Aspects of Contract and Negligence Business Law

Task 1

1.1 Essential elements required for the formation of contract and description of invitation to treat

The contract law is a legal agreement formed between two or more parties for the completion of described promise by them. For the formation of a valid contract, the following elements are required to be considered by contracting parties-

Offer– In order to create valid contract, offer must be definite and it should clearly states about the proposed performance (Taylor, 2011). By considering this aspect, it can be said that request for proposals, letters of intent, expression of intention and ball park estimation will not be considered as offer.

Acceptance– It can be termed as consent of party to whom offer was provided. Acceptance can be only provided to the offered aspect (Rosly, 2010). Thus, acceptance supported by condition or modification will not be valid and it will be treated as counter offer.

Consideration– For the formation of a binding contract, it must be supported by valuable consideration. It is not required to be at arm length price but it must be of some value in the eyes of law (Marsh and Soulsby, 2002).

Consent– In accordance with Section 14 of business law, consent of parties must not be supported by the following factors:

• Coercion
• Fraud
• Undue influence
• Mistake
• Coercion

The contract created by parties will not be enforceable by law if it is not supported by free consent.

The intention of legal capacity– Contracting parties must have intention to enter into a legal relationship for fulfilment of promises (Goldman, 2013). Intention of legal capacity is not required to be expressly stated by parties as it is presumed by English law.

Invitation to treat

Invitation to treat does not have legal implication of offer because it is merely a declaration of willingness to enter into a negotiation for contractual relationship. Due to this aspect, response of invitation is offer not acceptance (Gillies, 2004). In addition to this, inviting party is entitled to accept or reject the offer given by other party. In the given case description, advertisement by Bill is an invitation for the sale of printing press.

1.2 Description of different types of contract along with their impact

Individuals and business organizations can select different forms of contract in order to create contractual relationship. Different types of contract have different impact on the contractual obligations of parties. Description of different types of contract along with their impact is enumerated below:

Unilateral contract– It is a one-sided contract in which only offeror is bounded to provide performance in contract. In such a contract, offer is provided in general in which each party is entitled for acceptance but they are obliged to perform (Pesqueux, 2012). For this aspect case of Carlil v Carbolic smoke ball can be considered.

Bilateral contract– In a bilateral contract, both parties are obliged to provide performance to fulfill promises made by them (Olander and Norrman, 2012). It is because; there is exchange of consideration from both the sides. Example of bilateral contract is Ward v Byham [1956].

Implied contract– Implied contracts are formed on basis of actions instead of verbal or written description. It is also known as by conduct contract. Example of implied contract travel in local bus.

Executory Contract– Executory contracts are agreement formed by two or more parties for completing the performance on later date (Morris, 2010). In accordance with the provision of this contract, both the parties are required to complete their performance prior to the arrival of stipulated date (Williams v Roffey Bros [1990]).

Writing Contract– This contract is created through the written deed. These agreements are the formal form of contract as deed in this contract work as evidence in situation of future dispute (Tomprou and Nikolaou, 2011). Parties are required to act in accordance with contractual terms of the deed else they will be liable to provide damages. Example of written contract is sale of immovable property.

Verbal Contract– This contract is created on the basis of trust and faith. In this contract, there is no proof of contractual terms thus situational approach is used by court of law to provide damages to the aggrieved party (Manuel, 2011). Example of verbal contract is purchase of grocery from local store.

1.3 Applicability of essential elements of contract in the given case scenario

Bill and Cathy: In accordance with the described case situation, an invitation has been provided by Bill for selling the printing press in £100,000. On this invitation, offer was provided by Cathy for the purchase of printing press in £90,000. On this offer, Counter offer was provided by Bill that he will accept £80,000. However, no response was provided by Cathy and because of which again the letter was written by Bill that he will accept £80,000.

According to provisions of English law, an offer is said to be lapsed if counter offer is provided by the offerree. By considering this provision, in the present case situation further letter of acceptance of Bill is not valid because offer given by Cathy will be cancelled by his counter offer. Due to this aspect, he is not entitled for the acceptance of that offer. Henceforth, there is no contractual relationship between parties.

Bill and Liza: As per the described case situation, Bill had provided offer to Liza for the sale of computer in £550 through letter. On the next day of arrival of offer letter, acceptance was provided by Liza. In this case, approach of postal rule will be applied for the determining validity of contract. In accordance with this rule, acceptance is said to be valid if it is communicated to the offeror. Further, date of acceptance will be the day on which letter of acceptance is posted by the offerree. By considering this aspect, it can be said that all provisions of contract are satisfied and agreement formed by parties is enforceable by English law.

Task 2

2.1 and 2.2 Analysis of contractual terms with reference to their meaning and effects

Contractual terms can be defined as provision forming part of the contract. Such provisions create contractual obligation for the parties and breach of these provisions can lead to the litigation aspect. Description of contractual terms with reference to their meaning and effects is as follows-

Conditions– It is the major term of contract as it is connected to its objective. Breach of condition is considered as breach of contract (Magnus, Casals and Boom, 2004). Due to this aspect, breach of condition makes innocent party entitled for the repudiation of contract by making claim of damages.

Warranties– Warranties are the minor terms in the contract which does not central existence. In situation of breach of warranties, only damages can be claimed by the innocent party (Bettini v Gye 1876).

Exclusion Clause– These terms are inserted by parties to make reduction in their contractual obligation in situation where appropriate performance is not provided by them. These terms are considered for relief if it is properly incorporated and supported by legal provisions.

Innominate Terms– This approach is introduced for those contractual terms which can neither be considered as condition nor as warranty (Tomprou and Nikolaou, 2011). In accordance with this approach, party can terminate contractual relatiBill and Liza:onship if there is loss of entire benefit.

Case Scenario

In the described case situation, Opera singer Joyce DiDonato has been terminated from two employment contracts consequently by her employers due to poor heath. Initial employment contract was terminated because Joyce DiDonato had missed first four nights of the main performance due to which she was replaced by another opera singer by The Royal Albert Company. Second employment contract was terminated because she was not able to attend rehearsals and again her employer replaced her with the another singer.

For this situation, case of Poussard v Spiers (1876) 1 QBD 410 can be considered. In accordance with this case, innocent party is entitled for the termination of contract only if conditions are breached. By considering this aspect, it can be said termination of employment contract by The Royal Albert Company is fair because Joyce DiDonato had breach the condition. However, second termination of employment contract is not fair because absence from rehearsals will be considered as breach of warranty.

2.3 Evaluation of impact of expressed and implied terms

Nature of contractual terms can be expressed or implied. Expressed terms are inserted by the consent of parties in contractual deed. These terms can be bifurcated into conditions, warranties and innominate terms. On the other hand, implied terms are assumed to be part of the contractual deed because these are not expressly stated (Lockwood, 2011). These terms are inserted by statue, custom and court of law from the objective to provide protection to the weaker party from unfair terms. Impact of expressed and implied terms can be considered through following case situations:

Case scenario 1 (expressed terms): In the given case situation, there was agreement between Scammell and Outson for the supply of Van on hire purchase terms. With this agreement, Outson was proposed to earn £100 but due to disagreement he lost this opportunity. In this case description, there is breach of expressed terms. Due to this aspect, Outson is entitled to make claim for opportunity loss due to disagreement from Scammell.

Case scenario 2 (implied terms): According to the described case scenario, there was tenancy agreement between farmer and landlord. In this case, farmer had planter corn and barley on the fields. In order to assure, growth of crops he had worked on that field. However, tenancy agreement was terminated prior to the process of harvesting. Farmer had claimed for the compensation from his landlord for efforts and expenses incurred by him. However, landlord denied to pay because there was no such expressed term.

In the described case situation provision of Hutton v Warren [1836] EWHC Exch J61 can be considered. In this case court of law had stated that claimant is entitled for the compensation for the efforts made by them. By considering this case fact, farmer is entitled for the compensation from his landlord for efforts and expenses incurred by him.

Task 3

3.1 Advice to Brad for recovery of losses and provisions of defenses in negligence

In accordance with the described case situation, Brad had taken advice from Charles for the tenancy agreement with the Albert. Charles was banker of the Albert thus it was his duty to provide appropriate information to the Brad of his financial status. However, in confusion he provided information of another client that financial position of Albert is quiet strong but in actual there was continuous overdraft in their bank balance. Due to the negligent misstatement of Charles Brad had to suffered from economic losses as a consequence he is liable to provide damages for the financial injury.

In order to prevent liability for the negligent action defendant can take benefit of one of the following defence:

Volenti non fit injuria: It is a defence of limited application in tort law. This defence is applied in situation where individual voluntarily put themselves in a situation where there is possibility of injury (Bennett, 2011). In accordance with the case study of Nettleship v Weston [1971], implied agreement shows willingness of acceptance of not only of physical risks but also of legal risks.

Contributory Negligence: In common law, contributory negligence act as complete defence. In accordance with the case of Revill v Newbery [1996], defendant is not entitled to provide damages if claimant had also contributed in the act of negligence.

Ex turpi causa: This defence is applied in situation where none of the action of defendant can be considered as immoral or illegal. This aspect has been clarified in the case of Kirkham v Chief Constable of the Greater Manchester Police [1990]

3.2 Contrast liability in tort with contractual liability

Provision of liability in English law has been developed to ensure satisfactory performance by the parties. Obligation in contract and negligence law is governed by the provision of civil law. With the provision, compensation is provided to the innocent party for the injury occurred (Bennett and Gibbeson, 2010). However, there are certain difference between these obligations. Description of difference between contract and tort law is enumerated below:

3.3 Importance of case of Donoghue V Stevenson in the development of the concept of duty of care

In order to make successful claim for the negligent action claimant is required to satisfy following aspects:

Duty of Care– There should be duty of defendant to take care of their actions in order to reduce possibility of injury (Elements of a Negligence Case, 2014). . In the case of Donoghue V Stevenson, defendant was engaged in manufacturing of beer thus he is responsible for duty of care for their customers.

Breach of Duty– There should be breach of standard duty on the part of defendant due to their negligent action. In the cited case, occurrence of snail from the drink shows breach of duty by Stevenson.

Causation– Due to negligence of defendant injury should be occurred to claimant. Further, they should not have contribution in act of negligence else they will not be entitled to make claim of damages (Magnus, Casals and Boom, 2004). In the described case, claimant suffered from personal injury.

Foreseeability– Damages occurred to claimant should be foreseeable in nature i.e. damages can be predictable from negligent action. Damages of Donoghue in the cited case were forseeable and her claim was held successful.

In the case of Donoghue V Stevenson, defendant was engaged in manufacturing of beer. Due to his carelessness decomposed insect incurred in the drink of consumer. As a consequence, claimant suffered from the personal injury. In this case, Lord Atkin had established provision of duty of care. In accordance with this case, an individual is responsible to take care of their actions to prevent possibility of injury of related parties. For this aspect, they had developed the principle of neighbour love. In accordance with this principle, individual should avoid act of omission or negligence for the reduction in risk of injury.

Task 4

4.1 Negligence liability of Bill and vicarious liability of XYZ diaries

In the described case situation, minor was appointed by Bill for the employment despite of prohibition by employer. It was duty to act in accordance with the guidelines of employer and not to recruit minor for work. Due to his negligence, injury was occurred to recruited minor. By considering this aspect, Bill will be held liable for the act of negligence.

In this case scenario, XYZ Diaries will also be held vicariously liable because it was their duty to assure that guidelines are appropriately followed by employees. Further, they should make timely visit in order to assured that minor are not employed by workers for the completion of operational activities.

4.2 Vicarious liability of the business

Vicarious liability can be termed as situation in which third party is held liable for providing compensation for the negligent action of tortfeasor. In the context of business, employer is held liable for the omission or negligent action of employees. For this aspect following conditions are required to be satisfied:

1. Negligent party should have status of employee not as self employed.
2. Misconduct should be occurred in course of employment (Vicarious Liability, 2015).

However, provisions of vicarious liability will not be applied if employee is engaged in criminal conduct.

In the described case situation, negligent action was occurred by the friend of owner of vintage vehicles museum. Friend and employer does not have influential relationship thus vintage vehicles museum will not be held liable to provide damages to the injured party.

Conclusion

In accordance with the present study, it can be concluded that contracting parties are required to satisfy contractual terms in proper manner else they will be liable to provide compensation for breach. In absence of contractual relationship, individual should act as per their standard duty in order to prevent possibility of injury of innocent party. If they failed to do so, they will be held liable for the act of negligence. To prevent this liability, defendants are entitled to take benefit of defence. Further, employers are responsible for the negligence of employees thus they have duty to take care of their actions by providing appropriate guidelines.

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