Aspects of contract and negligences

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Aspects of contract and negligence

Table of Contents
INTRODUCTION..........................................................................................................................1
TASK 1.............................................................................................................................................
1.1 Essential elements of a valid contract....................................................................
1.2 Impact of different types of contract.....................................................................1
1.3 Terms applicable in contract....................................................................................4
TASK 2...........................................................................................................................................5
Business scenario 1............................................................................................................. 5
TASK 3........................................................................................................................................ 10
3.1 Liability in tort vs. contractual liability...............................................................10
Similarities............................................................................................................................10
3.2 Nature of liability in negligence............................................................................11
3.3 Vicarious liability.........................................................................................................12
TASK 4........................................................................................................................................ 13
Business scenario 5...........................................................................................................13

CONCLUSION............................................................................................................................16
REFERENCES............................................................................................................................17
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Aspects of Contracts and Negligence
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INTRODUCTION
Legal aspects are formulated so that every activity within an economy
is performed under certain code of conduct. It is essential for individuals and
business units to be abided by laws and regulation prevailing within the
country. Law is the field of study that determines duties and obligations of
different related parties. The report herewith deals with various aspects
related to legal rules and regulations (Palmer, 2014). It is through analysis of
various business cases that applicability of laws is determined. The report
provided a deep understanding of valid contract and its essential element. It
also develops learning of scenarios in which parties can be made liable and
situations when no liability can be established. Henceforth, the report
generates a complete picture of various aspects related to contract and
negligence within business unit.
TASK 1
1.1
The contract is said to be valid only with the existence of various
elements. Essential elements of the contract which are required to present
for validity and enforceable by law is as listed below. As an illustration, Mr.
Collins lost his dog and desire to find him back. For same he has given an
advertisement offering £ 50 to a person who finds the dog. Finally, Mr.
Bridge the dog and availed the offer given by Mr. Collins. The valid contract
can be established in the case through satisfaction of following terms and
conditions.
Offer and acceptance: In order to establish valid contract it is essential that
one of the related party put forward an offer that is accepted by another

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party. Therefore, two aspects are considered to be necessary for formation
of contract. In the case discussed above Mr. Collins is giving an offer to
public. Mr. Bridge who finds dog accepted the offer by accepting £ 50 in
return of the dog.
Intention to create legal relations: Another element that is necessary to form
valid contract is an intention of parties to enter into legal relations. Till the
parties are not interested in creating legal relations valid contract cannot be
established between them (Middlemiss, 2012). It is therefore necessary that
both parties are willing to create legal relations. The valid contract between
Mr. Collins and Bridge can be established when they both are interested in
creating legal relationship. Mr. Collins by giving advertisement signified that
he is interested in establishing legal relations.
Consideration: Every contract provides some or other benefits to related
parties that motivate them to enter into contract. The value created by
contract can be in monetary or non-monetary form. Henceforth, in order to
make contract valid there should be some value associated with it. The
consideration is necessary for both parties; in present case consideration for
Mr. Collins is Dog and same for Mr. Bridge is £ 50. If Mr. Bridge would have
returned back the dog without accepting any monetary value; the valid
contract between parties would not have been established.
Free Consent: It suggests that valid contact can be established only when
both parties are entered into contract without external influence. This implies
that no party should be influenced to agree on terms and conditions
prevailed in the contract. In present case none of the parties were forced to

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enter into contract. Mr. Collins advertised for his personal benefit and Mr.
Bridge also accepted offer without any external influence.
These elements have importance since it assist in determining whether
contract established is valid or not. It is through these elements that one can
judge the validity and reliability of contract. Moreover, in case of
discrepancies these elements helps in determining the parties suffered and
one against which liabilities can be claimed. Henceforth, understanding of
various elements of contract is essential not only to establish valid contract
but also solve discrepancies that are expected to arise.
1.2
There are various types of contract that can be established between
business units or parties into consideration. Following are the kinds of
contract:
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Verbal contract: These are contracts that are established by way of verbal
communication between two parties (Gulshan, 2012). The contract have no
legal evidence in written format henceforth it is difficult to set liability
against defaulter in case of loss or damage.
Written contract: It is the contract that is formulated by way of valid
documentation and signed by related parties. These documents can be
utilized as evidence in cases of discrepancies and negligence on the part of
parties.
Unilateral contract: This contract is established on the basis of promise made
by an individual or business unit. In this type of contract the single party
promise is considered to be an offer that can be accepted by any of
individual. The proof of contract can be established in form of written
promise offered by one of the party.
The kind of contract and its nature determines impact on relation that
existed between parties. As in some contracts claim against default party
can be established easily while in other it requires lot of efforts to establish
liability (Kidner, and Richard. 2007). Moreover, some of the contract
generates valid outcome for parties into consideration. Henceforth, it is the
kind of contract and nature of value associated that determines its capability
to set claim against the parties.
1.3
The range of terms needs to be defined by parties so as to enter into
valid contract. Some of the terms form an implicit assumption of the contract

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whereas other terms need to be expressed for entering into contract. All
kinds of terms that form part of contract are described below in brief.
Express terms: are expressed specifically and agreed between both the
parties during the formation of contract (Shavell, 2009). The terms are
specified clearly either in verbal or written form before entering into contract.
Implied terms: These terms are not specified by the parties to be entered
into contract but form an integral part of contract. The terms are not
mentioned specifically but are considered by court as included in the
contract.
Contractual terms: The terms that are to be essentially incorporated into
contract are referred to as contractual terms. They can be integrated into
contract in the form of conditions, warranties and intermediate terms. These
terms whether specified verbally or implied as a part of contract needs to be
documented while formulating an agreement between parties (Plimpton,
2007). Contractual terms help in creating all kind of evidence for solving
disputes that may arise in future.
TASK 2
Applicability of contract in given business scenarios
Business scenario 1
The case brings forth fact that Miss kaur has suffered loss due to
negligence of auctioneer since she travelled a distance of 264 kilometers
from London. She has also suffered loss due to Harry action. But in both of
cases she cannot claim for damage caused to her as per essential elements
of contract:

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Auctioneer has published an advertisement for auction of fountain pens
and was an invitation to offer instead of an offer. Invitation to treat refers
is a request to other parties for submitting their proposals; it cannot be
considered as an offer. In the case offer is made by Miss Kaur that is not
accepted by auctioneer. Henceforth, element of acceptance is absent
from the contract (Alkhamees, 2012).
There is a valid consideration from point of view of both the parties that
suggests presence of one of an important element in the contract.
Another aspect or element that is free consent on part of both the parties
is absent in the case. This is due to reason that auctioneer has advertised
that auction will be open for two days and one can find luxuries pen for
both of days. However, on second day Miss kaur was unable to find pen
required by her indicating that free consent on part of both the parties is
not present.
The valid contract between parties is not established due to absence of
certain element. Henceforth, Miss kaur cannot claim for her damage to
the auctioneer.
In other case Harry offered to sell fountain pen to Miss kaur whereby she
counter offered to buy at lesser price. However, it is consent of Harry that
can form the contract. The valid contract cannot be established without
free consent of both the parties. Therefore, in this case too valid contract
is not established (Ramanathan, 2014). Miss kaur henceforth cannot claim
for damages caused to any of the party.
Business scenario 2

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The given situation represents issue between Charles and Murphy for
extra payment of £10,000 which is determined by them. Modification in
contract is made by mutual consent of Charles and Murphy, for extra
payment for completion of work at time. In the case precedent Christy v Row
(1808) there was agreement for transfer of coal from England to Germany
but due to war. Claimant was unable but defendant asked for modification
and asked him to deliver coal with distinct port. Performance was done by
claimant. Further defendant refused to pay. It was held by court that due to
partial performance by claimant, defendant is require to pay. Similarly
Charles is required to pay Murphy amount of £60,000 on the following basis:
There was valid offer between them with appropriate consideration for
renovation of building. Initial amount determined for contract were
£50,000 which were further increased by £10,000.
Hence according to section 2 to 7 in both contract and tort there is
business liability from things done or to be done by a person in the course
of a business. Modification was done after argue but at the end they both
agree on it. Hence now obligation for payment which is required to be
paid by Charles.
Business scenario 3
In the given scenario Mia started a business as a self employed
builders so his cousin and friend offer him for work. After the completion of
work Hakim and Jane have failed to pay. For recovery of money for two
projects by Mia following clauses can be applied:
First project is offered by his brother Hakim who ran a retail estate agency
business, said he would give him £2,000 if he repairs the bathroom and a

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roof in one his properties. There is no legal intention by Hakim to enter
into contract work was given by him to Mia to provide him start in his
career (Hollingsworth, 2014). Hence there is no contractual obligation
between parties. Therefore Mia cannot recover amount from his brother.
Reason is acceptable that he would not pay anything as he had only
offered the work to help his brother out to gain more experience.
Second project is offered by his friend Jane to do work for her business for
a fixed price of £1,000. It is legal offer on which acceptance is given by
Mia. Hence they are bound under contractual obligation for performance.
Work is done by Mia so now Jane is under obligation to pay amount of
£1,000 which was pre determined by them. Reason is not acceptable that
she had only given her work to do on the basis of their friendship to help
him gain more experience.
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2.2 Applicability of law on terms in given contract
In the case precedent of Hutton v Warren [1836] EWHC Exch J61there
was tenancy agreement between claimant and precedent. It was farming
agreement but due to harvesting it was repudiated. Further the bill of
expensed was submitted for payment which was incur by claimant.
Defendant refuses to pay, by giving reason there was expressed term on this.
For this situation decision was taken by court that hence it is farming
agreement it is implied term that it includes clause for compensation if there
is termination of contract.
2.3 Evaluation of effect of different terms in given contract
Business scenario 4
In given situation there is contract between Mr. X and Mrs. Y for 3
years. Mrs. Y was employed by him as research assistant at a salary of
£25000 under a written agreement. Their agreement was comprises of
clauses that research assistant will dress smartly at all times and it was clear
that trousers will not be acceptable under any situation (Harpwood, 2009).
Next clause was she had to work no matter how much hours she is required
to complete projects given to her. Project was given to her on 1st June which
is required to be completed on 2nd June. She tried her best but got
terminated.
In given case scenario breach is made by Mrs. Y for both the clauses first
she did not complete her work. It was clear in agreement that she will
work whatever hours are necessary to complete the projects. Which was
no done it will not considered how much efforts was done at the end;
point to be noticed is that project was not completed.

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Secondly she was wearing trousers in next morning which was clearly
restricted in her agreement. Hence termination of contract is valid by Mr.
X he is not responsible for condition of Mrs. Y.
TASK 3
3.1
The Tort law is a law that is applicable in case of negligence. As per
tort law the liability can be established against an individual whose
negligence caused loss or damage to other party. This law is based on
domestic rules and regulations and does not take into account international
torts. Majority of times tort law between parties arises only in case of breach
of duty that forms an essential element of contract. According to contractual
agreements valid contracts are based on certain essential elements (Padhi,
2012). However, tort law allows claiming for damages caused not on the
basis of pre-defined terms and conditions. It has certain fixed norms that are
to be abided by parties into consideration.
Contractual liability on other hand can be established on the basis of
pre-defined terms and conditions that form a part of valid contract. As per
the contractual liability if any of the party is unable to perform its obligations
the contract is considered to be breach. The contractual liability sets against
the person who has not satisfied terms and conditions agreed upon at the
time of contract. It is based on evidence and facts established as per the
agreed conditions of contract.
Similarities
The laws under consideration are applicable to civil wrongs.

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There is a right with victim to claim for damage or loss due to behavior of
other party (Brand and Davenport, 2012).
The person into default needs to settle claim established against him
under all circumstances.
Dissimilarities
The contractual liability and tort liability are distinct from each other on
the basis of nature of duty.
Tortuous liability can be established even in the cases when no previous
relationship existed between the parties. This implies that in scenarios
when no contract is entered into the sufferer can claim for its damage
under law of tort.
The contractual claims or liability can be established only on the basis of
pre-defined terms and agreement stated in contract (Rush and Ottley,
2006).
Tortuous liability is said to be stricter in comparison to contractual liability.
3.2
The liability according to negligence act can be established when it is
the ignorance or carelessness of one party resulted in loss to another party.
The negligence is considered in cases of breach of duty that is exercised in
certain specific circumstances. However, it is in the scope of tort liability but
does not take into account international torts. The negligence liability is
applicable only to civil cases. Other kinds of cases such as criminal cases are
not covered under scope of negligence liability. The negligence liability is
based on certain principles; namely duty of care, breach of duty, causes of
damages and injuries, remoteness of damages for legal causation and type

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of damages and harm. These principles lay down foundation for liability as
per negligence act.
One of the most important principles for negligence liability is duty of
care that suggests each party to ensure sufficient amount of care to another
party. Responsibility of care is that precept in which one party bears a duty
of care towards another to ensure around that there is no damage and losses
due to their activities. The liability also takes into account the breach of duty
which suggests that in case defendants are going wrong to meet decided
standards for duty of care as per the law (Apme, and et al, 2004). On that
point is no negligence liability when there is no direct clause for defended for
the hurt and damages. Moreover, certain set rules are defined to determine
remoteness of damage. This is due to reason that remoteness of damage
that helps in deciding the claim to be set against the party into fault. The
claimant also needs to prove that loss or harm is caused due to negligence
on the part of another party. Once defendant is proved to be liable for the
harm or damage caused; the liability or claim can be set against him/her.
The sufferer or party that has to claim is requires to be abided by all
negligence principles and other rules and regulations as per the law.
3.3
It is the liability that can be set or established against persons for
offence committed by any other third party. The vicarious liability is claimed
many-a- times in cases of superior-subordinate relationship that is employer-
employee relationship. Vicarious liability is a position in which one party is
deemed liable for the loss, damages and injuries of claimant due to the
misdeeds of any other party. The liability can be established only in cases of

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valid legal relationship between parties (Goldman, 2013). As an illustration in
case of employer- employee relationship; employee tends to be responsible
for actions and activities of its employees. It is employer responsibility to
provide secure working condition with decent pay scale. Any misdeed on part
of employee due to employers’ action makes him/her liable for losses or
damages caused to third party. The employer henceforth can be claimed
vicarious liability so as to prevent all kind of unlawful actions of employees.
The liability henceforth can be raised in cases of legal relationship majorly
employer-employee relationship. It can be claimed in cases of employees’
misconduct and liability is set against its employer.
TASK 4
Business scenario 5
In the given situation oil was taken by UK Ship in Sydney harbor. Oil
was spilled onto the water and it drifted to a wharf 200 yards away where
welding equipment was in use. Work was in continuation by owner of the
wharf. He carried on working because he was suggested that sparks were
unlikely to set fire to furnace oil. Safety precautions were taken. Later a
spark fell onto a piece of cotton waste floating in the oil, thereby starting a
fire which damaged the wharf.
In the case there is no fault of both the parties as precaution was taken by
them. Owner of wharf was not required to take as there was no
contingency for fire with combination of fire and oil. Hence owner of wharf
cannot sue the chatterers of the ship.

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Business scenario 6
In the given situation issue is between Bell and Shell. Bell was
employed by Shell for maintenance of vehicle. Sight of one eye is already
lost by Bell. During the work chip of metal flew into Bell’s good eye and
blinded him.
For injury of Bell business cannot be held vicarious liable as it was a
normal practice to issue protective goggles since the risk of eye injury
was small. Precaution was required to be taken by Bell. As he was already
injures he should do such type of work which can cause danger to his
other eye.
Business scenario 7
In the given scenario Alf is employed by Safe Care Homes ltd. It is a
company which provides shelter to vulnerable children in London. She is
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warden there and has been accused for sexually abusing boys under his care.
In the given situation company can be sued by parents for sexual abuse
done by Alf.
In the case there is vicarious liability of business, as offence was
committed during the period of Employment by Alf. It was obligation of
company to take care of environment and on work of their employees
(Giliker, 2010). Due to negligence of business Alf which is employee of
Safe Care Homes ltd crime was done by her.
Hence Safe Care Homes ltd is vicariously liable for the act done by Alf of
sexual abuse to boys under his care. Obligation will not be extinguished
from Alf; she will be punished for her criminal act which is prohibited by
law.
Business scenario 8
In the given situation Amos Bridge is a pump attendant employed by
AB and Sons garage ltd. on duty he argue with customer and blame on him
believing that he wanted to drive off without paying for the diesel. Then
there was physical violence committed by attendant.
In this case business is vicariously liable for the act of Amos Bridge. The
offence was committed during term of employment (Faure, 2009). It is
responsibility of owner to train their employee that how should behave
their customers. They should take care that any violence should not take
place. Employees are not eligible in any situation to commit physical
violence with customers.
On the behalf of manager of AB and Sons Garage ltd it can be concluded
that company is vicariously liable for the torts of Mr. Bridge.

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CONCLUSION
From the present project report it can be concluded that contract is
agreement between two or more parties which is enforceable by law. It is
required to have essential elements to be validated by law (Cooke, 2009).
Breach of terms can lead to termination of contract at the choice of
aggrieved party. Business can be held vicariously liable for the offence
committed by his employees during the term of employment. The reason
behind it is that there is responsibility of owner to take care of such act as he
was in position to control it.
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REFERENCES
Alkhamees, A., 2012. Private action as a remedy against market
manipulation in the USA", Journal of Financial Regulation and Compliance.
20 (1). pp.41 – 55.
Apme, and et al, 2004. Business Aspects of Optometry: Association of
Practice Management Educators. Elsevier Health Sciences.
Brand, C. M. and Davenport, P., 2012. Adjudication in Australia: An analysis
of the amendments introduced by the building and construction industry
Security of Payment Amendment Act 2010. International Journal of Law in
the Built Environment. 4(3). pp.189–202.
Cooke J., 2009. Law of Tort. Longman
Faure, M., 2009. Tort law and economics. Edward Elgar publishing.
Giliker, P., 2010. Vicarious liability in tort. Cambridge University Press.
Goldman, A., 2013. Business law: Principles and Practices. Cengage.
Gulshan, S. S., 2012. Business law. Excel book publishing.
Harpwood, H. V., 2009. Modern tort law. Routledge.
Hollingsworth, G., 2014. Vicarious liability lawyers. [Online]. Available
through: <http://www.legalmatch.com/law-library/article/vicarious-liability-
lawyers.html> [Accessed on 27treMay, 2014]
Katter, N., 2004. "Who then in law is my neighbour?" - The Tort Law Review
12(2):pp. 85-97.
Kidner, and Richard. 2007. Resiling from the Anns principle: the variable
nature of proximity in negligence. Legal Studies. Blackwell Publishing 7(3).
Kidner, R., 2008. Casebook on Torts. Oxford University Press
Middlemiss, S., 2012. The legal impact on employers where there is a sham
element in contracts with their workers. International Journal of Law and
Management. 54(3). pp.209–221.

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