neighbours. It is because; breach of duty of care is known as the
major reason behind remoteness of damage. As per the negligence liability, defendant needs to
take appropriate action to reduce the physical and monetary loss of individuals (Hall, 2015).
There are some specific conditions which are not considered as negligence liabilities and these
include irrational care and expectations as well as unaccountable requirements of individuals.
3. Explaining the way in which a business can be vicariously liable
Vicarious liability is also one of the important sections of tort law and it focuses on the
association between employer and employee of a business organization. As per this liability,
employer is liable for safety and security of all employees of an organization. Due to vicarious
liabilities, employer needs to take appropriate action which can satisfy the needs and
requirements of all employees in an effective manner (Solis, 2016). In the working hour, safety
and security of employee is the major responsibility of employer. Vicarious liability can be
transferred from one employer to another in case of transfer of employee from one organization
to other. At the time of damage or loss suffered to employees in working hours, business can said
to be vicariously liable. So, there are some specific terms such as warring session which may
reduce the liability. For example, in case of construction in office building and at the time
accident of employees which was happening due to this construction can be considered as
vicarious liability of employer of the organization (Isermann, 2013).
4. Application of the elements of tort of negligence and defences in different business situations
of the case scenario
As per the given case scenario and negligence liability, TeleCo needs to place the pole at
the end for reducing chances of damage and David should drive a car with suitable speed. These
are included in the duty of care of TeleCo and David. By placing pole in the middle of lane,
TeleCo has breach his duty. As per the tort law, there are two major reasons behind the damage
such as placing a pole in middle of lane and rough driving and high speed of David. Due to this
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reason, David and his son Kevin got physical injuries. Therefore, according to the negligence
liability, both David and TeleCo are accountable for the physical injury of Kevin because they
have breached their duty of care (Afanasiev, Kolmanovskii and Nosov, 2013). But in case of
warranty and conditions, it can be used by business scenarios to defence in different business
situations.
5. Application of elements of vicarious liability in the given business situations of case scenario
As per the vicarious liability, employer is responsible for the safety and security of
employees of organization (Burke, 2013). Along with this, for reducing the chances of accident,
organization needs to focus on the actions of employees also. As per the given business scenario,
Colin is a head chef of Regent hotel and Colin knocked Roger with a frying pan due to which
individual was injured. Due to this reason, Roger has faced lots of physical injuries. He has
claimed for money against Regent Hotel for Colin’s action. As per the given information and
vicarious liability, Regent hotel is liable for the safety and security of Roger (Dekker and et al.,
2013). So, hotel needs to maintain a healthy work environment for all employees. So, Regent
hotel is accountable for Colin’s action. Therefore, all these elements have reflected that hotel and
its owner are liable towards the actions of Colin and physical injury of Roger.
CONCLUSION
The current research project has concluded that contract is an agreement between two or
more parties. It can be a legal written, oral, face to face contract. But a valid contract is a legal
and valuable part of any contract. Both the parties of contract know their duties and rights.
Before claiming, an employee should know the capacity to enter into a contract. A valid contract
always contains condition and warranty terms. As per the current study, without inclusion of
these terms, an agreement cannot be considered as a valid contract. Along with this, study has
also described that negligence and tort are the major liabilities of tort law. Considering the case,
employer is responsible for the safety of his employees. These are included in the vicarious
liability. But there are some major differences in contract and tort liability which can be analyzed
on the basis of remoteness of damage, nature of obligation, etc.
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REFERENCES
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