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Aspects of Contract Analysis Assignment
Diploma in Business
Unit Number and Title
Aspects of Contract Analysis Assignment
Aspects contract Analysis Assignment is pacific relationship between the parties to the contract. The parties to the contract are only entitled to its enforceability and rewards so gathered under the performance of the contract. A contract may be of several types and nature. The difference of the contract types are discussed under the present assignment. Furthermore, the nature of tort and the wrongs so committed is studied while referring to case laws.
The essential elements of a valid contract are studied to be such as offer, acceptance, consideration, capacity, privity, and intent. The reason for making a contract shall be common between the parties.
The party interested in entering into a contract will present an offer to another party for a certain terms. Such terms should be clear to understand and the simple to interpret. The offer should determine the intent for the terms of the contract. The offer is different from the invitation to offer because an offer lays down the term of contract wherein the invitation is only informs the possibility of a contract. It is also contrasted from the counter offer. As offer is only the statement, which has to be either, accepted or rejected. The counter offer nullifies the previous offer but is inspired from it. (Collins, 2008)
A contract is only formed when the offer is accepted. Acceptance should move from the offeree. The acceptance must be communicated to the offeror in order to form the contract. The communication and knowledge shall be acceptable under the type of contract. If the acceptance is made through post then the same may be considered applicable as soon as it is posted. The contract is considered to be valid if the contract is formed for a certain art of consideration. The consideration so involved should be profit, interest or promise. The consideration ensures that the contract is valid for restoring each party for being at loss. It should be sufficient and present in nature.
The intent to enter into the contract shall be clear in order to know the purpose of the contract. The intent of the contract shall be discussed among the parties. The enforceability for the contract of commercial nature is automatic unless otherwise mentioned. Whereas under the social contract it is required to specifically mention the extent of enforceability. Such parties shall be of capacity to understand the purpose of the contract in order to form the contract. The capacity of the parties may be defined on the basis of the mental state, financial status and the legal age. Unless the minor for a necessity enters into the contract the same may be void.
According to privity, it is essential to note that only the parties to the contract may be able to claim for the damages while performance. Only the signatory parties are entitles to recovery of damages. The third party has no right to claim for a damage in any case. (Cooke, 2007)
- Bilateral and Unilateral Contracts:Contracts that are entered into by the parties from an offer an acceptance are known as bilateral contracts. All simple contracts are bilateral contract. Such contracts include every aspect of contract. Under Unilateral Contracts the elements of the acceptance is waived off by the party making the offer. Such a contract is made to the world and the acceptance is considered to be of the acceptance. Under the case of Carlil v Carbolic Smoke Ball Co., it was adjudged that the advertisement was sufficient to be considered as an offer and clear in terms of considering an acceptance to the performance of the use of the product advertised for.
- Void and Voidable Contracts:Contracts that are illegal or the means to achieve them is illegal is regarded as the void contracts. The void contracts are not enforceable under the law as the purpose of the contract is not legal. The contracts that are entered into by the parties but may be partly enforceable based on certain conditions for being legal in nature are called voidable contracts. On the decision of the affected party the contract may be voided and continued if it deems right. Thereby, the voidable contracts are not illegal and may be enforced on the will of the affected party. In the case of Phillips v Brooks it was discussed that whereby the parties are entering for a face to face to contract the identity of the parties could not be certain. If in time it is found that the identity was not authentic the contract may be voided, as the impression was intentionally false. (Giliker, 2010)
- Distance Selling Contracts:Contracts that are entered into by distance seller and distances buyer are called the distance-selling contract. Under such contracts the transaction is carried out from a distance without physical presence of the party. The terms of the contract shall be clearly determined at the time of entering into the contract. The details of delivery, taxes and contents of the products shall be clearly mentioned within fourteen days of the contract formation. The Distance selling regulations of 2000 regulates the distance selling contracts. (Meyer, 2010)
The terms that are clearly included under the contract are regarded as the express terms. Such terms are clear and determine the expectations that the parties carry from the contract. The express terms may either be written or oral or the conduct of the party.
The express terms are important part of the contract as they are different according to the requirement of the parties. The terms are enforceable as these are clearly mentioned under the contract.
Implied terms- Implied by fact
Implied by fact terms are such terms that are to be performed from the pre-existent duty towards the parties that has been inexcusable in the past. Such terms are to be performed irrespective of its inclusion under the contract. (Nel, 2004)
The terms that are implied in fact are to be performed under the contract in order to meet the performance of the contract. The terms are implied and are not required to be included under the contract.
Implied terms-Implied by statutes
Implied terms by statute are not included under the contract as these are to be met according to the legislative requirements governing the contract. These are not mentioned in the contract because the legislations already enforce them under a contract.
The implied in statute terms are to be met in order to achieve the performance of the contract. (Pratt, 2000)
Implied terms- Implied by custom
Implied terms- Implied by trade usage
Implied terms through customs are such terms that are present in customary nature for the similar types of contract.
Implied terms through trade usage is similar to implied term in custom as they are included under the contract for the commonness of the term under a certain trade that mentioning the same is irrelevant.
Such terms are to be performed in order to fulfil the contract as these are inseparable from the nature of the contract. (Richards, 2006)
Terms that are primary to the contract are regarded as the condition. Such term are basic part of the contract and considered first when performing the contract Poussard v Spiers and Pond.
The performance of the condition is crucial in order to perform the contract. If the conditions are not fulfilled then the contract may be voided by the damaged party. It may also be noted that if the condition is said to be breached the damaged party would be able to claim for damages while repudiating the contract.
A warranty is a secondary part of the contract. Such terms are supportive of the conditions. (Vettori, 2007)
The performance of the warranties is not as crucial as he damages so caused from the non-performance may be claimed through injunction or specific performance. The damaged party may not be able to void the contract altogether Bettini v Gye. This would mean that for non-performance of warranty the contract cannot be repudiated.
Terms that are neither condition nor a warranty under a contract unless the situation is defined are known as the innominate terms of the contract Hong Kong Fir Shipping Co. Ltd v Kawasaki Kisen Kaisha Ltd.
The innominate terms are determined to be condition or a warranty on the event of non-performance and the effect so caused to the purpose of the contract.
Clauses that exclude the liability in a certain circumstance are regarded as the exclusion clause. The exclusion clause is to be included according to the UCTA, 1977.
According to the common law rules the exclusion clause are entered into by notices, signatures, or previous dealings L’Estrange v Graucob. The clause shall include the loss so suffered from the breach of contract subjected to Contra Proferentum.
The statutory rules state that exclusion clauses should be included in reference to UCTA, 1977 and UCTR 1999. The statutory rules doesn’t allow the parties to provide clauses that cover injuries and death. This is because the exclusion of liability for the threat of life is not legal.
The exclusion clause shall be included according to the notice, signatures or previous course of dealings and not exclude liability for death or injuries. (Collins, 2008)
Under the given case study, it may be determined that the sale of East Midlands Airways Airbus was to be carried out. On 15th October 2010 the advertisement was posted under the aviation trade journal for the cost of 10.4 million pounds. The advertisement so posted for the airbus will be considered as a invitation to offer as the seller wants to invite the offers from the interested buyers by notifying about the same in an industry journal. An invitation to offer is said to be that stamen which informs the general public about the availability of the product to be sold in the market. It notifies that the advertiser welcomes the interested parties to make an offer. The invitation to offer is determined in the case of Fisher v Bell wherein the knife that was illegal tobe sold was put up in display at the store window. However, the knife was not being offered as it merely meant to invite offers. As no offer was accepted no sale is said to be formed and the same is not a violation of law.
Accordingly, The CEO of Zulu Aviation Ltd. was interested in buying the same. He telephoned the MD for the East Midlands Airway to express the interest in the purchase for the same but not being able to buy it right away. Instead he proposed an offer to put off the sale till end of five days when he will be available to make the purchase and in turn offering a certain amount to put off the sale. An offer is a clear statement detrmining the intent of the party to create the contract. It holds the specific terms so required to be included in the contract. A counter offer is said to be that offer that originates from the original offer yet is in alteration of the same. Therefore, the counter offer makes the offeror and the offereee exchange places in the series of negotiation. The final offer so accepted by then offeree would lead to formation of the contract. Therefore, the counter offer negates the preious offer and invalidates the prior terms.
The acceptance is said to be that part of the contract that ensures that the contract is created. An acceptance shall be whole in nauter for all the termsunder the offer. It should be clear to understand and interpret te common meaning.
The acceptanceis said to be made by the parties wherein the letter is posted for the same Adams v Lindsell. The offer to not sell of the aircraft was accepted by the MD of EMA. The offer so entered into in the present case is for the not making the sale and not the sale of the aircraft. The offer for the contract was made by the CEO and accepted by the MD of EMA for a price of 100,000 Pounds that would be considered a consideration. A consideration is said to be that part of the contract that allows the parties to exchange the value and recover the losses from the said exchange. It includes different types of consideration such as the executed consideration or executory consideration. The executed implies that the consideration is already exchanged, whereasthee xceutory implies that the consideration will be exchanged. In the case of Chappel v Nestle it was determined that the consideration so exchanged between the parties shall be sufficient and not adequate.
The contract was entered into by parties having the capacity for being of sound mind and the financial stability to create a contract. The intention of commercial nature was present under the contract making it enforceable under the law. (Giliker, 2010). It may be stated that since all the elements of the contract were present between the parties a valid contract is said to be formed that would be binding in nature. The intent to create a legal relationship is said to be present under the commercial contract whereas absent in the social contracts. The commercial contracts are formed with an intent to create legal enforceability however, the social contracts are assumed to be created to eliminate legal enforceability. Therefore, the legal intent of enforceability is required to be determined under tehthecial contracts if the same is to be addressed at the time of breach. For social contracts the case of Jones v Padavatton that unless the intent to form legal customer relations is clearly determined in domestic agreements the law could not interfere for the same. The case of Esso Petroleum v Customs and Excise, it was held that as the parites did not know each other in prior the contract so formed was purely commercial and that the law could be enforced in the event of breach.
Since the contract so formed between the CEO and MD contains an offer so made from an invitation to offer, acceptance, consideration, capacity and intent was determined to be present the contract is said to be valid. Carlill v Carbolic Smoke Ball Co. discusses the factors of the contract in terms of invitation to offer, offer, acceptance and consideration. The case elaborated that the difference between the invitation to offer and offer is that the terms are clearly stated for being an offer unlike the invitation to offer that is vague. The consideration amount so deposited in the bank clearly determined the intent to create the contract and thereby, the acceptance could be waived off under a unilateral contract.
According to the facts of the case the contract determines that 300 mobile phones will be bought that may be immediately be used in the UK. The following circumstances are now to be determined in order to determines the nature of the term being talked about: (Meyer, 2010)
- A condition is said to be a term that is important to a contract’s performance. The condition is directly related to the contract and if not performed allows the damaged party to claim for the damages and void the contract. The telephones so supplied were of illegal make and no alteration could change the nature of the mobile phones. The contract was entered into for the purpose of the sale of the mobile phones. In order to make the sale it is necessary that the mobile phones are of legal make or at least be altered in a way to make legal for the sale in the UK. Thereby, the contract of illegal mobile phones will not support the sale the contract has to be voided. The term so said to be breached herein is a condition as it directly affects the performance of the contract. The contract may be voided because an implied condition of the contract is breached wherein the sale so made under the contract implies that he the goods shall be of standard quality, shall match the description and be provided with skilled duty and care according to the Sale of Goods Act, 1979. The mobile phones were the main basis of the contract making it a condition. Thereby, as the condition is said to be breached under the present contract the purchaser of the phones may void it. (Cooke, 2007) Poussard v Spiers elaborates that the parties to the contract shall lay down the contract terms clearly. The breach of a condition causes the other party a serious loss for which the contract is repudiated and damages are claimed for. As the singer, did not perform according to the terms of the contract the company was right in voiding the contract for the breach of a condition.
- A warranty is said to be that term which is determined under the contract to provide the support for the performance of the condition under the contract. If the warranty is breached the affected party shall claim for the damages but would not be able to void the contract. The telephone so supplied particularly required to turn to a certain frequency taking two minutes each. The purpose of the contract is to make sure that 300 mobile phones are supplied in order to sell the same further. The mobile phones were supplied with no defects as well except the delayed use of the same. The present case elaborates that the term so breached is a warranty as it does not affect the performance of contract directly. It may be said that the sale of the mobiles phones according to the implied conditions such as the standard of quality, duty of care and skill and matching the description however, the delayed use of the mobile phones was not disclosed at the time of making the sale. The same should have been stated in order to make an informed decision. However the mobile phones were duly supplied and are ready for use the condition is not breached however, the delayed use was kept hidden and will be considered as a breach of warranty for misrepresentation as the same affects the performance of the contract indirectly. Thereby, the purchaser may be able to claim of damages, or specific performance under the Sale of Goods Act, 1979. He may also claim for replacement, refund, or rescission of the contract under the consumer legislation. (Nel, 2004) In the case of Bettini v Gye, the contract so breached was for warranty as the singer had missed the rehearsals that were not part of the contract but support the final performance. Therefore, the company could not void the contract but however, could claim for damages for the loss so suffered.
Based on the facts of the case it may be determined that the car was handed over to Brakes Ltd for servicing. During her previous services she had been made to sign a document stating the exclusion clause regarding the injuries so caused if in case the car malfunctions after the servicing. This was done on every occasion in the past. On a certain day as the service centre was busy she was not asked to sign the document but was handed over a slip stating the same conditions. After accepting the car post servicing on her way back she was unable to control the car and crashed the car into the tree causing the damage and injuries to car and herself. It was later found that the Brakes Ltd. did not connect the transmission of the steering mechanism. Cathy did not sign the contract but it was implied to be included from the previous course of dealings. According to the common law rules, the exclusion clauses are to be entered into either through signatures, previous course of dealings and notice. The clause shall be included in a way that the same is determined at the time of creating the contract. This would require the party including it to be responsible to point it out at the time of entering into the contract. The notice shall be displayed before the contract is presented to allow the party to be informed for the same. The case of L’Estrangev Graucob it was determined that whereby the documents were signed the parties were bound by all the terms including exclusion clauses so present in the contract. In the case of Curtis v Chemical Cleaning it was determined that the clause so signed by the parties was misled to be interpreted something else on clarification and therefore was not bound even if the same was signed. This is because the intent for the clause was not common betweent he parties making it invalid. (Pratt, 2000)
As the previous instances of same nature included the exclusion clause the time when the accident occurred would be included as well. However, it may be determined that accruing to the UCTA, 1977 and UCTR, 1999 it may be determined that an exclusion clause for the restriction in case of injuries and or death is invalid and would not be enforceable under the law. The UCTA 1977 does not apply to the insurance contracts, sale of land, company contracts, sale of shares, carriage of goods by ssea and international supply contract. The Act is primarily aimed at business liability and for the actions ndertaken by the party in the course of business. The act was primarily meant for theprotectin of consumers when making a purchase in the market. The Act protects the parties from unreasonable indemnity clauses, guaranteesof consumer goods and exemption of liability for misrepresentation. The UCTR, 1999 revoked the regulations of 1994 and enforced the Council Firective for the consumer contracts and unfair terms. The unfair terms according to the regulation are defined to be so that the same is not individually negotiated and cause an significant imbalance for the rights and dutied of the contracting parties.
The exclusion clause stated in the present case is for the exclusion of the consequential loss or injury so sustained from any work conducted by Brakes Ltd. as a result of negligence or otherwise will be invalid as it restrict the right of Cathy to claim for the injuries and damages so suffered from the failure to connect the transmission resulting in the accident. According to common law rule a consumer has to be served with standardised services as discussed. If the same is not provided the seller or manufacturer would have to bear the loss so suffered by the consumer.
Accordingly, the exclusion clause so entered into by the parties is not valid even if the same was part of the contract in the previous dealings as the clause concerns damage from negligence injuries that are implied respectively under law of tort and consumer legislation. The damages so arising cannot be escaped by exclusion clauses. These are mandatory in nature as implied through law. Also, the defence of previous course of dealings making Cathy responsible of volenti-non-fit injuria is not applicable as the exclusion clause is not valid to begin with. This would determine that Cathy is not at fault.
Thereby it is advised to Cathy that she may file for a claim so suffered from the accident due to sub-standard quality of services provided by Brakes Ltd. under the Sale of Goods and Services Act. According to the act it is essential that the services if provided in the regular course of business strategy shall be of standard quality and provided with duty of skills and care. Therefore, the claim may stand valid under the two legislations. (Richards, 2006)
The liability under tort and contracts is of similar nature as they are civil in nature. The liability so arising under tort is for the breach of right against the society whereas the breach of right under contract is for a specific party. The amount of damages under the contract are quantified according to the consideration amount whereas the damages under the tort are quantified according to the courts and situations so arising. The elements considered under the contract are that of offer and acceptances whereas the elements under the tort are that of remoteness of damage and proximity. The liability under tort arises from right in rem whereas the liability under tort arises from right in personam. The liability under tort is for the social duty whereas the liability under contract is for the contractual duty. (Vettori, 2007)
1. Explain the nature of liability in negligence
The nature of liability in negligence may be defined with the help of duty so breached under the tort. If a person does not perform the duty of undertaking safety measures in order to safeguard the interest of the people under the society then it would be regarded as an act of negligence. The tort of negligence involves three basic elements. The tort assumes an existence of the duty towards the society. The duty concerning should be breached from the forgetfulness or ignorance. The breach should be serious that it results in the damage of the affected party in terms of monetary, physical or psychological loss. The tort of negligence may further be explained through the case of Caparo Industries wherein the three fold test was determined in order to determine the nature of liability. The factors to be considered while determining the tort of negligence are that of proximity, foreseeability, remoteness of damage and causation. The proximity defines the ability to influence the damage so caused, causation means the directness of relationship between the cause and effect and remoteness of damage means the possible influences the wrongful act had. It is determined that if the remoteness of damage exists the duty of care arises. (Collins, 2008)
2. Analyse the situation and advise Carlos and Janet regarding the tortuous liability.
In order to study the situation the case of Donoghue v Stevenson wherein Lord Atkin had derived a neighbour’s principle in order to define the extent of liability by the wrongdoer. The case identifies that while undertaking a sale of a good the liability extends to the direct as well as the possible users of the same. It is important to notice that the products are not always bought for self-consumption and thereby cannot be restricted to the person buying the product. Similarly, in the given situation as Janet had consumed the dessert that was bought by Carlos, the restaurant will still be responsible for the damages so caused to Janet even if she was an indirect consumer. The contents were suitable for consumption by any regular person and the liability for the same till extent to anyone that consumes the same. (Giliker, 2010)
1. Explain the nature of liability of Tort of professional misstatement.
The tort of professional misstatement is considered to be the tort committed from the performance of the profession. Such a wrong is committed while performing the specialised knowledge and the skills learned after years of study. It may happen while advising or presenting a professional statement that is not accurate or wrong. The wrong so committed shall be sufficient for the claimant to believe since the same is given for having a certain expertise on the topic. The duty of care under such a situation arises from the performance of the profession to provide honest and true views to the clients. Such breach of duty of care shall be against a reasonable person that may be affected from the provision of the professional comment. (Nel, 2004)
2.Explain the legal doctrine of vicarious liability
The doctrine of vicarious liability may be determined to be a responsibility of liability towards a person not performing the wrongful act by himself. This involves the liability for the non-performing party because the actions are undertaken for the benefit of the party. The liability exists only for the wrong committed while performing the delegated task and not the personal task committed on the premises. The most common relationship that includes vicarious liability is that of employer-employee. The employer-employee relationship is focusses on this liability because the employee undertakes the jobthat is assigned by the employer. Therefore, the benefit of the job perrfomed well would go to the employer and the responsibility for the wrongful acts would also lay on the employer. Therefore, vicarious liability is pre-dmoniantly part of the employer-employee relationship as it is a delegated relationship. The control test is one of the early tests of the law of tort in order to determine the liability towards the wrong so committed would be of the employer. This was determined in the case of Mersey Docks & Harbour Board v Coggins, it wa determined whereby an employee has more than one employer the employer having the direct control over the actions of the employee would be responsible for the liability arising from the wrongful act. However, the control shall in terms of how to do the act and not what the act is suppose to be.
Vicarious liability is created under such a relationship because the employee would not have done the same ask otherwise. If the act so achieved is illegal or the means to achieve the goal is illegal then the employer will not be liable for the employee’s actions. It should be noted that the same is performed during the course of business and isn’t created out of the personal motivation.
3. Advice Angelina if she has any right and remedies against Christian Auctioneers or Brad.
Angelina would be said to have the right to claim for the damage so suffered from relying upon the professional advice so given by Brad, an employee of Christian Auctioneers. However, the purpose of visit of Brad was to acquire antique furniture and not the painting. The advice so given was provided for the painting. Christian Auctioneers would have been responsible if the same was provided for the furniture. The vicarious liability so applicable under the given scenario is for the furniture and not the painting. Angelina was aware that he had come to pick up the furniture and no the painting. When she asked Brad for the advice the same was provided out of personal estimation and not professional. Thereby, the quote so relied on was not the responsibility of the Auctioneers, the employer, as the same wasn’t discussed in prior. The painting was not the purpose of the visit and the same may not extend Christian Auctioneers liability who is the employer.
The quote so made by Brad would be considered as a misrepresentation. This is because the statement so made was not in his full knowledge and not intended to mislead the customer. Therefore, the quote was for the information best to his knowledge and therefore a misrepresentation. According to the case of Rose v Plenty it was determined that however the wrongful act so committed was strictly prohibited by the employer the employee had not performed so out of his professional duties that the same is directly opposite. Therefore, the scopr of employment was not breached while giving the quote the Auctioneers will be liable towards the wrongful act of Brad. (Nel, 2004)
The defence of volenti non-fit injuria implies that a person hass voulntrily waived off the duty of care in order to perform a certain act. In such case the loss so arising from the damages so caused cannot be claimed from the damaging partya s the damaged party was already aware of the cisrcumstances. In the case of Morris v Murray it was held that the intent of the claimant to ride in an airplane flown by the drunk pilot was a willingful choice and the losses so suffered cannot be claimed for as the decision was made in the presence of mind. The defence of contributory negligence implies that the parties so involved in the wrongful act have contributed to a certain extent that the loss could have been reduced if the participation of either party was not present in the act. In the case of Davies v Swan Motort Co. it was held that the claimant was on-fifth responsible in contributing to the damages so caused as he had not undertaken the proper care precautions. Therefore, the defendant would not be liable for the one-fifth part of the liabitliy.
The defences available to Christian Auctioneers is that of vicarious liability. It may be determined that Brad had gone to Angelina’s place to acquire the furniture piece and not painting. Brad was asked to not making any statement regarding the furniture. The term of this contract would be bound by the exclusion clause of not providing the information for anything other than the purpose of the visit. Such a clause is valid as it does not restrict the liability only obstructs the provision of information. However, the exclusion of liability is implied if the act is performed. According to the case of McCutcheon v MacBrayne it was determined that the exclusion clauses are only valid if the same are inserted through signatures, previous dealings or notices. As the previous dealings had been inconsistent the presence of exclusion clause in the current case was not assumed and thereby not included.
The official duty is not breached and the statement was from the personal opinion not official as he used the word “I”. Thereby, Christian Auctioneers stand no liability for the same. Brad however may claim the defence that as it was a personal opinion and not official it is not sufficient to estimate the actual worth based on the statement and make a decision. Another defence that may be applied is that of volenti non-fit injuria wherein the Angelina had voluntarily asked Brad for his opinion knowing that the same may not be accurate as he wasn’t sure of the quote. Such other defences available are that of the contributory negligence wherein rad had not denied from providing any quotation but he still did knowing it won’t be accurate. (Richards, 2006)
The contracts are different based on the type of elements involved based on offer, acceptance and consideration. Sometimes a combination of elements defines the nature and type of the contract. Furthermore, the liability arising under the contract as well tort are determined to be similar yet different under the law. The liability for the wrongful act under tort for negligence and vicarious nature is studied to solve the case scenarios.
Collins, H. (2008). Standard contract terms in Europe. Alphen Aan Den Rijn: Kluwer Law International.
Cooke, P. (2007). Law of tort. Harlow: Longman.
Giliker, P. (2010). Vicarious liability in tort. Cambridge, UK: Cambridge University Press.
Meyer, L. (2010). Non-performance and remedies under international contract law principles and Indian contract law. Frankfurt am Main: P. Lang
Nel, J. (2004). The theoretical basis for contractual liability. Bathurst, N.S.W.: Faculty of Commerce, Charles Sturt University.
Pratt, S. (2000). Duty of care. East Roseville, N.S.W.: Simon & Schuster.
Vettori, S. (2007). The employment contract and the changed world of work. Burlington, VT: Ashgate Pub.