Delivery in day(s): 5
Unit 5 ACNB Terms of contract Assignment
Diploma in Business
Unit Number and Assignment Title
Unit 5 ACNB Terms of contract Assignment
Essential elements of contract
ACNB Terms of contract Assignment is the important part of the business. Contract is a legal agreement between two legally ‘no objection’ certified parties considering their free and mutual interest on the same. Therefore the contract definition shows the essential elements of contract. The entry point of any contract must be the offer and acceptance. A legal offer is transformed into agreement via legal acceptance. Therefore the object of consideration must be under legal capacity of both parties (Miller, 2016). That means the object should not have any illegal terms and both parties may have right, age and mental capacity (mature and adult) to make the agreement. Therefore other two elements are the free and mutual consent of both parties as well as the capacity of the parties. Next terms are the intention and consideration as other essential elements. The intention means both party can take the help of law in case of miscommunication and issues (Hair, 2015). The consideration part opens the opportunity of right, interest and benefits. The same indicates the intention of pricing the parties and the agreement. Therefore law is the primary situation in this case and all the elements are necessary to make the contract agreement legally enforceable.
Now if one or multiple elements are missing in a contract agreement then the complexity identifies with two terms as void or voidable contract (Fried, 2015). There are certain differences between these two terms of contract considering corporate law. According to the definition of void contract the contract is not enforceable in the court as one or more essential elements are missing in this case. As an example if a service provider forces an old man to take some service on signing an agreement (paying monthly amount) then the same is a void contract. The marketing essentials elements define that only free and mutual agreement make a contract enforceable (Pannebakker, 2013). In this case the element is missing as the agreement is done by force and the old man sign the same out of fear. In case of voidable contract all essential elements are present in the contract but due to some flaws or mistakes the same is considered as void. According to the definition of contract the capacity element includes right, age or mental capacity therefore if an offeree makes contract with a minor in presence of all essential elements then the same is void in the court of law (Rendon, 2016). The mistake in this case indicates the age of the minor. Therefore the contract is voidable. Finally the discussion comes to the unenforceable contract. Clearly the same term means the contract is not enforceable in the court of law. The business law defines a contract unenforceable when the terms are not clear and easy to understand. In one word the terms are ambiguous (Micklitz and Reich, 2014). Unenforceable contract includes two other terms and they are statute of limitations and latches. Statute of limitation means the period of contract and latches mean the forced delay in the period of contract. As an example if a builder has a contract of 7 years for maintaining a house then after 7 years he/she is not under the contract or statute of limitation is expired in the case. Again if a service provider keeps unreasonable silence after signing a ‘contact to send raw material’ causing delay then the contact is unenforceable in the court (Goldberger, 2016).
Type of contract
First of all considering all the essential elements of contract, a valid contract can have specific types. Three basic types of contracts are face to face, oral and written contract. A face to face contract includes the offer and acceptance as well as the overall agreement between both parties in person (Martin, 2015). But oral contract needs a spoken communication for completion of the legal agreement. The fundamental thing about an oral contract is the absence of written document as the proof of free and mutual agreement from both parties. With the increasing pace of technology the phone, voice chat and other type of conversation excluding the manual face to face communication are included in the oral contract (Cruz and Marques, 2013). Sometimes both the parties may write down the terms and conditions for individual clarity but the agreement itself is not written on free consent of mutual agreement. In question of validity the oral contract has the same value as the written one. But in some specific cases like property, assets the contract should be written to avoid the fraud and other troubles. Oral contract are taken as valid in presence of some authorize person for both parties. Another issue is the period of this type of contract (Agapiou, 2013). Oral contract usually have short period comparing the written contract. As an example in the famous handshake case of 1984, the company Pennzoil get 9.1 billion $ compensation from Texaco for breaching of oral contract with Getty oil. In the law of contract, the written contracts get highest priority due to its maximum level of security for both parties. Furthermore the level of transaction or the level of execution supports this type of contract strongly. The executing contract or optional contract which gives right to other party for the next level of contract relies highly on written contract. A written contract lists every minute details of the communication precisely (Neuenschwander, 2014). In case of optional contracts the steps are complex and the contracts have high tendency of fraud and damage for both parties. Therefore written contract can create a safe environment in this case. Written contract needs valid signs from both parties to include the parties in the terms of contract. Both parties have right to keep one copy of the signed document for further use. The statute of limitation varies for different states but the contracting parties should clear their ways in the period according to the contract. As an example, in case of debts the borrower should pay his/her debts in the limited period according to the written contract otherwise the same contract can take him/her to the court with a demand of penalty (Knapp, 2013). Again a contract under seal can be provided best by written contract. The most fundamental contract type (sealed contract) can show the seal as evidence of recognition for both parties. In case of fact or law implication written contract is helpful in identifying the levels and the same is best proof of quasi-contracts’ essential terms.
Effect of words in an offer
According to business definition advertisement is the most useful interface to connect the mass audience using audio or visual format for any company (Mahdi et al, 2013). If the company has a brand name or huge target audience then commercial advertisement increase the brand factors with its power of words. Moreover the promotional words for the product and services are controlled by the company and advertising is a fully paid process. Therefore if an advertisement seems like a contract offer then the offer is completely from the company and in case of aspect of contract violation the company is responsible for the penalty. Usually advertisement is best format of marketing strategy for any company with an aim of selling product and services in low prices. Butwrong or miscommunicated messages in the advertisement are the responsibility of the company (Wright, 2016). Now the essential elements of a contract are offer, acceptance and consideration. Therefore if an advertisement shows a tendency of initiating negotiation then the same may be considered as contract as any person can complete the contract by accepting the negotiating terms. As an example, the 1893 carbolic smoke ball case can provide suitable explanation. In this case the ‘Carbolic smoke ball’ company published advertisements in newspapers (including the Pall Mall gazette) that their product ‘smoke ball’ can cure Influenza and other flus. Moreover the company also declared that they would pay £100 if the smoke ball could not cure after usage (in the same advertisement). To gain the public trust the company also declared that they had deposited £1000 in the ‘Regent Street’ Alliance bank. According to the laws of contract the words of payment and ‘gaining trust’ words are the initiating points of negotiation and thus making the advertisement an offer (Hopkins, 2015). The deposited amount is the consideration part of a contract. Moreover the same advertisement is helping the selling of the product as the price was only 10s and can be refilled with 5s.
Mrs. Carlill bought a ball and used (as per instructions) but contracted flu after using the same. Therefore she claimed £100 from the company. But the company claimed that she had not used the ball as per instructions. But the court of law supported Mrs. Carlill. First of all both the payment words of £100 and Mrs. Carlill’s usage of smoke ball’ transform the advertisement in a binding contract via offer and acceptance (Jafarpour and Spiers, 2016).The Alliance bank deposit is used as the satisfied consideration in this case. Furthermore only buying the ball is enough consideration as the attracting words of the advertisement is increasing the profit factor of the company for the cheap smoke ball considering the flu pandemic of 1890s. Finally the declaration of deposit makes the company’s intention clear for legally bound. Therefore the advertisement has all the essential elements of contract and that proves that this is a specific case of legal offer under the shadow of advertisement.
2.1 Presence of elements in David-William case
Condition: According to the case William Haughton is interested in building a gym in the back side of the garden. On seeing the advertisement of a local builder David Frost, Haughton has made the first negotiation on 1st May, 2016. On response Frost asked for 10 days to ready a quotation. The first meeting between Haughton and Frost is on 10th May, 2016. In the first meeting, Frost has accepted the instructions about the size of the gym and other facilities given by Haughton. Furthermore the Frost’s quotation includes the material and other costs as £18000. In the same meeting Haughton also has paid £1000 in advance. A written contact is also signed in the meeting (Neal et al, 2003). Finally Frost left with the word that he will start working from 10th June, 2016.
Contract elements: According to the business law any valid contract has some basic elements and their absence in any contract can prove the contract void or unenforceable. The initial elements are offer and acceptance as well as the opportunities for negotiation. In the first meeting on the 1st May, 2016 seeing the advertisement and Frost’s response open the path of negotiation. Next the meeting of 10th may complete the offer and acceptance part (DiMatteo, 1997). The quotation with overall cost was the offer from Frost which Haughton eagerly accepted and paid advance money. Another element of contract, consideration is completed here as Frost considers the Gym building instruction and Haughton also considers the initiation of working on 10th June by Frost. Finally the written contract proves the negotiations valid according to the business law. Therefore considering the six essential elements of contract the present elements in the first meeting are:
- Offer and acceptance: Haughton’s negotiation is responded by Frost with his quotation and Frost’s offer of £18000 Gym building is accepted by Haughton providing £1000 as advance. The offer and acceptance part is also completed by the written contract ().
- Intention of going legal: The second major element of a valid contract. Any failed promise can take parties to the court of law (). Therefore the quotation, meeting, offering, acceptance, paying advance and finally the written contract proves systematic way of the legal intentions from both sides of parties.
- Free and mutual consent: The third element of a valid contract. It means the negotiation is mutually done without any pressure or force and the contract is done with free consent from both parties (). In this case the negotiation and meeting shows the free and mutual consent from both sides of parties (Frost and Haughton).
- Competency for legal agreement: This element checks the validity factors of both parties for a contract. That means if the parties are major, mature and without mental disabilities for the contract (). In this case both Frost and Haughton are mature and sound adults to sign and make the contract valid.
- Object of contract: This element checks if the object of contract is legal or not. In this case the quotation of Gym, instruments and infrastructure of Gym are objects of contract. Moreover they are legitimate and according to the case there is no fraudulent accusation against the same (Eckerd et al, 2013).
- Consideration: The final element checks the promise of return for both parties. In this case the contract is valid as Frost get advance payment while Haughton gets the promise of building his dream Gym in the back of garden ().
2.2 Formation of contract
Condition: According to the case, on 20th June 2016 Haughton informs Frost that he needs his Gym complete before 31st July as he has made the delivery arrangement on 3rd August and wants to throw a party on 7th August to celebrate the opening of the Gym. Haughton had not received any answer from Frost. On 25th July Frost asked for an extra amount of £2000 as he had shortage of labor and the extra amount is to complete the work before the given date.
Contract Formation: According to the business law a valid contract needs offer an acceptance. After the first meeting of Frost and Haughton they signed a written contract which says that Frost will start his work of Gym from 10th June 2016. Moreover the contract said nothing about the end date of Frosts work (Rayton and Yalabik, 2014). Now in case of valid contract both parties have the right to renegotiate considering present conditions. In this case Haughton had a condition and he needed his Gym job done before 31st July as he had a plan of party on 7th August. So he informed the same to Frost and Frost had not given an immediate reply but on 25th July Frost asked an extra amount to complete the same job as negotiated by Haughton. Therefore the renegotiation got its response via Frost and that means Haughton’s counter-offer is accepted by Frost with his response. But there is no written contract just like the first agreement between Haughton and Frost. But according to the types of contract oral or verbal contracts are valid in business law (Conway et al, 2014). Therefore a contract is formed between Haughton and Frost as Frost replied Haughton’s queries although the reply was late.
2.3 Discussion on contract situation
a) David’s Position: According to the first agreement between Frost and Haughton on 10th May, 2016 the contract decided that Frost would start his work from 10th June. But in the contract Frost had not said anything about the date of completion. In the second negotiation Haughton made a counter offer of completing the task before 31st July and Frost’s asked an extra payment as he had a valid condition (shortage of labor force). Frost had received the information on 20th June 2016 when he had already started working on the assignment. Moreover he answered Haughton’s offer with valid reason. Therefore from David Frost’s side there is no violation of contract.
b) Situation Explanation: David was informed of the changed situation on 20th June but he responded after 5 days or 25th June asking extra payment showing labor shortage as reason. As Haughton needed the work completion by 31st July he agreed to pay the extra amount out of desperation. Therefore in a way the free consent element is violated here. Frost replied in a time which made Haughton desperate to agree with Frost. So Frost’s act is tricky considering the date on which he replied to Haughton. Again Frost may have labor shortage truthfully but he should have replied formally and immediately to Haughton. Frost’s silence for5 days and then asking extra money makes Frost’s position fishy for this contract. But Haughton has promised to provide the extra amount of money according to the second offer. If he made his argument first while Frost kept his silent then Frost might delay the work. But after the completion of work as scheduled Haughton have to pay the extra money according to the second contract.
3.1 Liability in tort
According to the common law module, Tort means any violation, harm or damages both mentally and physically to a person. This type of law violation can caused from intentional action or negligence of duty. Moreover Tort liability means the responsibility of the accused for his/her actions (Patterson, 2014). The commitment of Tort makes the accused tortfeasor. Therefore the tortfeasor has to give penalty for his/her liability if the harm/damages are proved in the court of law. Furthermore a tortfeasor can harm a group of people by his/her liability. As an example, if a rock show in public place cause hearing problem for elderly people then the show manager is responsible for the high volume in public places and according to prove he should give penalty to the elderly people he harmed (Mehta, 2014). Moreover there are different types of situation in tort liability. Most common types are joint liability, strict liability and liability for third parties. In case of joint liability multiple tortfeasor are present for some tort. As an example, if waste materials of a power plant are affecting the natural conditions of a city then most of the power plant employees (manager, engineer) are responsible for the tort. Again in the case of strict liability the tortfeasor act is not intentional (Rosenthal and Winkler, 2013). If a person harbors wild animals in common or public places he/she is under strict liability. Finally the third party liability includes the impact of third parties in the law of Tort. As an example, if a tenant’s friend visit tenants place and get injury then landlord is responsible for the issue according to the law of tort. Now contractual liabilities are based on the given promises in the signed copies. Moreover the same also includes the valid essential elements like free consent, legal consideration, lawful object and finally proper way of offering and acceptance (both parties). Moreover types of agreement also effect the contractual liabilities. In case of simple and standard agreement the impacts are on the type of agreement (written or verbal) and other forms like bill, invoices etc. Bilateral agreement defines the responsibility of both parties. Therefore any violation of the promises from any side of the party can cause penalty for the party. Again the essential elements violation can be defined as contract violation too. In the 1968 Jones verses Padavatton domestic case the mother gets the support of law due to the absence of standard contract between her and her daughter. Moreover in the Tweddle verse Atkinson 1861 case consideration is not based on the employee of the estate and Atkinson as an employee had no liability to pay Tweddle Jr. Therefore some basic differences between tort and contract violation are as follows:
- Tort is violation of general responsibility while contract violation means damage of mutual agreements (Frumer et al, 2015)
- Tort as per definition is private damage therefore consideration may vary according to the circumstances but contract violation always need compensation from the violating party
- In case of Tort the damage level is defined by the court but contractual penalty is pre-determinedand inelastic as per the agreement ()
3.2 Tort of negligence
In the vast area of physical and mental damages of Tort, negligence is a major part. In case of negligence the loss or damages caused by the party on the other party may have no contract between them. Therefore predetermined and inelastic penalty is not effected in the same. But civilians can ask for justice in the court of law for the act of negligence according to the Donoghue v Stevenson 1932 case even if there is no presence of binding contract (Gifford and Robinette, 2014). Negligence tort has some essential elements and using them any claimant can establish the occurrence of negligence in the court of law. In court of law three factors; facts, testimony and evidence are checked to establish this kind of tort. The first element is duty. The court of law will check if the defendant really has a duty to the claimant. The duty or duty of care depends on the relationship between defendant and claimant. As an example, if the RND department of a company has issues in its lab and that cause illness of an employee in the lab then company is responsible for breaching of its duty. Therefore the second element is to prove the breaching of duty (Martin, 2016). According to the negligence tort but –for cause is the third and major element. The claimant has to prove that defendant is the real cause of his/her loss and damage. Especially relevant term in this case is the proximate cause which is the fourth element to check defendant’s responsibility in the damage case. Finally the level of damage/loss defines the penalty amount for the claimant in the court of law (Cusimano and Roberts, 2015).
3.3 Vicarious liability
Vicarious liability is the case of loss and damage when the accused is not directly responsible for the harm but his superior and legal terms make him responsible for the damages. Usually the Latin term Vicarious means imputed liability or responsibility as superior. Therefore in case of employers and organizational culture the liability is most suitable. For an organization certain work culture may open the opportunity of damage and the employers or the company is taken as responsible (Chamallas, 2014). The liability comes from the basic fact that higher authority is responsible for its agent’s act and impacts of the actions. But vicarious liability has area of limitation or scope. According to the job agreement independent contractors and illegal acts of agents are not under the scope of vicarious liability of the employer. As an example, if a driver of a car company uses the company car for his own needs or any illegal act then the car company is not responsible vicariously. But if the driver faces an accident during his working hours for some company job then the employer company is vicariously liable for the accident. Again vicarious liability includes parental responsibility in the same (Markovits, 2015). Therefore if a licensed parent places a loaded gun in the reach of children and the children use the same for some damage in the neighborhood then parent is vicariously liable for the damage. Finally if an employee of a product company uses company lab for extra cash and damages some lab instrument then company is not vicariously liable as the employee is under illegal act.
4.1 Defenses in tort cases
The ‘snail in the bottle’ or the famous Donoghue verses Stevenson (1932) case is significant as the case is also known as the entry point of modern theory of negligence (Luck, 2015). According to the 1928 case Mrs. Donoghue ordered a mixed ice cream of ginger beer in the Wellmeadow Café. The owner of the Café brought the order and the ginger beer bottle was leveled as ‘D. Stevenson, Glen Lane, Paisley’. After drinking some part of the ice cream when Mrs. Donoghue tried another pouring of the ginger beer on the ice cream float a decomposed snail came out with remaining beer (Goudkamp, 2015). According to Mrs. Donoghue the sight make her ill and she felt abdominal pain due to the sight. She blamed the manufacturer Stevenson for the same. According to the emergency treatment and doctor’s prescription she was affected by gastroenteritis and shock due to the sight of decomposed snail. According to the law of tort especially in negligence if the duty breaching and the cause is proved then the blamed person have to pay penalty (Judex, 2013). Therefore in this 1932 case the duty of care is breached and doctor’s report proves that Mrs. Donoghue felt ill for this breaching. Again in the infamous case of Hill verses Chief constable 1988 the final verdict says that the constable is not guilty of breaching pubic care duty as no general duty of care controls any individual of police department (Chamberlain, 2016). First of all the case is about Peter Sutcliffe who was accused of murdering 13 victims and Jacqueline Hill was his last victim. Hills mother claimed against the chief constable for his breaching of public duty and care. Comparing the two cases if manufacturer can hold guilty for the decomposed snail in the beer bottle then of course the chief constable has breached the public duty(Rogers, 2015). There were 13 murders and 8 attempts by that Yorkshire ripper before the Hill’s case. This proves the act of negligence from the Yorkshire police department and specially the chief constable. If this ripper case is in the hand of chief constable then he of course is responsible for this negligence of public care (Howarth et al, 2016). In the first case of ‘snail in the bottle’ manufacturer provides several bottles but his responsibility is to double check the bottles as it is the matter of public health. Again in the ripper case the situation is worse as the ripper was moving freely after 13 murders in front of Yorkshire police department. Therefore in the second case the verdict is not justified as the duty of public care is on both the police department and chief constable (Morgan, 2013). Moreover according to the police reform act chief constables are responsible for his police power, appointment of officers and staffs, investigation reports in the area, balancing the aims of PCC and operational decisions as well as his/her departments’ specific duties and responsibilities. Instead of all these the Yorkshire ripper was able to do all his crimes in the chief constable’s area. So in this Hill’s case the law of court had not done justice to Hill’s mother as well as the public of Yorkshire.
4.2 Application of vicarious liability elements
Condition: This is about an initiation of call taxi service. At the beginning the associate has an intention to hire 6 taxi drivers. According to the plan of the associate his instructions to the drivers include that for their reckless driving and accidents caused by the same will be total responsibility of the drivers (Ulfbeckand Ehlers, 2016). Therefore the associate and his service will not take any responsibility in this case.
Discussion: The situation is a vicarious liability case. According to the scopes of vicarious liability the employer has certain responsibilities for the acts of his/her agents. Therefore according to the valid laws the associate cannot get rid of his responsibilities as a call taxi service employer for some specific actions of the drivers (Geisser, 2015). First of all the doctrine of vicarious liability gives the employer every right to choose his agents or employees. Therefore the employer should check the employee details carefully as the employee may have involvement in prior illegitimate practices. Next the scope of this liability tells that working hours or shift for the taxi drivers are the times when the drivers work for the call taxi service. Therefore the service is responsible for their driving practices and damages caused during the work hours and shift hours(Ulfbeck and Ehlers, 2016). Although the associate has an intention to provide the instructions of no responsibility of reckless driving from the drivers’ side but common law of vicarious liability will not approve the same especially in the working hours (Macmurdo, 2015). Except form this the employee right control act tells that if the damage caused by the driver also affect the driver in the working hours of the service then in certain circumstances the driver as an employee can ask penalty from the ‘call taxi service’. Moreover the type of employment is also a major consideration in the vicarious liability cases. If the taxi driver is part time job holder then his action of damage is not the responsibility of the taxi service usually. But for full time employees the reckless act will cause trouble for the taxi service. Moreover the control, integration and multiple tests can act defensive for the taxi drivers and offensive for the call taxi service (Rogers, 2015). The ‘multiple test’ or the economic reality test can easily check the taxi drivers ‘checklists to identify employee status and a clear status can act offensive against the taxi service. In case the driver’s driving is occasional then the control test will prove the employee or the call taxi service guilty for recent reckless driving. Finally damages outside the working hours caused by the drivers are the sole responsibility of the driver and cannot affect the taxi service.
Agapiou, A., 2013. Impact of Legislative Change on Adjudication Provisions and the Requirement for Written Contracts under the New Construction Act, The. US-China L. Rev., 10, p.549.
Braekkan, K.F., 2012. High performance work systems and psychological contract violations. Journal of Managerial Issues, pp.277-292.
Chamallas, M., 2014. Two Very Different Stories: Vicarious Liability Under Tort and Title VII Law. Ohio St. LJ, 75, p.1315.
Chamberlain, E., 2016. To Serve and Protect Whom Proximity in Cases of Police Failure to Protect. Alberta L. Rev., 53, pp.977-1031.
Conway, N., Kiefer, T., Hartley, J. and Briner, R.B., 2014. Doing more with less Employee reactions to psychological contract breach via target similarity or spillover during public sector organizational change. British Journal of Management, 25(4), pp.737-754.
Cruz, C.O. and Marques, R.C., 2013. Flexible contracts to cope with uncertainty in public–private partnerships. International Journal of Project Management, 31(3), pp.473-483.
Cusimano, G.S. and Roberts, M.L., 2015. Contributory Negligence and Assumption of Risk. Alabama Tort Law, 1.
Demirel, S., 2016. The Effects of Psychological Contract Violations in Organizations on Organizational Trust and Alienation: An Application in the Healthcare Sector.
DiMatteo, L.A., 1997. International Contract Law Forumla: The Informality of International Business Transactions Plus the Internationalization of Contract Law Equals Unexpected Contractual Liability, L=(ii) 2, An. Syracuse J. Int'l L. & Com., 23, p.67.
Eckerd, S., Hill, J., Boyer, K.K., Donohue, K. and Ward, P.T., 2013. The relative impact of attribute, severity, and timing of psychological contract breach on behavioral and attitudinal outcomes. Journal of Operations Management, 31(7), pp.567-578.