Essential Elements of a Valid Contract in a Business Context

In this report, the different aspect of contract and negligence will be studied with reference to different case study. In this report, learning will be shown regarding the essential elements needed for the development of valid contract (Miles, Fleming and McKinney, 2010). Thereafter,different terms used in the contract will be discussed. Furthermore, the similarities and difference of liability in tort with contractual liability will be discussed. Thereafter, discussion regarding vicarious liability in a company and its element will be provided. The nature of liability in negligence will be explained.

TASK 1

Case scenario

From the provided case scenario, it has been identified that Peter Abraham is looking to set up as self employed building contract. Due to limited knowledge regarding contractual obligation and development of contract he is threatened regarding legal consequence. In the present section, learning will be shown regarding the elements of contract that must be focussed upon by Peter Abraham.

1.1 Importance of essential elements which has to be present to form a valid contract

Contract can be reasoned as valid only when it includes all the necessary components into it (Zoll, 2012).There are broadly 4 necessary elements which Peter Abraham require to regard while developing a contract. These elements are represented as follows:

• Offer: Offer can be defined willing but conditional promise made by one party that is offerer with an purpose to develop a valid and legally enforceable contract. The offer can be provided through different mediums like, face-to-face, through telecommunication, via formal letter, telegram, etc. The component can be effectively elaborated with the lawsuit of Harvey v Facey [1893] UKPC 1.In the presented scenario, Peter Abraham can provide or provided by the offer from suppliers, buyers and different organisation etc. (Olander and Norrman, 2012).
• Acceptance: With respect to develop a legally enforceable contract, it is essential for the offeree to provide valid acceptance within a provided time limit. In a presented case, Peter Abraham can develop the contract only when he take the offer provided by the supplier for furnishing raw material (Andrews, 2015). Moreover, Peter Abraham provide offer to the buyers in that period valid contract can only be developed if customer accept in reasonable time frame. This can be further understood with the lawsuit of Entorres v Miles Far East [1955] 2 QB 327
• Consideration: It is reasoned as the something of worth provided by both parties to a contract that provokes them to enter into agreement to exchange mutual execution. A contract is founded on the exchange of promises and all party of a contract must get fair advantage out of it and undergo the harm if not fulfilled. In a presented case scenario, the consideration in the contract will be value charged against the offerings provided to the buyers and cost paid to the provider during the buying of various components and inputs (Hayre, 2015). The case of Thomas v Thomas (1842) 2 QB 851 can be regarded as support for the understanding of consideration element.
• Capacity of Party: It is another element for valid contract which is important to develop a legally enforceable contract. In order to develop a binding contract it is essential to have capable parties (Klass, 2010). It refers to that the parties must be mentally sane, must not be minor a etc. The lunatic, drunkard etc. are also refrained from developing a valid contract (Four Essential Elements of a Contract. 2015). In the present case, Peter Abraham must check that customers or suppliers which will be participating in the contract must have normal mental capacity, legal age and not intoxicated while entering into contract (McKendrick, 2015).

1.2 Discussing the impact of forming contract by the different means

Peter Abraham can use different mediums to enter into valid contract with respective parties like, buyers, suppliers, workers etc. However, it is significant for the Peter to have proper understanding regarding the consequence of such kind on development and violation of contract ?(Milman, 2009). The discussion regarding which is provided as follows:

• Face-to-face Contract: It is kind of contract where parties are physically present while entering into contractual arrangement. In the provided case, Peter Abraham can develop face to face contract with customers where there needs and preference of them can be known. Thereafter, direct negotiation regarding terms and conditions of contract can be done (Aust, 2013). The main requirement of face-to-face contract is that it demand physical presence of both the parties while developing the contract. However, in case of failure of contract, parties may face issue due to lack of availability of evidence.
• Written contract: It is kind of contract which is formed after penning the terms and conditions of the contract on the written material and these papers are authenticated by the signature of parties participating in the contract. In the current case, Peter Can enter into written contract (Chen-Wishart, 2012). It is feasible option as in case of breach, the written document can be represented as evidence to the court of law.
• Distance selling: It is kind of contract which is developed by the parties which are separated due to geographical barriers. Therefore,parties to contract are not physically present during the time of development of contract. The terms and conditions can be thus discussed through telecommunication, telegraph, video conferencing etc (Sidgwick, 2012). Such as in current case, Peter Abraham can use distance selling contract to enter into legal relationship with customer with the aid if telephone etc. The limitation of this method is that due to communication failure the terms and conditions can be misinterpreted leading to non-fulfilment (Habermas, 2015).

1.3 Analysis of terms in the contract with reference to their meaning and effect

The contractual term can be defined as any condition forming part of contract. Each and every term give emergence to a contractual duty, breach of which can leads to legal proceeding. There are varied terms that are included in agreements developed by parties. Such as:

• Conditions: It can be reasoned as the leading term of the contract and it is in the heart of a contract by developing a kind of base of the deed. In case the conditions are not fulfilled by the individual then guiltless party is eligible to breach the contract and can demand charges for casualty (Strong, 2014). In the provided case, in course of entry into contract with the providers of input, main term can be the supply of 50 ton raw material which must be presented in 15 days. In case the provider fails to provide the input then there is a violation of conditions. Therefore, Peter Abraham can end the contract and also ask for the compensation for loss which he undergo.
• Warranties: They are the secondary term of contract and are not main to the contract. In the case of violation of warranty, the innocent party is likely to demand damages for the same and cannot reject the entire contract. Such as failure to provide input in the stated quantity and time frame (Wigmore, 2012). For instance, if provider send 25 ton material after 15 days then it is a breach of warranties and Peter can demand damages.
• Innominate Terms: They are neither conditions nor warranties. Hence they perform as in-between terms in the contract. The innominate terms was introductory known in the case of Hong Kong Fir Shipping. In the case of violation of innominate term, it is being identified that guiltless party is disadvantaged of considerably the entire performance or not (Milsom, 2014). The impact of innominate term depends upon the consequence of there breach on party.
• Exclusion Clause: it is another term when enclosed in the contract then it restricts the obligation of a party so as to prevent the negative outcomes of the failure of the contract (Hillman, 2012). For example, Peter Abraham can use the exclusion clause while getting into contract with the employees that during the course of construction mishap may happen and for same Peter will not be liable. Nevertheless, it is the obligation of Peter to render proper training before placing them to employment.

TASK 2

2.1 Applying the elements of contract in the provided case scenario.

CASE 1

Facts of the case

In the provided scenario, it has been ascertained that Carol student apartment was unfurnished. She contacted Gumtree a online entity with ad stating sale of good leather couch for £600. the advertisement was supported by photo and contact information. Carol through email stated that it want to buy the couch.

Findings and conclusion

From the above case, the online ad by company can be regarded as offer while the email of Carol can be referred as acceptance of offer. In addition to this aspect £600 can be termed as consideration at which both the part agree to buy and sell the couch. The case scenario, does not show that part to contract are suffering for mental incapacity or does not have legal age. Thus, it can be stated that they have legal capacity to enter into contract. Overall, in present case all the essential elements to contract are present. Hence, it can be said that contract between Carol and Gumtree can be legally enforced (Dobson, 2015). From the case, it has been identified that the contract was unilateral as well as distance selling. Such as, in case of Carlill v carbolic smoke ball company 1893 1 QB 256.

CASE 2

Facts of the case

From the provided scenario, it has been ascertained that Preston son Devi was looking for cybersecurity post in IT company name, George Smith and Fogarty Inc. The company decided to give job to Devi and devised offer letter on 12, April, 2015. Perston was worried about the career of Devi and mailed a letter on 13, April to George containing promise to pay £150,000 if they appoint its on. The company decided to enforce the contract.

Findings and conclusion

Concluding the case, it can be stated that this contract cannot be legally enforced as it is not valid. The contract is formed with illegal intention as the father of Devi is bribing the management to stimulate them to appoint its son. Hence, offer composed of £150000 is not legal and the sum cannot be regarded as valid consideration (Curtin, 2014). The case of Peterson and George Smith and Fogarty Inc. can be supported by law suit of Re McArdle (1951) Ch 669 Court of Appeal.

2.2 Applying the law on terms in the given cases

CASE 3

Facts of the case

According to the provided case, it has been identified that a couple reserved a table in the famous restaurant of London. On entrance man handed over it overcoat with wallet containing £500 in return porter gave a slip pn the back of which exclusion clause stating all the worthy items must be removed from the jacket pocket as restaurant is not responsible for their loss. After taking the meal while clearing the payment,couple noticed that the wallet is not there . Further, they asked restaurant owner to bear the loss. In return the proprietor of restaurant refused stating that they are not responsible on the basis of exclusion clause. It further means contractual provision disclaiming liability of specific event.

Findings and conclusion

In the present case, the exclusion clause transcribed on the receipt cannot be regarded as exclusion clause. According to British law, the exclusion clause can be incorporated into contract if it is by notice, signature or previous reason of transaction. In the current case, couple was not ware of the exclusion clause at the back of the receipt. It is further supported by the lawsuit of Chapleton v Barry where the judgement was provided that receipt and tickets are created after the development of contract (McKendrick, 2011). Hence, they are not the component of contract and clause written behind this are invalid. Therefore,man can claim for damages from the owner of restaurant.

CASE 4

Facts of the case:

In the provided case, it has been stated that Aaron rented a warehouse from Zehphra. The warehouse was not used for long time and demanded repair. Aaron made modification in the warehouse and in return Zehphra promised that it will not increase the rent for coming 5 years. The worth of property increased in value partly due to modification done by Aaron. On the death of Zehphra property was inherited by Yeti and after that she raised rent. The tenancy agreement was terminated. Aaron submitted bill claiming compensation for the expenditure incurred by it. Yeti new owner denied to pay compensation saying it was not part of tenancy agreement.

Findings and conclusion

According to English law, landlord is not eligible to pay compensation to the party who has rented the property and bring modification in the rented property (Trosborg, 2015). The Aaron is not liable for getting damages as it modified the property for its own convenience. Further, this case is based on the case of Hutton v Warren [1836] EWHC Exch J61.

2.3 Evaluate the impact of different terms provided in the case

CASE 5

Facts of the case:

As per the provided case, a holder of policy applied for motor insurance. The policy asked question stating does anyone driving the motor vehicle has made claim during past 5 years. The policyholder stated No. later, car was stolen and only enquiry it has was identified that claim was made under previous motor policy within the 5 years period. Hence, the contract was void and not entered in good faith. In response to this, it was stated by policyholder that he did not revealed the previous claim as the insurer concerned has decided not to meet it

Findings and conclusion

From the aforementioned case it can be noticed that there is breach of conditions. The motor insurance company entered into contract on the belief that there is no previous claim by the holder. Nevertheless, it was ascertained that previous claim was made on the basis of lie. Therefore,insurance company is not liable to provide any help to the holder (Cassells and Ball, 2011). Further, it can repudiate the contract and ask for damages with respect to breach of conditions. This can be further supported from the case of Poussard v Spiers (1876) 1 QBD 410.

CASE 6

Facts of the case:

With respect to the provided case, it has been ascertained that policyholder applied for the insurance. In proposal form it was asked regarding the alteration of modification in maker specification. Also, question regarding any claim made in previous 5 years due to accident or loss was asked. The policyholder refused and responded no to both the question. On the enquiry, it was identified that modification in car were made as it was fitted with oversize alloy wheels etc.In addition to this claim was made on previous policy. Therefore, insurer refused to meet the claim and cancelled the contract from the beginning(Bowal and Bontorin, 2014). In the response of this, policyholder stated that she thought all the modification in car are owner real specification. Further she said it was not into her husband claim were refused as it was third party cover during the period.

Findings and conclusion

The provided case the insurance company is eligible to repudiate the policy from the starting. However, as per the the obtained evidence, insurance company recognized that policyholder genuinely thought that car was not changed while purchasing it. Withal, she asked to disclose the before claim were made by her husband. Therefore, client of motor insurance company is needed to demonstration the past incidents and claims (Caulfield, 2016). Since, she failed to provide true information and give actual response doing so, she misguided the insurance company for accepting a risks she would have consented to cover against the higher premium. Hence, there is a breach of warranties by the client of insurance company and for this firm can demand the damages. The findings can be backed up with the case of Bettini v Gye 1876 QBD 18.

TASK 3

3.1 Explaining the similarities and difference of liability in tort with contractual liability

As per the English Law, provisions for liability has been characterized so as to assure that parties can execute there obligations in a adequate way. The liabilities for tort and contract are contrasting and they have been detailed as follows:

Hence, it can be state that within tort law the duty is imposed by law . While in breach of contract the duties are imposed by the parties to the contract. Thereafter,in tort law there is breach of right in rem while in contract there is violation of right in personam. Thereafter,in tort law the damages are unliquidated. On the other hand, damages within contract act are liquidated. Further, objective in tort contract the objective is material while in contract act the objective is immaterial. It is important in contractual liability that defendant and claimant must be parties to contract while, in tort law it is not important that defendant to have prior relationship with claimant (Law of contact and Tort of negligence. 2016).

The similarity between the tort and contract is that they both are civil wrong. In addition to this, in tort and contractual liability the wrongdoers can be sued in the court for compensation.

3.2 Explaining the liability for negligence and conditions needed to met claimant to successfully prove negligence

According to the provision of law, negligence characterized as the incompetence of a party to execute duty of care which a sensible individual must performed in a presented state. The injured party can demand compensation from the defendant as a result of negligence caused by them.

Elements of Negligence

With the objective to show the tort of negligence it is necessary for the affected party to conform to the next described elements of negligence:

• Duty of Care:According to the Court of English law it has been stated that various relationships and condition that give emergence to the standard duty of care which a reasonable person and enterprise must perform out while executing their work (Miles, Fleming and McKinney, 2010).
• Breach of Duty:The breach of duty occurs when a organization and an individual fails to carry out the legal duty of care in satisfactory way(Trosborg, 2015).
• Damages Caused:For establishing the breach of duty in carelessness then guiltless party is needed to demonstrate the damages or loss caused to them by defendant.
• Remoteness:According to the remoteness component it can be stated that the damages must be of predictable kind which have been reason by plaintiff (Wigmore, 2012).

Hence the case of negligent act can be supported with the actual case of Donoghue v Stevenson, 1932.

Defenses

For minimizing the obligation of plaintiff the English Law has characterized three kinds of defences. First and foremost is the Volenti non fit injuria in which applicant has kept themselves in a state of affairs where damage subsist and they are cognizant about the same. Hence, plaintiff is eased from their portion of susceptibility. Other than this, there is a Contributory Negligence where suspect and applicant both have shared equally and responsible for the occurrence of negligent action. Hence, plaintiff only is not liable but applicant is evenly responsible for the same. Other than this, Ex Turpi Causa is one of the philosophy according to which defendant may not render legal remedy if it arise due to the prohibited act of affected party (Chen-Wishart, 2012).

3.3 Explaining the vicarious liability of a business with example

Vicarious liability can be defined as liability for the wrong done by others. Such as, in case of the wrong done by employees, the owner is responsible. According to the provisions of vicarious liability the company is criminally liable for the actions of agent or employee in the course of employment (Vicarious Liability. 2015). Such as different prohibited actions performed out by the employee which involve physical and mental molestation of colleague, fraudulent activities towards the suppliers or customer, furious act at workplace, etc. In these case, the employer will be equally responsible for the acts of employee In vicarious liability the obligation are imposed by government due to relationship shared by the parties (Hayre, 2015) Similarly, in case of father and son/ daughter the parents are vicariously liable for the actions of their children. For instance, if the father the owner of bike permits its son to drive and later the accident is caused than in that case, father is partially liable for the actions of its child. However, there are certain condition, if they are met only than the employer will be held liable for the acts of employees. The description of which is provided as follows:

• The illegal act must be performed by the organizational member within the working hours.
• The prohibited act should be executed out under the employment period(McKendrick, 2015).
• The wrongdoers must be an worker or part of the firm.
• The act must be a tort that it should comprise all the components of negligence

Task 4

4.1 Discussing the elements and defence in negligence

CASE 7

According to the case study, Mr Brown fell unwell so that he went to Good Mayes Hospital under which they have breathing problem and chest pain. In this way, Mr Brown seen by the nurse and she called the doctor on duty. Nurse provides the medicine to the patient without checking the doctor under which they asked nurse to prescribes. Furthermore, negligence can be stated as the term wherein individual fail in taking the action due to some reasons. Person not able to take the action against the party and they knows the unfair activities occurred at the work place. In this way, the negligence as result in all types of the incidents due to physical and personnel injuries etc. It also includes the company mistakes and miscalculation under which individual make the claim for the damages based on the an allegation of the other negligence (Wigmore, 2012).As per this, plaintiff sue to the other party due to negligence wherein the owner of the firm knows the unfair practices occurred at the work place. In this situation, the injured party claim to the another party and they are reliable for that all unfair situations.

Facts of the case

A) The doctor and hospital are reliable for due to negligence under which they have reached the hospital and take the responsibility for examining the Mr Brown. Accordingly, they provides the some pain killer like medicine to patients due to suffering some personnel injure. The doctor take the responsibility for check the patients but they do not able to performing the duty of care in well manner. As per this negligence, the hospital is liable for taking the action against the doctor under which they avoid the all situation and they do not able to carry out the activities of the care. Doctor suggest the medicine to the nurse through the telephone without examined the patients (Hillman, 2012). As per this situation, hospital is liable for taking the action because he is an worker of the Good Mayes Hospital.

B) As per this case study, Mr Brown died due to pneumonia under which the hospital and doctor are not responsible for the reason behind the patients died. In this way, Mr Brown died because they have pneumonia caused from toxic mould in the home. In this situation, the doctor and hospital are are not responsible for the negligence act. Henceforth, Mr Brown is not able to sue the against the hospital and doctor because they died in personnel reason as well.

4.2 Application of elements of Vicarious Liability

CASE 8

According to the case study, the owner of the Chauffeur organization is sent to the driver for pick up the clients at the air port. In this way, the driver take the few glasses of the alcohol while during the wasted time. As per this situation, the driver has on the way from the airport to the clients hotel under which he has crashed the lamp post because they intake the alcohol. In this situation, the clients is liable to sued the company and the organization will responsible for the vicariously because they have injured due to negligence of the driver (Bowal and Bontorin, 2014). They pay the amount of the all damages which is occurred at the work place. Furthermore, the main element of the vicarious liability under which customer are satisfied as they the river was on the duty. The negligence carry out the wherein employee during the working hours.

CASE 9

As per the case study, Mr Jones works in the supermarket and they role play as a delivery driver under which they loading the pallets into his truck and there after he supplied on the tail gate and fall over the another place, during the working period under which he got the injured and they way very serious so that it requires to surgery and moths of the rehabilitation with a physiotherapist. In this situation, the colleague liable to sue against the supermarket due to damages for personnel injuries(Chen-Wishart, 2012). However, the company argued during the period of accident under which take the responsibility for health and safety has been provided by the other organization. As per the vicarious liability act, company responsible for taking the action about the employees care while during the some injuries. Moreover, If any case organization is not able to accomplish the duty under which they take the responsibility for paying the all amount of the damages. According to the case study, the plaint party sue the against the party and compensation as Mr Jones suffered the injuries (Lockwood, 2011). Furthermore, the supermarket is not responsible and liable for the compensating the damages because the Mr Jones working in another company while during the injuries so they carry out the health and safety . According to the Occupier's Liability Act 1984 is formulated by the UK government under which the physically damages will be compensatory for the liable the injury.

Conclusion

From the above report, it can be concluded that Any agreement which is willful, intended and lawfully bound between two or more capable parties are known as contract. Contracts are normally written but can also be verbalized or implied. In order to make a valid contract there are certain elements which are needed, offer and acceptance, intention to develop lawful relationship, contractual capacity , consideration etc. There are various kind of contract that can be entered by part, written, face to face and distance selling etc. further, it has been identified that there is significant difference between tort and contractual liability. In tort , legal duty of aggrieved party to innocent is due to civil wrong. While, in contract, the legal obligation between the party arises due to failure to perform and meet the terms and conditions of contract. It has been identified from the report that, vicarious liability in which one party is held liable for the unlawful actions of a third party. For example, employer of any organization is obligated for the outlaw act of their employees.

References

• Andrews, N., 2015. Contract Law.Cambridge University Press.
• Aust, A., 2013. Modern treaty law and practice. Cambridge University Press.
• Bowal, P. and Bontorin, L., 2014. Vicarious Liability: The Legal Responsibility of Employers.
• Cassells, N. C. L. and Ball, D. R., 2014. Difficult airway management and the risk of vicarious liability. Anaesthesia.69(10). pp.1178-1179.
• Caulfield, M. T., 2016. Relational Fault and the Intermediate Nature of Employer Vicarious Liability.
• Chen-Wishart, M., 2012. Contract law. Oxford University Press.
• Curtin, G., 2014. Professional negligence: The most frequent error in professional negligence cases. LSJ: Law Society of NSW Journal.7). p.82.
• Dobson, E., 2015. Negligence. Legaldate.27(1). p.4.
• Habermas, J., 2015. Between facts and norms: Contributions to a discourse theory of law and democracy. John Wiley & Sons.
• Hayre, A., 2015. Aspects of Contract and Tort Law: The Scenario of Budgburys Ltd.GRIN Verlag.
• Hillman, R.A., 2012. The richness of contract law: An analysis and critique of contemporary theories of contract law(Vol. 28). Springer Science & Business Media.
• Klass, G ., 2010. Contract Law in the USA.Kluwer Law International.

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