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Unit 5 ACNB Different Contract Liabilities Assignment
Diploma in Business
Unit Number and Title
Unit 5 ACNB
Here in this case study , there will be a discussion contracts and the format of entering a contract with some knowledge on different types of liabilities which should be taught to everybody as they have practical implication in the daily life of a person.
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
In the case study ACNB Different Contract Liabilities Assignment have been explained which helps in managing the business properly. Hence, this explanation will clear out the concept of Peter about the different aspect of contracts. Well first Peter needs to understand what are contract and the importance of it. Hence, a contract is a voluntary agreement between two or more parties that is enforceable by law applied as a binding for legal agreement (Ongar., 2011). A contract arises when both the parties agree that there is an agreement. Formation of a valid contract is requires the inclusion of an offer, acceptance, considerations and a mutual intent to be bound in an agreement. Each party of the contract should be eligible to enter into an agreement (Cross and Miller, 2011). A contract is not considered to be valid in case of minors, intoxicated persons and mentally instable person. There are some exceptions where a minor has to enter a contract and in those scenarios the contract is considered to be valid. Some of the contracts might require following some formalities like memorialization in writing.
Formation of contract
According to common law, to form a contract four things should be included such as offer, acceptance, intention to create legal relation and consideration (Chetwin, 2011). All agreements are not contracts but all contracts are an agreement. An agreement will then be considered to be a contract if the parties deemed to have an intention to be legally bound. Here, the elements to form a contract have been discussed briefly.
Offer and acceptance
In order to form a contract both parties needs to reach to a mutual assent. The offeror offers and the offeree has to accept it only then the agreement will be considered to be a valid contract. Contracts may be bilateral or unilateral (Fowler, 2011 p. 114). A bilateral contract is one in which both the offeror and offeree makes a promise or a set of promises to each other such as selling of home the buyer offers a price for the house and the seller delivers the title to the property.
Intention to create legal relation
Both the parties should have an intention to be bound legally (Harroch, 2011). They should create a legal relation between them only then the contract will be considered to be valid.
Consideration can be used for simple contracts but not for specified contracts. Both the party should consider and promise to exchange something of value. It is a concept of legal value in terms of contracts. Peter has to have the knowledge of consideration as when he plans to get into a contract with other party; he should understand what the valuable thing that has been promised to be exchanged.
Hence, a compilation of all these elements forms legal valid contracts.
1.2 Discuss the impact of forming contracts:
Maintaining a contract law in business is a good practice that has a good impact on the organisation. So Peter should understand the impacts of legal contracts (Miller, 2011). Below are the different impacts of legal contracts.
Breach of Contract
Each party bound by the contract should perform the task that has been document in the contract but if one of the party follows it and the other party fails to do that then he might face legal consequences (Forde, 2011). Failure to perform the agreed task leads to breach of contracts. According to this the party who is performing can file a law suit against the other for the damages or losses in his business.
Level of Breach
The party entering into the contract, if breaches it then the other party should first decide the type breach the other has done (Maidin and Sulaima,, 2011 p.2249). If it is a material breach then the other party does not have to follow and perform his work from the other end (MacQueen, 2014 p 529). Minor breach occurs when the other party makes minor mistakes on their part then, he should be paid but the performer party can sue them in the court.
Some of the contracts require few conditions to be performed (Rodwin, 2011 p. 50). The party doesn’t have to perform unless a certain conditions occur. So in this case the non-performance cannot be considered as a breach of contract. For example a broker is asked to sell a property provided the gives the finances but if the party fails to arrange the finance then the brokers duty ends there (Mares, 2011. P 170).
Statute of Frauds
Certain type of contracts must fulfil the statute of frauds before it is presented in the court (Rancourt, 2011 ). A contract is believe to follow the statute if it is formed in a written format ( Smolo and Ismail, 2011 p.183) . The person challenging the contract must have kept the contract signed and it should state the essential terms and conditions.
The contract should always be in a written format as it works as proof and avoids creating misunderstandings with a security to the contract
Face to face
A contract should be always formed in a written form where both the offeror and offeree has to be present in the same place and the contract should be signed in presence of both the party.
Distance selling contracts
In distance selling contracts the parties are in front of each other rather it is done through phone or internet (Wong and Deubert, 2011 p.473). Hence, the seller should disclose certain information for the buyers before getting into a contract if that is not done then the buyer can sue the seller.
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
Contract is an essential part that must be followed by every person. Peter should understand the importance of the terms of the contract.
Offer and acceptance
The first term of the contract is the offer and acceptance of the agreement mutually (McArthur et al, 2011 p.206). The agreement should include the conditions in which both the party places their accep0tance.
The next is the term is the consideration. Consideration implies exchanging of something that has value (Abdullah, M., Shahimi and Ghafar , 2011 p.133). So Peter should decide what valuable items he wants to exchange with the other party.
It is an intermediate term that cannot be defined.as either a condition or warranty. It actually looks to the effects of warranty and checks whether the innocent party deprived or not (Mayer, 2011 p.714).Innominate is determined basing on the effect the condition and warranty cause in the situation of breach. It is an useful information for Peter as it will help to measure the breach of contract against which he take action against the other party
Warranty is minor terms of contract which are not concentrated to the existence of the contract. If the warranty is breached they can claim their damages (Joint and Baker, 2011. P.407).
A condition is a major term of the contract which goes to the root of the contract if the condition is breached the innoce3nt party is entitle to terminate the contract and claim his damages (Teubner, 2011.). Hence, it can be explained as a requirement or event that has to be performed before the completion of another action. Violating the condition can lead to termination to the contract. As a remedy one can repudiate the contract andcan claim damages from the party.
2.1 Apply the elements of contracts in the given business scenarios below
A seller has given an advertisement in the newspaper about selling the couch, Carol had seen the advertisement and has sent an email to seller for wanting to buy the couch but seller didn’t reply to the mail.
As per Fisher v Bell (1961) 1 QB 394 is an English contract law concerning the requirements of offer and acceptance in the formation of a Valid contract. The case states that where goods are displayed in a shop together with a price level such display is treated as an invitation to treat by the seller and not an offer The offer actually forms when the customer present item with the price. Acceptance occurs when the cashier accepts the cash. (Johnson and Ricca, 2011 p.75).Hence, in this particular case there has not been any agreement between the parties. Rather when the advertisement was given in the newspaper by the seller by displaying the couch with its price is considered to be ‘Invitation to treat” and when Carol send the mail expressing her interest in buying the product is considered to be “Invitation to Offer”. But the seller has not replied to the mail which proves that there had been no occurrence of agreement between the parties.
In this case study, it is presented that Devi wanted to join a company dealing with cyber security expertise. Danny got a call from the company for an interview but Devi has asked his father not to get involved in the interview process, subsequently Devi qualified for the position and was offered the job on 12th of April which was immediately accepted by him. On the other hand Devi’s father had offered 150,000 pounds on 13th of April( Sweet and Schneier, 2012.), So the company wanted to enforce the contract where it may be stated that the contract is invalid .
According to Bolton V Madden Black burn J , the general rule states that an executor agreement by which the plaintiff agrees to do something on the terms that the defendant agrees to do something else, may be enforced if what the plaintiff .has agreed to do is either for the benefit of the defendant or to the trouble or prejudice of the plaintiff. In this case the offer that Devi’s father made to the company was done after the event has already occurred. So the company cannot enforce act and state the offer as invalid.
2.2 Apply the law on terms in the following contracts
According to the case study the scenario was that a couple went to renowned restaurant in London where they had to submit the overcoats and they were handed with a slip as proof to collect their over coats in which it was mentioned that the restaurant is exclusion of liability for missing valuable items After having the dinner the couple realised that they have left their wallet in the pockets of the overcoat which was later on found missing occurred (Hynes and Loewenstein, 2011).
As opined by Darlington Future Ltd v. Delcon Australia Pty Ltd the meaning of an exclusion clause construed in its ordinary and natural meaning in the context Although we construe the meaning much like in any other ordinary clause in the contract, we need to examine the clause in light of the contract as whole Exclusion clause should not be subject to strained construction in order to reduce the ambit of their operation. Therefore, in this case the exclusion clause is applicable for the hotel but it is unenforceable as the statement was printed under the slip which is not the actual contract rather it was determined after the parties entered into the contract consequently, the restaurant will be held liable for the missing of the wallet within their premises.
Here in this case study it was found that Aaron the tenant has invested his money for the modification of the warehouse on the terms and conditions that the landlord Zehphera has agreed into a contract that her will not increase the rent for next five years . The sudden death of the landlord made Yeti inherit the property from her mother and she immediately increase the rent on completing one year. The tenant revoked against the action but the landlord was not ready to lessen the rent neither she was ready to pay the repair charges.
As stated in the general rule according to Ungoed Thomas J the custom must be certain, notorious reasonable, recognised as legally binding and consistent with express term. Hence, as per the tenancy agreement it is an implied term that the landlord is bound to repay the repair amount to the tenant. Therefore, the tenant has all the rights to claim the amount from the landlord legally (Sullivan 2011 P.77).
2.3 Evaluate the effect of different terms in the given scenario
In this scenario the policy holder wanted to insure his car from theft or damages occurred from accidents. He was given a form to be filled where he has to fill up the details of the car and also the details of any theft incidents occurred in the last five years where he never mentioned about the previous theft incident. This information is required and important to the insurance company for insuring the car. In the mean while a complaint was lodged for the theft of the car (Revak, 2011 p.1645). On further investigation the insurance company found that a similar incident has occurred within the last five years. On questioning the policyholder he said that it is nothing to do with policy and is not required to answer.
As per the goods act 1979 section 49 allows for summary actions for price of goods and or services. Meaning a quick set of court procedure rules is followed. Consumers also benefit under section 48A-E with a specific right to have a broken product to be repaired The added benefit is that the claimant brings an action for debt, she or he will have no further duty to mitigate his loss. This was another requirement that common law courts have invented before a claim of breach of contract could be enforced. Therefore the insurance company can state that the policy is void as there has been a breach of contract for not revealing the details.
As per the case study we can see that there has misleading information provided to the insurance company. The policyholder denies of making any changes in the car and any claims made in the fast five years According to misrepresentation act 1967 English laws generally allows a contract to be unwound so that both parties are put back into the position before the agreement was made It may be that the misrepresentation was incorporated into the contract as a term so as an alternative one can the contract should subsist and claim for a loss in expectations. Consequently, in this case as the policyholder made misrepresentation of the facts so the insurance company can state the policy as void basing on the fact the policyholder has made misrepresentation of facts.
3.1 Explain the similarities and differences of liability in tort with contractual liability using an example.
Tort liability and contractual; liability
Both liabilities come under the s\civil liability preview. It is designed in an identical structure. And requires the similar structure to be followed for fulfilment of the work. It should have the element for the cumulative presence for the four conditions such as illegal action, prejudice, causality relation to the illegal actions, and prejudice and guilt. Both are based on the concept of repairing the prejudices that are followed due illegal actions of the assets. In both cases the repair implemented should be integral such as it should cover both the damaged caused and earnings, benefits not achieved. In both the cases the repair is done in the form of kind or by money equivalent that represents the value of the prejudice.
In tort liability the obligations of the person causing the prejudice to another person through an illegal extra contractual action that is attributable to the person to repair the damages caused thereby. Where as in contractual liability is type of civil liability which is differentiated basing on the fact that the damaging and illegal action is taken for the failure to fulfil the obligations given in the contract by the debtor and is finally repaired in the form of kind or equivalent cash.
The liability contract arises from the right present in the contract and in case of tort the liability arises from a social right.
The motive of breach is not considered under the contract whereas it is considered under law of breach.
The damages in case of contract are quantified according to the consideration whereas the damages are considered according to the jurisdiction of court.
The scope of liability under the contract is limited but in the case of tort it is unlimited.
The elements are considered as per the validity of the contract whereas in the case of tort the elements are considered determining the liability.
Example of Tort Liability
Example of tort liability is that a person is driving a car with great speed and hits a person standing on the roadside without noticing his presence then; the person is not following his duty for which he is liable though he is not bonded by any contract. And can be penalised this type of liability is called tort liability.
Example of contractual liability
A company declares bonus for working on the festival days, the employee’s works for the day but later the company does not pay the bonus to the employee then, the company falls under the jurisdiction of contractual liability.
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 tort negligence generally occurs when a person is careless, ignorant and forgetful. The tort negligence arises when a person breaches the duty towards the society. Each person is liable to fulfil his duty towards the society for which doesn’t need to enter into a contract. It was created for maintaining proper care and precaution while performing an action that has an effect on the society. Say for an example while driving a car a person should maintain a speed limit and should never drink and . Say for an instance john a 25 year old lad has attended a party and had drinks in party. After the party was over he decided to drive back home He was driving the car at a great speed, while driving he did not notice an aged person trying to cross and also did not notice the in the red signal. He hit the man for which he was arrested later for breaking rules under the tort liability. The consequences of his carefree attitude have ultimately killed the old man and end up John’s life in the jail on murder charges. So it is necessary that everyone understand their duties and responsibilities toward the society then it will be good for both the parties. The vulgarity of the negligence depends on three criteria first if the sinner is a minor then he will be excused considering the fact that he is not in a position to judge the after effects of the incident or the sin. Second if the negligence has been done by a claimant then, he will punish or penalised to the extent he was involved in the negligence and third if the person has committed the negligence on the studied knowledge then, no defendant will stand on hi9s side. Hence, he will be penalised and punished for his negligence.
3.3 Explain what the vicarious liability means and how a business such as your organisation can become vicariously liable giving example
Vicarious liability refers to a situation in which someone is held liable and responsible for the action of other person. Referring to work place context an employer is liable for the actions of their employees provided it is proved that they are still under the employment of the company. It has been noticed that many companies are still unaware about the fact that they can be held liable for the action or omission of their employees in the course of their employment. The risk doesn’t end here as the law can still consider liable of the employee even if he has left the job depending on the situation.
In Case of Barclay Banks a similar incident happened that has put the employer in a difficult position. John the sales executive of Barclays bank went to the house of Janet George for opening a savings account. John was asked to wait in the drawing room. John noticed that no one was there in the house except Janet. This situation tempted john to sexually attack Janet but he failed as Janet has called the police. Later for his action Janet has put charges on Barclays Bank and they have to pay a huge penalty for their employees act and john was punished for his act. After the incident Barclays Bank\ started giving training to their employees on the particular topic like sexual harassment, racism, discrimination so that the employees are educated about the outcome and consequence of this act from both company’s end and from the law This step of Barclays has saved them their reputation back in the market and they have no further faced these issues.
4.1 Apply the elements of tort of negligence and defences in the given business scenarios below:
In the given scenario it has been seen that Mr Brown has come to the hospital complaining chest pain. The nurse immediately informed the doctor about it but the doctor was busy so he prescribed over the counter medicine to the patient. The patient had the medicine and went back home. The next day he was found dead on further investigation it was found that he was suffering from pneumonia and his death occurred due to the toxic moulds present in his house
As Bolam McNair J. stated at 587) that the defendant had to have in accordance with the practice as proper by a ‘responsible body of medical men’. In this case it can be stated that a doctor being a professional medicine practitioner should have prescribed medicines after knowing the symptoms after performing the check-up. Rather the doctor prescribed the medicines without performing the check-ups. Hence, he will be considered to have shown a professional negligence.Though it was not the reason for death but the death could have been avoided if the doctor treated the patient right time then, he could have diagnosed the problem and could have treated accordingly which might have saved the life of the patient So the doctor can be held liable for professional negligence and the hospital would be held liable for the vicarious liability as the doctor is the employee of the hospital.
In the second instance the Hospital would not be held liable as the death occurred due to the toxic moulds present in his house. Moreover, the prescription could have been proved wrong as it did not cause the death. Hence, nor the doctor neither the patie3nt is liable for the death of Mr Brown.
4.2 Apply the elements of vicarious liability in given business situations below (Cases 8 and 9)
In the given scenario the driver of the executive chauffeur was sent for the pickup of a client from the airport while waiti8ng for the client the driver had decided consume alcohol but he over drank the driving limit and while taking the client to the hotel he crashed the car with a lamp post for which client was seriously injured. Later on investigation it was found that the driver was over drunk so the client lodged complaint against company.
As opined by Storey v Ashton An employer will only be liable for the torts of their employees if they are committed during the course of employment rather than, as the courts put it, ‘on a frolic of his own' As per vicarious liability the driver was the employee of the company and the employer is liable for the misconduct of his employee so the company ended up paying penalties.
In the present scenario while loading the goods in the truck the employee tripped and seriously injured another employee working in the supermarket. For which the person sue the supermarket but they denied the liability as they have already informed to the other employer about the safety rules and regulation so they will be held liable for the incident. As per the case of ready mix concrete it was discussed and decided that the primary employer is liable for the actions of the employee even if the incident does not occur under their influence. However, where there is more than one employer for given employee, the employer having the direct control over the situation or the incident would be held liable for it. Hence, as the incident occurred under the supervision of the supermarket, they will be held liable for the employee’s action
From the above case studies one has got a small overview about contracts and different types of liability which can help them while working or entering into a contract with the other person. A legal knowledge is very essential to understand one’s duty and responsibility towards the society, organisation and own business.
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