Legal Aspects of Contracts and Negligence in Business Operations

This report delves into the crucial aspects of contract law and negligence within a business context. It begins by defining the essential elements of a valid contract, including offer, acceptance, and consideration, and explores the impact of different contract types such as written, face-to-face, valid, ...Read More

Aspects of Contract and
Negligence for Business

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Define the essential elements of a valid contract..................................................................3
1.2 Impact of different types of contracts...................................................................................4
1.3 Analysis of different terms used in a contract.......................................................................5
TASK 2............................................................................................................................................5
2.1 Applying elements of contract in given scenario..................................................................5
2.2 Various terms of contract......................................................................................................6
2.3 Exemption clause in contract................................................................................................7
TASK 3............................................................................................................................................8
3.1 Contractual liability in tort....................................................................................................8
3.2 Nature of liability in Negligence...........................................................................................8
3.3Vicarious liabilities of the business........................................................................................9
TASK 4............................................................................................................................................9
4.1 Tort negligence' elements......................................................................................................9
4.2 Vicarious liability element..................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Law is a system in which there is a set of rules and regulations which are responsible for
the effective governance and effective control over the behaviour of company. In this light, t can
be assessed that law has a different parts. In this report, different aspects of contract and
negligence of business will be discussed. Also, various elements which make a contract a valid
and legal document will also be discussed (Aldous, 2016). In addition to this, terms and
conditions related to the written document is also demonstrated. Furthermore, various aspects of
vicarious liabilities will be illustrated. It is the term in which employer is liable for the acts and
tasks done by its employee. Also, various concepts of offer, acceptance warranties and
conditions will also be explained in a detailed manner. Various decided case laws can also be
give effect in the light of these provisions.
TASK 1
1.1 Define the essential elements of a valid contract
In order to effect a written agreement in a legal and lawful manner, it is considered as
necessary that it should consist al the essential requirements of a valid contract, it can be further
noted that an agreement is called a valid contract if it is consisted of all the legitimate and legal
elements in it. In the context of the business organization, it is rendered necessary to include all
the essential requirement so that there transaction can be termed as lawful transaction (Ang,
2013). There are various elements of the contract which are illustrated as follows:
 Offer: It is the first and foremost element of contract. It is a concept which includes an
offer which has been given by one party to another party. In other words, it refers to a
proposal which is given by one party to another party in a legal terms. The main
importance of offer is that without a legal and legitimate offer, a contract can not be
established. In the decided case law of Carlill v Carbolic Smoke ball company [1893]1
QB 256, it was held that there was a legal contractual relationship established between
both the parties.
 Acceptance: A contract can not be completely established if an offer is not accepted by
another party to whom offer has been given. It refers to the situation, in which one party
willingly accepts the offer made by another party.

 Lawful consideration: There should be legal and valid consideration in the contract for
which both the parties have agreed. In other word, consideration is the value, based on
which the contract is formed ( Chetwin, 2011).
 Intention to create legal relationships: It is an another essential element of a valid
contract, in which there is an intention to create legal relationship between the parties.
1.2 Impact of different types of contracts
There are different types of contract which can be practised in accordance with the
provisions of law in the time being in force. These contracts have their own impact on the
business institutions. Different forms of contract which are explained as :
 Written contract: It is the contract which is formed in a written way and also consist of
all the essential legal elements. In this agreed terms and conditions by both the parties
are written in a contract. In accordance with the decided case law of Harvey v
Facey[1893] UKPC 1 , it was been held that there was a contract established in between
both the parties in a written form. Also, the parties are bound by both the parties in the
contractual relationship and terms and conditions.
 Face to face contract: It is another type of contract in which both the parties to the
contract establishes a contractual relationship in a verbal form. These contract are framed
through the use of words of mouth. Transactions related to the contract are operated in a
verbal form.
 Valid contract: It is a different form of contract in which there is an existence of all legal
essential elements required by law in the time being in force (Ford, 2010). It is a contract
which is enforceable in the eyes of law. This contract fulfils all the requirements of a
legitimate agreement.
 Unilateral and Bilateral contract: Unilateral contract is the one in which only one party
to the contract makes an offer to an another party to an agreement. Terms and conditions
are establishment on the basis of one party who is initiating an offer. On the other hand, it
can be evaluated that bilateral contract is the one in which there is an existence of an
offer made by both the parties to the written agreement.
1.3 Analysis of different terms used in a contract
To highlight a legal document as a valid contract, it is also be very necessary that it
should contain all terms and conditions in it. In Prior to establishment of a contractual

relationship, parties wishes to include different terms and conditions in a respective contract.
These are rendered as important in the framing a contract (Gergen, 2013). The different terms
and conditions are illustrated as follows: Breach of contract: It is a condition which is implied in a contract due to the reason that
if any party does not performs its functions in a legal manner, it will considered as the
breach of contract . In other words, if the conditions and terms are not fulfilled by either
of the parties to the written declaration, then it will be considered as a breach of rupture
of contract. Also, if the contract established between them expressly provides for the
payment of damages ,then , it will be the duty of the defendant party to pay for the
injuries and loss caused by another party. Exclusion clause: It is an another legal term in the formation of the contract. It is the
term which means that one of the party excludes it self from any kind of injuries or
liabilities that arises or might be arise in the transaction of a business. It is considered as
a valid clause until and unless it does not cause any harm and injuries to the plaintiff
arty. Guarantee: This is the term in which the Principle debtor has been assured by the person
namely guarantor for payment and discharge of the liabilities of the debtor in the front of
creditor (Hisham and et. al, 2013).
 Express terms: These are those terms , which are expressly mentioned and illustrated in
the contract. On the basis of this both the parties have to express their terms and
conditions in which to fulfil their duties.
TASK 2
2.1 Applying elements of contract in given scenario
In given scenario, Ivan was the person who have purchase the book which was display on
the wall. He wants to buy that book for £50. He went to the counter to pay the amount for book.
But Todor forget to tell him that this book already sold to Carl yesterday and he forget to remove
the book form the display. On other side, Ivan was insisting them to purchase the book and he
became upset. In this scenario, the following are the elements of contracts which has been
applied in this case.

Offer – A contract is formed when one party accept the offer which has been provided by
the second person. The offer is not made for the specific person. The offer can be made to
specific person or the class of people (Jakobsen, 2010). The person has right to withdraw the
proposed offer before the acceptance by the second party. In this case, Todor was offering to
Ivan to purchase the book from his book store.
Acceptance – The acceptance occurs when the offer has been accepted by the second
party. There are many offer which is accepted by the performance or non performance for
performing an particular act. An acceptance became valid contract when, offeree knows the
offer and offeree has manifest the intention to accept it. After that acceptance must be expressed.
In above scenario, Ivan has accept the offer and he expressed his intention to purchase the book.
Consent – While entering into any contract the consent of both the parties must be
genuine. The consent of the parties cannot became valid contract until and unless it is free from
the fraud, misrepresentation of fact, etc. The case is depend upon the mistake, because Todor
forget to remove the book from the display.
Consideration – In this, when the contract has been accepted by the party then they have
to pay some little amount which is also known as consideration. In this case, Ivan was ready to
pay the amount of £50 to book seller.
2.2 Various terms of contract
The contract between the parties can either be warranties, condition or innominate term.
It is responsibility of both the parties to correctly find out the term that which are condition and
which are to be a warranties (Joint and Baker, 2011). The breach of contract has been take place
that the party has to determine that what condition has been breached so that proper remedy can
be available. These three terms has been described below.
Condition – It is a legal term which is using in contract. When any of the party are doing
contract then some of the agreements are binding with conditions and both the parties have to
comply with all these conditions. A legal contract is essential with some various terms and
conditions which is already expressed by both the parties. Case law, Poussard v Spiers (1876),
the decision of court held that Poussard was in breach of condition and Spiers were entitled with
the end of contract. She (Poussard) had missed the opening night which was the important
performance and all the publicity and critics would be based from this night.

Warranties – This is the minor term which are not central for the existence of contract. If
any of the party had breach the warranty, then the party can claim the damage but cannot the
contract. In given case scenario, any of the party has not given the warranty about any books.
Case law, Bettni v Gye (1876), the judgement of court is that Bettni was in the breach of
contract and employer are not entitled for the to end the contract. Any missing in the rehearsals
will not go for the root of contract.
Innominate term – This term was established in the case of Hong Kong Fir Shipping.
This terms looks the effect of breach and question. This approach has been criticised foe
sacrificing the certainty. The innocent party has right to deprived the benefit from the contract.
2.3 Exemption clause in contract
Exemption clause is an agreement in contract which stipulates that party is excluded from
the liability. Exemption clause is used when any person is unfairly treating with them (Letsou,
2010). It can be inserted as where the contract aims to exclude or limit one's liability from the
breach of contract or any negligence which has been occurred by the person. The party will only
relay on such exemption clause if; it has been incorporated into the contract, the intention of
parties has been made clear and the contract adheres in unfair contract term act 1977 (Statutory
control).
In given case scenario, John gone to the park and he noticed that if they want to hire the
chair then they have to pay 50p per hour. John had paid the amount and got the ticket for hiring
the chair. Later on, the chair was collapse and he got injured from them badly and cloths were
also damaged. He went to complain for compensating amount from the council. But council
refuse to pay the amount. Because, on the ticket it was mentioned about the exemption clause is
that “No Liability is accepted for any damage or injury caused by the failure of any hired
equipment”.
There are two types of exemption clause, limitation and exclusion. In limitation, the party
is limited from the liability. On other side in exclusion clause, the party is excluded from the
liability. If court decides that the exemption clause is enforceable, then they will look for the
agreement whether the money is involved or not (Mayer, 2011). The term incorporation means
that whether the clause is related within contract or not. The person will get the consideration if
the exemption clause is covered in the contract. Case law, Olley v Marlborough (1949), the
judgement of court is that the term of exemption clause were too late.

In clarity, the act must be done in the form of clarity which must e free from the
controversial and ambiguity meaning. In Statutory control, the parliament has passed the law in
regard to the safeguard of the consumer.
TASK 3
3.1 Contractual liability in tort
Contractual liability define as that one party assumes on the behalf of another party via a
contract. It is called contractual liability.
Case study :- Samways v Work Cover Queensland & Ors [2010] QSC 127
Samways maid a claim on their employer, site occupier De Luca and the supplier of
bobcat lynsha due to injured by the bucket of bobcat on site. Court observe situation and gave
their decision that De luca completely indemnify in all claims under statute or common law.
Legal principle
 Contract should be in proper agreement.
 Consideration should be clear in agreement for party.
 Both parties are ready to Contractual capacity agreement (Middlemiss, 2011).
 Agreement should be legal and not against public policy.
 Both of the parties should be genuine.
3.2 Nature of liability in Negligence
Negligence is the failure which is occurred by the one party to cause other person.
Negligence cause the harm carelessly not by intention. The following are the nature of liability in
negligence.
Tort negligence:- In this if a person have to present evidence if person found in
responsible for legal negligence or illegal negligence (Moomjian, 2012).
Criminal negligence:- Criminal negligence refers that person who charged for any
criminal activity. Criminal negligence is act of serious injury or death of someone.
Defence against negligence:- law refers many defences rule against civil negligence.
This law involved the modern approach in to comparative negligence and a person can sue for a
percentage of fault is occurred by defendant.
Other consideration:- It refers all type of negligence as gross negligence, ordinary
negligence.

3.3Vicarious liabilities of the business
The vicarious liabilities are the situations where one person is responsible for the
activities and the performances done by others. Hence, the person is liable to answer for the harm
that another person has done to the third party. In the organisation the employers are responsible
for all the actions that his employees does in the operations of the firm (Prum and Del Percio,
2011). The action of the liability lies only on the employers and his employees, the third party is
the one who is to be compensate for the situation he has faced. Following are the things that are
very necessary-
 Relation between the employers and the employees.- The test is to be done by the court
so as to prove that there is a relation between the employees and employers. Three test
has to be carried out. First- The control test, second- the integration test and third- the
economic test.
 The tort is done by employee is taken in the course of employment- If the tort is done by
the employee was not in the consent of the employee then he will not be responsible for
the vicarious liability. Therefore he does not have to be compensating for the harm that
his employee did to the third party.
If discrimination in
TASK 4
4.1 Tort negligence' elements
Due to the carelessness of one individual to the other party the tort negligence takes
place. It is the act of breach done by one to the other by not taking proper care. Basically the tort
of negligence is the legally wrong act carried out by someone with reference to other person and
he fails to accomplish in taking proper care, this can increase the risk of harm (Revak, 2011).
As the case David is driving down to the four lane street at 35 MPH in 25MPH zone. It is
the place where many children are playing. A boy name Kevin who is 9 year old running behind
a soccer ball, suddenly David without looking around enters into the lane and he hits a telephone
pole and it fell on Kevin they meets with an accident. It resulted in the permanent injury.
This is the tort negligence situation where due to the carelessness of David this harmful
situation took place (Stempel, 2010).

4.2 Vicarious liability element.
The vicarious liability means that the person is liable and responsible for the actions
performed by others. Mostly this act is opted at the work place and the employers are liable for
the actions that his employees does to the third person ( Wong and Deubert, 2010).
In the case Colin is a person who is head chef and leading the kitchen at Regent Hotel.
He is very fed up with the attitude and anger of Roger, he is a dish washer. One day Colin knock
him with the pan as he was very angry with the behaviour of Roger. It injured him very badly but
being an egoistic person he is not going to hospital. This is the act taken at a working place
therefore the employer is most liable for the compensation. And they are both in a contractual
relationship, Roger can also sue Colin for the act that is does to him. It has also injured him.
CONCLUSION
It is concluded from the report that do carry out any of the business transactions with
other person it is very must to generate a contract. The contract must contain various things like
the consideration, free consent, enforceability. As to maintain the activities of the firm in legal
way the contract is very essential. The vicarious liabilities are also understood in this report, the
consequences and the out comes of this is also concluded. The different cases related to the study
has be described so that the several concepts of contract and vicarious liabilities can be
understood.

REFERENCES
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through multilateral contracts (Doctoral dissertation, University of Birmingham).
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contractual breaches in England and Wales, Australia and New Zealand. International
Journal of Law in the Built Environment. 3(2). pp.113-125.
Ford, D.G., 2010. The Ethical Duties and Prohibitions Affecting the Decision of an Attorney to
Blow the Whistle on an Organization Client. Mustang Journal of Law and Legal
Studies. 1. p.44.
Gergen, M.P., 2013. Negligent Misrepresentation as Contract.
Hisham, S., and et. al., 2013. The concept and challenges of Islamic pawn broking (Ar-Rahnu).
Middle-East Journal of Scientific Research. 13. pp.98-102
Jakobsen, J., 2010. Old problems remain, new ones crop up: Political risk in the 21 st century.
Business Horizons. 53(5). pp.481-490.
Joint, A. and Baker, E., 2011. Knowing the past to understand the present–issues in the
contracting for cloud based services. Computer Law & Security Review. 27(4). pp.407-
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Letsou, P. V., 2010. Implications of Shareholder Diversification on Corporate Law and
Organization: The Case of the Business Judgment Rule.
Mayer, D., 2011. Legal loopholes, business ethics, and corporate legal strategy: A reply to
professor Ostas. American Business Law Journal. 48(4). pp.713-763.
Middlemiss, S., 2011. The psychological contract and implied contractual terms: Synchronous or
asynchronous models?. International Journal of Law and Management. 53(1). pp.32-50.
Moomjian, C. A., 2012, January. Drilling Contract Historical Development and Future Trends
Post-Macondo: Reflections on a 35 Year Industry Career. In IADC/SPE Drilling
Conference and Exhibition. Society of Petroleum Engineers.
Prum, D. A. and Del Percio, S., 2011. Green Building Contracts: Considering the Roles of
Consequential Damages & Limitation of Liability Provisions.
Revak, H., 2011. Corporate codes of conduct: binding contract or ideal publicity. Hastings LJ.
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Stempel, J. W., 2010. The Insurance Policy as Social Instrument and Social Institution.
Wong, G. M. and Deubert, C., 2010. The Legal & Business Aspects of Disability Insurance in
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Online

Elements of a Negligence Case. 2017. [Online]. Available through:
<http://injury.findlaw.com/accident-injury-law/elements-of-a-negligence-case.html>. [Accessed
on 12th May 2017].