ACNB: Comprehensive Report on Contract and Negligence Law

This report provides a comprehensive analysis of contract and negligence law within the context of English law. It begins by outlining the essential elements required for a valid contract, including offer, acceptance, consideration, and the intention to create legal relations. Different types of contracts, s...Read More

ACNB

TABLE OF CONTENTS
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
1.1 Explanation of importance of essential elements required for the formation of valid
contract.........................................................................................................................................3
1.2 Impact of different types of contract .....................................................................................4
1.3 Analysis of contractual terms with reference to their meaning and effect............................5
Task 2...............................................................................................................................................6
2.1 Applicability of essential elements of the valid contract.......................................................6
2.2 Applicability of law of terms in different contracts...............................................................7
2.3 Evaluation of effect of different business contracts...............................................................8
Task 3...............................................................................................................................................9
3.1 Contrast liability in tort with contractual liability.................................................................9
3.2 Explanation of nature of liability in negligence...................................................................10
3.3 Vicarious liability of business..............................................................................................11
Task 4.............................................................................................................................................11
4.1 Applicability of elements of tort of negligence and defences in different business situations
...................................................................................................................................................11
4.2 Applicability of elements of vicarious liability in different business situations..................12
Conclusion.....................................................................................................................................13
References......................................................................................................................................14
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INTRODUCTION
Contract and negligence law in English law is developed to promote fairness and protect
interest of weaker party. For this purpose, guidelines of standard conduct is provided by the
legislation. Provisions covered in this legislation is part of the civil law. All individuals and
business entities are required to comply these legal norms else they will be held liable to provide
damages (Adams, 2010). Present study provides description of provisions of contract and
negligence legislation in order to resolve given case problems. For this aspect, description will be
provided regarding essential elements, different types and terms of the contract along with its
impact. Further, negligence law will be explained along with the defences and provisions of
vicarious liability. Described legal aspects will be applied to the provided case situation in order
to provide justified recommendations.
TASK 1
1.1 Explanation of importance of essential elements required for the formation of valid contract
Contract is an agreement between two or more parties for the completion of justified
promise. This agreement is enforceable by law thus parties are required to provide performance
in a proper manner. However, all agreements are not considered to be legally enforceable. It is
because; validity of agreement requires presence of following aspects:
Offer
Offer can be defined as proposal given by one party for the completion of particular
performance to the specific person or to the general public. Offer is required to be specific and
justified by law. Example of offer is quotation to the contract or offer of lease by commercial
entity (Miller, 2011). However, offer does be valid if it comprises of ball park estimates, letter of
intent, request for proposals and expression of interest. Offer is said to be cancelled if counter
offer is provided or after passage of reasonable time or by the incapacity of contracting parties.
Acceptance
In accordance with the English law, acceptance can only be provided to the offer given
by the offeror. Due to this aspect, acceptance supported by condition or modification is not valid.
Further, it is considered as counter offer on which acceptance of initial party is required (Steele,
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2007). Acceptance can be provided in verbal or written or inferred (by conduct) manner.
Example of acceptance is delivery of goods by storekeeper on the offer of customers.
Consideration
Promise formed without consideration is not considered as agreement. Due to this aspect,
for the formation of valid contract there should be mutual exchange of promises. Consideration
is derived from Latin phase pro quo i.e. something in return. Validity of contract is not judged by
its sufficiency (Lawful consideration, 2011). However, past consideration and social
responsibility is not valid consideration for the formation of contract. For example, if customer
orders lunch in restaurant for cost £5 then consideration for hotel will be £5 and for customer it
will be food served by the restaurant.
Intention to create legal relationship
Contracting parties must be have intention to create legal relationship and they must be
capable to enter into contractual relationship. This is an assumed element of the valid contract.
However, in case of domestic and charitable agreements this element is not assumed (Luo,
2002). For example agreements between husband and wife are social arrangements thus these are
not enforceable by law. This fact can be noticed in the case of Balfour v Balfour.
1.2 Impact of different types of contract
In accordance with the provisions of Contract Act 1950, different contracts have different
impact on the contractual relationship and performance of parties. By considering this aspect,
contracting parties are required to select suitable form of contract for entering into legal
relationship. Description of different types of contract and its impact is enumerated below:
Face to face contract
This form of contract is selected in situation where all the contracting parties are able to
present at same place for the negotiations of contractual terms. These contracts are created in
verbal manner (Gray, 2010). Example of face to face contract is purchase of daily goods from the
retail store. In situation of dispute between parties, courts considers situational approach these is
absence of proof of initial deed.
Written contract
This is the most formal form of contract in which terms of the contract are described in
written manner. Written contracts are selected by business entities for the formation of contract
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linked to their operational activities. Example of written contract is employment agreement in a
commercial entity. In this contract, parties are required to performance as per the terms of deed
else they will be held liable to provide damages.
By conduct contract
By conduct contract are also known as implied contract and inferred contract. In such
agreements contract is formed in other than written or verbal manner. In this contract, parties
provide offer and acceptance through conduct (DiMatteo, 2012). Example of implied contract is
usage of local transport by public. In this contract, parties have duty to fulfil the implied
performance after the completion of performance for other party. By considering cited example
passengers will be obliged to pay for the ticket for the usage of local transport services.
Distance contract
This form of contract is selected when parties are not able to present at common place for
the negotiation of contracting terms. Validity of distance contracts is determined through the
applicability of postal rule (Warren, 2012). As per this rule, acceptance is said to be valid only if
it is communicated to the party by whom offer was provided. Example of distance contract is
shopping from trading websites. Contracting parties are required to comply provisions of
distance selling regulations.
1.3 Analysis of contractual terms with reference to their meaning and effect
Contractual terms can be defined as provisions that give raise to the contractual
obligations of the parties. Description of different types of contractual terms and their effect is as
follows:
Expressed terms
These terms are cited by the mutual consent of parties in expressed way. These terms are
linked to the objective for which contract is formulated. Further, bifurcation of contract terms
can be done in following manner: Conditions- Conditions are the major terms of the contract which is directly connected to
its objectives. Breach of condition is treated as breach of entire contractual agreement
(Emerson, 2009). Due to this aspect, innocent party is entitled for the termination of
contract and claim of damages if conditions of the agreements are not satisfied.
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 Warranties- These terms are secondary in nature. Breach of warranties does not provide
rise to the termination of contract (Collins, 2003). By considering this fact, innocent party
can only make claim of damages if warranties of the contract is not satisfied. Innominate terms- In situation where expressed term cited by the parties cannot be
bifurcated into condition or warranty then concept of innominate terms is applied. In
accordance with this approach, innocent party is entitled for the repudiation of
contractual agreement if entire benefit is relinquished.
Implied terms
Implied terms in English law can be defined as practice of setting down the obvious rules
for the contractual relationship. These terms are assumed to be part of the contract in order to
provide effect to the obvious intention of parties (Austen-Baker, 2011). Terms may be implied
into contractual agreement through courts or statue. Example of implied terms is provisions of
Sales of Goods Act 1979. In accordance with these terms, seller is required to provide goods of
satisfactory quality.
Exclusion clause
Exclusion clauses are inserted by contracting parties in order to make reduction in their
obligations. These terms are considered for relief by court of law only if following aspects are
satisfied:
 Incorporation of these terms in proper manner (Bowyer, 2006).
 Terms must cover the provisions of loss cited in the claim of claimant.
TASK 2
2.1 Applicability of essential elements of the valid contract
Business scenario 1
In accordance with the described case situation, auction is invitation to treat on which
offer was given by the Miss Kaur. In the invitation to treat, offering party cannot force other
party for the acceptance. By considering this aspect, Miss Kaur is not entitled to force auctioneer
for the sale of pen.
Further, in second situation she offered shopkeeper for the purchase of antique pen in
£800. On the offer of Miss Kaur, counter offer was provided by the shopkeeper that he will sell
pen in £950. On this offer, she has asked time till lunch break for the acceptance and shopkeeper
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promises to wait for her response till the decided time. However, shopkeeper sold to the another
party prior to the completion of lunch break. Due to this aspect, Miss Kaur is entitled to claim
damages to cancel the offer prior to the completion of reasonable time.
Business scenario 2
In accordance with the given case scenario, Charles had bought the building for the
purpose of conversion it into guest house during tourist season. For this aspect, he entered into
contract with the Murphy in £50,000. Later, Murphy demanded additional payment of £10,000
for the completion of work in timely manner. Initially Charles argued but at last he accepted the
modification in term. After the completion of Work, Charles denied to pay additional payment.
In the described case, Charles will be obliged for the full payment because modification in
contractual terms was supported by the mutual consent.
Business scenario 3
Cited case situation is having issue of intention of formation of contractual relationship.
In accordance with described scenario, Mia had start up her business in building industry as a
self employer. Hakim (his brother) gives him contract for the repair of bathroom in £2,000 in
order to help her in start up. Further, Jane (friend of Mia) also entered into fixed price contract
with her of £1,000. However, later they both denied for the payment of consideration because
they did not intend to enter into contractual relationship.
In the given case situation, Hakim will not be entitled for the payment of repair work
because his intention was help Mia in start up of his business. He does not have intention to enter
into contractual relationship with him. Contract of Jane and Mia was commercial contract due to
which element of intention is assumed to be present in their agreement. By considering this fact,
she will be liable for the payment of fixed price contract in against of services provided by the
Mia.
2.2 Applicability of law of terms in different contracts
Contract for the sale of land
Date: ___________
Purchasing party Selling party
Mr. John Mr. Sam
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 Purchasing party will provide for the £20,000/hectare for the land of Kensington
Olympia
 After the date of transfer, selling party will not be responsible for any of the statutory
liability occurred due to the conduct of the purchasing party.
 All the rights and benefits will be transferred to the purchasing party with the sale of
land. Payment by the purchasing party will be made through account payee cheque in favour
of seller.
 Miscellaneous: In this contract provisions of Land law of UK and Transfer of Property
Act will be applicable.
Purchasing party Selling party
Mr. John Mr. Sam
Signature Signature
___________ _________________
Date Date
Above contract is formed for the sell by land by Mr. Sam to John. Expressed terms in this
contract is price stated for the land and its location. Miscellaneous terms will be considered as
implied terms because it is cited to provide effect to the obvious intention of the contracting
parties (Ramanathan, 2014). Exclusion of obligation after the transfer of land will be considered
as exclusion because it is making reduction in liability of selling party.
2.3 Evaluation of effect of different business contracts
Business scenario 4
In the given case situation, Mr. X had appointed Miss Y as research assistants with the
terms that she will be dressed up in proper manner and have to work for necessary hours for the
accomplishment of provided work. In the course of employment, she was provided with the
project with the deadline of 2nd June. In order to completed her work she stayed in office for late
night but still she was not able to complete her work. Due to this aspect, she arrived early on 2nd
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June but in trousers. Mr. X was angry on Miss Y because of incomplete work and casual dress
up. In anger, he fired Miss Y in front of all staff. Due to this incident, Miss Y felt so humiliated
that she is taking treatment of depression.
In this case, contractual terms will be considered as innominate terms. It is because; cited
terms can neither be considered as condition or warranty. By considering this fact, Mr. X is
entitled for the termination of contract because he was deprived from the entire benefit of
contract. Further, Miss Y had work hard to complete the provided project due to which
termination was not fair. In accordance with the implied term in employment contract, employer
are obliged to act with dignity with their employees. Thus, action of humiliating Miss Y was also
not justified. By considering this aspect, Miss Y is entitled for the claim of damages from Mr. X.
TASK 3
3.1 Contrast liability in tort with contractual liability
Provision of liability in contract and tort is part of the civil law. These provisions are
introduced for the compensation of injury of the innocent party by imposing obligation on the
faulty party. However, there are certain differences in contract and tort liability (Hussain and
Ishaq, 2008). Description of these differences is as follows:
Basis of difference Contractual Liability Liability in Tort
Relationship Contract is created by mutual
consent of parties. Due to this
aspect, there is existing
relationship between contracting
parties (Partington, 2013).
Hadley v Baxendale
Parties in tort are stranger to
each other. Tort liability is
imposed by court law after
the negligence conduct of the
defendant.
Lane v Holloway
Nature of obligation In accordance with the contractual
obligations, contracting parties are
required to act as per the formed
deed.
Tort liability states that
parties should take care of
their actions in order to
prevent possibility of injury
of innocent party.
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Addis v Gramophone Donoghue V Steveson
Reason of occurence Contractual liability is imposed in
situation where party fails to
satisfy terms of contract in proper
manner.
Victoria Laundry v Newham
Industries
Tort liability is imposed in
situation where defendant
fails to take care of their
standard duties and due to
which injury is occurred to
the innocent party (Keenan,
2012).
Sayers v Harlow
Measure of damages
for obligation
Contractual liability provided
damages to bring claimant in
position if contractual terms were
satisfied by the faulty party.
Carlil v Carbolic smoke ball
Tort liability provide remedy
to bring injured party in
situation where default action
was not conducted by the
tortfeasor.
Murphy v Culhane
3.2 Explanation of nature of liability in negligence
Negligence can be define as situation in which party fails to satisfy the duties expected
from the prudent person in similar situation. In order to make successful claim of negligence
following principles are required to be satisfied (these principles will be supported by the case
facts of Donoghue v Stevenson): Duty of care: Defendant must have duty of standard care for the prevention of possibility
of injury of the claimant (Giliker, 2010). In the cited case, Stevenson (defendant) was
engaged in production activities of beer. As a manufacturer, it was duty to prevent
omissions and negligent conduct in production activities in order to provide better
product to the customers. Breach of duty: Defendant must be incapacitated to act in accordance with their standard
duties which had leaded to the negligent action. In the case of Donoghue v Stevenson,
drink was served in opaque bottle due to which ingredients in it were not visible. During
the consumption by Donoghue (claimant) decomposed snail emerged from the drink.
This act demonstrates the breach of duty on the part of defendant.
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 Causation: Due to the negligent action of defendant, injury should be occurred to the
claimant. Further, claimant must not contribute in the negligent action else they will not
be entitled for making claim of damages (Owen, 2007). In the described case, due to
occurrence of decomposed insect claimant has to suffered from personal injury.
 Foreseeability of damages: Damages occurred to the claimant must be predictable from
the misconduct of defendant for the successful claim of negligence (Garriga, 2013). In
accordance with the described case, injury of claimant was foreseeable in nature and thus
their claim were held successful.
3.3 Vicarious liability of business
Vicarious liability is doctrine in English law in which obligation of damages is imposed
on third party for the misconduct of the faulty party. By the applicability of provisions of
vicarious liability, employer is said to be responsible for the misconduct or negligence actions of
employees if following conditions are satisfied: Status of employee- Party in fault must have status of employee either part time or full
time employee. By considering this factors, obligation of negligence of self employed
will not be transferred on the employer (Rose, 2009).
 Course of employment- Negligent action must be occurred in course of employment in
the provided rights and responsibilities.
In order to prevent vicarious liability, employer is required to provide proper training and
guidance by which employees can accomplish their work in proper manner (Levinson, 2005).
Further, they should comply provisions of Health and Safety Act and Occupier's Liability Act for
the reduction of risk of injury of visitors.
TASK 4
4.1 Applicability of elements of tort of negligence and defences in different business situations
Business scenario 5
In accordance with the described case situation, oil was spilled onto the water by UK ship
in Sydney harbour. This oil drifted to Wharf where welding work was carried out. Employer of
the wharf had taken proper precaution for the prevention of fire. However, spark of welding fell
on the piece of cotton floating on the spilled oil. Due to this incident, fire was emerged and
Wharf was damaged. Applicability of provisions of negligence in this case is as follows:
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 Duty of care: Chatterers of ship has duty to act in proper manner to prevent spill of oil
because it can cause severe injury to the innocent parties. Breach of duty: Due to the negligence of chatterers of the ship oil was spilled onto the
water. This act shows breach of duty on the part of chatterers.
 Causation and foreseeability of damages:Due to the negligent action of defendant,
owner of Wharf had to suffered from the property damages.
In the described scenario, all the principles of negligence are satisfied thus they are
entitled to sue owners of the Wharf.
Business scenario 6
According to the described case situation, Bell was employed by Shell for the
maintenance of vehicle. At the workplace, it was not normal practice to make use of protective
goggles. Bell had lost the sight of one eye previously to the employment contract and still he was
not making use of protective goggles as risk of eye injury was small. Later, while working metal
bar flew in the good eye of Bell due to which he become blind. Duty of care: Shell has duty to provide protective goggles to the employees for the
prevention of risk of injury. Breach of duty: At the workplace, it was not normal practice to make use of protective
goggles. Due to this aspect, Bell had contributed in the negligent action of employer.
 Causation and foreseeability of damages: Damages of Bell occurred due to negligence
of him and employer. Due to this aspect he is not entitled to make claim of damages.
In the described case situation, defence of contributory negligence will be applicable due
to which employer will not be held liable to provide damages.
4.2 Applicability of elements of vicarious liability in different business situations
Business scenario 5
According to the provided case scenario, Alf is employed by Safe Care Homes ltd. This
company is engaged in running home for vulnerable children in London. Alf has been accused
for the sexual abuse of boys under his care. Parents and guardians of accused children had sued
Safe Care Homes ltd for the action of Alf. Applicability of provisions of vicarious liability in this
case is as follows:
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 Status of employee- Alf is working as warden of care home thus she has status of
employee in the Safe Care Homes ltd.
 Course of employment- Act of sexual abuse was conducted in course of employment by
Alf.
In the described case situation, all the conditions of vicarious liability are satisfied thus
Safe Care Homes ltd will be held liable for the action of Alf.
Business scenario 6
In the given case situation, Amos Bridge is pump attendant in AB and Sons garage ltd. At
his duty, he acts violently with the customer. In the response customer had sued AB and Sons
garage ltd for the action of Amos Bridge. Applicability of provisions of vicarious liability in this
case is as follows: Status of employee- In the described case situation, Amos Bridge is pump attendant in
AB and Sons garage ltd. This fact demonstrates that he is employee of the company.
 Course of employment- Negligent action was occurred during the employment hours by
Amos Bridge.
By considering the described facts, all the conditions of vicarious liability are satisfied
thus AB and Sons garage ltd will be held liable for the action of Amos Bridge.
CONCLUSION
In accordance with the present study conclusion can be drawn that contracting parties are
required to fulfil their obligations in justified manner. In situation where they fail to satisfy
contractual terms they will be liable to provide damages in order to compensate the injury of
innocent party. In situation of absence of contractual relationship, provisions of negligence law
will be applicability for the prevention of risk of injury. In accordance with the tort law,
individuals are obliged to take standard care of their actions in order to reduce possibility of
omission or negligence. If they fail to satisfy their general duties, then they will be liable to
provide damages for their negligent action. As per the conceptual framework of vicarious
liability, employer is responsible for the actions of employees. Thus, they are required to take
care of action in order to avoid negligent acts.
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REFERENCES
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Emerson, W. R., 2009. Business Law. Barron's Educational Series.
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