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Unit 5 Aspect of Contract Law and Negligence Business Assignment
Diploma in Business
Unit Number and Title
Unit 5 Aspect of Contract Law and Negligence Business
Two or more parties may enter into a contract. Every contract shall be similar in formation in order to obtain its validity and enforceability under the law. For the same purpose every contract is checked for the presence of the essential elements. The contract so created may be of different types depending on the availability and intent of the parties to the contract. Performance of contract is important as it is formed at a cost so chargeable if not performed. Such charge is regarded as a consideration. The liability arising from a contract may differ from that of tort on several bases. It is aimed to determine the namely differences in the present assignment. To ensure the study of liabilities, the law of tort is studied based on vicarious liability and tort of negligence.
According to the facts of the case, Peter Abraham is interested in being a sole contractor and is unaware of the details of laws that concern his profession. For the benefit of his better knowledge the following elements of the contract are studied:
Offer: An offer is said to be a statement that moves from the offeror towards the offeree. The offeror is the party presenting the statement containing the terms of the contract. The offer is required to be clear to interpret and derive the actual meaning. It is different from an invitation to offer as the invitation to offer presents a statement made by the party interested to enter into the contract. An invitation to offer is the merely a statement and not an offer. It may or may not include the selling price for the product. The same is made to merely inform the parties interested to create the contract to approach the advertiser in order to start the negotiations Carlill v Carbolic Smoke Ball Co. The importance of the contract is determined by the initiation of the contract. Without the offer the contract cannot be negotiated. It helps is structuring the term and conditions for the contract by stating the basic terms to be included under a contract. An offer is different from a counter offer. A counter offer is offer made by the offeree that is altered form of the original offer. A counter offer is not final unless the same is agreed to by the party the offer is been made to. (Collins, 2008)
Acceptance: An acceptance is said to be the second most important part of the contract. This is because the acceptance of the contract determines the creation of the contract. The acceptance certifies that a valid contract is in function between the parties. The offer when presented to the offeree can either be accepted, rejected, revoked, invalidated by lapse of time or discontinued from death of the either party. If the offeree accepts the offer then the contract is formed. The acceptance so made by the parties shall be clear and with complete intent to do so. The acceptance shall be easy to understand and interpret by use of simplified language.(Cooke, 2007) Although, not all contracts require the presence of the acceptance. Under the unilateral contracts or offer made to the world the element of acceptance is waived off by the party decision making the offer. This is because the offer so made is clear to interpret that the offeror is stating the terms in such a manner that the party performing the act so specified with automatically enter into a contract with the offeror. The offeror shall be clear in intent while presenting the offer that it in fact is an offer and should not be such to give an impression of an invitation to offer. An example of a unilateral contract would be that of the advertisement posted for a lost bag stating reward for the person finding the same. Hereby, whoever is able to find the bag would be able to claim for the amount so stated as a reward. The acceptance so made by the parties shall be in a manner that is acceptable under the arrangement of the contract. This would mean that the acceptance shall be through oral, writing, or post as long as the same is identified by the other party. According to the postal rule of acceptance the same is considered to be valid as soon as the acceptance is posted by the offeree. (Giliker, 2010)
Consideration: Every contract shall contain the element of consideration. This is because the consideration ensures that the contract is legal under the law for the performance. The consideration would enable the party to present the breach so committed by the party and make a claim for the same stating the breach in proportion to the consideration. The consideration ensures that a promise becomes a contract by stating the cost of the contract. The consideration shall be sufficient, not of past, and not arising from a prior duty of social care or contractual obligation. (Meyer, 2010)
Intent: The contract being created shall be ensured that the parties to the contract are intending to enter into the contract. This is because the contract so created requires the common purpose in order to create the enforceability. The intent of the contract enables the parties to create enforceability of the contract under the law. This ensures the claim made by the party in case of breach. The contracts so entered into by parties socially or domestically are not enforceable under the law unless the same is mentioned by the parties. However, the contracts of commercial nature are enforceable as the contracting parties are not related prior to the contract.
Capacity:When a contract is being created it is important to identify the eligibility of the parties to the contract. The contract shall be entered into by the parties that are capable of understanding the meaning of the contract at the time it is being created. This should ensure that the parties are of legal age, mentally sound and financially stable. The contract shall be created free from any undue influence from any party to force the party to unwillingly accept the contract. Such contracts are considered to be void. Certain contracts that are entered into by parties of age less than 18 are voidable in nature at the option of the contracting party.
Peter Abraham shall be aware that a contract may be created through various arrangements. The following are the different types of contract that may be created during the course of business:
Face to face contract: The contract that are not entered in writing but through oral conversations are considered to be face to face contracts. These contracts require the presence of parties in person in order to determine the face-to-face nature of the contract. Such contract are entered through the presence of the parties in the same room whereby the offer is made by the offeror and the offeree is given an option to accept the same during the same conversation or provide it at a later stage. If the acceptance is to be provided at a later stage the parties shall stipulate the time or the same should be valid within a reasonable amount of time for the concerning terms of the contract. These contracts are difficult to be established under the law as they are not present in writing. The contracts cannot be presented in law for the enforceability. The contract is essential to be presented in order to create a legal enforceability. (Nel, 2004)
Written Contracts:The contracts that are entered into by the parties in the written format are known to be the written contracts. These contracts are essential to be offered in writing and accepted in writing. The acceptance of the contract takes place through signatures of the parties to the contract. These contracts are easier to be established in the court of law because the same are available in writing. Thereby, the enforceability of the terms and conditions is determined and can be certain of intent from the document of contract. Therefore, the legal enforceability is easier under written contracts.(Meyer, 2010)
Distance Selling Contracts: Contracts that are entered into without the parties being present in front of each other or within approachable means to communicate for the said product are said to be distance selling contracts. An example of such a contract is the online selling contract. The contracting party in such cases shall ensure that the details of the product are provided clearly along with the details of the sale so made. The taxes, delivery details and receipt of the order shall be provided at the time the contract is being entered into. Other such contracts of distance selling may be entered through the sample of the products, mail order, fax and telephone. Under such types of contracts the offer and acceptance may vary depending on the mode of contract adopted by the parties.
Peter Abraham shall ensure that the contract so entered into by the parties should contain the following terms that are essential to every contract:
Condition: The contract is entered into by the parties in order to perform a certain act so discussed under the contract. If the same is not performed the contract is said to be not performed. This would mean that such terms that re important to a contract are referred to as conditions. The performance of condition may depend on the type of condition such as condition subsequent, concurrent or precedent. The conditions are important to performance of the contract as it determines the nature of the contract. It provides for the details of the performance of the contract that elementary in nature. If the condition is not performed the contract may be voided and not be continued to be performed by the affected party. (Collins, 2008)
Warranties:A warranty is said to be that term of the contract that is secondary to the contract. These terms are provided in the contract in order to help the fulfilment of the contract so that the parties perform the entire contract. The warranty is to be performed in order to ensure the complete performance of the contract. However, it is noted that if the warranty is not performed the contract should not be voided by the parties. This would mean that the affected party may claim for the damages, specific performance in order to recover for the breach of the contact so occurred. (Cooke, 2007)
Innominate Terms:Terms that are not clear to distinguish as a condition or a warranty is said to be that of the innominate term. These terms have a different effect under different situations. Therefore, when a term has a direct impact on the performance of the contract the term is said to be a condition and if not then it is a warranty.
Exclusion Clauses:The terms that restrict the extent of liability under the contract for the breach are said to be the exclusion clauses. These clauses are to be included in a manner that the party to the contract are not affected from the non-performance. The liability to be restricted shall be in regards to the purpose of the contract. The exclusion terms are not valid if they restrict liability in case of death or injury. The incorporation of these terms shall be through notices, signatures or previous course of dealings between the parties.
Case 1: The case facts determine that Carol was looking for a couch for which she came across an advertisement and promotion. It was observed that the advertisement so posted quoted the sale price for the interested buyers. The advertisement is considered to be the invitation to offer whereby the selling party has determine its intent to enter into the contract with the interested party. When Carol presents the intent to enter into the contract to the advertiser, she is making an offer. The offer once made can either be accepted or rejected. If the advertiser decides to enter into the contract, then an acceptance shall be made. This would ensure that a contract is made. Unless the acceptance is presented no contract is said to be created. (Nel, 2004)
Case 2: It is determined that Devi wanted to work with the cyber security firm. He had specifically asked his father not to participate in getting him the job through unfair means. It may be determined that Devi after taking the interview was selected and presented with an offer on 12th April. The father unaware of the same had approached the company and offered an amount stating that if his son is hired he would pay the amount so discussed. This offer was made on 13th April. It was determined that the offer so made and accepted by the company was invalid as the offer so made was for an event that had already taken place. As the past consideration is invalid the contract so formed would be invalid and the company would not be able to claim for the amount as well. (Meyer, 2010)
Case 3: In the provided scenario, a couple had gone out to have a dinner at a restaurant for which they were made to keep their coats at the entry desk. The coats after being hung, the couple was provided a receipt that stated that the belongings and the coats are not a responsibility of the restaurant. After finishing the meal, they found out that the wallet was missing. It was determined that the receipt containing the exclusion clause would not be applied in the given case for being invalid. It would be invalid because the same was determined after the contract was already formed and the same does not form part of the contract. This means that the restaurant would be liable for the loss so suffered.
Case 4: In the given case study, the contract so formed between the parties is a rent agreement. The agreement was for the rent of a unit that was to be used for an agreed period of time. The unit required some improvements for which the tenant paid for by himself. The rent agreements imply that any improvements so made by the tenant may be claimed for from the landlord for being the original owner. The land lord in turn promises to not increase the rent in lieu of the improvements for the next five years. The owner however died an year later and the new owner increased the rent. The new owner however, increased the rent to which the tenant did not agree. The tenant would be able to terminate the contract and claim for the balance of the improvements so made in the ration of remaining four years. (Cooke, 2007)
Case 5: Under the present case study a policy agreement is entered into by the parties. The policy provider presents a form of questions to the applicant in order to determine the status of the car. The question so asked was regarding the previous claims so made by the applicant for the same car in the past. The applicant had not presented the right answer. It may be stated that the questions so asked under the policy form directly related to the policy. The said term of previous claims was directly related to the policy and the same would be a condition to the contract. This would mean that the contract so entered into by the parties is void and the company may not allow for the claim so made under the voided policy. (Collins, 2008)
Case 6: According to the facts of the case, the policy form contained terms relating to the policy applied for by the applicant. The policy form contained questions regarding the previous claims so made the authenticity of the parts of the car. The contract so entered into was on the basis of the answers to the question. The answers however so provided were not true as the applicant was not aware of the actual status for the car. The wrongful statement so made is for the condition to the contract as they directly relate the policy claim to be made by the party. The contract so formed would be void as the party does not provide the right answers. It would be considered as a misrepresentation as the intent of the wrong answers was not present for the lack of information knowledge. The breach would allow the company to void the contract so made for the policy.
The different type of liability arising under the civil laws is of two types such as the contractual liability and tortuous liability. The liability so arising under contracts is strict in nature same as the tortuous liability. These liabilities are to be paid for as soon as the duty is breached. The duty so breached is a necessary one and cannot be let go off without performance. The differences that may rise between the two types of liabilities is as follows:
- The contract law recognizes a prior relationship between the parties, whereas no prior relationship between the parties under the law of tort exists.
- The duty so owed under contract is discussed in prior between the parties whereas the duty under tort is not discussed but assumed under the law of tort.
- The damages incontract law are discussed under the contract whereas the damages cannot be discussed in prior for the uncertain nature of the breach under law of tort.
- The damages are calculated based on the consideration amount of the contract whereas the damages are calculated based on the type of damages occurring under the tort.
- The breach of duty under law of tort is towards a specific party whereas the breach of duty under tort is towards society in general.(Giliker, 2010)
- The right so affected under the contract is the right in personam and the right affected under the tort is that of right in rem.
- The factors so determining the breach are validity of the contract such as offer and acceptance whereas the factors determining the breach under tort are that of proximity and foreseeability. (Richards, 2006)
The liability of negligence arises from the existing duty of care towards the immediate neighbor. The party so affected under the breach of duty shall be directly harmed. The harm shall be serious enough to establish a loss measurable in monetary, physical or psychological terms. The duty of care is such that it is to be undertaken by every person capable to understand the basics of life in a society. The society is to be maintained in a manner that safeguards each member. This gives rise to a duty of care on every member to undertake safety precautions to safeguard the immediate neighbor from the act if not performed safely. The case of Donoghue v Stevenson lays down the basic rule of creation of the duty of care towards person as a consumer in a given market. It was determined that whereby a product is supplied in the market it changes many hands to reach the consumer. This presented the prior responsibility of the manufacturer to provide the goods of quality for appropriate consumption by a person deemed fit for the same. This would create a duty of care on the part of the manufacturer to provide a good towards anyone who may consume the product and not only the person purchasing it.
According to the case of Caparo Industries the limit of duty of care is provided in a way that the liability is easier to establish. The factors responsible to determine the liability are that of proximity, causation, remoteness of damage. The proximity explains the possibility of the wrongful act causing the damage. The causation determines that the cause and effect relationship of the wrongful act and the harm shall be direct. The remoteness of damage explains that the wrongful act shall have the least influence to cause the damage and create liability. (Vettori, 2007)
The liability so created from the wrongful act committed by someone else is called a vicarious liability. This type of liability is determined by the delegation of the duty to perform a certain act for the benefit of the delegating party. The act so performed is not for the personal benefit and thereby the breach of duty shall not be the responsibility of the performing party. Thereby, the non-performing party is liable for the same. This type of liability generally arises in the case of employer-employee relationship where the employee performs for the benefit of the employer. The vicarious liability is only applicable when the wrongful act is committed from the breach of professional duty and not personal. (Giliker, 2010)
As per the Health and Safety at Work etc. Act, it is the responsibility of the employer to ensure that the employees are provided safe and healthy working environment to protect them from any harm so caused from the business environment. The quality of water and sanitation shall be standard. The equipment so used on the premises shall be industry approved. According to the Occupier’s Liability Act, the occupier is obligated to ensure that the people visiting the premises and trespassing the same shall be safe from any hazard that may occur. The warning sign for the same shall be put up in a place where the same is easily accessible and timely informed.
Case 7: According to the facts of the case it is determined that the hospital had employed the doctor as an employee. The doctor is said to be an employee but is allowed to practice medicine by himself as well. He owes a duty of care as a doctor as well as an employee. The patient when given the wrong medicines without check-up was found dead the next day. The doctor owed the patient a duty of care to perform a check up. However, the reason of his death was not the medicines but the toxic mould in the house. Applying the but-for test the reason of death was not related to the wrongful act. Therefore, the doctor will not be liable for the death but for the professional negligence so committed by him as a doctor. Also, the hospital will be liable for the negligence of the doctor as the patient had approached the institution primarily and thereby creates a liability on its part as well. (Pratt, 2000)
Case 8: The scenario so presented requires to consider the concept of vicarious liability. The driver was an employee of the company and the duty to pick up the client was official. The act of drinking the alcohol is personal. However, when the driver picks up the client, he is said to be performing in the official capacity. As per, Rose v Plenty, the act so performed of negligent driving was for performing the official duty only and thereby is part of the assigned duty. Thereby the damage and loss suffered from the accident will be the responsibility of the company under the rules of vicarious liability for being an employer. (Vettori, 2007)
Case 9: The case so given determines that the supermarket had assigned the responsibility to maintain the safety of the premises to another organization. The employee of the company was unloading some pallets when he slipped and the pallet landed on another employee causing him injuries. The supermarket took no responsibility for the same. It is observed that however the responsibility of the safety measures were delegated to another company the liability of the original employer always persists. It can also be determined that the employer having the direct control over the employee is liable. As the supermarket was directly in control of the employee causing the damage, it would be liable for the injury so suffered from the accident.
The formation of a contract is dependent on the presences of the essential elements of offer, acceptance, intention, consideration and capacity. Each element ensures that when a contract is created the parties are aware of the terms and the aspects of contract. The breach of a contract is studied based on the performance of the different terms such as condition and warranties. A detailed study of exclusion clauses is also presented in the given assignment. Tortuous liability is differentiated from the contractual liability while both are civil in nature. The basis of differences have been laid down for a better understanding. Tortuous liability may arise in the case vicarious liability and the tort of negligence. The various aspects of tort have been presented through the study of liability in the present study.
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