The purpose of this aspects of contract and negligence assignment is to understand basic concepts of law and their purpose in the society. Law and order are one of the basic necessities of a society, without proper law and order the society will be in a chaotic situation as there will be no control on the crimes that are of heinous nature and which causes hurdle in the day to day functioning of the society. Law helps in maintaining peace and it also helps in keeping crimes in control. If the society is devoid of law than it would result in two horrendous consequences, firstly the society would become an anarchical society where the people would become out of control and would commit as many crimes as they want and there will be no one to stop them, secondly the society would slowly cease to exist because there would not be any civil order. (BHÀIRD, Luke Mac an, 2012) This aspects of contract and negligence assignment will talk about two private laws which are law of contract and law of torts. The law of contract talks about the legally enforceable promises so those promises that are legally binding come under the law of contract, to enforce a promise, certain elements should be present only then the contract would be legally binding. (CATHARINE MACMILLAN, Richard stone, 2012) Another law that we are going to discuss is the law of torts. A tort is a civil wrong. Actions of law of tort arise when law of contract ceases to apply. In this law the claimant are provided with compensation for the legal injury suffered by him or her because of the negligent act of the responding party. (KEATING, Gregory C., 2001), both these laws have been thoroughly discussed in this assignment.
P1 the essential elements of a valid contract in a business context
P1.1 The impact of different types of contract
The various forms of contracts are as follows
Unilateral contracts: The contracts in which performance of the terms of the offer is considered as the acceptance of the offer, usually an offer of some prize is considered as a unilateral contract, in this contract the offer is termed as accepted even if that acceptance has not been conveyed to the party that made the offer. The leading case of Carlill v Carbolic Smoke Ball Companyis an example of a unilateral contract. (LAWMENTOR)
Bilateral contract: The type of contract in which there is a compulsion on both the parties to a contract to perform an act or abstain from doing an act. It is a contract which is regarded as contract from the time that it came into existence and not after the performance of an act. (PUBLISHERS, new age)
Oral contracts and written contracts: when the contracts are not made in a written form and the agreement is made orally between the parties than that agreement is termed as an oral agreement. (STEPTOE, october,2008) When contracts term are made in writing on a paper with both parties agreeing to the term than that contract is known as a written contract.Written contractsare more reliable and they are easier to prove as being legally enforceable. (CATHARINE MACMILLAN, Richard stone, 2012)
P1.2 Analyse terms in contracts with reference to their meaning and effect
Various stipulations in the contract are as follows
Express clause term –A contract should be made in express terms and those terms should be in written form; this makes it convenient for the court to construe the correct terms of the contracts and make the contract enforceable if the express terms of the contract are not fulfilled by a party to a contract. The court examines the whole contract and takes into consideration all the facts of that particular contract. (ASHURST, 2012)
Implied clause term-Implied terms are those terms that reflect the parties acknowledged intentions, these are those terms which are not expressly mentioned but they are still considered as a part of the terms of contract; in particular types of contracts like consumer, employment and rent agreements certain standard terms are implied by the legislation even if they are not being mentioned in the terms of the contracts. (ASHURST, 2012)
Exclusion clause- These are those clauses in a contract which frees a party from the liability of the performing the terms of the contract, i.e. in certain conditions in the contract the party will not be held liable to perform the terms of the contracts, but this clause should be accepted by the parties to the contract. (E-LAWRESOURCES)
Condition and warranty-A condition is a term which is the core part of a contract and which is regarded as an essential term of the contract which goes to the origin of the contract. The breach to the conditions of the contract would lead to the contract being terminated. (FALCONBRIDGE, John Delatre, 1921)
A warranty is an express or implied proclamation of something which the parties to the contract take as being the part of the contract. Breach of the warranty of the contract would lead to the demand for claim of damages. (FALCONBRIDGE, John Delatre, 1921)
Innominate terms-The terms of a contract which cannot be differentiated as exactly being a warranty or a condition, these terms fall somewhere between a condition and a warranty, its effect is decided on the type of breach it would have where a simple breach would lead to claim for damages and a severe breach would lead to termination of contract. (FIRM, wiselink law, 2010) (Grab the complete Unit 7 Business Strategy Assignment)
P2 Apply the elements of the contract in business situation
P2.1 Apply the elements of contract in given business scenario
Business Scenario 1
Miss Kaur, a keen Fine Watches, Pens and Luxury Accessories collector, saw a notice for an auction of Montblanc, Catherine the Great, Limited Edition Patron of the Art's Series fountain pen in the July edition of Antiques News. She travelled 264 kilometres from London to attend the auction in Manchester in order to bid for a particularly Limited Edition Patron of the Art's Series fountain pen which was specifically mentioned in the lists of items to be auctioned.
The auction was to last two days. However, on the second day the lot for luxury pens was cancelled. Miss Kaur went into a nearby antique shop and saw a similar type of fountain pen she had come to bid for. The price ticket stated that it was £1,050, but Kaur said she was only willing to pay £800 for it. The shop assistant, Harry said he would sell it for £950 and Miss Kaur said she would like time to think about it over lunch, Harry agreed not to sell it before lunch. After Lunch Miss Kaur came back to buy the fountain pen, she found that Harry had already sold it to another customer, who had paid £1000 for the fountain pen.
In the context of contract law, advise Miss Kaur whether she can take action against the auctioneer for the expense of her travel to the auction and Harry for not selling the fountain pen to her.
In the present scenario both the parties cannot be said to have entered a valid contract because the parties did not have the legal intention to enter into a contract, this is a social contract which cannot be enforceable by law, and this concept was decided in the leading case of (BALFOUR V. BALFOUR, 1919)
Business Scenario 2
Charles and Murphy entered into a contract for the building repair @£50,000 and Charles paid £20,000 at the initial stage but during the same there was an additional payment demanded by Murphy that was £10,000 after arguing. Charles agreed for the same as he did not want his work to be delayed.
The main issue is that is Charles bound to pay the extra consideration of £10,000? This case is related to the terms of a contract and in particular to ‘consideration’ part in a contract. (M.WEITZENBÖCK, Emily, 2012)To be considered as a valid consideration the consideration must be legal, the consideration must be sufficient i.e. the consideration should be of some value even if it is of the least value. If the consideration is pre decided than the party cannot ask for increased consideration amount after the terms of the contract are performed. (M.WEITZENBÖCK, Emily, 2012)
Business Scenario 3
Mia got some work from Hakim & Jane and they both promised to pay £2,000 and £1,000 respectively, for the task but after completion of the work they refused to pay her. The main issue is can Mia claim from Hakim and Jane?
When offer is given and that offer is accepted in lieu of a consideration, with the intention to enter a legal contract than that contract is held to be a valid legal contract, in the present scenario there were two parties and there was an offer and an acceptance, there was also a consideration that was pre-decided before the performance of the contract, so after the performance of the terms of the contract the party to the contract cannot refrain from paying the consideration and Mia can claim for damages and she would succeed.
P2.2 Apply the law on terms in different contracts
In each contract, there are three types of terms that are present which is express, implied and exclusion. Express terms are those terms that are decided by the parties to a contract and they agree to those terms, these terms are written clearly in the contract.Routledge v. McKay (1954) Implied terms: the contract terms that are not expressly decided by the parties but these are terms which are generally thought to be intended by the parties to the contract, these terms must be implied in nature. The Moorcock (1889) (WEITZENBÖCK, Emily M., 2012)
Exclusion terms are those terms which liberated the parties to a contract from the liability to perform the terms and conditions of the contract, but the party must prove that the clause is effective to exclude the liability of the claim of loss. Shepherd homes ltd v. Encia Remediation ltd EWHC 70(TCC), BLR 135) (MCKENDRICK, Ewan, 01 may-2014)
P2.3 Evaluate the effect of different terms in given contracts using business scenario 4 given below
Y was employed by x and in contract it was stated that Y has to work till the assignment is completed for which she may have to work as many hours as required and secondly she had to dress smartly and it was clear that she cannot wear trouser. But y breaches both of the terms and thus her services were terminated. The main issue is can Y claim from X for termination?
The contract and negligence is based on many terms which include warranty and conditions where if warranty is breached than compensation can be asked for and if condition if breached than the contract can be terminated (Photo Production Ltd. v Securicor Transport Ltd, 1980), in the present scenario Y has breached both the terms of the contract therefore the contract is correctly terminated and Y cannot claim.
P3 Understanding the principles of liability in negligence in business activity
P3.1 Contrast liability in tort with contractual liability
The law of tort and the law of contract are two branches of private law that are very different in nature and in application.
The law of tort:torts are civil wrongs which are recognized by courts as a ground for claim of damages. This law provides remedy to a person in the form of claim for damages for the legal injury that a person has suffered. (KEETON, Prosser and, 1984)
A tort is penalizing in character whereas contract is more innovative and optimistic in nature. Examples of contracts are rent agreement, partnership deeds, and property loan. Tort by disparity will apply when an accident is caused, or there is harm to the person or property by the negligent act of another person. Contracts are consensual in nature where two parties agree to do or abstain from doing an act, whereas in tort none of the people involved agree to any act or the absence of it, instead it is present where a person is reasonably thought to be careful in an act but the person fails to take reasonable care. (WISEGEEK) The terms of the contracts are legally binding and are pre decided, whereas in tort the damages are decided by the courts only for the legal injury caused any damages would not be paid if the injury is not legal in nature i.e. injuria sine damnum damnum sine injuria.
P3.2 Explain the nature of liability in negligence
The contract negligence approach of the present legal system determines liability by focusing on the value of the harm done rather than the type of injury caused. In the past negligence used to be somewhat one of the factors of a writ that a plaintiff would submit, or which a defendant may raise as a way of presentation. (BAKER, john, 2003). The word negligence means a conduct which was not performed carefully; the failure to do something is only a lawful wrong when a person was legally bound to perform the duty. Negligence is defined as a behaviour which falls lower than the standard established by law for the protection of others against unfair risk of harm. The prevailing theory that negligence is unreasonably hazardous behaviour may be justified on two grounds. First is executive simplicity. It is easier to prove a behaviour rather than a state of mind. Secondly the results of the mental tests are different from behaviour test therefore the results are bad.
Factors to determine whether a behaviour is negligent or not
General formula given by Baron Alderson in Blyth v. Birmingham Waterworks Co:
“Negligence is the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which the prudent and reasonable man would not do.” This means that the defendant should have a duty to care and the plaintiff needs to prove that the defendant breached the duty to care. The extent of caution required increases with the likelihood that the person’s conduct will harm others. (FLEMING JAMES, JR, 1953)
P3.3 Explain how a business can be vicariously liable
Vicarious liability is a liability in which one person is held liable for the negligent act or wrong of another person because both of them share a relationship where one person is held responsible for another person’s wrong. Examples of these kinds of relationships are master and servant, employer and employee, agent and principal. Also by and large vicarious liability means that the principal or master will be the one who will be liable to pay damages, the reason for this is that the servant or agent works on the directions given by the master or principal and that it is because of the mistake on the part of the master or principal that he did not took care to see whether the work was dangerous or whether the agent or servant had the required talent and knowledge to do the work, so any work which a servant or agent does on the command of his master or principal in his official capacity in the course of his employment and he causes an injury to someone than the principal or master would be held liable for the injury or damage caused. (JAMES, FLEMING, 1954)
P4 Apply the principles of liability in negligence in business situations
P4.1 Apply the elements of tort of negligence and defences in different business situations using the scenario 5 and 6 given below
Business Scenario 5
A ship spilled oil on water and the same floated on the piece of cotton and caught fire from the spark of welding which was going on dock. The main issue is can the dock owner claim from the ship chatters.
The first requirement to establish negligence is that there must be a duty to care in existence that offender failed to take care of and because of that breach the plaintiff suffered damage or injury of legal nature. () (Morril v. Morril, 1928)
Secondly there should be proximity of cause where there is a chance that the wrongdoer breach of duty of care was directly related to the cause of the damage to the plaintiff, and not where there is some farfetched reason. (Davis v. Atlas AssuranceCo, 1925) In the present scenario also we can see that the conduct of the ship owner was negligent but it was not directly related to the damage caused to the dock owner, so he cannot claim.
Business Scenario 6
Shell had employed Bell and Bell was already having vision of one eye, but he lost another eye when a metal chip flew into his eye. The main issue is can Bell claim from Shell?
In the present case Shell had a duty to care because even if the risk was low for the metal chip to have hit him also Shell should have taken more care as Bell was already having one eye and his duty of care is extended even more because of the special condition in which Bell was.
P4.2 Apply the elements of vicarious liability in given business situations given in the business scenarios 7 and 8 below.
Safe Care Homes ltd had employed Alf who is the warden of the children home. Alf in course of his employment had sexually abused children of the home in which he was serving as a warden. The main issue is can the parents of the children sue the Safe Care homes ltd as being vicariously liable for the acts of Alf.
In the present scenario Safe Care Homes would be held vicariously responsible for the conduct of Alf because he did his act in the course of his employment and Safe Care Homes ltd had the responsibility to have taken care of the safety of the children and should have had kept a check on Alf. (JAMES, FLEMING, 1954)
Business Scenario 8
AB and Sons garage ltd had employed Amos. During the course of his employment he had an argument with the customer i.e. Mr. Alex Khan, Amos hit Mr. Khan on his chin. Mr. Khan sued the company under vicarious liability. The issue is whether AB and Sons ltd are vicariously liable for the act of Amos.
In the present situation AB and Sons garage ltd will not be held vicariously liable because the argument between Mr. Khan and Amos was of a personal kind and it was not done in the official capacity by Amos and personal damage are not held to be liable under the vicarious liability. (Mitchell v. Keith, 1985)