Delivery in day(s): 5
Unit 5 Law of Tort and Contractual Liability Assignment
Diploma in Business
Unit Number and Title
Unit 5 Law of Tort and Contractual Liability
When a two way agreement held between the two parties where both of them agree to follow the similar conditions and terms is termed as a ‘contract’. All the conditions must be fulfilled to give effect of a contract. To derive the benefit from any contract, the parties must require all the elements that includeefficient and effective terms of the law. Under this unit 5 law of tort and contractual liability assignment learners will learn all the possible breaches for non- performance.They will also study the comparison between the law of tort and the contractual liability. The various types of law of tort are need to be analyzed under this study and also their applicability is discussed in accordance with the scenarios that are provided.
1.1: Explain to Peter Abraham how a contract is formed and the importance of the various elements which has to be present to form a contract.
All the elements that are required to form a contract is determined as follows-
- Offer- A statement in which an offeror provides all the terms and conditionsto the offeree is known as an offer. Under this, an offeror shall have intent to enter into a contract. Offers are of different types like a counter offer or invitation to offer. It is clearly said that an offer should be expressible and clear to understand.
- Acceptance- It is the process when an offeree accepts the offer. It is a sign of acceptance of offer where both the parties came into a contract. The acceptance of the same must be clear and expressible to the offeror. It is very important so that the offeror becomes aware of the contract in which both are entered. As the acceptance is posted, it is determined valid by postal rules.
- Consideration- A consideration is said to be the price that is exchange as a bargain between the two parties. It can be an amount for some value. It is said that the value is replaced by each party that caused in the transaction. Some of the rules of the consideration says that it could not be of past, it should be sufficient enough, and should move from the offeree or not be a part of any kind of contractual or social duty.
- Intention- There should be clear intention of the parties as it helps to determine the nature of the contract. It must be specific in nature too. There are two types of contacts i.e., social care contracts and commercial contracts. In the case of social contracts, they are not enforceable unless they are determined but the commercial contracts are diffent from the social contract.
- Capacity- The ability of a person to enter into a contract is termed as the capacity of that person. This capability are of different types like age, financial status, mental status etc. when he or she is entering into a contract. When a party enters into a contract, the capacities that required are age, financial stability, and must be of sound mind.
1.2: Discuss the impact of forming contracts
- Face to face contracts- When a contract takes place in the presence of all the parties and they directly discussed all the terms and conditions of the contract in front of each other are known as a face to face contract. The important part of this contract is the presence of all the parties. All the terms are discussed before entering into a contract. These types of contracts are time saving but difficult to prove to the court of law about its existence as all the terms and conditions are being present in the verbal form. [Meyer (2010)]
- Written contracts- All the contracts that are in the written form are termed as written contracts. It is not important for the physical presence of all the parties but written in nature. They are the most clear and expressible contracts. These types of contracts also carry an evidential value as they are in written format.
- Distance selling contracts- When two parties entered into a contract that belongsto different parts of the world, this type of contract is known as distance selling contracts. They are either in a written form or verbal. The example of such type of contract is onlineselling of products. These contracts are regulated by the Distance Selling Regulations of 2000. Under these contracts the seller presents the terms and conditions of the same to the buyer as soon as possible that includes the price rate, tax rate etc.
1.3: Give an analysis of the following terms in contract with reference to their meaning and effect as it may apply to peter Abraham
1. Condition- All the terms that are relevant to a contract is regarded as the condition to the contract. The fulfillment of such conditions is important to the contract. If the terms and conditions are not fulfilled then the contract can become void. It happens because the conditions are the tools that define the purposeand character of any contract. It is of various types that may be used in different stages.
2. Warranty- A term which is very important to the contract but the non- presence of this cannot void the contract is termed as a warranty. It is the second most important part of any contract. The non- performance of such terms can be met with damages by the damaged party. There are three types of warranties that is offered by any party which are written as follows-
- Full warranty
- Specific warranty
- Life warranty
3. Innominate terms- A term that is neither a contract nor a warranty but equally important to a contract is known as innominate terms. Theseterms are based on the effect in theevent of the breach when the non- performance under a contract taken place. When the terms effect the fulfillment of the contract then it converts into a condition or a warranty.
4. Exemption clause- It is also known as exclusion clause. It is a clause whereby the liability or obligation is restricted towards the party that may get affected by the occurrence of such event. These terms are included either through signatures or notice or pervious dealings. These terms are interpreted through a narrow approach, strict approach and fundamental breach or contra proferentum. This has to be brought in the notice of all the parties.
2.1: Apply the elements of contract in the given business scenarios below.
Case 1 - It is an illustration whereby an advertisement was printed to invite the prospective buyers of the couch. Carol was one the prospective seller of the same. These types of advertisements are merely an invitation to inform the purchaser about the product. Under the same, no offer was made by the offeror but a mere intention to make sale. In this case, no offer to sale is regarded to takes place. These offers can either be accepted or rejected by the offeree. Carol sent the e-mail containing her offer but not a contract because there is no acceptance by the offeree so no contract would take place as supported by the case law Carlill v Carbolic Smoke Ball Co. [Collins (2008)]
Case 2 - Under this case, Devi was a person who was interested to work with a company named as George, Smith,Fogarty in the cyber security department of the same. In accordance with that, he applied for the same and gave interview for that position in the company. He asked his dad that he do not want any kind of interference of him as he wants to achieve something by his own. He cleared the interview and the company offered him the same position on 12th of April. As Devi’s dad was unaware of the fact, he went to the company and asked them that to hire my son I will ay an amount of 150000 pounds. This offer was made on 13th of April by Devi’s dad to the company. This contract cannot take place as there was a contract had already taken place by Devi and the company. Even the amount that Devi’s dad asked for cannot be valid and accepted as the consideration for the contract had been discussed before.
2.2: Apply the law on terms in the following contracts
Case 3 - The term that is provided on the slip is termed as exemption clause whereby the man had agreed upon. The clause of exemption is valid as it clearly mentioned the restrictions in possible circumstances. It was also mentioned that there would be no right to remedy to any customer. The exclusion clauses are only valid if the same are included in the contract at the time it is being entered into. The same should be through signatures, notice or previous dealings. Thereby, the clause of exclusion was always included in a written form and under this case, it was presented at the time the customer satisfaction checked into the restaurant. This term is valid in nature because the act of checking the coat was not a daily service or any product provided by the restaurant. It can be restricted as discussed under the case of L’Estrange v Graucob. [Andrews (2011)]
Case 4 - Under this case, a tenant had carried out some repair work in the building that had added to the value of the same. At that point of time, the owner of the property had agreed upon that he will not increase the rent of the property for the next five years. The owner died after a year and the inheriting party blackmailed the tenant for non-payment of the property as they increased the rent without informing the tenant. The terms and conditions under the tenancy contract are to enjoy peacefully, also to take care of the repaired work and to compensate the tenant for the extra repair work carried out by him. Under this case, the inheriting party had refused to pay for the same which was an implied duty of him. Hence, the tenant would have right to claim against the new property holder for the additional repair work due to which the value of the property had raised as discussed under the case of Hutton v Warren. [Meyer (2010)].
2.3: Evaluate the effect of different terms in the given scenario
Case 5 - Under this case study, it is determined that every policy form contained some questions regarding the involvement of the party with the previous claims related to the motor vehicle accidents. The answer against this question is put in as no by the party. But when the investigation takes place for the same, it was discovered that the party had previously filed a claim for the same vehicle in the previous five years. This term had been specifically asked by the party and was directly related to the claim. Therefore, it would be termed as the condition to the contract. Thereby, we can say that as the facts to the claim were not clearly provided at the time of filling the policy form which is mandatory, the condition was said to be breached for which the company can void the contract as discussed under the case of Poussards v Spiers. [Andrews (2011)]
Case 6 - A representation is considered to be a statement that is made by the seller in his best knowledge. The same cannot be held against him as the same may not be accurate and be personal in nature. However, a misrepresentation is regarded as a statement that lets the buyer believe otherwise from the actual situation. The seller when intentionally lets the buyer believe a certain statement to be true when it is false it is considered to be a misrepresentation. Thereby, the terms to the policy was misrepresented by the party under the contract which were too important to the contract of any motor vehicle. In this present situation, the misrepresentation is regarded as concealment of the actual facts. Therefore, the company has right to void the contact as illustrated under the case of Bisset v Wilkinson. [Richards (2006)]
3.1: Explain the similarities and differences of liability in tort with contractual liability using an example.
There are many similarity between the liability of tort and the contractual liability. But yet they are different on some points. The contractual liability is considered as strict as the liability of tort. Under both the liabilities, arising from the breach of either tort or contractual liability, the party that is affected will require only to establish the breach but not the reason or the purpose of the breach. The liability arising is such that the parties voluntarily accept the duty. These duties are for the society in both the liability either tort or contractual under the contracts. The difference between the two liabilities is determined under the following table-
Liability in tort
This type of liability is not quantifiable in nature form situation to situation.
This type of liability is quantifiable according to the consideration involved in it.
One important reason of the tort is determined to approach the breach
Under this, the reason of contractual breach is not considered.
The rights that are breached and affected under the law of tort are the right in rem that is against the society.
The rights that are breached and affected under the law of contract is that of right in personam that is specific in nature
In tort liability the cause of the same is considered
In contract liability the cause is not considered.
The scope of the liability is unlimited
The scope of the liability is limited
The remedy provided under this liability is through compensation
The remedy under this liability is restitution or restoration.
3.2: Explain using suitable example how liability for negligence can arise and the conditions needed to be met for ac claimant to successfully prove negligence
There are various factors considered in the law of tort with regards to negligence. These factors are need to be considered while determining the law of tort of negligence is that duty of care. Sometimes the avoidance of the duty leads in damage that may be settled in terms of psychological, physical and monetary terms. While committing a negligence, the primary thing that need to be considered is the existence of the duty. In tort of negligence, the duty of care that is per- determined or pre- existent shall be avoided. The negligence should be enough that it cause harm or damage to a party by injuries. Then those injuries are quantifiable through monetary, psychological or physical terms. These damages should be clear from the breach of duty. The other different elements that need to be considered while studying the law of tort are-
- Donoghue v Stevenson: It is determined in this case that Mrs. Stevenson and her friend had gone to a cafeteria. Her friend had brought her a drink with an ice-cream. She consumed half of the drink and after drinking half she encountered a decomposed snail in the same due to which she suffered from the stomach infection and also psychological loss in her mind. She claimed the same to the manufacturer of the drink. Under this case, the manufacturer would be responsible for the consumer and for the entire society too. The product must be prepared with a care that the immediate user or even the other consumers may not get affected by such defected products. It constructed a universal burden on the manufactures.
- Caparo Industries plc v Dickman: It is determined under this case that the court had laid down certain principles of classification for the tort of negligence-
- Remoteness of damage- The damage that arise must be least related to the causation.
- Foreseeability and proximity- The damage that arise must be in the same area as the breach had occurred.
- Causation- The damage and the cause must be inter related to each other to form a tort of negligence.
Comparative negligence, volenti-non-fit injuria or minor negligence are the defenses that are studies or considered under the law of tort of negligence. Comparative negligence is also called as contributory negligence in which both the parties, damaged and damaging are responsible to a certain extent to be a tort of negligence. In these cases, the party who is causing the damage is only responsible and pays the affected party for the amount responsible. When a party intentionally let goes the duty of care and focus on other duties then it termed as volenti-non-fit injuria. These situations are excusable as the party is keeping with important duties. The other defense is when the ignorance is committed by the minor person. When a person is less than 18 years old then the punishment that is granted is also be determined according to the age of that minor person. This rule has come into existence because the minorities are incapable of making decisions and judging the consequences of the acts. Thereby, they are unable to undertake the duty of care.
3.3: Explain what the vicarious liability means and how a business such as your organization can become vicariously liable giving example.
The primary meaning is when one party is responsible or liable for another party. It generally found in employer-employee relationships or between superior and subordinate where employee has to perform for the benefits of the employer. Such duties arise due to delegation of the duties from the employer to the employee under which only the employer is responsible if the duty so breached is within the scope of employment but not outside of it. The breach should related to the professional obligation but not personal. Other conditions where the vicarious liability exits are between partners, servant, agency, etc. it happens because the parties are bound to do work for the benefit of other party. It results in vicarious liability.
- The Health and Safety at Work Act of 1974- The Health and Safety at Work Act of 1974 states that, it is the employer’s duty to keep maintenance of the premises of the organization. It should be safe and secure so that no mishap can take place. He should consider the provision of safety, water, equipment and the other things related to the health of the employees in a company. The duty of care under vicarious liability falls on the employer to make sure the safety of the neighbors is maintained from the actions of the employees as the same work is being delegated by the employer.
- The Occupier Liability act- The Occupier Liability act states that it is a duty of an employer to maintain the welfare of the visitors and the non-visitor s, both the permanent and non- permanent is kept for in order to provide them a safe and secure environment in the organization. To accomplish this purpose, the employer should put signs across the premises to give a message of danger in case it persists in the organization. [Bell (2013)]
4.1: Apply the elements of the tort of negligence and defenses in the given business scenarios below:
Case 7 - It is the responsibility of the doctor to check the patient before prescribing such medicines. As a professional, the doctor can’t afford to repeat the mistake again. So the negligence under this case that is committed is that of professional negligence whereby the professional duties are ignored by the doctor. Professional negligence is regarded as a type of negligence that results in damage from the performance of certain specific skills acquired under the profession by practicing the same to earn the regular income. The profession is concerned as the special skill by a study of license. Thereby, the negligence occurred while practicing the special skill is known as professional negligence. Such professions may be of doctors, accountants, architects and such other. It should be further checked whether the cause and effect relationship was directly related to the damage or not. The patient was said to die due to pneumonia and not due to heart attack or chest pain. The test is applied to such situation for the case of negligence is also called a but-for test. It helps to check the reasons behind the damage that takes place. In this case, the doctor undertook the professional negligence but the fact is that the cause of death was not because of the same. The main cause was pneumonia due to which the patient had died. Hence, the doctor is only be responsible for professional negligence not for the death of the patient. Thereby, he could not be sued for the harm so caused to the patient from the pneumonia as was the case in Froom v Butcher. [Giliker(2010)]
4.2: Apply the elements of vicarious liability in given business situations below:
Case 8 - The client had arrived and the driver drove back from the airport. He was still in the drunk state so he lost his better sense and stuck to an accident. The car and the client both got affected by the same. It was determined that it is a case of drink and drive. It could be realised that the duties that are relevant in nature cannot be breached. The driver was on his duty but being drunk while performing the daily work was not the part of his duty. It may be stated that the driver was an employee of the company and thereby, the company will be responsible for the acts of negligence so committed by the driver while performing his duties. Though the employer cannot control the driver from not drinking, the duty to not drink on the service is implied as the same may lead to impairing vision and senses leading up to accidents. Under this case, the driver would be responsible for the act of drinking and the employer would also be responsible for the act of driving. Because this accident takes place during performing his duty and within the scope of the employment. Though, the company had not asked the driver to drink while performing the same but he had done this obligation for which both held responsible so was discussed under the case of Lister v Hesley Hall Ltd. [Cooke (2007)]
Case 9 - It was analyzed in the case of Ready Mix Concrete (South East) V MPNI, the judgement that stated in a situation whereby more than one employer is present at the time any damage takes place, the employer who have the direct control over the employees is responsible. Under this case, the accident that took place was in the supermarket while loading the pallets to the truck. The case suggests that the employer having the direct control over the employee would be responsible for the damages so occurring. As the Supermarket had a direct control over the employee as the accident happened on the premises it would have a vicarious liability towards the accident. It should be noted that since the duty to perform the health and safety aspects were delegated does not imply that the supermarket had no duty in the same aspects. Thereby, the supermarket would have an existing responsibility towards the employee even if few aspects have been delegated. The duty that determines in this case is the official duty that is performed at the premises and the damages so arise are form the performance of the duty. Thereby, the supermarket had direct control over the situation and would be considered responsible for such situations. Hence, in present case supermarket would bear the vicarious liability.
Under this study, there are various contracts that are discussed. Also the effects of breaches in the cases had been analysed with reference to the knowledge that derived through the study. There are many types of concepts in relation with the elements and their types held in interpreting the meaning of the contract. Under the present assignment, the nature and their meaning was derived in accordance with the questions asked. Under this study, the tort of liability is considered to be the breach of law in which the damage so occurred is enough that it could be applied to any person present in the society hence deriving a universal nature of liability so arising. There is a difference between the liability under tort and the contractual liability along with their types is provided under the case study.
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