Legal Elements of Contract Law in Business Assignment

Task 2:

2.1: Analyze the terms of the contract and assess whether the parties in the case have made any contract.

Invitation to offer: According to the facts of the case it is observed that the advertisement so posted in the journal of aviation is an invitation to offer. An invitation to offer is referred to as the stamen made by an intending party to create a contract if the right offer is made. It is merely an intimation rather than a concrete offer. Th interested parties on the intimation may present an offer containing the term of the contract to the intending party in order to initiate the contract Fisher v Bell.

Offer: The offer so made shall contain the basic elements and be clear in meaning.  When the CEO of Zulu approaches the MD of EMA he is said to be making an offer. The CEO is the offeror here and the MD is the offeree. The terms of the offer were that he would not be available to make the purchase and would like the MD hold the sale till Friday for a certain amount of consideration Harvey v Facey.

Acceptance: Every offer may be concluded by either acceptance or rejection. If the offer is accepted the same[CE2]  shall be for the entire offer and not just the partial offer. If the acceptance is made for few terms of the offer the offeree is said to be making a counter offer. The MD in turn accepts the offer. The acceptance being made results in creation of the contract between the parties Gibson v MCC.

Consideration: Every contract shall include the element of the consideration to create an exchange mechanism between the parties to restore the value of the loss so suffered from the exchange taking place in the contract. The consideration shall be sufficient and be past. The amount of consideration so discussed is for 100,000 Pounds Currie v Misa.

Intention: Every contract should include the intent to enter into a contract. The intent of such contracts shall be clear in order to be establish the enforceability of the same within the law. Therefore, whereby the parties have no prior relationship are said to be commercial contracts.  Both the parties’ intent to enter the contract. As the parties were not previously related they may be considered for being intending to create a commercial contract DPP v Smith.

Capacity: When a contract is being formed the capacity of the parties is important to be assessed in order to establish the legality of the contract. This is because if the parties are not of capacity or under influence at the time of creating the contract, the same would be regarded as void ab initio. The parties are capable for being involved in the contract as both are of majority of age and sound mind with good financial position for being in respective professional positions De Francesco v Barnum.

Privity: In case the contract is breached by either parties by not presenting the airplane for offer as agreed or paying up the amount of consideration as agreed under the contract, the contract would be termed as breached. In such a situation only the parties affected from the wrong would be allowed to claim the damages. This is because the parties are the only beneficiaries of the performance of the contract Tweddle v Atkinson.

Thereby, based on the analysis of the case study, the contract is said to be valid under law. (Collins, 2008)

2.2: Applying the law on terms, which term has been breached? Give reasons to support your answer.

Two situations are identified under the scenario presented. Both the situations so discussed are as follows:

First Situation: The term so breached in the given case is that of supply of the mobile phones so contracted for was illegal. The contract clearly mentioned the term stating the phones should be available for immediate use. Thereby, the term so breached is said to be a condition. A condition is the essential term that directly relates to the performance of the contract. The condition if not performed would void the contract Poussard v Spiers & Pond.(Richards, 2006[CE3] )

Second Situation: As per the second situation it is determined that the telephones were set to a certain frequency that wouldn’t allow the use to be immediate in the UK. It may be said that the phones so supplied were legal and be used just had to be adjusted to make a proper use. Thereby, the term so affected under the contract would be of warranty. A warranty is that term that is not directly related to the performance of the contract. The terms are present in support of the conditions. The warranty when breached allows the damaged party to make claim for the damages so caused but does not let the party discontinue or void the contract Bettini v Gye.

2.3: Evaluate the effect of the exclusion clause and unfair contract terms on Cathy’s contract.

An exclusion clause is said to be a term wherein the contracting parties restrict the liability in case of non-performance of the contract. The exclusion clauses according to the common-law rules shall be included through signatures, notices or previous dealings. In the current case since the contract containing the exclusion clause was not signed but included in the previous dealings, it would be applicable despite of not signing the contract.

Statutory Rules: These clauses should be included according to the Unfair Contract Terms Act and not restrict the liability for injury or death. The UCTA lays down the exclusion clauses so applicable for variety of contracts and makes it illegal to exclude liability for the damages so caused in the form of injury or death. The Unfair Term in Consumer Contracts Act focuses on the exclusion clauses concerning the consumer contracts. This legislation provides that the contract terms are unfair if the same are not individually negotiated, are not in good faith or comply an imbalance of the rights of the parties to the contract.

Common Law Rules: An exclusion clause is said to be entered into by the parties through signatures. Notices and previous dealings. It is determined that the Cathy is allowed to claim for the loss and injury suffered as the exclusion clause limiting the liability for such cases is invalid. Although the clause would form part of the contract for being a part of pervious dealings, however the same is not applicable for being invalid. The liability may arise for having provided the sub-par services to the customer under the Unfair Term in Consumer Contracts Act for not being individually negotiated and creates a misbalance for the rights of the parties. Although the contract applies from previous course of dealings, the exclusion clause is invalid[CE4] .

As per the provided case study it is determined that Cathy had been a regular customer at the Brakes Ltd. And had signed the same documents every time on visit. This time she did not sign the same document. This would mean, according to the common-law rules that he exclusion clause was part of the contract from previous dealings. Although, it contained that the company takes no responsibility for the loss or[CE5]  injury so caused from the work conducted by the company on the car for negligence or otherwise. According to the statutory rules the exclusion clauses for the liability in case of injury or death are invalid under the UCTA. It is noted that Cathy had met with an accident after using the car on the way back. Th e company would be said to have breached the contract as even I the exclusion clause was part of the contract it was invalid to begin with and the company would be liable for the physical and other such damages so caused to Cathy from the accident for the non-functioning of the car on servicing.  (Adams, 2008)

Task 3:

3.1: Contrast liability in tort with contractual liability.

Liability arising under law of tort is that of the performance of a social wrong for a breach of duty so owed to the society. The liability arising under law of contract and tort is for the breach of a duty. The liability is strict in nature for both the aspects as the immediate breach creates a liability by the person performing it without any escape. The liability under contract and tort are however different on the following grounds:

• The liability under tort arises from a duty owed to the society whereas the liability under contract arise from the duty so owed under the contract.
• The duty under tort is not discussed in prior between the parties whereas the duty id discussed in prior between the parties in law of contract.
• The liability under law of tort arises under the law for the smooth functioning of the society, whereas the liability under contract is self-imposed for the creation of a contract.
• The parties do not have a prior relationship in the tort whereas the parties have a contractual relationship under contract law. (Bell, 2013)
• The liability under tort is derived by the situation on the decision of the courts whereas the liability under contract is determined based on the consideration so involved.
• The right so affected under tort is that of right in rem whereas the right affected under contract law is that of right in personam.
• Example of tort is negligent driving on the street whereas the example of contractual breach is not paying the rent under the tenancy agreement. (TAN, 2008)

3.2: Explain the nature of liability in negligence making the reference to the elements of a tort of negligence.

The liability arising from the breach of a duty is regarded as negligence. Such a breach should be a breach of duty of care already owed to be performed towards the neighbor while undertaking desired actions. The breach of duty of care shall affect the neighbor in a manner that the affected party is damaged in terms of monetary, physical or psychological loss. The breach of duty of care shall be determined from an act that is result of the negligence, irresponsibility or carelessness. According to the judgment of Donoghue v Stevenson, it was held that the duty of care so owed for a manufacturer under a market is direct towards the consumers. The relationship of the manufacturer and the consumer shall not be direct because the manufacturer owes the duty towards anyone capable of consuming the product. This created the necessary obligation to undertake precautions for the manufacturer towards the customers that may consume the product in question.

In the case of Caparo Industries, it was held to determine the extent of wrongful act three factors shall be considered under the tort. The remoteness of damage would refer to the extent to which the parties are remotely connected from the wrong so committed. The causation determines the directness of the wrong so committed to create the effect in question. The proximity defines the ability of the effect to be caused as determined. It is also discussed that whereby a certain act could be predicted to cause a damage the performing party is obligated to undertake the required precautions to maintain the foreseeable effect. (Cooke, 2007)

3.3: Explain how a business can be vicariously liable?

A business is said to be vicariously liable in a way that the people employed work in accordance with the requirements of the business to benefit the business. It would mean that whereby a certain act is delegated by a person or a business the performing party would not be liable for the damage so caused from the performance as the same is done to benefit the delegating party. This type of liability arises under the relationship of employer-employee because the parties are related for the performance of a specific function that wouldn’t have been performed if the same was not an official duty. The employer would only be responsible towards the wrongful act if the same is committed by the employee in the course of employment and not the personal motivation.

According to the Health and Safety at Work etc. Act, it is essential for the employer to provide the employees with an business environment that is fit for use and safe to work at. The essential requirements are provision of clean water and sanitation facilities. The material so provided for the work shall be fit for use and of standard quality. Also, determined by the Occupier’s Liability Act, employer or the occupier shall undertake the necessary steps to ensure that the visitors and non-visitors are safe while present on the premises. The same may be done if the occupier ensures to display the signs and notices at an accessible place to ensure the persons visiting and working on the premise towards the unsafe environment and possible dangers so present on the premises. The same may apply to the trespassers. (Giliker, 2010)

Task 4:

4.1: Apply the elements of the tort of negligence on the above case study and advise Janet whether she can succeed in a negligence action in tort?

As per the facts, the case study implies the tort of negligence on the part of the restaurant while providing the cake contaminated with an insect. As a service provider, it is the duty of the restaurant to provide a healthy meal to its customers in order to ensure the health of the customers. When Janet had the cake with the insect she ran into shock and became ill after returning from the restaurant. In the case of Donoghue v Stevenson it was determined that the person providing any service of food and beverages shall be responsible for the safety of the customer that may consume the product or is capable to do so. Therefore, Janet may be able to claim the damages for the loss so suffered from the negligence so performed by the restaurant. Janet is also entitled to remedy under the Consumer Protection Act, 1987 for not being provided services of standard quality and claim damages for the loss and injuries so suffered without proving for the negligence. (Vettori, 2007)

4.2: Briefly explain the three defenses that are available and apply any possible defenses.

The nature of professional negligence is said to be that of the liability arising from the negligence committed while performing the skills specifically acquired to earn a living. This type of negligence is referred to as a professional negligence. The present case study determines that the organization had specifically asked the representative not to make any other estimates other than the one he was being sent for Hedley Byrne v Heller. When Angelina asked Brad of his advice on the painting, he made an estimate in personal capacity and not professional capacity however, the same had been conducted while performing the official duty. However, the profession of Brad was reason enough to believe his estimate and act upon it.

The defences that may be used in the case of tort are that of the following nature:

Contributory Negligence: The negligence whereby both the parties are responsible to make the said contribution towards the breach of duty is said to be the contributory negligence. This negligence allows the party breaching the duty of care to only pay for the wrong contributed by the party and not the participation of the other party towards the wrong Revill v Newbery.

Volenti-non-fit-injuria: This type of defense is applied in the cases whereby the affected party willingly waives of its right to safety from the said damage so undertaken by the party performing the breach of the contract. The party committing the breach of duty could not be liable as the affected party knew of the duty of care and yet decided to carry on with the respective actions. This defence is voluntarily and called volenti-non-fit-injuria Nettleship v Weston.

Exclusion Clause: Whereby in the contract it is derived that the said action so undertaken would not be responsibility of the performing party is said to be the exclusion clause. If the same is signed by the parties to the contract, then it would be regarded as the agreement whereby the affected party would not be able to bring any claim as the same had been discussed between the parties. Th exclusion clause shall only be valid if it is not restricting the liability for death or injury. It is also essential to note that the parties shall include these clauses through the signatures, notices or previous dealings Baldry v Marshall.

According to the case of Rose v Plenty, as the negligence was not so far from the negligent act, the organization would be vicariously liable for the same. The defense that may be used by the Brad is that of the contributory negligence as Angelina knew it was a opinion and not the professional for the lack of experience for valuing the paintings. Also, that Angelina was informed that he is not the right person for doing the same still she chose to believe him is regarded as volenti non-fit injuria. (TAN, 2008)

Conclusion:

The assignment determines the different types of contract that may exist between two parties. The effect of the contract on the non-performance is studied in detail in order to determine the rights and duties of the parties so involved. There are two types of liabilities that exist under contract and tort that have been discussed to highlight the function of the legislations in case of any damages so caused from the breach of duty. Contract law determines the different types of terms that consider the breach of the contract whereas the law of tort considers other factors that relate to the analysis of the tort and the wrong so committed.

References:

Books:
Andrews, N. (2011). Contract law. Cambridge: Cambridge University Press.
Meyer, L. (2010). Non-performance and remedies under international contract law principles and Indian contract law. Frankfurt am Main: P. Lang.
Vettori, S. (2007). The employability skills and the changed world of work. Burlington, VT: Ashgate Pub.
Giliker, P. (2010). Vicarious liability in tort. Cambridge, UK: Cambridge University Press.
Cooke, P. (2007). Law of tort. Harlow: Longman.