Aspects of Contract Negligence in Business Assignment Sample

Unit 5 Aspects of Contract Negligence in Business Assignment Sample

Aspects of Contract Negligence in Business Assignment Sample


Diploma in Business

Unit Number and Title

Unit 5 Aspects of Contract Negligence in Business

QFC Level

Level 5


The contract is regarded as a relationship between the parties to the contract who are only entitled to the benefit and not the third parties. The contract to be valid is required to possess certain basic requirements such as the offer and acceptance. The importance and effect of the various terms and types of contract is to be determined in order to understand the case scenarios presented in the assignment. The liability may arise of the contract is not performed and the same is to be fulfilled by the damaging party. The liability may also arise under tort but the relationship between the parties is not contractual. The difference in such liabilities is to be presented under the assignment. Furthermore, the nature of torts such as negligence and vicarious liability is to be presented.

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.

A contract has to be initiated from an offer. Offer is moved from the offer or and is clear in its meaning and intention. The offer contains the elements of the contract that may be included if the same is accepted by the party to the contract. Offer may be of different types such as invitation to offer, offer to the world or counter offer. The offer made to the world derives that no acceptance shall be made as the action to perform a certain act may be considered as the acceptance. The invitation to offer is not exactly an offer but it is a statement that invites the offer from interested buyers. If the terms of the offer are accepted by the party then the same is regarded as an acceptance. The acceptance leads to a contract with a mutual consent of the parties. the acceptance is to be communicated to the offeror through a valid means of communication. Accordingly, the postal rule states that the acceptance will be valid as soon as it is posted. If the acceptance is not made but the offer is negotiated it will be regarded as a counter offer. The counter offer would in turn replace the places of the offeror and the offeree. The final offer would be said to be the binding offer under a contract. (Adams, 2008)

Every contract requires the parties to exchange something of value in order to ensure the gain of some nature for the loss so suffered by each party. The consideration may be of several types such as the promise, money or an object. The rules of consideration state that the contract shall be sufficient enough should not form a part of social o contractual duty, move from the promise and not to be of past nature. It is essential for consideration to be a part of the contract in order to derive the validity for the contract under the law.In order to derive the enforceability of the contract it is essential that the intention of the contract is derived at the time of entering into a contract. If the contract is of commercial nature then it will be regarded as that of enforceable under the law irrespective of mentioning the purpose. Whereas the social contracts are considered to unenforceable, unless the same is mentioned under the contract. (Andrews, 2011)

The parties entering into a contract are required to possess the required capacity in order to derive the true meaning of the contract. Such capacity is determined based on the mental ability to enter into a contract, being of legal age and having the financial resources. When the contract is being entered into the parties are required to know that the same is not entered into under undue influence or intoxication. While entering into contract, Peter Abraham should ensure that the parties to the contract are of capacity and sound mind. He should make sure to define the nature of the contracts in order to derive the enforceability under the law in case of breach. While accepting the offers the same shall be done with negotiations in order to get the best deal. (Finch, 2007)

1.2: Discuss the impact of forming contracts:

Face to face contracts are such contracts that are entered into by the parties in presence of each other. These generally arise from a conversation that takes place between the parties in the interest of the contract. The parties should be aware of the discussion and shall clearly state the acceptance as valid when the same is made. If the no time limit is discussed the acceptance shall be made within a reasonable amount of time from the conversation. The face to face contracts are mostly oral in nature and save time and money. However, as they are not present in the writing it is difficult to establish an oral contract under law for the purpose of enforceability.

Written contracts are such contracts that are provided in written through exchange of terms and conditions and accepting the same through signatures by the parties to the contract. The terms for being present in the written form are easier to be established under the law and the express and clear. These are easier to be established as the common intention may be determined through referring to a written document. (Meyer, 2010) When the buyer and seller enter into a contract from a far distance from each other then such contracts are regarded as the distance selling contracts. Distance selling contracts are regarded as a contract between a distance seller and a distance buyer. The distance seller has to be provided in the written form and the parties shall agree to the similar terms and conditions for the contract.  the seller at the time of making the sale shall inform the buyer of the costs, date of delivery, and packaging and handling charges along with the taxes. The contract shall be communicated on time and through an acceptable means of communication. Peter Abraham should make sure that when he is entering into a contract he provides the necessary information in the written form. If the distance selling contract is being entered into the contract shall be of common intention and the necessary information should be provided at the time of entering into the contract.

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

A condition is regarded as that part of the contract that defines the basis of the contract. Such a term is to be performed in order to perform the contract and fulfil the obligations so defined. If the same goes unperformed then the damaged party may be able to discontinue the contract. The conditions may be of various types such as the precedent, concurrent and subsequent in nature required to be performed in accordance with the contract and its requirements.

If the term so performed is only secondary in nature then it will be considered as a warranty. A warranty may be regarded of different types full warranty, lifetime warranty and such other. If the warranty is not performed then the damaged party may not be able to discontinue the contract but the damaged party may be able to claim for the damages so suffered from the non-performance. (Andrews, 2011) Sometimes it is difficult to derive the nature of the term included under the contract. It is important to derive its importance in order to know the role played under a contract. In such a situation the effect of non-performance would derive the nature of the term. If the non-performance leads to voiding the contract then it will be a condition and if not then it will be a warranty. If the terms included under a contract law are for the purpose of restricting the liability under a contract then such terms will be regarded as the exclusion clause. The clause so included should not be in regards with the limitation of liability for injury or damages. The damaged party may claim the damages if the exclusion clause is invalid in accordance with the Unfair Contract Terms Act, 1977. Such clauses may be including under a contract though signatures, notice or previous dealings. (Adams, 2008) Peter Abraham should be able to distinguish between the type and nature of term under a contract. The condition shall be distinguished from warranty while entering into a contract. The exclusion clauses shall be brought into the attention of the parties at the time of entering into a contract in order to enforce the same.

Task 2:

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

Case 1:

Under the present case study it could be determined that the Carol wanted to purchase a couch for which she came across an advertisement under the newspaper. The couch was advertised for along with the details and the price. The advertisement in this case would be regarded as an invitation to offer. This would mean that the person posting the newspaper wanted to draw offer from prospective buyers. Carol being one posted an e-mail to the seller. She did not hear back from the seller and it may be determined that the contract was not entered into. This is because an acceptance is to be communicated if the contract is to be formed. As no response was received no contract will said to have been entered into Carlill v Carbolic Smoke Ball Co. (Collins, 2008)

Case 2:

Devi wanted to work with a cyber-security firm as a professional and had applied for a position. The company had received the application and called Devi for an interview. On hearing the call Devi asked his father not to interfere with the interview process as he was a man of means. Devi on giving the interview was offered the job and the same was accepted by him on 12th April. On 13th April, Devi’s father wanted to make sure that his son gets the job. For this purpose he presented the company with an offer that if he pays 150,000 Pounds then the company would hire his son. The company now wants to claim the amount as offered under the contract. It may be noted that the amount so offered was for the purpose that had already taken place in the past one day ago. According to the rules of the consideration the past consideration is regarded as invalid. Therefore, the contract for the purpose of the hiring the son would be invalid and the father would not be obligated to pay for the amount so promised under the invalid contract Mmills v Wyman. (Vettori, 2007)

2.2: Apply the law on terms in the following contracts

Case 3:

In the present case, it can be determined that the couple had gone to the restaurant to have a meal. They checked in the coats at the reception. On checking the coats the couple was provided with the receipt for the coats. The receipt stated that the restaurant will not be responsible in case of any loss or theft towards the belongings of the customer. The couple realises on finishing the meal that the wallet was not with them but in the coat checked in at the reception. The couple when approached the reception the wallet was not found in the coats as expected. The couple now wants to seek compensation was the loss so suffered to which the restaurant denies the responsibility as the same liability was excluded through the provision of the receipt. It may be determined that the clause so provided under the receipt is an exclusion clause but not a valid one as it is not included under the contract. The exclusion clause so included was after the contract had been entered into. Therefore, as it does not form a part of the contract it could not be enforced and is not considered valid. The restaurant would be liable towards the couple for causing the damage and loss of the wallet L’Estrange v Graucob. (Andrews, 2011)

Case 4:

According to the present case scenario, the tenant staying at the rented place had made some additions for the improvement of the rented premises. The landlord in turn promises not to increase the price of the rent for the next five years. However, a year later, the landlord passes away. The subsequent landlord decides to increase the rent of the premises. It is in turn observed that when the tenant wants to claim for the improvements so made by him, the same are denied to be repaid to the tenant. It may stated that under a tenancy agreements it is an implied term to pay for the improvements so carried out during the tenancy period by the tenant. This is because the additions adds to the value over the years. Therefore, the repayment of the balance of the amount for the rest of the four years is to be paid back in proportion to the tenant. The tenant has the right to claim for the improvements so made under the Property Act Hutton v Warren. (Meyer, 2010)

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

Case 5:

In the present scenario it may be determined that the policy holder was presented with a form to be filled out in order to acquire the policy. The policy was regarding the theft of car. It contained questions regarding the previous claims if made for the theft of the car. The answer provided was not true as it was denied and the claim was made previously in past five years. The terms so presented under the contract determined the allotment of the policy. As they directly influence the policy they will considered as the condition. The condition was breached by providing wrong information. Therefore, the company would be valid to discontinue the contract for the breach of the condition under a contract Poussard v Spiers. (Andrews, 2011)

Case 6:

In the present case scenario it may be classified that the policy form was provided to acquire the policy. The policy holder was presented with the terms in relation with the previous claims so made and the originality of the car and its sub parts. The policy holder had misled by providing the wrong information while filling out the form. When the car was stolen an investigation was carried out that determined the false nature of the information provided under the form. The same would be regarded as a misrepresentation. The terms so answered we misrepresented conditions leading to a breach of the contract. Therefore, the policy may be denied by the company towards the policy holder. Therefore, no claim would stand true for the policyholder as the policy is breached and discontinued Bisset v Wilkinson. (Richards, 2006)

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Task 3:

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

The two types of liability such as contractual and the tortuous liability are civil in nature and strict. Such liabilities arise from the breach of a civil right. The right arises under different legislations and different situations. These liabilities are to be presented for the breach of right by the party and the reasons are not considered while doing so. The liability is accepted by the party in order to perform the right so presented under the legislations. (Vettori, 2007) The difference so present for the two liabilities is as follows:


Liability under contract

Liability under tort

Rights involved

The right so breached under the contract is for the right in personam

The right affected under the tort is right in rem.


The damages under the contract are calculated based on the amount of consideration

The damages under tort are determined by the court depending on the situation

Scope of liability

The scope of liability is narrow under contract

The scope of liability is wide under tort.


The remedy under contract is for the restitution of the contract

The remedies available under the tort are for the compensation


The elements considered under contract are of offer and acceptance.

The elements considered under tort are that of remoteness of damage and causation.


The motive behind the breach is not considered

The motive behind the breach is considered. (Giliker,  (2010)

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

The liability for negligence under law of tort arises from the ignorance or non-performance of a duty of care. The duty of care is existent under the law of tort against the society at large. The duty of care when breached should amount to damages in order for it to be a tort. The damages so occurring shall be measurable in terms of economic, physical or psychological terms. An example of such a tort is the negligent driving on the road by the driver. The duty of care is for the maintenance of peace and happiness in the society with every citizen bearing the same right and duties of equal nature. (TAN, 2008)

In the case of Donoghue v Stevenson it was derived that the manufacturers are required to undertake the duty of care in accordance with the direct users as well as the indirect users of the product so provided into the market. The liability derived in the case is universally applicable to the manufacturers of the world. The preparation shall be such that the possible damages shall be considered for not only the buyers but buyer’s family and friends in the circumstances. In the case of Caparo Industries plc v Dickman it was held that while determining the effects of the negligence three aspects shall be considered, such as, remoteness of damage, causation, and froeseaability. The remoteness of damage derives the possible damage that could occur from the actions, causation derives the relationship between the event and the damage and the foreseeability gives rise to undertaking the duty of care.

The types of defences that may be applicable under the tort of negligence are that of volenti non-fit injuria and the contributory negligence. The contributory negligence is regarded as the negligence whereby both the parties contribute to the negligence and the damages may only be claimed for the extent of negligence not undertaken by the claiming party. Whereby volenti non-fit injuria applies it means that the damaged party voluntarily undertook action that lead to damages. (Cooke, 2007)

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

The liability of vicarious nature determines that the person liable for the actions is not performing but is performed by another person. The person undertaking the actions has been asked in specific to perform tasks on someone else’s behalf. Therefore, being vicariously liable means being liable for the actions of another person. Such type of liability exists under the relationship of employer-employee relationship. It is to be determined that when the wrongful act is being performed if the same is performed under official duty only then the vicarious liability would be applied and not if the same is perfumed in personal capacity. (Morgan, 2011)

According to the Health and Safety at Work etc. Act, it is important for the employer to make sure that the condition of the premises is functional and safe for the protection of the employees. To do so it is important to check the workability of the equipment provided sanitary provisions, clean water for drinking and such other facilities.  Under the Occupier’s Liability Act, it is necessary for the employer to undertake responsibility of making the premises safe for the visitors as well as the non-visitors, of permanent and temporary nature. If the premises are unsafe the same is to be determined at a place accessible by everyone through putting up a warning sign or a notice. (Bell, 2013)

Task 4:

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

Case 7:

Under the present case study it is determined that the person affected by chest pains and the breathing problems. The nurse when telephoned the doctor she was asked to provide the patient with the over the counter medicines and send him home. The patient then was discharged and it was found that he died the very next day. On investigating the reason it was found that he died of pneumonia. It may be said that the patient had died from the pneumonia and not the medicines so provided by the doctor at the hospital. It is derived that the doctor should be checked for the professional negligence. As the doctor had advised the medicines of mild nature for serious issues without performing a check-up, it would be regarded as a professional negligence under the law of tort. (TAN, 2008)

According to the law of tort for negligence the but-for test is to be applied in the present case. The test signifies the extent of liability of the wrong-doer. The but-for test determines the relationship between the action performed by the wrong doer and its effect on the affected party. Herein, the doctor is accused of the professional negligence however; the medicines did not cause the death of the patient. Therefore, as there is no relationship between the wrongful action and the reason of death of the patient no liability will arise on the part of the doctor or the hospital for the death of the patient. However, the hospital will be vicariously liable for the professional negligence so undertaken by the doctor while on duty of the hospital for not performing a regular check-up before prescribing the medicines. (Giliker, 2010)

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

Case 8:

 In the present case study, it is derived that the driver was employed by the company. The driver had the duty to pick up a client from the airport. While waiting for the flight to land he decided to have a few drinks. On receiving the client the driver decided to drive back to the destination. On his way back he was involved in an accident that caused damage to the car as well as the client. The client wants to make a claim against the company as well as the driver for the damages so caused. It may be determined that the driver was drunk at the time of performing the duties. However, it is implied that the while driving the driver shall be in sober condition however, the breach was not so distant from the scope of employment. As the action of drinking was personal the performance of duty was professional. Therefore, the damages so caused in the course of employment would be responsibility of the company Rose v Plenty. (Cooke, 2007)

Case 9:

Under the present case scenario, the case of Ready Mix Concrete (South East) V MPNI may be useful to provide a solution. It was discussed that whereby more than one employer is present for the employee, the employer having a direct control over the employee at the time of damage occurring would be responsible for the actions. The damage so occurring should be in the course of employment. In the given case scenario, the Supermarket had delegated the duty for provision of health and safety standards to another company. One day while performing the duty of loading planks the employee slipped and the plank fell on to another employee. The employee was in turn injured. It may be derived that the accident happening at the premises of the supermarket the employer would responsible for the damages so occurring. Even if the employer has delegated a certain responsibility to another employer, the original employer would not lose the responsibility for the actions of the employees. Therefore, the Supermarket will be vicariously responsible for the actions of the employee causing damage to another employee. (Morgan, 2011)

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The relationship between the contracting parties is definitive in nature. The kind of relationship may be either social or commercial. The same is required to be defined in order to notify the extent of enforceability under the law. The different types of terms so present under the contract are different and vary from contract to contract. The same are to be included according to the type of contract. If a party is damaged under the performance of the contract then the damages may be claimed from the damaging party. The liability so arising under contract is different from the one under the law of tort. The tortuous liability is against the society and not merely for the specific person. The liabilities of civil nature under two different legislations have been determined. Tort of negligence and vicarious liability are two common types of tort present that are studied in the given assignment.


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Vettori, S. (2007). The employment contract and the changed world of work. Burlington, VT: Ashgate Pub.
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TAN, S. (2008). Vicarious Liability. Internal Medicine News, 41(24), pp.36-37.
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Bell, J. (2013). THE BASIS OF VICARIOUS LIABILITY. C.L.J., 72(01), pp.17-20.