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Unit 5 ACNB Assignment
Diploma in Business
Unit Number and Title
Unit 5 ACNB
The law of contract is a very important piece of legislation. Whenever parties desire to make contracts then it is necessary that an agreement must be first formulated which when accompanied with other contract essentials will result in binding contract. So, the main contract essentials are: (Furmston & Tolhurst 2010)
- Offer – the communication of offeror intention to an offeree wherein he specifies the performances or non-performances he desires to be undertaken, then, such communication is an offer in law (Harvey v Facey (1893). A valid offer is one which is received by an offeree and can be made orally or in documented form. (ElawresourceUK 2016)
- Acceptances – the confirmation of the offer by the offeree without bringing any deviation to its terms are called an acceptance of offer (British Steel Corp. v Clevenland Bridge and Engineering Co. (1984). An acceptance must be conveyed to an offeror to make it valid in law.
- Consideration – The consideration is the third element and non presence of consideration makes the contract gratuitous (Foakes v Beer (1884). It is kind of gain which moves from the offeror against the performance of an offeree which he undertook for an on behalf of the offeror.
- Legal intention – The parties to the contract must have legal intention which signifies that the parties are willing to go to court of any contractual disputes is incurred amid them (Balfour v Balfour (1919). Normally this legal intention is found in commercial contracts and not in family relationship. But, this presumption can be rebutted by laying down evidence.
- Capacity – all the parties to the contract must be mentally stable and have attained the age of majority.
All contract elements are very important in the formation of the contract and if any party makes a contract in deprivation of one element, then, such contracts are void in nature.
Face to face
The contracts which are made on the face of the parties are face to face contracts. The parties are normally sitting in front of each other when the contract is made. These contracts mainly are in oral form.
Now, when the disputes are raised amid the parties, then, these kinds of contracts are not very easy to prove. The main reason is that such contracts are oral and thus he terms are no written so it becomes very difficult to portray the exact intentions of the parties.
When the contracts are made between the parties not by orally communicating the terms but when all the terms are written down by the parties on the piece of paper. There is no oral settlement of terms and conditions. All intention of the parties is in documentation form.
Now, whenever disputes arise amid the parties then the courts are at every position to give meaning to such kinds of contracts as all the contract terms are written in nature. So, such contract has strong legal impact and is much safe to establish amid the parties.
Those contracts which are made amid the parties when the parties are not seeing each other or are physically present with each other are distance selling contracts. These contracts can be made in written form or can be made in oral form but the only condition that is required is that the parties must be physically apart from each other.
The effect of such contracts is that if the contract is oral then the impact is weak but if the contract is written then such kinds of contracts is very strong.
The terms which are the foundation of any contract and because of which a contract is actually made amid the parties are conditions (Poussard v Spiers (1876). They are contract essence. If conditions are violated by the parties then the main foundation of the contract is violated and the aggrieved party has every right to cancel the contract and claim damages for the same. (ElawreourceUK 2016)
The terms which are supplementary to the conditions and which are required for the functioning of the contract though they are not rooting to the contract are warranties (Bettini v Gye (1876). If warranties are violated then the aggrieved party has no right to cancel the contract but has every right to claim damages.
The terms whish are neither classified as conditions nor classified are in-nominate terms. It is the situation when the terms are violated that defies the nature of the term. If the breach shatters the essence of the contract then it is condition otherwise warranty. The effects also depend upon how the term is treated (Hong Kong Fir Shipping v Kawasaki Kisen Kaisha (1962).
When the term is made part of the contract and which has the capacity to limit/exclude the obligation/liabilities of the parties depending upon some contingencies then such kinds of terms are called exclusion terms(Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd (1987). These terms are valid only when are relied on by the parties mutually. However, if a unilateral attempt is made to bring the exclusion term in the contract then the party who is incorporating has every responsibility that the clause should be in the awareness of the other party otherwise the clause has no validate. (Chitty 2012)
Whenever any contract is made amid the parties, then, it is necessary that an offer must be accompanied by an acceptance. This offer and acceptance results in the formation of an agreement. But, when a person does not make any offer at all. But, his actions are such that he invites offers from the public then such phenomenon is called invitation to treat. Normally, an invitation is made via advertisements, tenders, auctions, displays, etc. Now, the people who wish to make an offer can do so to an inviter and an inviter may confirm such offers (acceptance) resulting in the formulation of a binding contract amid the inviter and the offeror.
Now, in the given case study, Carol and Gumtree are two parties. Gumtree has displayed an advertisement and promotion which is an invitation as per (Pharmaceutical Society v Boots (1953). so, the company intends to receive offers. An offer is made by Carol. But, no acceptance is made by Gumtree. So, no acceptance is reciprocated against the offer of Carol. S o, no contract exists amid the two. (Treitel 2011)
Consideration is one of the significant elements in the law of contract. An offer and acceptance results in the formation of an agreement and this agreement when supported by consideration makes the same enforceable in law. A consideration is a kind of gain which moves from the offeror against the performance of an offeree which he undertook for and on behalf of the offeror. But, this consideration is no valid for past actions. To make a valid consideration, the same must support present/future actions (Foakes v Beer (1884).
Now, Preston promises George on 13th that if the employees Devi that he will make a contract with him. But, George has already appointed Devi on 12th. So, the promise of Preston was a past actions and is not a valid consideration. So the same is not enforceable and thus George cannot take any action against Preston.
An exclusion clause is the term which excludes the obligation in the contract of one party when both the parties have approved of the same. Thus, the consent of both the parties is very necessary to make any exclusion clause valid (Watford Electronics Ltd v Sanderson CFL Ltd (2001). But, a unilateral act of relying on the exclusion clause is not valid and the relying party must make every effort to bring the clause in the awareness of the other party. Lack of reasonable efforts makes the clause in invalid (Thornton v Shoe Lane Parking (1971).
Now, the couple handed over their coat to the restaurant which contains $500 but the same went missing when the cost is returned to them. However, the restaurant excluded its liability by submitting that they are relieved under the exclusion clause mentioned on the back of the receipt which imposes no liability if the articles are stolen.
But, it is submitted that the clause has no validly because the same was made part of ticket by the restaurant and no reasonable efforts are made to bring the clause in the knowledge of the couple. So the clause has no legal significance and the couple can sue the restaurant.
There are two terms in every valid contract, that is, the terms which are mutually/expressly decided by the parties are express terms but the terms not mutually decided by are imposed under the sanctity of custom or law or tradition etc are implied terms (Dick Bentley Productions v Arnold Smith Motors (1965).
Now, Zehphra and Aaron are under an agreement herein they have expressly decided that the rent of the warehouse which is undertaken by Aaron will not be enhanced for next five years because there are repairs which are undertaken by Aaron. So, this express contract is binding upon them.
But, Yeti later incised the rent (he inherited the property). It is submitted that under the implied law, every legal representatives has an obligation to fulfil the terms of the contract entered by the deceased. So, Yeti has to comply with the express terms amid Zehphra and Aaron. So, if Yeti increases the rent then Aaron has full right to sue Yeti and claim compensation for the repairs undertaken by him.
There are two terms that are normally found in every contract, that is, condition and another is warranty. A condition is the foundation of the contract and because of which a contract is actually made amid the parties. If conditions are violated by the parties then the main foundation of the contract is violated and the aggrieved party has every right to cancel the contract and claim damages for the same (Poussard v Spiers (1876).
Now, the company before making decision the insurance contract with the holder has asked a question as to whether any claim of accident or theft is either made by him or any other person and the holder replied in negative which was a false answer. Now, this term was so important that it was the basis of the insurance contract and so the condition was breached by the holder.
So the company has every right to claim damages and terminate the contract.
The terms whish are neither classified as conditions nor classified are in-nominate terms. It is the situation when the terms are violated that defies the nature of the term. If the breach shatters the essence of the contract then it is condition otherwise warranty. The effects also depend upon how the term is treated. If conditions are violated by the parties then the main foundation of the contract is violated and the aggrieved party has every right to cancel the contract and claim damages for the same (Poussard v Spiers (1876). If warranties are violated then the aggrieved party has no right to cancel the contract but has every right to claim damages Bettini v Gye (1876).
Now, there are two terms which are made part of the insurance contract entered amid company and the insurance seeker. The first term deals with any variations in the makers specification and the second term deals with any claim regarding to any accident in last five year by the insurance seeker himself or any other person. Both are falsely denied by the insurance seeker.
Now, the first term is not the contract essence and thus a warranty but the second term is crucial in any insurance contract so is a condition. So, both the terms are violated, so the company can cancel the contract on the basis of breach of condition and claim damages.
The law of tort and contract law both are civil in nature.
In case of tort, the liability arises when there is breach of duty of care (negligence). But the contractual liability arises when there is breach of contract by any party who is in contractual relation with other.
In case of tortuous liability the parties can be known or unknown to each other as the liability is towards the person who suffers injury and that person can be anybody. But in case of contractual liability the parties who carry breach are in contract with each other hence known to each other.
In case of tort, the liability is undefined and un-liquidated and in case of contractual liability the liability is fixed as per the contract between the parties.
The tortuous liability is based on fault committed by any party but the contractual liability is strict in nature. (Slideshare 2013)
The Law of negligence states that if wrongdoer does not acts with duty of care obligated upon him and breaches the same and due to that breach injury is caused to third person then the wrongdoer is liable to the third person. The law of negligence developed in Donoghue v Steveson(1932). (Kelly et.al 2014)
The three elements to prove negligence are:
- The Duty of care – A duty is casted upon the wrongdoer to act properly so that no one gets injured from his acts. But if he acts carelessly and causes injury to the third person then wrongdoer is said to had breached the duty obligated upon him. The wrongdoer is liable to his neighbours who get injured by his negligent acts (Marc Rich & Co v Bishops Rock Marine (1995). Moreover the injury must be foreseeable reasonably then only the wrongdoer can be held.
- The duty of care is said to be breached when the wrongdoer does not acts in a way he should had acted or has not taken care which should had been taken by wrongdoer and injury is the result of same (Simmonds v Isle of Wight Council (2003).
- The damage must be the result due to the breach of duty of care. If there is no injury or damage then the third person cannot claim under law of negligence. It is mandatory that injury must had been occurred. There must also be proximity between the injury and the act of wrongdoer plus the injury caused must be practically predictable in nature (Rothwell v Chemical & Insulating Co (2007).
Vicarious liability is that from of liability in which the liability shifts from the performer of the act to his superior. In this concept the servant performs the acts for his master and in case the liability arises the master will be liable for acts of his servant provided the acts must had been performed by the servant during the course of employment and in discharge of the duty assigned to him. The acts which are of personal nature performed by the servant does not holds a master liable under the head vicarious liability. for example, employer, employee; principal , agent; master, servant. (Tufal A, n.d)
The various points which must be considered while holding subordinate liable for acts of superior are:
- There must be superior subordinate relation between the parties other (Netheremere Ltd v Taverna & Gardiner (1984)).
- The liability by subordinate must occur while performing official duty and during his tenure of employment under the superior(Station v. National Coal Board
- The superior must have control over his subordinate.
- The acts of subordinate should not be personal in nature.
As per law of negligence, the wrongdoer is liable when he carries out breach of duty of care obligated upon him and such breach is cause of injury to the third person. The wrongdoer has this duty towards everybody who is his neighbor. The act which is cause of injury must be reasonably foreseeable and not remote one. The proximity between act and injury is must. The care varies with the situation, in certain situations the duty of care is expected to be high. (Murphy v Brentwood District Council (1990).
The various defenses can be taken by a wrongdoer to save himself they are:
- Whenever the injured also is liable along with the wrongdoer towards his injury then in that case the wrongdoer can mitigate his liability by talking plea of Contributory negligence.(Barrett v Ministry of Defence (1995)).
- In case the injured himself assents to the danger inspite of knowing about the same and gets injured then the wrongdoer can safeguard himself by taking plea of volenti non fit injuria.
In case law provided Mr Brown when went to hospital complained to nurse about chest pain along with breathing problem and nurse called up doctor over phone and gave medicines. But after a day Mr Brown died due to pneumonia which resulted due to toxic mould which was in Mr Brown’s house.
By applying law of negligence it can be stated that doctor, nurse and the hospitality provision indeed were negligence as the nurse telephoned the doctor and he told her to give medicines without even diagnosing the patient which was his duty and he thus breached the duty of care which was obligated upon him and thus carried breach and in turn which was cause of death of Mr Brown. The act of doctor was in proximity to the injury caused to Mr Brown and also the act was reasonably foreseeable so this is clear case of negligence.
Thus, the hospital will be liable for negligence for sure as the duty of care is violated causing death of Mr Brown.
The hospital can mitigate the liability by taking plea of contributory negligence on part of Mr Brown as he did not informed of toxic mould at his house which was cause of pneumonia to him. As the presence of toxic mould was not told to nurse and in turn doctor also had no knowledge about the same so hospital can shift part of liability by taking this defense.
Under Vicarious liability the subordinate acts make the superior liable provided the subordinate acted for his superior and he must had acted during the course of his employment under the superior and while performing his duty assigned to him. In case of acts which are personal in nature being performed by the subordinate the superior cannot be held liable. The subordinate must be under the control of superior (Massey v Crown Life insurance(1978). Under the notion of vicarious liability the actual liability in turn shifts from subordinate to superior (Limpus v London General Omnibus Co (1862). (Lawmentor 2016)
As per given case law provided the chauffeur company sent their driver to pick passenger from airport the driver while waiting there drank alcohol and in turn the car met with an accident injuring the passenger. As per investigation it was revealed that the driver was drunk over permissible limit.
In the instant case the driver was employed by the company and he thus while on his duty drank alcohol and resulted in an accident as he was negligent and he was performing his duty and during his course of employment with company he met with an accident while discharging his duty the act was not of personal nature so hence the company will be vicariously liable in this case.
In vicarious liability the superior is liable for acts of his subordinate provided the acts of subordinate must not be of personal nature and the acts of subordinate must be during his employment with the superior. The main aim of shifting the liability upon superior is that as the superior earns and makes huge profits by employing the subordinate then in case of liability the superior who had earned through the acts of subordinate must be liable for wrongs of subordinates also. (Tufal A, n.d)
In given case law Mr Jones who was supermarket’s driver injured his colleague while loading pallets in the truck. His college was injured severely and thus sued the supermarket but supermarket says that it had delegated the responsibility of safety and health to other company.
In this case Mr Jones if assumed was employed by supermarket will make the supermarket liable but in case he was just kept as a delivery contractor and was not employed by supermarket then the supermarket cannot be held liable. Moreover as the supermarket had delegated its safety and health responsibility to other company then it can surely recover from that company. But it will be liable to the colleague assuming Mr Jones was employed by the supermarket as the supermarket is in vicarious relationship with Mr Jones and not that other company to which supermarket had delegated the responsibility of health and safety.
So assuming Mr Jones was employed by supermarket the supermarket will be vicariously liable otherwise not.
Chitty J, 2012, Chitty on Contract : General principles, Sweet and Maxwell, p1012.
Furmston & Tolhurst, 2010, Contract Formation: law and practice, Oxford University Press, p13 – 20.
Kelly et.al, 2014), Business Law.
Treitel, 2011, Law of contract, Edited by Epeel, 13th Edition, Para 1-001.
WeitzenböckE, 2012, English Law of Contract: Terms of contract.
Bettini v Gye (1876).
British Steel Corp. v Clevenland Bridge and Engineering Co. (1984).
Balfour v Balfour (1919).
Donoghue v Stevenson (1932).
Dick Bentley Productions v Arnold Smith Motors (1965).
Foakes v Beer (1884).
Harvey v Facey (1893).
Hong Kong Fir Shipping v Kawasaki Kisen Kaisha (1962).
Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd (1987).
Limpus v London General Omnibus Co (1862).
Marc Rich & Co v Bishops Rock Marine (1995).
Massey v Crown Life insurance(1978).
Murphy v Brentwood District Council (1990)
Netheremere Ltd v Taverna & Gardiner (1984).
Poussard v Spiers (1876).
Pharmaceutical Society v Boots (1953).
ElawresourceUK, 2016, offer an acceptanc http://e-lawresources.co.uk/Offer-and-acceptance-contract.php. Viewed on 24th November 2016.
ElawresourceUK, 2016, condition, warranty & in nominate terms, http://e-lawresources.co.uk/Conditions,-warranties-and-innominate-terms.php. Viewed on 24th November 2016.
Lawmentor, 2016, Vicarious liability, http://www.lawmentor.co.uk/resources/essays/outline-concept-vicarious-liability-tort-discuss/. Viewed on 24th November 2016.
Slideshare, 2013, <http://www.slideshare.net/btecexpert/0201compare-contrast-tort-and-contract>. Viewed on 24th November 2016.
Tufal A, n.d, <http://www.lawteacher.net/PDF/Vicarious%20Liability.pdf>. Viewed on 24th November 2016.
The Law Teacher, 2016, Past Consideration, http://www.lawteacher.net/cases/contract-law/consideration-cases.php. Viewed on 24th