Aspects of Contract and Negligence in Business Assignment

Aspects of Contract and Negligence in Business Assignment

Aspects of Contract and Negligence in Business Assignment


Diploma in Business

Unit Number and Title

Aspects of Contract and Negligence in Business

QFC Level

Level 5


Aspects of Contract and Negligence in Business aims at studying the different aspects of the two types of legislations such as contractual and tort. The elements and the impact of nature of liabilities arising under the two types of legislations are to be compared and represented in reference with the case laws. The negligence is to be determined in relation with the duty of care and the vicarious liability is considered with respect to the delegation of the duties.

Task 1

1.1 Explain the importance of the essential elements required for the formation of a valid contract to Mr. Michael Johnson.

A contract is regarded as a meeting of minds of the party to the specific purpose common between the parties. The contract contains the terms and conditions of a contract that is discussed between the parties. A contract has to be entered into on the presence of four important elements such as offer, acceptance, consideration and intention. The offer is considered as the part of contract that initiates the contracting process. An offer has to be clear in the meaning as it is the first step towards formation of the contract. An example would be Cargill v Carbolic Smoke Ball when the offer that was made was to the entire world and not just one particular person. When the offeree agrees to the offer so made then the same is considered to be acceptance. The acceptance confirms the existence of a contract. The example of an acceptance is that described under the case of Payne v Cave wherein the bid could be withdrawn, as the acceptance was not made. (Meyer, 2010)

The element of consideration ensures that the parties are getting something of value in replacement of the detriment so suffered by them to perform a certain act under the contract. The consideration validates the existence of the contract. An example of the consideration may be found in the case of Chappel v Nestle wherein a sufficient amount of consideration in the form of wrappers was considered to be valid. The element of intention aims at determining the purpose of entering into the contract to establish the enforceability under the law. It would mean that the parties if enter in to a social care the same would not be enforceable under the law but if the same is not the case with the commercial contracts. According to the case of R v Clarke the intention to enter into a contract shall be express. (Richards, 2006)

1.2 Discuss with Mr. Michael, the impact of different types of contract.

Face-to face Contracts: The parties in the presence of each other enter into these contracts. Such contracts are express and clear initiated by a discussion of the term of the contract. These contracts are mostly orally communicated.

Written Contracts: When the terms and conditions are presented in the written format then these are called as written contracts. These contracts are expressive and entered into through signatures of the parties.(Collins, 2008)

Distance Selling Contracts: When the terms and conditions are discussed by separate state or country, they are to be regarded as the distance selling contracts. The distance seller should mention the details such as delivery charges and tax charges at the time of sale. 


Impact of Contracts

Face-to face Contracts

As these contracts lack presence they are difficult to be established.

Written Contracts

The enforceability in the court is greater for being available in writing.   

Distance Selling Contracts

Distance sellers are required to provide the relevant information of the order when the same is entered into. The Contracts are to be presented in written form and are easily established under the law.

1.3 Analyze terms in contract with reference to their meaning and effect




It is primary in nature and the non-performance would lead to breach of the contract. Like in the case of Poussards v Spiers the contract may be voided for the opera singer not being able to perform as agreed under the contract. (Vettori, 2007)


It is second in importance under a contract If the warranty is not performed it would not result in voiding the contract. The breach may be met by claiming the damages, specific performance or injunctions. In the case of Bettini v Gye the contract could not breached for the terms not performed if not mentioned in the contract and do not directly relate with the purpose of the same.

Innominate Terms

Terms that are difficult to be established in importance under a contract are so. Such terms are discussed based on the element of breach. This would mean that if the breach of the term leads to voiding the contract it is a condition or otherwise a warranty Hong Kong Fir Shipping v Kawasaki Kisen Kaisha. (Giliker, 2010)

Implied Term

A term that isn’t expressed under a contract but is to be performed is regarded as an implied term. The implied term is to be performed because of its relevance with type of contract. The terms are usual that the performance is considered implied Hutton v Warren.

Exclusion Clause

Terms that restrict the liability under a contract are regarded as exclusion clauses. Such clauses should no restrict the liability in case of injuries or death as determined under the Unfair Contract Terms Act, 1977. The exclusion clauses are to be included by signatures, notices or previous course of dealings Curtis v Chemical Cleaning 1951(Cooke, 2007)

Task 2

2.1 Apply the elements of contract to the case study.

In the given case study, it could be analyzed that the Law Book was present at the display window with a certain price stating the availability of the same. Such a display would be considered as an invitation to offer. When the shopkeeper was approached it could be classified as an offer being made. When the shopkeeper alerted that the book is not longer available therefore, the acceptance could not be made. The price herein would be considered as the consideration of the contract is had been present. The intention in the given cases study would be that of the commercial nature. (TAN, 2008)

2.2 Apply the law on terms in different contracts by explaining the terms

Condition: The condition may be regarded as that part of the contract without which the contract would cease to exist. This would include the purpose of the contract for which the parties have come together. If the contract condition is not fulfilled the contract could be voided by the damaged party Betting v Gye.

Warranties: If a term is important to the contract but he non performance does not affect the purpose of the contract then it would be regarded as the warranty. The breach of such term may be met with specific performance, injunction or claiming damages Poussard v Spiers. (Morgan, 2011)

Innominate Terms: If the nature of the term is uncertain then the same may be regarded as the innominate term. Such terms may only be determined based on its effect in case of the breach.  Therefore, the term would be considered as a condition if it affects the nature of the contract and if not then it will be a warranty Hong Kong Fir Shipping v Kawasaki Kisen Kaisha.

Exclusion Clauses: Clauses that aim at determining the limit of liability in case of breach of a contract then it will be a exclusion clause Curtis v Chemical Cleaning Co. 1951. Terms that are present in writing are regarded as written contracts. Exclusion clauses are to be entered into by the parties through signatures, notices or previous course of dealings These terms are express and clear in its meeting and included under the contract for being common between the parties Chapelton v Barry UDC. If the clause is included through the notice the same has to be brought into the attention. However, the same may not be necessarily a duty to do so Thompson v London, Midland and Scotland Railway Co. The same clause shall only be applicable to only the parties entering into the contract and not the third parties Thornton v Shoe Lane Parking.

2.3 Evaluate the effect of different terms of law

It may be determined that the chairs could be hired for 50p per hour. When being hired a ticket was provided. The slip contained a clause determining the limitation of liability of the council in case of injury or damage. . When John went to use the chair it was observed that the same collapsed causing him injuries. The clause so included under the case is that of exclusion clause. It may be determined that the exclusion clause so entered into is invalid on two basis. First is that the clause restricts liability in case of injury that is considered invalid under the UCTA, 1977. Secondly, the clause so entered into is after the contract has been entered into making it invalid or insufficient to be included under the contract. John had an implied term to claim for the standard of duty of care under Section 13 and 14 of Sale of Goods Act, 1979. Therefore, according to the applications of the legislations John would be abel to claim for the damages. (Bell, 2013)

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Task 3

3.1 Supporting your answer with reference to cases and clear explanation of legal principles, contrast liability in tort with contractual liability

The tort case of Donoghue v Stevenson it was determined that the duty of care is to be undertaken not only towards the direct consumers but the indirect consumers as well. This rule is classified as the neighbor’s principle. Under this case, Mrs. Stevenson had gone to a café with her friend wherein a beer and ice cream was bought by the friend for her. On subsequent pouring of the beer she came across a decomposed snail was seen. This led to Mrs. Stevenson being shocked and causing her the stomach flu. An action was brought against to claim for the damages so caused. It was held by Lord Atkin that the manufacturers are expected to undertake precautions not only for the direct users by the indirect users as well. In my opinion the decision in the case was correctly held establishing the extent of duty of care of manufactures across the world. (Ewald, 2010)

In the case of Adam v Lindsell, the validation of postal rule was analysed. Herein, the defendant had determined that the acceptance to the offerof the wool shall be made through course of post. Whereby, the letter of offer was delayed but was accepted and posted on the same day it was received.  However, in the meanwhile the offeror had sold the wool to another buyer. It will be held that the contract was entered into when the acceptance is posted. In my opinion the contracts herein under has been breached by selling the wool to another party before receiving the acceptance or rejection. Similarly, it may be determined that the difference between the liability under contract and liability in tort is different based on breach of type of right. The breach in tort arises from the breach of right in rem and the liability under law of contract is from the breach of right in personam. Under tort, no previous relationship exists whereas under contract a relationship exists. The breach under tort is unlimited in scope whereas it is limited in scope under contract. The liability under tort is different depending on circumstances whereas the liability under contract is from the consideration amount involved under the contract.( Luzak, 2013)

3.2 Explain the nature of liability in Negligence

The liability under negligence arises from the ignorance or forgetfulness of the performance of a duty of care. Such duty of care exists against the society and is to be undertaken by every person. If the duty of care is breached then the breach is regarded as negligence. It is to be noted that the resulting breach should give rise to damages that may be either in the form of physical, psychological or monetary.

The tort of negligence is to be determined based on certain aspects as determined under the case of Caparo Industries. It was held that when the negligence is being determined the three principles shall be considered such as remoteness of damage, foreseeability and causation. If the negligence so being undertaken could assess for the damage and is undertaken anyways then the same is foreseeable and gives rise to the duty of care. The breach or wrong shall be undertaken I proximity that the relationship between the action and the damage is present to give rise to the breach. The causation of the breach shall be directly related to the damages so caused. In the case of Wagon Mound no. 1, it was discussed that defendant would be liable for the loss that may be for the foreseeable kind.  (Randall, 2014)

3.3 Explain how a business can be vicariously liable

Vicarious liability arises from the duties so delegated for the benefit of one party from the performance of another party. Vicarious liability is the type that makes the responsibility of one party towards another party. The liability arises in case of wrong so committed by the performing party. However, the wrong so committed shall be within the professional scope and not personal scope. Such type of liability arises under the employer-employee relationship. In some cases the liability may be also be found under master-servant, partnership and agency relationships. (Renouf, 2008)

In the case of Mattis v Pollock it was determined that the doorman had assaulted the prospective customer. It was held in the case that the damages so arising from the actions would be the responsibility of the club. This is because the doorman had been employed by the nightclub owner and the same may not be separated from time and place for the aggressive actions. In the case of Rose v Plenty, it was determined that the milkman had breached the duty to not employ an underage child on duty. Thereby, for negligent driving the damages so caused to the child will be the responsibility of the employer as the milkman had not completely crossed the official duties and the wrong was committed within the scope of employment. (Giliker, 2010)

Task 4

4.1 Apply the elements of the tort of negligence and defenses in different business situations

It was determined that David was driving the car over the acceptable speed by 10mph. A child runs over into the street in which David was driving. David panicked and hurrying swerves into the telephone pole that broke into two and fell over to the child’s head making him unconscious. The child is noticed to sustaining permanent injuries. David would be said to have not undertaken the duty of care to be taken while driving in the limit of a four-lane road. David exceeded the speed limit and the duty of care to be undertaken by him was neglected. This would be regarded as the tort of negligence. It may be noted that the child should not have been playing in the street as well. However, the defense of minority liability would be undertaken in the given case study. If the negligence on the part of the child is committed, then the same is forgiven considering that the minor does not have the mental capacity to understand the meaning and effect of the actions so undertaken. Therefore, this is not a case of comparative negligence and David would be liable entirely. (Cooke, 2007)

4.2: Apply the elements of vicarious liability in this situation

It may be determined that the Head Chef was not satisfied by the dishwasher’s work at the Regent Hotel. One day in anger he decided to hit him with a frying pan that caused him serious injuries. It should be noted that the actions so undertaken by the head chef are personal and professional. The hotel was not aware of such situations and that the same event was not motivated by the professional duties. The action of hitting the dishwasher is personal. Therefore, the chef would be personally responsible for the damages so caused from hitting the dishwasher with the frying pan. (TAN, 2008)


In the given assignment, the contract types are analyzed. The types of terms involved in preparing a contract are also studied to derive their impacts. The concept of offer and acceptance has been analyzed and applied towards the case studies so presented. The differences arising in the two types of liabilities are adjudged under the assignment. Furthermore, an analysis of different types of liabilities arising under tort is studied with the help of legislations and case laws.

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Vettori, S. (2007). The employment contract and the changed world of work. Burlington, VT: Ashgate Pub.
Giliker, P. (2010). Vicarious liability in tort. Cambridge, UK: Cambridge University Press.
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