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Unit 5 Aspects of Contract and Negligence Assignment Sample
Diploma in Business
Unit Number and Title
Unit 5 Aspects of Contract and Negligence
Contract is an agreement made between two or more parties with the intention to create a legal relationship. There are certain elements of Aspect contract that has been detailed in this report. There are different types of contract which contains different terms depending on the types of contract. All these terms in contract have legal effect. Other than contract, there is another limb of law known as the law of tort. Law of tort and contract law are civil wrongs but yet, there are numerous differences between the two which has been enumerated herewith. In the present report we are going to discuss the aspects of contract and the law of trot and negligence with the help of the case studies provided to us, like the case study of PRIMARK Direct and PRESEC pacesetters and in the task two the case of top tooling and side-line automation and also the case of George and Barratt homes ltd.
TASK1 Elements of a contract
Question 1: Identify whether all the essential elements of a contract are in place between PRIMARK Direct and PRESEC Pacesetters and explain the importance of these elements.
In the present case to determine whether all the elements of a valid contract are present we need to discuss firstly what the main elements of a contract are. The elements have been discussed below (CRYSTAL, Garry, 2013):
Offer and acceptance: the first requirement of the contract is that the offeror must make an offer to the offeree and the offeree must be given an unequivocal acceptance and in the present case there was an offer by PRESEC Pacesetters and the offer were accepted by PRIMARK Direct.
Consideration: it is something which possesses some value legally and this is exchanged by the parties to contract and this is known as consideration, in the present contract the computers were being exchanged for £1.3 Million.
Intention: this means that both the parties to the contract which is PRIMARK Direct and PRESEC Pacesetters must have the intention that they will be legally bound by the terms of the contract in which they have entered and in the present case both the parties did have the intention to be bound by the terms of the contract legally.
The terms and condition: the terms and conditions of the contract must be clear and must be incorporated in the contract so that the contract is legally binding (CRYSTAL, Garry, 2013). In the present contract both the parties to the contract have laid down some conditions and they are as following by the PRIMARK Direct:
- The total price of £1.3m and the payment schedule are agreed.
- This is subject to a formal contract being agreed in the near future.
- The contract is not effective until both parties have signed the formal contract.
- We agree to reimburse all legitimate expenses if a formal contract cannot be agreed.
Conditions by PRESEC Pacesetters are as following:
’Should a formal contract not be agreed, we reserve the right to claim not only our legitimate expenses but also to claim a reasonable amount of the profit we would have made had the contract been finalised’
The first issue is that PRIMARK Direct should claim the money from PRESEC Pacesetters or from Jango solutions well as the clause in the contract says that no other party other than PRESEC pacesetters and Jango solutions has any right under the contracts (rights of third parties) act 1999 to enforce any term so PRIMATK cannot claim the money from Jango solutions, it can only claim the money from PRESEC
But again If we see the present terms and conditions we can see that according to the conditions set by PRIMARK Direct there is no contract between PRIMARK direct and PRESEC pacesetters because they have only made a draft contract but it has not being signed and in the condition it is written that the contract will not be effective until both the parties have signed the formal contract.
The other issue is that PRIMARK Direct wants to keep all the computers till it is fully compensated but in the present case there was no contract betweenPRIMARK Direct and PRESEC pacesetters so both the parties just need to take their expenses from each other as there was no contract so they are not bound to sell and buy the computer sets and PRIMARK should return all the computers and the servers to PRESEC pacesetters.
Question 2: Explain and analyse the impact of standard form business contracts and advise on the importance of express terms, implied terms and exclusion clauses in line with the PRIMARK Scenario.
The standard form of business contracts are thoseAspect contracts in which one party has all the bargaining power whereas the party has none or negligible bargaining powers. These contracts are made in a way where one party has only the choice to make a contract or to leave it; he does not have amending rights to the contracts. These contracts are also known as commercial contract and are made between parties that do trade commerce or business. The impact of this contract is that this contract makes the terms and conditions binding on the parties who sign it (SALES, HB, 1953). There are many different types of terms in the contract that are important for the contract and these terms have been discussed below:
Express terms: express terms are those terms that PRIMARK and PRESEC have agreed to so in the present case the express terms are the total agreement on the payment of £ 1.3 million. Also they both have agreed that the contract will not be effective until both of the parties have signed the formal contract.
Implied terms: the implied term in the contract is a term which the court considers necessary for the contract to have like in the present contract the implied term will be that both the parties will work in good faith and according to the customs of the trade.
Exclusion clause: this clause takes away the liability from the party that breaches the contract and also takes away or restricts the right to remedy from the innocent party. In the present contract the clause in the contract between PRESEC and Jango that excludes any third party from any rights or any enforcement of the terms of the contract.
Question 3: Discuss the impact of different forms of contract and their relative legality.
The different types of contract are:
Face to face contract: it is a contract where the owners of PRIMARK Direct and PRESEC Pacesetters enter into an oral contract by being in front of each other. Although there was no face to face contract between the present two parties.
This type of contract is has less legal value and they are also considered as quasi contract as these contracts are difficult to prove legally.
Written contract: it is a formal contract where PRIMARK Direct and PRESEC Pacesetters would have a written contract and all the terms and conditions of the contract are written in the contract, they become valid only when both the parties to the contract sign the contract.
Legality: these types of contracts are the most favoured form of contracts and in case there is sale of goods in that case it is the legal requirement that the contract must be written on a standard from and both the parties must have signed it. In the present case there was a draft contract made but it was never signed.
Distant selling contract: In this contract PRIMARK and PRESEC can enter into a contract even when they are not in front of each other like in the present case the quotation NUMBER 222 was accepted through email and the other terms were also accepted through email.
Legality: This type of contract is legally valid and the distant selling act protects the right of the parties.
Question 4: Explain, analyse and evaluate conditions, warranty and in nominate terms in contracts with reference to their meaning and effect including availability of remedies in case of breach of such terms.
Conditions: the condition in a contract is the fundamental or the most important term of a contract because without it the contract is not considered to be complete. Now in the present contract both the parties have some conditions where the main conditions by PRIMARK were that they have agreed to the 1.3 million pound payment for the computer and the contract is not effective until there is a signed formal contract. And lastly they have agreed to reimburse the legitimate expenses if a formal contract is not agreed upon.
The main conditions by PRESEC were that if a formal contract is not agreed upon then they reserve the right to claim not only the legitimate expenses but also a reasonable amount of the profit they would have made.
If these conditions are breached by either of the party then the other party can terminate the contract of sale.
Warranty: it is the second type of term which is less important than condition like in the present case the quality of the software and computer would be warranty terms and if they are breached then the innocent party can claim damages.
Innominate terms: the terms of a contract that are not decided by PRIMARK and PRESEC to be a warranty or condition and the court would decide that whether the term is contract or Innominate and this term was first decided in the case of Hongkong Fir Shipping Co. Ltd. V Kawasaki Kisen Kaisha Ltd, (1962).In the present case the payment terms and the subs contractor terms have not been decidded between PRIMARK and PRESEC so these two trems could be decided by the courtst to see whether they are conditions or warranties.
TASK 2 Liabilities and negligence
Question 1: Explain liability under tort and contract and their differences
Difference between tort and contract
- The relationship of the parties in tort imposed by law whereas the relationship of the parties in contract is created and governed by the contract.
- Another point of difference between tort and contract is the nature of right. In tort, there is a right in rem and it is against the world at large whereas in contract, right in person and which is against a particular person.
- There is no contractual relationship between the wrong and the wrongdoer in tort, whereas in contract, there is a valid contractual relationship between the defendant and the plaintiff.
- The parties in tort may be unknown to each other whereas the parties in contract are known.
- The defendant in tort owes a duty of standard care which an ordinary man is expected to act in those particular circumstances. In contrast, the parties in contract are required to comply with the terms and conditions of the contract.
- There is no consent for tort while in contract; the parties give their free consent to contract.
- The remedy in tort is for unliquidated damages whereas in contract, it is for liquidated damages.
- The damages in tort are measured by calculating what is requisite to restore the claimant from the position before occurrence of tort. In contrast, the damages in contract are recovered for loss of profit.
- In tort, the obligations on the parties for taking due care in imposed by law. While in contract, the obligation is voluntarily assumed by the parties.
- The test to establish the remoteness of damage which has to be recovered is “reasonable foresee ability”, whereas the test is one of “reasonable contemplation” in contract.
- In tort, the cause of action begins on the day when the damage was suffered whereas in contract, the cause of action begins from the date of breach (ACCAGLOBAL, 2014).
Question 2: Explain the nature of liability in negligence and inform the parties in this case of what legal options may be available to them
Negligence is a part of tort where the legal duty of care is breached by the defendant and the plaintiff has to bear the consequences of that breach this concept first found its establishment in the landmark case of Donoghue v Stevenson (1932),where the court held that every person has a duty of care towards the other person who gets affected by his actions. To be held negligent it is necessary that the below mentioned elements are present:
Duty of care: there should be a duty of care present to make the person liable under negligence. For fixing the duty of care the caparo test is applied which was gvien in the case of Caparo Industries pIc v Dickman (1990).
Breach of duty of care: the legal duty of care must be breached by the defendant which he owed towards the plaintiff. For the breach of duty the objective test is applied which was given in the case ofVaughan v Menlove (1837).
The breach resulted in damage: that breach of legal duty that he breached must have resulted in suffered damage by the plaintiff. The causation test is applied which also known as the “but for test” which was givenin the case of Barnett v Chelsea & Kensington Hospital (1969).
The damage was not remote: and finally the cause of the damage must not be remote and the duty should not such about which the defendant did not had any knowledge. For remoteness of damage the test given in the case of The Wagon Mound no 1 (1961),a ccording to this acase it was held that the cause of damage should be foreseeable and too remeote wher ethe defendant ahd no knowledge about the duty of care which he owed.(E-LAW RESOURCE, (n.d.)).
The defences in negligence are:
Volenti non fit injuria: if the consent for the foreseeable damage is given the plaintiff losses the right to remedy on subsequent injury suffere.
Illegal act: if the act is itself illegal then there is no claim for negligence contract
Contributory negligence: if there is some contribution by the plaintiff himself to the negligenc that he himself has suffered.
If any of the above defence is presentt then the defendant will not be held negligent.
Now coming to the present case the site foremanTONY SMITH will be responsible because as a person responsible for the construction site he had the responibility to provide safe working environment and he did not took any action even after having the knowldge
Roger Fyn will be liable as his act led George Fowler to commit suicide and he should have taken care that his buying does not hurt George to this extent, negligence on his part is gross negligence as was first established in the case of R v Bateman , (1925).
The hospital will be negligent because due to their delay George could not be saved and their negligence will come under medical negligence as was held in the case of Kent v Griffiths (2000), in this case the ambulance service were held negligent because they arrived forty minutes late that caused medical complications fro the patient.
Roger will not be held negligent for the damage suffered by Nigel fisher because his cause is too remote and Roger could not have expected it as was given in the case of The Wagon Mound no 1 (1961) and according to this case test the cause of damage caused to Nigel istoo remote.
Question 3: Explain how a business can be vicariously liable and advise the pedestrian, Sideline (automation) Ltd and Frozone if they have a claim against Top Tolling PLC for vicarious liability.
Vicarious liability is the part of tort where the employer becomes liable for the torts of the employee or the principal become liable for his agent’s torts or even the master becomes liable for the act of the servant. All this liability is legally valid for the reasons that when the servant, employee or agent perform any act they do it on behalf of or on command of the master, employer, or principal respectively and not on their own also these subordinates are not financially strong so the courts have assumed that the more powerful of the two would be held vicariously liable as is the case as they have the control over the actions of the employee, servant or agent therefore they are held liable for the torts of the subordinates or the weaker party, for the torts committed against any third party so if a company’s employee causes damages to the third party the company has to bear the damage costs. For this liability there are some elements that are required to be present.
Firstly the act should be a professional act committed on duty and then the act should have been committed in the course of employment and lastly that act must not be any personal act, when all these elements are present then only vicarious liability can be established.
The defences to vicarious liability are
- Personal acts committed by the employee, agent or master will not be covered under vicarious liability
- The act that are not done in the due course of the employment will also not be held vicariously liable
- The illegal act of the employee, agent, or master will also not be covered under vicarious liability
- The frolic of his own will also not be covered under the vicarious liability.
Now coming to the present case : The Pedestrian cannot claim the damages suffered from the top Tooling Plc because they will not be held vicariously liable for the tort committed by Ben Peters as the tort was committed on his personal level so he will be personally liable as was held in the case of General Engineering Services Ltd v. Kingston and Saint Andrew Corp., 1989).
Sideline (autommation) ltd: sideline can claim the damage from Top Tooling Plc because the professional act done by Ben has resulted in the damage suffered by Sideline as Ben had taken the permission from his boss before doing the work. Like for example in the case of (Bazley v. Curry, 1999), the company was held vicariously liable even for the sexual wrongs of the employee.
Frozone: in the present case Frozone does not have any direct claim against Top tooling Plc as the loss was suffered by Sideline comapny and not them so they will no be held liable for it.
In the present report we have discussed the aspects of contract and the law of tort and negligence with the help of the case studies provided to us, like the case study of PRIMARK Direct and PRESEC pacesetters and in the task two the case of top tooling and side-line automation and also the case of George and Barratt homes ltd.
Accaglobal. 2014. Key aspects of the law of contract and the tort of negligence. . [online]. [Accessed 11september2014]. Available from World Wide Web: <http://www.accaglobal.com/lk/en/student/acca-qual-student-journey/qual-resource/acca-qualification/f4/technical-articles/key-aspects-of-the-law-of-contract-and-the-tort-of-negligence.html>
Barnett v Chelsea & Kensington Hospital  1 QB 428.
Bazley v. Curry  2 SCR 534.
Caparo Industries pIc v Dickman  2 AC 605 House of Lords.
CRYSTAL, Garry. 2013. The Law of Contracts. [online]. [Accessed 11septmber2014]. Available from World Wide Web: <http://www.contractsandagreements.co.uk/law-of-contracts.html>
Donoghue v Stevenson  UKHL 100.
E-LAW RESOURCE. (n.d.). Negligence. [online]. [Accessed 11september2014]. Available from World Wide Web: <http://www.e-lawresources.co.uk/Negligence.php>
General Engineering Services Ltd v. Kingston and Saint Andrew Corp.  1 W.L.R. 69; I.C.R. 88(P.C.).
Hongkong Fir Shipping Co. Ltd. V Kawasaki Kisen Kaisha Ltd  1 All ER 474.
Kent v Griffiths  2 All ER 474.
R v Bateman  19 Cr App R 8.
SALES, HB. 1953. STANDARD FORM CONTRACTS. modern law review. 16(3), pp.318-342.
The Wagon Mound no 1  AC 388.
Vaughan v Menlove  3 Bing. N.C. 467.