Delivery in day(s): 5
Unit 5 Assignment on Aspect of Contract in Business
Diploma in Business
Unit Number and Title
Unit 5 Aspect of Contract in Business
Every party to the contract shall have a common intent to create the relationship so binding in nature. The nature and intent of the Unit 5 Aspect of contract in business is important to be defined in order to derive if the same shall be enforceable under the law and applied on the parties to perform. It may be said that when the contract is not performed damaged party owes the affected party compensation for the loss suffered from the non-performance of the duty. A certain duty also lies under the common law that sets the parties out in terms of performance of the duty. This would mean that when the duty is not performed so owed, the performing party would be liable for the breach of the same. The liabilities may arise of different kinds under the tort. These are required to be differentiated from that of the contract in order to determine the importance of two liabilities.
1.1 Explain the essential elements of a contract
A contract is said to be relationship between the parties for a decided purpose willingly bound in order to gather something beneficial in return. This relationship has to be intended commonly between the parties and shall have the elements of a standard contract in order to enforce the same. (Cooke, 2007). An offer is said to be the primary step towards the contract. This would mean that the offer helps in starting the process of entering into the contract. Accordingly, the contract may be created once the offer is made. Therefore, offer is an important part of the contract for being able to create the contract. Every offer shall move from the offeror. The offer should include all the terms for which the contract may be intended to be created. An offer may either be accepted or rejected. It is important to know that the offer is different from invitation to offer. An invitation to offer is considered to be that part whereby, the interested party merely makes a statement intending to create a contract if the right offer is approached with. The invitation to offer does not contain he terms of the contract but merely the intent of one. The offer may then be made by the interested buyer to the party posting the invitation to offer. It would then be decided by the offeree to create a contract or not. (Collins, 2008)
Every contract is created when the offer so made is accepted by the offeree. This means that unless the acceptance is made the contract cannot be created by the parties. Therefore, the acceptance is an important part of the contract as without it the contract cannot be created between the parties. The acceptance so made shall be clear in meaning and intend. It should move from the offeree and be clearly communicated. The communication of the acceptance can be made through the written format, oral communication or distant communication such as telephone, fax, online, post and such other means. Whereby the acceptance is made by postal means the same shall be enforced as soon as it is posted. This is because the contract acceptance once posted by the offeree according to the postal rule a contract is said to be created, Adam v Lindsell. However, the acceptance so being made should before the entire offer and not the parts of it. The offer has to be accepted as a whole and not with alterations. If the offeree agrees to the terms but only in parts then it would be said to be counter offer. This would mean that the offeree becomes the offeror and the parties have now switched places. Therefore, unless the final acceptance of the final offer is made no contract is said to be created. It is also to be noted that not all contracts need acceptance. In contracts whereby the offer is made to the world, the offer contains such acts and events to be performed by the other party that it concludes that the performance of the action shall be sufficient to be summarised as the acceptance and would not require to be intimated to the offeror. This means that the offeror under the unilateral contract waives off the requirement of the intimation of acceptance by the offeree.
The consideration ensures that when a contract is created the parties to the contract have a certain participation to the addition to the value towards the contract. It is an important part of the contract because it ensures that the parties losing the value are restored from the exchange of something of value under the contract. The consideration so exchanged under the contract shall be sufficient, not of past nature, or arise from an existing duty. It could either be a profit, promise or such other aspect of value. (Cooke, 2007). Intent is an important part of the contract. This is because the intent of the contract helps in determining whether the contract would be enforceable under the contract or not. This would help in determining the purpose of the contract and the participation of the law to fully enforce it. It is if for commercial contracts the law is applicable without mentioning the same unlike the social contract. This allows the parties for the social contract to create the contract without the interference of the law in the matter of private nature. The parties so contracting shall ensure that they are of sound mind, legal age and financial accounting stable to ensure that the contract so formed is legal in nature. The capacity of the parties is directly related to its legality under the law. The parties shall not be incapacitating at the time of entering the contract or otherwise the contract would be said to be illegal. (Giliker, 2010)
1.2: Is it possible to have a contract without face to face contract?
Yes, it is possible to have a contract without a face to face interaction. Such contract may be entered by the parties whereby the parties create a contract in writing. Such contracts are known to be written contracts. Written contracts do not demand the actual presence of the parties but the signatures of the parties on the written agreement stating the common intent to create the contract. Written contracts are necessary to be created so for the tenancy agreement, sale of land agreements, creation of partnership and such other areas of law. These contracts carry importance of land and value of money to be present in writing. The written contracts are easily established under the law as the written proof of the terms so to be made enforceable are present in the contract. (Meyer, 2010)
Other such contracts may be that of distance selling contracts. These contracts are entered by the parties whereby the parties are unable to meet or discuss the terms of the contract. The contract so entered by the parties is from a distant and the terms of the contract are discussed through different means such as fax, post, mails or online portals. This would mean that the parties are not available to meet and discuss the same and the contract so created is a distance selling contract. Most common of such contract is the online selling contracts that are created for selling the products to distant consumers. The Distance Selling Regulations provide that at the time of the sale the delivery details and tax details shall be clearly provided.
Apart from written contracts and distance selling contracts, contracts may also be created through bulk order or mail orders. Under this type of contract the seller may send the products for testing to the various consumers and supply a form that when filled correctly would be implied as an offer for which the seller is bound to provide the product as specified under the contract. The seller may also send e-mails to several buyers stating the product and its detail as an invitation to offer whereby the interested parties may approach the seller to create a contract. Such contracts may require the parties to discuss the terms of the contract through exchange of letters or mails to finalise the terms of the contract. Other such contracts may also be created through telephone discussion or fax. (Nel, 2004)
1.3: Describe the effects of the words in the advertisement
In the case of Carlill v Carbolic Smoke Ball Co., the company had advertised for the sale of the smoke ball stating that it would cure the influenza so spread at the time. It also stated that if the same is not cured from the use of the smoke ball the company is willing to reward the damaged parties to the contract by already having deposited the said amount in the bank. The advertisement so posted by the company for the product could be said to be a unilateral contract and not the invitation to offer. It was held that the wording so used in the advertisement were clearly intended to create a contract between the user of the product and the company. This meant that the company was making an offer to the world and not inviting for offers. This was also supported by the fact that the consideration amount was offered in the advertisement by providing the money being offered to the damaged party that has been affected from the use of the product and not satisfied. (Pratt, 2000)
As per the facts of the case Mrs. Carlill had come across the advertisement and had intended to use the product to cure the influenza. However, the disease was not cured and Mrs. Carlill wanted to claim for the damages so suffered. The use of the product was the cause of the damage. Thereby, when she had gone to claim for the damages she wasn’t provided with the same for not having intimated the acceptance to the contract. It was determined in the judgement that for a unilateral contract the offeror waives off the element of the acceptance to the offer. As the advertisement clearly stated that the use of the product would lead to making a claim for non-performance the said act is enough to create a contract. This would mean that when Mrs. Carlill used the product a valid contract was created for which the damages were liable to be paid by the company. The court described that whereby the offer is made for the unilateral contract the intent and the meaning of the same shall be clear to determine the effect of the contract when created. As the advertisement was clear in determining its terms and effects in case of performance and non-performance it clearly specified the purpose and nature of the contract.
2.1: Give a clear opinion on whether the essential elements of a contract were present.
The case study so provided presents that a series of communication had taken place between the two parties of the said contract. William was keen on establishing a gym for which he required a builder. He had come across an advertisement in the newspaper for the same. It may be said that the advertisement so posted by David was an invitation to offer inviting offers from interested parties. Thereby, when William approached David for the said purpose he is said to be making an offer. The negotiations took place and on the 10th David accepted the offer to build the gym. The contract so formed was for 18,000 Pounds. The parties both intended to create a contract to give the consent to the contract. Also, the means of the contract is through the advertisement making it a contract for commercial purposes creating the legal enforceability of the contract. Thereby, as all the essential elements are present for the contract it is concluded to be a valid contract. (Giliker, 2010)
2.2: Was a contract formed between them?
The contract so formed between the parties could be said to be for the construction of the gym by David for William. The invitation to offer so posted by David was responded by William for the similar purpose. The contract terms were discussed and the same was agreed to by both the parties. The amount of consideration so discussed was for 18,000 Pounds. The additional term of paying extra for the shortage of labour was a contingent event so agree to by William by paying the additional money and allowing David to carry forward the contract as planned. Thereby the added term is also valid part of the contract since it has been consented. Therefore, a valid contract was formed between the parties. (Nel, 2004)
2.3: a) Discuss the position of David
William had intimated that David should complete his work on a certain date after the contract had already been formed. The same was not met with any response. After a few days David, had intimated that a certain extra sum of money is required to complete the job as the labour is short on supply. This was reluctantly met by William as he paid for the sum asked. After the gym was built and the balance of money was asked for William denied to pay the sum stating that the agreement was only for 18,000 Pounds and not anymore. As David, had not consented to deliver on the time later specified by William he was not bound to deliver the same on that date. However, David’s demand for extra money was consented for and therefore would become part of the contract.
b) Explain the situation to David on his claim.
This reluctance to pay the balance amount would be considered as a breach of contract as when the amendment was made to the contract William had consented to the same making him bound to pay the extra charges. William towards the end of the contract would the amount of 19,000Pounds of which 1000 Pounds were already paid to get the additional labour. The remaining amount so due to David would be the amount of 18,000 Pounds that forms part of the contract. Therefore, David is right in claiming for the extra charges as he had provided services and fulfilled the agreement as discussed under the contract timely and efficiently. (Pratt, 2000)
3.1: Describe how a liability in tort may arise?
Under the law of tort, the liability may arise from the performance of the wrongful act or breaching the duty so previously owed by the party towards another party. The types of liability that the tort covers are that of nuisance, negligence, vicarious and such other. The liability so due is for the performance of the civil duty and is to be undertaken for the protection of the other fellow citizens of the society so present. The right so affected under the tort are that of right in rem wherein the parties are obligated to perform the same when undertaking or imposing an act in the society. If the duties are noticeably breached the damages may be calculated during the judgement of the court depending on the nature of the damages. The parties both damaging and damaged are not related to each other when the tort is being performed. (Richards, 2006)
The liability in tort is however, different from that of contract. This is because the right so affected under the tort is the right in personam as the parties already share a relationship when the wrong is committed. Also, the damages for the contractual wrong may be calculated based on the consideration so involved in the contract. The damages may only be claimed for if the contract is stated to be valid between the parties with a common intent to create the same.
3.2: Describe what have to be proved by the claimant.
It may be determined that whereby the tort of negligence is concerned, the claimant may only be required to present that the breach of right in rem has been experienced to establish the liability. It may be required to provide that a certain duty of care had existed on the part of the wrongdoer that was not fulfilled and eventually led to the breach causing damages in terms of monetary, physical or psychological loss. It is to be established that when the wrongful act took place the same was direct in its effect causing serious harm for having the remoteness of damage. If the act to be performed was to be carefully done so for having a possible damage on any person of nature the duty of care is foreseen and the performing party would automatically owe the duty of care towards the damaged party. The claimant when making the claim shall state that the tort of negligence had occurred and that the said damages are the result of the same. (Vettori, 2007)
3.3: Describe the concept of vicarious liability.
The law of tort provides for the liability that may arise from a certain relationship already shared between the parties. The certain relationship for the same duty of care so owed primarily by one party delegated to another party for performance under the relationship. Such a liability is said to be a vicarious liability. It is most commonly found under the relationship of employer-employee whereby the employer provides the job to perform on his behalf and drive the benefits from it. If while performing the official duties the employee is negligent and breaches duty of care the effect of the said liability would fall on the employer. However, if the acts are not part of the official duty the employer would not be responsible for the wrongful acts so performed by the employee. The Health and Safety at Work etc. Act, makes it mandatory for the employer to ensure that the premises for the employees are well maintained and kept clean to ensure their safety and security during the working hours. Also, under the Occupier Liability Act, it is essential to derive that the premises are safe for the visitors and the non-visitors that includes the trespassers. This may be done by providing warning signs in terms of security measures to ensure the visitors are informed of the environment on the premises. (Giliker, 2010)
In the case of Rose v Plenty a milkman was working for a dairy and had been specifically asked not to employ an underage boy to deliver the milk. He anyways continued to do so and caused injuries from negligence in riding the bicycle. The court held that although he had been warned not to so the act so caused was not so far from the official duties as the accident took while delivering the milk. This made it the liability of the dairy to provide the boy for the injuries. In the case of Roe v Minister of Healthit was determined that as long as the wrongful act was committed by an employee the employer would be liable for the same. If the employee that caused the wrong cannot be determined it would not let the employer escape the primary liability for the negligence from the performance of official duties.
Under the case of Market Investigations Ltd. V Minister for Social Security it was derived that Mrs. Anne had been undertaking questionnaires for the company. It was disputed between the company and the Minister for Social Security that the National Insurance contributions should be considered to be made on her behalf to the nation. This raised the question of her being an employee of the company. The decision making held that whereby the person is under the contract for services the person would be at his own risk employed to perform the duties discussed whereas the contract of employment would make the person an employee. Therefore, the person only being an employee could qualify for the vicarious liability. Under the case of Mattis v Pollock it was determined that the bouncer at the night club had participated in causing disorder and had injured one prospective client. It was determined that causing disorder was not part of his employment and therefore the employer, the nightclub, would not be responsible to fulfill the damages.
4.1: Compare and contrast the verdict in Donoghue v Stevenson with Hill v Chief Constable of West Yorkshire.
In the case of Donoghue v Stevenson, the facts determined that whereby a manufacturer is providing a product in the market, the responsibility of the quality of the product would lie with manufacturer. This is because the product so made available was through the functioning of the manufacturer and the same had not be created without the required inputs. The case clearly states a situation whereby the local consumption of the product is superseded by the party purchasing the same. Two friends had gone to a café and one friend placing the order also paid for the friend’s beer and ice cream. The beer was consumed by the friend and was found to have a decomposed snail. The site of the snail led the friend to a mental shock and stomach disorder. It was found that the beer was however bought from a seller he had not made it himself. The seller had in turn bought it from the manufacturer who had made the product and packaged the same. The damages so arising from the wrongful act were now said to be the responsibility of the manufacturer and not the seller. However, manufacturer defended stating that the liability for the act is only due towards the person purchasing it. The court had determined in the present case that the liability towards the consumer would lie for any standard consumer that can do so. This is because a market is commercial in nature and the duty so arising would be towards the market and not just one specific consumer. Therefore, the manufacturer’s liability would arise towards Ms, Donoghue for the loss so suffered from the consumption of the unfit product. (Cooke, 2007)
In the case of Hill v Chief Constable of West it was determined that the vicarious liability that was owed to the society was owed in balance and not favouring any specific party so affected from a crime. The case facts determined that the police force had not provided enough resources and attention to determining the reasons of the crime and the justice to restore the position of the citizen so affected from the crime. It was thereby adjudged that the police force owes a duty of care towards the entire society equally. It was also determined that the prevention of escape of the criminal was not a public duty but to try the best to avoid it was. The defence of the case so undertaken was that the police force owed a duty towards the society and not party so suffering at the time. The judge further stated that the police is occupied with several cases at the time and not just one and paying attention in equity is as important as solving the cases timely. Therefore, the police is not namely bound by one specific case at any given time. Therefore, the police force would not be liable for the actions of the police so undertaken to keep up with the duties so owed to the society and the citizens.
4.2: Discuss the position of the taxi driver from the vicarious liability point of view.
According to the facts of the case it is determined that the person who owns the business strategy has the final liability towards the wrongful act so undertaken while performing the business. This would imply that the business owner is vicariously liable towards the actions so undertaken during business by the employees. Under the given case study the business owner had hired several drivers and had instructed that the job so undertaken shall be carefully applied and the negligent acts so undertaken will not be the responsibility of the employer. However, on one such day the driver had negligently driven the car that led to causing an accident. The act of breach of duty of care was owed by the driver as a person as well as an employee of the business. The employer had asked the driver clearly not to drive negligently that formed a part of the official duty of the driver. When the breach took place, it may be determined that the same would be responsibility of the employer and not just the employee. This is because according to the case of Rose v Plenty it was determined that when a breach of duty takes place during the course of employment the same shall not be so far from the original duty to not make the employer vicariously liable. As the driver was performing an official duty while not driving carefully he was not acting too far away from the scope of employment. Thereby, the breach so committed would be considered to being the course of business and the same shall be the liability of the employer for being vicariously liable. (Meyer, 2010)
In the present case study the aspects so studied are that of the formation of contract, performance of contract and liability so arising form the breach of duty. The different aspects are based on the study of elements that lead to creation of the contract and the types of terms involved that help in determining the breach so undertaken if any by either party. The contractual liability just like tortuous liability is civil in nature and the same is to be distinguished in order to derive an accurate interpretation of the both. The liabilities so arising under the tort are also provided in detail for the clarity of the purpose of solving the case scenarios.
Collins, H. (2008). Standard contract terms in Europe. Alphen Aan Den Rijn: Kluwer Law International.
Cooke, P. (2007). Law of tort. Harlow: Longman.
Giliker, P. (2010). Vicarious liability in tort. Cambridge, UK: Cambridge University Press.
Meyer, L. (2010). Non-performance and remedies under international contract law principles and Indian contract law. Frankfurt am Main: P. Lang.
Nel, J. (2004). The theoretical basis for contractual liability. Bathurst, N.S.W.: Faculty of Commerce, Charles Sturt University.
Pratt, S. (2000). Duty of care. East Roseville, N.S.W.: Simon & Schuster.
Vettori, S. (2007). The employment contract and the changed world of work. Burlington, VT: Ashgate Pb.