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Aspects of Contracts

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Understand how the law of tort differs from the law of contract

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INTRODUCTION

All the business organizations are enchained by the different legal requirements encompassing contracts that assist them to operate their business successfully in the external environment (Hersch and Viscusi, 2007). Law of contract and negligence is developed to manage contractual and non-contractual agreements among parties. The present report comprises of description and effective judgment of given case scenarios. For better decisions, scenarios will be linked to the case precedents. The present report focuses on understanding that how the law of tort differs from the law of contract and it also analyzes different issues of liability in non-accomplishment relating to business and how to confront it. However, the vicarious liability and occupier’s liability act will also be discussed to assist the case scenario in second project brief.

Project Brief A

Task- 1

1.1 The importance of essential elements required for the formulation of valid contract

Contract is defined as the agreement between two or more parties to agree upon the similar considerations and which is enforced by the law (Baker, 2005). The contract may be in the written form or in the verbal form. The key elements required for the formulation of valid contract include:

  • Offer and acceptance: The key element for formulating the contract includes legal offer and acceptance between the parties. However, the acceptance by the party should be unconditional and without any changes (Kim and Feldman, 2006).
  • Intention to create legal consideration: Another key element required for formulating the valid contract includes that should be legal purpose or intention for formulating the contract.
  • Consideration: Agreement without consideration has no legal existence. It can be monetary system or non-monetary for the parties. Thus, consideration by both the parties is considered as the essential element that positively contributes in formulating the valid contract.
  • Capacity: Contract must ensure that parties must be competent of involving into the legal contract. However, minors or mentally disorder person should not be legally allowed to engage in the valid contract (Hillman, 2012).

1.2 Impact of different types of contract

Contract can be categorized into various forms and their impact also varies from one to another:

  • Face to face contract: It is also known as verbal contract that is not documented. Under this form of communication, both the parties express in words that they are going into an agreement (McKendrick, 2014).
  • Written contract: The written agreement assure that, all the terms and conditions regarding the contract should be in writing and must be agreed by both the parties. The Impact of written document is that it is legally enforced by the law and also treated as the evidence of having a valid contract (Hermalin, Katz and Craswell, 2007).

1.3 Analyze the term contract

Types of terms in the valid contract

  • Condition: This is the key term on which the whole contract has been established. For instance if the parties are unable to meet conditions of contract then the other party is in the state to breach the contract and also demand for damages (Chen-Wishart, 2012).
  • Warranties: Warranties are the supportive terms of the valid contract. In the position of breach of warranty, innocent party can claim the compensation but it is not eligible to reject or decline the contract (Vicarious liability for international torts, 2005).
  • Exclusion clause: If such clauses are inserted in the deed of the contract then liability for injury can be abolished by parties. But it should be contradictory to law. In this clause, safety is provided only for minor injuries.
  • Implied and expressed terms: Expressed terms are considered as the clauses that are inserted into the contract with the help of mutual understanding of both participants. However, the implied terms are those that are added or mandatory by the jurisdictions that have to be followed by parties (Paterson, Robertson and Heffey, 2005).
Case description-

According to the case study Mr. Powell expresses their consent towards buying the van of Jess but due to long distance he offered to come and buy van after 3 days a valid contract enables that acceptance should be unconditional but Jess says that, she would sell the car if any other customers arrive before Mr Powell. Therefore, it is not the valid contract. However, Jess says that shoe would sell the van before Mr. Powell takes the van. Thus, intention is not to create legal consideration.

Task- 2

2.1 The element of contract

After taking the case study into the consideration it can be said that, there is valid contract between Barry and local council as there is notice which state that park chairs are for hire for 50p per hour (Bix, 2008). Although offer is made by the local authorities by providing ticket and offer is accepted by the Barry. Both the parties reciprocally exchange promises and thus, both parties that is Barry and local councils had aim to come into a contractual relationship.

2.2 The law on terms in different contracts

Therefore, in the case study there will be applicability of expressed term between the parties. However, the ticket provided by the attendant of local council, clearly state that no liability will be accepted if there is any injury caused by the failure of hired equipment (Meyer, 2006). However, the local council is not liable to pay the compensation for the damages to the claimant or visitors.

2.3 The effect of different terms in given contract

By considering the case study, Barry complains the local authority as he got injured due to collapse of the hired chair (Occupiers Liability Act, 2001). As, the attendant points to the clause that is stated on the ticket this results that the local council is not eligible or liable to pay for the damages as it is clearly stated that is no liability is accepted for the damages. In this situation, Barry is accountable for claiming damages. However, if this clause was not included on the ticket, then implied terms will be applicable. According to that, the attendant or the local council should take care of their equipment so that; they do not harm their visitors. In that situation, local council will be accountable to pay Barry for their damages or injury (Hassett, 2012).

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Project Brief B

Task- 3

3.1 Contrast liability in tort with contractual liability

Contract law is termed as the governing body that focuses on governing the contractual agreement between individuals and businesses (Hernandez, 2010). However, the contract is termed as the agreement between parties which mainly outline their responsibilities and roles to one another. So, contractual liability or laws assist the individual in outlining terms and condition that can or cannot include in the valid contract. On the contrary, tort law focuses on governing the situation where one party has injured the other party in the valid contract. Therefore, the tort laws commonly outcome in paying monetary damages to balance off their losses (Hersch and Viscusi, 2007).

Basis Contractual liability Tort liability
Definition This arises from the failure of terms or contract between the parties (Kim and Feldman, 2006). However, the tort liability arises from failure of the responsibility.
Relationship with the parties Under contractual liability, both parties are well-known with each other which mainly posses intention to create contractual relationship. However, Under tort liability parties are not familiar with each other and they are strangers but they are enforced by law to come into the legal relationship (Paterson, Robertson and Heffey, 2005).
Awarding damages For the contracts main purpose of awarding damages is to restore the position of parties before the breach of contract.  In the tort liability damages are awarded to compensate or balance the loss of victim party.
Measurement of damages Under contractual liability damages provided on the basis of written agreement among the different parties.  As, it act as the proof or evidence that parties are engaged in the lawful contract. In tort damages are determined by the court as both the parties are unknown to each other (Hermalin, Katz and Craswell, 2007).

Despite of several differences there are some common aspects in both contractual liability and liability in tort. The similarities are:

  • Both the laws are civil law.
  • In order to claim compensation the claimant will sue the defendant not for enabling the punishment (Chen-Wishart, 2012).

3.2 The nature of liability in negligence

Negligence is defined as the situation in which the agreed party fails to implement their duties and responsibility while performing activities and thus result in causing harm or injury to the other party. Therefore, all the parties are required to take duty of care so that they can omit the activities that can be injurious to another party (Paterson, Robertson and Heffey, 2005). Negligence mainly involves harm caused by the carelessness not through intention. Thus, in order to be successful in negligence demand the applicant must possess these:

  • The suspect is payable a duty of care.
  • The suspect has failed the duty (Bix, 2008).
  • The suspect's failure had resulted in damaging to the claimant.

For taking case study into the consideration Brian is entitled to claim the reward as the advertisement has been published in the newspaper and Brian purchases the voyage and is all set to crosses the English channel. But suddenly Adam has withdrawn the advertisement. Unaware about the situation Brian crosses the English Channel and duly arrives in Calais. Hence, Brian is entitled for claiming the reward if £1000. If Adam refuses to pay the reward amount then the claimant that is Brian is liable to take compensation. The basic nature of liability in negligence includes:

  • Duty of care: This act is considered as the legal obligation that is imposed on the party which is required to be bounded with standards of care while performing the tasks (Meyer, 2006).

3.3 How a business can be vicariously liable

Under vicarious liability, the wrong party is liable for their acts which have been caused to the innocent party. According to the law, employer of the organization is being accountable for all the wrong doings or the negligent actions which are performed by their employees (Occupiers Liability Act, 2001). Therefore, the business Enterprise is being liable for taking attention of health and safety within their environment. The firm can be accountable for the activities that neglect the employees working during the period of their employment. Furthermore, it can also be defined as situation where a business is responsible for the banned activities of another party are called vicariously liable (Vicarious liability for international torts, 2005).

According to the case scenario, Adam firstly advertises the reward and then later on withdraws the reward for the one that crosses the English Channel in bath. Meanwhile, the Brian purchases the bath and set out from Driver. When the Brain is in the mid channel, Adam withdraws the reward money from the advertisement. Unaware of the fact Brian crosses the river and claims the reward but Adam refuses to pay him. Thus, it is considered as the one-sided contract between the parties as Brian was unaware of the withdrawal of reward and continues the voyage. Thus, for crossing the river the Adam is liable to pay for the performance that was acknowledged by the Brian.

CONCLUSION

From the above presented report, it can be concluded that contract is the judicial statement between the parties which is organized by law. However, the agreement is a contract if all the necessary elements are present in it like offer and acceptance, consideration, intention, capacity of parties etc. However, the report has also studied the contractual and tort liability as a part of civil law in which indemnity is provided to grieve party. However, liability in contract arises due to disappointing performance while in tort it arises due to negligent enactment. Lastly, it has also measured that according to vicarious liability, business should take care of health and safety issues else they will be held liable for the negligent act of their employees.

REFERENCES

Books and Journals

  1. Baker, T., 2005. Liability insurance as tort regulation: six ways that liability insurance shapes tort law in action. Connecticut Insurance Law Journal. 12(1).
  2. Bix, B. H., 2008. Contract Rights and Remedies, and the Divergence between Law and Morality*. Ratio Juris. 21(2). pp. 194-211.
  3. Chen-Wishart, M., 2012. Contract law. Oxford University Press.
  4. Hermalin, B. E., Katz, A. W. and Craswell, R., 2007. Contract law. Handbook of law and economics. 1. pp. 3-138.
  5. Hersch, J. and Viscusi, W. K., 2007. Tort Liability Litigation Costs for Commercial Claims. American Law and Economics Review. pp. 330-369.
  6. Hillman, R. A., 2012. The Richness of Contract Law (Vol. 28). Springer Science & Business Media.
  7. Kim, J. and Feldman, A. M., 2006. Victim or injurer, small car or SUV: Tort liability rules under role-type uncertainty. International Review of Law and Economics. 26(4). pp. 455-477.
  8. McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press.
  9. Meyer, L., 2006. Soft Law for Solid Contracts-A Comparative Analysis of the Value of the UNIDROIT Principles of International Commercial Contracts and the Principles of European Contract Law to the Process of Contract Law Harmonization. Denv. J. Int'l L. & Pol'y. 34. pp. 119.
  10. Paterson, J., Robertson, A. and Heffey, P., 2005. Principles of contract law. Lawbook Co.

Online

  1. Hassett, M., 2012. The extent of the duty. [pdf]. Available through: <http://www.forsters.co.uk/cmsfiles/pdf/MJJH_PLJ_Occupiers%20Liability_050312.pdf>. [Accessed on 12th October 2015].
  2. Hernandez, K., 2010. Elements of a negligent tort. [Online]. Available through: <http://www.legalsource360.com/index.php/elements-of-a-negligent-tort-torts-tort-law-negligence-duty-breach-causation-damages-2181/>. [Accessed on 12th October 2015].
  3. Vicarious liability for international torts. 2005. [Online]. Available through: <http://www.1cor.com/1158/?form_1155.replyids=282>. [Accessed on 12th October 2015].
  4. Occupiers Liability Act. 2001. [pdf]. Available through: <http://www.legislation.gov.uk/ukpga/1984/3/data.pdf>. [Accessed on 12th October 2015].
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