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Diploma in Business
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Unit 5 Assignment on Contract law & Negligence in Business
A contract is a common decision between the parties to create binding relationship. The formation of such a relationship requires the presence of certain elements as determined by the study undertaken in the present assignment. Every contract shall be standard in nature despite of being different in nature. The liability so arising from contract is civil in nature. The liability from tort is compared against the contractual liability to understand the different aspects of both. The assignment also helps in providing an understanding of the different types of liability arising under law of tort.
When two parties come together to perform a certain task and lay down the rules of performance such as relationship is called contractual and is binding in nature. The parties to the contract are bound by the rules as well the duties of performance in order complete the contract. If the parties fail to do so the contract is said to be breached and now the damaged party may claim for the damages so suffered from the breach of contract. Peter Abraham while creating a contract should be able to discuss the terms accordingly and include the following element to create a valid contract:
An offer is that part of the contract that helps in initiating the contract from the very first step. It contains the prior terms of the contract for approval by the person being offered the contract. The offer terms shall be clear in understanding and shall use simple English language. It should be an express statement of creation of contract on acceptance. Every offer is not an invitation to offer. An invitation to offer merely explains that if the offer is made the contract may be considered. The invitation to offer aims at generating awareness, of the possibility to form a contract. Therefore, an offer is different from an invitation to offer Carlill v Carbolic Smoke Ball Co. The offer may or may not be accepted completely by the offeree. Sometimes the offeree may only be able to agree to the partial terms and the same shall be intimated to the offeror. When this intimation reaches the offeror it would be considered as the counter offer. Until the final offer is wholly accepted by either party the negotiations carry on unless either party withdraws the intent and rejects the terms wholly. Therefore, an offer helps in building the foundation of the contract. (Collins, 2008)
Whereby the offer so presented by the parties is accepted it is said to be acceptance. When the acceptance is made it shall be noted that it is complete and clear. The acceptance helps in creation of the contract and should be express with intent. The acceptance is not however required for all types of contracts. In the case of offer to the world it is determined that the offer is made to each and every one coming across the offer. If the same has to be accepted the actions so determine d in the offer shall be performed in order to create a contract. (Cooke, 2007)
Therefore, the offeror waives off the need of intimating the acceptance to him by the party creating the contract. Such offers may be advertisements for a reward to find a lost bag or wallet. When the acceptance is being made the same shall be made through a means of communication that is discussed to be appropriate under the terms of the contract. The same shall be done through writing, post or telecommunication. If the acceptance is made through post the same shall be considered to be valid when the offeree posts the acceptance.
Every contract shall contain the element of consideration. This is because the consideration allows the contract to be legal in enforcement. Without a consideration a contract is not valid and not enforceable under the law. The consideration amount ensures that the parties have come together bearing a loss and gain from the performance of the contract. Without the consideration contract does not exist. Therefore, it helps in creating the enforceability under the law. The consideration amount so involved should be of present nature, not of past, be sufficient and not adequate and move from the offeree. A consideration is said to be anything of some value that is not part of the existing duty of contractual nature. (Giliker, 2010)
When creating the contract the parties should ensure that they come together knowing the intent of the contract. It is important to discuss the intent of the contract in order to intimate the enforceability under the law. The intent of the contract indicates the parties’ intention to create a relationship binding by the law. Therefore, two types of intent are recognized under the laws that are social and commercial. If the parties are entering into a commercial contract the parties may assume the legal enforceability unlike that of the social contract. This is because the social contracts are said to be created with the intent of the no legal interference unless the same is explicitly mentioned under the contract. (Meyer, 2010)
The contract so created by the parties should be ensured to be created by parties of capacity to ensure that the contract is valid in nature. The capacity of the parties may be determined in regards with the age, financial status and the mental status at the time of creating the contract. If the contracting parties are not of capacity the contract is considered to be invalid.
Peter Abraham shall be informed that when creating a contract he may choose to opt for various types of contract from the following list according to the needs and the availability of the parties:
When the parties are present in front of each other when creating the contract it is called as a face to face contract. This is because the contract is made through an oral conversation only. These contract are not present in writing. The oral contracts are said to be different from other contracts in terms of enforceability. This is because these contracts are present in oral format and only known to the parties to the contract. If at some point the contract is breached the terms so agreed cannot be certain of and the contract may not be enforceable under the law for the absence of proof of the terms of the contract. (Pratt, 2000)
When the parties agree to create a contract in the written format then such contract are said to be written contracts. Such contracts are said to be the most common types of contract as it ensures evidential nature in case of breach. As the term of the contract may be easily interpreted, the same is easily enforceable under the law. Such contracts come to performance through the signature of the parties to the contract.
Whereby the parties coming together for a purpose are not closely located form a contract such contract are said to be distance-selling contracts. These contracts are mostly entered into writing and may be created through exchange of letters, mails, mail order, and advertisement in the newspaper telephone, fax and suh other means of communication. According to the distance selling regulations when a contract of this nature is formed the seller is required to inform the buyer of the delivery details, product details and the validity for exchange or refund.
Peter Abraham while assessing the performance of the contract to create a claim for the breach shall consider the following terms and its effect in order to determine its accuracy:
Whereby the parties to the contract determine the purpose of the contract that term in the contract is regarded as the condition of the contract. It explains the primary details of performance and if the same is not carried forward the contract may be voided by the affected party and may claim for the respective damages. The performance of condition is elemental to the performance of the contract. (Giliker, 2010)
Whereby the one party promises to fulfill a certain purpose in a certain way, that term is considered as the warranty of the contract. Warranties are secondary to the contract performance and allow the parties to fulfill the purpose of the contract. If the warranty is not performed the affected party may be able to claim for the damages only and not void the contract. The claims for non-performance that can be made are specific performance, injunction and damages.
When the terms of the contract are breached and the parties are not sure if the same is a condition or a warranty then such terms are considered to be innominate terms. This would mean that the terms that are breached are neither condition nor warranty unless the breach is occurred. The effect of the breach on the performance of the contract would help in deciding its effect and the nature of the term. If the term so breached affects the performance of the contract then it will be a condition and if not it will be a warranty. The same depends on the performance of the contract from situation to situation. (Pratt, 2000)
Terms that are part of the contract and restrict the liability in case of non-performance of the contract are considered to be exclusion clauses. The exclusion clauses are to be included according to the UCTA whereby it is detailed that any exclusion clause restricting liability for the death or injury so caused would be invalid. According to the common law rules the exclusion clauses shall be part of the contract through signatures, notice and previous dealings. It is the duty of the party including the exclusion clause to ensure that the same is brought to notice of the contracting parties.
In the provided case study the advertisement was posted in the newspaper to intimate about the availability of the couch for sale. The price of the same was provided alongside. It would be considered as an invitation to offer as the advertiser provides no other information or terms of offer. Carol when contacting the advertiser would be considered to be making an offer for the couch. When the offer is made the advertiser may accept the same or reject it. If the same is accepted a contract would be created for the purchase of the couch. (Richards, 2006)
The present case would be considered to be a case of the past consideration. Devi was to be interviewed for a profile at a cyber security firm. The father was asked to not participate in the process of getting him the job. After the interview was over he was offered the job on 12th April. He accepted the same. However, the father approached the company in order to offer them a certain amount to hire the son on 13th April. As the contract was already created. The amount so offered by the father would not be considered as valid as it would be past in nature. Similarly, the company would not be able to claim the said amount form the contract of invalid nature. (Vettori, 2007)
According to the case scenario, the couple had gone to a restaurant for a dinner reservation. The two were made to keep the coats at the entrance. Once it was done they were provided a slip containing the clause that the restaurant would not be responsible for the damages so caused from the loss of the items kept at the entrance. It is determined that after the dinner was sufficed the two recalled that the payment is kept in the coat. When they approached the entrance it was found that the wallet was missing. The restaurant upholding the clause is now refusing for liability. It is derived that the slip so provided was after the coats were already kept at the entrance. The exclusion clause is only valid when the same is done at the time of creation of the contract. The party including it should be notifying the same at the time of creation of the contract. Therefore, the restaurant would be liable for the loss so suffered by the couple.
According to the case scenario, the implied term in custom is part of the contract without including as a written term. This would imply that the same is part of the contract without it being mentioned under the contract. The tenancy contract so signed between the parties is said to be the purpose of renting the premises. The tenant in order to keep up the place paid for the improvements. Under the tenancy agreements the implied term from customs is that whereby, the tenant pays for the improvements the landlord is obligated to reimburse for the same. The landlord promises not to increase the rent in exchange. The same landlord dies the next year and the new landlord increases the rent. The tenant would now have the right to terminate he contract and claim for the amount so spent on the premises n proportions of the remaining four years. (Collins, 2008)
The facts of the case determine that the policy document was presented to the applicant to gather information of the car on the basis of which the contract would be created. The policy form is the invitation to offer and the applicant filing out he details is an offer. The offer when accepted creates the contract. The policy terms are the contract terms. The term regarding the previous use of the policy to make a claim was a condition as it is directly related to the purpose of the contract. The same was determined to be false. Providing the wrong answer would be considered to be a breach of contract and would allows the company to void the contract. Therefore, the policy claim for the present theft would be rejected. (Cooke, 2007)
The present case study provides that the policy form was provided to the applicant and two answers were in dispute at the time of the fresh claim. The questions were regarding the previous claim so made and the originality of the car parts. The same was provided to be false. A previous claim was made in the past five years and not all parts were authentic. The breach so committed is that of the condition and the warranty. The condition is particularly misrepresented because and so is the term for originality of the parts as the same could be checked for at the time filling out the form. The contract is said to be breached for not providing the accurate information and knowledge for the terms leading to formation of the contract. The company may successfully void the contract for not providing the true information at the time of creating the contract.
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The liabilities arising under the civil law may be described to be as of two types such as the contractual liability and the tortuous liability. The liability arising from the breach of contract is contractual liability and the liability arising from committing a tort is tortuous liability. The tort and contract are two different types of liabilities in its nature but similar in performance. The similarity between the two other than being civil liability is that both of these liabilities are to be strictly performed. These are strict in nature because when these are created the damages are to be fulfilled by the party creating the breach. This is because the duty so breached cannot be escaped by any defense. (Richards, 2006)
Despite of these similarities the two liabilities are different in the following nature:
The liability arising under the tort of negligence is arising from the breach of duty of care existent in a society. The duty of care is due in terms of undertaking measures to ensure safety of one self as much as the surroundings to reduce the risk of damage so foreseeable. The duty of care when breached is considered to be civil wrong and provided for under the law of tort. The reason of breach should be neglect or forgetfulness. The duty so breached should be able to create a damage of serious nature. The damages so created may be measured in terms of the monetary, psychological or physical loss. The damages so arising shall be direct in nature and independent of any other cause.
According to the case of Donoghue v Stevenson it is determined that the duty of care in a consumer market extends to the entire market and not just the consumer buying the product. This would imply that the liability is extended to anyone and everyone capable and eligible to consume the product. This case was landmark in creation of the liability of the manufacturer in a given market for the manufacturing defects causing breach of duty of care. (Giliker, 2010)
Another landmark case for tort of negligence was the Caparo Industries wherein the elements were studied that helped in determining the creation of tort of negligence. These elements were causation, remoteness of damage and proximity. When the duty of care is breached it shall be direct in nature, be at least remotely influenced from the act and be able to be influenced from the proximity. If the person committing the act could foresee the damage the same would obligate the party to undertake the duty of care. (Nel, 2004)
The vicarious liability is considered to be a tort wherein the party committing the wrong is not liable for the act of tort. This is because the action so performed is on the instruction of another party that is not performing the same act. However the non-performing party derives the benefits of the act so performed as well. This liability is regarded as vicarious liability. It is to be noted that such liabilities are only created when the party is performing the act during the course of the business environment and not just the personal motives.
The vicarious liability may also be provided under the legislations of UK. According to the Health and Safety at Work Act etc, it is determined that the employer should ensure that the employees on the premises are provided with a safe and clean environment to work with. The health standards should be followed and the equipment should be latest to check the same. Accordingly, the Occupier’s Liability act should ensure that the premises are safe for visitation purposes for visitors and non-visitors including the trespassers. The occupier should put out warning signs in order to inform them of the safety hazards in order to stay clear of them.
According to the case study provided it is determined that professional negligence is considered to be that negligence when committed while performing the specialized knowledge so derived from the personal and professionalstudy. To be doctor it is required to carry a qualification to be called so as well. Therefore, medicine is a profession and the doctor is the practicing party. When the patient approaches the doctor it is his professional duty to perform a basic check up of the condition before prescribing medical treatment. In the given case, the patient approaches the hospital that employs the doctor in order to get medicines for the chest pains so suffered by him. He although was not checked up and was prescribed the over the counter medicines. The medicines were for the chest pains. However, next day he dies from the pneumonia. It may be observed applying the but-for test that the negligence so committed by the doctor was professional negligence however the same was not the case of death and thereby would only create liability for professional negligence and not the death of the patient. Also, the doctor being the employer and the negligence committed while on the job would be sufficient to create the liability for the hospital being vicarious in nature. (Nel, 2004)
The case study so provided determines that the driver was employed by the company to perform the certain duties as instructed. On one day he was instructed to go pick up the client of the company from the airport. The driver had arrived early and decides to have a few drinks. When he was driving back after receiving the client, due to his negligent driving, he caused an accident damaging the client as well the cars. It is determined according to the case of Rose v Plenty that the wrong so committed wasn’t so distant from the professional duties despite the fault of the driver’s personal choices. Therefore, the company would be liable for the losses so suffered.
According to the case study, the employee in question had more than one employer. Under the case of Mersey Docks it was discussed that whereby the employee has more than one employer the employee having the direct control over the employee would be liable for the wrong so committed. It was also determined that when original employer in in question the vicarious liability is always present in any situation inside or outside the premises. In the present case the employee unloading the pallets was present on the premises under the direct control of the original employer. Thereby, the liability would be that of the original employer and not the company delegated with the duty of maintaining the health and safety regulations. (Richards, 2006)
The present assignment has been undertaken in order to study the liabilities so arising under the civil law. It helps in understanding the creation and termination of the contract. The terms leading to the determination of the same are studied while determining the function of the same under different types of contract. The cause and effect relationship of the liability under tort is provided in detail. The two types of liabilities are studied and compared to better understand the elements that concern these liabilities. The liability arising under trot is discussed to elaborate the function of the same in different circumstances of legal nature.
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