Delivery in day(s): 5
Unit 5 ACNB Contract formation Assignment
Diploma in Business
Unit Number and Title
Unit 5 ACNB Contract formation
The formation of valid contract requires few conditions to be fulfilled. The importance of ACNB Contract formation assignment can be submitted by saying that if any of the conditions are not met by the parties, then, such parities cannot make a contract which can be enforceable in law. So to make a contract enforceable, it is necessary that the conditions must be met. Thus the essential conditions are:
- Agreement– Every agreement is established when there is an offer and acceptance which is made by the offeror and the offeree respectively by complying with all legal obligations.
- Offer– when the offeror wish that his desires are carried on by the offeree, then, he tries to convey the same to the offeree, the statement which is used to convey the intention of the offeror is called offer (Grainger & Son v Gough.
- Acceptance– The offeree confirmation to the offer without bringing any amendments to the same is acceptance in law The variation in law while giving acceptance is invalid and is a counter offer which has the tendency of cancelation of the original offer.
- Consideration– The monetary benefit of any kind of gain which is deserved by the offeree because of the compliance of the terms of the offer is consideration in law. A valid consideration gave enforceability to an agreement Foakes v Beer
- Intention – It is the legal intention which makes an agreement valid in business law. Legal intention is normally found in commercial transactions but not in family undertakings
- Capacity– the parties who are making contracts should legally capable to do the same, that is, there should not be any kind of metal disability and have attained the age limit set by the law prior making any contract.
- Face to face: The contract established between the parties when they are physically present and can look at each other while exchanging the terms and conditions of the contract. The parties verbally communicate their intentions and abide themselves with the terms with oral offer and acceptance.The contract has full sanctity in law. But, when the enforceability is judged, then, it can be submitted that these contracts are not very strong when its application is concerned. These contracts are made orally so there are high chances that the terms are not remembered by the parties and when any conflict arise, then, it is more difficult to prove these terms in law. (Steptoe 2008)
- Written contract: All the terms and conditions when written on a paper or document or deed, then, it is a kind of written contract which is made between the parties. The parties may or may not be physically present, but, all contract terms are exchanged amid them in written form. Since, the terms are written thus, this contract has strong authenticity in law. The courts can easily interpret the terms of the contract and give meaning to the same. So, disputes can be easily resolved when written contracts are in picture. (Pettigrew 2012)
- Distance selling (telephone, internet):At times, there are situations when the parties intent to make contract but they are not physically in touch with each other. In such situations, the contracts which are formed are distance selling in nature. The repercussion depends upon the kind of contract that is made. A telephonic contract is verbal and is weak but an internet contract is a documented form of contract and has strong relevance in law. (The Law Teacher 2016)
- Condition:The contract has terms, some are important and some are not. When the terms are of such a nature that if somehow they are not followed then the contract losses its essence and is not in the position to be completed by the parties. Such extra ordinary terms in law are called Conditions without which no contract can be performed (Poussard v Spiers (1876). Now, if somehow, these important terms of the contract are breached by any party to the contract, then, the repercussions are grave. The contract can be cancelled and an additional right is also given to the plaintiff under which he is permitted to claim damages for his loss. (ElawreourceUK 2016)
- Warranty:Apart from conditions, there are few terms which are required for the continuation of the contract but are not so extra ordinary that without which a contract is not in the position to be performed. These are warranty terms and are required for contract continuation but cannot break the contract if not performed (.Bettini v Gye (1876). Thus, the only repercussion that can be faced by the defaulter is that he is liable to pay compensation/damages to the plaintiff. No other right can be availed. (ElawreourceUK 2016)
- In-nominate terms:The situation is very different when the terms are easily distinguished between condition and warranty. These are in-nominate terms. It is the conditions of the breach which determine the nature of the term and the repercussion are also lies upon the same. So, treating a term as condition causes contract cancellation plus damages but treating a term as warranty allows only damages (Hong Kong Fir Shipping v Kawasaki Kisen Kaisha (1962).
- Exemption clauses (including legality):Every party in the contract wishes to frame the contract in such a manner so that minimum liability can be imposed upon him. One of the clause which helps in the same is the exclusion clause. A exclusion clause limits or at time excludes the obligation of one party when some contingent event takes place which is pre decided by the parties. Thus, mutual admiration of the exclusion clause is very important to make it enforceable (Olley v Marlborough Court (1949). But, if one party is unaware of the clause and the other is relying on the same, then, the burden of proof lies upon the party who is relying to prove that he has made all efforts and actions so that such clause is appreciated by the other. In such scenario the clause is valid otherwise not. (Inbrief 2016)
Case 1 – Agreement
The combination of offer and acceptance makes an agreement which is supported with consideration, intention and capacity to make a contract. An offer starts a contract and the statement which is used by the offeror to convey his intention to the offeree with a hope of conformation is called offer (Carlill v Carbolic Smoke Ball (1893). Further, the offeree confirmation to the offer without bringing any amendments to the same is acceptance in law.
But, when the intention of the person is to receive offers from public, it is an act of invitation to treat. Invitations are based on the advertisements, tenders, auctions, displays by the inviter and the people rely on such acts of the inviter before making any offer to him Partridge v Crittenden (1968). The offer so received has to be confirmed by the inviter to make an agreement in law.
Now, an online display of offer is an invitation to treat by Gumtree (offeree). Carol (offeror) reacted on the ad and made an offer to Gumtree which was never approved by Gumtree. So, offer is not supported by corresponding acceptance resulting in no agreement amid the two.
Case 2 – Consideration
Combination of offer and acceptance makes a valid agreement in law. But, the legal sanctity is only given to such an agreement when there is presence of consideration to the same Foakes v Beer (1884). The monetary benefit of any kind of gain which is deserved by the offeree because of the compliance of the terms of the offer is consideration in law. A valid consideration gave enforceability to an agreement (Re McArdle(1951). But, if the consideration supports promises which are already performed, then, it has no significance in law and is not enforceable. Consideration should support promises which performing or yet to be performed. (The Law Teacher 2016).
Now, George appointed Devi on 12th April 2015. Preston is not aware of the same and promised George that if he appoints Devi then he will gave him a contract of @ £150,000. But, this promises is made against an action which is already done and is past in nature. So, the consideration provided Preston is not valid and is thus invalid in law.
So, there is no obligation on Preston to fulfill his promise.
Case 3 – Exclusion clause
In a valid contract, parties should obligate with the terms of the contract and if any party does not comply with the terms, and then he must face the penalties and the contract liabilities. But, there are situations herein, the liability can be reduced or excluded to some extend with the help of clauses called exclusion clause (Glynn v Margeston (1893).
An exclusion clause limits or at time excludes the obligation of one party when some contingent event takes place which is pre decided by the parties (Thornton v Shoe Lane Parking (1971). But, if one party is unaware of the clause and the other is relying on the same, then, the burden of proof lies upon the party who is relying to prove that he has made all efforts and actions so that such clause is appreciated by the other. In such scenario the clause is valid otherwise not. (Inbrief 2016)
Now, the couple visited the restaurant and handed over their coat to the porter which contains £500 inside. A receipt was provided to them which excluded the obligation of the restaurant which may arise from any items stolen or missing. But, this clause was made part of the receipt not with the consent of the couple but by the restaurant alone. This clause is valid only when the restaurant has made attempts to bring the clause in the awareness of the couple. But, no such efforts are made. So, the clause has no legal sanctity and is thus not applicable on the couple. So, restaurant cannot rely on the clause.
Case 4 – Implied term
There are two categories in which the terms of the contract can be divided, that is, those terms which is transmitted upon the parties as per law, custom, then, such are implied terms (Trollope and Colls Ltd. V. North West Regional Hospital Board (1973)) but the terms which are part of the contract by the mutual actions of the parties are express terms (Oscar Chess v. Williams (1957). (Weitzenböck 2012)
Now, an express undertaking is exchanged between Zehphra and Aaron according to which the rent which is fixed by Zehphra will not be increased as improvements are made by Aaron on the warehouse of Zehphra. This is the express declaration amid the two. But, Yeti violated these express provisions when he became the legal representative of the warehouse after the death of Zehphra. According to implied law, every express term exchanged amid the parties should be transmitted to their respective legal heirs. So, Yeti should follow the terms of Zehphra and if her increases the rent the Aaron has right in law to sue Yeti for breach of the terms of the contract.
There are two basic categories in which a term is normally divided. The same are conditions and warranties. When the terms are of such a nature that if somehow they are not followed then the contract losses its essence then such extra ordinary terms in law is called Conditions without which no contract can be performed (Poussard v Spiers (1876). If they are breached, then, the repercussions are grave. The contract can be cancelled and an additional right is also given to the plaintiff under which he is permitted to claim damages for his loss. (ElawreourceUK 2016)
Now, motor insurance is applied by the holder. Amid various terms of the insurance, one term which deals with any accidents or claims by the holder or anyone are negatively replied by the holder?
This term is very important as it helps in analyzing the premium of the insurance and various other terms and conditions.
Thus, this is the condition in the contract and since the condition is violated so the company has every right to treat the policy as terminated and can sue the holder for damages.
The terms which are not easily distinguished between condition and warranty are in-nominate term. If a term is a condition then it causes contract cancellation plus damages (Poussard v Spiers (1876) but treating a term as warranty allows only damages (Bettini v Gye (1876). (ElawreourceUK 2016)
Now, two questions were asked by the company which is replied in negative by the holder. The first term is only in regard to changes in the maker’s specification. This term is not very important and essence to the contract. So, since this term is replied in negative so it will only be treated as warranty and damage can be claimed. But, the second term, that is, any loss or accident is caused by the holder or any concerned person is also negatively replied. Now, this is the term which is very important as it helps in analyzing the premium of the insurance and various other terms and conditions. So, since the same is violated so, the company has every right to treat the policy as terminated and can sue the holder for damages.
There are various similarities and differences that exist amid the liability in tort with contractual liability. The same are as follows:
- The civil law is the guiding law for both the laws.
- They provide monetary damages by way of relied.
- They rarely adopt for penal provisions, except in exceptional situations, for example, the breach is grave and outside the scope of civil law.
- The defendant is under duty to perform their actions keeping in mind the safeguard of the plaintiff.
- Liability is strict in contract and faulty in tort.
- The parties are known in contract but unknown in tort.
- The liability is already calculated in contract but uncalculated in tort.
- There is legal duty in tort but contractual duty in contract.
Thus these are the significant contrasting features between the two.
Every law in any country is divided into two braid categories, that is, the civil law and the criminal law. Tort law which is the branch of civil law comprises of one very essential law, called, the law of negligence.
The law of negligence in Business is based on the theory that every person should conduct in a reasonable manner without harming any person who is closely associated with him. In 1932, in Donoghue v Stevenson (1932), the law was established and it was held that every manufacturer must produce his goods of such quality that it was be safe when used by his consumers and if does not do the same then he is negligent provided same kind of damage is faced by the plaintiff. This basic principle of negligence can be established when three basic elements are fulfilled.
- Duty of Care – The duty of care signifies that the defendant who is performing must do so, so that no plaintiff is injured because of the same. However, two basics must be complied with prior establishing duty of care. First, the duty is only against those plaintiffs who are very closely associated with the defendant. This implies that every act of the defendant falls upon the plaintiff and thus both are neighbours of each other (Anns v Merton London Borough (1978); second, the result of the actions of the defendant that he is willing to carry out is presumably expected by the defendant and knowing the results he still preferred to continue with the same. In such scenario, he is legally under the duty to carry his actions with all precautions (Caparo Industries plc v Dickman (1990).
- Breach of duty of care – the defendant should carry out his actions with utmost care but when this care is not fulfilled then there is breach of the same. The breach of duty exists when the defendant is expected to carry out his actions at certain level of care but such level of care is not met by him (Simmonds v Isle of Wight Council (2003).
- Injury-The injury implies that the plaintiff have suffered harm because of the breach of duty by the defendant. The injury must be direct and not remote in order to come in the frame of negligent law and to make the defendant liable under the law of negligence (Rothwell v Chemical & Insulating Co (2007).
The relationship amid a master/employer and the employee/servant should be carried out with utmost carefulness. This is because every employer is held accountable for the actions of his employee. Thus, if an employer can earn from his employee then he must also be answerable for his actions that resulted in some kind of loss. This principle is captured in the law of vicarious liability (Netheremere Ltd v Taverna & Gardiner. There are few basic principles which govern the law of vicarious liability. these are, First, the law is only applicable amid those persons who share a bind of an employer and an employee (Storey v Ashton; second, the employer has authorized the employee to carry out few actions on his behalf; third, while carrying out such actions, there is some kind of injury which is caused by him to any third party (Maga v The Trustees of the Birmingham Archdiocese of the Roman Catholic Church; fourth, there is no deviation from the course of employment. It is on compliance of all of the above principles, a business is said to be liable for the actions of his employee.
But, if any of the principles are not complied with, then the business is not said to be vicariously liable.
The law of negligence is applicable.
In law of negligence, every person should conduct in a reasonable manner without harming any person who is closely associated with him. There are three ingredients required to prove negligence (Donoghue v Stevenson (1932). The same are: First, that the defendant must act so that no plaintiff is injured because of the same provided, the duty is only against those plaintiffs who are very closely associated with the defendant and the result of the defendants actions presumably expected by the defendant (Caparo Industries plc v Dickman (1990); second, the duty of care is violated as the defendant is expected to carry out his actions at certain level of care but such level of care is not met by him; third, the plaintiff have suffered harm because of the breach of duty by the defendant (Simmonds v Isle of Wight Council (2003).
Now, the Hospitality provision is in proximate relation with Mr Brown as hospital must act with due care so that no harm is caused to Mr Brown., but, the doctors acted negligently by prescribing medicine to him without checking him properly. Si the level of care is not met causing harm to Mr Brown. So, the hospital is properly negligent in their actions.
Now, the hospital can still protect its interest by relying on the defense of contributory negligence. The hospital can prove that Mr Brown is aware of his health but still he only complained of chest pain and breathing problem, even though the problem is grave. So, the hospital can establish that Mr Brown has also contributed to his own loss and thus the penalties must be bifurcated amid both of them.
To prove vicarious liability amid employer and the employee, the employer must have authorized the employee to carry out few actions on his behalf and while carrying out such actions some kind of injury is caused to any third party, thus, in such scenario, the business is said to be liable for the actions of his employee Limpus v London General Omnibus Co (1862). (Lawmentor 2016)
Now, the driver when injured the client, at that time he was performing the actions of the company even though he in his personal capacity has consumed alcohol.
Thus, the third party has every right in law to sue the company for the loss sustained by him.
It is a very important principle in law that if any person wants to hold the employer liable for the actions of the employee, then, it is very necessary that the actions of such an employee should be carried out within the course of employment Smith v Stahes (1989).
Now, when the actions of Mr Jones ha resulted in causing harm to his colleague, at that time, Mr Jone was not acting within the authority of the supermarket and the duty of health and acre at that time is delegated to some other department. Thus, the colleague of Mr Jones has no right to sue the supermarket for the actions of Mr Jones as the same are outside the scope of employment.
The Formation of a contract
The Law of negligence
WeitzenböckE, 2012, English Law of Contract: Terms of contract,
Anns v Merton London Borough (1978)
Bettini v Gye (1876).
Carlill v Carbolic Smoke Ball (1893).
Caparo Industries plc v Dickman (1990).
Donoghue v Stevenson (1932).
Edwards v Skyways (1964).
Foakes v Beer (1884).
Glynn v Margeston (1893).
Hong Kong Fir Shipping v Kawasaki Kisen Kaisha (1962)
Limpus v London General Omnibus Co (1862).
Maga v The Trustees of the Birmingham Archdiocese of the Roman Catholic Church (2010).
ElawresourceUK, 2016, offer an acceptance, http://e-lawresources.co.uk/Offer-and-acceptance-contract.php. Viewed on 18th November 2016.
ElawresourceUK, 2016, condition, warranty & in nominate terms, http://e-lawresources.co.uk/Conditions,-warranties-and-innominate-terms.php. Viewed on 18th November 2016.
Inbrief, 2016, Exclusion clause, < http://www.inbrief.co.uk/contract-law/exemption-clauses-in-contract/>. Viewed on 18th November 2016.
Lawmentor, 2016, Vicarious liability, http://www.lawmentor.co.uk/resources/essays/outline-concept-vicarious-liability-tort-discuss/. Viewed on 18th November 2016.
Pettigrew, 2012, Contracts: verbal vs written < http://www.independent.co.uk/student/young-entrepreneurs/contracts-verbal- vs-written- 6297966.html>. Viewed on 18th November 2016.
Steptoe, 2008, Important English law terms < http://www.steptoe.com/publications-6430.html>. Viewed on 18th November 2016.