ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESS

TASK 1:LO1

1. Essential elements required for forming a valid contract (AC 1.1)

As mentioned by Featherstone et al. (2015, p.50), a legal agreement between two parties enforced by law and accepted by two parties is called as contract. Every legal and valid contract includes elements determining the viability and the contract of organisation or two parties. Freddy can use the following below mentioned contract for forming the business along with various terms.

Offer: It is essential to have a contract which needs to be legalised by government and legal authority for the better fulfilment of the offer and the contract. Offers mean an invitation or a proposal by an individual to another to show prime willingness of entering a legally bonded contract (Smits, 2014, p.55). Freddy offered for the sale of the high definition TV for £145 through e commerce.

Acceptance: As inferred by Thomas and Wright (2016, p.67), a contract can be initiated only after the acceptance of the offer properly by one party to another. The acceptance depends upon consideration proposed by one party to another party. Therefore, there is a need for similarity between offer and acceptance without modification. Layla responmded to th advertisement and presented to buy to the high definition TV for £125

Consideration: As mentioned by Micklitz and Reich (2014, p.800), the consideration in an agreement is one of the most important aspect, as the performance of the parties should be based on the consideration. The consideration term marks the agreement to have something in return for the completion of the agreement. Freddy with no no other cjhoice in the offer, accepted the reply offer of Layla and decided to sell the product at £125.  

Intention: The term intention means that the every party need to have a common intention of fulfilling the agreement maintain the consideration of the agreement. Since, the agreement between the charitable factors includes love, bond and affection, there needs to be an intention between two parties agreeing in one agreement. As per the contract there were no ill intentions of Freddy and decided as he decided just to sell the product. 

2. Identification and explanation of Types of contracts that may be entered in UK by individuals and business (AC 1.2)

Written and Oral Contracts: As supported by Dowell et al. (2013, p.445), written contracts are the agreement signed by two parties with mutual consent with signed paper for the better chance of providing evidence of the agreement..  The documents provided are duly signed by the parties on the consent of legal authorities. On the other hand, the oral contracts have no such documents in the agreement.  Verbal agreement has no documents for supporting agreement in the future.

Business to Business contracts: Agreements between two commercial units or bodies in the society is called as business to business contract. The Business to business contracts are bound by law and generally deal with support of maintain the price and the quality of the product.

Business to consumer contract: These contracts takes place between consumers and the seller of a product, where the seller agree to sell the object and the consumer who is willing accepts the proposal; depending on satisfactory level of the consideration.  In the above case scenario, Freddy and Layla were bided in a written contract as Freddy advertised, Layla accepted and the consideration was accepted by both Layla and Freddy via mail, which is in written and can be used in case of proof.  

3. Different terms that are included in a valid contract (AC 1.3)

Implied terms: As supported by Turner (2014, p.78), the terms or the facts which are  taken as default in making any of the contract are viable. The implied terms refers to the values and the assumption that ae not recorded but are implied by the provider. The Court of law can define implied terms in the contract between the tenant and the landlord.

Expressed terms:  As mentioned by Warren (2014, p.43), the terms which are included mutually agreed by both the parties constituting the agreement into a valid one. The obligation and the implication along with the ground rules are written in the contract with mutual consent. Consents and the conditions written are the primary terms used in the contracts.

Innominate terms: As supported by Norta et al. (2015, p.8), the terms which are not mentioned as warranties or guarantees are called the innominate clause. This cause was first described at the situation of Hong Kong Fir Shipping. The breach in contract with Innominate terms is judged by understanding the situation in which the innocent party is restrained from any grant is done or not.

Exclusion clause: As mentioned by Clarkson et al. (2014, p.56), the legal; terms that reduces chance of bearing the risk of liability is called as the exclusion clause. The exclusion clause is only applicable if the deed of  agreement includes the exclusion clause clearly.  In words of Kiss et al. (2015, p.2660), the exclusion clause needs to be well informed beforehand for the proper applicability of the clause

Task 2: LO2

1. Application of elements of contracts in the given business scenarios (AC 2.1, 2.2)

M3

In terms of the case study given, there has not been a proper form of contract because there has been a simple by small negligence in the contract. In most general and elementary case, there has been a seller and consumer contract where Hair 4 U proposed Bella UK in showing intention to buy  product known as the miracle oil with a proper consideration. The support of the contract provided by the organisation was most common and had offer, acceptance in the elementary situation (Arrow and Lind, 2014, p.40). The elementary situation was successful as there the offer was offered by Bella UK and Hair 4 U accepted the offer marking the initiation of the offer. The third requirement which is consideration was also settle as Hair 4 U agreed on the consideration of 10 boxes for 5. However, there was intention which can be termed as negative as Bella UK said they would not be accountable for any effect on the hair.

Elements of contract in this given scenario:

Bella UK produce their new product and for promoting that specific product they have to follow specific elements of contracts like deal with government policies rules and regulation, agreements, proper understanding of market demand, creating legal relations or many more. Majorly the inside element of contracts consist the factors like consideration, offer, competency and capacity, mutuality of obligation or more. Basically elements of contracts majorly consist agreements between two entities and then further processing. As according to given scenario, it is clear that for launching a new product Bella UK must follow the process of dealing with the market trend and demand of customers as well.

Implied Terms:  There has been an implied term in between Bella UK and Hair 4 U as they both agreed for better understanding between them in buying one product and understanding the entire situation proposed by Bella UK. The Bella UK and Hair 4 U need to follow all consequences in the organisation and contracts.

Expressed term: In terms of the expressed terms, the Bella UK and Hair 4 U have agreed on the quantity and the rate of shampoo.

Exclusion Clause:

Definition: The exclusion of clause helps in lowering down the chance of acquiring of risk and loss.

Timing: The exclusion clause needs to be included in forming of the agreement between two parties. The option if interested from beforehand the objective of the organisation is set as valid contract if any issue is raised against the viability of the contract.

Criteria of validity: The objective will be considered in proper relief; the issue is properly included in the beginning of the contract. However, as argued by Glover and Kusterer (2016, p.46), exclusion clause is applicable only in terms of item and not in any contradiction to law.

Legality in terms of the law: Exclusion as inserted by Bella UK needs to be in terms of the public policy. It must not be in disadvantage of hair 4 U. It is to be evidently supported that exclusion clause should be entered in the agreement with the prior notice.

The Bella UK will not be liable to any consequences and effect the shampoo and will also not be liable to pay any amount if the product delivered is not as per described.

3. Evaluation of effect of different terms in given contracts (AC 2.3)

M2

Breach of condition: Breach of condition is regarded as the condition in the contract that has not been satisfied through which defendant was obliged to make payment for the damages as well as claimant was being entitled towards repudiating the contract. As mentioned by Ayres and Schwartz (2014, p.545), condition describing the situation of non satisfaction by Bella UK  then hair 4 U can claim for the damages for the same amount and hw quality.  If the warranty of the perfect is not properly satisfied by the Bella UK then the innocent party can claim for the product which is not received in time.   

Exclusion clause legality: In terms of the exclusion clause, the Bella UK is not liable of paying any amount for not delivering the product according to the description. The exclusion clause as per the case study has proper consent of both the parties, here the Bella UK and the Hair 4 U. Since, the clause is placed in beginning and both the parties had mutual consent over the clause, there has been no confliction to legal norms. Thus, the Bella UK has effective relief. In case of breach of contract Hair 4 U can return the goods without making payment for the damages in relation with contract breach.   

Remedy outline: Remedy online means the mitigation form which can be accessed to make the issue situation all right (Drechsler et al. 2017, p.75). The actual situation may not be clarified but the innocent party can ask for the mitigation methods. Hair 4 U is clearly eligible in repudiating the contract if the contract is not in terms of deeds implemented in the beginning of the contract. In addition to this they can demand for special performance as well.

Task 3: LO3

1. Contrasting liability in tort with contractual liability (AC 3.1)

Contractual liability:  This type of liability occurs in the situation where one of the parties does not fulfil the views and promise made to another.  As per the notions of Twigg-Flesner (2013, p.76), breaching and none performing of situation can be termed as the failure of the party to meet contractual obligations as per the deed or contract signed.

Tort liability: This particular liability arises from a breach of duty which is fixed by law and negligent or tortuous act refer to the situation where any individual typically fail to undertake optimum duty of care during the performance of  contract.

Contrasting both tort liability and contractual liability, it could be stated that both come under the perspectives of civil law. According to the views of Gilson et al. (2013, p.170), damages that are incurred under both liabilities are supposed to be recovered on behalf of the party for whom the innocent party has suffered. The origin of the tortuous liability has been observed to form the act of negligence whereas the contractual liability has risen from non-fulfilment of obligation of signed contract.

Under the liability of tort, relationship among parties is said to be imposed by any effective law without any ultimate consent of parties whereas referring to the contractual liability, parties entered into their mutual relationship on their willingness. As per the statements of Bakos et al. (2014, p.34), objective of the tortuous liability is to bring the claimant in the position when the act of tort was eventually not committed by the defendant or the innocent party. Under the notions of contractual liability, if the obligations are fulfilled by the specific party supporting acts of tort, the objective of this specific kind of liability lies in bringing the claimant into the position due to cause of damages to the party. Referring to the tort liability, un-liquidated damages have the probability to take place whereas under the contractual liability, liquidated damages occur very frequently.

2. Explaining the nature of liability in negligence (AC 3.2)

D1

Liability in legal perspective meaning

In the views of Morgan (2015, p.120), liability could be defined as the obligation that might arise through unjustified and unreasonable act by the particular party accidently or deliberately. It is regarded as the comprehensive legal term which describes a specific situation by being actually or potentially subjected to the lawful compulsion.

Negligence meaning

On the other hand, negligence could be considered to be the situation of not achieving success in taking care of something. It is referred to as the act which does not go according to behavioural standards which are established by the law for protecting the public against unreasonable or unjustifiable risk concerned with harm or damage.

Liability in negligence

As per the suggestions of VerSteeg (2015, p.73), for claiming liability under the negligence that follows principles are supposed to be satisfied. This could be illustrated through the case of Donoghue v Stevenson n [1932] AC 562. The element of ‘duty of care could be understood through the demonstration of the case while elaborating element of negligence.

Duty of care: it could be evidently stated that plaintiff is supposed to prove that the defendant possesses duty to justifiable and reasonable care of actions. Relating to the case of Donoghue v Stevenson, when the plaintiff who is Donoghue visited the cafe, she ordered cream along with the ginger beer. The beer turned out to be harmful since decomposed snail has emerged out of the beer and she claimed the Stevenson to be completely liable for such a discrepancy in his action. Hence, for avoiding the negligence factor, duty of care must be present in order about the tortuous action.

• Breach of duty: The defendant needs to breach the duty through failure towards confirming towards the standard needed for conduct. In the present case decomposed snail within the drink of plaintiff demonstrates breach of duty.
• Remote damages: Damages has to be reasonable in accordance with the negligence of claimant. Because of act of Stevenson, Donoghue might has expressed mental trauma. Therefore injury was  reasonable towards claiming for damages.
• Causation: The primary reason related with the injury needs to be negligent act of plaintiff. In the present case the major reason relates with negligence of defendant therefore claim was successful and therefore damages needs to be paid by Stevenson.  
• Foreseeability: The damages towards the claimant needs to be foreseeable from the act that are negligent of defendant. Otherwise claimant would not be entitled towards claiming damages in case of injury.

Nature of liability in negligence mainly includes that way of outcomes and that results in violation of the law or injury to others as well. Negligence mainly consider several factors like Tort negligence, criminal negligence, defense against negligence. These factor directly affect nature of liability like when a person charged with crime, so in that case criminal negligence is quite difficult to prove the specific crime as well.

3. Explaining how a business can be vicariously liable (AC 3.3)

The origin of a vicarious liability is from the fact when any innocent party is held liable for any kind of the tortuous act. As per the observations of Aguir et al. (2014, p.585), those obligations are imposed by law as a result of the influential relationship as the liable party is in position of controlling act of the party which had committed mistake. Thus, it could be evidently stated that as a result of the negligence, the liable party is charged of committing the tort and that particular individual is held vicariously liable for such sincere mistake. Any negligence caused on behalf of a party amongst the two in any contract are deed which would be held responsible for causing any act of tort which makes the party vicariously liable who performs the tortuous act.

As per the opinions of Ding (2014, p.90), the party committing actions of torts would be obliged to undertake complete liability for causing any harm or damage to other party. If being vicariously liable, any party rejects undertaking the liability of causing the damage or harm, and then sincere actions are supposed to be taken against the offending party. Referring to the case study, Bob is vicariously liable to undertake complete liability of 13 year old boy, named Matt due to him the injury had been caused to him. Hence, justifying the above case, it could be stated that Norfolk farms could be held vicariously liable since, due to Bob’s negligence, Matt has been injured which was completely unfair and an act of tort as well.

Task 4: LO4

1. Application of the elements of tort of negligence and defences in different business situation (AC 4.1)

Referring to the case scenario, it could be evidently observed that a tort of negligence had occurred with Brad through Charles as he informed wrong about the client Albert who had turned out to be a fraud. The elements of tort of negligence involve breach of duty, property damage and contributory negligence.

M1

Breach of duty: Breach of duty could be stated as any mis-happening that is not supposed to occur while the duration of a contract. As suggested by Morgan (2015, p.121), violating any rules and regulations and breaking up of a contract without meeting the contractual terms would be even considered as the breach of duty. In the mentioned case study, it could be stated that Charles is obliged to pay compensation to Brad for this loss since his negligence has resulted in the action of tort committed by the Albert.  Since, Brad has faced serious issues and a breach of duty due to the negligence in act shown by Charles; hence it could be referred to as a breach of duty.

Damage to the Property: Property damages could be regarded as the specific injury caused to the real and personal property of opposite party through the wilful destruction. Due to the damage caused to Brad as a result of wrong information provided by Charles, he would be completely obliged to pay off the compensation charges by paying off the flat’s net worth since Brad had been suffering through it due to such act of negligence. Contributory negligence: As per the norms of tort of negligence, the defendant would not be liable to pay for the compensation since; the party had been digressed by the offendant party. If in any case, the defendant would pay for the compensation, it would not be liable to claim for the compensation charges. 

2. Applying elements of vicarious liability in given business situation (AC 4.2)

D3

• a) Yes, Macho men plc is liable for such offences made by Graham but if on the grounds of such act, Graham is prohibited from working in the pub as a doorman then the company might not be vicariously liable for paying for the damage made to the customer. Despite being the intentions of Graham being pure and vital, the company is obliged to pay for the charges due to Graham's negligent act. As per the vicarious liability the acts of employee are liable for employer in the course of employment. Thus Macho men plc would be liable for the acts committed by Graham.
• b) Carla is completely liable for damages made to the car due to her negligence in the basis of which, she could be charged to pay off the compensation. Links Ltd. could not be held responsible since Carla used the car at the time of her week off. Hence, the company would not be responsible for compensation. Carla would be completely responsible for it.

In this given case scenario, it is clear that carla is responsible for all damage of George's car. Hence, in case of vicarious liability it basically refers to employer’s liability and it directly related to higher management of the company so that according to their rules and policy they take required action against employee. This vicarious liability also provide training for managers in relation to the illegal and unlawful acts in the workplace as well. In addition to this, there is an effective approaches are available to solve that specific problem like Macho men plc and carla's car case. Moreover, convergent, lateral and creative thinking helps to improve the thought process in right direction and manage the process of generating new ideas and creative approach as well. Creative thinking in this case, is states that Macho men thinks creatively and find solution by inspecting all matter and then take right actions. Lateral thinking is also as similar to the creative thinking and has direct impact on the ability of taking decisions.

CONCLUSION

Through the study, it could be concluded that a valid contract contains few essential elements such as offer, acceptance, mutual consent, consideration and intention. Referring to the study, it could be evaluated that the elements of a valid contract justify  validity and reliability of the contract. It could be eventually deduced that a significant distinction exists between the tort liability and the contractual liability. There are few particular elements of tort of negligence which are applicable in various situations of business and a business could be stated as vicariously liable under certain terms and conditions. The terms of a contract must be read through before signing up or accepting any contract which might be implied terms, express terms, innominate terms and exclusion clauses. 

References

• Aguir, I., Burns, N., Mansi, S.A. and Wald, J.K., (2014). Liability protection, director compensation, and incentives. Journal of Financial Intermediation, 23(4), pp.570-589.
• Arrow, K.J. and Lind, R.C., (2014). Uncertainty and the evaluation of public investment decisions. Journal of Natural Resources Policy Research, 6(1), pp.29-44.
• Ayres, I. and Schwartz, A., (2014). The no-reading problem in consumer contract law. Stan. L. Rev., 66, p.545.
• Bakos, Y., Marotta-Wurgler, F. and Trossen, D.R., (2014). Does anyone read the fine print? Consumer attention to standard-form contracts. The Journal of Legal Studies, 43(1), pp.1-35.
• Clarkson, K., Miller, R. and Cross, F., (2014). Business Law: Texts and Cases. Nelson Education.
• Ding, C., (2014). Development of Employer’s Vicarious Liability: A Chinese Perspective. Journal of European Tort Law, 5(1), pp.67-97.
• Dowell, D., Heffernan, T. and Morrison, M., (2013). Trust formation at the growth stage of a business-to-business relationship: A qualitative investigation. Qualitative Market Research: An International Journal, 16(4), pp.436-451.
• Drechsler, M., Johst, K. and Wätzold, F., (2017). The cost-effective length of contracts for payments to compensate land owners for biodiversity conservation measures. Biological Conservation, 207, pp.72-79.
• Featherstone, R.M., Dryden, D.M., Foisy, M., Guise, J.M., Mitchell, M.D., Paynter, R.A., Robinson, K.A., Umscheid, C.A. and Hartling, L., (2015). Advancing knowledge of rapid reviews: an analysis of results, conclusions and recommendations from published review articles examining rapid reviews. Systematic reviews, 4(1), p.50.

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