Unit 5 Aspects of Contract for Business Assignment

Unit 5 Aspects of Contract for Business Assignment

Unit 5 Aspects of Contract for Business Assignment


Diploma in Business

Unit Number and Title

Unit 5 Aspects of Contract for Business

QFC Level

Level 5


An agreement becomes a contract when it can be enforceable by law. All contracts are agreement but all agreements are not contracts. There are some valid elements that are required in an agreement to become a contract. The law can be explained as a collection of guidelines that are usually developed by the authorities of state and Governments. They are responsible for enforcing the law that is made within the system of jurisdiction using various aspects as guidelines. In the business context, there are various kinds of law, but the most widely used law in the business is the contact law. A contract is basically a promise through the official commitment under the law that is enforceable. It can be represented as anapparatus that corporations or people utilisefor the safety measure of their resources. Though oral contracts can be used in business organisations, most of them prefer to have a written document at the time of engaging in an agreement or operation. This is done because the legal documents provide people and companies with a surety of having a legal document that briefly and clearly states the expectations and promises done by both parties. As the carelessness is rapidly increasing the business world, it has become a system of compensating people for the financial resources

The purpose of this study is to understand the business law. This report will determine the characteristics of contract and its carelessness in business. This study will demonstrate the essential elements that are required to form a lawful contract along with the elements that are involved in a contract during different business situations. It will also identify the liability of a partyduring the negligence of contract in business operations.

Task 1


The agreements which are enforced by rules and laws are known as a contract. It is stated that all contracts are an agreement but all agreements are not contracts. There are various types of elements of valid contracts which are quite important and at the same time vital to be enforced by legislation and law(Cartwright, 2007). The various elements are essential for a valid contract and if any of the elements of a valid contract is missing then the agreement will not be considered as a contract. Offer and acceptance are the first step in order to start a contract.In this one party makes an offer to the other party that will be legal and lawful, the party to whom the offer is given will accept the offer while acceptance converts into promise. Secondly, the reason of promise becomes a consideration and without consideration, contract is void as consideration can be unlawful while the court may concern it as corrupt and when if it is fraudulent(Extempore.ie, 2016). A contract includes a statement of will and it expresses the intention to cause a legal impact, it is important to form a valid contract. Various parties who are engaged in the contract should have the capacity to form a valid contract. The capacity defines that both the parties should be mentally sound and also should be an adult i.e. must be 18 years old. So, in the case of Mr Peter Abraham can be able to form a valid contract as he is an adult male and at the same time mentally sound.


Various legal contracts are formed with the help of different terms and conditions, these terms and conditions provide the contracts in a complete way(Jewell, 2002). Before starting any contract, different kinds of statements are made by one party for encouraging another party for entering into the contract. The parties who are involved in the contracts are bound only by its terms.

Face to Face- A contract which gets initiated by face to face interaction is generally void and is not valid. For developing or forming a business contract it is necessary to provide proper documents of the contract details. Mr Peter needs to highlight the application of this certain case as it legally not valid(Routledge-Cavendish., 2008).  And in face to face contract formation the party cannot take any legal help as it is not applicable because appropriate documents in terms of specification of a contract are missing in this case.

WrittenContract- written contracts are those contract in which the contracting parties forms a contract in writings, and those contracts are considered as written contracts. The written contract can be counted as a legally valid contract. The contract is considered as written contract while the contract is signed and at the same time submitted to license lawyer. A written contract is considered to be legal as the contract bears judiciary seal. So in the case of Mr Peter Abraham, it is suggested that he can enter to a written contract because this contract will be safe for him from the contrary results of violation in business.

Distance Selling- Distance selling is an approach in which the contract can be formed amongst the contracting parties through many ways like telephone, internet etc. This mode of contract can be formed with the help of telephone as well as with the help of verbal interaction onthe internet. This mode of contract is same as face to face communication in which contract is formed through a telephonic conversation and also by online verbal interactions(Routledge-Cavendish., 2008). But this type of contract is considered to be legally invalid as it does not form any written documents and cannot be able to give security regarding any incident of a breach. The contracts created with the help of this particular approach are lacking a legal attachment and the closure of such contract is reliant on the notions of the parties engaged in the contract.


  • Condition-In terms of permissibleassociations of the contracts created condition is considered as the important term in contributing to the formation of contracts. In order to apprehend the impacts of the fissure of a situation, it is essential to reflect that fissure of a condition may convert a casual aspect for expulsion or damage(The Law Handbook, 2015). In this case, the guiltless party has the legalised strength for terminating the contract and claim for the compensation legally for the suffering of damages because of breach.
  • Warranty- Warranty is termed as a supplementary responsibility which is not an important section of an agreement but it acts as a confirmation to the contract formed(The Law Handbook, 2015). Same as breach of condition in contract, this breach of warranty allows the innocent party in order to claim compensation in a legalised way but the freedom of terminating the contract is not permitted.
  • InnominateTerms- In order to consider a legalised implication of contract an innominate term is represented which is not associated with condition term as well as not related to warranty term in the contract. Claiming compensation is allowed and applicable in this case but it is dependent on the effects formed by a breach.
  • ExemptionClauses- Under the section of English contract law, the implementation of the clauses that are exceptional is dissimilar in the cases where the engaged parties have restrictedcontrol from tolerating the accountabilities of the contract (Young, 2010). The exceptional clauses are diversified into two different categories, namely, true exclusion law and the limited clause.

Task 2


Case 1 – Agreement: In the business world, for the formation of an agreement, it is important that the agreement is conceded under different parties in which the first party has to make some offer that is valid under the law and the other party needs to admit that offer with a valid consideration. From the evidencedelivered in the description of case 1, it is identified that the issue of the case portrays as a reflection of the invitation to the treat in accordance with the offer that is placed under the given contract. In contract law, An Invitation or any form of promotional activity of a product or anything is considered as a treat that persuades the offer for its selling to the customers.Thus, in reference to the situation of the case, it can be identified that Carol has approached to make an approval to the proposal. The vendor in the case is considered as an offeror and Carol is considered as an offeree(Andrews, 2011).There is no formation of a valid contract as the advertisement can only be considered as a published proposal and there is also no document in written which is a must for a valid contract. The shared approval was also missing from both parties, which is the foremost element that is required for the initiation of a contract. Thus, an acceptance of invitation cannot be enforced as law under the English Contract Law. From the description of Carol situation, it can be identified that she has only approached the contract to be established. Hence, in regards to the mere communication between the parties, there is no agreement formed. The case of Partridge versus Crittenden (1968) can be cited here for this discussion.

Case 2 – Consideration: From the understanding of the case, it can easily be observed that Devi’s father Preston can be considered as promisor,as he promise George to pay consideration if he hires his son Devi. But, George,who is the owner of IT firm where Devi had applied for the job, can’t be described as promisee. This is because, as the assuranceprepared by Preston now becomea promise made in past and it also does not exist validly. In sustenance to this, it is important to mention here that George can’tlegitimatelyimpose Preston to retain his assuranceas a disadvantage the consideration made by him has already been expired due to fact that company has already hired Preston’s son Devi(Cornford, 2008). Under this case, consideration in accordance with the formation of a contract can be connected with the ability to alter the settlement into a negotiation. Scenario of the case portrays thenegotiatingsituation and Preston can be considered as an initiator of the consideration and the quantity that he mentioned can be termed as an executed consideration(Burrows, 2011). It must be noted here that for a consideration, it is mandatory for it to be a disadvantage to the promisee and advantage for the promisor. George cannot enforce Preston to pay the promised amount as the major rudiment that is required in a legal consideration is missing. For this case scenario, the case of Roscorlavs. Thomas (1842) re McArdle (1951) is mentioned as an example.


Case 3 – Exclusion clause: After commencing the brief case situation, it is significant to notify that the specified case falls under the segment ofthe exclusion clause in English Contract Law. The primary objective of the exclusion clause of English Contract Law is to confine or restrict the obligation of a penetrating partner. In reference to case situation, it has been detected that the twosome and the proprietor of the restaurant are the chief contracting party that is tangled in this case. The major evidence of this case is the nonappearance of message or communiqué with reference to the standings and circumstances of the eating place in relation to the liability of the materials. Thus, from the simpleideologies of exclusion clause of English Contract law, statementin the middle of the parties is the foremost indispensablemeasures that are required during the entrance and initiating a contract(Casebrief.me, 2016). The major objective of this is for emphasising a clear announcement is to achieve the clear consideration of the additional party. Hence, in accordance with case, the gatekeeper only handled anacknowledgement regarding the obligationsubjects of the restaurant without engaging in any communication with the couple. Another point which is important to be noted is that the acknowledgement was not contracted by the pair who are chosen as a second party. From the scenario, it can be stated that it is likely to parallel with the case of Olley vs. Marlborough Court Hotel, 1949. Now, after the examination of the case scenario, it is acceptable that restaurant proprietorcan’ttotallybe dependent on the exclusion clause for preservinghis side as there was no communication made by the porter or the owner of the restaurant to the couple regarding the liability issue and just submitting or giving a liability issue is not enough for gaining the exclusion clause(Austen-Baker, 2011). For this particular case, the case of Thompson versus Shoe Lane Parking (1970) can be used as a reference.

Case 4 – Implied term: The description provided for the case indicates the submission of implied positions that are available under the English Contract Law. The legal expansion of implied terms has been designated as a preparation of avoidance rule formulation of a contract. In the case situation, Aaron and Sephraare considered asthe engaged parties, and their contract was made with clear communication and mutual consent(Austen-Baker, 2011). But the contract was terminated before the maturity death, due to the death of one of the contracting parties. Aaron who is termed as defender in this particular case has done some noteworthyspeculation on the borrowedpossessions. As the agreement was impulsivelyfinished, he or respondent can privilegerecompensebased on the permittedmain beliefs of implied terms from the antagonist party who avoidance has congenital the possessions of demised.The situation of Liverpool City Council vs. Irwin (1977) can be taken as an illustration for the above-discussed case situation in which the judgment was in favour of defending party.


Case 5: From the discussion or statements provided in the circumstance scenario, it is identified that the policy holder has not received the awaiting theft privilege(Burrows, 2011). From the examination of the specified statement, it is conveyed that the insurer who is convoluted in the case has no authority to reject the current policy. It is also important to note that the policy holder has not formed any incorrect evidence to the insurer as the terms and conditions of any preceding or past policy can’t be relevantto a current policy. Though, it is necessary to present some key fundamental issues related to the voidable contract which is to assist the given case scenario. In the case of a voidable agreement, the blamelessparty has the permissible right to impose the lawful agreement but the contract is not lawfullypermissible against the blamelessparty(Netk.net.au, 2016). In addition to this, it is also significant to deliberate that in attendance of conditions in which the engaged party is involved with an inappropriatelytransmitted property value, should consider the transaction as the contract made is void. However, there are many factors that lead to a voidable contract under the section of English contract law such as minority age and mentally challenged persons. 

Case 6: From the information and the scenario delivered in the case, it is identified that the specified case has represented a complex situation in which the lawfulsuitability of a policy holder who is accompanying with a policy of carprotection is involved(Smith, 2011). From the description of the case scenario, a situation is formed where it is established that the anxious policy holder who is engaged in the case does create wrong facts in the announcementof document of the insurer. The incorrectinfo which is represented by the elaborated policy holder indicated that there were claims made by the policy holder within the given time frame. Thus, after reviewing the legal aspects of this case, it can be specified that the integrated policy holder has provided incorrectevidence, though it can rightly be measured as anerror but the insurer gain a position of legal right where he or she has the right to make the policy void(Netk.net.au, 2016). In addition to this, itis also stated that a lawful agreement which is conventional between the two parties does not depend on a mistake which can later be presented as a defence. Nevertheless, it is also significant to note that the possibility of incidence of error remainspracticable during the periodof initiating the contract. Thus, such faults can be declared as a contrasting issue that prevents the meeting of the mind on the same thing and subsequently making the contract as void. The features of ‘Reasonableness of the reliance’ are also involved in the valuation made by many factors, namely, age, literacy, nature and conditional facts.

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Task 3


Tort, which is alegal responsibility, is formed in the situation in which anindividual breaches the obligation of law and harms the person and also harms its singular rights. Management accounting in a contractual liability is developed when one party faults or breaks the conditions implied by the terms of the contract. After it, the party willfall under the contractual accountability that falls under the agreement of injured party (Cooke, 2009). The happening of tort is legally wrong and the contractual accountability is usually considered as a criminal offence. Under the jurisdiction of contractual liability, defendant is punishable under the law and the person who suffered gets reimburse by the preparation. Each liability is usually dependent on the liability for failure in order to approach the duty imposed by the law. As a contract is a form of agreement that is enforceable by law, then if any party miscarries to accomplish under the expressions of contract, then that party suffers contractual liability.

For illustration-  Mr A made a contract with Mr B to buy an automobile at $50,000. If Mr B fails to deliver the automobile within the specified time frame, then he or she will automatically become contractually liable to Mr A. Similarly, If Mr A fails to pay the contractual amount within the given time frame, he will become contractual liable to Mr B. Mr A also has the duty to control the truck for carrying the product and if he or his any employee fails to perform the task properly, he will incur liability in tort.


Negligence, under the law of business can be defined as a state of affairs where a responsible person does not do something that he or she must do(Cooke, 2009). It happens when a person fails to execute the care under reasonable circumstances. According to the law of tort, if any person does this wrong, it will be termed as negligence. Four factors or issue should be considered in tort negligence. Firstly, the defendant should owe some sort of duty. Secondly, the defendant must fail in some way to honour the duty(E-lawresources.co.uk, 2016). Thirdly,the petitioner must incur some sort of injury. Fourthly, a reasonable person needs to predict that the defendant’s breakdown may lead to an injury to plaintiff. Some other features of negligence law have been described below:

  • Children or underage are not generally held to the same standard as an adult.
  • Defences against the negligence.


Vicarious liability is mainly the accountability of one person, namely termed as a principle, for the tortious conduct of another and the individual acting on marketing principles, behalf is called an agent. It is a state of affairs in which somebody is held under the liability for the omission of the action accomplished by another person. Vicarious liability actually is the obligation ofthe third party for the responsible party(Legislation.gov.uk, 2016). For illustration, if a goods supplier of a company doses off while driving and hits someone, then both the driver and its proprietor are liable to meet the damages of the person who go hit. It arises for the liability of the torts of others and happens mainly because of a relationship between the parties.

Task 4


Case 7: From the description provide in the case, it is important to first note that fundamentals and the consequences of a tort in negligence and consequences when someone doesn’t obey his duty of care (Schmerler, 2008). Mr Brown, who was the affected person in the specified case, is proved that he has faced the consequences the next day of his treatment. Though, the passing of the specific was due to the toxic effects from his home.But certain aspects of the case are considered, his widow can blame hospital for the passing of Mr Brown. Henceforth, supposing a state of affairs where the death of Mr Brown happened at the time of admitting him in the hospital, Mrs Brown can accuse the hospital of its liability. In addition to this, if the doctor and nurse on duty had indicated any negligence towards the patient, leading to the injury of the concerned subject, Mrs Brown can claim for the damages and the loss that she has suffered.

In the circumstance of Mr Brown, it is evident that his death happened due to the toxic effects at his home. Another point to note in this scenario is that there is no indication in which it can be proved that in-duty doctor and nurse can be blamed for any negligence and thus cannot be blamed on the legal ground (Lindemann, Kadue and Lindemann, 2012). In addition to this, it can also be identified that with respect to the probability of injury, there was medication and provided bythe hospitality provision. The point where the doctor consent the nurse about prescribing a medicine to the patient proves the point that they have legally conducted their services. 


Case 8: According to the English Contract Law, the legal implications of vicarious liability are applicable in order to analyse the given case. This case signifies the heights of negligence during the time of duty so the victim suffered from injury can claim legal compensation from the company for which the chauffeur works for(McLean, Mason and McLean, 2004). The victim has the legal ability and power for claiming compensation from the company as the damage occurs during the time of duty performed for the company. So the victim in terms of vicarious liability is eligible for claiming legal compensation from the firm for the harms under the act of Civil Liability Act, 1978.

Case 9: According to English Contract Law, the legal implication of vicarious liability in terms of offence of negligence it is necessary for considering that vicarious liability is not allowed to implement in a certain company if any workplace health and safety problems have been vicarious to the other company(Cornford, 2008). But by considering the case in detail it is identified that the victim suffered an injury in the supermarket but he is not allowed to hold supermarket proprietor directly for the injuries suffered by the victim because the owner of the supermarket has already assigned the worker health and safety to other company.

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