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Aspects of Contract and Negligence for Business


Law is a term which is consist of rules and regulations that are created and implemented through social and governmental institutions for the regulation of behavior. There are different types of law that can be contract law, civil law, criminal law, international law, etc. In today's world, the business organizations in whole over the world enters into the contract with other parties for giving a legal effect to their contractual relationship. A valid contract is an agreement which is consists of all the essential elements of a contract. It includes an offer, acceptance, intention to create a legal relationship, etc (Conrad, 2011). Also, in this present report concept of contractual liability and tort liability has also been had been defined. Vicarious liability is another type of contract in which the employer is held liable for the acts of its employee. In this present assignment, various concepts of terms of law have been discussed with their case laws.

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Task 1

1.1Essential elements of a valid contract

In a valid written agreement, there are many particulars that make it legal and lawful in the eyes of law (Cross and Miller, 2011). The companies are required to include these terms in their contract. There are numerous elements of contract some of them can be demonstrated as :




An offer is a term that signifies the offer and willingness of one person to form a contractual relationship with another party (Fried, 2015). One party, offerer makes an offer that has been accepted by another party so that they can create a binding contract. An offer is different from an invitation to offer. A case of Harvey v Facey[1893] UKPC 1,has been decided in this aspect. In the given case scenario, Layla offers to purchase a LED at 125 pounds to Freddy. It will be only considered as a legal contract if Freddy accepts it.


Once a binding acceptance takes place, it forms a binding contract. Acceptance is given by another party to the contract to whom the offer is provided. Also, the acceptance must be communicated by an offeree. The legal agreement must be certain.

Intention To Create Legal Relations

To form a valid contract is necessary that there should be a legal and valid intention behind the formation of a contractual relationship (Gergen, 2013.). In the given case scenario, there is no intention to create an offer as Freddy is not interested and responded to purchase at an agreed price.


Consideration is a value that has been decided by both parties in respect of the transaction of business.

The consideration must not be related to the past. According to the decided case law: Re McArdle(1951) Ch 669, it has been held that the promise related to payment occurred after consideration so, promise to make payment was not of binding nature. As past consideration is invalid.


In the creation of a legal contract, the capacity of the parties to the contract should be considered. They should not be under the age of “18” and of unsound mind, lunatic and disqualified from the law for the time being in force.

Privity Of Contract

This doctrine in law conveys that a contract framed between both the parties can not confer rights or impose any sort of liabilities or obligations arising ., except the parties under it.

1.2 Explain different types of contract

A contract is an agreement which is consists of various legal elements. There are a few types of contract which are as follows:-

  • Face to face contract
  • Written contract
  • Void and valid contract
  • Distance selling contract

Face to face contract

Face to face contract is that kind of contract in which two parties are coming together in front of them to make a valid and proper contract with the agreement of both parties (Idowu, Capaldi and Zu, 2013). It is a very simple and straight forward contract in which legal formalities are not much indispensable because most of the face to face contract is done between families, relatives, friends or to whom you are very close to them and you can trust easily on them.

Written contract

Written contracts are those contracts in which paperwork is the most important part because all the formalities are mostly done on the paper only so that written proof is available which will be shown while ending up the contract. In the written contract all the details of both the parties are available to avoid fraudulent activities and they can fulfill all the details by signing that paper which shows that all the above information is true.

Void and valid contract

A void contract is that contract where there is no availability of court and which was nullified by the court (Latimer, 2012). Simply it means all the contract which was refused by the law that is called void contract whereas a valid contract is signed and accepted by the court of the law because valid contract consists of all the essential terms and conditions given by the court.

Distance selling contract

Distance selling contract is one of the different kinds of agreements where sellers and buyers are present to make a contract between them without seeing each other it means this contract takes place either on the phone call or any other technology used by them to complete this contract.

1.3 Different types of terms used in the valid contract.

To give a contract a legal effect, it is necessary to consider the various terms used in the contract by the parties.

Key Terms


Express Terms

Express terms are those terms in which all the terms are express either orally or in writing so that both the parties get aware of the essential terms and conditions to come in any contract.

Implied Terms

Implied terms are the most indispensable part of any contract because implied terms are made by the court which was mention in every document while making deals as it is said that implied terms are mandatory (McInnes, Kerr and VanDuzer,2013).


These are those terms that are firstly not included by the parties to the contract but at the time of issues, the court introduces this term to clear to ambiguity.


The condition means that a contract which takes place between certain conditions and it is compulsory to follow those conditions because that was an important thing on which the contract was based. In the case-law of Poussard v Spiers(1876) 1 QBD 410, both the parties have laid down their own terms and conditions.


Warranties are a word in the context of contract describes as if any contact does not take place in a warranty period then the other party must sue the opposite party to not fulfilling the contract in the warranty period.

Exclusion Clauses

An exclusion clause is the other name of limitation it means the clauses which were excluded or it can control the other party and these clauses are very precise and clearly shown on the contract.

Task 2

2.1&2.2 Draft contract between Bella UK and Hair for you

Purchase Agreement

Party 1: Bella UK

Party 2: Hair for you

Based on the following position:

Party 1 will agree to sell 10 boxes of shampoo for the price of 5 boxes to Hair for your company. The company has introduced a shampoo namely ' Miracle Oil' that claims rapid growth of hair and also has advertised through flyers. The company has expressly stated that the offer will continue for a limited period.

Party 2 will agree to purchase 10 boxes as advertised by Bella UK just for the price of 5 boxes. The said company has agreed on all the terms and conditions as conferred by Bella UK.

(Implied terms)

In this agreement, it has been implied that the offer is for a limited period and also it implies that risk has been transferred along with the product by Party 1 to Party 2, as a seller accepts no guarantee for adverse results.

(Exclusion clause)

From this agreement, party 1 has excluded itself from the liability that will occur or to has occurred in respect of shampoo. Party1 has clearly mentioned in their advertisement that the seller accepts no responsibility for any adverse results also the product has 20% success. This indicates that party 1 has no responsibility in case of any damage or injury.

2.3 Evaluation of the effects of different terms used in the contract.

In a written agreement, it has been defined that both parties include their own terms and conditions at the time of framing the contract (Meiners, Ringleb and Edwards, 2014). It helps to underpin several issues and conflicts. The different terms that can be used are as: breach of contract and legality of the exemption clause.

Report to Mr. Michael Hair

To Mr. Michael Hair

RE: Report on key terms

·Breach of contract: It is the concept which signifies that it is a lawful cause of action which includes a bidding agreement or bargained-for exchange is not complied by any of the parties to the contract. It also includes the non-performance of any of the conditions implied at the time of the creation of a contract. It means that one party is liable to damages in case of breach of contract to another party.

·Legality of the exemption clause: Exemption clause is a legal concept in which one party to the contract exempts itself from any kind of liabilities and da,mages that can be occurred in the context of the business transactions. It is legal until and unless it does not cause any harm to other parties.

In the given scenario, “Bella UK” has advertised its newly introduced product that is “Miracle Oil” shampoo. The company claims that it results in rapid hair growth. For attraction, the company has declared that 10 boxes will be provided at the price of 5. The company has also excluded itself from any case of liability or any adverse results. In this case, the Bella UK has implied the exclusion clause in their agreement that they will not be responsible for any inauspicious results. It is valid until and unless it does not cause harm to other parties that are “Hair For You”. On the other hand, the breach of contract between both parties will happen only if any of the parties dishonor the conditions or terms expressly mentioned in the contract.


Task 3

3.1 Contrast contract and tort liability

Contract liability

Contract liability is that liability in which one party is liable by other parties while doing a contract with each other which is called contract liability (Miller and Cross, 2012). While elaborating this term contact liability it shows that all the matters related to liability come under this like a person is liable while performing any job in any business and if a liable person was not able to fulfill all the terms then maybe the party should face any damage. In a Contract liability, a party comes under certain rules and regulation which is mandatory for them and it must be followed by them because they are bind by their task

Tort liability

The tort is a word which means anything happens in a wrongful way must consider under tort liability or maybe a person should pay for that wrong thing whatever was done by that party(Pathak, 2013). Simply tort liability is the term describes the violation of rules and regulations by doing any unfruitful task which resulted in a punishment. According to the decided case law: Barnett v Chelsea & Kensington Hospital[1969] 1 QB 428, it has been held that the hospital is not liable for damages as the doctor's failure to check his patient did not result in the death of that patient. So, a doctor is not liable to pay the damages.



The similarities between these two terms are that in both terms result in liability to pay the damages in breach of contract and its conditions (Miller, 2015).

Terms and conditions in contract liability are made by the parties only who are taking part in the contract whereas in tort liability rules and regulations are made by law themselves (Sweet and Schneier, 2012).


Contract liability is not that strict whereas tort liability is more strict.

3.2 Explain the nature of liability in negligence.

The tort is the civil law which deals with civil wrong. Negligence of duty is the term which implies that there is a breach of duty on the part of the defendant but without an intention (Trompenaars and Hampden-Turner, 2011). The defendant causes harm to the injured party due to its negligence or carelessness. In this aspect, the defendant is held liable in the eyes of law to pay for the damages to the plaintiff. In order to claim da, ages by a litigant, the claimant should prove :

  • That the defendant must owe a duty of care.
  • That defendant has breached that duty of care.
  • The damage has been caused by a litigant.

According to the landmark case of Donoghue v Stevenson[1932] AC 562, Mrs. Donoghue went to the cafe with her friend. Her friend bought him a bottle of ginger beer. As, a ginger bottle was in an opaque bottle so its content can not be seen. Then Mrs. Donoghue poured some of the contents in the ice cream and then found a snail in it. As a result of it, Mrs. Donoghue suffered from personal damages. She sued the manufacturer of beer in the context of negligence as she suffered injuries. In this respect, it was held that her claim was successful. The manufacturer was held liable for the damages and compensation. In other words, it has been said that the defendant has breached its duty of care and hence liable to damages.

3.3 Explain how a business can be vicariously liable.

Vicarious liability is the term in which one person to the contract is held liable for the acts done on the behalf of other parties to the contract. It means that the business is held liable for all the acts done by its employees and also responsible for the damages. It must be noted that vicarious liability occurs where there is a contractual relationship between the parties to the contract (Zamore, 2016). Vicarious liability is the doctrine that imposes strict liability on employers due to wrong things committed by its employees. Generally, an employer will be held liable for the acts done by its employees while performing their dutie4s assigned.

In the given case scenario, it has been shown that Bob was a local milkman hired by Norfolk farms. He had occupied a 13-year-old child namely Matt as his assistant and asked him to keep this thing between them only. Furthermore, Matt met an accident while the delivery of milk.

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In this case, Matt can sue Bob only through his guardian. As Matt is a minor, he can not sue Bob on its own name. According to the case-law of BYERS WATTS v. PARKER, Michelle Byers Watts on behalf of herself and as a guardian of Michelle Miller Watts had filed a suit on Toni. L Parker. A minor can only sue the defendant through his guardian.

Also, the Norkflok firms are held liable for the acts done by his employee Bob. Due to the provision of Vicarious liability, an employer will be held liable for the acts done by an employee.

Task 4

4.1 Application of elements of the tort of negligence.

The tort is the civil wrong done by any party of other parties. Negligence of duty is the part of Tort law in which one party breaches contract and conditions due to negligence (Wong and Deubert, 2010). In this case, Albert who wishes to purchase a flat has agreed to buy a flat from Brad. Brad authorized its accountant Charles to verify about Albert. Due to negligence, Charles misinterprets and conveyed that Albert is a sound man, but he was not.



Re: Recovery of losses.

Brad can recover its loss from Charles. Due to the concept of the negligence of duty, Charles has breached the duty of care and he is liable to pay the damages to Brad as he was expected duty to care from him. According to the concept of negligence, a defendant is held liable for breaching of contract and the plaintiff can claim damages from him.

4.2 Application of elements of vicarious liability in the context of the case.

Vicarious liability is the strict liability that has been conferred on one person for the actions performed by others. It means that an employer will be held liable and responsible for the deeds done by its employees (Ashcroft, Ashcroft and Patterson, 2016). It must be noted that those elements of vicarious liability only occur in the case of a relationship between employer and employee during the course of employment.

a)In the given case scenario, Graham a doorman is authorized by Macho men plc, a company that owns pubs and bars, to eject any misbehaved person. When he ejects a drunken customer, he broke his hand. In this case, the cited company is held liable for the acts of its employee namely Graham. According to the said concept of Vicarious liability, the employer will be accountable for the acts done by its employee. Also, if Graham has expressly prohibited to deal with troublesome customers then, the Macho men plc company will be liable to the acts of Graham as there is a contractual relationship between them.

b) In this case, Carla is an employee of the company namely Links LTD. Who is engaged in the business of courier delivery? She used to take office van for delivery. She injured the car when she was on her duty to deliver the courier. In this case, the company will be held liable for the acts of Carla as she was on her duty and performing the tasks assigned to her in respect of the concept of vicarious liability.


From this above report, it has been assessed that there are many essential elements of a valid contract. A valid contract is a legal agreement in a written for. Also various terms like implied terms, express terms have been discussed. Also, the concept of vicarious liability has been mentioned in the context of employer and employee relationships.


  • Ashcroft, J.D., Ashcroft, K. and Patterson, M., 2016.Cengage Advantage Books: Law for Business. Cengage Learning.
  • Conrad, M., 2011. The business of sports: A primer for journalists. Routledge.
  • Cross, F.B and Miller, R.L., 2011. The Legal Environment of Business: Text and Cases: Ethical, Regulatory, Global, and Corporate Issues. Cengage Learning.
  • Fried, C., 2015. Contract as Promise: A theory of contractual obligation. OUP Us.
  • Gergen, M.P., 2013. Negligent Misrepresentation as Contract.
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