ACNB Report: Contract and Negligence Law - Legal Analysis

This report delves into the intricacies of contract and negligence law, providing a comprehensive overview of the essential elements required for a valid contract, including offer, acceptance, intention, consideration, and privity. It explores the impact and meaning of different contract types, such as unilateral, bilateral, and collateral contracts, as well as electronic contracts. The report also examines various contractual terms, including expressed and implied terms, conditions, warranties, innominate terms, and exclusion clauses. Through case studies, the report analyzes real-world scenarios, such as the cases of Ivan and Todor, Adam and Brian, and Barry and the local council, to illustrate the application of contract law principles. Furthermore, the report contrasts contractual liability with tort liability, highlighting the differences in the basis of liability, the relationship between parties, and the basis of damages. Finally, the report includes a case study involving Mark and the Regent Hotel to further demonstrate the application of legal principles.

ACNB

TABLE OF CONTENTS
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
1. Importance of essential elements required for the formation of valid contract.......................3
2. Impact and meaning of different types of contract .................................................................4
3. Description and impact of different type of contractual terms................................................5
4. Case study of Ivan and Todor..................................................................................................6
5. Case study of Adam and Brian................................................................................................7
6. Case study of Barry and local council.....................................................................................7
Task 2...............................................................................................................................................8
Contrast liability in tort with contractual liability.......................................................................8
2. Scenario A................................................................................................................................9
Scenario B..................................................................................................................................10
Case of Mark and Regent Hotel.................................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
2

INTRODUCTION
Contract and negligence law is developed by English law for the promotion of fairness in
commercial agreements. In these legal provisions, description regarding general obligations of
parties is provided. These obligations are mandatory be complied whether there is absence or
presence of contractual relationship (Camenisch, 2011). Present study highlights different
aspects of contract and negligence law in order to provide justified recommendation to the given
case scenario. In this report description will be provided regarding basic principles of contract
and negligence law along with the suitable case scenarios.
TASK 1
1. Importance of essential elements required for the formation of valid contract
An agreement is considered as valid contract if following elements are present in it:
Element Description Case
Offer Offer can be termed as expression
provided by one party for entering
into legal relationship (Elements of a
contract, 2015). Provided offer must
be supported by the intention to
provide performance if it is accepted.
According to the case of Fisher v Bell
[1961] 1 QB 394, invitation to treat
does not consider as offer because it is
way to invite other parties to provide
offer.
Acceptance It is absolute and unconditioned
consent given by the party to whom
offer is provided (Adams, 2010).
Acceptance must be communicated
to the offerree in reasonable time
period.
As per the case of Felthouse v
Bindley [1862], mere silence cannot
be deemed as acceptance in any
contract.
Intention Contracting parties must have
intention to create legal enforceable
agreement to provide satisfactory
performance.
According to the case facts Balfour v
Balfour [1919], this element is not
assumed in charitable and domestic
contract because their agreement is
3

supported by love and affection.
Consideration Contract created by parties must be
supported by mutual exchange of
promises (Desai, 2008). Further,
consideration is required to move
from the side of promisee.
As per the case of Chappell v Nestle
[1960] AC 87, consideration is
required to be sufficient but it is
needed to be adequate. It is because,
court of law is not interested in
bargaining capacity of the parties.
Privity of
contract
It is a legal doctrine which states that
third party to the contract will not be
entitled to make claim for the
damages in case of non-satisfactory
performance of contracting parties.
By considering the doctrine of privity
of contract claim of third party was
not considered by the court in the case
of Dunlop v Selfridge (1915).
2. Impact and meaning of different types of contract
Cited statement regarding type of contract is not true. It is because; English law states
that all the contractual forms have different impact on the performance of parties. Explanation of
impact of different types of contract is as follows:
Unilateral contract Meaning- In unilateral contract, one party promises to provide benefit to another party in
against of performance provided by them (Garriga, 2013). In such contract, offer is
provided to the general public by which each individual is entitled for the performance. Impact- In such contract, acceptor is not entitled for the performance but if they provide
performance then offering party will be liable to fulfil the promise made by them. Case- In accordance with the case of Carlil V Carbolic Smoke ball, if offering party deny
for the performance after completion of performance of acceptor then they will be liable
to provide damages.
Bilateral contract
4

 Meaning- In this type of contract, there is mutual exchange of promises by the
contracting parties (Keenan, 2012). Further, contract is created after the acceptance of
both the parties on the described contractual terms. Impact- All contracting parties are obliged to satisfy the terms of contract in order to
prevent contractual obligation. If they fail to satisfy these terms, then they have to
provide damages to compensate the injury of innocent party. Case- In accordance with the case facts of Ward v Byham [1956] 1 WLR 496, both the
parties were entitled to provide performance for the completion of promise made by
them.
Collateral contract Meaning- Collateral contracts are those agreements in which consideration is payable by
entering into another contract (Nystén-Haarala, 2010). It is because; there is coexistence
of another main contract. Impact- Similar consideration is used for both main and secondary contract. In absence of
appropriate agreement, contract created between parties is said to be invalid. Case- Example of collateral contract is; Mr. A pay sum of £500 to Miss B for entering
into some another contract.
Electronic contract Meaning- E-contract is form of contract in which agreement between parties is formed by
using electronic means. These contracts are covered in provisions of E-commerce. Impact- It is form of distance contract, thus contracting parties are required to comply
distance selling regulations in justified manner (Partington, 2013). Further, acceptance is
provided by electronic signature in formal contracts.
 Case- In the case of Challenger Navegante SA v Metalexportimport SA (2004) court held
that formal contracts with the typed names on electronic means will be considered by
valid and enforceable by law.
3. Description and impact of different type of contractual terms
Contractual terms cannot be easily bifurcated because non-fulfilment of any term lead to
the liability for the payment of damages in order to compensate the injury of innocent party. Due
5

to this aspect, terms in contract are segregated on the basis of their effect on contract relationship
(Zoll, 2012). Description of contractual terms is enumerated as below:
Expressed and implied terms
Expressed terms are specifically mentioned by the contracting parties at the time of
formation of contract. These terms can be included either in oral or written manner (Austen-
Baker, 2011). Implied terms are statement assumed by the court of law to be part of contract
even if it is not expressly stated. Example of implied terms is implied responsibilities of seller
and buyer in Sales of Goods Act.
Conditions and warranties
Condition is the fundamental stipulation of the contract whereas warranty is considered
as additional stipulation. Breach of condition gives effect to the breach of contract due to
innocent party is in position for the termination of contractual relationship along with the claim
of damages (Blum, 2007). Breach of warranty refers to the non-fulfilment of minor terms thus
aggrieved can only make claim of damages.
Innominate terms
This provision is applicable in situation where term classification of term in condition
and warranty is not possible. As per this approach, party can terminate the contractual
relationship only in situation where entire benefit of agreement is lapsed.
Exclusion clause
These terms are inserted to make reduction in contractual obligations in situation of non
satisfactory performance (Emerson, 2009). Protection is provided by exclusion clause to the
faulty partly only if it is incorporated in proper manner and provisions of loss is covered in loss.
4. Case study of Ivan and Todor Invitation to treat- It is expression of willingness given by party for the purpose of
negotiation for entering into contract. In accordance with the case of Pharmaceutical
Society of Great Britain v Boots [1953], goods on display is considered as invitation. By
considering this fact, in this case there was invitation by Todor to the customers. Written contract- In this form of contract, parties describe contractual terms in written
manner for the future reference. In the cited situation, negotiation is done in verbal
manner thus there is verbal contract between parties.
6

 Acceptance- As per the case of Pharmaceutical Society of Great Britain v Boots [1953],
trader decided whether to accept or reject the offer. Henceforth, Todor is obliged to
accept the offer given by Ivan. Expressed terms- In described scenario price of the book will be considered as expressed
term.
 Condition- Expressed term will be considered as condition as it is primary stipulation.
By considering case facts cited precedent, there is no contractual relationship between
Ivan and Todor.
5. Case study of Adam and Brian Unilateral contract- In the described case situation, Adam had provided unilateral offer
through the advertisement for declaring reward for the person who will cross English
Channel first. Intention- In offer, offering parties has intention to provide performance after acceptance
provided by offerree. In this case, intention of Adam is presumed for entering into
contractual relationship. Offer and acceptance- Advert given by the Adam is offer as per the case of Carlill v
Carbolic Smoke Ball co [1893] and performance of Brian will be considered as
acceptance. Expressed term- Statements described in provided advert will be treated as expressed
terms.
 Condition- Amount of reward declared by Adam in against of performance is condition
of the contract.
By considering the case facts of Carlill v Carbolic Smoke ball, revocation of offer is not
in reasonable time period. Due to this aspect, Adam will be liable to provide declared reward to
the Brian.
6. Case study of Barry and local council Written and bilateral contract- According to the given case situation, there is mutual
exchange of promises (bilateral contract) between Barry and local council. Ticket was
provided by local council thus it will be considered as written contract.
7

 Condition- In the described scenario, condition is price charged by the local council for
the services of hiring of chair. Expressed term- Described condition will be considered as expressed term.
 Exclusion clause- Exclusion clause is cited on the back side of provided ticket. According
to this ticket, local council will not be held liable to provide damages for the injury
occurred due to their equipment.
In accordance with the case facts of Chapleton v Barry, ticket is merely a receipt
provided after formation of contract. Due to this aspect, statement cited on the ticket is
considered to be contractual term. This fact demonstrates that exclusion clause is not proper
incorporated by local council and they will be liable to compensate the injury of Barry.
TASK 2
Contrast liability in tort with contractual liability
Provision of liability for damages in contract and negligence law is introduced to ensure
standard performance by parties. In accordance with these legal norms, parties are required to
pay damages in situation of misconduct. Difference between tort and contractual liability is as
follows:
Basis of difference Contractual liability Tort liability
Reason of occurrence Liability in contract is imposed
in situation where terms of the
contractual deed is not
satisfied (Contract and Tort
Law, 2014).
Dahlia v Four Millbank
[1978] Ch 231
Tort liability arises through the
negligent conduct by
defendant and due to which
injury is occurred to innocent
party.
Donoghue V Stevenson
Relationship between parties In contractual liability, there is
existing relationship between
parties as contract is formed by
their mutual consent.
Scammell & Nephew v.
Relationship in tort liability is
imposed after occurrence of
negligent action by defendant.
Barnett v Chelsea &
Kensington Hospital [1969] 1
8

Ouston [1941] AC 251 QB 428
Basis of damages In contractual liability,
damages are provided to
compensate the injury of
innocent party occurred due to
non-fulfillment of contractual
terms.
Avery v Bowden (1855)
Damages in tort liability is
provided from the objective to
bring injured party in position
where negligent action has not
been conducted by the
defendant (Contract and Tort
Law, 2014).
Henderson v Merrett
Syndicates [1995] 2 AC 145
2. Scenario A
For the successful claim of negligence, following principles are required to be satisfied
by the claimant: Breach of duty of care: Defendant must be failed to act in accordance with the provided
responsibilities. Further, due to this aspect, negligence act should be occurred. In the case
of Donoghue v Stevenson, because of the carelessness of defendant decomposed insect
occurred from the drink of claimant. Duty of care: Duty of care can be termed as general responsibilities expected from the
reasonable person in similar situation (Elements of a Negligence Case, 2014). Presence of
duty of care is judged through caparo test according to which presence of sufficient
proximity is required for the claim of negligence. This test was developed from the case
Caparo Industries pIc v Dickman [1990] 2 AC 605.
 Economic losses: Case facts of Ross V Caunters 1980 demonstrates that negligence
claim is held valid only if damages are predictable from the negligent action. In the cited
case, injury to claimant occurred due to misleading statement by defendant (Frey and
Frey, 2001). As a consequence, he was held responsible to provide damages.
According to given case scenario, Ben as an owner of hotel had responsibility to provide
appropriable working environment to their employees. He had satisfied his duty by providing
safety gloves to the workers. These gloves were not used by the Roger. Thus, it can be said that
9

injury was not occurred due to negligence of Ben. As a consequence, Ben cannot held
responsible for the injury of Roger under negligence law.
Scenario B
As per the provisions of vicarious liability, third party is held liable for the negligent
action of tortfeasor. There is transfer in obligation because liable party was in position to prevent
the act of negligence and they failed to do so (Heine and Kerber, 2002). By considering this
provision, employer is said to be responsible for the action of employees in situation where
negligent action is conducted in course of employment. In the case of Lister v Hesley Hall Ltd
[2001] UKHL 22, employer of warden was held responsible for the act of sexual abuse.
In accordance with the described case scenario, Colin had hit Roger in anger with the
frying pan. It is responsibility of employer (Ben) to instruct their senior employees to prevent
violent behavior at workplace. Negligent action was occurred in course of employment and Colin
was having status of employee. By considering this fact, Ben will be held vicariously liable for
the damages of Roger. Vicarious liability does not relinquish obligation of actual tortfeasor thus
Roger is entitled to sue Colin for his action.
Case of Mark and Regent Hotel
Liability for the act of negligence is considered to be relinquished if plaintiff is in
position to take benefit of one of the following defence: Contributory negligence- Benefit of this defence is provided in situation where injured
party had contributed in the negligence action (Platz, 2007). In accordance with the case
of Davies v Swan Motor co [1949] 2 KB 291, if claimant failed to take proper care of
their safety in any situation then they will not be entitled to make claim of damages. Volenti non fit injuria- In accordance with this defence, claimant put themselves in
situation where there is possibility of injury. As per the case of Nettleship v Weston
[1971] 3 WLR 370, benefit of this defence is provided only if risk is taken voluntarily
with the awareness of risk. Ex turpi causa- Provision of this defence is applicable in situation where none of the
action of the defendant can be considered unjustified (DiMatteo, 2012). According to the
case of Kirkham v Chief Constable of the Greater Manchester Police [1990] 2 QB 283, it
is generally an illegality defence applied to prevent unjust obligation.
10

Occupiers Liability Act, 1957
According to the provisions of this Act, occupier is responsible only for the personal
injury (Heine and Kerber, 2002). In accordance with the case of Roles V Nathan 1963, personal
liability can be relinquished by providing proper notice of warning. In this case defendant was
not held responsible to provide damages for the injury of claimant because they had provided
sufficient noticed. By considering this fact, owner of the hotel will not be liable for the injury of
Mark as they had warning near the pool.
Occupiers Liability Act, 1984
Provision of this Act had extended the responsibility of employer to property injury along
with the personal injury. In accordance with the s.1(1)(a) Occupiers Liability Act 1984 occupier
is not liable if risk do not arises form the state of premises but due to the action of claimant. In
such situation defense of volenti non fit injuria is applicable. By considering this aspect owner of
hotel is not responsible for the damages of Mark.
CONCLUSION
Present study provides description of various provisions of contract and negligence law.
By considering description in present report, conclusion can be drawn that individual are
required to provide satisfactory performance as per the pre-determined contractual terms. In
situation of absence of contractual relationship, individual should act by considering their
standard responsibilities in order to prevent possibility of injury. In situation of non-compliance
of contract and negligence law individual will be liable to provide compensation for the injury
occurred to the innocent party. Liability in negligence can be prevented by the applicability of
defences described by English law. Employer is liable for the actions of employees thus they
should assure that operational activities in workplace is accomplished in a proper manner.
11

REFERENCES
Books and journals
Adams, A., 2010. Law For Business Students. 6th ed. Pearson Education Ltd.
Austen-Baker, R., 2011. Implied Terms in English Contract Law. Edward Elgar Publishing.
Blum, A. B., 2007. Contracts: Examples & Explanations. Aspen Publishers.
Camenisch, P., 2001. Business Ethics: Getting to the Heart of the Matter. Business &
Professional Ethics Journal. 1(1).pp. 59-69.
Desai, N., 2008. May. Checking correctness of business contracts via commitments. In
Proceedings of the 7th international joint conference on Autonomous agents and
multiagent systems. 2. pp. 787-794.
DiMatteo, A. L., 2012. False dichotomies in commercial contract interpretation. Journal of
International Trade Law and Policy. 11(1). pp.27-43.
Emerson, W. R., 2009. Business Law. Barron's Educational Series.
Frey, A. M. and Frey, H. P., 2001. Essentials of Contract Law. Cengage Learning.
Garriga, E., 2013. Corporate social responsibility theories: Mapping the territory. In Citation
Classics from the Journal of Business Ethics. pp. 69-96.
Heine, K. and Kerber, W. 2002. European Corporate Laws, Regulatory Competition & Path
Dependence. European Journal of Law and Economics. 13, pp. 43–71.
Keenan, F., 2012. European Corporate Laws, Regulatory Competition & Path Dependence.
European Journal of Law and Economics. 13. pp. 43–71.
Nystén-Haarala, S., 2010. Flexibility in contract terms and contracting processes. International
Journal of Managing Projects in Business. 3(3). pp.462 – 478.
Partington, M., 2013. The psychological contract and implied contractual terms: Synchronous or
asynchronous models?. International Journal of Law and Management. 53(1). pp.32-50.
Platz, L., 2007. Defining the most desirable outsourcing contract between customer and vendor.
Management Decision. 45(10).pp. 1656-1666.
12

Zoll, F., 2012. The binding power of the contract: Protection of performance in the system of the
Common European Sales Law. Journal of International Trade Law and Policy. 11(3).
pp.259 – 265.
Online
Contract and Tort Law. 2014. [Online]. Available through: <http://www.legalmatch.com/law-
library/article/contract-and-tort-law.html>. [Accessed on 11 December 2015].
Elements of a contract. 2015. [Online] Available through:
<http://www.lawhandbook.org.au/07_01_02_elements_of_a_contract/>. [Accessed on 11
December 2015].
Elements of a Negligence Case, 2014. [Online]. Available through:
<http://images.findlaw.com/optimost/accident-injury-law/elements-of-a-negligence-case-
2.html>. [Accessed on 11 December 2015].
13