Essential Elements of Contract Law Assignment

Introduction

Tort and contract are two branches of law. They both are civil wrong but despite their various similarities there are various dissimilarities between the two which have been enumerated in the report herewith in brief on the ground nature of right, consent of parties and on the type of remedies. This Essential Elements of Contract Law Assignment comprises of all the elements of contract, negligence and vicarious liability discussed in brief.  

Task 1 Understand the essential elements of contract in business context

Task 1.1 Essential elements of contract

There are following four elements of contract-

1. There must be a valid offer to do or not to do something, the terms of which must be certain and defined. Offer must be distinguished from mere invitation to treat because invitation to treat is a mere declaration to do something and is not an offer (Government of Western Australia, 2014).
2. There must be a valid acceptance to the offer. A valid acceptance takes place when the offer is accepted without any condition or alteration in the terms of offer (Government of Western Australia, 2014). Any alteration will amount to counter offer terminating the original offer (Hyde v Wrench, 1840).
3. The parties entering into contracts must intend to create legal relationship (Government of Western Australia, 2014). In social or domestic contracts the courts presumes that the parties did not had the legal intention (Balfour v Balfour, 1919), unless the contrary rebutted by strong evidence (Merritt v Merritt, 1970). In commercial contracts, the court presumes the parties intended to create a legal relationship (Esso Petroleum v Commissioners of Customs & Excise, 1976), unless the contrary is rebutted by strong evidence (Ferrera v Littlewoods pools, 1998).
4. For a binding contract, the contract must be supported by a valuable consideration (Government of Western Australia, 2014). Consideration must not be a past consideration (Re mcardle, 1951).

Task1.2 is it possible to have a contract without face to face?

Face to face contract is a contract where the parties negotiate the terms in contract in their physical presence. There can be contracts such as the Distance Selling contract whereby the parties are unknown to each other such as online shopping.

The Distance selling Regulation properly known as the Protection (Distance Selling) Regulations 2000 was passed in UK for the protection of the consumers who enter into Contracts and Liabilities with the supplier at a distance. The underlying principle for proving such protection to the consumers is that the consumer are not benefited to meet the supplier face to face for inspection of goods or services that has been offered for sale (Out-Law.com, 2010).

Task 1.3 Referring the case of Carlill v Carbolic Smoke Ball Co (1893), explain the effect of the words in the advertisement placed by the company informing the readers that it had placed £1000 with the Alliance Bank to meet any possible claim

The effect of the words in the advertisement placed by the company in the case of Carlill v Carbolic Smoke Ball Company 1892, informing the readers that it had placed £1000 with Alliance Bank to meet any possible claim was that it constituted a binding unilateral offer that could be accepted by anyone who performed its terms.  In a unilateral offer the party making promise to reward is under obligation to perform their promise on the completion of the performance of the act.

Task 2 be able to apply the elements of contract in business situations

Task 2.1 Identify the elements present and that were not in contract between David and William

In the very first agreement between David and William, dated 01/05/2014 there was no elements of contract because an advertisement is an invitation to treat and does not amount to offer (Partridge v Crittenden, 1968). William made an offer to David after which David wanted 10 days for quotation.

On 10/05/2014, the acceptance of offer took place when David accepted the instructions given by William about the size of the gym and the facilities required. Since this is a commercial contract, the intention of David and William is to make a legal relationship (Esso Petroleum v Commissioners of Customs & Excise, 1976). The consideration that William was required to pay to David was £18000.

Task 2.2 when William informed David of the requirement to complete the work before 31^st July 2014, was a contract formed between them?

Even if William claims that David did not oppose, then also William cannot treat this as a contract because it is necessary that acceptance of the offer is very essential to complete the formation of a contract and the same must be communicated. Any inactivity or silence and silence will not amount to offer. When William informed David for the requirement to complete the work before 31 July 2014, it cannot be said that David accepted the term, because he did not say anything and silence does not amount acceptance (Felthouse v Bindley, 1862). Hence, no contract was formed between William and David.

Task 2.3 a) Discuss the position of David when he informed William on 25 June 2014 that he would not be able to complete the work before 31 July 2014, and was he in violation of the contract terms

David has not violated the terms of contract when he informed William on 25 June 2014 that he would not be able to complete the work before 31 July 2014 because no contract was formed between William and David regarding acceptance of this term.

Task 2.3 b) Explain the situation to David on his claim for the additional £2000 for completing his work before 31 July 2014

David cannot claim for the extra £2000 for completion of his work because he had an existing contractual duty to complete the gym and this act cannot be used as consideration for new promise. An existing contractual duty is not a valid consideration (Stilk v Myrrick, 1809).

The contract between the parties is contrary to public policy and is void for want of consideration.

Task 3 Understand principles of liability in negligence in business activities

Task 3.1 How liability in tort may arise, give example and differentiate it from contractual liability

The liability in tort arises when the wrongdoer violates some interests vested in another person which has been imposed by law (RMTSA, 1998).

For example- A negligently drives a car and thereby met accident with B injuring B very badly. It is imposed by the law that a person should take reasonable care while driving. A is the wrongdoer who has committed tort.

Tort is different from contract in the following manners-

1. The right in tort is rem as it is against the whole world whereas the right is personam in contract because it is against an individual or a particular group.
2. There is no contract between the wrongdoer and wronged, whereas there is contract between the parties in contract.
3. Consent of parties in tort is irrelevant whereas there is consent of parties in contract.
4. The duty of care is imposed by law in tort whereas in contract the party voluntarily accepts the terms of contract.
5. The remedy in tort is for unliquidated damages whereas the remedy in contract is for liquidated damages (ACCA, 2014).

Task 3.2 what have to be proved by the claimant that court will establish tort of negligence has occurred

The claimant must prove the following so that the court will establish occurrence of negligence-

1. That the defendant owed a duty of care. In the latest case of Caparo v. Dickman (1990), a threefold test was established for the duty of care which stated that harm must be reasonably foreseeable, there must be a employee relationship of proximity between these parties and in order to impose liability, it must be fair, just and reasonable.
2. The defendant breached that duty. The test to determine the breach of duty is that, if the defendant knowingly causes a substantial risk of loss then the duty of care is breached. Also, if that defendant had failed to realize that substantial risk of loss which any other person of ordinary degree would have realised, then also duty of care is breached (Wyong Shire Council v Shirt, 1980).
3. The plaintiff must also show that the act of the defendant caused loss to the plaintiff.
4. The negligence of the defendant must not be too remote of plaintiff’s harm if one would never ever foresee that to be happening. This means that if the defendant could foresee that something bad can occur and therefore take precautions to stop it cannot be held liable (Palsgraf v. Long Island Rail Road Co., 1928).
5. The breach of duty caused loss or damage to the claimant (Donoghue v Stevenson, 1932).

Task 3.3 Explain concept of vicarious liability with two examples where employer was held liable for action of their employee and two examples where they were not held liable

Vicarious liability- Vicarious liability is basically where a person is held liable for the tort committed by another person. To make an employer vicariously liable for the tort committed by its employee the following three elements are required to be established-

1. There must be a relationship of employer and employee
2. The tort must be committed by the employee during the course of employment and
3. The act must be authorised act by the employer (Law Mentor, 2014).

Examples where employer liable for action of their employee-

1. In Lister v Hesley Hall Ltd. 2002, the employer was vicariously liable for to sexual assault and deceit committed by the employee.
2. In Sheffield and Lincolnshire Railway Co. 1873, a porter believed that the passenger was on the wrong train, violently pulled him off and caused injury to him. The employer was vicariously liable.

Examples where employer was not held liable for action of their employee-

1. In Beard v London General Omnibus Co. 1900, a bus conductor drove a bus and injured a pedestrian, but the employer was not vicariously liable because to hold an employer vicariously liable it must be completely outside the duties of the employee.
2. In Bugge v Brown 1919, the employer was not vicariously liable because the employee act was so as to be in effect a stranger in relation to his employee with respect to the act he has committed.

Task 4 Apply the elements of tort and negligence and defences in different business situations

Task 4.1 compare and contrast the verdict in Donoghue v Stevenson (1932) with Hill v Chief Constable of West Yorkshire (1989). What defences were used in each case? Give your view on the verdict of the second case. Do you consider it as a just verdict?

Both the cases of Donoghue v Stevenson 1932, and Hill v Chief Constable of West Yorkshire 1989, are the case of negligence whereby in the former the duty of care was established on the defendant while in the latter case, the duty of care by defendant was not established.In Donoghue v Stevenson 1932, and Hill v Chief Constable of West Yorkshire 1989 case, the defendants contended that they did not owe a duty of care towards their respective plaintiff.
I agree on the verdict passed in the case of Hill v Chief Constable of West Yorkshire 1989, where it was established that the police did not owe a duty of care. The police was not negligent in their detection and detention of the plaintiff. There are various functions involved when a police discharges their duty, and at times they may make mistake. Since it is in the interest of general public, liabilities cannot be imposed on the police for such negligence.
According to me, the verdict was just, fair and reasonable because I believe that there was no cause of action because there was no duty of care owed by the police in the detection of crime as it was in the interest of the general public.

Task 4.2 Discuss the position of the taxi service in the given case, from the vicarious liability point of view

Vicarious liability is a liability imposed on the employer for tort committed by their employee during the course of employment and for the acts authorized by the employer (Law Reform Commission Act 1968, 2001). Even if the taxi service is instructing the drivers that there should not be any negligent driving, yet the taxi service will be vicariously liable for any negligent or reckless driving if any of its drivers commit during the course of environment R v Seymour (E), 1983.

The taxi service some of following certain circumstances will not be held vicariously liable-

1. If the drivers committed tort when they were not in the scope of employment (Cheshire v Bailey, 1905).
2. If the negligence committed by the driver is an independent personal act of passion and resentment (Deatons Pty Ltd v Flew, 1949).

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Conclusion

Contract is an agreement between two or more parties binding them legally. Offer, acceptance, intention and consideration are few elements that together constitute a valid contract.  Negligence is basically carelessness and vicarious liability is a liability imposed on the employer for tort committed by the employees during their course of employment. Tort and contract are two branches of law with various differences.

Reference

ACCA. (2014). KEY ASPECTS OF THE LAW OF CONTRACT AND THE TORT OF NEGLIGENCE. Retrieved 11 2, 2014, from http://www.accaglobal.com/in/en/student/acca-qual-student-journey/qual-resource/acca-qualification/f4/technical-articles/key-aspects-of-the-law-of-contract-and-the-tort-of-negligence.html
Balfour v Balfour , 2 KB 571 (1919).
Beard v London General Omnibus Co., 2 QB 530 (1900).
Bugge v Brown , 26 CLR 110 (1919).
Carlill v Carbolic Smoke Ball Company, EWCA Civ 1 (1892).
Cheshire v Bailey , 1 KB 237 (1905).

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