Contents

Introduction..........................................................................................................................................1

LO1 understand the essential elements of a valid and legally binding contract in a business context 1

P1.1 explain the importance of the essential elements required for the formation of a valid

contract.............................................................................................................................................1

1.2 Discuss the impact of different types of contract.......................................................................3

1.3 Analyse terms in contracts with references to their meaning and effect....................................4

LO2 Be able to apply the elements of a contracts in business situations.............................................5

2.1 Apply the elements of contracts in given business scenario......................................................5

2.2 Apply the law on terms in different contracts and evaluate the effect of different terms in

given contracts..................................................................................................................................7

LO3 Understand principles of liability in negligence in business activities........................................7

3.1 contrast liability in tort with contractual liability.......................................................................7

3.2 Explain the nature of liability in negligence...............................................................................8

3.3 Explain how a business can be vicariously liable.....................................................................10

TASK-4..............................................................................................................................................11

LO4 Be able to apply principles of liability in negligence in business situations..........................11

4.1 Apply the elements of the tort of negligence and possible defences....................................11

4.2 Apply the rules of vicarious liability........................................................................................13

Conclusion..........................................................................................................................................15

References..........................................................................................................................................15

Introduction

The main objective of the report is to recognize the contracts and negligence in the business

situations. Now a day’s business environment has been loaded with the various assertions. This

project is collecting all the information related to the contracts and different types of terms which

has been used by the contracting parties.

LO1 understand the essential elements of a valid and legally binding contract in a business

context

P1.1 explain the importance of the essential elements required for the formation of a valid

contract

Nature of contract- Contract is agreement between the two parties. It is become legally binding

upon the both parties who are entered into the agreement both parties are legally obliged to each

other. Under the contract if any party fails to do the agreed under the contract then injured party has

right to file suit against the defendant.

The key elements for making the valid contract are—

1) Offer

2) Acceptance

3) Intention to create legal relationship

4) Consideration

Offer-

For the formation of the valid contract there must be an offer made by one party to another.

In other words contract can be made by offer.

According to contract law, the person who make offer is known as offers and the person

who accepts offer is known as offered.

Under the contract for the sale of goods, seller or buyer any of them become the offer.

Case –Harvey v Facee [1893]

Acceptance-

a) Second element for the formation of the valid contract is acceptance of the offers.

b) Acceptance of offer must be communicated to the third party and communication of

acceptance must be clear and understandable.

c) Acceptance can make through by words, in written or spoken form.

d) If any person made the counter- offer it is not treated as acceptance of the offer.

e) The people who accept the offer it must be positive, if any person not accept the offer

positively then it is not the acceptance of offer.

There is case which is related to postal rule of acceptance postal rule of acceptance is applied when

any person accept the offer through any postal services.

Case- Adams v Lind sells (1818)

Consideration- Importance of consideration in a contract.

Every promise which is made by one person to another does not enforced by English law as already

stated that domestic and social agreement or promises are not legally enforced. But if there is

presence of consideration then promise will be legally enforced. Consideration is defined as it

involves the exchanges of money between two persons who are under the contract. In which one

party gives consideration money to other party and other party gives goods and services in return of

his consideration,

Case- white v bluet( 1853)

Intention to create legal relationship

All the contracts are binding agreement but not all agreement are contract the court have power to

enforced those agreements which have intention to be contract and have a legal relationship is exit

or was, not so agreement divide into two party.

1) Domestic and social agreements

2) Commercial agreements

1.2 Discuss the impact of different types of contract

There are different kinds of contracts which are used by the parties when they enter into the

contracts.

1. Express contracts.

Express contracts are those contracts in which parties stated by their terms in oral form

or in writing. It is the discretion of the parties.

The parties who makes offer under this contract must be in definite written or oral offer.

2. Implied contracts

Implied contracts are those contracts which implied in fact and implied in law is known

as implied contracts.

Any contract will not imply if from this result in guilty or harm.

3. Bilateral or Unilateral Contract:-

Bilateral contract are those contract in which mutual promise are exchange between the

entities. While unilateral contract are those contract in which promise is made by only one

party.

Bilateral contract is also known as two sided contract. Unilateral contract is also known as

one side contract.

In unilateral contract the party who gives promise has to perform his act of promise.

4. Aleatory contracts

Aleatory Contract is that in which both parties mutually agreed that contract will effect

on certain events.

For instance fire insurance policy, life insurance under this type of contract party get

compensation, when the person is died or any fire is occurred at home or company.

5. Void and voidable Contract:-

Void contracts are those contracts in which there are no legal rights and duties are arise

upon the parties and these contracts are not enforced by the court.

Voidable contract are those contract which are enforced by law but they will treat as

they are not binding upon the party who is suffering from legal disability like incapacity,

minor etc. This contract can be ratified either expressly or impliedly.

1.3 Analyse terms in contracts with references to their meaning and effect

Contract terms:-

Contract terms are those terms which are used by the parties for forming their contract. The parties

which are enter into the contract with these terms then both are legally binding on each party. If any

party breach the contract teem then other party have right to take legal action towards the breach of

contract. Remedy is available to the injured party.

The contract terms which are used in formation of the valid contract:-

1) Conditions

2) Warranties

3) Innominate teems

Conditions:-

A) Conditions is the most important teems which is used by the party for entering into the

contract.

B) It is the essential form of contract.

C) Any party who want to enter into the contract must have to use the conditions terms.

D) Any person who breach the conditions of the teem then the injured has certain right either

he:-

i) Terminate the contract; refuse the carry the rights and obligation which is laid down

under the contract.

ii) And have right to sue for claiming the damages.

Warranties:-

A) Warranty is the team which is not mostly used by the party and not the essential overall

agreements.

B) Under this if any party breach the warranties under the contract then whole contract is not

destroyed and the party who suffers injury have not right to terminate the contract.

C) Under warranty injured party complete his act under the agreement and can file suit against

the defendant who breached the contract.

There is a Case related to warranty.

Bettina V Gaye (1876):- In this case there is opera singer who was entered into the contract

and he have to attend the rehearsals for six days before the opening. But singer did not

attend the rehearsals because he was suffering from fever. Then it was promote treat the

contract that it was discharged by the singer. But court help that rehearsal clause was a

warranty and contract is not destroyed but opera singer was under the breach of warranty.

1) Innominate terms:-

A) Innominate terms are also recognized by the court.

B) The party who are suffer any loss or damage at the event of breach of contract then rights of

the injured party is depend upon the conditions of the breach.

i) If any injured party does not breach the contract deprives the injured party of

substantially the whole benefit of the contract, then injured has right to terminate the

contract.

Case:- Hong Kong fir shipping V Kawasaki risen Keisha (1962) 2 QB 26:- In this case

court held that defendant is liable for wrongful repudiation. Court introduced innominate

term approach.

LO2 Be able to apply the elements of a contracts in business situations

2.1 Apply the elements of contracts in given business scenario

The elements of Contract are:-

A) Offer

B) Acceptance

C) Consideration

D) Intention of create legal relationship, but in this business rule of offer and acceptance is

applied.

Offer:- Offer is the first element of the contract. Without offer there is no valid contract. Offer is

made by one party to another. Offer which is made by the person must be capable of

acceptance. Offer must not be vague it must be definite.

Case:- Harvey V Facey (1893):- Plaintiff enquired for the Bumper hall pen price through the

telegram and defendant replied that he will sell the bumper hall pen at $900 by telegram. The

plaintiff accept the price of bumper hall pen but there was no response from the defendant, so it

was held in that case that second telegram which is made by the defendant was only statement

of price, not an offer by the defendant and plaintiff made the offer by the third telegram and

defendant did not accept the offer which is made by plaintiff to the defendant and defendant did

not accept the offer so there is no binding contract.

Invitation of treat and offer:- Offer is legally banded if offer is accepted but invitation to

treat is that invitation to someone else to make an offer in the offer and it is legally binding

when party accept the offer.

Examples of invitation to treat:-

1). Advertisements

2). Catalogues

Case: - Fisher v Bell (1961)

In this case shopkeeper was prosecuted and convicted for showing the illegal flick knife in

their shopping window. But in appeal it was held that he makes invitation to treat it is not

the offer to sell, so seller not makes any breach of law.

Termination of Offer:-

Offer can be terminated by the offered.

Offered can also make the counter-offer.

Offered can terminate the offer by rejecting the offer.

By the death of the offer or.

Offer or revoked the offer.

Counter offer: - When any offer is made and offered not accepts the offer and made the

offer to the offered then it is known as the counter offer.

Case: - Hyde V Wrench (1840)

Acceptance: - Acceptance is also one of the essential elements of a legal contract. The

offered has to accept the offer but acceptance must be in clear form. Acceptance must be

made through words, either written or through any spoken words. If any person made the

counter offer it is not treating as acceptance.

Case: - Holtville securities V Hughes (1974)

In this task: Steve decides that he will sell his caravan for £10,000. On Monday he uploaded

an advertisement on the website and also stated his e-mail address for buyers who are

interested in purchasing the caravan. So according to this Steve makes an invitation to treat

through the advertisement by uploading on advertisement. Janet is also accept the offer and

he also make replied to the Steve that he is okay with the bankers draft on Saturday but

Steve never received this email and Steve assumed that Janet is not interested in purchasing

the caravan so he sold to his friend on Friday. On Saturday Janet went for purchasing the car

but Steve told him that he sold the caravan. So Janet accepts the offer and in both parties

there is valid contract has been made. So Steve makes the breach of contract and Janet has

right to claim the clam ages against the breach which is made by the Steve

2.2 Apply the law on terms in different contracts and evaluate the effect of different terms in

given contracts

LO3 Understand principles of liability in negligence in business activities

3.1 contrast liability in tort with contractual liability

Liability in tort and contractual liability:-

A) Liability in tort in tort is that in which any act is doing by the person which causes injury to

the someone in some way, and injured party has right to sue for wrongdoer and damages

which he suffers.

It is the part of English common law. Tortious liability includes the “intentional torts” for

instance battery defamation and tort for negligence. When any person who is under the duty

of care and he breached that duty of care, then he will liable for the tort of negligence.

Definition of tortious liability is that in which law fixed the duty and someone breaches his

duty by any actions is known as tortious liability.

B) Liability in Contractual:- Contractual liability is that in which when two parties are entered

into the contract then both are legally binding so any party breach the teams of the contract

then contractual liability is arise on the defendant.

i) Tort is made with or without the consent, but contract cannot make without the consent.

ii) There is no private is needed in the tort but in implied contract private is needed.

iii) Violation in rem is in tort and breach has been made in the contract.

iv) In tort damages are not measured strictly but in contract damages are measured strictly.

v) In tort relationship between the parties are in non-contractual relationship and in contract

both parties are under the contractual relationship.

3.2 Explain the nature of liability in negligence

Negligence: - Negligence means that any person who harms the other person by some way without

any intention then it is known as the negligence. The parties who suffer any damages or loss

have to prove these things:-

i) The Defendant is under the duty of care.

ii) Defendant was under the breach of duty of care.

iii) From the breach of duty of care it caused injury to the plaintiff.

iv) The damage which is suffered by the plaintiff was not remote.

Duty of Care:- The plaintiff has to prove that defendant is under the duty of care for claiming the

compensation against the defendant. The existence of duty of care is checked through two tests

which is used for determining the loss & these are applied according to the loss. Duty of care is

treated as manufacturer is under duty of care for his consumer; employer is under duty of care for

their employees.

Duty of care is test through:-

Camaro test

Adcock test

Breach of Duty: - There is an objective test which determines the breach of duty is made by the

defendant.

Case:- Vaughan V Men love (1837) 3 Bing. N.C. 467.

Causation: - Damages are measured through the ‘but for’ test.

Case: - Barnett V Chelsea & Kensington Hospital (1969) 1 QB 428.

Remoteness of damages: - Under this defendant is liable for the damage which is foreseeable.

Case- wagon mound no 1 (1961) ACC 388

In this case defendant vessel and the wagon mound, in which the furnace act is leaked at the wharf

in Sydney harbor some cotton is dip in the oil and where welding works is held from the welding

work sparks cotton is ignited and five is spread everywhere which caused destruction of the some

boats and the wharf.

Held- Re- polemic should no longer be regarded as god law. For the direct cones quinces test the

test remoteness of damages was one of the substituted. The test is used that the damages was

foreseeable or not. If the damages is foreseeable then defendant is liable for the damages at the full

extent, it does not matter whether the damages was foreseeable.

Two proven cases

Vaughan v men love- due to the poor ventilation the haystack of defendant is caught fire and

defendant is also warned by number of times and on various occasions that it will happen if

he left the haystack but defendant makes argument and said that he used his best judgment

and did not foresee a risk of fire.

Held- The court passed an order and held that the defendant best judgment is not enough

and he made judgment by the standard of a reasonable man.

Barnett V Chelsea & Kensington hospital (1968) 1QB 428

Facts of case- MR. Barnett have a server stomach pain and he went to hospital complaining about

the stomach pain and vomiting. He is checked by then nurse and offer checking she calls the doctor

who is one duty. Doctor told he that sent back to him at home and said the contact his GP in the

morning. But after 5 hours Barnett is died due to arsenic poisoning. Had the doctor examined Mr.

Barnett at the time there would have been nothing the doctor could have done to save him.

Held- hospital was not liable for the death of patient due to doctor failure examine the patent. So in

this case but for test is applied if act is occurred due to the defendant then defendant is liable.

3.3 Explain how a business can be vicariously liable

Vicarious liability- Vicarious liability is that in which defendant is held quality even he did not

commit the offence. In the business employees are the main force for the profit. Under vicarious

liability in business employer is held liable for their employees act but it is the limits which is

prescribed by the employer. So employee has rights under the vicarious liability such as-

1) Employee get the insurance claim from the employer

2) Trained and recruit the people.

3) Listen and understand the concerns for the recruitment.

4) Damages which is caused by employees.

The two main elements of vicarious liability case-

1) Vicarious

2) Liabilities is arise

Under the court decide the person is employee or an employer by the control, multiple and

organizational test. So any employer commits any act under the tort in the agreement which is made

with the employer then employee is liable for the act done by the employee in the course of

employment.

It is the advantage for the employee that employee get compensation from the employer.

Case- performing rights society V Mitchel & Booker ltd (1924)

Case- ready mixed concrete – V Minister of pensions (1968). In this case mackinaw has to prove

these three conditions of the wrongdoer is to be properly considered an employer-

1) Employer is agree provide skill in return of wages

2) Employer has control over the employee.

3) Other contact terms

So, court considerations they lock at such issues as tax and insurance liability this placed the

liability upon the both employees and employers. If any act is made outside the employment then

employer is not held liable.

Case- Beard V London general omnibus (1900)

In this case plaintiff make claim against the defendant. Defendant drives the bus negligent. The bus

driver at the time was not the employed as a bus driver but he was the bus- conductor. So bus

company is not held liable because the under the company he over the duty of bus-driver not the

bus-conductor whose only duty is to collect the fares but he drive the bus negligent so he was

outside the scope of his job.

TASK-4

LO4 Be able to apply principles of liability in negligence in business situations

4.1 Apply the elements of the tort of negligence and possible defences.

Elements of tort of negligence are

There are four main elements of tort of negligence are the duty, breach, damages and causation. If

any person wants to claim in the tort of negligence they have to prove these elements. In case of

Donoghue v Stevenson create the tort of negligence. In this case defendant is under the duty of care

and he breaches his duty of care and due to this claimant causes damages. The above elements are

important for deciding the whether the defendant has breached the tort of negligence.

Duty of care: The medical practioneer is under the duty of care to take care of his patient. Any

person who is under the duty of care will be liable for the damages which is suffer by the injured

party due to the tort of negligence of the person who is under the duty of care. It is necessary for

examine that whether the person is under the duty of care or not then we have to consider these

point reasonable foreseeability, proximity and fair just. Proximity means the relation between the

parties.

Causation and damages: The damages are measured fairly by the court, when there are multiple

causes then court refers the “but for cause”.

Defences for the negligence claims

When any person claims the suit against the defendant then defendant has various defences against

the claim which is made by the plaintiff on the cause of action. The defendant makes the defences

like he / she is not under the duty of care, he/ she exercised the reasonable care and he has no

intention to cause the damages to the plaintiff and so on.

There are three doctrines which is used by the defendants for eliminating or limit the liability of the

negligence which is imposed by the plaintiff on him. These doctrines are:

1. Contributory negligence: this is one of the most important defence which is used by the

defendants on the part of the claim which is made by the plaintiff on defendant.

Contributory negligence is that in which plaintiff is also need to take certain protection or

certain care but he did not take the standard necessary and form this plaintiff cause’s injury.

For example: A factory worker suffers the burn on his face after the welding torch is

malfunctions. Form this he failed to down his mask on her mouth before using the torch, which

helps in preventing the injury. So according to the facts of the case plaintiff is also negligent for the

safety which is used at the time of welding so he also engaged in the contributory negligence.

2. Comparative negligence: in some cases contributory negligence has led to the harsh result

and majority of situations the contributory negligence has been replaced by the alternatives

which is known as comparative negligence. In this doctrine plaintiff recovery of damages

has been reduced by the percentages because of the plaintiff fault of damages.

There are three main types of comparative negligence are:

• Pure

• Modified

• Slight-gross

3. Assumption of risk: if any plaintiff suffer any risk due to the involved in the obviously

dangerous activity, then he/ she is not liable for recover the damages for the injury he/she suffers.

Under this case Patricia went out with the husband to a restaurant for a meal and she went in the

toilet she fell slipped due to the water which was spilt on the floor and from sue to this his arm was

broke. So according to the elements of tort of negligence the restaurant is liable for the broken arm

because restaurant is under the duty of care of the Patricia because she went for the meal in the

restaurant, restaurant has to clean his washroom for the guests who used the washroom, so it is the

duty of the restaurant that they have to take care of his clients they have to clean their washrooms

by wipes, from this water is not split in to the floor and no one is fell slipped.

So under this defendant is liable for the clients injuries but restaurant has also defences which are

1. Restaurant takes reasonable care while they are under the duty of care.

2. They have no intention to cause injury to the clients.

3. Restaurant has also claim that the clients should have also take care while using the washroom.

4.2 Apply the rules of vicarious liability

Vicarious lability is that in which the superior is held liable for the sub- ordinate acts or omission. If

any employee injured any other person in the course of employment then employer is held liable for

the employee act. In simple sense injured person also get the compensation for the injury he suffers

from the employer rather than the employee. It is the advantage for the injured person that they

compensated by the employer. If any injured party did not get the full compensation from the

employer then he might recover his balance compensation from the employee.

Employers are not held liable under the vicarious liability on the following points.

1. The person who caused harm or damages to the third person is not the employee but he is the

independent contractors, or other non- employee workers.

2. The employee who injured the person is not injured in the course of the employment.

In general any person who is the independent contractor other than employee then employer is not

liable for the act which is done by the independent contractor. This is one of the exceptions for the

employer.

The doctrine of vicarious liability is not apply if there is no express and implied authority by the

employer for the act which is performed by the employee. Courts apply to this various outcomes.

Driving cases

For instances: there are various number of truck drivers cases in which courts decided whether the

act is done under the course of employment or not while they drive the vehicle outside the

designated route.

If there is specific points are mentioned like form point a to b and it is the designated route and if

the drivers use another way to reach the point B then he is also acting within the course of the

employment, but driver use the car for the non- business purpose or act outside the course of

employment then he it will regarding that he is acting outside the course of his employment (like

pick his girlfriend or taking her for shopping).

Use of force: when any employee harm the person at the workplace and courts appears that it is

take place outside the course of his employment then in cases where the cause of harm is not

intentional.

Under this business situations Tim is the driver of the delivery van for Tesco, when he carries out

his deliveries for the company he decide to go his girlfriend house and when he go back from the

girlfriend house to continue his deliveries he negligently crashed the car which is parked in the

parking area. So as per rules employer is held liable for the act done by the driver Tim but employer

is only held liable for that act which is given by the employer and Tim crash the car which is in the

parking nearby the girlfriend house and it is not her work to go his girlfriend house it is not the

designated routes of the delivery. So employer is not liable, employee himself liable for the act he

made.

Conclusion

This report gives the huge information about the contract law and law of torts. The above

discussion is analyse the supporting cases and given scenarios.

References

• Acas, (2015). Understanding what vicarious liability means for employers [Accessed 13 June

2014]. Available at: http://www.acas.org.uk/index.aspx?articleid=3715

•Anon,(2015).[online]Availableat:http://www.uio.no/studier/emner/jus/jus/JUS5260/v12/

undervisningsmateriale/Terms.pdf [Accessed 11 July 2015].

• BusinessDictionary.com, 'What Is Contract? Definition and Meaning N.p, 2015 (Assessed 1 July

2015).

• Collins, H. (1993) the law of contract. London: Butterworth.

• E-lawresources.co.uk, 'Duty of Care'. N.p., 2015. [Accessed 28 June 2015]

• Findlaw,. 'Proving Fault: What Is Negligence? - FindLaw'. N.p., 2015. (Assessed 24 June 2015)

• Lawhandbook.org.au,. 'Elements of A Contract'. N.p., 2015. (Assessed 14 June 2015)

• Mc Kendrick, E. (2007) Contract law. Basingstoke: Palgrave Macmillan.

•Riley, J. (2015). Contract-Express & Implied Terms Available at:

http://www.tutor2u.net/law/notes/contract-express-implied-terms.html [Accessed 10 July 2015]