AssignmentFront Cover Sheet
PART 1 – To be completed by the student
Student ID Number
(e.g.: Business Environment)
Aspects of Contract and Negligence for Business
Course (e.g. HND Business )
ACNB Individual Assignment
Assignment Due Date
8th April 2016
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Table of Contents
LO1 A valid contract In a Business Context 4
1.1 Essential elements for the formation of a valid contract 4
1.2 Types of contracts that may be entered in the UK by individuals and businesses 4
1.3 Different terms included in a valid Contract 5
LO2 Elements Of A Contract In Business Situations 6
2.1 Elements of contracts in given business settings 6
2.2 Law on terms of contracts 7
LO3 Negligence in business Activities 8
3.1 Differences between contract and tort liability 8
3.2 Liability in negligence 8
3.3 Vicariously liability 9
LO4 PRINCIPLES OF LIABILITY IN NEGLIGENCE IN BUSINESS SITUATIONS 10
4.1Elements of tort of negligence 10
4.2 Elements of Vicarious liability 11
LO1 A valid contract In a Business Context1.1 Essential elements for the formation of a valid contract
Offer and acceptance
For a contract to be valid, there must exist a lawful offer by one ofthe parties involved and an acceptance from the other (Enwan, 2005).Like in the case above, James advertisement for the sale of thecamera at $55 is an offer. Maria’s $45 offer is a counter offerwhile James accepting it makes it a lawful acceptance
Intention to enter into a Legal relationship
There must be an intention to enter into a legal relationship by theofferer. In the case above James’ advertisement shows that he iswilling to form a valid contract (Enwan, 2005).
Consideration is the price the offerer expects to get from the offermade. In the case, $55 is the consideration (Enwan, 2005).
Capacity of parties
The parties entering a contract must be capable of contracting.Minors and persons of unsound mind lack the capacity to contract.
A valid contract exists where parties come into agreement on freeconsent. A consent is not free where there is coercion, undueinfluence or mis-representation. There should be no mistakes orfrauds in the contract formation (Enwan, 2005).
1.2 Types of contracts that may be entered in the UK by individualsand businesses
All the contracts entered must have the basic elements of a contractwhich include offer, acceptance, consideration and the parties musthave an agreement to contract. An individual and businesses can enterinto the following types of contracts in the UK:
This is a one-sided contract in which one party the offeror makes apromise to the offeree and takes full responsibility and obligationof the contract. For instance if James promises to give $200 toanyone who finds his lost pet dog, then that is a unilateralcontract.
This contract exist between two people for the sale of goods. The isthe most common type of contract where both parties are bound by theterms of the contract (Ewan 2005). For example the agreement by Jamesto sell his watch to Maria is a bilateral contract.
A simple contract is either a verbal or written contract in which oneparty agrees to enter into a valid contract with another. For examplein James agrees to sell the camera to Maria at $45 but fails todeliver it then Maria can sue him.
Standard contracts are mostly formed by large businesses andcompanies. Multinational companies enter into such contracts betweenthemselves to conduct businesses (Gerven et al. 2001).
Verbal contract are formed through face-to-face contacts by theperson forming the contracts ad are valid
A written contract is contained in a detailed form in which the termsand conditions of the contract for both parties are captured and arefully signed by the parties involved Gerven et al. 2001).
These are contract in which people make through the internet and donot necessarily need to meet to make the contract Gerven et al.2001). Such contracts are binding provided the parties reach a mutualagreement on offer, acceptance and consideration.
These are express or implied contracts in which parties enter acontract based on facts and circumstances of the situation Gerven etal. 2001). Such contracts are also legally binding. An example of animplied contract is where a father leaves some property to be givento the children when they mature. The parties left with the propertyhas a contract with the father and is legally binding.
1.3 Different terms included in a valid Contract
Express terms- are terms that have been clearly laid down by theparties involved
Implied terms- these are expressed terms read out by the courtdepending on the interpretation of the express terms of contract(Gerven et al. 2001).
Are the bases of the contract and lead to serious consequences whenthey are breeched.
These are not as serious as conditions and do not lead to seriousconsequences should they be breeched.
These can either be conditions or warranties depending on the natureof the contract. If the breach of these leads to seriousconsequences, then they become conditions and vice versa.
LO2 Elements Of A Contract In Business Situations 2.1 Elements of contracts in given business settings
A simple contract in business setting should contain the basicelements of a contract. It must have an offer which is given by theofferor. The offeree must accept the offer for the contract tomaterialize. This is followed by a consideration. This is the pricethe offeree compensates for the offer given. The contract can then bewritten down. The two parties entering the contract must be competentand have the capacity to contract. An example of a contract is givenbelow:
A Simple Contract
We Bella UK agree to supply Hair 4 U company with 10 boxes miracleOil at a half price of $5 per carton.
Terms and conditions of the Sale Contract
The seller will supply a minimum of 10 cartons to the buyer and get paid upon delivery either through cash or cheque
That the buyer has understood that the seller does not accept responsibility of adverse results of the product.
Bella UK (Seller)Sign ­­­­­­­
Hair 4 U (Buyer) Sign_
Explanation of the Simple contract
The contract has the following terms:
In the above contract the express terms include the quantity andprice of the product. The seller strictly points out that it willsupply a minimum of 10 cartons at a price of $5 per carton. That thebuyer is expected to pa immediately after delivery is also an expressterm.
The implied term in this contract is that the product might fail towork. The sller states in their flyer that it has 20% efficiency.This implies that should the product fail to work according to theexpectations of the buyer, then the seller will still be within theterms of the contract and will not have breached any conditions(Koffman, 2007).
One exclusion Clause
The exclusion clause term is that the company will not bear anyresponsibility for the adverse effects of the product. This meansthat the seller bears no responsibility for negative impacts of thecommodity to the buyer. The seller evades duty of care through thisexemption clause.
2.2 Law on terms of contracts
Report to Mr Michael owner of Hair UK explaining:
a) Breach of a condition
In the contract above, Hair Uk should understand that it can onlyfile for a negligence claim or seek for damages from the breach ofthis contract if Bella UK does not fulfill the express termsstipulated in the contract. If the company delivers the 10 cartons atthe half price of $5 per carton, the Hair UK will have no optionrather than pay. The buyer should also be aware of the implied terms.The implied conditions are that the product might have adverseeffects or even fail to work according to the expectations. This willnot be a breach of contract on the sellers side.
b) Legality of the exemption clause
The exemption clause in the contract is valid and legal. Theexemption clause is one in which one for instance state that I willnot be liable for non-delivery of goods once released from mypremises. It is a clever means of avoiding tort of negligence byBella UK. Hair Uk should sign the contract on the knowledge that theproduct has only 20% success rate and can have advance effects.
LO3 Negligence in business Activities 3.1 Differences between contract and tort liability
There are several core differences between a contract and tortliability. One of the significance differences between the two isthat a contract has the element of consent which lacks in the tortlaws. In a contract, the two parties involved must come into anagreement in free state of mind without any coercion, mistake ormis-representation. The two parties should be are of the contractexpectations all the conditions and warranties and possibly theconsequences of breach of the contract terms and conditions (Beatson1998). Since the parties to a contract have consent to theestablishment of the engagement, a claim to damages from the contractcan only arise either through a mistake or misunderstanding by theparties.
On the contrary, the issues in a tort do not arise after consent.Torts liabilities normally arise after a party does something offails to do something that is omission and puts to risk the life,health or safety of another party (Steve, 2003). This means thatwhereas the courts award damages in the case of torts, the intentionof damage awards to breach of contracts is to put the parties back totheir initial financial positions before the contract was formed(Goldberg2005).
3.2 Liability in negligence
Concept of “duty of care” and the neighbor principle in the Tortof Negligence
In the case Donoghue v Stevenson the House of Lord’s determinedthat the defendant had breached the civil law tort of negligence andrequired the manufacturers to have a duty of care towards theirclients (Ferrari 1994). The ruling established that it is an offencenot to take reasonable care to avoid actions or omissions that canlogically be foreseen to put into risk the life, health or safety ofthe neighbor. A neighbor in this case is anyone affected by another’sactions. That responsibility towards the neighbor is known as a dutyto care (Mark & Oliphant 2003).
3.3 Vicariously liability
Vicarious liability refers to a situation where the defendant isfound guilty of an offence especially tort of negligence even if theydid not directly commit the offence. Employers usually fall guilty ofvicarious liability particularly due to the carelessness of theirstaff members. In the case of Alan and Mathew, the company: Norfolkfarms is culpable of vicarious liability and Mathew can sue Alan.Since employees are the core organs from which the employer enjoysprofits. The employer thus has a responsibility to offer validinsurance for all the workers, train, and recruit the appropriateperson for correct placements in their persons (Feinman 2010). Thecompany failed to offer the appropriate training to Alan leading tohim recruiting an underage person to assist and him and by extensionthe company in its operations. Probably if the company had informedAlan of the possible consequences of hiring an underage person intothe operations of the company, he would not have hired Mathew. Thecompany is thus liable for the actions of Alan. Mathew can sue Alanas well as the company for hiring him well knowing that he is a minor(Whaples2006). A minor does not have the capacity to enter intoa contract rendering the arrangement between Mathew and Alanirrelevant and not valid to constitute a contract.
LO4 PRINCIPLES OF LIABILITY IN NEGLIGENCE IN BUSINESSSITUATIONS4.1Elements of tort of negligence
Brad v Charles Case
This is to inform you that you can recover your losses from Brad.Brad can recover his losses from Charles because Charles is culpableof tort of negligence. There are five major elements of a negligencecase. The first element is duty (Chen-Wishart2007). In a court of law, the jury has to decidewhether the defendant had a duty to the plaintiff. This brings aboutthe element of duty of care and the principle of a neighbor. In ourcase, Charles had the responsibility of duty of care to Brad. Aneighbor in such a case refers to anyone directly affected by theactions of another. Charles was appointed as the referee by Albertand since Brad requested Chalres to provide Albert’s financialrecords, then he has that duty. The second element of such a case isbreach of duty. A defendant is deemed to have breached duty byfailing to conduct reasonable care in accomplishing the duty. Charles carelessly checked Albert’s records, in the process mistookhim for another client, and gave wrong information. This wronginformation eventually led to Brad’s losses. Charles thus breachedthe duty he had towards Brad. The third element is cause in fact. Thebreach in duty must have led to the losses incurred for the case toremain valid. Had Charles given the correct financial informationabout Albert, Brad would not have hired the premises to him. Thisimplies that the false information that Charles gave led to thelosses. The other element is proximate cause. This simply means thescope of the defendant’s duty in the case. In our case, it is clearthat Charles’ actions were key determinant in Brad’s decisiontowards issuing Albert with a house. His responsibility was thuscritical in the entire process implying that he is guilty. The lastelement is damage. A plaintiff is a negligence case must proof theharm caused as a result of the negligence (Douglas 2002). The rentarrears are the damages in this case. Based on the above analysis,Brad can recover the damages from Charles.
4.2 Elements of Vicarious liability
a) Macho Men plc and Graham
Macho men plc bears vicarious liability for the actions of Graham. Acompany is culpable for the actions of the employee’s conduct ifthe actions of the employee were within the terms of the employment(Laski 2000). To establish whether the actions are within the termsof the employment, the actions must take place relatively within thetime agreed on the contract and whether the employee has beenmotivated in any way by the objectives in the terms of employment(Randy 2003). Further, the actions in this regard must be the kindthe person has been hired to execute. Graham had been hired to takecare of disturbing customers and was thus acting within the scope andterms of his employment which puts the employer into task. Had thecompany clearly prohibited Graham from manhandling troublesomeclients, then Graham would be liable for his offence.
b) Carla and Links Ltd
Just like the case of Graham, Links Ltd too is vicariously liable forCarla’s actions. Carla is also responsible for the damages toGeorge’s car. In this case two issues arise the issue of tort ofnegligence and vicarious liability. Vicarious liability arise by thefact that because Carla’s actions were within her terms ofemployment. Though she was not on duty at the time of the incident,she was in the course of delivering the companies parcels, which washer responsibility. She would not be at the scene of the accident ifshe was not required by her terms of employment to deliver theparcels. This implies that the company bears vicarious liability forher actions by the virtue that her actions are within the scope ofher responsibilities in the firm (Chapman 2008). On the other hand,Carla is liable for her actions for acting in a negligent manner. Shefailed to exhibit duty of care while driving thus causing theaccident. She is therefore responsible for her actions.
List of References
Beatson, Anson`sLaw of Contract (1998)27th ed. OUP
Chapman B. 2008. PunitiveDamages as Aggravated Damages: The Case of Contract. Canadian Business Law Journal.
Chen-Wishart M. 2007. ContractLaw. NewYork: Oxford UniversityPress.
Douglas D. 2002,  ContractRights and Civil Rights. MichiganLaw Review.
Ewan M, 2005,  ContractLaw – Text, Cases and Materials.Oxford: Oxford University Press
Feinman, J., 2010,  Law101. New York: OxfordUniversity Press.
Ferrari F. (1994). Donoghuev. Stevenson`s 60th Anniversary. AnnualSurvey of International & Comparative Law.
Gerven, van W. etal. (eds),2001,  Cases,Materials and Text on National, Supranational and International TortLaw. Oxford: HartPublishing.
Goldberg JCP. 2005. Theconstitutional status of tort law: Due process and the right to a lawfor the redress of wrongs. YaleLaw Journal.
Koffman L, MacDonald E. 2007. TheLaw of Contract. Oxford:Oxford University Press.
Laski, H 2000, `Basis of Vicarious Liability` YaleLaw Journal 10 (26)
Mark L. & Oliphant, K., 2003, TortLaw – Texts, Cases 2ndEd. Ne York: Oxford University Press,
Randy E. B., 2003,  Contracts.London: Aspen Publishers
Steven M. S. 2003, Economics:Principles in action.Upper Saddle River, New Jersey
Whaples, R. (2006). "TheCosts of Critical Commentary in Economics Journals". EconJournal Watch 3 (2):275–282.