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Unit 5 ACNB Sample Assignment
Diploma in Business
Unit Number and Title
Unit 5 ACNB
In the given task, the various elements which are required in contract formation is explained to Peter Abraham.
A contract is a kind of legal document which can only be prepared wither in writing or orally only when it’s main contract essentials are comply with. The same are: (Treitel 2011)
Offer: An offer is initiated by an offeror who desires that some other person (offeree) carry out some act or omission on his behalf and expects that the offeree will approve of his expectations. An offeror can make his offer to one single person, group of person or to the world in oral or written form (Storer v Manchester City Council (1974).
Acceptance: The offeree when grants his consent to the offer which is received by him is called an acceptance and the same must be brought to the perception of the offeror to make a binding effect. An acceptance can be made in oral or written form. Silence is no acceptance in law and must be communicated (British Steel Corp. v Clevenland Bridge and Engineering Co. (1984). (Furmston & Tolhurst 2010)
Intention: The intention of both the offeror and the offeree should be legal in nature which emphasize that the parties are willing to go to court in any hassle exist amid them. The general rule is that there is legal intent in commercial relations and no legal intent in family relations. But, this rule can be rebutted by laying down proofs (Balfour v Balfour (1919).
Consideration: Every act of offer and acceptance must be made with some kind of gain and benefit. This gain or benefit is essential to make the contract enforceable in law. The consideration can be monetary or non-monetary but must be sufficient to make the contract liable (Thomas v Thomas (1842)).
Capacity: The parties should also be capable, that is, the parties are of sound mind and are not minor in age.
Importance: All the contract elements are very much required to make a sound contract. Even if one element is missing then it results in cancellation of aspects of contract.
There are contracts that can be formulated with the help of all the contract essentials. Some of the contracts are:
Face to face: Whenever the contract which comes into existence because the same is made by the parties in physical presence of each other, then, such kinds of contract are face to face contracts.
The impact of face to face contract is not strong as all terms are verbal in nature and there is no documentary proof to prove the same in law. (The Law Teacher 2012)
Written contract:Whenever a contract is created by the parties by not verbally communicating the terms but by writing the same on the piece of paper and forming a formal document the such written texts are called written contracts.
The written contracts have significant impacts and every single term of such kinds of contract can be established by interpreting the same and disputes can be resolved much easily when compared with oral pr face to face contracts.
Distance selling (telephone, internet): When the contracts are made by the parties over internet or over telephone wherein the parties are not present physically then such are distance selling contracts. These can be verbal (telephone) or in written form (internet) and the impact varies depending upon the kind of contract is made.
Now, few contractual terms are analyzed keeping in mind their meaning and effect including their remedies and damages.
Condition: The terms which are made part of the contract and which are so important/crucial/core to the contract that if they are not performed then the contract will lose its essence. These are the terms which are the foundation and the core to any contract and are the reason because of which the parties agreed to establish a contract amid them (Poussard v Spiers (1876). Once a condition is breached then the aggrieved party has every right to terminate the contract and can take legal proceedings against the defaulter and claim damages for the same.
Warranty: The terms which are made part of the contract by the parties but are not treated as conditions, rather, these terms are not the core of the contract. They are supplement to the conditions and are not the foundational terms though are required to keep the contract working (Bettini v Gye (1876). However, if any of the warranties are violated by the parties, then, the party who is not the defaulter has every right to bring legal action against the defaulter and sue him for damages. But, the contract cannot be cancelled on the basis of violation of warranties.
In-nominate terms: At times, the parties incorporate terms in the contract, but, the terms are of such a nature that it is not easy to bifurcate them in conditions and warranties. In such situations, it is only the event under which these terms are violated and the impact and relevance they portray that denies the true nature of such terms. Such kinds of terms are called in-nominate terms and the effect ad damages that are claimed whether the terms are treated as condition or warranties.
Exemption clauses (including legality): One of the terms which are made part of the contract is exclusion clause. These are the clauses which limit or exclude the obligation of one of the parties to the contract provided the other party to the contract have assented to the same. If there is no approval from the other party then the clause is invalid. Thus, the consent of both the parties is required (Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd (1987)). Also, if only one party has incorporated the clause in the contract then he must make every effort to bring the clause in the information knowledge of another in order to make the clause valid.
Case 1 – Agreement
If an offeror wants to make a contract then he must make an offer first. An offer is the desires of the offeror that the offeree carry out some act or omission on his behalf and expects that the offeree will approve of his expectations and when such approval is gained then an agreement exists.
But, when no offer is made but a person invites offer then it is invitation to treat and can be made with the help of auctions, tenders, advertisements, display of goods , etc. upon receipt of offer, if the inviter approves of the same, then, there is a binding relationship (Thornton v Shoe Lane Parking (1971) & (Pharmaceutical Society v Boots (1953).
Now, Gumtree is the inviter and it has invited offers via an advertisement online. This online invitation was reciprocated by Carol by giving an offer. So, it is the duty of Gumtree to act like an offeree. But, no approval or rejection is made by Gumtree. So, there is no relationship amid the two and there is no contract between the two.
Case 2 – Consideration
When any agreement is made offer plus acceptance), then, every agreement should be hold along with consideration so that it is enforceable in law. Mainly a consideration is some kind of gain and benefit, whether monetary or non-monetary to make a contract enforceable (Eastwood v Kenyon (1840). But, a valid consideration is one which does not protect past actions but only performing or yet to be performed promises. (HartPub 2016)
Now, Devi was employed by George on 12th April. Not aware of the same, on 13th, Preston promised George that he will gave an IT contract to George of Devi is appointed by him. But, the promise and consideration provided by Preston is for past actions and is thus an invalid consideration in law. So, Preston is not bound by his promise.
Case 3 – Exclusion clause
An exclusion clause excludes the obligation of one party to the contract provided the same is approved by another party to the contract. Thus, both the parties to the contract must be aware of the clause to make it binding and enforceable. However, if any single party has made the clause part of the contract then he has an obligation to bring the clause within the kind notice of the other party to make it enforceable. (Goldstone A 2009)
Now, the restaurant issues a receipt contain an exclusion clause relieving itself from the liability arising out of any theft or steal of any valuable from the customers goods. A wallet went missing from the coat of the couple and the restaurant relied upon the clause. The clause was held to be not applicable because the restaurant incorporated the clause unilaterally and did not make any efforts to bring the same in the notion of the other party.
So, the couple can sue the restaurant as the exclusion clause is not applicable.
Case 4 – Implied term
When the parties make a contract then they decide the terms under which they are obligated themselves. The terms which are decided by the parties on own, either orally or in written form, are express terms (Dick Bentley Productions v Arnold Smith Motors (1965). But, those terms which are made part of the clause by law, usage, and custom are implied in nature (Schuler v Wickham Machine Tool Sales (1973). Both the terms must be complied by the parties.
Now, an express undertaking is established between Aaron & Zehphra, wherein Aaron has taken the warehouse of Zehphra on rent and Zehphra will not increase the same for next five years. So, both are bound by this express term. These express terms are also binding upon the legal representatives of both the parties.
Now, when Zehphra died, the property moved to the legal representative of Zehphra, that is, Yeti. Yeti however, violated the express provisions of Zehphra and increased the rent. It is submitted that Yeti has to company with the express terms entered amid Aaron and Zehphra under the implied law. However, Yeti has violated the said implied term. So, Aaron can sue Yeti for the breach of implied term can claim damages.
In the law of contract, there are terms which bound the parties to the contract. One of such term is condition. The terms which are made part of the contract and which are so important/crucial/core to the contract that if they are not performed then the contract will lose its essence, then such terms are called conditions. These are the terms which are the foundation and the core to any contract. Once a condition is breached then the aggrieved party has every right to terminate the contract and can take legal proceedings against the defaulter and claim damages for the same (Poussard v Spiers (1876). Now, in the given case,
An insurance contract was established amid the company and the holder. Before making the contract, the company has asked the holder whether the holder is involved in any claim or accident in last five year. This was the very relevant term in the law of contract as it is the foundation of any insurance contract. However, the same was answered in negative by the holder thereby breaching the contract term. So, the condition of the contract was violated so, the company has every right to terminate the contract and sue the holder for damages.
There is yet another term that is normally found in the contract. The same is in-nominate terms. These terms are of such a nature that it is not easy to bifurcate them in conditions and warranties. In such situations, it is only the event under which these terms are violated and the impact and relevance they portray that denies the true nature of such terms. Such kinds of terms are called in-nominate terms and the effect ad damages that are claimed whether the terms are treated as condition or warranties. If a condition is breached then the aggrieved party has every right to terminate the contract and can take legal proceedings against the defaulter and claim damages for the same. But, if any of the warranties are violated, then, the party who is not the defaulter can sue for damages.
Now, the insurance company asked two questions from the holder. The first question is treated as warranties as it only seeks information regarding the modification in the maker’s specification. The same was wrongly answered by the holder but the wrong statement does not nullify the essence of the contract.
However, the second term is the condition because, the same deals with information regarding any loss/accident in last five years which was again denied by the holder and was the wrong answer. This has hampered the very foundation for which the insurance contract was established. Thus, the company can cancel the contract because of violation of condition and can claim damages.
In the present given task, the similarities and the differences amid the liability in contract and tort are analyzed here in under:
- The laws are of civil nature and aims at providing relief to the plaintiff;
- The relief is in the form of monetary compensation rather than penal punishments.
- There is some kind of relationship which is established in both the laws, such as, contractual association in the law of contract and proximity association in tort law.
- The parties are obligated to comply with their respective duties.
- The liability in contract can be mitigated by relying on exclusion clause and the liability in tort can be mitigated by availing the respective defences.
- The contract terms defined the contractual liabilities and thus are strict. But, the liability in tort is determined by the fault of the defendant and is thus a fault based liability.
- The parties are known in contractual liability but are total strangers in tort liability.
- There is prevalence of privity of contract in contractual liability but the same is not present in contractual liability.
In the present task, the nature of the liability of negligence and the major conditions that are required by the plaintiff to prove negligence against defendant is submitted herein under.
When any liability under the law of negligence is to be established by the plaintiff against the defendant, then, it is necessary that the plaintiff has to prove the fault of the defendant, that is, he is not able to comply with the duty of care that is imposed upon him under law, and because of such breach some kind of loss is caused to the plaintiff (Donoghue v Stevenson (1932). Thus, the prevalence of fault is very much required to prove negligence on the part of the defendant. So, the nature of the liability under the law of negligence is mainly fault based. (Kelly et.al 2014Now, in order to prove that the defendant is negligent in his actions, there are few conditions which must be satisfied by the plaintiff. The same are:
Duty of care
Every defendant has an obligation under civil law that he must act with all due care and diligence so that by no actions of his any kind of injury or damage is caused to any person who is associated with him, that is, the plaintiff (Hilder v Associated Portland (1961)). But, a defendant is answerable to the injury or damage of the plaintiff provided there are two basic essentials which are fulfilled, that is, (Hussain D, 2009)
- That the relationship of the defendant and the plaintiff must of be of neighbours, that is, they are so closely connected with each other that any act/omission of the defendant is directly hampering the interest of the plaintiff (Marc Rich & Co v Bishops Rock Marine (1995);
- Also, the injury or damage which may be incurred upon the plaintiff must be such which can be reasonably analysed by the defendant himself and thus he must avoid such actions.Both these elements imposed a duty of care upon the defendant.
Breach of duty of care
The duty of care which is imposed upon the defendant should be catered by him with all care and up to such level which is expected in the desired situation. If the desired level of care is not met by the defendant then considered to be breach of duty of care (Scott v London and St. Katherine Docks (1865)). The breach depends upon the level of care that is required and that the defendant has failed to meet such level of care.
Lastly, because of the breach of duty of care, the plaintiff has suffered from some kind of damage provided the damage which is so caused to the plaintiff is reasonably foreseeable by the defendant and is directly linked with the actions of the defendant.
When all the above elements are fulfilled thane the defendant is held to be negligent in his actions.
The law of vicarious liability is one of the significant laws in tort law. it is the law which defines the relationship of employers and employees at the time when the employees incurred losses upon third parties during their employment course. In such scenarios, it is the employer who is considered to be accountable for the losses so incurred. The basic elements to prove vicarious liability against employer are: (Tufal A, n.d)
- The parties are exchanging the relationship of employer-employee.
- That the employee has suffered losses upon third parties while carrying out his employment Century Insurance v Northern Irish Road Transport Boar (1942).
- That the actions of the employee are governed by the employer and are not of personal nature Ministry of defence v Radcliffe (2009).
- It is then the employer is held accountable for the actions and losses incurred by the employee.
Any defendant is held to be negligent when the plaintiff proves that there is a legal fault of the defendant, that is, he is not able to comply with the duty of care that is imposed upon him under law, and because of such breach some kind of loss is caused to the plaintiff. Thus, the prevalence of fault is very much required to prove negligence on the part of the defendant, provided, the parties are neighbors and the impact of defendant actions is reasonably foreseeable and there is causation amid the loss is caused and the acts of the defendant Donoghue v Stevenson (1932).
Now, Mr Briton visited for treatment of his breathing problem and chest pain at the hospital. Thus, they are neighbors of each other because any medicine prescribed by the doctor will directly impact Mr Brown. So, there is duty of care on the hospital. But, the doctors has provided medicine without checking Mr Brown and thus it resulted in his death, thus, loss is caused to Mr brown. So, the hospital is negligent in its action.
But, there is defense called contributory negligence upon which the hospital can rely according to which the hospital can prove that Mr brown has contributed to his own loss, that is, he did not specify that he is suffering from pneumonia because of the toxic mould in his house and thus also negligent in his actions so the hospital should not be held liable under the law of negligence totally and the damages must be apportioned proportionally (Barclays Bank plc v Fairclough Building Ltd (1995)).
In the law of vicarious liability, the employer who is considered to be accountable for the losses so incurred by the employee provided, the parties are employer-employee; the employee has suffered losses upon third parties while carrying out his employment and the actions of the employee are governed by the employer and are not of personal nature (Massey v Crown Life insurance (1978).
Now, the driver while taking the client back from the airport hit the lamp post and caused injuries to the client. Now, the client has every right to sue the company of the driver because the driver was acting his official duties when the accident took place. Though he was drunk but still acts are within the employment course and thus the company is accountable for the same.
It is very essential that the employee is acting within the directions and authorities of the employer in order to hold such employer under the law of vicarious liability (Ferguson v Dawson Partners (1976).
Now, Mr Jones injured one of his friends while he was loading pallets. His friend brought an action against the supermarket on the pretext that Mr Jones was the employee of the supermarket. However, the supermarket had not employed rather the services was delegated to some other company. So, the supermarket was no the employer of Mr Jones, thus, his friend cannot hold the supermarket vicariously liable.
Chitty J, 2012, Chitty on Contract : General principles, Sweet and Maxwell, p1012.
Goldstone A, 2009, Effective Exclusion Clauses: Ensuring They Work - Excluding And Limiting Liability .
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.
Bettini v Gye (1876).
Balfour v Balfour (1919).
Barclays Bank plc v Fairclough Building Ltd (1995)
British Steel Corp. v Clevenland Bridge and Engineering Co. (1984).
Century Insurance v Northern Irish Road Transport Boar (1942).
Donoghue v Stevenson (1932)
Dick Bentley Productions v Arnold Smith Motors (1965).
Eastwood v Kenyon (1840).
Ministry of defence v Radcliffe (2009).
Pharmaceutical Society v Boots (1953).