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Unit 5 ACNB Liability Principles Assignment
Diploma in Business
Unit Number and Title
Unit 5 ACNB Liability Principles Assignment
LO 1: Understand the essential elements of a valid contract in a business context
A. To make a legally binding contract, there is a requirement of compilation of five elements. The same are:
- Offer: At times there are certain actions which an offeror desires to be performed by an offeree. This desire when communicated in the form of oral or written communication is called an offer in business law. In (Carlill v CarbolicSmoke BallCo (1893) an offer should be reached to an offeree in order to be held valid. (The Law Teacher 2016)
- Acceptance: The confirmation to an offer by an offeree is an acceptance in law. An acceptance should agree with the exact terms of an offer otherwise the same is considered to be a counter offer. When an offeree provides acceptance then the offeror should admit the same in order to make the acceptable binding and is held in (Payn v Case (1789). (The Law Teacher 2016)
- Consideration: Consideration is a kind of monetary support which is provided for the performance of the promise by the promisor. In (Currie v Misa (1875) only consideration supporting present/future promises are allowed. Supporting past action is invalid in law. (MacMillan & Stone 2012)
- Intention: The promises should be supported by legal intention (Edmonds v Lawson (2000). If parties do not intent to bind the contract legally, then, such contracts have no value in law. (MacMillan & Stone 2012)
- Capacity: The promisor and the promisee should be not mentally unstable and should not be minor.
All, elements make a valid contract.
B. Various contracts can be made with the help of contract elements. Such as:
Face to face: Contracts made on the face of the parties are face to face contracts. These contracts are verbal and so not simple to prove as there is no written proof (Phillips v Brooks (1919). (ElawresourceUK 2016)
Written: When the terms of the contract are jot down on the piece of paper then such contract are written in nature. The courts gave full sanctity to these kinds of contracts because the terms are written and easy to prove and depict and de-codified by the court when settlement needs to be made. (Elawresource UK 2016)
Distance selling: Parties who are physically apart can make distance selling contracts. These contracts if verbal are equivalent to face to face contracts and thus are weak. But, if made in written form then is strong and holds substantial value in law (Cundy v Lindsay (1878 ).
C. The terms of a contract are divided into three broad categories.
- Condition: When a contract is formed then the parties incorporate terms upon which a contract exists. These terms are the main themes of the contract for which the contact is actually established. These important terms in law are called conditions (The Mihalis Angelos (1970).
The violation of conditions grants right the non-defaulter a right in law to take the defaulter to court and ask for damages and compensation. He is also authorized to declare the contract terminated. (Weitzenböck 2012)
- Warranty: Along with conditions, there are few terms which are part of the contract so that a contract can be performed but are not the reasons because of which the contract is established. These are secondary to conditions and are called warranties (Bettini v Gye (1876)
Since these terms are no so essential, thus, the non-defaulting party can only ask for damages and nothing else. There cannot be any kind of contract termination.
- Innominate term: When the contract terms are not easy to define as condition or warranty on the face of them, but, it is the condition of their volitions which defines them as condition or warranties are in-nominate terms in law. The repercussions of the terms depend upon whether the terms are condition or warranties (The Naxos (1990).
LO 2: Be able to apply the elements of a contract in business situations
In the present tasks, the potential course of action of Mark is analyzed.
The facts submit that, the BMW of Johnson was put on sale at £16,000. He has advertised the sale on Tuesday.
In law, an advertisement and promotion is an invitation to sale. Any potential buyer must make an offer to the advertiser and if the adviser accepts the same then there is a contract between the two parties. So, in the given case, Johnson is the advertiser and thus the prospective offeree Partridge vcrittenden (1968).
On Thursday, Mark emailed Johnson, and has made an offer to Johnson.
Now, a valid contract can only be made amid Mark and Johnson provided Johnson accepts the offer of Mark (Carlill v Carbolic Smoke Ball Co (1893) & Payn v Case (1789). Then, Johnson enquired the day he wished to pick the car and how he can pay the amount. (The Law Teacher 2016)
In law, the response to any query or questions asked against the offer is never an acceptance in law and is held in (Hyde v Wrench (1840) & (Stevenson v McLean (1880). So, on Friday, there was no acceptance that was provided by Johnson to the offer of Mark. (The Law Teacher, 2016)
Mark replied to the query of Johnson and submitted that whether he can pay by cash on Saturday. But, this email of Mark was never received by Johnson. Johnson assumed that Mark is not intended to buy the car.
Now, on Saturday, Mark visited Johnson to collect the car but Johnson has sold the car.
It is submitted that the offer of Mark was never accepted by Johnson. There were only communications regarding the offer that was exchanged amid them which is no manner an acceptance.
So, there is no acceptance by Johnson to the offer of Mark, so, there is no contract between the two.
A valid contract requires several terms which are the basis of any contractual relationship amid the parties. One of the significant terms that are normally found in the contract is Exclusion clauses.
An exclusion clause is mainly made part of the contract to deal with the contingencies. The clause specifies that if any event takes place as mentioned in the contract and such event causes the liability of one of the party then such liability can be excluded/limited because the other party has assented to the same (Hollier v Rambler Motors (1972). Thus, the mutual co-operation of both the parties is required for the application of exclusion clause. If the aggrieved party is not aware of the clause and no efforts are made by the relying party so that the clause is known to the aggrieved then such clause has no application. (Inbrief 2016)
Now, Sam wish to visit France and the booklet he signed contains a clause which establishes that the company will not accept any liability for the damages and the injuries to property to any plaintiff caused on the premises of the company including any contractual breaches.
This, clause is only applicable upon Sam if the company has incorporated the clause within the knowledge of the Sam. Reasonable efforts must be made by the company to bring the clause in the knowledge of Sam. If no such efforts are made then the clause is not applicable.
Since, the company has not made any efforts thus the clause is not applicable on Sam.
In online contracts, a contractual relationship can only be made amid an offeror and the offeree if a valid offer is made online and a valid acceptance take place by clicking the acceptance button. The intention of the offeror must be very clear that when the offeree will accept the agree button, there is a valid contract between the two (L’Estrange v Graucob (1934 & (Thornton v Shoe Lane Parking (1970). (Macdonald E, 2011)
Janet bought a dress from an online shop and in order to complete the transaction she click on the acceptance term. One of the terms of the contract is that the company has authority to change the color and size of the item so purchased. Since, Janet has agreed with the conditions of the contract prior accepting the same, thus, the term is binding on Janet as soon as she clicked on the acceptance button.
When a contract is made then the terms of the contract are binding upon the parties. Now, after the contract formation, if any party wants to incorporate any new term then the same can be done by making amendment in the contract either expressly or orally. A new term can thus be incorporated in the contract by making oral exchange of promises (Olley v Marlborough Court (1949). But, no new term can be imposed upon the party without bringing the same within his knowledge. If any one term is added then reasonable actions must be undertaken to bring such term in the knowledge of the other party.
Now, various documents are signed by Tony prior checking in the hotel.
When he entered the room there is a sticker at the back of the room which submitted that “Lights must be switched off after 12 midnight regardless”. Now, this new term which is not made part of the documents is only imposed on Tony if reasonable efforts are made by the hotel to bring such term in the awareness of Tony. Since, no such efforts are made, so the clause is not binding.
LO 3: Understand principles of liability in negligence in business activities
A brief comparison is drawn amid the law of tort and the law of contract.
The terms of the contract decides the liability on the contractual parties. The liability cannot go beyond the terms of the contract and thus is very strict. Whereas, it is the interpretation of the courts that decides the liability of the parties in tort law. Thus, the liability is not very rigid but is based on the fault of the defaulting party. Thus, the liability in tort is faulty. (EssayUK 2016)
The liability in the contract law is liquidated and pre decided but the liability in the tort law is un-liquidated and not pre decided.
The parties are totally strangers in the law of tort but the liabilities are known to each other in the law of contract.
Thus, these are the basic difference that exists amid the law of contract and the law of tort.
The landmark case of Donohughe V Stevenson (1932) is the foundation case upon which the law of negligence was established. In the given case, the defendant was the manufacturer of the ginger beer and the plaintiff is the consumer. Once, the plaintiff saw a decomposed snail in the ginger beer while consuming the same. The consumer fell ill after the incident. The consumer held the manufacturer negligent in his actions and submitted he owns a duty of care. But, the defendant contended that the consumer fell ill because of her own deteriorated health. The House of Lord held that every manufacturer is under a duty of care to provide safe products and if because of any unsafe product injury is caused to the consumer then the manufacturer is negligent. But, the consumer must be the neighbor of the manufacturer, that is, they must e in proximate relationship with each other.
Thus, the key elements that are required in order to prove negligence are:
- Duty of care: that the defendant has a duty of care in law according to which his actions must not cause damage to the plaintiff. This duty of protection requires tow important elements in law (Caparo Industries plc v Dickman (1990).
- Reasonable forseeability: The defendant has a duty to protect the plaintiff against those impacts of his actions which he can reasonably foresee. If he cannot predict the outcomes then he has no duty to protect (Junior Books v Veitchi (1983).
- Proximity: the plaintiff and the defendant should be in proximate relationship. This signifies that the plaintiff will bear the repercussions of all the defendants’ actions directly. In such situations, those parties are neighbour of each other and are proximately connected with each other.
- Breach: That the duty of care is considered to be violated when the level of care that is needed to be comply by the defendant is not complied with (Nettleship v Weston (1971).
- Damages: the breach of the duty should result some kind of damage to the plaintiff in order to make the defendant negligent.
- Causation: that the loss caused to the plaintiff must be because if the cause of defendant actions. Thus, there must be some kind of link amid the acts of the defendant and the loss of the plaintiff (McFarlane v Tayside Health Board (1999).
- Remoteness: That the damage which is sustained by the plaintiff is reasonably considered by the defendant. The loss should not be very remote.
Thus, these are the elements which must be fulfilled to make the defendant negligent in his actions.
In the law of tort, there is significant development of one of the principles called vicarious liability. the law of vicarious liability gains importance from the facts that it makes the employer liable for all the losses which is caused by his employee while carrying out the actions of his employer, that is, within the course of employment. (LawMentor 2016)
If any person has to establish that there exists a vicarious liability then the basic elements that are required to be proved are:
That the law of vicarious liability is applicable only in the situations when the people are in the connection of employer and employee Performing Rights Society v Mitchell & Booker Ltd (1924),
That the employee in carrying out his official duties.
That while carrying out his official duties, some kind of loss is inflicted by him upon some third party.
That the acts of the employee are not outside the course of employment or are those acts which are prohibited by the employer Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance (1968).
In such situations, the third party has every right to sue the employer for the losses caused by the employee.
LO 4: Be able to apply principles of liability in negligence in business situations
As per the facts of the case, Christine visited an internet cafe to check some of her mails. She slipped because of some water on the floor of the café. Because of the fall she broke her foot.
As per the law of negligence, the defendant should carry out his actions in such manner so that upon action of his should cause any injury to the plaintiff with who he is sharing a proximate relationship. If such duty is breached and loss is caused to the plaintiff then the defendant is negligent in his actions.
By applying the law of negligence it is submitted that it is the duty of the owner of the internet café that he must provide a safe premises to any person who is visiting his premises. This duty must be catered with all duty care and responsibility. It is the duty of the internet cafe owner that no water must be sprinkled on the floor of the care to make the same slipper and dangerous or the visitors (Caparo Industries plc v Dickman (1990). If the owner of the internet café is aware of the same and has still not taken any action to wipe out the floor then there is breach of duty of care by the owner of the internet café as the level of duty that is required in the given situation is not met by him. Because of the breach of the duty of care by the internet café owner there is injury which is sustained by Christine. The injury which is caused to her is the direct result of the breach and the loss is reasonably predictable by the owner of the internet cafe.
Thus, the duty of care imposed upon the owner of internet cafe is not met by him which has caused loss to Christine.
Thus, there is negligence on the part of the intended café owner and Christine an sue him in the law of negligence.
Whenever any employee causes some kind of damage while carrying out his official duties, then, it is a settled law in tort, the loss which is caused by such employee will not be inflicted upon him, but, it is the employer if such employee who will be answerable for the loss that is caused by such employee Imperial Chemical Industries v Shatwell . The branch of tort law that deals with such kind of shift in liability is captured in vicarious liability Daviev New Merton Board Mills . The basic requirements are that the actions of the employee must be carried out while carrying out his official duties. Actions outside employment are also outside the scope of vicarious Ice and Storage liability Lister v Romford Cold (1957).
James is the driver of Royal Mail Plc. He takes a detour and visits his girlfriend. While returning back he negligently crashes in to a parked Benz car.
It is submitted that while returning from his girlfriend he is not within his employment course. Thus, any accident at that time will not come within the preview of vicarious liability.
So, the Benz car owner cannot sue the Royal Mail Plc for the negligent actions of James.
Allen & Overy (2010) Email acceptance of offer: when is it effective?. Publications, Litigation Review.
EssayUK (2016) Differences and similarities between rights and obligations in contract and tort.
MacMillan & Stone (2012) Elements of the law of contract, University of London, International Programmes.
Macdonald E (2011), “Incorporation of Standard Terms in Website Contracting – ‘Clicking I Agree’ Journal of Contract Law, 198, 199-210.
Weitzenböck EM (2012) English Law of Contract: Terms of contract.
Bettini v Gye (1876)
Carlill v Carbolic Smoke Ball Co (1893).
Caparo Industries plc v Dickman (1990).
Currie v Misa (1875).
Cundy v Lindsay (1878).
Donoghue v Stevenson (1932).
Edmonds v Lawson (2000).
Hollier v Rambler Motors (1972).
Hyde v Wrench (1840).
Imperial Chemical Industries v Shatwell 
Junior Books v Veitchi (1983).
Lister v Romford Ice and Cold Storage (1957).
McFarlane v Tayside Health Board (1999).
Nettleship v Weston (1971).
Olley v Marlborough Court (1949)
Payn v Case (1789).