Delivery in day(s): 5
Unit 5 Valid Contract Law Assignment
Diploma in Business
Unit Number and Title
Unit 5 Valid Contract Law
A contract is definitive of a purposeful relationship between the parties agreeing to it. To form a valid contract the presence of essential elements is required. The elements so included under a contract are standard in nature and contribute to making it enforceable under the law. The effect of different types of terms and elements is to be studied under the following assignment. If the contract terms are not fulfilled the damaged party may claim for the fulfilment of the contract or damages. The liability arising under the contract differs from that arising under the tort. Liability under both the areas of law is however strict in nature. The different types of liabilities and breaches arising under the law of tort have to be studied to meet the learning criteria.
1.1: Explain the essential elements of a contract.
Every contract has to be entered into by the parties in a way that it contains the necessary elements of the contract. Such elements are standard in every aspect and the have to be present for a contract to be recognised in law. Following are such elements to consider while entering into a contract:
- Offer: An offer is regarded as an initiation of the contract. It contains the important aspects of the contract to be entered into by the parties to form a valid contract. The offer concerns the purpose of creating the contract and the nature of the contract. The offer so made should be clear to understand and the intent. The offeror should make the offer and the same shall be concluded by either rejection or acceptance. The offer should be clearly understood for one as an invitation to offer is different from the offer. An invitation to offer is a statement that informs of a possibility of a contract for which the interested parties may offer a decent one. Therefore, every contract is required to be initiated from an offer. (Collins, 2008)
- Acceptance: When the offeree accepts the offer it is said that the contract has been created. If the offeree does not make the acceptance the contract is not entered into. When the acceptance is made the party should ensure that it is clear in understanding and communication for market strategy . The acceptance is to be made in a way that the same is an acceptable means of communication under the contract. The different modes of communication for the same are that of post, telephone, or writing. If the acceptance is being made through post it important that the same shall be considered to be so as soon as the letter is posted. It is also noted that the element of acceptance may not be include in certain types of contracts. Such contracts are offer to the world, whereby it is mentioned in the contract to perform a certain act in order to enforce the contract. Therefore, the performance in such cases is considered to be an acceptance.
- Consideration: In order to make the contract valid in the law it is essential that every contract contains the element of the consideration that leads to creating an exchange between the parties for something of value. This would mean that the parties are to ensure that it participates in a manner that contributes equally to the efforts of the other party. The consideration, thereby, should be something of value, sufficient and not derived from an existing duty of social or contractual nature. The same shall be present in nature as contract would be. (Cooke, 2007)
- Capacity: Every contract has to be entered into by parties that are capable to derive the meaning and nature of the contract. It is important that the parties are of legal age, mentally sound and financially stable. If the parties are not of capacity when the contract is created then it is regarded as a void contract. The contract is to be made without any undue influence of anyone in order to ensure a contract in good faith.
- Intent: The intent to enter into the contract is to be clear before creating the contract in order to know the enforceability of the same under the law. The intent derives the purpose for which the contract is created. If the contract is created between unknown parties then the same is considered to be a commercial contract. Wherein the parties know each other for other than business then it is a social contract. When a commercial contract is formed the enforceability of the same is assumed to be present whereas same is not the case under the social contracts.
1.2: Is it possible to have a contract without face to face contact?
It is absolutely possible to have a contract between the parties whereby both the parties are not present in person. Such contracts are called written contracts or distance selling contracts. These contracts do not involve a physical presence of the party. Rather, such contracts are included in a way wherein the contract terms are discussed through exchange of mails, letters of telephonic communication. These contracts include the supplier and the purchaser whereby the intending parties undertake the conversation for the same. When such a contract is made it is said to be distance selling contracts. Most common form of such contracts is that of the online selling contracts. For such contracts it is given that the consumers can check the goods before accepting the same. It is important to determine that the communication so taking place is present in the written format. The supplier may present a product online at a certain price and the consumer while interested to purchase the same can make an offer. If the supplier accepts the offer it may present a counter offer stating the terms and conditions of the contract. The contract may then be entered into if the consumer agrees to the same. The cancellation terms and taxation amount shall be clearly determined under the contract in order to ensure the amount being paid for is accurate. (Meyer, 2010) Some other forms of contract are through mail. Such contracts are a variant of invitation to offer wherein the supplier posts a message in bulk to various e-mail addresses for the sale of different products. It may be in the form of a catalogue as well. If the consumer is interested in purchasing any of the products listed it may make an offer to the supplier through mail or a faster means of communication. Sometimes the supplier circulates the sample of products along with a slip containing the terms of contract if interested to make the purchase. This is a variant of offer to the world whereby the accepting parties will be able to enforce the contract. Other such contracts may be through the fax or telephone whereby the terms are speedily discussed whereby the contracting parties are not available in the same distance to interact personally. (Nel, 2004)
1.3: Describe the effects of the words in the advertisement
An advertisement is regarded as the notification published for publicising a certain event or a product. The advertisements are published, in newspapers, catalogues, journals, magazines, flyers and such other means of written communication. Such an advertisement is considered to be an invitation to offer because it is used for creating an awareness for the availability of the product and not the actual offer in itself. In such a case of Carlill v Carbolic Smoke Ball it was determined that the company had advertised for the publicity of the smoke ball motivating the customers of the newspaper to buy the smoke ball for a sure recovery from influenza. However, if the same does not work they guarantee to pay the amount already deposited in a bank for not functioning as promised. Mrs. Carlill was one such customer as she bought the smoke ball but was unable to be cured. When she made the claim as promised she is denied to do the same stating that she did not inform the company of the acceptance for the contract. It was determined by the judge that since the statement so made by the company in the newspaper is for the sale of the product and an offer to the world. Thereby, the acceptance under such an offer is waived off by the seller as the statement was clear in its intent to enter in to a contract for a purpose and if the same is not done the amount of damages to be paid were informed as well. The judgment for the case held that the offer is primary to the cases of acceptance and that every offer shall be clear in its intent and meaning to avoid any confusion. As under this case it was a unilateral contract the affected party may claim for damages as mentioned under the advertisement of offer. (Pratt, 2000)
2.1: Give a clear opinion on whether the essential elements of a contract were present.
According to the case facts it is determined that the William was interested in making a gym for which he required a builder. He had come across an advertisement of David and offered him to do the same. After certain negotiations the parties decide that David would revert on the amount to be charged. It is observed that William had offered on the invitation to offer from David. The contract is not yet formed as no considerations involved. Ten days later according to the decision the parties meet and decide to enter into a contract at the cost of 18000 Pounds. William as part consideration pays 1000 Pounds. Whereby a written agreement is observed being entered into. Both the parties here are of capacity for being a legal age and financially management. The contract so created would be considered to be that of commercial in nature as David provides the service of building as a business organisation . The same was approached through an advertisement by William without any prior relationship with David. Therefore, the contract would have the legal enforceability.
2.2: Was a contract formed between them?
According to the facts of the case it is determined that after the initial contract had been entered into by David and William. William towards the end of the contract determines his willingness to receive the equipment on 31at July. However, on 26th July David informed William that due to shortage of labour and limited time it is important to pay extra 2000 Pounds to meet the labour requirement. William pays the same. At the time of settlement David asks for 19,000 Pounds in balance. William contends that as the original sum of 17,000 Pounds was discussed to be entered into he would only pay that much. It is observed that the term of additional payment was already agreed to by William and thereby a contract was created between the parties for the additional sum of 2000 Pounds. The labour force was short in supply and the same cannot be equated to misuse the situation. As a contract is established on consent, William will have a legal responsibility to pay the same. (Richards, 2006)
Discuss the position of David: The contract is to be performed while determining the conditions from warranties. In case the contract is breached the party so affected is entitled to make the claim for the same. A term to be fulfilled should be included under the contract. Whereby any additions or alterations are required the same shall be common between the parties. Accordingly, William when mentioned the date of completion it was only a request made to ask for fulfilment. David did not agree to the same or denied it as he was silent. According to the law, silence is not considered to an acceptance. Different terms have different effects on the fulfilment of the contract. In the present case David made no acknowledgement of the request and thereby he had no obligation to complete the work within the time specified by William. (Vettori, 2007)
Explain the situation to David on his claim: David had to invest extra labour during the last days as he was short of labour as forecasted by him while signing the contract. The contract while being fulfilled experienced a change in the circumstances for which additional costs were required. As William had presented the acceptance for the payment of the additional costs David has the ability to claim for the amount so spent in addition to the original price of the contract. Ashe has provided his services on time and with additional efforts to comply with the same, David is entitled for the claim. (Collins, 2008)
3.1: Describe how a liability in tort may arise?
The liability arising for the wrong committed under tort is to be paid for by the person committing the tort. Such a wrong may be of several types such as the negligence, nuisance, vicarious liability and such other. A liability in tort arises from the breach of a civil duty against the society. It extends to the neighbour to whom the most effect may be driven when a duty is not performed. The right so breached under the tort is right in rem. The damages for such a wrong are decided by the courts as the facts change from case to case. The parties under the tort are not related previously and only come together from the committal of wrong. The liability so arsing shall be from an effect directly connected to the damage so caused under the tort.
The liability under contract derives from a prior relationship so existent between the parties. The contract involves the performance of duty on the part of every party owes towards the other. The right breached under the contract to claim for a liability is that of the right in personam. The damages under the breach of contract is decided based on the consideration involved under the contract. The damages are to be claimed only if the court finds that a valid contract was present between the parties for which performance was due. (Giliker, 2010) The liability under contract and tort are both said to be of strict nature. This is because when a wrong is committed the liability is due on the part of the person causing the damage. This makes the liability strict in nature. It is important to know that the parties are connected prior to the damage or not in order to derive the type of liability.
3.2: Describe what have to be proved by the claimant.
Under the law of tort, the most common form of wrong is the one created from negligence. The tort of negligence is caused due to a neglect or careless behaviour of a person. The most affected party in such a wrong is that of the neighbour of the person committing the wrong. A tort of business negligence is originated from the existence of the duty of care towards the society. The duty of care when breached amounts to a negligence. The affect of the breach shall be direct on the damaged party. The damages so suffered from the breach shall be measurable in terms of monetary loss, physical loss or psychological. The tort arises whereby the responsible party does not perform the said duty of care. The damaged party may file for a claim for damage while the court is of the view it would have been as damaging for any other party wherein the actual damage was to the damaged party. That’s why the duty of care is burdened to extend against the society at large. (Cooke, 2007)
According to the case of Donoghue v Stevenson, Mrs. Stevenson had gone to a café with her friend. However, she did not buy anything but had a beer and ice cream that was bought by her friend. At the sight of decomposed snail she went into shock and developed stomach flu. This led to a claim from the seller by her. It was decided that whereby a consumer is involved under the case of tort the liability may fall on manufacturer if the fault was in the product so reaching the market in the first place. This case was elemental in creating a liability on the part of manufacturer towards any consumer that would or may use the product as deemed fit for the product. Even if the same is not directly purchased the duty would still be owed under the society towards any consumer.
Another case of Caparo Industries provided that the tort of negligence may be scaled against a three-fold test that would derive whether a liability arises or not. The test involved three elements such as the remoteness of damage, causation and proximity. According to the test, the remoteness of damage would mean that the wrong and the damage may be connected with the least reason. The effect of the wrongful act shall directly cause the damage. The proximity of the affect shall be so close that the damage is possible. It was also determined that if it could be determined that the harm may be foreseen the person performing the act should owe a duty of care. (Meyer, 2010)
3.3: Describe the concept of vicarious liability.
The vicarious liability under the law of tort arises from a certain relationship of performance of duty between two parties. It is derived from the Doctrine of Respondeat Superior whereby a person is responsible for the acts so performed by another person because he derives the benefits of the act so performed. A vicarious liability is defined to have the responsibility for the liability so incurred by another person. This type of liability is mostly present in the case of employer-employee relationship because the employee performs the duties so assigned by his employer and would not have performed the same otherwise. It should be important to note that the wrong so committed shall be from the duty so assigned and not a personal motivation.
According to the at Health and Safety Work etc. Act it is important for the employer to provide an environment that is free from any risks for the employees in order to safeguard their best interest. This would mean that the equipment shall be of standard. If the employee suffers from a specific condition, steps should be taken in order to maintain his or her interests. According to the Occupier’s Liability Act it is important that the employer takes responsibility to inform the visitors of the risks so present on the premises by putting up notifications and the boards that are explicit in nature to do the same. The same shall extend to both visitors and non-visitors. (Giliker, 2010)
4.1: Compare and contrast the verdict in Donoghue v Stevenson with Hill v Chief Constable of West Yorkshire.
The case of Donoghue v Stevenson was a case about the liability of the wrong doer with respect to having an indirect relationship between the parties. It was determined that the order made for the drink was by her friend and not herself. Thereby, the defence presented for the case by the manufacturer was the indirect influence on the customer from the product so sold. A view that the manufacturer is only responsible to those who buy their product and consume was presented. However, the court held that as a manufacturer it is the duty towards the society to supply the product appropriate for consumption because in a market of sale and purchase a commodity changes hands several time but a defect dates back to when it is manufactured originally and that cannot be escaped.
Under the case of Hill v Chief Constable of West it is important to know that was based on the concept of vicarious liability under the government bodies. A woman accused a policeman for not exercising the duty of care to investigate for the murderers in order to protect the victims. It was determined under the court that the policeman owed not liability for negligence as the prevention of escape of the criminal is not to be imposed on the police force. It is determined that the police force has a duty in general towards the society and the same cannot be apprehended to be breached just due to an error in timing.
Despite the mistakes the police force has performed well in various cases. The police force is occupied at one time with several cases and if equal attention is not provided some or the other case gets affected. Justice has to be made available to every citizen. Therefore, the defences so undertaken was that of a public duty and not just the duty towards immediate neighbour. Although, the responsibility is limited to the cases the view so undertaken in the case is appropriate. The reason for the same would be that it is not the responsibility of the policeman but the responsibility of the government to increase the police force in order to look after the crimes at a speedy disposal. Therefore, the duty of care towards the public is owed by the government and not the policemen working for the government. The verdict is just in my opinion. (Cooke, 2007)
4.2: Discuss the position of the taxi driver from the vicarious liability point of view.
When a business is run by a person is shall be assumed that the employees so hired by him are the responsibility of the business owner. Therefore, all the actions so undertaken as an employee of the business would be the responsibility of the business owner. The instruction provided by him to the drivers for not being responsible for the actions of the reckless driving would not be that of the business is unfair. This is because when the drivers are performing the function of driving they are doing so in the benefit of the business and not personal motivation. Under the contract of employment, the employees are permanently employed with the employer for a routine of tasks. However, the contract for employment offers temporary employment and most likely does not leave the employer liable for the breach of duty of care as the duties are responsibility of the contracted party.
However, according to the case of Rose v Plenty, it was presented that whereby, the employee has performed a negligent act that is not so far away from its official duties, the employer would be vicariously liable for the wrong so committed by the employees. Under the case of Vasey v Surrey Inns, it was decided that whereby the employees had attacked the customers breaking the entrance were doing so to protect the premises of the employer as per the duties of the job. Therefore, the attack o caused would be the responsibility of the employer for having taken place on the job for contract of employment. Accordingly, the case of Alcock v Wraith decides that the employer is not responsible for the hired contractors. Similarly, under Mersey Docks v Coggins, it is provided that when an employee has two employers, the employer controlling the act that led to negligence would be liable for the breach. This would be because under contract for employment the employer only assigns the duty and not the method of the duty. Thereby, the independent contractor is liable if the cause is the performance and not the fulfilment of the duty. It further illustrates that the original employer would have a liability towards the employee in which case the independent contractors firm would be held liable for the performance as well as fulfilment of the duty.
However, the act of negligence is a breach of duty of care. The negligent driving would lead to an accident on the road that should be personally be undertaken to avoid the same. The duty of care of the driver as a member of the society is to protect the neighbours from the accident so caused from reckless driving. Whereby, the drivers are doing the same while being an employee the employer’s instructions to avoid the negligent driving is a duty under the employment. The employee should not be involved under any case to drive negligently. Limpus v London General Omnibus Co., provides that the employer is liable whereby the breach of duty takes place while performing the duty as an employee. Thereby, the employer is vicariously liable for the acts so performed while performing the duty as the driver. (Nel, 2004)
It is derived that the terms form an important part of the contract as they help in determining the fulfilment of the contract. The performance of the contract is measured based on the extent of performance of these terms by either of the parties. Every contract includes elements of offer, acceptance, consideration, capacity and intent. It is essential that the contract so formed is valid and includes these elements to make it enforceable. If the contract terms are not fulfilled it would create a liability on the non-performing party. The liability under tort arises from the non-performance of the duty already owed by the member of the society towards the immediate neighbour. If the same is not performed the safety of the person is hindered for which damages may be claimed. The differences between the two types of liabilities are highlighted in the assignment. An attempt to identify the different types of liabilities arising under the law of tort has also been made to gather a better understanding.
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 Pub.