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Aspects of Contract & Negligence

Essential Elements Required for a Valid Contract

INTRODUCTION TO ASPECTS OF CONTRACT AND NEGLIGENCE

A contract is a valid promise made by one party to another. It is a legal agreement related to completion of a good deal which is important in its nature and includes the sale of goods and services. Many organizations try to minimize their responsibilities under a contract and the rules are follows to maintain the customer’s interests (Britton and Bailey, 2011). This report discusses about the importance of the essential elements required for the formation of a valid contract. The four essential elements of a contract are; Offer, acceptance, consequences and intention of legal consequences. In contract law both parties are legally bound, and any deal is made when the parties are ready to fulfill requirement of each other and this contract between both the parties is enforceable in court.

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Task 1

Lo 1.1 Importance of the essential elements required for the formation of a valid contract

All agreements are not contracts. The agreement which is enforceable at law is a contract. In case if two terms agreement and contract are compared than agreement has more scope than contract (Elliot and Quinn, 2009). All agreements are not contracts but all Contracts are agreements. Conformity is to be enforceable by law, must possess the necessary elements of a valid contract. All agreements are contract if they are made without any disputes by the parties.

The essential elements of a valid contract are discusses below:

Offer: In order to make a valid contract, there must be an offer which is lawful by one party and a lawful acceptance by the other party. The tender or quotation is declared to do work regarding that offer (Graham and Smith, 2006). For example, if a company release a tender to sell 150 boxes of cold drinks at the price of $10,000, that company is making an offer.

Acceptance: A contract is not valid until the offer is accepted by the party to whom the offer is addressed. It is the offer made without any conditions. It can be given verbally or in writing which clearly indicates acceptance. For example, dealer immediately deliver the goods to the party without saying or writing anything when he/she receives the cheque.

Intention of legal consequences: A contract requires that the parties aim to enter into a lawfully compulsory agreement (Horsey and Rackley, 2009). The parties entering into the contract must look to create legal relations and must understand that the agreement can be enforced by law. If the parties to a contract make a decision not to be lawfully bound, this must be clearly confirmed in the contract for not to be legally enforceable.

Consideration: In order for a contract to be compulsory it must be maintained by valuable consideration. When one party promises to do something in return for a promise from the other party, to provide a benefit of value is known as consideration (Reid and et.al, 2009).

Lo 1.2 The impact of different types of contract

A contract is an agreement between two parties that must include the essential elements such as an offer, an acceptance, and a consideration. There are different types of contracts used for different purposes (McKendrick, 2008). The different types of contract are; written contracts and verbal contracts.

Written contracts: It refers to a written document outlining an agreement between two parties. This contract has been properly written and signed by the parties. A written contract is mainly uses by many organizations because it is valid and it looks like a contract not simply a receipt. It is helpful during any disputes between the parties (Pattern, 2007). Once this contract is signed, it is assumed that all the terms and conditions have been read and parties are satisfied.

Verbal contracts: It is a contract which is expressed in words. In this modern world it is mostly used because it is time saving, cost effectiveness, maintain good relationship and improving the communication skills. It is rely on good faith of all the parties. It is sometime misused because parties are refused to fulfill the demand.

Lo 1.3 Types of terms in contracts

Various declarations will frequently be made by one party in order to encourage the other party to enter into the contract (Plimpton, 2007). A dispute may later take place as to which the statements made should be considered a term of the contract. Parties to a contract are forcible only by its terms, not by any minor statements that may have been made. There are different types of terms in contract and their effects are discusses below:

  • Conditions: It is a major term of the contract which goes to the root of the contract. If a condition is breached the victim party is entitled to end the contract (Riches and Allen, 2011).
  • Warranties: It is minor conditions of contract which do not cause any negative effect on the contract.
  • Innominate terms: Those conditions which cannot be classified as warranties or conditions. It is mainly depending on its effect on the innocent party.
  • Expressed and implied terms: In expressed terms, the contracts are made when the parties agree to each other. It is made during negotiations prior to end of contract becomes a term of the contract or

remains simple promise (Sadah, 2010). Implied terms take place when both the parties do not agree with the contract and it is invalid. The term cannot be implied if one of the parties’ was not aware of the subject matter of the term on which it is based.

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Task 2

Lo 2.1 Elements of contract

An agreement contains four essential elements of a contract. If any one of them is missing, the agreement will not be lawfully binding. The essential elements of a valid contract are; offer, in order to make a valid contract, there must be an offer which is lawful by one party and a lawful acceptance by the other party (Twomey and Jennings, 2010). In the given case, Harry making an offer to Miss Kaur that he would sell pen for £950. In acceptance a contract is not valid until the offer is accepted by the party to whom the offer is addressed. It is the offer made without any conditions. It can be given verbally or in writing which clearly indicates acceptance (Warren, 2013). In the given situation, Harry delivers the pen to Miss Kaur when he receives the amount.
In intention of legal consequences the parties entering into the contract must look to create legal relations and must understand that the agreement can be enforced by law. Both Harry and Miss Kaur have to create legal relationship and this relationship is made when Harry sell pen to Miss Kaur according to his promise at £950. But when Miss Kaur come back after lunch the pen is already sold by Harry at £1000 (MacMillan and Stone, 2009). In this case Harry is not lawfully bound this must be clearly confirmed that both the parties are not to be legally enforceable. When one party promises to do something in return for a promise from the other party, to provide a benefit of value is known as consideration. Miss Kaur promises to pay £950 for pen to Harry. But he sold the pen to other party at £1000.

Lo2.2 Relate the law on terms in different contracts

While entering into the contract different statements will be made by one party in order to support the other party (Astrom, 2013). Parties to a contract are bounded only by its terms, not by any minor statements that may have been made. There are different types of terms in contract: a condition is a main term of the contract which goes to the root of the contract. If a condition is breached the victim party is entitled to end the contract. In the given case, Murphy is the victim and he is entitled to end the contract with Charles. Innominate terms are the conditions which cannot be classified as warranties or conditions. It is mainly depending on its effect on the innocent party (Gillies, 2005). In the given case Murphy is the victim and he files a case against Charles because Charles agree to increase his payment by £10,000 but after completing the work on time Charles refused to make the additional payments to Murphy outside the original contractual price.
In exclusion clause the term must be incorporated when the court have traditionally held that this clause only operate if they are essential part of the contract. There are three methods of incorporation; by notice, by signature and by past cause of dealings (Johnson, 2013). But in the given case Murphy take help from court and file a case against Charles because he refuses to give Murphy the extra amount.

Lo 2.3 The effect of different terms

In this particular case of Mr. X and Miss Y they made an express contract because they both are in same sense at the time of making contract. According to law they have attained the age of majority so they are liable to each other. The effects of various terms are:
Offer- It means that Mr. X has made an offer to Miss Y for the job of research assistant and made a written agreement and both undergo certain clauses. So, they both are liable to each other.

Acceptance- Miss Y accepted the proposal made by X and ready to work with the stated conditions. So, now she is liable to complete the work given to her by Mr. X.

Capacity of parties- In this case both the parties have attained the age of majority and they are of sound mind when the contract is made.

Free consent- It means that both the parties mutually agreed to the contract. They are not forced by any of the other party to do the same.

Lawful consideration- It states that when the job was offered by the person he has offered some lawful consideration also and which was accepted by other party.

Task 3

Lo 3.1 Distinguish between contractual liability and liability in tort

In liability in tort, no objective has been covered by the parties in contract whereas contractual liability takes place when two parties work together for same objectives. There are no terms and conditions which have been covered in tort (Potter, 2012). But in contractual liability there are rules and regulation which have to follow by the parties. Tort has no thought shaped between the parties but in contractual liability consideration is constructed according to party’s requirements.

When X asked Y to create certain statistics for a meeting with an important client at 9 am on 2nd June. Y was not able to complete the statistics on 1st June. She returned to the office at early 7 am on 2nd June but had still not quite finished the work when X arrived at 8:30 he was angry (White and Baldwin, 2009). He then noticed that Y was wearing trousers and told her, in front of staff, that her contract was terminated. Y was extremely upset and humiliated and due to this she is receiving medical treatment for depression.

In this case liability in tort and conceptual liability take place. There are rules and regulations regarding the dress code so in this situation X terminate Y because rules and regulations are followed in conceptual liability (Peel and Treitel, 2007). There are no terms and conditions regarding the working hours so X did not terminate Y because no terms and conditions are covered in tort.

Lo 3.2 The nature of liability in negligence

Negligence is a lawful concept in the general law legal systems mostly useful in tort cases to reach monetary compensation for physical and mental injuries. The different components of tort include:

Duty of care: It includes personal injuries and damages. It is the duty of X not to harm any damage to Y (Chetwin, 2011). When X terminated Y, she was extremely upset and humiliated and due to this she is receiving medical treatment for depression.

Breach of duty: The person who caused the damage did not live up to his or her responsibility. It is the responsibility of X not to harm any damage or injury to Y. but in this case X terminated Y and not lives up to his responsibility.

Causation and remoteness of damages: It relates to the requirement that the damage must be a foreseeable type. In the given case X did not terminated Y because she of his uncompleted work (Middlemiss, 2011). He terminates Y because she wears trousers which are not an acceptable form of dress under this circumstances.

Lo 3.3 How the business can be vicariously liable

Vicarious liability can take place in situations where one party is supposed to be liable for a third party. In the given situation, X is liable for unlawful actions by which Y was extremely upset and humiliated (Allen and Overy, 2007). Even though X is not the one who committed the unlawful act, but he is liable because it is considered liable for Y actions while she is on the job and it is considered to be able to prevent from any harmful acts. The employer may be able to avoid vicarious liability by exercising reasonable care to prevent the unlawful behavior. X can avoid vicarious liability if he did not terminated Y and help her to produce statistics for meeting.

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TASK 4

Lo 4.1 The elements of the tort of negligence

Business Scenario 5: In this case, ship of UK was taking oil to Sydney harbor and on the way it was spilled in water and floated to wharf 200 yards away (Rogers, 2005). There welding wok was going on and he was advised that he can continue with his work as there were very less or no chances of sparks to set fire to furnace oil. In order to avoid any mishap, every single safety precautions were taken. But suddenly, spark felt on the piece of cotton waste which was floating in oil as a result to which fire was started which has damaged the entire wharf. As per Vicarious Liability of Occupiers Liability Act 1984, the owner of wharf has right to sue chatterers of the ship as this entire course of action take place due to mistake done on the part of ship by means of which wharf has suffered heavy losses (Gray, 2010). Vicarious liability is a kind of legal doctoring which has the power to assign liability for any kind of injury to person who is not held accountable for damages or on the part of whom damages did not take place. But because of legal relationships with defaulter party they become liable to make payment for damages. On the basis of liability, chatterers can be sued by owner of ship as he has incurred losses due to act carried out by ship.

Business Scenario 6: In this, for maintenance of vehicles Bell was employed by Shell who was disabled as he lost sight of one eye (Velentzas, Savvidou and Broni, 2009). As his injury was quite small, so it was not a normal practice for him to issue protective goggles. During work, one fine day his good eye hit by metal chip which flew into his eyes and as a result to it he became blind. The Unfair Contract Terms 1997 will be considered in this case which implies that any personal injury to any employee which is caused at employer’s place will be paid by employer (Jerrell, 2010). In this particular case Bell lost his eye sight during his work so according to section 2(1) of The Unfair Contract Terms 1997, it is the first and foremost duty of Shell to pay for injury and damages to Bell.

Lo 4.2 The elements of vicarious liability

Business Scenario 7: In this state of affairs, Alf was being employed by Safe Care Homes Ltd which carries out their operations by working for vulnerable children in London. Alf was appointed warden of care home in which he was being accused for sexually abusing some of the boys (Britton and Bailey, 2011). By listening to this, guardians as well as parents of children became angry and decided to sue Safe Care Homes Ltd as Alf was their employee. In this current case, care home is being liable for torts of Alf according to vicarious liability of Occupier’s Liability Act 1984. As per this law, employer will be held accountable to pay for damages on the side of employee as they are charged with one or other type of legal responsibility for negligence of their workforce (Elliot and Quinn, 2009). Alf has sexually abused boys of care home and according to vicarious liability; care home became legally liable for torts as misconduct was done on the side of employee.

Business Scenario 8: The case revolves around Amos Bridge who is a pump attendant at AB and Sons garage ltd. One day at duty he challenged one of the customers Mr. Alex Khan that he went without making any payment for diesel (MacMillan and Stone, 2009). Bridge accused Alex by threatening him and insulting him and reports this case to his manager as a result to which he was being hit on his chin by one of the employee. Mr. Khan has taken this matter to court and company being held liable for the act of Mr. Bridge as he was the employee of business enterprise and share legal employment relationships. According to vicarious liability organization is held accountable for the act which was being conducted by employee and has to pay for it (Velentzas, Savvidou and Broni, 2009).

CONCLUSION

A contract is a lawfully enforceable agreement made by one party to another. Each contract makes some rights and duties on contracting parties. This report discussed about the essential elements of a valid contract. They are offer, acceptance, intention of legal consequences and consequences. In order to make a valid contract, there must be an offer which is lawful by one party and a lawful acceptance by the other party. A contract is not valid until the offer is accepted by the party to whom the offer is addressed. Acceptance is the offer made without any conditions. It can be given verbally or in writing which clearly indicates acceptance. When one party promises to do something in return for a promise from the other party, to provide a benefit of value is known as consideration.

REFERENCES

  • Adams, A., 2010. Law for Business Students, 6th edition. Pearson Education Ltd.
  • Astrom, O. H. Z., 2013. Credit risk management pertaining to profit and loss sharing instruments in Islamic banking. Journal of Financial Reporting and Accounting.
  • Britton, P. and Bailey, J., 2011. New homes and consumer rights: England and Australia compared. International Journal of Law in the Built Environment.
  • Chetwin, M., 2011. Comparative analysis of some aspects of assessment of damages for contractual breaches in England and Wales. Australia and New Zealand. International Journal of Law in the Built Environment.
  • Elliot, C. and Quinn, F., 2009. Tort Law, Longman.
 
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