Aspects of Contract and Negligence in Business Assignment Solution

Program	Diploma in Business
Unit Number and Title	Aspects of Contract and Negligence In Business
QFC Level	Level 4

Task 1

In compliant with the requirements of task 1 it is essential to inform Peter Abraham regarding how procedural path of a contract formation and also regarding the key elements involved in formation of a legally validated contract. To begin with Peter Abraham should understand that contract is not a mere agreement but a legally validated agreement enforceable by law wherein two or more parties are legally bound to remain faithful towards the contractual terms and conditions.  However, a contract can either be unilateral or bilateral. In case of the former, only one party is found to bear the contractual obligation while in case of the latter, both the parties should accept to remain obliged towards the contractual terms and conditions. Hence in a process of contract formation the key elements required are offer, acceptance to the offer, considerations and intention to establish a legal relation within the contracting parties. Also the involved parties should own the legal capacity to enter into a contract. Minor aged individuals and mentally challenged people are not legally entitled to form a contract because they lack of independent decision making ability (Elliot and Quinn, 2009).  Coming to the offer made in a contract, the person making an offer is represented as the offeror while the person to whom the offer is made is the offeree. However invitation to treat should not be considered as an offer and hence not sufficient to form a contract. The longevity of an offer is also important wherein an offer made can exist for a specified time, and rejection, counter-offer, demise of the offeror and revocation often results in termination of the contract. Proper communication is mandatory for an offer to be accepted. As mentioned previously, consideration is also another key element of contract formation that is reflected as the requirement of reciprocal obligations on the parties involved in a contract. Importantly, Peter Abraham should also know that parties in a contract should obtain valuable consideration for performance of their side of contractual duties. Also, a proper contract must clearly specify the contractual terms and conditions although in majority of cases certain implied contractual terms are also prevalent (Elliot and Quinn, 2009).

In context of the topic of discussion it can be further added that while documenting a contract paper, Peter Abraham should emphasize on mentioning the full names and postal address of the involved parties. The documented contract paper should also contain payment provision, detailed specifications of the goods or services in concern, contractual terms and conditions along with specific timescale of the undertaken business project.   Apart from this proper documentation is also important with respect to limitation of liability, termination provision if the contract is needed to be terminated and details regarding change of control.

1.2

• Face to face-  Face to face contract formation can be considered as one of the most conventional and traditionally practiced mode wherein the parties communicate with each other directly at an interpersonal level. Verbal commitment to the contract formed by face to face communication form the backbone of such contract and the involved contracting parties remain verbally obliged towards their respective contractual conditions. Also the contractual terms and condition in contract formed by face to face communication is decided orally (McKendrick, 2005). However breach in such contract is a tedious task to resolve. Important to convey the legal guidelines of postal rule cannot be implemented in contract developed through face to face communication. Henceforth Peter Abraham is suggested not to enter into a contract formed by face to face communication as there are many gaps in contracts formed in such manner.
• Written contract- Written contract is another variant of contract formation methods and in this case, the contractual terms and conditions are clearly documented. Also the mutual consent of the parties to enter into the said contract is supported by their respective signatures on the contract paper. The above mentioned aspects are found missing in can of a contract developed orally. Furthermore, a written contract mentioning all the contractual specifications enable to address breach in contrast and the injured party can seek for compensation (McKendrick, 2005). A written contract is enforceable by the legal guidelines of English contract law and is a far better option for contract formation compared to an orally developed contract.
• Distance selling (telephone, internet)- The contract that are formed wherein a supplier and the consumer are not found to deal through face to face information communication and use exclusive modes of distant communication are considered as distant selling. Telephones and emails are the major options for distant selling. However distant selling should also have an offer, acceptance to the said offer, intention to establish a legal association and considerations in the said contract. Essential to highlight as distance selling regulations are no longer applicable with the legal guidelines of United Kingdom and has been replaced by the consumer contracts regulations (MacIntyre, 2007). This particular regulation is applicable for online purchases. Therefore if Peter Abraham is interest to expend his business he may consider incorporating distant selling within his business operations.

1.3

1. Condition-  Conditions and warranties are the major variants of contractual terms. The former is considered as a fundament to a contract formed. henceforth a breach in condition of a contract permit the injured or claimant party to terminate the said contract and can also proceed for claiming compensation as a remedy to the injury or loss suffered (MacIntyre, 2007).
2. Warranty-  In comparison to conditions of a contract, the warranty is less imperative in nature and hence the contract can survive a breach. Hence a warranty is identified as superficial to the contract and breach in warranty permit the claimant to claim for the damages but is restricted from terminating the entire contract. It can be further added as if breach has occurred in conditions or warranty of a contract, in both the cases shall give rise to damages and provisions to claim for compensation is valid in both the cases (MacIntyre, 2007). 
3. Innominate terms- Innominate term is found to lack a proper definition; however it can be explained as an intermediate term that cannot be either a contractual condition or a warranty related to a contract. The case of Universal Furniture versus Maple Flock Company can be cited for better understanding of innominate term. The case of Hong Kong Fir Shipping Co Ltd versus Kawasaki Kisen Kaisha Ltd that was produced in the court of appeal of England and Wales was the origin point of innominate terms and this cited case was also referred in the case of the Mihalis Angelos (E-lawresources.co.uk, 2016).
4. Exemption clauses (including legality)- The application of exemption clause is found in contractual agreement with an objective to limit or exclude the liability of the involved contracting parties. Often such exemption clause is applied in an unfair or unethical manner which is also one of the major drawbacks of the applicability to such clause. Exemption clause is primarily of two variants: the limitation clause and the exclusion clause (Elliot and Quinn, 2009). Important to convey that all exclusion clause are exemption clause but all exemption clause are not exclusion clause and hence should not be confused. Furthermore for the purpose of interpretation of the exemption clause it is the responsibility of the judiciary body to assess liabilities and this can be viewed as ‘construction’. In this context the case of Glynn versus Margeston (1893) can be reviewed (swarb.co.uk, 2015). On the contrary the case of Houghton versus Trafalgar Insurance (1954) has reflected an ambiguity with respect to implementation of the exemption clause (I-law.com, 2016).

Task 2

Cases

Case 1- Agreement

Prior venturing into the details of case 1 it is justified to state that certain kinds of transactions that are found to be associated wherein one party invited another to make an offer  can be defined as invitation to treat and should not be confused with an offer. Hence the parties are not bound to obey the contractual terms and condition on invitation to treat as this is merely an initiation to start a contract. In this given case situation, Carol as expressed her interest to purchase the product advertised and she has not entered into any contract with the seller (Willmott, Christensen and Butler, 2005). It can be further added that Carol may proceed with further negotiation to enter into a contract. This case can be considered as an example of advertisement given for a bilateral contract and are therefore identified as invitation to treat. The case of Grainger & Sons versus Gough (1896) can be reviewed that distributed a circulation quoting the price of wine by a wine merchant. The cited case is an example of advertisement given for a bilateral contract and it is only an invitation to treat (Webstroke.co.uk, 2016). Therefore, advertisements, display of goods, auctions, are not example of offer but are different types of invitation to treat. Hence Carol has not entered into any contract with the furniture seller rather she has only initiated a    communications and information  with the seller as a response to his invitation to treat.

Case 2 – Consideration

Referring to the details produced in case 2 it is observed that Preston has made a promise to pay an amount to the George, Smith & Forgarty Inc. provided the company has hired his son. However Preston’s son was hired by the concerned Organization before such promise was made. In this context the legal implications of consideration with respect to contract formation need to be highlighted.  Prior concluding whether the concerned organization can enforce Preston to keep his promise it can be stated that past consideration are not good consideration and hence not legally supported. Also it is important to investigate whether the consideration is sufficient and hence it is essential to evaluate the adequacy of the agreed consideration (McKendrick, 2005). The case of Collins versus Godefrey can be cited in order to understand that a consideration is not sufficient if it is in accordance with a legal duty already owned (Scribd, 2016). The case of Stilk versus Myrick has reflected the fact that consideration is not sufficient if it is in accordance with a contractual duty already owned. Therefore it can be concluded that since the promise made by Preston fall into a past consideration and the consideration is also not sufficient in nature, the defendant cannot legally enforce Preston to pay the promised sum.

Case 3 – Exclusion clause

Case 3 can be analysed with the intention to understand whether the contractual terms can be applied as an exclusion clause. Important to covey fairness in contracts is often connected with the applicability of an exclusion clause. In this context the case of Green versus Cade (1978) can be cited (I-law.com, 2016). The case of St. Albans city and DC versus International Computers (1994) can produced the jury decision wherein application of exclusion clause was found to be unfair and   unreasonable (Webstroke.co.uk, 2016). As communication of the contractual terms is the key requirement for implementation of exclusion clause which is missing in case 3, the restaurant owner cannot impose this clause to limit its liability (Peel and Treitel, 2011). Another case of Overland Shoes Ltd versus Schenkers (1998) can be considered as an example wherein implementation of exclusion clause was evident to be unfair (I-law.com, 2016).  Hence for application of exclusion clause it is essential for the restaurant authority to inform the claimant regarding the contractual terms. The case of Chapelton versus Barry UDC can be aligned with the given case scenario (InBrief.co.uk, 2016).

Case 4 – Implied term

According to the incident described in case 4 it is justified to convey that the initial contract formed between Zephra and Aaron was terminated with the death of the offeror (Zephra). However it is to be noted that Aaron being a part of the said contract has heavily invested on Zephra’s property. The case can be analysed with respect to the legal aspects of implied terms. According to English contract law, contractual terms can be implied in fact, in law and by custom or trade (Riches and Allen, 2011). The case of Aaron and Zephra can be reviewed with respect to terms implied in good faith. Aaron invested on the property of Zephra with a faith that he is allowed to stay in that house for a period of five year with no increase of rent. Although the contract has been already terminated with the untimely death of Zephra, but it is justified to compensate Aaron by application of implied term. The case of Director General of Fair Trading versus First National Bank can be cited wherein implied term was not applicable as good faith was found to be missing (E-lawresources.co.uk, 2016).

Case -5

An automobile insurance policy serve to cover all the claims related to the concerned vehicle which is also inclusive of the accidental coverage. Insurance is made with an intention to safeguard if certain damages are incurred by the insured vehicle. If the insurance claim is legally validated the insurance company is accountable to address the insurance claims. However due to certain fraudulent activity and also     due to non-disclosure of material information often practised by the insurance holder the insurance agent has right to terminate or void an insurance subsequently rejecting the insurance claims made by the policy holder (Sharrock, 2007). Venturing into the scenario presented in case 5 it is evident that a non-disclosure of information has been committed by the policy holder as he has not informed regarding the theft claims already made by him in the previous year. Hence as the incident can be aligned with non-disclosure of material information, the insurance agent has the legal right to void the car insurance and also to refuse meeting the insurance claim made by the policy holder.

Case – 6

As already mentioned while addressing case 5, the practice of non-disclosure of material fact enable the insurance agent right to void an insurance policy, similar situation is evident in case-6. Important to note non–disclosure of material information or fact committed by the policy holder can be either intention or unintentional. Hence this particular aspect demands further investigation by the insurance company (Peel and Treitel, 2011).  Therefore if it is proved that non-disclosure of material information has been deliberately done by the policy holder indicating a fraudulent activity, the concerned policy agent has the legal capacity to void the said policy. In this case it is observed that the policy holder has practised a non-disclosure of material information and has not mentioned the technical alterations made in the insured vehicle. If his act is found to be deliberate in nature, the insurance agent has right to void the policy from the staring date with immediate effect.

Task 3

The liability that appear as contractual liability and tortious liability are found to cause damage or injury. In case of contractual liability it is presented as application of the civil liability rule to a qualified assumption from a valid contract.  On the contrary tort liability is found to be connected with a legal relation that is compulsory in nature and emerge from the illegal act resulting to prejudices. With an intention to discuss the similarities between contractual liability and tort liability it can be conveyed that both own an identifiable structure and also demand fulfilment of the similar structural element. Legal action, prejudice, causality relation of the illegal act and guilt are the major ingredients of both the forms of liabilities. Furthermore, both contractual and tort liability reflect an essence of repairing or a compensatory act to incur the   damages caused and in both the cases the repair done should essentially be of integral in nature (Peel and Treitel, 2011). Coming to the differences between the above discussed forms of liabilities it can be stated that in case of contractual liability the individual held responsible should bear a relation with the said contract while in case of tortious liability it is not mandatory for the accused individual to be a part of the contract. Also contractual liability arises from the failure to meet the contractual obligations which is not applicable in case of tortious liability. Contractual liability is addressed by special standards of the regulations while tortious liability is a frequent in common law of civil liability. In case of tortious liability harm of direct injury to suffered by the claimant which is not in case of contractual liability (LUDU?AN, 2013).

In accordance to the legal principles of civil law  a negligence claim can be presented as an individual also identified as the plaintiff who is entitled to file a  case against another individual (also presented as the defendant) who has caused harm to the plaintiff by failing to take proper and reasonable care with respect to duty of care. Importantly negligence law is evident to be comparing the defendant to a ‘reasonable individual’ and it is the decision given by the jury to consider on individual as a reasonable person. Negligence being one of the serious aspects of tort law its presence is satisfied by elements namely duty of care, breach to   duty, cause in fact, proximate cause and damages suffered (Peel and Treitel, 2007). Therefore in order to prove a negligent claim it is essential for the plaintiff to prove that the defendant owned him a duty or care that was subsequently breached. Also the breached duty was the proximate cause of the damages or injuries suffered by the plaintiff. In this context duty of care can be aligned with reasonable care while breach to duty can be presented as the failure of the defendant to meet the standard of care demanded. Proximate cause can be explained as the reason behind the damages caused to the plaintiff. Furthermore in order to make an affirmative negligent claim it is mandatory to establish that the damages suffered by the injured party or individual were not remote and hence foreseeable to the defendant (Ohiobar.org, 2016). The case of Blake versus Galloway (2004) can be cited that reflected negligence wherein breach to duty of care was evident (Sixthformlaw.info, 2016).

Restoration of workplace safety with respect to employee health and safety is observed to be one of the key concerns of the employer at present times. The employer should remain aware regarding the legal implication that can be imposed holding the organization behaviour  or the employer vicariously responsible for the acts or omission of its employee. The key question in cases related to vicarious liability is whether the accused employee was acting in a personal capacity or was in course of his service tenure. However the concept of holding an employer or an organization vicariously responsible is logical because of the fact that the employer is at the governing position with a duty to keep a control over the activities of its working force. Essential to mention that an employer cannot be held vicariously responsible for the tort committed by an independent contractor, however organizational vicariously responsible is applicable if the employer has not checked that the task assigned to the independent contractor was performed with efficacy. Also breach in this respect is subjected to occur provided the duty cannot be delegated to another party (Giliker, 2010). As the cases related to organizational vicariously responsibility is not an easy one to solve several investigative procedure or test are implemented. Control test, integration test, Salmond test and economic reality test are the examples in this respect (MacIntyre, 2007). Employer’s indemnity is also found to be connected with vicarious liability wherein am employer if proved to be vicarious liable in turn may sue the accused employee to recover the loss suffered. The case of Lister versus Romford Ice Cold Storage Co. (1957) is an example to cite. The case of Netheremere Ltd versus Taverna & Gardiner can be reviewed wherein the employer or company was held vicariously responsible for the act of its employees (Emplaw.co.uk, 2016).

Task 4

Cases

Case – 7

The situation provided in case 7 need to be addressed in two different approaches. at the beginning it is required to investigate on what and how the Goodmayes hosp[ital can be held responsible for the death of Mr. Brown while to address the second question it is important to analyse on what grounds the concerned hospital cannot be held responsible for the undesirable incident that has occurred.

• In order to establish that Goodmayes hospital is accountable for the demise of the concerned subject it is essential to prove that the concerned hospital owned Mr. Brown a duty of care and that duty of care was breached. Also it is essential to prove the proximate cause and the damages suffered. More importantly, in this particular case, it is essential to prove that the damages suffered was not remote was foreseeable in nature (Elliot and Quinn, 2009). Aligning with the topic of discussion it can be stated that remoteness of damages is found to bear an association with the requirement that was damage must be of foreseeable type hence remoteness of damage is applicable for the claims made under the Occupier’s Liability acts. The case of Re Polemis & Furness Withy & Company Ltd. (1921) can be cited in this respect (E-lawresources.co.uk, 2016). Also in order to establish that the damage was foreseeable in nature, the concerned case must qualify the Wagon Mound test
• As already addressed in the previous part that remoteness of damage is one of the crucial and deciding factor with respect to establish a negligent claim; the Goodmayes hospital cannot be held accountable for the death of Mr. Brown if the damages suffered are proved to be remote and not foreseeable by the defendant. Similar to the requirements of the previous situation, wagon mound test is essential to be incorporated in order investigate remoteness of damage. If remoteness of damage is proved and it is also evident that the death of Mr. Brown was not foreseeable by the concerned hospital authority, the jury cannot hold the hospital responsible for his death (Elliot and Quinn, 2009). However legal investigations are also essential in order to evaluate the degree of care need by Mr. Brown with respect to his medical condition. The case of Tremain versus Pike (1969) can be reviewed in this context. According to the above referred case, the decision of the jury indicated that damages suffered were not foreseeable and remote and hence the defendant was not found to be liable for the damages caused (E-lawresources.co.uk, 2016).

Case-8

The situation depicted in case 8 can be aligned with the cases of organizational vicariously liability wherein the employer is held accountable for the tort committed by it employee causing injury to a third party. In this case, the driver of the chauffeur company was found to execute a negligent act while driving the plaintiff. Grave injury was encountered by the plaintiff due to the negligent act of the driver. Although the driver is held directly responsible for the negligent act a tort committed but it is also justified to hold the chauffeur company accountable as the tort occurred in course of the driver’s employment and it is also the duty of the   chauffeur company head to monitor how efficiently the driver is performing his duty.  The case of Barker versus Corus (UK) Plc, , HL (Lord Hoffman, Lord Scott of Foscoite, Lord Rodger of Earlsferry, Lord Walker of Gestingthorpe, Baroness Hale of Richmond)  (2006)   can be cited as an example wherein the employer was   held vicariously liable for the negligent exposure to asbestos (Injury and Liability, 2016). Furthermore employer indemnity is also applicable in this case and the chauffeur company is entitled to sue the accused driver to recover some of the damages awarded against him.

Case – 9

The situation presented in case-9 can be considered to bear certain relevancy with the previously discussed case-8 as the legal implications of vicarious liability are also applicable in this case. The  british supermarket  owners can be presented as the employer who is also the defendant of this case and an employee who suffered severe injury while working in the supermarket can be considered as the plaintiff. In this case the   supermarket owner can be held vicariously liable for the accident that has occurred although it has delegated the duty of employee’s workplace safety to another party. The reason behind holding the supermarket owner vicariously accountable for the injury suffered by the plaintiff is due to the fact that it is the responsibility of the employer to monitor whether a delegated task is executed properly. Hence in order to properly establish the given case it is important to perform an integration test and also economic reality test. The rationale behind suggesting economic reality test is to evaluate whether the workplace safety monitoring was officially delegated to another party and integration test is recommend in order affirm that the plaintiff was an integral part of the concerned supermarket (Giliker, 2010).  The case of Dorothy Elizabeth Munro versus Aberdeen City Council (2009) can be cited wherein an employer was evident to slip on ice suffered an accidental fall during her course of employment (Casecheck.co.uk, 2016)

References

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