Unit 5 Elements of Contract in Business Assignment

Introduction

It is essential to study the nature of the contract legislation in terms of entering into a contract and the situation of breach. The variety of contract that exist under the law are to be analyzed in the Unit 5 Elements Contract Business Assignment. The different types of terms and grounds of contract are important to recognize the formation of the contract. It is aimed to undertake an analysis towards the scenarios so presented under the contract. The nature of tort under the legislation is to be considered and studied in order to derive the nature of different types of torts such as that of negligence and vicarious liability. The same when analysed are to be applied towards the analysis of the difference in the liabilities so arising under the contract law and law of tort.

Task 1:

1.1: Explain to Peter Abraham how a contract is formed and the importance of the various elements which has to be present to form a contract.

There are different elements of a contract which defines the contract in a better way –

• Offer- Offer means a statement, which an offeror gives to offeree. This statement contains several terms and condition. Offeror gives offer of contract to offeree when he wants something from the offeree.  There are different types of offer which contains different characteristics like general offer, special offer etc.
• Acceptance– When the offeree accepts the terms and conditions or the act then it leads to acceptance. Acceptance must be expressed and communicated to the offeror. If acceptance is not communicated to offeror then it does not lead to acceptance. There is a different postal rule for acceptance, so acceptance must be according to the rule. The acceptance will be valid as soon as the acceptance is posted. (Adams, 2008)
• Consideration- Consideration means something in return. It is the value which a person pays in return for another value. When two people exchange something for a value then it is known as a transaction. It can be in the form of money, any object, any promise etc. It must be sufficient and cannot be a part of social duty or contractual duty. It must be lawful.
• Intention- There should be a specific intention of the parties and that intention must be related to entering into a contract. There are two types of contracts- social contracts and commercial contracts. When social contracts takes place then they are not enforceable unless it is pre-determined but the same is not with commercial contracts. (Andrews, 2011)
• Capacity- Capacity means the essentials of a contract for a person to enter into a contract. At the time of entering into a contract, the capacity of a person is checked and it can be defined by checking his age, financial status and mental ability. A person must be a major by age, have sound financial condition and he must not be of unsound mind.

1.2: Discuss the impact of forming contracts

• Face to face contracts- These types of contracts take place when the parties entering into the contract are physically present. The discussion about the contract is a face to face discussion. All the terms and conditions are discussed by the parties when they are physically present. These contracts save time and money and they takes place under the court of law, so there is a legal existence of these contracts. All the terms are in a verbal format.
• Written contract- These contracts are not verbal contracts and considered as the best contracts. Everything in such contracts is written. In these contracts, terms and conditions are in written form and physical presence of the parties are not necessary. These are expressed and clear from any doubt. They can also be used as an evidence for future reference. It is easy to establish under the court of law. (Finch, 2007)
• Distance Selling Contracts- These are the contracts in which the participants belong to different parts of the world. These are generally in writing and rarely in verbal formats. Example of these contracts is availing online services. In these contracts, the service provider provides all the terms, conditions, price, taxes about the service to service receiver so that the service receiver cannot remain with any doubt regarding anything. These distance selling contracts are comes under Distance selling Regulations of 2000.

1.3: Give an analysis of the following terms in contract with reference to their meaning and effect as it may apply to peter Abraham

• Conditions- Conditions are the basic terms of a contract. These conditions are necessary for a contract and it is important to fulfill the same. There are different conditions for different type of contract and may be applicable on different phases of a contract. It can be one or more than one condition depending upon the nature of the contract. If the terms of a contract are not fulfilled then it is regarded as a void contract. (Meyer, 2010)
• Warranty- When there is a not a void contract, even after the nonperformance of any condition which is an important part of the contract is known as warranty. Warranty is an important part of a contract. Nonperformance of the condition results is some damages which need to be fulfilled by the party who is responsible for nonperformance. There can be any warranty in a contract such as lifetime warranty, full warranty etc. (Andrews, 2011)
• Innominate terms- Terms those are very important in a contract but they are neither condition nor warranty are innominate terms. It refers to the effect of the breach and to know if the innocent party is deprived of the whole benefit of the contract or not. If the party is deprived of the whole benefit of the contract then only the contract is treated as an end. It can be treated as a warranty or a condition depends upon the effects on fulfillment of the contract.
• Exemption Clauses- It is a term that falls under a contract in which a term restricts the liability of the party that can affect the occurrence or non-occurrence of an event is called as exemptions. Exemptions means when a party gets exempted from anything. It may be included through any previous deal or any notice. It must be in the knowledge of the parties who are the parts of the contract that is there any exemption in the contract or not. This term has to be considered through a strict and narrow approach. (Adams, 2008)

TASK 2

2.1: Apply the elements of contract in the given business scenarios below

Case 1:

In the case it is represented that Carol was a prospective purchaser of the couch which was advertised in the newspaper. Advertisement like this is termed as a type of invitation to offer in which the offer is not made to the party but it is made with the intention to make sale to the prospective buyers. Advertisement and Promotion made is merely inviting offer from the prospective buyers which shall not be regarded as an offer to sale.  There are two options available either to accept or to reject if such an offer is made. Sending e-mail stating an offer in relation with such type of advertisement will not be termed as a contract but merely an offer (Collins, 2008). Similarly E-mail sent by Carol will not be termed as contract but merely an offer. For the E-mail no acceptance was communicated therefore it would not be termed as a contracted as supported by the case law Carlill v Carbonic Smoke Ball Co.

Case 2:

It is mentioned in the case the Devi was interested to work with the cyber-security department of George, Smith Fogarty Company according to which he applied for the vacancy and interviewed for a position in the company. Devi wanted to gain the position by himself therefore he asked his Dad not to interfere in the matter. On 12^th of April the position was offered to Devi. Being unaware of the situation Devi’s Dad wrote a letter to the company stating that he would pay 150,000 Pounds to the company if they will hire his son for the position. On 13^th of April the offer was made by Devi’s Dad. According to the law if event has already occurred and offer is made after that event then the contract could not be entered by any of the parties. Therefore it could be said that the amount offered by Devi’s Dad would not be valid for the contract as the event has already occurred and the acceptance made for the amount would also not be considered as valid according to the case of Mmills v Wyman (Vettori, 2007).

2.2: Apply the law on terms in the following contracts

Case 3:

Case presented states that a couple had gone to a dinner in a restaurant. While entering into the premises the couple was assigned a slip, containing a clause stating restaurant would not be responsible for the checked item. The couple had checked the coats at the entrance. After some time man had discovered that he has forgotten his wallet in the coat, but after checking he could not find his wallet in that coat. According to the law, term provided in the slip will be considered as an exemption clause for which the man had agreed while receiving the slip. Restrictions to the obligations in possible circumstances are provided by presenting the exemption to the clause which is considered as valid. A written exclusion clause was provided at the time coat was checked which was constructed accordingly (Andrews, 2011). The term provided in the clause will be termed as valid because the act so restricted are not included in the daily services of the restaurant and can be restricted as discussed under the case of L’Estrange v Graucob. However, it would not be enforceable because the slip was handed over after the coats were checked into at the desk. This is because the exclusion clause was presented after the contract was entered into. Therefore, the restaurant will be liable to pay the concerning damages so incurred.

Case 4:

Present case is related with a tenant who had carried out a repair work that was added to the value of the property. At that time it was agreed by the property owner that he will not increase the rent for the next five years. A year later the owner of the property died and the inheriting party increased the rent and threatened to evict for the nonpayment of the rent. Understanding the scenario it could be said that the terms implied under the tenancy contract were for the peaceful enjoyment of the property. According to the term, compensation will be provided to the tenant for the repair work carried out by him. In the present case new property owner refused to pay for the repair work to the tenant which is an implied term (Meyer, 2010). Therefore according to the law tenant have the right to claim for the repair work for which the value of property had increased as discussed under the case of Hutton v Warren.

2.3: Evaluate the effect of different terms in the given scenario

Case 5:

The case study is regarding the policy form which includes certain questions related with the previous policy that whether there were any policy claims made for the motor vehicle accidents by the policy holder. The policy holder answered as no to the question. After investigation for the stolen car it was found that in previous five years owner of the car had filed a claim for the theft of car. The terms asked in the form were directly related with claim made by the owner under the policy which will be considered as a condition. Therefore condition could be said to be breached in such case for not providing true information at the time of filling out the proposal for which company can void the contract with owner as discussed under the case of Poussards v Spiers (Andrews, 2011).

Case 6:

According to the case study answer to the questions provided under the policy were false which failed to represent the true facts regarding the motor vehicle owned by the owner for which the policy was undertaken. Thereby the questions in the policy were asked in relation with the previous claims for theft made by the policy holder to judge  the authenticity of the vehicle and sub parts so used for which policy holder had marked the answer as No. With the investigation it was found that previously there were two claims that were filed in which one claim was rejected and for other one policy holder was unaware. Therefore it could be said that the terms which were important for the contract of policy were misrepresented by the owner of the motor vehicle. Accordingly, Policy Company has a right to void the contract considered under the breach of condition through misrepresentation of information by the policyholder (Richards, 2006). Therefore, Company has the right to void the contract Bissat v Wilkinson.

Task 3:

3.1: Explain the similarities and differences of liability in tort with contractual liability using an example.

The liability under tort and the contractual liability are two different liabilities but they have some similarities between them. As the contractual liability, the liability under tort is also considered as a strict liability. In both tort and contractual breach, the affected party only wants an establishment of breach not the real purpose of it. The liability that arises in this situation is done in a voluntary acceptance of the duty. Under the contracts, such duties are for the welfare of society in both tort and contract. (Vettori, 2007)

Basis	Tortuous Liability	Contractual Liability
Damages	They are different in different situation and also not quantifiable	According to the consideration they are quantifiable.
Motive	The reason behind tort is determined to approach the breach	The reason of contractual breach is not considered
Rights affected	In tort, the rights that are affected under law are right in rem that is against the society. (Giliker,  (2010)	In this the right that is breached is right in personam that is in specific.
Cause	Cause is considered	In this the cause is not considered
Scope	Scope of the liability is unlimited	Scope of the liability is limited
Remedies	Remedy is given through compensation	Remedy is given through restitution.

3.2: Explain using suitable example how liability for negligence can arise and the conditions needed to be met for ac claimant to successfully prove negligence.

There are various factors in which the liability of tort is regarded as negligence. Those factors that are considered while determining the tort of negligence are the duty of care, the misconduct of that duty that leads to damage that may be weighed in terms of money, physical, or psychological. The basic thing that has to be considered is the existence of duty at the time of negligence. The duty of care must be followed and has to be complied with every citizen and with an equal importance. The negligence shall be so grave that it results in damage or harm to a party through injuries. Then the injuries are quantifiable in terms of money, psychological or physical terms. From the breach of duty such damages should be clear. (TAN, 2008)

Some more different elements that must be considered while studying the tort of negligence are:

Donoghue v Stevenson: In this case, Mrs. Stevenson and her friend gone to a cafe. Her friend purchased a drink with ice-cream. After having half of it, she realized that a decomposed snail was there in the drink that resulted in stomach infection and psychological loss. The same she claimed from the manufacturer. It was held by Lord Atkin in the present case. In these types of cases, manufacturer is responsible for the whole society. It depicts that the buyer should prepare the products in a way that they don’t harm the immediate users or a possible user from the defects of the product. This results in a universal burden on the manufactures. (Cooke, 2007)

Caparo Industries plc v Dickman: Under this case study, some principles are laid down by the court for classification for the tort of negligence:

1. Remoteness of damage: The damage that arises shall be related even if it is least related to causation.
2. Proximity or foreseeability: The breach and the damage that is arisen shall be in the same area.
3. Causation: To be a tort of negligence, the cause and the damage should be directly related to it.

The defenses available are volenti-non- fit injuria or minor negligence, or comparative negligence. In comparative or contributory negligence, the parties both the damaged and the damaging party are responsible equally for the tort of negligence. In such cases, the party that is causing the damage has to give the affected party the compensation. The defense of volenti-non-fit injuria refers to a situation in which the damaged party intentionally lets go the duty of care for the sake of other duties. In such situation, the party is excusable because as it is keeping other important duties. One more defense is when the ignorance was done by the minor person. The punishment is granted according to the age of the person and if the person is less than 18 than he or she will not be termed as damaging party.It has been assumed by the court that the children are incapable of taking financial resources decisions and the consequences thereby being unable to be assigned the duty of care.

3.3: Explain what the vicarious liability means and how a business such as your organization can become vicariously liable giving example.’

Under law of tort, the vicarious liability is considered when the party is responsible for another party for taking benefits out of the work and so fulfilled by the party performing the work. This depicts that when one party derives the benefits out of other party and the other party works the liability of the former party for the same arises. Such kind of labilities is considered as vicarious liability. It generally refers to the responsibility of one party to another party. (Morgan, 2011)
It may be found in places where superior and subordinates are working together. Many times an employer takes benefits of his employee by transferring his own work to him. In this the delegation of duty takes place. In this case, the employer is the only responsible person for breaching his responsibility of employment and not outside of it. The breach shall not be personal management instead it shall be professional only. Other arrangements whereby the vicarious liability occurs is master servant, partnership, and agency. Ithappens because in such arrangements, the parties are bound to perform the work that has been assigned to them for the other benefits of other party that results in vicarious liability.
It is a duty of the employer to maintain premises of the company in order to be safe and secure says the Health and Safety at Work Act, 1974. The employer should arrange provision of drinking water, equipment, and other health standards to ensure the employees a peaceful environment. Under “The Occupier’s Liability Act”, the employer duty is towards the welfare of the visitors and non-visitors, either permanent or non-permanent in order to provide them safety and security. For the same, it is important to know that the company have put up the safety signs to deliver the message of danger in case it exits in the premises.

TASK 4

4.1: Apply the elements of the tort of negligence and defenses in the given business scenarios below:

Case 7:

According to the case study a patient had approached the hospital when he suffered from the chest pains. Next day it was found that the same patient died due to pneumonia by the toxic mould. To resolve the issue doctor prescribed OTC medicines. It was investigated that the doctor had not done the proper checkup of the patient and made the prescriptions just by hearing the issue from the nurse. It is a responsibility and a duty of a doctor to check the severity of such pain, as it could be a symptom of potential heart attack. As a professional, such kind of ignorance can be termed as an unethical behavior of a doctor, and he could not afford to ignore the same. Therefore, in this case the doctor ignored professional duties and such type of ignorance could be termed as negligence (TAN, 2008)
It is further to be checked that the cause and effect relationship was direct and concerning the damages occurred to the patient. It was found that the patient was found to be dead due to pneumonia and not due to the heart attack or chest pain. But-for test is applied in such case of negligence. But-for test is the test that is applied so as to find out the reason for the damage so occurred. In present case professional negligence was undertaken by the doctor but it was not the cause. However in this case the patient was died due to pneumonia. Therefore, in this case negligence occurred but was not the cause of death (Giliker, 2010). In such case, doctor would be responsible for the professional negligence which could have harmed the patient and not for the damages which were not caused due to the negligence in business. Hence, the doctor cannot be sued for the damages that were caused to the patient from toxic mould.

4.2: Apply the elements of vicarious liability in given business situations below:

Case 8:

Adriver working for a company was asked to pick up the client from the airport. After reaching the airport driver discovered that the flight has been delayed, therefore he had decided to have some drinks while waiting for the flight. After the arrival of client driver drove back from the airport. Driver was still drunk and lost his consciousness that led to an accident in which both car as well as client were damaged. (Cooke, 2007). In this case, duties that are to be performed by the driver were not breached. It was stated that the driver was performing the duty of dropping the client on the basis of instructions provided by its employer. However, driving in the drunken condition will not be considered as a formal duty of the driver in this case. Therefore, in this case driver will be responsible for the act of drinking and employer will be responsible for the act of driving. It was found that the accident so occurred was due the reason driver was performing his official duties which were under the act of driving, therefore employer would be termed as responsible for the damages so caused due to the accident as act was within the scope of employment and official duties. Although the duty of the driver was just to drive and drop the client, company has not allowed the driver to drink while performing the duty. So was discussed under the case of Lister v Hesley Hall Ltd.

Case 9:

In present case the situation of vicarious liability had taken place. According to the case the accident took place in the supermarket while performing the official duty. It was determined by the supermarket that it had no responsibility for the damage which occurred due to the accident as the accident so taking place concerned the health and safety measures which were delegated to another company. In the case of Ready Mix Concrete (South East) V MPNI, it was stated in the judgement that if in any case such type of situation occurs where there are more than one employers are present, then the employer who has a direct control over the situation will be find responsible. According to the case the accident was held while loading the pallets to the truck at the supermarket. Therefore in such scenario duties so formed are performed with in the premises and the damages took place while performing the professional duties (Morgan, 2011). As super market had the direct control over the situation at the time accident took place, therefore it would be considered responsible to regulate the standards in such type of cases for which supermarket will have to bear the vicarious liability.

Conclusion:

The contract entered into by the parties is for a specific purpose. Such a purpose may be defined by the relationship shared by the parties to the contract. The contract in reference may be broadly categorized into social and commercial for the purpose of enforceability of the same. It may be stated that the parties to the contract are required to ensure the fulfillment of the duties and obligations under a contract to ensure the performance of the contract. If the performance is tainted it would amount to breach. Such breaches may also arise under the law of tort for breach of existing duties. The liabilities so arising are to be studied on the basis of nature and presented in a distinction under the assignment. The different types of torts such as the tort of negligence and vicarious liability are to be studied and discussed in accordance with the case scenarios provided.

References:

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.
Collins, H. (2008). Standard contract terms in Europe. Alphen Aan Den Rijn: Kluwer Law International.
Vettori, S. (2007). The employment contract 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.
TAN, S. (2008). Vicarious Liability. Internal Medicine News, 41(24), pp.36-37.
Morgan, P. (2011). Distorting Vicarious Liability. Mod. L. Rev., 74(6), pp.932-946.
Bell, J. (2013). THE BASIS OF VICARIOUS LIABILITY. C.L.J., 72(01), pp.17-20.