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Unit 5 ACNB Assignment Sample
Diploma in Business
Unit Number and Title
Unit 5 Aspact of Contract and Negligence Business
When two or more parties come together to create a binding relationship for a common purpose it is considered as a contract. A contract so formed is for several terms common between the parties created from the mutual consent for the same. If the terms are not performed it leads to the breach of contract, the effect of which varies from the importance of the different terms. The breach so caused under tort and contract are to be differentiated. The different type of breaches present under the tort are also required to be studied in order understand its effect under civil laws.
1.1: Explain the essential elements required for the formation of a valid contract.
Every contract is prepared in a standard manner. Therefore, each contact requires to have a certain set of elements that determine the aspect of contract as a valid one. The following are the important elements to include in the formation of the contract.
Whereby the offeror provides a statement to involve the offeree to consider the terms of the contract is regarded as the offer. It should include the basic purpose of the contract and the effect of the same when performed. The language should be simplified and involve clarity. The offer should be clear and different from the invitation to offer. The invitation implied the intent to create a contract once an appropriate offer is made to be accepted by party inviting offers. Invitation to offer comes before an offer and is not binding or the final set of terms. The invitation to offer may be an advertisement in the newspaper Partridge v Crittenden. (Adams, 2008)
Whereby the party agrees to the terms so provided in the offer is an acceptance. It should be made for the entire offer and the same shall be clear to interpret. The acceptance is the consent so gathered from the offeree to create a contract. If the acceptance is provided for partial offer, then it is referred as the counter offerCarlill v Carbolic Smoke Balll Co. The counter offer forms part of the negotiations until the final offer is accepted by the party. While making the acceptance, the offeree may consider various methods of communication as suited by him under the contract. The postal rule provides that the acceptance comes into action when the letter is posted.
It is important to include something of value while creating the contract. The exchange of values restores the parties with the loss so suffered for being part of the contract. This would allow the parties to be at the same place towards the end of contract as they were before creating the contract. The consideration amount shall include present nature, no obligation of duty and the sufficiency to bind the contract.(Andrews, 2011) A consideration implies that a compensation is made for the detriment so caused Currie v Misa.
When creating a contract the parties should ensure that the intent to create the contract is certain among them. The intent of the contract helps in defining the enforceability of the contract in case of breach of the contract. The contract may be enforceable under the law would be the commercial contract without mentioning the same. The social contracts require to be determined if the parties’ intent to create the law enforceability to make it so. Therefore, enforceability is directly related to the intent of the contract. The intent of the contract shall be determined according to the relationship between the parties. Under Balfour v Balfour this has been defined with respect to the social and commercial contracts. The social contract are assumed to be not enforceable under the law unlike the commercial agreements.
Whereby the parties at the time of creating the contract are not of capacity then it is not considered to be a valid contract. The capacity of parties to the contract is defined through the mental soundness, age under law, that is, 18 years, and the financial capability to create the contract. The contract may be termed as void if the parties fail to be of capacity.
1.2: Explain and discuss the different types of contract
- Unilateral contracts are referred to as offer to the world wherein the offeror presents the offer to the world and person performing the act is said to have accepted the contract. The bilateral contracts are determined as the contracts wherein the parties only present the offer and the acceptance is timely made. Both the parties in such contracts are equally involved and they intend the common purpose of the contract. (Finch, 2007)
- The contracts so made under seal do not require a presence of consideration. This because the seal is the guarantee enough to perform the contract and the breach would be recognised without the consideration amount involved. The simple contracts so involve all the basic elements of the contract including offer, acceptance, consideration, intent and capacity. It is easy to perform and fulfil and contains minimum terms. Some simple contracts are also considered to be those that are no provided in seal and may differ in types of formation such as the written or oral contracts.
- The contract created through written format are written contracts. These contracts are namely where the offer is presented to the offeree through writing and the contract is accepted through presenting signatures of consent. Although, sometimes, if the terms are clear in nature the signatures are to required to be provided. These contracts are easily evidenced under the law. The contract that involve a conversation only and not the written format. The contracts contain the elements of a standard contract but cannot be established as easily because the terms cannot be sure of when breached.
- Sometimes the parties agree to the contract by providing the terms of the contract in person. When these contracts are agreed to in presence of the other it is said to be the face to face contracts. These are generally oral and contain the elements of a standard contract. The contracts that are created by the parties that are not available in front of each other at the time of contracting are known to be distance selling contracts. These contracts are created by parties through mail, advertisement, letters or online. The seller for such contracts shall inform the details to the buyer at the time of creating the contract. (Meyer, 2010)
1.3: Explain and analyse the different forms of contractual terms
Express Terms: The terms that are presented in the contract are known as express terms. These terms form part of the contract as these are discussed between the parties and common in intent. The terms may either be a condition or a warranty.
Implied Terms: The terms that not determined while forming the contract are said to be the implied terms. These terms are to be performed even when the same are not discussed as these are present under aw or customs. These terms also may be condition or a warranty.
Condition: The terms that are to be performed to fulfil the purpose of the contract are regarded as the condition. These terms are elemental in nature and primarily performed to achieve the contract. The condition is the aim of the contract and is achieved otherwise it would render the contract voidPoussard v Spiers and Pond. (Collins, 2008)
Warranty: The terms that are mentioned under the contract for the purpose of supporting the purpose of the contract is regarded as the warranty. These terms are not directly related to the contract and shall not render the contract void if not performed. The affected party may be able to claim for the damages for the loss so suffered Bettini v Gye.
Innominate Terms: The terms that are provided by the parties in a contract but are not determined whether it is a condition or a warranty are regarded as the innominate terms. These terms are said to be have different impact in different situations. Therefore, when term affects he purpose of the contract it is a condition and if not then it is a warranty Hong Kong Fir Shipping case.
Exclusion Clause: The terms that are included by either party in order to limit the liability in case of non-performance of the contract is regarded as the exclusion clause. These clauses are to be included either through signatures, notices or previous dealings. However, it is provided under the UCTA that the clauses restricting liability for injuries or death are invalid. This is because the act governs the validity of unfair terms in each contract. The same is provided under the Consumer Rights Act, 2015 in order to provide the consumers against the misleading contracts by manufacturers and sellers. (Vettori, 2007)
2.1: Apply the law on essential elements to the scenario
The case study provides that the City Car Dealers had advertised for a contest inviting the interested parties to do the act so provided in the advertisement to create a contact. This type of offer issaid to be the offer to the world as it is clear in determining the intent to form a contract on performance of the act and expressing the same by notifying about the placement of the cars at the showroom to be inspected before creating the contract. The offer has been made for the purpose of contest whereby the successful person would be awarded a car. Abel being one such customer can do as the advertisement suggests and expresses his acceptance for the same. The performance of the action mentioned in the advertisement would be termed as the acceptance performed by Abel.
Herein when Abel performs a certain act of collecting the ticket and reaching te showroom it is considered to be a consideration since he would not have done the same otherwise in the regular course. When he reaches the showroom after completing the contest and is one of the first three participants the company denies to provide the reward as promised under the advertisement. Abel is twenty two years of age and is capable of entering into the contract. It may be derived that the parties involved are of capacity and intent to create the contract as determined under the advertisement. The offer and acceptance was duly made for the consideration in the form of the car. Since the basic elements of the contract are present in the given case study Abel would be able to claim for the car for successfully completing the contract. (Andrews, 2011)
2.2: Apply the law on terms to the scenario
In the provided case study, the advertisement so posted for the sale of cars by Rani is an invitation to offer. When Eric approached the showroom for the purchase of the car he was making an offer. However, when signing the documents the contract included the terms for the exclusion of the liability in case of injury or death from the use of the car so sold by the company. Such a clause is termed as an exclusion clause whereby the liability for the foreseeable act is restricted. However, according to the UCTA and Consumer Rights Act, 2015, it is determined that such a clause is invalid as the same restricts the right to safety under common law. Therefore, the same may not prevail while enforcing the contract. Also, under the common law rules the party including the clause shall determine its presence at the time of creating the contract. Therefore, Rani would be liable to pay for the damages so caused from accident due to the faulty brakes disabling him to stop the car to save himself from the bus. She would also be liable to pay for the losses so suffered in the course of recovery from the injuries.
2.3: Evaluate what remedies are available to Eric
According to the Consumer Laws, the consumer buying a creating product would be entitled to be served with product or service of standard quality, as per the sample, duly delivered on time. However, in the present case the car in question was not of standard quality and was faulty in one of the primary areas involving the safety making it prone to accidents at the first drive. The seller in this case would be liable for the damage so caused from the provision of faulty goods. According to Consumer Rights Act, 2015 the manufacturer’s liability arises if the defect so caused in in the product itself and not from any third party involvement. The seller would be liable if the same is his fault. The remedies so available to Eric for the loss and damage so suffered would be repair, rescind or replace. As provided under the CRA, 2015, Eric may either file for the repair of the car, recovery of the loss and expenses of voiding the contract for the breach of condition and filing for the damages so suffered from the accident. As a consumer, Eric would have a consumer right to publish for the ill treatment so caused to him from the sub-standard product. This would allow him to claim for the loss of effort and time so spent in recovering from the hazardous accident that he was victim of by driving the car. (Meyer, 2010)
3.1: Contrast liability in tort with contractual liability
The liability so arising under the contract ad tort are the civil liabilities. These liabilities are similar and different at the same time. Both the liabilities are to be performed strictly when the breach of duty take place as the liability cannot be escaped. The series of event giving rise to the respective liabilities are different and are presented as follows:
- The breach of duty in the case of contract is for the right in personam whereas the breach of duty for tort is towards any person in the society.
- The parties to contract know each other before the breach occurs whereas the parties under tort do not necessarily know each other before the breach takes place.
- Under contracts the damages for the loss suffered is already discussed unlike the law of tort whereby the damages vary from case to case.(Bell, 2013)
- The damages are liquidated in contract and damages are unliquidated under law of tort.
- The terms of breach of contractual duty is discussed under the contract whereas the terms of breach is not discussed between the parties under tort as it is not a pre meditated relationship or arrangement.
- The duty under contract extends only to the contracting party whereas the duty under the tort extends to the society. (TAN, 2008)
3.2: Explain the nature of liability in negligence
The liability under tort of negligence is associated with the duty of care. As a part of society every person is required to undertake the duty of care towards the other people so that the benefit of one party is not the loss of another. The health & safety of the people under the society is important and should be prioritised when conducting an action of benefit. The duty of care extends to any person that may influenced from the breach of the duty. The duty of care when breached shall be so serious that it causes the parties to get affected from the same. The affect shall be measured in terms of physical, psychological or monetary loss. (Morgan, 2011)
About the duty of care the case of Donoghue v Stevenson ensures that when the manufacturer produces the goods the responsibility to duty of care would be applied towards anyone that is capable to consume the product. The same may affect the parties in different manner but the manufacturing defect would be the responsibility of the manufacturer. This is important to know when providing a product in the market. It is on the landmark case for tort of negligence in a consumer market. According to the neighbour test it is determined that the manufacturer would liable for the person buying the product as well as the person consuming the product as the liability extends to anyone that is capable of doing so.
Also, in the case of Caparo Industries it was determined that the study of the tort of negligence may be derived from the involvement of three factors such as the proximity, reasonable foreseeability and the fairness to impose the liability. The wrong so committed shall be directly connected with the loss so occurred. The act of breach and the damage shall be so closely located to have the influence of the act. The two shall be least related to create liability. If the party so performing the act has the reasons to believe it will cause damage, then the it is said to be foreseeable for which the precautions are to be taken.
3.3: Explain how a business can be vicariously liable
Whereby the party so held liable for the breach of duty is not the one committing the breach is considered to be the vicarious liability. The liability arises for the delegation of responsibility by the party responsible for the liability. Since the party delegating the act towards another party is deriving the benefits of performance the liability for breach of duty lies on the same party as well. The party so committing the breach would not have done so without the primary party delegating the same. The vicarious liability generally arises in the case of the employer-employee relationship as the employee performs the act so addressed by the employer. When the duty of care is breached the same shall take place while performing the official duties and not just the private actions. (TAN, 2008)
4.1: Apply the elements of the tort of negligence and possible defences
The case study derives that the couple had agreed to go to the restaurant to have a meal. The chef of the restaurant was informed that he should not be using the expired products while preparing the dishes. However, he did the same and when the wife had consumed the dish so prepared she got sick and was shocked while developing an infection. It was derived that the restaurant had provided the warning to not perform certain act that was still performed by the chef. The same instruction would form an official duty. The duty so breached is during the employment. The duty of care was supposed to be undertaken by the employee while serving the customers. The employer should have assumed the duty of care with respect to the employee’s actions. The duty was breached when the products were used after expiry while serving the customers. The same duty was reason enough to cause damage to the customers that creates a liability on the part of the chef as well as the restaurant.
Therefore, the present case may be determined to be a breach of duty of care and tort of negligence. The defences that are present under the tort are voelnti non-fit injuria and contributory negligence. The volenti non-fit injuria provides that the person has intentionally waived off the duty of care to be undertaken as a precaution by others for a certain reason and cannot hold the same liable for the loss. The contributory negligence implies that both the parties are responsible for the wrongful act creating the liability for the damages. The damaging party would only be liable for the share of neglect and not the entire liability altogether. The defences that may be used under the present case would be that of the professional negligence for the chef having an obligation as a chef to provide safe products to the customers. Therefore, the restaurant may not be entirely liable since both the parties are a equal wrong making it a case of contributory negligence. (Giliker, 2010)
4.2: Apply the law on vicarious liability.
In the provided case study, the chef was an employee at the restaurant. The chef as a professional would have a duty of care towards the clients to provide food of standard quality. As an employee at the restaurant the chef would be obligated to serve the customers of the restaurant. Since the couple were a customer of the restaurant the food so served was in the name of the restaurant. This would make it the responsibility of the restaurant to ensure that the food so served is of standard quality.
The chef is said to be the employeeat the restaurant and as an employer the acts of chef during the performance of the job shall be the liability of the restaurant. The tort of negligence of ignoring the expiry date took place on the job and will be considered to be the liability of the restaurant under the vicarious liability. As the products were used during preparing the food for the restaurant customers it is the act under the regular employment. Therefore, when the food was served to the customers they were customers of the restaurant first. Thereby the duty of care so breached is for the customers of the restaurant and gives rise to vicarious liability. This would allow the restaurant to be solely responsible for the loss so suffered from the performance of the breach. Under the case of Rose v Plenty, it was determined that the act of breach shall not be so far away from the professional duties to create vicarious liability. As the expired products were used to make dishes that serve the customers, the liability for the same is considered to have taken place during the performance of professional duties. This would make the restaurant vicariously liable towards the loss so suffered by the couple for the supply of sub-standard services. (Bell, 2013)
A contract is an arrangement between the parties to exchange values to get the desired outcome that benefits either parties. This relationship may either be a social or commercial arrangement. The elements of such contracts are however common and standard. These terms are studied in accordance to the performance of the contract so that the extent of breach may be defined. The effect of breach of duty of care in tort is determined accordingly to outline the difference between the two liabilities. The types of contracts and liabilities are presented to better understand the meaning and effect of the breach to create the liability.
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