Law has turn out to be one of the most important aspect in regulating the system of society. It has been worked as a protection layer to all the citizen who are governing with certain rights and duties. It is because of enactment of law only, several rights and duties have been granted to people which is why it became easy for the people to seek any kind of legal remedy in court of law.(Hunter, 2015.) It is a well known fact that half of the world is being govern by business activities which has been regulated by most of the companies and it became necessary to protect such business activities. Taking this view in context government had initiated several plans which will result into enactment of acts and law. The main aim behind enactment of these law is to protect interest and rights of people who are engaged in business activity. Following project will aim for reflecting all the important aspect of contract which has been taken as one of the important part of business activity. Main motive of project is to rise good knowledge and learning skills regarding contract and its various parts with reference to certain cases.
A contract has been taken as one of the important aspect at all times specially for all those organisation who has been involved in some kind of business activity. It is very important for all those business organisation who are planning to sign a deal with another company, to know various important elements of the contract.(Clarke, Lancaster, 2013.) It is to be done because only a valid contract shall arise legal liability on the party when there shall be breach in any term of contract, hence it is very important for both the parties to enter into a valid contract. A formation of a valid contract can be done when these elements are to be included while the contract has been made:-
Parties- the first and foremost essential element to a contract is that 2 parties shall be present while making a contract. A contract can only be formed when there are two parties or more than two. None of the party can make contract with himself it is very essential that 2nd party shall be present while entering into a contract.(Gommer, illiams, 2012.)
Offer- when 2 parties have a interest for the formation of a contract then an offer shall be made by one party to another. It is very essential to make an offer in which the other party will show interest. An offer shall be made on valid and lawful object.
There are certain kinds of offer written as follows:
- Counter offer :- The offer made by 2nd party in reply to the primary offer to 1st party to negotiate further between them and form a final contract.
- Advertisement :- These are generally constituted through media like internet, television, print ads, bill boards etc.
- Display :- These are the offers for the promotion of goods and services publicly.
- Invitation to treat :- An invitation made by one person to another person to convert an offer into a valid contract. For ex. The displayed price tag on a certain item in a shop is an invitation to treat not an offer for sale.
The offer can be terminated by a party by various types like revocation of the offer by the offerer, or if counter offer given by offeree or the offer is rejected by the offeree, due to the lapse of time or due to the death or disability of either party or if the performance of contract becomes illegal after the offer is made.
Acceptance- once the offer has been made by one party then it is the duty of another party to accept the offer. An acceptance shall show the interest of the party to enter into a valid contract. Without the performance of acceptance no contract can be formed. The main thing that's need to be considered is communication because without communication an acceptance can't be able to come in knowledge of offerer.
Consideration- consideration is basically exchange of value from one party to another. A consideration shall be there on certain object over which a contract has to be made. When a party make a consideration(Marks, Marks, Jackson, 2013.) in a contract then he must take care of including a lawful consideration. When the consideration has not been made lawful then the contract shall be entitled as void and does not raise any legal obligation.
Rules of consideration:
- Promise to pay certain price for a good or a service.
- Promise by parties not to sue each other while settling claim.
- While earning a good package one should agree to leave a company.
- For working earning a certain wage for specified number of hours.
- Both the parties must be benefited by one – another's promise.
Agreement_it is the last essential element towards the formation of a valid contract. An agreement shall show that parties who have entered to a contract does possess a legal obligation to each other. Here legal obligation is rights and duties of one party towards other in terms of fulfilling the condition of contract. In case no right and duty has been fulfilled by party which has been mentioned in contract or if there is any breach then it shall result into legal liability on to the party.(Azoulay, 2012. )
Incapacity to form a contract or competency to form a contract :-
- Person should be major i.e., above the age of 18.
- Person should be of sound mind i.e., not like lunatics.
- Person should not be disqualified by law to enter into a contract.
- Person should be able to understand consequences of the contract made by him.
- Person should not be insane at the time of contract.
Intention of parties to enter into a contract :- The agreement between the parties must have a legal obligation on each other. Parties should have intention to go in front of court of law to form a contract.
Privity of contract :- Privity of contract is a doctrine says that third party has no right to sue any of the party to a contract accepting the fact that the damages occurred to third party.
Consent: consent is a free assent to given by both the parties without any fear, threat, undue influence etc.
Besides the essential elements of contract there are various types of contract too which shall be formed by the parties according to the need of situation and preference of the parties and those are:-
Face to face contract:- it shall referred to a contract which has been made by the parties in person that is both the parties shall be present in front of each other physically. Such kind of contract shall include transparency and accountability for both the parties.
Written contract:- when the formation of contract has been taking place in terms of written document that is when a contract has been made in documents and the clauses and conditions are mentioned in a written document. Such contract is the most preferable kind of contract as they appear to be concrete evidence in front of court of law.
Distance selling contract:- when the contract has been formed on telephone of internet shall be termed as distance selling contract.(Chomsky, 2014. ) These contract generally include sales and purchase of goods and services.
Bilateral contracts :- An agreement formed between two parties for an exchange of a promise of one party is the consideration for supporting the promise of other party.
Unilateral contracts :- A unilateral contract is a legally enforceable promise between two parties who are competent to do or to refrain from doing a specified legal act.
When the contract has been formed then there are certain terms which is to be included in the contract and those are:-
Implied terms- these are those terms which has been included by the government or statute in the contract and are essential to put in a contract. These terms are implied on the parties who raise an intention as well as interest to enter into a contract. For an example consideration is known as one of the implied term which a party who is into contract has to mention or has to follow.
Express Terms- these are those terms which has been stated by the parties.(Mandiartha, Duffield, 2016.)Any terms which has been expressly included by the party is known as express terms. For an example if a party include any kind of exclusion clause that is fall of liability on to other party by mentioning any special clause. Or any other provision which will fall liability on to other party.
Exclusion clause :- It is a term in a contract which restricts rights of the parties to a contract.
Conditions :- It is the obligation or a duty that is required to be followed by both the parties.
Warranty :- It is a guarantee or promise of assurance by a party to another one.
Innominate :- These are those contracts which have no classified particular name.
Puffing :- A judgement or an opinion that is not made like a representation of fact.
Representation :- Any conduct or any action that can be put up into a form of statement of fact.
For understanding the various aspects of contract, different cases have been discussed below to describe the facts and application of contract's element
Case A: Carlill v Carbolic Smoke Ball Co (1893)
it has been seen in this case that an offer has been made by the carbolic smoke ball company in the newspaper regarding some antibiotics of disease. (Qi, Chau,2015.)The offer states that any person who has been suffering from or contracts the influenza will not catch to disease further if the person intake 3 smoke ball and still if he catch the disease then reward shall be given. To make this offer more valid, company has deposited 1000 Pound in the bank. But one lady Carlill still catches flu and claim her reward.(Davies, 2016.) It was held in this case that the plaintiff is entitled to reward as the advertisement given by the company clearly state an offer of unilateral contract which she accepted by performing the condition stated in offer. It was further held in this case that it is quite possible to make an offer to world. The case was wholly based on offer and acceptance to be made in contract law.
Case B: Hyde v Wrench (1840)
this case has been taken as one of the leading case in he history of English contract law. Issues raise in this case point out a very essential view that it is very important to include all the essential elements in a contract for the formation of a contract whether it is offer of acceptance. (Srinivasan, 2014.)The case mainly focus on the offer which has been made by the party and a counter offer which has been made by the other party. Such counter offer led the original offer to destroy. The facts of cases states that Wrench is a person who owns a farm and want to sell his farm to Hyde in Luddenham for 1200 Pound. But Hyde decline the offer as the price has been offered was too high. Wrench again wrote a letter to his agent making an offer to sell the farm at the rate of 1000 Pound and further stated that this would be the last price and no further alteration shall be made. Hyde offered 950 Pound in his letter by 8th of june, but soon after observing the offer it has been refused on the accept, and informed Hyde of this by 27th June. By the 29th Hyde agreed to buy the farm for Pound 1000 without any additional agreement from Wrench, and when Wrench refused to sell his farm Hyde sued him to breach for contract.
In this case it was clearly seen that valid offer has been made by Wrench to Hyde in terms of selling farm.(Twigg-Flesner, 2013. ) When the contract has to be formed by the parties then it is very important to make an offer by one party to another. Without offer no contract can be formed but in this case a offer has been made as well as a counter offer is also being made by the Plaintiff. According to the law of contract no counter offer can be made once the party has already made an offer. A counter offer always destroy the original offer by which offeree cannot accept it. In this case no breach of contract has been done on the part of defendant as the contract on which breach has been claimed by made out of counter offer. In this case there was no formation of a valid contract by the party hence it can be seen that defendant shall not be held liable for breach of contract as in contract no original offer has been prevailing only counter offer was prevailed. The judgement passed by Lord Landgdale in this case was that there was no existence of valid binding contract between parties for the purchase of property. The defendant offered to sell it for 1000 Pound and if that has been at the once unconditionally there would be undoubtedly have been a prefect binding contract. It was not afterwards competent for him to revive the proposal of the defendant, by tendering an acceptance of it; and that; therefore there exists no obligation of any sort between parties.
Case C: Lampleigh v Brathwait (1615)
this case has been remarked as a famous case law in English contract law in terms of implied assumption and past consideration. The facts of the case are, Brathwait is a person who killed a man unlawfully in past and soon has to rush towards king in order to seek petition and release. He asked Lampleigh who was the lawyer to ride to the king and file a petition of pardon about the murder. Lampleigh was successful in filling the petition for the case. Braithwait promised him to pay 100 Pound if the petition has been filled successfully by the lawyer but soon after the petition has been filled no further payment has been received on the account of lawyer. Taking that view in context Lampleigh sued Braithwait for not fulfilling the consideration. Braithwait in defence said the service had been performed in the past so there was no good consideration at the time of promise, regardless of the fact that Lampleigh was successful in securing a pardon.(Hartmann, Rutherford, 2015.) It can be clearly seen in this case that a contract has been formed between the parties where there was an offer for the payment of 100 Pound which has been accepted by the party on a lawful consideration but later on he refused to pay. It has been held in this case that there are certain implied terms to be included while a contract has been formed and consideration is one of them. The court of King's Bench held that there was an implied understanding or an assumption of obligation that when the work is being done a particular fee shall be payable to party. Where a past benefit was conferred at the beneficiary's request and where a rewards would be reasonably accepted, the promiser would be bound by his promise. In this case defendant is bound to pay 100 Pound to Plaintiff. It was further held in this case that the promise to make payment has raised after the performance and was thus past consideration, the consideration was proceeded by a request from the defendant which brings to a conclusion that the consideration was valid. Defendant is liable to pay 100 Pound to Plaintiff.(Davis, Girth, Stazyk, 2016.) When the contract has been formed by the parties, consideration is one kind of essential element which is to be included in the contract. Without consideration no contract can be entitled as valid. And when any agreement has been made by the parties, prevailing that consideration, then it became a legal duty of the parties to fulfil consideration. When a consideration has not been fulfilled by the party then it shall raise some kind of legal obligation on to the party by which when the consideration has been breached, it shall raise legal liability on either of the party. In the following case same situation has been observed where a contract has been formed on a valid consideration but there was a breach of consideration by either of the party, resulted in legal liability to pay 100 Pound to party.
Case D: Tweddle v Atkinsin (1861)
this case has also being entitled as one of the famous case in English contract law focusing on the privity of contract and consideration. In this case, court declared that privity of contract shall be prevailed on those parties only who are into an agreement and may sue or be sued on it.(Ali, Kumar, 2015. ) A principle has also being established which states that consideration must flow from promisee. In this case it was held that there were two persons name John Tweddler and William Guy who have mutually agreed in writing to pay sum amount of money that is 100 Pound and 200 Pound to Teweddle's son william. But before the payment has to be made guy died which has resulted into no payment of the estate. Seeing that change in payment, Tweddler Jr. then Sued Mr. Atkinson, the Executor of Guy's Estate for the promised payment of 200 Pound. The court in this case held that the suit would not be succeed and entertained by the court of law as no stranger to the contract can enforce a contract.(Rodriguez, Hurtado, Estrada, 2014.) According to the law of contract, all the provisions of contract shall be prevail over parties who has entered into a contract. No third party or any stranger could enforce any contract he is not involved with even though the case has been in benefit. The court further held that a promise bring an action unless the consideration from the promise moved. Consideration must move from the party entitled to sue upon the contract. When a third party is there then no legal entitlement has been conferred on it to an agreement. Only those parties who has been involved in a contract are entitled to enjoy all the rights arising out of contract and no third party shall possess any right from that agreement nor they subject to any burdens imposed by it. In this case a couple were getting married.(Offerdahl, Hodgson, Krupke, 2016.) An agreement has been made between the father of both the couple in which a sum amount has to be paid but unfortunately the father of bride was died and amount cannot be paid. The claim has been made by the groom regarding the payment to executor of will. But in the case, claim has been failed as groom was not the competent party to agreement and according to the law of contract the first essential element for entering into a contract is that parties should be competent to contract. No other party shall be entertained in this case groom was not a competent party and no further consideration has been passed over him therefore he was not entitled to enforce the contract.
Case E: Chapple v Cooper (1844)
it was held in this case that a young minor widow has sued successfully for the expenses incurred at the funeral of her husband.(Wills, Napier-Munn, 2015.) These services are to be considered as one of the most important and necessary services during the funeral but the delivery if these services has not being done one time by the the lady has to suffer certain damages. According to the law of contract and sales of goods act, when the services has been ordered that it is the duty of the other party to provide on time delivery suitable for the condition in life at the time of sale. In this case, company who has been providing the services shall be held liable for not delivering the services on time and in the situation where it was most necessary.(Bennett, Blocker, 2016.) According to section 3(3) of sales of goods act 1979 necessary goods can be defined as the goods suitable for his condition in life, and to his actual requirement at the time of sale and delivery. Further it has been mentioned in this act that minors are liable to pay for those goods and services actually supplied to them that are necessaries according to their station of life. The main purpose behind establishment of this rule is to allow all the minors to enter into a contract which is appearing beneficial to them. And to prevent unscrupulous business from taking advantage of their youth and inexperience. In this case the funeral has been organised for the private benefit and was a necessary as she an obvious obligation to perform all the ceremony which is necessary for funeral like burying her husband. In this case it was further guided that “necessary” more than just food or clothes. It could be shelter also.(Hesselink, 2015. ) What is much necessary may differ according to particular minor who is entering into a contract with any entity. The court in this case further held that a minor can enter into a contract and that contract shall be entitled as valid. Another note which has been made by the court was regarding the necessity of goods and services.(Rodwell, Gulyas, 2013.) If a minor has entered into a contract involve delivery of goods and services then it has to be done on time. All the conditions mention in contract law shall also prevail over minor.
Tort can be explained as when any person commits any kind of civil wrong which shall result into infringement of rights of a person as well as the infringement shall result into damages to the person can be titled as tort.(Kraft, Kwantes, 2013.) A tort has always been committed against the individual. In order to protect rights and duties of an individual as well as all the human rights, government of UK has specially enacted a law called Law of tort which shall protect all the citizen from getting violation of their human rights. Law of tort always rise a liability on to the person who breach any provision of it. Such liability may award compensation to the person who has been suffering from damages.
Negligence is a kind of tort which has been committed against society. In negligence a party own a duty to care towards other party and such duty shall be breached which shall result into some kind of damages. For the occurrence of negligence it is very important that there shall be a duty of care from one party towards other party.(Salanţă, Popa, 2014.) Such duty shall be breached by one party. It shall be taken on the account of negligence that a duty of care shall be reasonably foreseen that is the person who owns a duty to care must have a prior knowledge about it. A liability arising from negligence shall be awarded a liability of tort as negligence is a kind of tort so when any person commits act of negligence then he shall be awarded with the liability of tort. For an example a A is the chef of a very well known restaurant B went to this restaurant for a lavish dinner. He ordered a vegetable soup and some fish sticks. After eating the same B falls ill and had to get admitted to the hospital by which he was not able to get back to his job and suffered from income loss. Later when B recovered from the injury he sued hotel for paying the compensation of loss. When the investigation has been carried out it has been observed that, the raw food material used by chef was experted which is why B falls ill. In this illustration it can be clearly that a negligence has been committed on the part of chef. He was having a duty to care from chef side to B. such duty has been breached by chef by providing him a food made of expired raw material. It can also be clearly seen in the illustration that, B has suffered from damages as he ate the dinner. So in this case A shall be held liable for the act of negligence committed and a liability shall be arise to A. such liability shall be treated as liability from tort. The essential element for the commitment of act of negligence are:-
- the person must own a duty of care towards the other party
- such duty of care shall be breached by the party
- after the breach of duty to care there shall be damages for the party against whom a duty to care has been breached.(Hesselink, 2015.)
CASE LAW: Nettleship v Weston.
This case has been remarked as one of the important case in the english law of tort. The judgement which has been passed in English court of appeal was in the breach of duty in negligence claim. In this case it has been further observed that a question has been raised on the part of standard of care which should be applied on the driver learning driving. And whether it should be same as expected for the experienced learner. It has been observed in the case that Plaintiff agreed to teach Mrs Weston driving who is defendant. She just took one lesson from the learner and soon afterwards she lost control over the driving and caused an accident in which plaintiff was injured. The defendant had argued that plaintiff was fully aware of the fact that plaintiff was less skill about driving by which she met with an accident. In this case court of appeal has further made a statement there was no act of negligence on the part of plaintiff as it has been seen very clearly that plaintiff has very less experience about driving and defendant cannot expect him to act as a experienced learner of driving.(McLaughlin, McLaughlin, Elaydi, 2014.) The standard of care for a learner driver would be the usual applied to drivers that of an experienced and skilled driver. The policy consideration that played a role in this decision was that the learner driver was covered by insurance. It has been further held by the court of appeal that the instructor would also be held liable for the negligence as he was partially controlling the cas and he was the instructior so he must have the knowledge that how much the person had learned . In this case only half of the damages will be recovered by the plaintiff.(Rodwell, Gulyas, 2013.) It has been decided by the court of law that there was a contributory negligence on the party of both the parties. .
Basic differences between law of torts and contract law:
- Any damage or injury occurred other than contractual liability comes under law of torts.
- Torts imposed unliquidated damages while contracts imposed liquidated damages.
- In contracts obligation to follow duties are on both parties but in torts it is on an individual.
- In torts intention is irrelevant except malicious prosecution while in contracts it is relevant.
- In torts legal right is violated while in contracts legal terms are violated.
- Privity of contract doesn't arises in law of torts as it is not a duty towards an individual.
- In breach of contract motive is immaterial but in contract it is sometime relevant.
Donoghue V Stevenson
this case has been marked as one of the landmark case in the context to act of negligence. There was foundational decision have been formed in this case by house of Lords. It has created modern form of negligence by creating various principles about duty to case which is an important element in the act of negligence. This case is further known with the name of paisley snail case. Or snail in the bottle case. The facts of the cases states that Plaintiff went to a cafe to have a ginger beer. When the beer was served to the lady a dead snail was in the bottle. Looking at the pathetic view, Plaintiff fall sick. She sued the company for act of negligence. In this case House of Lords held that manufactures owned a duty to care towards his consumer in terms of packaging of the beer. It can be reasonably foreseen that any fault occur in the packaging of the beer shall result into some damaged to the consumer. It can be clearly seen in this case that there was a duty of care of manufacturer towards its consumers and such duty of care has been breached by them by which the consumer has suffered from damages. In this case a breach of duty to care can be clearly seen on the part of Manufacturer hence he shall be held liable for the act of negligence. The decision fundamentally created a new type of new type of liability in the law by which the law shall not be dependent upon previously recognised category of tortious liability.(Chakrabarty, 2015.)
There are some specific types of negligence as follows:-
- Gross negligence:- Negligence occurred which is conscious and foreseeable or intentionally disregard of reasonable case and injury caused in result to that.
- Comparative negligence :- It is the partial legal defence which reduces the amount claimed by plaintiff.
- Negligence by minor :- Negligence or the violation of legal duty by a minor which is not able to understand consequences of the act done by him.
- Contributory negligence:- If the injured party fails to act as prudently then both are liable.
- Vicarious negligence :- Negligence occurred by a servant in course of employment than master will be held for the act done by his servant.
Rules or the pillars for the liability in negligence :-
- Duty of care :- It is an obligation over the proximate cause that a person should think reasonably and should be foreseeable by a normal prudent person.
- Breach of duty :- It is the violation of a legal duty that a person should not supposed to do.
- Causation :- In this the claimant have to prove that suffered loss is occurred by defendant.
- Proximity :- It means the reasonable and foreseeable cause that a normal person can foresee.
Hence it can be concluded from the above discussion that Negligence has been result of when there are two parties and one party own a duty to care towards other party and such duty to care has been breached by the person resulted into damages on to the party. The liability shall be of tort in act of negligence.
Vicarious liability :- Vicarious liability is defined as one person is liable for the act done by other. In this the maxim followed is “qui facit per alium facit per se”that means "He who acts through another does the act himself."
In this context the focus is on “vicarious liabilities in business activities”. In this continuation the maxim “respondent superior” i.e., “Let the superior be responsible” which means if any act which violates legal duty of a person who is at the time of commission of act is an employee of somebody and did that act during course of his employment that employer should be held liable for the act done by his employee.
CASE LAW: Top v London Country Bus (1993)
according to the law of tort, an act of negligence can be defined as when a person own a duty to care towards other person and such duty to care was breached which has resulted into damages then it shall be termed as negligence. When a person commits any kind of negligence then he shall be held liable for committing a tort that is the liability which has been arising from committing the act of Negligence shall be liability of tort as Negligence has been an act of tort. The person who commits negligence shall be held liable for the same. In this case it has been held that Defendant was the owner of a bus company who run his bus services all over. One day the company bus has left a mini bus in lay by overnight. The fault which has been occurred on the part of driver was that he left the keys in bus only and the driver who was expected to show up didn't come by which thieves stole the bus and drove it away. Unfortunately the bus knocked a woman off her bicycle and killed her. Her husband brought an action for damages. It has been observed in the case that negligence has been done on the part of the drover as he left the keys and bus was drove away but after the bus was stolen it came into the possession of another by which the liability of act of negligence end on the part of bus company. It was further recorded in this case that the bus company shall not be held liable for the act done by third party and in this case thieves are to be termed as third party. Possession of the assets was not under the owner of bus. When the bus has been stolen by thieves, it cannot be reasonably foreseen that they could hit the hit the lady.
Mansfield v Weetabix (1997) CA: it was held in this case that D was the driver of a lorry. While driving his truck, Driver suffered from the lack of glucose to his brain. He was unaware of the fact that what shall be the effect of of his driving. Due to the lack of glucose in his body lorry met with an accident in which it hit the shop. C had suffered from damages to their shop. It has been seen in this case that the lorry driver shall not be held liable for the act as the driver was unaware of the effect which was happening due to the loss of glucose in his brain. It was clearly seen that the driver could not reasonably foreseen the after effects of loss of glucose therefore he shall not be held liable for the Negligence. His action shall not fall below the standard of care.(Bercovitz, Tyler, 2014.)
Mersey Docks and Harbour Board Ltd v Coggins and Griffith (Liverpool) Ltd  2 All ER 345HL a : the facts of the cases states that Mersey Dock is in charge of training and providing crane Operator to companies in the carrier business. One one day an operator has been injured badly as the crane was handle with negligence. It has been seen in the case that the operator was an employee in the company which was shown from the formation of a valid contract. The court found that the agreement as to the employment was inconclusive, unless there is a real transfer of employment. It has been further held in this case that control over the machine had rapidly passed. In this case the damages has been awarded by judge against appellants. An appeal has also been made against the decision but the appeal against this decision was dismissed.
The project has shown various aspects of contract. It can be concluded from the above project that while the company enter into a contract, it is very important to from a valid contract and such valid contract has been formed by the input of all the essential elements. Further the project has explained various kinds of contract which a person will enter into. There are various terms which has been explained in project regarding the formation of a contract. The other part of the project shall reflect on the various elements to be described in act of negligence. All the important point have been described with the reference of case laws as well as several landmark cases has also been mentioned in the project.
- Ali, J. and Kumar, S., 2015. Understanding the contract structure for mango and empirical analysis of its determinants. British Food Journal, 117(8), pp.2161-2181.
- Azoulay, A., 2012. The civil contract of photography.
- Beale, H., 2014. Bridging the Gap: A Relational Approach to Contract Theory. Journal of Law and Society, 41(4), pp.641-651.
- Bennett, B.W. and Blocker, J.M., 2016. Interpretation and Requirements of Contract Specifications. In Construction Contract Claims, Changes, and Dispute Resolution(pp. 91-116).
- Bercovitz, J.E. and Tyler, B.B., 2014. Who I am and how I contract: The effect of contractors’ roles on the evolution of contract structure in university–industry research agreements. Organization Science, 25(6), pp.1840-1859.