Aspects of Contract and Negligence business Assignment

Program	Diploma in Business
Unit Number and Title	Aspects of Contract and Negligence business Assignment
QFC Level	Level 5

Introduction:

This Aspects Contract Negligence business Assignment is an agreement between the two parties that is enforced by law. Both the parties under the contract are ready to engage in the contractual relationship voluntarily. There are many types of contracts. The detailed explanation of the types of contract is given in the unit below. Many torts and unfair doings are associated with the contracts that are also discussed with reference to the case laws.

Task A: Identify the essential legal elements for the formation of a valid contract and explain their importance.

With the purpose of the contract every contract is being entered into by the parties. It is necessary that the reason for which contract is to be made should be common between both the parties. Hence, offer will be presented by the interested party to other party so as to enter into the contract. Terms presented for the contract should be clear to understand. Basis of the contract and the reasons for which the contract is formed must be presented in the offer (Collins, 2008). Invitation to offer is another aspect which is different from offer as offer is made for the purpose of entering into the contract; on the other hand invitation to offer is for providing the information and knowledge to the world that contract may be entered. Counter offer can also contrast offer. Offer is the statement made by the party which could either be accepted or rejected by other party to who the offer is made. Previous offer get null when counter offer is made but previous offer remains the base for counter offer. Counter offer is presented in order to suit the offeree.

Counter offer can only be formed in the case when offer is accepted. Person that has been made the offer may only accept it. To ensure that the contract could be made it is necessary to communicate acceptance to the offeror. Acceptance presented by the post will be considered applicable if and only if it will be posted (Cooke, 2007). Certain art of consideration should be there for a valid contract. Consideration is the amount that is provided by the parties so as to restore the losses so suffered under the transactions made by involved parties. Consideration involved in the contract should be in the form of profit, interest or promise. Consideration will be termed as valid if it passes all the criteria like it should not be of past nature, already a party of duty and sufficient.

In order to define enforceability under the law it is necessary that the parties entering into the contract should mention appropriate reason due to which the contract is being formed. Enforceability of the contracts which are of commercial nature is automatic or can be mentioned. On the other hand in social contract it is necessary to mention for the enforceability. Such parties shall be of capacity so as to understand the purpose of the contract in order to form the contract. Capacity can be defined on the basis of mental state of the party, financial status, and the age of the party. In case of minor enters into the contract then the contract will be void (Giliker, 2010).

Task B Discuss the impact of the following contract:

1. Bilateral and Unilateral Contracts: Contract which is entered by the parties with the help of an offer and by presenting the acceptance is known as bilateral contracts. Bilateral contracts are of simple nature. All the aspects of contracts are included in such type of contract. The contract in which the element of acceptance related with the contract are waived off by the parties is known as Unilateral Contract (Meyer, 2010). Unilateral Contracts are made to the world and acceptance of other party is considered as the acceptance for the contract. With the help of the case of Carlil v Carbolic Smoke Ball Co. a better understanding could be developed. In this case advertisement was considered sufficient as an offer and clear in terms of considering it as an acceptance to the performance of the use of the product for which advertisement was presented.
2. Void and Voidable Contracts: Void contracts are the contracts which include certain illegal activities which are against the law. Such of contracts are not enforceable by law as the purpose of it is not legal. Voidable contracts are the contracts which are partly enforceable by the law which are based on certain conditions which proves them for being legal in nature (Richards, 2006). On the basis of the decision made by affected party the contract may be voided. Hence, it could be said that voidable contracts are not legal and can be enforced on the will of the party that is being affected. Discussion regarding such aspect was held in the case of Philips v Brooks. In this case discussion was held that parties entering face to face into the contract, the identity of the parties could not be termed to be certain. In case it was found that the identity of the parties is not authentic then in this case contract may be voided.
3. Distance Selling Contracts: These are the contracts which are formed between the parties at distance. Parties that are involved in distance selling contract are mostly sellers and buyers. In such type of contract physical presence of the parties is not important while entering into the contract. It is necessary that seller should present clear terms at the time contract is being entered (Vettori, 2007). Details regarding the product that is to be sold like delivery, taxes and content of the product must be clearly presented within the fourteen days of the contract formation. Distance selling is regulated by Distance Selling Regulations of 2000.

Task C: Analyse terms in contracts with reference to their meaning and effect.

Terms	Meaning	Effect
Express terms	There are certain terms that are clearly mentioned or included in the contract those terms are known as express terms. These are the terms which are clear and helps in understanding the expectations of the parties that they expect from the contract.	Express terms are very important for the contract which are enforceable by law as they are clear and determines clear purpose of contract.
Implied terms- Implied by fact	Implied by fact are the terms in which pre-existence of the duty is required as they cannot be performed without those duties. These are the terms that are to be performed irrespective of its inclusion in the contract. (Nel, 2004)	It is necessary to perform the terms that are implied in fact so as to meet the performance of the contract. These are the terms which are implied and it is not required to include them under the contract.
Implied terms-Implied by statutes	Terms that are implied by the statute are not necessary to be included in the contract but it is necessary to meet them by the parties entering into the contract. These terms are to be met according to the requirement of the legislatives governing the contracts. Due to the reason legislations already enforce these terms under the contract therefore, these terms are not required to be presented in the contract.	To achieve the performance of the contract terms implied by statutes are necessary to be met  (Pratt, 2000)
Implied terms- Implied by custom   Implied terms-  Implied by trade usage	There are several terms that are presented in customary nature for similar type of contract these terms are known as implied by custom. Implied terms through trade are same as implied terms by customs as both the terms are of same nature are presented to fulfil the common purpose.	To fulfil the requirements of contract it is necessary that these terms should be performed as these are inspired by the nature of contract. (Richards, 2006)
Condition	There are certain primary requirements of the contract these requirements are termed as condition.	It is necessary that the conditions are to be performed presented in the contract as non performance of the condition could void the contract.
Warranty	These are the supportive terms of the contract which are mentioned in the contract. (Vettori, 2007)	Non performance of warranty will not affect the contract. Damages caused due to the non performance of warranty could be claimed through injunction or specific performance. Damaged party cannot not void the contract due to non performance of such term.
Innominate terms	There are several terms which are neither condition nor warranty. These are the terms which are defined on the basis of the situation.	Innominate terms are determined to be condition or warranty on the basis of the situation arises or the nature of the non performance held by the party.
Exclusion clause	In certain circumstances the liability is excluded by certain clause these clauses are known as exclusion clause. According to UCTA, 1977 exclusion clause are included.	These are the clauses that could be included by a signature, notice or previous course of dealings (Collins, 2008).

Task D: Apply the elements of contract in given business scenario.

Present case study is about the information in which sale of East Midlands Airways Airbus was to be carried out. In relation with this sale an advertisement was posted under aviation trade journal on 15^th October 2010 for the cost of 10.4 million pounds. In this case the advertisement posted by the seller will be considered as the invitation to offer as seller wants to invite the offer for the advertisement made for the sale of Airbus in industry journal (Collins, 2008). It was found that the CEO of Zulu Aviation Ltd. was interested in buying the Airbus. Therefore, in relation with the purchase of Airbus CEO of Zulu Aviation Ltd. telephoned the MD of East Midlands Airways so as to express the interest in the purchase of the same but at present he won’t be able to buy it. CEO of Zulu Aviation Ltd. made an offer to put off the sale just for 5 days as he would be available to pay the amount after five days. After listening to the CEO, MD of East Midlands Airways accepted the offer. In this case acceptance is shown for the offer made for not selling the Airbus and is not regarded for the purchase of the Airbus. For the contract the offer is made by the CEO and accepted by MD of EMA for the price of 100,000 Pounds. In this case the contract was entered into by the parties having the capacity and the commercial nature of the contract make it enforceable under the law (Giliker, 2010)

Task E: Explain how you arrive at the conclusion relevant cases in each circumstance and refer to relevant cases.

In the case the contract determines that 300 mobile phones will be bought and will be immediately used in UK. There are several circumstances that are to be determined so as to determine the nature of the term discussed about:

1. The nature of the telephones which were supplied was of illegal nature and any kind of alteration could not change the nature of the mobile phones. The purpose for which the contract was entered into was sale of the mobile phones. In order to make the sale of the mobile phones it is important that the mobile phones that are to be sold in UK should be of legal nature or could be altered in some form of legal aspect (Meyer, 2010). Therefore, the contract of the sale of illegal mobile phones may be voided according to the law. Reason due to which contract is voided is that the implied terms of the contracts were breached in this case whereas sale so made according to the contract include that the goods that are to be sold should be of standard quality, should match the description provided and should be provided with care in accordance with Sale of Goods Act, 1979 (Cooke, 2007). In this contract basis for it were the mobile phones which were making it a condition. Therefore, as in this situation condition is breached, purchaser of the mobile phone may void the contract.
2. Supplied mobile phones require turning to a certain frequency which takes 2 minute each. The contract is aimed to make sure that the 300 mobiles are supplied to make the further sale of those mobile phones. The mobile phones that are supplied have no defect except the delayed use of them. It could be said that according to the Sale of Goods Act, 1979 the standards of the sale of the mobile phones are matching with the descriptions like standard of quality, duty of care and skills but delayed use of the mobile phones was not mentioned at the time of sale. In this case supply of the mobile phones were made on time and according to the standards then in this situation condition will not be said to be breached but as delay use were not mentions then the breach of warranty will be considered as misrepresentation. Hence, the purchases of the mobile phones may claim the damages or specific performance according to the Sale of Goods Act, 1979 (Nel, 2004).

Task F: Cathy v Brakes Ltd.

In this case it could be determined that the car of Cathy was handed over for servicing to Brakes Ltd. In previous services Cathy was made sign to an exclusion clause regarding the injuries caused due to malfunctions in car after servicing. At every service this was done by the Brakes Ltd. Due to certain reason this time Brakes Ltd was unable to provide the condition and the same was not signed by Cathy. But at the time car was handed over to Cathy a slip stating the same condition was provided to her (Pratt, 2000). After receiving the slip and the car after servicing a way back to her house she loss control over the car and crashed into the tree which cause damage to the car and injuries to Cathy. In the investigation it was found that Brakes Ltd forgot to connect the transmission of the steering mechanism. In this case Cathy did not sign the condition but due to the previous acceptance of Cathy she cannot make any claim for the damage from Brakes Ltd. According to the law exclusion clause are entered either through signature, previous course of dealings and choice.

In this case previous instances were included in the same manner the time of the accident will also be included. However, according to UCTA, 1977 AND UCTR, 1999 it could be determined that the exclusion clause made for the injuries or death is not valid and will not be enforceable under law (Richards, 2006). Therefore, it could be advised to Cathy that she may file for a claim for the injuries she had from the accident due to sub standards quality of the services provided by Brakes Ltd. According to Sale of Goods Act, it is necessary that the goods and services provided should be of standard quality which should be provided with the duty of skills and care. Therefore, in this case claim made by Cathy will be termed as valid.

Task G: Contrast liability in tort with contractual liability

Both the liabilities, liability under tort and contractual liability are of similar nature which is civil in nature. Under liability under tort the liability so arises is due to the breach of right against the society whereas under the contract breach of right is for a specific party. Under contractual liability the amount that is quantified is the consideration amount on the other hand amount that a person is liable to pay in tort is decided by the court and the situation arising. Under contractual liability the elements that are being considered are offer and acceptance on the other hand under liability of tor elements that are considered are remoteness of damage and proximity (Vettori, 2007). Liability under contract arises from right on personam whereas liability under tort arises from right on rem.

Task H:

1.Explain the nature of liability in negligence

Negligence in simple terms can be defined as carelessness. The act of negligence comes under tort. Tort of negligence is the non-criminal act that has been done unintentionally but has somehow harmed the plaintiff. The tort of negligence has five elements associated with it:

• Duty of care: It means that the duty exist between the defendant and the plaintiff. duty of care refers to performing the duty in the way that it does not harm anyone or damage something. (Collins, 2008)
• Breach of duty: Breach of duty means failing to perform a particular duty. If a person is doing his Duty which in turn causing harm to others is actually breaching his duty to perform his task carefully
• Causation: The defendant is liable only when the act by the defendant is the actual cause of that damage or harm.
• Harm and damages: the plaintiff can claim the damages or compensation only when he proves that the breach of duty by the defendant harmed him in any way. (Giliker, 2010)

We can consider the case of Caparo Industries. The three fold test was conducted to indentify the nature of liability. Determination of tort of negligence in this case considers three factors:

• Proximity
• Causation
• damage

Proximity means the negligence towards the duty, causation means the effect of cause on liability and damage refers to the possible harmful result of the breach of duty.

2.Analyse the situation and advise Carlos and Janet regarding the tortuous liability.

The case of Donoghue v Stevenson can be considered to study the situation. This case very well explains the extent of liability. In the sale of goods case, the liability does not limits to the direct buyer but extends to the possible users of the goods because goods are not always used for self-consumption. (Nel, 2004)

Similarly, if we consider the case of Janet and Carlos, the dessert bought by Carlos has its effect on Janet who was the indirect consumer. Therefore, the restaurant is liable for the damages to Janet as well. It clearly explains extent of liability concept that suggests that the liability extends from the buyer of the goods to the consumer of the same.

Task I:

1.Explain the nature of liability of Tort of professional misstatement.

The wrongful act by the performance of any professional cause the tort of personal and professional misstatement. The tort of misstatement takes place when a professional is providing advice or presenting any professional statement. In this case,the defendant is liable only when there is a breach of duty. The carelessness in presenting the professional statement by the people with specialized knowledge and skills leads to tort of misstatement. Providing true and honest statements is the duty of care in this case. The person making the wrongful statement is liable only if the circumstances made it necessary to rely on that statement. (Richards, 2006)

It is almost same as tort of negligence with the difference of the extent of the affect caused by the wrongdoing. The effect may be far reaching in case of misstatement as compared to negligence by action. (Vettori, 2007)

2. Explain the legal doctrine of vicarious liability

Vicarious liability arises when any third party has the control over the work or wrongful act done by the doer. In this case, the person who is not performing is liable for the wrongful act because he is responsible for the actions of that violator. This liability is only applicable on the delegated task and not on the personal doings by an individual. The vicarious liability is the most common in the relationship of employee and employer as the employer is answerable for the task that has been delegated to the employee.

3. Advice Angelina if she has any right and remedies against Christian Auctioneers or Brad.

Angelina may have the right to claim against Brad as she has suffered  damage regarding the painting auction but she does not have a right to claim against Christian Auctioneers in the given situation. This is because Brad, the employee of Christian Auctioneer is responsible for giving the advice for valuing the painting. This was his personal view that was not necessarily to be relied upon. The main purpose of the visit was to value the furniture and not the painting. Therefore, the liability is not extended to Christian Auctioneers. (Richards, 2006)

Task J: Briefly explain the possible defenses in the case available to Christian Auctioneers or Brad.

The above case is about vicarious liability. The defense that may be made by Christian Auctioneer is that Brad, who was asked to give advice Angelina about the value of the furniture has made a personal statement about the valuation of painting. According to Christian Auctioneer, the act was not wrong, as Brad has given the personal advice. This not leads to breach of duty. Therefore, they are not responsible for the damage.

Brad may also give the reason in defense that he is not liable because it was a personal advice and not official one. Angelina should not rely upon that statement for making a auction decision. (Nel, 2004)

Conclusion:

There are different contracts based on offer, acceptance and consideration. Contract may involve two or more elements that identify the nature and type of the contract. The violation of contract leads to liability for one or the other party engaged in the contract. Cases given are solved by studying the tort of negligence, misstatement and vicarious liability.

References:

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.