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Aspects of Contract and Negligence for Businesss

INTRODUCTION

This assignment is discussing about the aspects of contract law, and negligence by applying to the different practical scenario. According to that in the first part of the assignment is discussing about the essential elements, terms & conditions of a valid contract. In the second part, the elements, terms and conditions are identified in the section one has been applied to the current business situations & practical life. In third part, tort liability, negligence of tots and contractual liability is discussed. And section four this theories were in section two applied or theory mode. And at the finale, merit and distinctions part have been answered.

LEARNING OUTCOME 01

THE ESSENTIAL ELEMENTS OF A VALID CONTRACT IN A BUSINESS CONTEXT

LO 1.1 – THE IMPORTANCE OF THE ESSENTIAL ELEMENTS REQUIRED FOR THE FORMATION OF A VALID CONTRACT

Contract is an agreement which binds the parties legally. According to the Contract Law UK, (1872), essential four elements of a valid contract are and the absence of each is disqualified the considering it as the valid contract by law.

  1. Offer – It is the formal and valid invitation to start a contract or and agreement between parties. This is having all the terms and conditions are related to the contract.
  2. Acceptance – Unconditional verbal or written or implied willingness to the offer. Unless accepting the offer there can not be seen a valid agreement. It should be exactly matched with the offer. Mere silence is not a valid acceptance.
  3. Consideration – Each party of the agreement expected to be received something at a value is considered as the consideration. In English law this must be measurable by financial terms. According to that without consideration there have nothing to be shared between parties. This consideration of each party must be valued by both parties.
  4. Legal intention or purpose – The purpose of the contract must be complied with the current common legal system of the Country. The parties in the agreement must have an intention to be bound legally.

According to the law the parties are involved in the contract should have legal capacity for that. According to that, minors, insane (psychological disorders) people, bankrupt people accepted under a judgement, and drunken people are considered as the parties who cannot engage in a valid contract by law. According to law, a contract with legally incapacity person is considered as the void contract.

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LO 1.2 – THE IMPACT OF DIFFERENT TYPES OF CONTRACT

According to law to form a valid contract it is essential to communicate the acceptance by verbal, written or implication (Carlill v Carbolic Smoke Ball Company, 1892). Mere silence is not considered as the valid acceptance (Felt House Vs Bindly, 1862). And also according to case law Hyde v Wrench, (1840), counter offer also is not considered as the valid contract. There have several types of contracts such as verbal, written, on-line and contracts by deed. According to the UK law, verbal agreements are valid only for the telephone or other verbal exchange for obtaining a service. But regarding sale of property, tenancy agreements, copyright transfer, and contracts for consumer credit it is essential to use written agreement is selling goods under the law. The online agreements are become a valid contract in sales once the customer sees physically products (Consumer Protection Regulations, 2000).

And the other way there have void contracts and voidable contracts. The contract is no legal rights or obligations on the parties or no enforceable by law to execute. The case law Cundy v Lindsay (1877), Blenkiron named thief took an order for selling handkerchiefs on the name of Blenkiron named company and after that the thief left with the goods without paying money. The supplier sued against the company and court has decided there have no valid contract to be executed because it is void at the beginning of it since its purpose is not legal.

And the voidable contracts are the contracts which are accepted by law as reasonable about its incompletion. According to the law the contracts are having the parties with a minor in one side is a voidable because the minors are not allowed and considered as the parties who have no capacity to bind a legal relationship.

LO 1.3 – TERMS IN CONTRACTS WITH REFERENCE TO THEIR MEANING AND EFFECT

All the statements are important to contract should be either term or representation. Terms are two types. Conditions or warranties are two natures of the terms of the contract. According to the law the statements and clauses which are directly connected to the ultimate purpose of the contract are considered as terms and the mere statements in the offer are considered as representations. Case law Bettini vs. Gye, (1876), says breaching of a term of the contract is considered as the breaching of the contract.

Conditions are the most important terms which are extended up to the beginning of it and warranties are only less important terms having no connection with the begging and no impact to the end purpose if it was unexecuted. Conditions are in the initial offer which is persuading the offeree to accept the agreement and warranties are later additions to the contract with the purpose of supporting to conditions to achieve main purpose of the contract.

Ex:

In case law Bettini vs. Gye, (1876), Bettini agreed not to sing anywhere within fifty miles of London except at the Royal Italian Opera. He couldn’t come to the show before 6 days for rehearsals but came for the show on time. Gye refused him to perform and court decided his participation for the rehearsals has no connection with the end purpose or to enter in too this agreement. Therefore, it is warranty and Gay has breached the contract by taking a new person to the show. Breaching of a warrant has not allowed terminating the contract.

Poussard v Spiers, (1876), Mrs. Poussard couldn’t come for the first three days of the show due to ill and Spiers replaced Miss Lewis for Poussard. Mr. Poussard sued and judgement decided it is reasonable to replace another because it breaches a condition of the contract and Mrs. Poussard has to pay loss of hiring new member due to her inability to participate for the show.

LEARNING OUTCOME 02

THE ELEMENTS OF A CONTRACT IN BUSINESS SITUATIONS

LO 2.1 – THE ELEMENTS OF CONTRACT IN GIVEN BUSINESS SCENARIOS

  1. According to case law Fisher v Bell, (1961), showing prices is only invitation to offer and not an offer. Once customer sees prices and expresses the willingness to buy, is considered the offer of the sales contract. If she asks the bike at £ 250 it becomes the offer of the agreement. And the same time as in case law Hyde v Wrench, (1840), if shop owner accept it to sell to the same price it is unconditional valid acceptance. Therefore, Miss Green’s statement is the offer of the agreement.
  2. This is regarding the conditions and terms of the contract. According to law, pay additional £ 25,000 to Smith Builders by XYZ Ltd is not a term of the contract. And according to the agreement whether the financial problems are arisen or not Smith builders should give completed houses at the end of December under the agreed price. The consideration of the agreement is £ 100,000. Therefore, XYZ refusal to pay additional money for the houses is not a condition it is a warranty. The consideration is clear and additional money has no longer relationship with the initial agreement.

LO 2.2 – THE LAW ON TERMS IN DIFFERENT CONTRACTS

Exclusions are inserted to the agreement when the parties in the agreement needed to mislead their main responsibility. Case law L’Estrange v Graucob, (1934) states when there has been accepted exclusions under a written agreement, whether it is seen or not parties cannot right for claim for breaching of exclusion. But, Contract law UK, (1872), states, when there has exclusions, there would be suggested some alternative remedies for them. Under the contract law, Andy’s right to claim for bike is not effective. But under the Unfair Contract Terms Act, (1977), Andy is eligible to claim for breaching of exclusions. Because it is unfair to exclude their main liability from the service agreement and it was intentional mislead of the possible main liability from the service agreement. Therefore, according to the law Andy can sue against shop owner to claim for the loss and the exception clause is not valid.

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LO 2.3 – THE EFFECT OF DIFFERENT TERMS IN GIVEN CONTRACTS

  1. According to the contract law, car selling agreement is a void agreement since the beginning of it because it the purpose of the contract is not legal. When there has a common law in the country by banning car sales, this agreement is violated the common law. Therefore, this agreement is void since its purpose is not legal at the beginning of it.
  2. This is a warranty of the car sale agreement. According to the contract law, it has mentioned the contract agreement should be complied with other laws, rules and regulations in the country. Therefore, according to the law, all the cars are bought should be adjusted according to the EU environmental law before take them for usage.
  3. This is also an intermediate term and will face for the same situation in section 02.

In such cases the court could delay deciding whether an event is a breach of condition or warranty until the extent of the damage is known (Hong Kong Fir Shipping Co Ltd v Kawasaki Kisa Kaisha Ltd, 1962).

LEARNING OUTCOME 03

PRINCIPLES OF LIABILITY IN NEGLIGENCE IN BUSINESS ACTIVITIES

LO 3.1 – LIABILITY IN TORT WITH CONTRACTUAL LIABILITY

Both tort law and contract law are main parts of civil law. According to the Tort law UK, (1977), it is the body with rights, obligations, and remedies are imposed by the court law on civil to provide reinforcement for people who have affected by the wrongful acts of the other party in the society. The person who was affected by physical or financial damages as the outcome of breaching of tort liability is considered as the plaintiff and the persona who responsible for that is known as defendant. Therefore, according to the case law Electro chrome v Welsh Plastics (1968) liability of in the tort law arises due to wrong and damage by ones on other. Mainly tort law is discussing about the impact of or liability arises due to once activities on other one in the society. It is volunteer liability arises in everyone in the society. As in the section 02 question, car seller should be complied with the environmental law of the country.

According to contract law, liability is arisen in the contract law between the parties of it. Contractual liability is the liability occurred on each other when the binding two parties legally. In the contractual law accountability for execution of terms and conditions of the contract are considered as the liability of the contract. It is clearly expressed liability by the parties of the contract on each other. Case law Bettini vs. Gye, (1876), says the liability of the contract is execution of the terms and conditions of it. Therefore both parties have a liability to perform the terms and conditions of the contract.

LO 3.2 – THE NATURE OF LIABILITY IN NEGLIGENCE

In law negligence is considered as non-performance, performing other or underperformance of the liability is arisen (Wets and Lewis, 2009). According to the contract law, negligence is considered as breaching of terms and conditions of the contract. And according to tort law negligence is arisen due to neglect the volunteer liability. According to case law, Donoghue Vs Stevenson, (1932), the consumer bought a beer can and at the bottom there were a snail. The consumer was seriously ill, hospitalised and affected with flu (fever) and vomiting. The customer sued against manufacturer and the court decided a manufacturer has a liability of his products on the customer. The customer’s ill healthiness has been occurred due to having beer and thee beer was not in the proper quality and because of that manufacturer’s duty of care was breached. And as a result of that it became a proximate cause of harming the customer.

The manufacturer has a liability on its customers due to consuming their products and it is unexpressed volunteer liability of the manufacturer on the customer to protect them if they face to the damages which arises on tort liability.

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LO 3.3 – THE WAYS OF BUSINESS CAN BE VICARIOUSLY LIABLE

Vicarious liability comes under the tort law of the civil law. It simply means unexpressed mandatory volunteer liability of one party on other party in the society. It cannot define but a business can vicariously liable mainly by four ways as follows.

  1. A manufacturer has a liability on his product on customers. Manufacturer is liable to the customers for the damages are occurred due to consuming the particular products (Donoghue Vs Stevenson, 1932).
  2. Employer is liable on the works of employees related to job, working under the permission of employer within working hours or after working hours (Hewitt v. Bonvin, 1940)
  3. Manufacturer is liable to the environment and community due to the pollution is happened to them on his production and to maintain a fair trade under a fair competition (Environmental Protection Act UK, 1990).
  4. Employer has a liability on the employees to recover the damages are happened to them during the working hours related to job and during the non working hours related to job under the permission of employer (contract law UK, 1872)

LEARNING OUTCOME 04

PRINCIPLES OF LIABILITY IN NEGLIGENCE IN BUSINESS SITUATIONS

LO 4.1 – THE ELEMENTS OF THE TORT OF NEGLIGENCE AND DEFENCES IN DIFFERENT BUSINESS SITUATIONS

  1. According to tort law (Hewitt v. Bonvin, 1940), this injury was happened due to fell down to the gully from the fence. As per Carroll v Fearon, (1999), the proximate cause for the damage was fallen from the fence. The fence was in a better condition and therefore this was not happened due to breaching of duty of care of the park owners. According to case law Caparo Industries plc v Dickman, (1990), there have no harm was happened due to breaching of duty of care, therefore the proximate cause for the damage was not happened dur to negligence the liability of the park owners. Therefore, Smith cannot claim for the damages from the park because there have no breaching of vicarious liability of the park owners.
  2. As in the previous case Alan also is not eligible for claim from the council. Because the risk of the swimming in the mid winter has already been informed to Allen. Therefore, council not owe a duty of care to Allen. As in the pre case law Winterbottom v Wright, (1842), claim is possible when the breach of the contract by negligence. Therefore, the council has no liability on breaching of duty of care to pay for the damages to Allen.

LO 4.2 – THE ELEMENTS OF VICARIOUS LIABILITY IN GIVEN BUSINESS SITUATIONS

  1. In this scenario, Bill is not an employee of XYZ Dairies. Therefore, XYZ Dairies are totally free from the liabilities in here. According to law, using minors for the employment is a punishable offence. And the other way, according to case law Kohlmayer v. Keller, (1970), employer is liable for the damages and injuries are happened to employees during the service or under being his government with his permission. Therefore, Bill should bear all the claims for the damages were happened to teenager. And according to contract law UK, (1872) also it is a expressed term in the employment act as well as the unexpressed liability under the tort law too.
  2. If the driver was an employee, Museum owner has to bear the losses under the case law Hewitt v. Bonvin, (1940). And according to case law Ricketts v Thomas Tilling, (1915), no person has a liability of transferring duty responsibilities to others. And the friend drove the bus on behalf of Museum owner and as per his request to take it to the correct place. Therefore, Museum owner has to bear the half of damages was happened to Mrs. Smith’s car. And friend has to bear half of the damages due to his carelessness regarding the duty.

MERIT CRITERIA

M 1 – THE TIME OF EXCLUSION CLAUSES ARE DEEMED TO BE VALID AND NOT TO BE VALID

According to the case law L’Estrange v Graucob, (1934), when available exclusions have been accepted by the parties in the agreement under a written agreement, whether it is seen or not by the other party, exclusion is valid and cannot claim by breaching of it. But contract law has imposed when there have exclusions it is essential to propose alternative remedies for those exclusions. It is mandatory bay the law. When there have alternatives in the agreement, excisions are valid to the agreement and or the other party has a right to claim under the Unfair Contract Terms Act, (1977) for the damages were happened. According to the law, when the exclusions are available the liable party is subjected to pay damages maximum under the available alternatives or under the court decision according to Unfair Contract Terms Act. If not exclusions are not valid for the agreement. And when there have no written agreement, exclusions are not valid.

M 2 – STRICT LIABILITY AND THE RULE ESTABLISHED IN ‘RYLANDS V FLETCHER 1868’ HELPED TO DEVELOP THE CONCEPT

It is strict or absolute liability stands for, liability which may exist in either a criminal or civil context, is arisen the liability under the activities in tort. It means the legal responsibility is arisen on the injuries, damages or losses on the parties due to negligence. Manufacturer should liable on the product have been supplied to the customers (product liability). Employer liable on the damages are happened by the employees to their party (employee liability), are some of the examples for strict liability. According to case law Rylands v Fletcher, (1868),

  1. The person who use his own asset for his own purpose uses it mischievously must keep it under own peril, and if not he becomes prima facie answerable for all the damages though the damages where happened by the natural consequences to a third party
  2. The asset owner uses the asset for its ordinary usage without willfulness or negligence, he is not a party for liable for the neighbors for the damages were happened to them.

M 3 – EMPLOYER’S VICARIOUS LIABILITY IN EMPLOYEES AND EXCEPTIONS

To: William Brown

From:

Date: 2013-11-07

Employer is vicariously liable for the works are done by the employees. According to case law Hewitt v Bonvin, (1940), employer is liable for the works are done by the employees when;

  1. The employees are working in normal working time, and
  2. The employees are working in special working hours under the permission and awareness of employer.

But in law though;

  1. The employee is working in the normal working hours, but it is not related to job description and or,
  2. The employee is working in special working hours on behalf of employer but he or she is not awareing about that

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; the employer is not liable for the harms, injuries and damages are happened to employees.

DISTINCTION CRITERIA

D 1 – IMPLIED TERMS INCORPORATED INTO CONTRACTS

Implied terms are not well expressed but the parties in the agreement know about those by implications or it is derived from other law to the contractual agreement. Neither party can be free from by breaching the implied terms by expressing unawareness about them. When the people are entering in to a sales contract, the implied terms are transferred from the Sale of Goods Act, (1979), are;

  1. The seller has legal right to sell goods to be sold
  2. The goods to be sold are completely possessed with the corresponding descriptions
  3. The goods to be sold are in the satisfactory quality
  4. The samples have been shown related to sales agreement are completely closer to the goods to be sold

According to Hutton v Warren, (1836), according to the custom of the country farm tenant should give a reasonable allowance to the landlord. Though this allowance has not in the land rent agreement it is implied term in the contract by the common customs of the country.

According to case law Liverpool City Council v Irwin, (1977), Mr. & Mrs. Irwin was not willing to pay rent at the flat to the council due to vandalise the common parts of the building including lift, stair lights, chute and lavatory cisterns. The court decided those facilities are implied terms of the rent agreement and therefore it is reasonable to neglect the rent payment by tenants.

D 2 – ‘LIABILITY FOR ECONOMIC LOSSES’ AND ‘LIABILITY FOR NERVOUS SHOCK’ IN TORT

Both cases are explained same impact to the asset and human body can be happened by breaching the tort liability of each other.

According to the Tort law UK, liability for economic losses is defined as the damages or losses are happened to a party in the society due to work on other party and that damage can be clearly measured by the financial terms. As an example, a tourist hotel has lost its seasonal demand due to cutting trees of the forest by a manufacturer and when it cuts the main power cable to the hotel and because of that it ruins tourist demand of the hotel. The liability of this economic loss to the hotel is arisen on the manufacturer under the tort liability and then if it is insured, manufacturer can claim it from the insurance company.

According to tort law UK, liability for nervous shock is defined as the recognisable and severe physical damages are happened to the physical body, mind and internal system due to the sense of external event to the mind. This situation should be proofed by the medical assessment to the court and it can be proofed that the nervous shock was happened due to other party would be clear. In the case law Rhodes v Canadian National Railway, (1991), judge says the situation of affecting inside of a person due to killing or suiciding their beloved ones is medically accepted as the nervous shock. And the proximate cause for this internal shock should definitely be the deprivation of beloved one. And the other way, if one party’s activity will be become the proximate cause for being mentally affected third party person, it calls as nervous shock.

D 3 – ‘PROMISSORY ESTOPPEL’

Promissory Estoppel is a term of used in the contract law and if it may not be an enforceable contract, it is not inequitable to enforce to a party when the other party has relied on the promise of one party. In the contract law set of guidelines has been provided that if a party changes their position substantially either by acting or long-suffering from acting in confidence upon a unwarranted promise, then that party can put into effect the promise even if the essential elements of a contract are not present.

REFERENCES

Felt House Vs Bindly, (1862)

Carlill v Carbolic Smoke Ball Company, (1892)

Hyde v Wrench, (1840)

Consumer Protection Regulations, (2000)

Bettini vs. Gye, (1876)

Poussard v Spiers, (1876)

Fisher v Bell, (1961)

Contract law, (1872), UK

L’Estrange v Graucob, (1934)

Unfair Contract Terms Act, (1977)

Hong Kong Fir Shipping Co Ltd v Kawasaki Kisa Kaisha Ltd, (1962)

West, G.D and Lewis, W.B., (2009), Contracting to Avoid Extra-Contractual Liability—Can Your Contractual Deal Ever Really Be the “Entire” Deal, The Business Lawyer, Vol. 64, pg. 999-1038

Tort law, (1977), UK

Hewitt v. Bonvin, (1940)

Donoghue Vs Stevenson, (1932)

Environmental Protection Act, (1990), UK

Carroll v Fearon, (1999)

Winterbottom v Wright, (1842)

Kohlmayer v. Keller, (1970)

Ricketts v Thomas Tilling, (1915)

Sale of Goods Act, (1979)

Philips Electronique Grand Public SA v British Sky Broadcasting Ltd, (1995)

Hutton v Warren, (1836)

Liverpool City Council v Irwin, (1977)

Rhodes v Canadian National Railway, (1991)

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