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Unit 5 Aspects of contract Assignment
Diploma in Business
Unit Number and Title
Unit 5 Aspects of contract Assignment
It is important to study the different elements of the contract and its formation in order to determine the liability so arising from the breach of these terms. Every contract is standard in its formation and requires the presence of the element that help in establishing the purpose of the contract. The contract is said to be breached if the terms of the contract are not fulfilled by the parties. The liability arising from the breach of contract is required to be distinguished from the breach of duty so owed in the tort in order to determine the different aspects of liability of similar nature. Furthermore, the study of trot of negligence and the vicarious liability is said to be presented so that the case scenarios may be answered.
Peter Abraham is planning on starting a business of his own. As a businessman, it Is important to know the different aspect of a contract that he may be part of. As a standard form of contract the following elements of the contract are to be discussed to gather the true meaning of a valid and legal contract. Following are the noted elements important to the formation of a valid contract:
- Offer: A statement made by the offeror to form the contract of the provided terms is an offer. It is a clear statement moved from the offeror allowing the offeree analyze the terms of the contract and make an informed decision. The offer is to hold the meaning as intended by the offeror.(Andrews, 2011) The same shall be analyzed with the common intent of the offeree. The meaning and interpretation of the offer shall be clear and as offered by the offeror. The offer so made should be an express intent towards a specific party to generate a contract. This is because an offer is different from an invitation to offer. The invitation to offer is said to be a statement or expression made by any party to express the possibility to make negotiations for the sale of the product. This would imply the openness to offers and not an offer. The invitation to offer differs from the offer as the price so offered under the invitation is for negotiations and the party is not found to accept the same despite of being quoted. Under an offer is the same is accepted the offeror is now bound to provide the same amount of considerationso quoted under the contract. (Adams, 2008)
In the case of Carlill v Carbolic Smoke Ball Co. It was determined that the company had posted an advertisement in the newspaper to attract the customers into buying the product. However, the company had not made an invitation to offer but a unilateral offer wherein the accepting party would be bound under the contract and can claim the amount as promised for the non-performance. The same was clear from the intent to enter the contract as the money was already deposited with the bank. This meant that the company had waived off the element of acceptance to create a contract by the act of using the product to check its functioning. Thereby, an offer is considered to be an important part of the contract because it helps in initiating the contract for being the first step towards it. Without the offer the contract could not be created for having no common intent between the parties.
- Acceptance:the offeree is said to be the party to whom the offer is made. Thereby, the acceptance must be made from the offeree. The acceptance is said to be the final statement mentioning the willingness to enter a contract for the types of statements so made by the offeror. The acceptance shall be clear in its meaning by determining the exact consent for the offer so determined. Sometimes the offer is not completely accepted. The offer is altered by the offeree and presented to the offeror in order to establish its nature is said to be a counter offer. The counter offer replaces the original places of the offeror and offeree. The final roles of the parties are decided based on the final offer so accepted or rejected by the then offeree. Therefore, the acceptance must be made of the entire offer and not just partial to enter the contract. At any time, the acceptance being made shall be clear, easy to understand and the through a discussed means of communication style. The means of communication shall either be discussed among the parties or be standard to find its validity. The acceptance can be made by writing, orally or a distant means of communication. If the acceptance is provided through the post then the according to postal rule of acceptance it will come into force at the time it is posted. An acceptance is important part of the contract because it delivers the common intent of the parties to the contract. The acceptance ensures a contract is created for a common purpose and is final in nature with no further negotiations. (Collins, 2008)
- Consideration:Every contract is created for a certain gain in exchange of the loss suffered by each party. This element ensures that the consideration amount so exchanges restores the original place of the parties to the contract. It is should be something of value, sufficient, present and not a part of exiting duty under the law. The consideration can be monetary exchange or material as well. As per the case of Chappel v Nestle the consideration of three wrappers for a record was considered sufficient if not adequate to form a contract as the wrappers had some value that they added to the chocolate. A consideration is important part of the contract because it ensures that the contract so formed is a valid contract and not merely a promise between the parties. The presence of consideration ensures the binding nature of the transaction unlike the promise. (Meyer, 2010)
- Intention:While entering into the contract it is important to derive the intent of the parties creating the contract. The intent of the contract helps in determining the purpose of the contract and extent of enforceability under the law. The intent of the contract can be divided into two parts such as the commercial contracts and the social contracts. This would mean that the commercial contract does not require the mention of the intent of legal enforceability as the same is assumed to be present for no prior relationship between the parties. The social contracts require the presence of the legal enforceability to be mentioned under the contract as the same may not be created unless present. This would imply that the social contract are between friends and family and is assumed that the law is not intended to be part of the contract in order to enforce the contract. (Richards, 2006)
- Capacity:The capacity of the parties is essential to be determined at the time of creating the contract. This is because the interpretation of the contracts is based on the capacity of the parties to the contract to construct the meaning. Thereby, capacity forms an important part of the contract and helps in constructing the actual reason for which the contract was formed. At the time the contract is created it is essential to notice whether the parties to the contract were of legal age, free of influence, mentally sound and financially stable. As if the parties are not found of capacity the other party to the contract may void the contract for the said purpose. (Collins, 2008)
- Privity:The contract so entered by the parties is not necessarily fulfilled as expected. This would mean if the contract is not performed a breach is said to have occurred among the parties to the contract. Such a breach to the contract is recoverable from the non-performing party by the damaged party. The claim for such breach is only to be made by the parties that are part of the contract and perform respectively. The parties are said to be bound by the privity of the contract wherein only the parties entering the contract are able to derive the claim in case of the breach and no third party to the contract.
Peter Abraham shall ensure that when he is entering into the contract the type of contract that is being created is clear in meaning and the aim of the parties is clearly expressed. Following are the different types of contract that he may enter into:
- Face to face contracts:Whereby the parties are presence in person to determine the terms of the contract are said to be face to face contracts. These contracts are required to be the derived from the oral conversation taking place between the parties. The offer so made is through the conversation for which the acceptance is to be provided in oral form as well. It is determined that the oral contracts are not as easy to be established under the law for the lack presence of the written contract to establish the validity and existence of the terms of the contract to enforce the same.
- Written Contracts:Contracts that are entered into by the parties through the written conversation of negotiations are said to be written contracts. These contracts are signed by the parties and the terms so entered into are common through the presence of signatures. The parties have the intent and the consent to the term. These contracts are easily established in the law for being present in the written format. This is because the contracts are present to study the terms of the contract and the intent of the parties when the contract was being made.(Cooke, 2007)
- Distance Selling Contracts:Contracts that are entered into by the parties through the distant communication are known as the distance selling contracts. Such contracts are created through online, post, bulk ordering, telephone, fax and such other means of communication. The most of these contracts is the online selling contracts that present the invitation to offer for which the offeror makes and offer is presented with an acceptance on successful payment for the goods. This would ensure that the seller requires to present the tax details, product quantity, delivery details and such other information according to the distance selling regulations. (Adams, 2008)
Every contract shall contain the different types of terms. These should be clear in nature in order to interpret and enforce the contract. The contract is made of the following terms:
- Conditions:The terms that are directly related to the performance of the contract are said to be the condition of the contract. This ensures the performance of the contract in order to determine the breach of the contract. If the condition is not performed, the contract would be considered as a breach. The damages party in case of breach would be able to claim for the remedy and void the contract. This is because the condition defines the purpose of the contract. (Richards, 2006)
- Warranties:Terms that are secondary in nature to the contract are regarded as the warranties. The warranty of a contract is indirectly related to the performance of the contract. Such terms are important to performance of the contract as the non-performance would breach the contract. However, the remedy for the damaged party is not as serious as that of the breach of condition. This would allow the damaged party to make claim for the damages so suffered, injunction may be claimed for and the specific performance may be demanded in order to restore the status of the parties. The damaged party may not be able to void the contract as the purpose of the contract is not affected from the said non-performance.
- Innominate Terms:Terms that are switch the importance depending on the nature of the situation is regarded as the innominate terms. For such terms the breach of the same determines its importance and relevance to the contract. If in case, the breach leads to affecting the purpose of the contract it would be determined as the condition and if not then it will be a warranty. Therefore, if the breach is a condition then the damaged party may void the contract and if not then only damages can be claimed for non-performance. (Andrews, 2011)
- Exclusion Clauses:Terms of the contract that restrict the liability of the party in case of the breach of the contract is said to be an exclusion clause. These clauses determine the limit of liability in case the party in unable to fulfill the contract. These terms are to be included in the contract through the rules of common law by signatures, notices or previous dealings between the parties. The UCTA applies that the exclusion clauses should not be concerning the death or injuries to be caused. This exclusion clause shall only be relevant to fulfilment of the contract.
- Case 1: According to the case study it is determined that the couch was advertised for in the newspaper. The advertisement so posted would be considered to be an invitation to offer. Carol then approached the advertiser intimating the intention to buy the couch for the price so quoted in the advertisement. IT may be noted that Carol had made an offer to the advertiser that was neither accepted or rejected. Until the offer is concluded no contract is made. As of now no contract may be said to be formed.
- Case 2: In the provided case study, it is determined that Devi had gone for an interview for the position in cyber security. He was keen on the profile and asked his father not to deal with any of the interview process for having an influence. Devi was hired on 12th April and his father made an offer to the company to hire him for certain consideration. The consideration amount was for an event that had already taken place and thereby invalid for being in the past. The contract so offered by the father is not enforceable. (Collins, 2008)
- Case 3:The case study states that the couple were made to check the coats at the reception, after which they were provided a receipt stating that the belongings are not a responsibility of the restaurant. After they were done with the meal they realize that the wallet is left in the coat which wasn’t to be found when checked. It may be determined that since the exclusion clause was added after the contract was already formed the same wouldn’t be applicable in the given situation. Therefore, the restaurant would owe the couple the damages for the loss suffered. (Richards, 2006)
- Case 4: The present contract is a rent agreement formed between the parties. The expenditure so undertaken to improve the premises was provided by the tenant. As per the implied terms of tenancy the tenant can claim for the amount so spent by him on the maintenance of the premises. Thereby, the landlord had promised not to increase the rent for the same purpose for next five years. However, after the death of the landlord the new landlord had asked for the increased rent that the tenant had refused to do so. He can now terminate the agreement for the disagreement on increase of rent and the claim for the balance of the arrears for the improvements so made by him.
- Case 5:In the given scenario the validity of the contract for the breach of condition is required to be studied. The policy form so provided for undertaking the policy contained the questions that directly related to the purpose of the contract. The terms so provided would be considered to be conditions of the contract. Thereby, the answers so provided for the previous claims so made being wrong would amount to a breach as the same disturbs the purpose of the contract. The since the breach is serious and affects the contract law the company may be able to void the contract. (Adams, 2008)
- Case 6: According to the facts of the case, the policy form contained questions related to the previous claims so made for the car and the authenticity of the parts of the current vehicle. The answers to the questions were not true and had been answered half-knowingly. It is determined that these questions were important to know the true value of the car in order to estimate the cost of policy. Since the answers misled the policy evaluation the same affects the policy terms causing a breach of condition by misrepresentation. Therefore, the company may be able to void the contract.
The types of liabilities present under the civil law are of two types such as the contractual liability and tortuous liability. The liability preset under the contract and tort are strict in nature, because the duty once breached would immediately create the liability as a severe loss is suffered by the damaged party. However, the liability so arising under tort and contract are different in nature depending on the various basis discussed as follows:
- The liability under tort arises from a duty that is due towards the society whereas the duty so owed under contract is towards the other party.
- The amount of liability is discussed from the damages so arising in every situation whereas the liability is fixed under the contract through consideration.
- The right so breached in tort is of right in rem whereas the right breached under the contract is a right in personam. (Bell, 2013)
- The elements discussed to determine tort are remoteness of damage and causation whereas the elements discussed for contracts are offer, acceptance and consideration.
- The parties don’t know each other before the occurrence of tort whereas the parties know each other under contract at the time of breach taking place. (TAN, 2008)
The liability arising under the tort from negligence is determined based on the duties so owed to society. The person committing a certain act shall realize the duty of care towards the neighbors and take safety precautions for the society to protect them from any damage. The duty of care so owed is towards the neighbor under the tort. The liability arises when the duty of care is breached by the performing party. The breach shall directly lead to the damage measured in monetary, physical or psychological terms. Accordingly, it is determined under the case of Donoghue v Stevenson that under the consumer cases, the manufacturer owes a direct duty towards the society and the consumers at large and not the immediate neighbor. This is because the person manufacturing the product has the responsibility to take the precautions and not the seller. The seller only owes the duty of maintaining the safety of the product as received by him. Therefore, the duty of care may be indirect in case of consumer market. Also, to study the effect of the negligence the act factors such as the remoteness of damage, causation and proximity are to be studied to determine the cause and effect relationship between the damage and the actions of the wrong doer. (Cooke, 2007)
The vicarious liability under law of tort is referred to that duty whereby the person not committing the wrongful act will liable for the damages so caused. This is because the person committing the wrongful act is doing so on the instructions provided by the former person. Therefore, such a liability is regarded as a vicarious liability. It is determined that this liability generally arises under the relationship of employer-employee. This is because the employer assigns the employee with the work that would profit him initially thereby, the responsibility for the work so performed lies on the employer as well. The Health and Safety at Work etc. Act determines that the employer is responsible to maintain the premises in a way that the wrongful act do not occur or are minimized in possibility. Therefore, the employer should ensure that the premises has the appropriate equipment and facilities to maintain the same. The Occupier’s Liability Act, ensures that the safety for the visitors is taken care of by the occupier by providing notices that warn them of the possible harm in an informative manner. The legislation applies to the visitors and non-visitors equally. (Giliker, 2010)
Case 7: The case study provided illustrates that the doctor was an employee of the hospital. However, doctor was also a practitioner free from the hospital. The doctor has been practicing the profession of medicine. As a professional it is the duty towards the patients to ensure that they get the appropriate treatment after the check-up. However, the doctor had not done so and prescribed the wrong medicines. The patient thereafter died from pneumonia the next day. It is derived that the doctor would only be responsible for the professional negligence so committed by him for not checking the patient but not for the death as according to the but-for test the wrongful act and the damage are not connected. Therefore, the doctor would have a liability towards the patient for the professional negligence. Also, the hospital will be liable towards the patient because the hospital was the employer and the wrongful act took place while proving medical care facility under the hospital’s authorities. Therefore, for being an employer the hospital would have the liability towards the patient. (Vettori, 2007)
Case 8: The case study provided concerns the employer-employee relationship in regards to vicarious liability. The driver had received the client from the airport in a drunk state. However, the act of drinking was not official, the act of driving the client back was official. The drinks influencing the act of driving was a personal choice resulting in causing an accident while performing a professional obligation. The act of performing drunken driving was not so far off from the professional obligation and would give rise to the vicarious liability Rose v Plenty. Therefore, the damages so caused from the accident will be covered by the employer of the driver. (TAN, 2008)
Case 9: According to the facts of the case, the supermarket had delegated the task of maintaining the safety of the premises and the employees. One employee while performing his official duties slipped and threw a pallet from unloading towards another employee causing him serious harms. The damages so caused were to be taken care of the organization responsible for maintaining the premises. However, according to the case of Mersey Docks, the employer having the direct control over the employee would be said to have the liability for the damages so caused. As the super market is the original employer, it would have the liability towards the employee even if certain aspect has been delegated to another employer.
The contract may be of several types such as the face to face and written contract. Every contract shall have the presence of the elements of the contract in order to make it valid and enforceable under the law. The validity would help in establishing the breach so committed by the parties. If the breach of term has taken place the liability may arise on the part of the non-performing party. The liability arising under tort has been distinguished from that of the tortuous liability despite being civil in nature. The differences have been based on different aspects so determined in the assignment. The tort may arise as negligence as well as vicarious liability. Both the liabilities are detailed in depth for a balanced view on the liabilities under the tort.
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