Unit 5 Various Legal Contracts Assignment
Diploma in Business
Unit Number and Title
Unit 5 Various Legal Contracts
The unit 5 various legal contracts assignment is developed so as to provide effective set of knowledge regarding various legal and regulatory frameworks in accordance with various types of contracts. Information related with various breach of contract will be shared in this report. With the help of this report information related with various liabilities will be delivered so as to provide proper set of direction to general public.
P1.1 Explain the importance of the essential elements required for the formation of a valid contract.
An agreement helps in binding the contracting parties legally which is to be enforceable and recognized under the business law. Social agreements are the agreements which take place between the family members and friends on the other hand Commercial agreements takes place between the professionals. There are certain standard elements of contract they are:
- Offer and Acceptance: The statement that shows the willingness by the offeror which is expressed for acceptance by the interested person which becomes offerree once it is communicated in an effective manner (Meyer, 2010). It is not necessary that invitation to offer and the statement shown for the intention could meet the requirements of an offer. For an acceptance it is necessary that offeree should communicate the acceptance because a mere silence means that no offer is made. Under the sale of goods contract customers are the offeror and seller becomes the offeree.
- Intent: Intent helps in differentiating the commercial contract and social contract. It is being evaluated that social contract is the contract in which intention to the contract should be expressly mentioned on the other hand it is totally opposite for the commercial agreements. Under the sale of good contract intent for the purchase the goods and selling those goods at an agreed term exists (Collins, 2008).
- Consideration: The sacrifice or the amount paid by the party involve in the contract in fulfilment of the contract and the promise made by other party charging the price. Enforceability of the contract is established by consideration. Consideration may be taken in a form of money, property acts or forbearance which could be executed or executory. It is necessary that the consideration should be presented in a legal form. Under sale of goods act such type of exchange of the products and price takes place.
- Privity: The establishment of a relationship in a legal form which is of a contractual form so that rights and duties of the parties that falls under the contract could be identified. Such type of duties helps the seller so as to provide quality and competitive price in the marketing planning. Relationship of an agency, assignment and contracts are expected in such type of elements which are regulated under the Road Traffic Act, 192 (Giliker, 2010).
- Capacity: The capability of the parties indulging in the contract is known as capacity. According to the Family Law Reform Act, 1969, people who are incapacitated to the contract are termed as minor also the people who are suffering from mental disorders, which are certified as insane or not insane under Mental Health Act, 1983. Minor Contract Act, 1987 also looks after the contracts which are entered by the minors who are of age below 18 years. There are certain contracts which do not require ratification on attaining the age of majority such contracts are marriage, settlement, partnership and purchase of the shares.
P1.2 Discuss the impact of different types of contract.
Various Contracts having different impacts are:
- Face to Face: Face to face contracts are the contracts which can be entered by the parties just by the mere conversation only. These contracts are not presented in a written form. These contracts are restricted to the terms which are verbally discussed by both the parties and termination of the offer held when conversations ends. Offer may remains standing if expression is made by the offeror in otherwise.
- Written: The contract which is entered by the parties which is presented in a written form. Such types of contracts are capable of being read and interpreted. Written contracts could be shown in an evidential form in the law of court (Koziol, et. al., 2008).
- Distance Selling: There are certain contracts that are in which physical presence is not necessary but are presented in a written form such type of contracts are known as distance selling. Contracts falling under distance selling are presented and accepted within 15 days. Contracts falling in distance selling could be cancelled within the 30 days.
- Implied – in – Fact: There are certain that are entered into by the conduct of act such type of contract are known as Implied in fact contract, it is not necessary that these contracts are presented in a written or oral form. For example: in case of emergency patient gets agreed to get treated by the doctor. This is the case in which contract is entered into on the basis of meeting, such type of contracts are mostly of unilateral nature. Enforceability for such type of contracts are little difficult in the court of law in comparison to the written contract (Linden, et. al., 2007).
P1.3 Analyse terms in contract with reference to their meaning and effect.
To induce others it is necessary that representations should be made to the parties to the contract while entering into it. These kinds of contracts are of binding nature on breaching which may result in meeting the damages and certain other remedies. There are certain ways in which remedies can be stated, these are as follows:
- Damages: Damages are the amount or the price money which is awarded so as to compensate the losses which are suffered by the parties which get affected. Compensation could be liquidated or could be calculated specifically on the basis of expectation, reliance or loss (Koziol, et. al., 2008).
- Action for Price: Action of price is applicable if payments of goods and services rendered are not made.
- Quantum Meruit: Amount for which it is worth and is payable.
- Specific Performance: When the non performing party is being enforced by the court so as to perform according to the contract.
- Injunction: Certain aspects are restricted according to the clause for which court enforce the party not to indulge in certain type of activity.
- Rescission: When the contracts and its effect are cancelled and the parties indulge in the contract are returned to the pre contractual state (Collins, 2008).
There are certain ways in which contract could be terminated which are through performance of the contract, agreement, frustration or breach. There are certain tests that are used by the court so as to establish nature of binding to the contract:
- Time available between the contract and statement made
- Analysing that whether the statement was written or oral
- Statement relevance for the contract
- Representator’s expertise
Various terms of contract in respect to the breach and its effect:
- Condition: Conditions are the primary aspects of the contract, breaching of conditions could result in void of the contract. Claim could be made by the affected for the damages occur in the breach.
- Warranties: Warranties are the terms that are important to be presented in the contract but are secondary to the condition. Non performance of the terms of warranties by either of the party may lead to void the contract. In such case affected party may claim for the damages (Meyer, 2010).
- Innominate Terms: There are certain terms which are of uncertain nature and vary according to the contract. Court takes care for the interpretation or decides on the basis of the losses suffered by the parties.
- Exclusion Clause: There are certain terms that limit the won liabilities of the party which are subject to the abuse by a party having strong control over the contract. There are certain tests that are applied so as to make the judgement which are as follows:
- Common Law Test: It is the test in which clause is presented in a clear and precise manner.
- Statutory Law Test: Certain set of negligence are there which are attached with the death or personal injury of a person in such type of situation breach occurs which affects the contract.
To protect the interest of the consumers provisions are made from the sellers indulge in the sale (Giliker, 2010).
P2.1 Apply the elements of contracts in a given business scenarios 1, 2 and 3.
Business Scenario 1
Facts: Scenario is given in which Mrs. Kaur is vintage pen collector for which she traveled from London to Manchester so that she could attend the auction of Montblanc pens. In that auction a limited edition pen was suppose to be sold. Notification about the action was received with the help of an advertisement through newspaper. Auction was on second which now got cancelled due to which Mrs. Kaur got disappointed and moves to see the pen in the nearby shop. In the shop Mrs. Kaur found the same pen (Linden, et. al., 2007). To purchase that pen she negotiated with the shop keeper for which the last price that was decided was 950 Euros. Mrs. Kaur asked for some time to think by the shopkeeper and told the shopkeeper not to sale the pen until that. After lunch when Mrs. Kaur again visited to the shop she found that the pen was sold for one thousand Euros.
Interpretation: There are certain analyses that are made:
- Response to the advertisement was given by Mrs. Kaur which is regarded as an invitation
- Mrs. Kaur was termed as the offeror after she made the decision to travel to Manchester so as to purchase the pen.
- An open offer to Harry was made by Mrs. Kaur because the pen was available for general public of Manchester and not for Mrs. Kaur (Koziol, et. al., 2008).
Hence, it is necessary that Mrs. Kaur should know that initially the invitation was made by the company and another was an open offer. There was no agreement made in either of the case. It could be suggested that Mrs. Kaur cannot claim the damages occurred.
Facts: A business of independent contractor was recently started by Mia. Friends of Mia, Hakim, Brother and Jane made an offer to him so as to do some work for them which will help Mia in gaining experience. 2000 Euros were offered by Hakim so as to fix the bathroom and 100 Euros were offered by Jane so as to fix her office (Giliker, 2010). After completion of the work no one paid him because reason behind it was that the primary purpose was to provide the experience to Mia.
- Contract was held between Mia and Hakim
- Contract was held between Mia and Jane
- Contracts held were verbal contracts
- Nature of binding was ambiguous
It could be analysed that the contract was both oral and social, it is required that such type of contract should express its legal binding if they are presented. There were no such legal bindings were found due to which it could be said that Mia cannot make claim for the promised amount by Jane and Hakim (Meyer, 2010).
P 2.2 Apply the law on terms in different contracts using a contract of your choice.
- Time records provided should be maintained in a proper manner
- According to Employment Rights Act 1996, it is necessary that 8.5 Euros per hour should be paid to the employees.
- According to Employment Rights Act 1996, it is necessary that sick leaves should be provided to the employees (Richards, 2006).
- According to Equality Act 2010, equal treatment should be promised at the workplace.
- Certain small issues should be resolved informally without taking any strict actions.
3. Express Terms:
- Employee can be terminated without giving any prior notice
4. Implied Terms:
- It is necessary that grievance cell of the company solve the grievance that arises.
- Proper professional attire should be worn by the employees.
5. Exclusion Clause:
- Refreshments will not be provided to the employees
- Any monetary bonuses will not be provided to the employees (Collins, 2008)
P 2.3 Evaluate the effect of different terms in given contracts using business scenario 4
Business Scenario 4:
Facts: Miss Y was hired by Mr. X for three years and provided several clauses in the question which are as follows:
- It is required that Miss Y should in put all the time that is required to complete the tasks
- It is necessary that Miss Y should dress in formal attire at all time in which trousers will not be allowed.
Tasks were assigned to Miss Y so as to complete an important meeting. Miss Y fails to perform the task and attend the meeting in Trousers without any complete work.
- Relationship o employee and employer existed between the parties
- The term was innominate term
- Another term was express, condition and exclusion clause (Vettori, 2007).
Making the innominate terms as a warranty does not provide the basis of any kind of claims. Reason for the termination was non completion of the tasks provided and not following the clause in proper manner. Hence, no claim could made by Miss Y for the termination.
P 3.1 Contrast liability in tort with contractual liability.
Any wrongful act give rise to the liability under Law of Tort on the other hand performance and non performance of the terms gives rise to the liability under contract. There are certain liabilities that are recognised under law of tor these are:
1. Liability of Negligence: there are several principles where an act is an agreement:
- Duty of care is presented
- Breach of the duty of care
- No assessment of the risk attached and breaching the duty of care
- Consequences of the breach help in deriving the reason of the harms that are suffered by the affected party.
2. Vicarious Liability
- Employer and employee relation is presented
- Undertaking the risk of assessment
- Breach is conducted by the employee during the discharge of the duty
Diff. b/w the contractual liability and tortuous liability:
Parties indulging in the contract
Liability up to which extent it is required
depends upon the condition
Depends on the price considered
Duty for which care is required
It is presumed
It depends on the terms of contract
P3.2 Explain the nature of liability in negligence
Certain factors enforce the establishment of liability for the negligence:
- Duty of Care: There are certain duties that are based on the actions that stands against the society like duty to provide the medicine to the users with the necessary information of the salts so that safety dosage could be provided to the patient which could help it in cure and do not cause any harm of personal injuries in terms of health and death (Giliker, 2010).
- Breach of Duty of Care: When the duty of care remains unassisted then it is termed as breach of duty of care.
- Damages Arising: There are several tests that should be adopted according to the Wagon Mound Case, these tests are
- Remoteness of Damage: Presence of the breach of duty and the foreseeability of the damage that is caused should be there in neighbour test. Egg Skull test is the test that involves that the pre existence of conditions should be there to as to avail the contribution in the damages so caused (Cooke, 2007). According to the Occupier’s Liability Act, 1957 it is necessary that occupier should assess and eliminate the risks based on the principles.
- Causation: Damages are related with the wrongful act.
- Foreseeability- Proximity: It is necessary that the wrongful acts and damages should occur in proximal limits that are to be related for the reason and consequences. By predicting the damages the wrongful damages could be analysed.
- Burden of Liability: As an independent liability the liability may be categorised according to the extent up to which wrongful act is involved. If in case one party is solely found to be responsible for any kind of wrongful act then the affecting party would be responsible. If in case both the parties are found to be participated in the occurrence of wrongful act then the damages arising would be because of contributory negligence.
- Personal Injury: It is necessary that personal damages should occur so as to claim the tortuous liability (Koziol, et. al., 2008).
P 3.3 Explain how a business can be vicariously liable
It is previously mentioned that vicarious liability occurs between the employee and employer relationship. Some of the relationships in which such liability falls are as follows:
- Agencies where the principles for the acts are conducted by the agents and not by the owner.
- Partnership in which partners works on the basis of each other’s decision
- Master remains responsible for the doings of his servants.
Liability of the employers occurs in such cases because employee performs the duties of the employer that are delegated on him and are performed to provide benefits to the employer. It is necessary that the nature of the act should be decided so as to establish the employer’s vicarious liability:
- Detour: When the duty is performed in relation with the said act.
- Frolic: When the duty so performed is not in accordance with the said act.
According to Health and Safety at Work Act, 1974, it is necessary that employer should ensure that all provisions for the health and safety of the employees are undertaken and all the health and safety equipments are placed at a right place in the premises. It is also necessary that employer should undertake the provision to keep the clean and healthy water for the employees working with other senoir employees.
P 4.1 Apply the elements of the tort of negligence and defences in different business situations using business scenarios 5 and 6.
Business Scenario 5
Facts: The case is about ship carrying oil from which oil was spilling which approached the wharf where the welding work was conducted which was at a distance of 200 Yards. It was noticed and wharf owner was advised the spark could lead to catch fire in the oil. However, even after providing the information the welding work was not stopped due to which oil spill caught fire.
- Duty of care held with the ships travelling in the sea
- Duty is breached
- The event was foreseeable
- The loss was caused to the damage of the property and the economic property (Koziol, et. al., 2008)
In the event that had occurred both UK ship as well as the Wharf both had the equal contribution. Negligence was shown by the UK ship in oil spill and after knowing the result wharf continues to do the welding work. Hence, it could be said that the act was an act of contributory negligence and cannot be claimed only from the UK ship.
Facts: Shell has an employee named as Bell. Bell was employed to perform the vehicle maintenance at Shell which involved low risk of eye injury. This was considered because Bell was having problem with his eye. Another eye of Bell which was fine got injured while at work because of the metal chip that flew into his eye.
- Employer and employee relationship is shared by Bell and Shell (Linden, et. al., 2007).
- Risk attached to the job was shared by Bell which was accepted by him.
- Necessary provisions were not taken by Shell in relation with the protection
- Risk remained unassisted
According to Health and Safety Act 194 it is required that an employer should ensure that all the safety and security measures should be undertaken which were not undertaken by Shell. Hence, it could be said that damages for the personal injuries should be claimed by Shell.
P 4.2 Apply the elements of vicarious liability in given businesses situations using businesses scenarios 7 and 8.
Business Scenario 7:
Facts: Safe Care Homes Ltd. is a care home in which Alf was a Warden, it was instructed that Alf will look after the children who are vulnerable in London. After sometime it was noted that Alf was involved in the sexual harassment of the boys during the working hours of the job. Parents asked to sui both employers as well as employee for such type of acts (Pratt, 2000).
- There was a relationship of employer and employees between Alf and Safe Care Homes Ltd.
- Act of sexual abuse was conducted by Alf while he was on the job
- Duty of care was neglected by Alf
- Act of Alf was not in accordance with the professional duties (Nel, 2004).
Hence, it could be said that such type of activity was included in the professional duties of Alf. It was a breach of law as necessary precautions for the safety and security of the customers were not taken. In this case Alf will only beer all the damages and employer of Alf will not be liable for any kind of claim.
Facts: AB and Sons Garage Ltd. have the employee named as Amos. Amos worked as a pump attendant over there. After filling the tank of Mr. Khan, Amos accused him for driving away without paying for the oil filled at the station. This lead to create arguments in which Mr. Khan started threatened to report the disrespectful behaviour sown by Amos due to which Amos got furious and hit the chin of Mr. Khan (Balfour, 1919)
- Existence of employer and employee relationship
- Performance of duties by Amos
- Amos hit due the reason of personal drives
- Innocence was claimed by Mr. Khan
It could be analysed that the act of claiming amount was in relation with the professional duty of Amos which was done for the employer. In this scenario argument made was not included in the professional duties and nor the action of hitting Mr. Khan. All the aspects explained in the scenario resulted in the partial claims towards the employer for the purpose of claiming the money or the economic loss but not for causing the personal injury to Mr. Khan. For the personal injury only Amos will be said to be liable. Hence in this case partial vicarious liability is established (Currie, 1875).
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It could be concluded that the assignment h provided various aspects related with contracts and liabilities that could occur of the terms or contract is being breached by any person. Difference between various types of contracts were analysed which helped in delivering the information of each contract for the organisations and the parties indulging in the contract.
Balfour v Balfour  2 KB 571
Collins, H. (2008). Standard contract terms in Europe. Alphen Aan Den Rijn: Kluwer Law International.
Cooke, P. (2007). Law of tort. Harlow: Longman.
Currie v Misa (1875) LR 10 Ex 153
Dunlop Pneumatic Tyre Co Ltd v Selfridge Co Ltd UKHL 1, AC 847
Giliker, P. (2010). Vicarious liability in tort. Cambridge, UK: Cambridge University Press.
Holden v White  2 All ER 328
Home Office v Dorset Yacht Co Ltd  AC 1004
Koziol, H., Schulze, R. and Antoniolli, L. (2008). Tort law of the European Community. Wien: Springer.
Linden, A., Feldthusen, B. and Brecher, J. (2007). Negligence. Markham, Ont.: LexisNexis.
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.