Unit 5 Aspects of Contract in UK Sample Assignment

Unit 5 Aspects of Contract in UK Sample Assignment

Unit 5 Aspects of Contract in UK Sample Assignment

Programme Diploma in Business
Unit Number and Title Unit 5 Aspects of Contract and Negligence for Business
QFC Level Level 4
Credit value 15 credits
Unit Code Y/601/0563

Introduction

In this aspects contract negligence business assignment we are going to discuss the case study of practically anything Ltd and Silver stream Ltd and we will discuss the different aspects of law of contract, law of tort, law of negligence, law of occupier’s liability, vicarious liability and the diffences that are available in the present business scenario. In this paper we will also discuss the difference between tort and contract and how the liability is decided in case of negligence and vicarious liability.

                                                        aspects contract negligence business

Task 1

a) The essential elements of a contract

Official Letter

Arnold Legal Services LLP
21 Cheyenne walk
London W1P 33R
Phone: (3) 345 0987
Fax: (3) 345 66789
Date: 04/05/2014
Ref:123/09/DOR/5
Mr.Charles Phipps
Practically Anything Pty Ltd
31 Cheyenne walk
London E1 6BV
Re: Contract
Thank you for coming to meet us regarding your queries of the new contract with the Silver stream Pty Ltd. we will try to explain to you all the important aspects of a business contracts so that the contract that you enter into with Silver stream Pty Ltd is legally binding. We will start with the essential elements of a contract which has been explained below :
Offer and acceptance: In the beginning of the contract there was an offer by the Silver stream Pty Ltd to sell the steel plates and that offer was clear and was specifically made to Practically Anything Pty Ltd.Nowif Practically Anything Ltd is interested to accept the offer then it is required to given an unequivocal acceptance to Silver stream in the written, oral or implied form of conduct.
Intention: Both the parties to the contract which is Practically Anything and Silver stream they are both required to have an intention that they will be legally bound by the contract and if they breached the contract terms then it can be legally enforceable on them.
Consideration: It is something that will be exchanged between both the party in lieu of the promise of contract and in the present case the consideration between the two companies will be the Steel plates and money will be given by Practically Anything for the steel plates.
CapacityThis means the legal capacity to understand the contract and for this both the parties must be adult and mentally stable and both the parties Practically Anything and Silver stream have there quired legal capacity.
Privity of contract:
 This means the exclusivity of the contract so in the present contract only the parties to the contract i.e. Practically Anything and Silver stream can sue each other and only they have the obligation to full fill their duties and only they can enforce their rights.
Now we will discuss the different types of contracts as was inquired by Mr. Phipps
1) Face to face:
 In this contract both the parties Practically Anything and Silver stream will be in front of each other and they will orally enter into the contract of sale of steel.

  • Its application: It would apply because in this contract both the parties will be in front of each other so there will be no confusion about the parties to the contract.
  • The impact: This contract is known as quasi contract as it is difficult to prove legally as the parties can easily deny what they said.

2) Distance selling: In this contract there will be a contract between Practically Anything and Silverstream and they will not be required to be in front of each other so the contract can be made over the phone or internet.

  • Its application: It would apply because it would give both the parties the option to enter into a contract even when they are not in front of each other.
  • The impact: This contract will be legally valid and enforceable and there is distant selling regulation to protect the rights of both the parties.

3) Written contract: In this contract the terms and conditions of the contract will be written on a standard form of sale of goods contract and both the parties will be bound by it as soon as they sign the contract.

  • Its application: This would apply as it is the best legal form of contract and sale of goods contract are required to be made in a written from.
  • The impact: This contract is perfectly valid legally and to be binding it is necessary that the sale of good contract must be made in writing so we would suggest Mr. Phipps to enter into a written contract with Silver stream to make the contract legally binding on both the parties to the contract.

Next we will explain to you Mr. Phipps the different types of term in the contract and what their importance in the contract is:

Condition: This is the fundamental term in the contract and in the present contract the subject of the contract, the price of the object will be the main conditions of the contract, like in this contract the agreed price of the steel plates.

  • Positive effect: If the conditions are completed then it means that contract is completed by both the party to the contract.
  • Negative effect: If the condition is breached then the innocent party will be discharged from the liabilities of the contract and he also has the option to sue for claim of damages suffered.

Warranty: It is a term that tells something about the product of the contract like its quality, like in the present case the steel plates are of the highest quality but if they are of substandard quality then it is the breach of the warranty but that means that these terms are not very important to the contract.

  • Positive effect: If the warranty terms are fulfilled then it means that the quality of the product is good and it is as described in the warranty.
  • Negative effect: If the warranty is breached then the innocent party can only sue for damages and it will not be discharged of its duty nor can he terminate the contract.

Innominate term: This will be a term which has not been decided by Practically Anything and Silver stream as the condition or warranty and if it is breached then the court will decide whether it was a condition or warranty in the contract.
Validity: This term is legally valid and enforceable according to the effect of the breach of this term
Express term: The main clear terms of the contract which would be agreed by practically anything and Silver stream will be the express terms like the duration of contract, the delivery date, and payment mode .
Validity: These terms are legally valid and as these terms are incorporated in the contract by the parties and if breached they can be enforced by law.
Implied termThese terms are incorporated in the contract by courts and not by the parties themselves, like the timely delivery of the steel and the steel are of good quality.
Validity: These terms are valid as they are incorporated by the courts and these terms are implied by law, fact or custom.
Exclusion clauses: The clause which will save practically anything from the liability arising out of the breach of sale of steel contract is known as exclusion clause.
Validity: It will be legally valid if it is not unfair; it is incorporated in the contract and the party has signed the contract.
Mr. Phipps after discussing the different types of contract I would like to suggest to you that a written contract is the best form of contract because if any of the party breaches the terms of the contract the other party has the remedy in court and the court considers the written evidence as more reliable than an oral one.
Yours sincerely,
Teodora
Arnold Legal Service

Task 2

MEMO
To: Charles Phipps, Practically Anything
From: Arnold Legal services
Date:04/05/2014
Subject: Draft
Mr. Phipps I have attached a draft of the terms that would be included in the contract of sale of gold
Terms of sale of gold

Definitions In this contract the “seller” would mean “Practically Anything Pty Ltd” and its associates and the “buyer” would be meanMr. ABC and his associates. The “product” would mean “gold”.PaymentThe buyer agrees to pay £1000per ounce on 2nd January 2015 for the gold.

Delivery

The gold will be delivered by “Practically Anything” within one week of the receipt of the payment.

Warranty

“Practically Anything Pty Ltd” gives the warranty that the gold is of 24ct and it is hundred percent pure.

Exclusion clause

Practically anything will not be bound by the contract if the payment is not received on 2nd January 2015.  (ISCAR, (n.d.))
Mr. Phipps you asked us to explain to you the use of standard contracts in consumer contract and we have explained the standard contract below so that you can use in the consumer contract:

Standard Contract (FARLEX, 2014)

This is a contract in which only one party has all the bargaining power and the other party does not has a say in the formation of the contract where the other party can only accept the contract or leave the contract. This type of contract is generally made with the customers and this contract is also known as boiler plate contract (FARLEX, 2014).

Importance of invoices

Invoices are the receipt of the products that are sold and they give the customer all the information in regard to the product, its quantity and its cost and they are a necessary part of the consumer contract as on the basis of the invoices the consumer gets a warranty of the product also the invoices fixes the VAT liability of the seller, therefore an invoice is an important part of the consumer contract (REVENUE, 2013).

We are going to discuss the exclusion clause and the liability of exclusion clause below:

Exclusion clauses are those clauses that can be inserted in the contract by Practically Anything to avoid their liability arising out of the breach of the contract.

To be legally valid the exclusion clause must be

Incorporated in the consumer contract
The exclusion term must not be unfair according to the unfair terms in consumer                   contract act.·
The contract must be signed by both the parties to the contract for the exclusion                    clause to be binding on them (INSITE LAW MAGAZINE, 2014).

Exclusion ofliability:

The seller is excluded of his liability if he has incorporated the exclusion term in the contract and the like for example if “Practically Anything”puts an exclusion clause in that contract “that they will not be liable for the damages found in the product once the product is checked by the consumer and the payment has been made” (INSITE LAW MAGAZINE, 2014).

The express and implied terms in the consumer contract have been discussed below:

The express terms are those terms that are incorporated in the contract by the parties themselves (E-LAW RESOURCES, (n.d.)) like in the consumer contract the quantity of the product and the price of the product is express term.

The implied term in the contract is the term which is implied to the quality of the product and it is implied that the product will be as per description and of a reasonable quality according to the Sale of Goods Act 1979.

In the present scenario the express term will be for example if in the invoice it is written “ten carat white diamond” this means that it is a real diamond and of the specific carat.

Remedy: If this term is breached then the buyer has the option to terminate the sale contract and also sue for damages.

The seller would have the remedy to exchange the product or get it repaired free of charge.

The implied term in the sale of diamond contract will be that the diamond ring is fit for the purpose for which it is bought.

Remedy: The buyer can sue for the claim for damages like if the diamond ring has sharp edges which will make it unsuitable for the purpose.

The seller has the remedy to repair the goods to escape from the claim of damages (EMANUEL, 2011).

The effects of the breac

The effect of the breach of express is that negative as this would give the buyer the option to terminate the contract
The breach of the implied term will be negative where the court will impose the eimpoled term on the party that breached the contract

For any other questions or issues please write back to us.

Yours sincerely,                                                                                                                           Teodora

Arnold Legal services

Task 3

a) Difference between contractual liability and the tortuous liability

Difference between contractual liability and tortuous liability
  • In contract there is a previous relationship between the parties whereas in tort there is no previous relationship and that relationship is created by the contract in the contract law and in tort it is created by the courts. For example A and B entered into a contract for the sale of a land then they have a contractual relationship but if a pedestrian is hit by a speeding car then he will be liable even though they both did not had any previous relationship.
  • In contract a person is held liable if the he breaches the conditions or warranty or any other term of the contract whereas in tort a person is held liable if he breaches his duty of care which is fixed by the law. For example A and B entered into the contract and they themselves decided the terms of the contract and have contractual duty but in the case of tort the person did not fix any duty towards the pedestrian who got hit by the car but he had the duty of law to take when driving a speeding car.
  • In contract both the party consent to be bound by the contract whereas in tort there is no consent between the parties regarding the contract. For example A and B entered the sale contract by their own consent but there was no consent between the pedestrian and the car driver.
  • In contract the remedy is to terminate the contract or to claim for damages whereas in tort the remedy is in form of damages where the plaintiff can be brought back to the position he was before the tort done (CLARKE, Peter, 2014). For example if A, breaches the terms of the sale contract then B has the remedy to terminate the contract or claim damages.

b) Nature of liability in negligence and occupier’s liability

Notes

Negligence:

 Negligence is the lack, absence, or ignorance of duty of care which was first fixed in the case of Donoghue v Stevenson (1932). To be held negligently liable, the following:

  • The duty of care was owed by the defendant towards the plaintiff
  • The defendant breached that duty which he owed towards the defendant
  • The breach of the duty by the defendant caused the damage to the plaintiff
  • The damage was not very remote in nature.
  • In common law to prove negligence there is three stage test where it is required to be seen that firstly that there is relationship of proximity between the parties or not and secondly was the damage foreseeable or not? And thirdly will it be fair, reasonable, and just that a duty should be imposed on the defendant? (LEXIS NEXIS, 2014)
  • For breach of duty an objective test is applied to determine if the defendant breached the duty which was given in the case of Vaughan v Menlove (1837).
  • Causation: This is decided by the “butfor” test which was given in the case of Aspects Contract Negligence Business Assignment
  • Remoteness of damage: This test says that the defendant will only be liable if the damage was foreseeable by the defendant and was not too remote and this test was given in the case of the Wagon Mound no 1 (1961)(E-LAW RESOURCE, (n.d.))

Occupier’s liability: an occupier is a person who is in possession of a property and he has some duties towards its visitors. The main duties according to the Occupier’s liability act 1957, section 2 is:

  • Common duty of care towards all the visitors
  • The duty of care of visitors should such which will make the visitors reasonably safe
  • The occupier must be prepared for the children to be less careful than the adults
  • The occupier of a property can be discharged from his duty of care if he puts a proper sign about the danger ahead(LEGISLATION GOV.UK, (n.d.)).

c) Vicarious liability of a company for damage caused during legal activity

Vicarious liability: It is the doctrine in which the liability shifts from the person who conducted the wrong to the other person who had a special relationship with the person who committed the wrong. The main elements of this liability are:

  • An act of tort or omission by another person
  • The presence of a relationship between the person who committed the tort and the person who is being made the defendant
  • Some connection between the wrong doer and the relationship he had like in the relationship of the employer and employee, the employee committed the tort while doing something that was being commanded by the employer (ATANER, Attila, 2006).
  • For example in a window cleaning business any damage to the window by the window cleaner would make the company liable to pay for the damages instead of the window cleaner who did the damage to the window. But for the liability in vicarious liability it is required to be seen that the window cleaner did the act in course of his employment and that the act was not illegal then the company can be held liable vicariously

Health and safety requirements (HSE GOV, 2014): this should be placed on the notice board and it should be written in bold letters so that everyone can see it and be aware of the health and safety requirements which says that the employer that has more than five employees needs to have a written health and safety policy.

Task 4

§  The workers are required to wear proper safety equipment
§  In case of fire please empty the building as soon as possible
§  Please keep the children away from the equipment
§  Please check the equipment before using them
§  Please follow the health and safety requirements

a) The basics of tort of negligence and its defences

Arnold Legal Services LLP
21 Cheyenne walk
ondon W1P 33R
Phone: (3) 345 0987
Fax: (3) 345 66789
Date: 22/06/2014
Ref:321/09/TEO/
4  Mr. Charles Phipps
Practically Anything Pty Ltd
31 Cheyenne walk
London E1 6BV
Re: the basics of tort
I am writing to you because I have received a mail from you where you have asked for our advice regarding the negligence caused by your company below we are explaining to you the basics of the law of negligence and the liability and defences that are available.
Negligence is the lack, absence, or ignorance of duty of care which was first fixed in the case of Donoghue v Stevenson (1932). And to be laible in negligence the following elements need to be present:

  1. The duty of care was owed by the defendant towards the plaintiff
  2. The defendant breached that duty which he owed towards the defendant
  3. The breach of the duty by the defendant caused the damage to the plaintiff
  4. The damage was not very remote in nature.

For breach of duty an objective test is applied to determine if the defendant breached the duty which was given in the case of Vaughan v Menlove  (1837).
Causation: T
his is decided by the “butfor” test which was given in the case of Barnett v Chelsea & Kensington Hospital (1969).
Remoteness of damage:
This test says that the defendant will only be liable if the damage was foreseeable by the defendant and was not too remote and this test was given in the case of the Wagon Mound no 1  (1961)

Defences to negligence:

Volenti non fit injuria: This means that the plaintiff knew about the danger and still consented to face the danger and therefore later on cannot claim a damage if the plaintiff suffers an injury.
Remoteness: This means that the damage was not foreseeable by the defendant this test says that the defendant will only be liable if the damage was foreseeable by the defendant and was not too remote and this test was given in the case of the Wagon Mound no 1  (1961)
Illegal act:
 If the act was illegal then the defendant will not be held liable under negligence for causing damage to the palin tiff.
Now coming to your case we can see that all the elements of negligence are present so it is better that you settle the case with your company’s employee Mr. Bob Smith, and the other option is that if in the employment contract there is a clause which says that the company will not be liable for any injury caused due to negligence then your company can escape its liability under negligence caused to the employee.

b) The vicarious liability of the company

Note:

We just received a phone call from you Mr. Phipps about the accident involving your van driver. Well in vicarious liability an employer is held liable in the following conditions:

  • If the wrong or tort was committed by the employee
  • The tort was committed in due course of his employment
  • The tort was not a personal act

Defences:

  • The tort was not committed by the employee
  • The tort was a personal act
  • The employer did not had control over the employee
  • The act was not committed in due course of his employment

In the present case your company will be vicariously liable because the tort committed by your van driver was a professional act which was done in due course of his employment and he was your company’s employee. And finally his tort has caused damage to the third party who is the customer and this was also held in the case of Century Insurance v Northern Ireland Road Transport Board  (1942), in this case also the driver of the company caused a damage to the third party.
We hope we have been able to answer all your issues, hope to hear from you soon.
Yours sincerely,
Teodora
Arnold Legal services

Conclusion

In the present paper we have discussed the case study of Practically Anything Ltd and Silver stream Ltd and we have also discussed the different aspects of law of contract, law of tort, law of negligence, law of occupier’s liability, vicarious liability and the defences that are available in the present business scenario. In this paper we have also discussed the difference between tort and contract and how the liability is decided in case of negligence and vicarious liability. In this paper we have tried to understand all the concepts of law of contract and tort and their importance in the present business scenario and we have tried to solve the issue of the present case study with the help of different case laws and acts.

Bibliography

ATANER, Attila. 2006. How Strict is Vicarious Liability? Reassessing the Enterprise Risk Theory. university of toronto faculty of law review. 64(2), pp.63-103.
Barnett v Chelsea & Kensington Hospital [1969] 1 QB 428.
Century Insurance v Northern Ireland Road Transport Board [1942] AC 509 UKHL 2.
CLARKE, Peter. 2014. Contract and Tort Law. [online]. [Accessed 8 SEPTEMBER 2014]. Available from World Wide Web: <http://www.legalmatch.com/law-library/article/contract-and-tort-law.html>
Donoghue v Stevenson [1932] AC 562.

FARLEX. 2014. Adhesion Contract. [online]. [Accessed 2 september 2014]. Available from World Wide Web: <http://legal-dictionary.thefreedictionary.com/Standard+form+contract>
FINDLAW. 2014. Making a legally valid business contract. [online]. [Accessed 8 september 2014]. Available from World Wide Web: <http://www.findlaw.co.uk/law/small_business/business_contracts/500510.html>
HSE. GOV. 2014. Health and safety made simple. [online]. [Accessed 8 september 2014]. Available from World Wide Web: <http://www.hse.gov.uk/pubns/indg449.pdf>
INSITE LAW MAGAZINE. 2014. 7. Exclusion Clauses. [online]. [Accessed 8 september 2014]. Available from World Wide Web: <http://www.insitelawmagazine.com/ch8exclusionclases.htm>
ISCAR. (n.d.). Terms and Conditions of Sale. [online]. [Accessed 2 september 2014]. Available from World Wide Web: <http://www.iscar.com/ecat/terms/terms.asp>
LEGISLATION GOV.UK. (n.d.). Occupiers’ Liability Act 1957. [online]. [Accessed 8 september 2014]. Available from World Wide Web: <http://www.legislation.gov.uk/ukpga/Eliz2/5-6/31/section/2>