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Aspects of Contract

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Study of Various Types of Contracts

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Introduction

A contract can be defined as a voluntarily and legal relationship between two or more parties. It binds contracting parties in legal relations through the written form of the contract as well as provides rights and responsibilities to each party in against of another. To convert agreement into a contract it must have the four essential ingredients of the valid contract such as offer, acceptance, legal consequences and consideration (Flodgren and Runesson, 2015). The present depicts essential elements of the contract without which on cannot make valid contract. It also represents the impact and effect of different type of contract upon the business aspects or activities. Besides this, it states the nature of liability in negligence and application of tort of negligence in different business situations.

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TASK 1

1.1 Explaining the importance of essential elements of contracts which are required to form a valid contract

In order to form valid contract parties of the contract must fulfill the essential needs of the contract. Offer and acceptance, lawful consideration, capacities of the parties, free consent, lawful object, certainty and possibility of performance are the main elements of the valid contract (Srinivasan, 2014).

For example:- Peter is the bookseller and Ronald is the customer who wants to purchase the books which is shown to Ronald by the bookseller. Peter is 24 years old and Ronald is in the age of 19. Peter offers the books to Ronald with the intention to sell it @ 24£. Once Peter has displayed the book to Ronald thereafter, he gives his acceptance to purchase the book @ 24£.

In the above case contracting parties possess all the attributes of the valid contract. The agreement which is enforceable by law is known as legal contract. Essential elements which are required to form a valid contract are as follows:

Offer and Acceptance: In order to make legal bindings there must be lawful offer and lawful acceptance is required between the two competent parties. The word lawful states that contract must required to satisfy the legal requirements which are mention in the contract in relation with thereto (Faure, 2009). In the above example Peter offeror and Ronald is the offeree. As stated in the example that Perter legally offers the book to Ronald and he give legal acceptance in relation to the purchasing of book. As per the contract act 1857 there is the legal offer and acceptance between the Peter and Ronald.

Intention to create the contract: As per the example it has been analyzed that there is an intention among the parties to the contract. As per the contract act there must be legal relationship and obligation between Perter and Ronald.

Lawful consideration: On the basis of above-cited example it has been assessed that Peter sells its book to Ronald @25£. Peter does not sell it books in king so there by he fulfills the condition of valid contract. In contrary to this, in return of amount Peter give a book to Ronald which shows that both the have lawful considerations.

Capacities of the parties: To make a contract contracting parties must be major, with a sound mind and cannot be disqualification by any law. Above cites case states that Peter and Ronald both the parties possess the capacity to make a valid contract.

Free consent: In the above-mentioned example it can be seen that both the parties to the contract are agree to build a legal relationship without any coercion, fraud, misrepresentation, undue influence or mistake.

Lawful object: In order to make a valid contract there must be a lawful object between the parties which are going to make a contract.
In addition to this, parties require to make written contract because oral contract has no evidence to prove it as a legal contract.

As per the cited example, it has identified that Peter and Ronald meet all the requirements of the valid contract and it is enforceable by law (Ten Essential elements of a valid contract. 2015).

1.2 Impact of various types of contracts

Impact of various types of contracts is as follows:

Unilateral and Bilateral Contract: On the one hand, in unilateral form of contract one party make promise to another without taking consent of another party. It is also known as one sided contract in which party who make promise is known as offeror and another party to whom promise is made are known as offeree. In the unilateral contract offeror is obliged to fulfill the promise which he made but offeree cannot be enforced by law to act (Botha, J. C., 2005). On the other hand, in bilateral contract exchange of mutual promises have been done between the parties. In this, parties of the contract are obliged to perform their promises If they does not complying with the conditions of the contract then damaged party have the right to make violate the contract (Unilateral and Bilateral Contracts. 2015).

Written and Oral Contract: When parties to the contract make agreement through verbal forms of communication then it is known as verbal agreement. It only works well when there is no room for disputes between the contracting parties. In case of disputes claimant have no legal proof to resolve the problem. In contrary to this, written contract reduce the risk of default because in this detail description of terms and conditions are mentioned. Written contract minimizes the business risk and give more certainty to the contracting parties. In case of written contract claimant party is able to present the evidence in the court and get satisfactorily results.

Face to Face and Distance Contract: In face to face contract, there must be an existence of parties at the time of formation of agreement. In this, one person make offer to the another person known as offeree through face to face interaction. If offeree rejects the offer then offer is cancelled at the time of contract. In contrary to this, parties of the contract are not available when deed is formed and signed by the contracting parties (Ali and Kumar, 2015). In distant contract, contacting parties communicate with each other through the mail. Offeree has to give acceptance within a predetermined time period if it is not then offeror has the right to revoke it.

1.3 Analyzing the terms of the contracts

Analysis of the terms of the contract is as follows:

Express terms: Express terms are those which are specifically defined or mentioned in the agreement. Both the parties of the contract give their acceptance when a contract has been made. In express terms warranties and conditions are specifically defined in the written form of the contract. Innocent party of the contract has the right to breach the contract and claim for the compensation against damages (Butler, 2014). Case of Poussard v Spiers [1876] 1 QBD 410 referred that claimant can revoke the contract if the defendant party fails to perform according to the terms and conditions of the contract. In this, the innocent party has the right to claim for the compensation in against to damages. It happens only when the defendant party of the contract does not act or perform as per the terms and conditions of the contract.

Implied terms: Implied terms are those which stated by public policy and law. They are usually not mentioned in the body of the contract. Provisions of the contracts are usually not described in the oral or written form but it is mentioned into the contract. In accordance with the case of Hutton v Warren [1836] EWHC Exch J61, if implied terms are not in accordance with the legal aspect then the contract is said to be void.

TASK 2

2.1 Impact of different types of contract

There are various types of contracts are mentioned in the contract act such as written, oral and face to face or distance contract. Different types of contract place different impact upon the contracting parties (Geavlete and et.al, 2015). On the basis of case study Ivan went to the Todor's book store and expressed his feeling to buy a book @50£. Ivan took the book to the counter to purchase it but Todor's refused to sell the book. Todor's said to Ivan that he already sold this book to Carl so he was unable to give book to Ivan. In this situation, Ivan offers to Todor's but he refused so there was no acceptance from this side. To make a valid or legal contract there must be offer and acceptance from both the side of the contracting parties. According to the case of Fisher v Bell if goods are showcased with their price tag then it is recognized as invitation to offer rather than offer. Specifically parties to a contract must fulfill the four essentials which are required to form a valid contract namely offer, acceptance, valid consideration and intention to create legal obligation. In the given case or scenario offer was present and there were no acceptance from the other side. Thus, only offer valid consideration and intention to create lrgal obligation is present from the side of one party because Todor's had not accepted the offer made by Ivan. Thus, there was no contract between the Ivan and Todor's due to the absence of elements of valid contract.

2.2 Application of the elements of the contract

As per the given case scenario Adam made an advertisement in the newspaper that he will provide the reward to the first person who is able to swim across the English Channel from Dover to Calais. Brian saw the advertisement and decided to take part in the swim competition to get the reward of 1000£. It is a unilateral offer in which one party make promise to the another party without taking permission of another party (Nijem and Galpin, 2014). Adam made an advertisement as a general offer to the large group of public. As per the terms of the advertisement Brian acts in the same direction which is regarded as acceptance. On the same day when Brian is in the mid-channel of the swimming then Adam place another advertisement. It represented that he did not provide reward to the person who swim from Dover to Calais. As Brian is unaware from the advertisement and accomplished his performance. Thereafter, Brian asked to Adam for the reward amount but he refused to provide the same. As per the essential elements of the contract it has been stated that Adam would to liable to compensate or reward the Brian for his performance. According to case of Carlil v Carbolic Smoke ball Adam could not revoked the contract because before another advertisement Brian has started his performance. On the basis of the case of Carlil v Carbolic Smoke ball offeror is not obliged to perform their duties and obligation until and unless offeree has started to perform the same. If offeree has started to perform then offeror has the legal obligation to perform the promise which is made by them. Therefore, Adam has to compensate to Brian as against the claimed amount.

2.3 Evaluating the effect of different terms

Barry made contract with the local council regarding the hiring of chair. Barry paid money to the local council which indicates that he accepts the offer but he did not read the statement which stated on the back side of the ticket. In this, local council and Barry entered in the contractual relationship by giving the acceptance. Due to statement is cited on the back side of the ticket so it is recognizes as an express terms (Koppelman, 2014). As per the case of Poussard v Spiers [1876] 1 QBD 410 innocent part has the right to reject the whole contract if performance of defendant party is unsatisfactorily. In this situation, innocent party can claim for the damages in against to defendant party. Nevertheless, if defendant party succeeds in giving the evidence of the allegation then innocent would not revoke the contract. In addition to this, he is also not in position to claim for the damages in against to defendant party. .According to this, local council will be liable to pay for the injury. Barry got injured after sitting on the chair due to crumple of chair. Barry was claiming for the damages but local council denied for the compensation. Exclusion clause mentioned in the ticket in the written form and it was the mistake of the Barry that he sat on the chair without reading the clauses. Therefore, local council is not obliged to compensate the Barry for the damages as the laws and legislation thus Barry is liable for its own damages.

TASK 3

3.1 Contrast liability in tort with contractual liability

Contractual liability highly differs from liability in tort and it differently affects the contracting parties. On the one hand, when a breach of the term occurs then contractual liability arises. Whereas on the other hand, liability in tort arises when the contracting party breaches the duty of the contract. In contractual liability, the damages are ascertained on the basis of the deed of the contract. In contrary to this, in tort damages are analyzed by the law (Wernette Jr and Rogers, 2014). Besides this, in a contractual relationship, there must be an existence of familiarity among the parties. In contrast to this, in case of liability in tort obligations are imposed by law. In case of tort, claimant party compensated only when the principles of negligence are satisfied. Whereas in the breach of the contract there is no deed to satisfy any principles in relation that compensates the claimant or damaged party (Miceli, Segerson and Wang, 2015).

3.2 Nature of liability in negligence and employer's liability

Negligence can be defined as a condition in which one party cause of damages to the other party due to his/her misdemeanor. Employer's liability in case of negligence is enumerated below:

Duty of Care: It states that employer needs to make proper arrangements regarding healthy and safe working environment. If employer fails to perform the duty of care then injured party or employees have the right to make sue upon the employer.

Breach of Duty: If injured or damaged party neglects the duties which they requires to undertake while performing their job then it is referred as breach of duty (Hagenhoff and et.al., 2014).

On the basis of cited case scenario it can be seen that Roger is the dishwasher who make complaint about the problem of rashes which occurs due to long period of washing up. To resolve this problem Ben who is the owner of Regent hotel provides rubber gloves to Ben and other employees. Merely few employees use that gloves which are availed by Ben and large number of employees do not use them Roger is one of them. As per the case scenario it has been stated that Ben fulfills all the health and safety aspects for the projection of the employees. As an employer he plays all the role and responsibilities in relation to the safe working environment so he would not be responsible to compensate the injured employees. Roger is not able to make sue upon the employees because he neglects the use of rubbers gloves which is not the fault of Ben.

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3.3 Vicarious liability

It consists of the business situations in which one party is partially accountable for the unlawful actions of the third party. According to the law at workplace employer is responsible for the undesirable act of the employees (Lim, 2014). Condition of vicarious liability arises where one party is assumed as a power to make control upon the third party. Usually in material, professional and employment relationship vicarious liability can be enforced by law. On the basis of this law employer of the company is accountable for the actions of employees (Overgoor and et.al, 2015). In order to prevent negligence and undesirable behavior organization or employer needs to make control over the actions of the employees.

In the present case, Colin who is the head chef of the hotel got fed up with Rogers’s attitude. He mitigated his frustration by hitting the frying pan on the head of the Roger due to angriness. In this condition, Roger injured but he refused to go to the hospital. As per the negligence act, Ben is liable to compensate the Roger for the misconduct or unlawful behavior of the Colin. Moreover, as an employer, Ben has the liability to take care of its workforce and he requires controlling the unlawful actions and activities of the employees. On the basis of the cited case, it has been stated that Ben is vicariously liable for the unlawful actions or activities of Colin. In order to restrict violence and unlawful activities, employers are required to involve terms and conditions in the employment contract.

TASK 4

4.1 And 4.2. Application of the elements of the tort of negligence, defenses and vicarious liabilities in the given business situation

Various elements of defense in negligence are as follows:

Volenti-non Fit injuria: When claimant or damaged party commits the act unintentionally then they possess the right to claim for the damages. In contrary to this, if claimant party intentionally acts in the wrong direction then they has no right to claim for the compensation (Wernette Jr and Rogers, 2014).

Necessity: If negligence act is not indispensable then defendant party is not responsible to pay for the damages. When employees of the company do illegitimate act in order to restrict illegal act then employee is not liable to pay for the damages (Comola and Fafchamps, 2014).

Justification: If defendant party succeeds in justify the reason of the act then claimant party is not able to claim for the compensation.
Illegal: When defendant perform illegal or unlawful act then claimant party has the right to ask for the damages or compensation.

As per the Occupier's liability act organization or manager is responsible for the injury of the guest or customer. It is the duty of the organization to make proper safety arrangements for the guest. If organization fails to comply with the safety arrangement for the guest then company is liable to pay for the damages.

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As cited in the case that Mark, guest of the Regent hotel, decided to go to the pool for swim. It is mentioned at the pool site that it is closed between 7pm. to 7 am. Marks neglected the sign board and entered in the poll. Due to this, Mark badly injured and expensive sunglasses of Mark had broken down. According to the Occupier's liability act 1957 it is the responsibility of the Regent hotel to compensate the guest for the damages. Various amendments have made in the occupier's liability act 1984 which provides more relief to the organization against the damaged party. Occupier's liability act 1984 states that employer or organization is not responsible to compensate the employees when damaged party injured due to his own negligence. As per the case study Mark neglected the sign broad and jumped in the swimming pool. Therefore, he got injured due to his negligence so Regent hotel is not liable to pay for the damages.

Conclusion

By summing up this project report it has been concluded in order to make valid contract parties to the contract requires to undertake the essential elements. It can be concluded that different types of contract impact differently to the contracting parties so they need to takes into consideration these factors. As per the negligence act damaged party will not be able to take compensation from another party when he intentionally neglects the rules. Occupier's liability act States that employer or organization will be liable to compensate the customers or employees when they injured due to the negligence of firm. In contrary to this, if customer and employees intentionally neglect the aspect then the firm will not responsible to compensates the damaged party.

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