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Types of Contract

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Introduction to Contract

The contract may be defined as a legally binding agreement between two or more competent parties who give their consent to the terms and conditions of the contract. Competent parties to a contract must fulfil essential requirements such as offer, acceptance, lawful consideration and intention to create the legal obligation (Appleman, Appleman and Holmes, 2013). These elements are highly required in order to form a valid contract. The contract is usually made in written form but it may also be in oral or implied form. The present report is based upon the different case scenarios which will discuss essential elements which are required to form a legally binding. Besides this, it will also develop an understanding of the different types and terms of the contract as well as its effect on the competent parties. Further, it will also shed light on the doctrine of ODF vicarious liability and aspects of negligence.

TASK 1

1. Stating the essential elements required to form the legally binding

There are mainly four essential interments which competent parties must fulfil in order to form a valid contract. Essential elements refer to offer, acceptance, lawful consideration as well as the intention to form a legally binding agreement (Chen-Wishart, 2012). In order to covert agreement into a contract parties to a contract must fulfill the following essentials which are as under:

Offer: It may be defined as a proposal in which one party expresses their feelings in relation to the purchase or sale of an asset. As per the cited scenario, Xs contacted Country Pine Ltd in relation to the supply of dining tables, chairs and barstools @ £4200. In this case, Xs had made an offer to Country Pine in relation to the purchasing of furniture.

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Acceptance: When one party give acceptance to another party by taking into consideration all the terms of the contract then it is considered as an acceptance. In the given case Country Pine quoted £45000 for the supply of furniture. Whereas Xs negotiated the amount and quoted £42000 for such a deal. Country Pine had accepted the figures which are quoted by Xs and thereby shows their acceptance.

Lawful or legal consideration: Considerations in the form of monetary terms are also one of the essential elements which are required to form a legally binding. For the legal relationship, there must be a law consideration between the parties to a contract. In the cited case Country Pine takes £42000 in return for the supply of furniture. Besides this, Xs also receive assets in return for the losing money. Thus, in this, each party of the contract give something and receives something in monetary terms rather than in kind (Lawful Consideration, 2011).

Intention to form a legally binding: Legal intention is also required between the parties to a contract which assures satisfactory performance from both sides (Four Essential Elements of a Contract. 2015). In the cited case scenario Country Pine Country Pine had accepted the offer which is made by Xs which reflects that both the parties have the intention to create the legal obligations.

2. Discussing the different types of contract

As per the given case scenario written contract was made between the parties to a contract. Country Pine quoted the figure of £45000 in relation to making delivery of dining tables, chairs and barstools. In this situation, Xs had quoted £42000 and sent the standard contract form by making their signature. The country had accepted the conditions and sent further mail to Xs which contains data and delivery time. At the time of delivery, Xs had received the invoice of £43100. In this situation, Xs represented his query in relation to the high prices. In addition to this, there are a number of dining tables whose legs are detached from themselves. In this, Country Pine had represented the written evidence or mail which contains that the price could be raised by 5% if the price of the raw material increased. Besides this, the Country had also mentioned the clause that thrty have no liability for any kind of defects. On the basis of the written evidence, Country Pine is not liable to compensate Xs for the damaged assets. Thus, a written contract provides assistance to the defendant party against the claimant on the basis of written proof.

Besides the written contract there are also oral as well as unilateral and bilateral contracts which place different impacts upon the competent parties as follows:

Oral contract: In the oral contract competent parties discuss all the terms and conditions in the oral form. Nevertheless, in the case of disputes claimant has no legal proof against the defendant party which creates difficulty in front of the legal authorities in relation to resolving disputes

Unilateral and bilateral contract: In a unilateral one party makes a promise to another without obtaining the consent of another party. In a unilateral contract, the offeror has an obligation to perform his promise if the offeree also performs as per the terms and conditions of the contract. Offered possesses the right to claim the compensation if the offeror makes a default in his performance (DeMitchell, 2006). In contrary to this, competent parties have agreed to the terms and conditions of the contract. Both parties to a contract have a legal obligation in relation to the performance of the promise.

3. Applying the elements of the contract in context to the given scenario

As per the essential element of the contract, there must be an offer, acceptance, legal consideration and intention between the parties to a contract. On the basis of the cited case scenario Xs has made an offer to Country Pine that he is ready to give £42000 with the intention to the purchasing of a dining table, chairs and barstools. Country Pine had also accepted the offer and agreed to deliver the furniture at the mentioned price. This aspect reflects that all the essential elements are present in agreement so it is considered as a valid contract. Nevertheless, the invoice which Xs received contains £43100, as well as most of the dining tables, are damaged.

In this situation Xs made a complaint to Country Pine then CP drew the attention of the claimant upon clauses which are mentioned in the contract. Country Pine had mentioned in the contract that the price could be raised by 5% if the price of raw materials increased. In addition to this, they have also mentioned that the company has no liability for defects after delivery. On the basis of this aspect, Xs has a legal obligation in relation to the performance of their duties and responsibilities. Thus, Xs has to prevail over the contract until and unless mutual consent occurs between the parties in relation to the revocation or reformation of the contract.

4. Stating the type of terms as per the given scenario

There are mainly three types of terms such as express, implied and innominate parties which place different impacts upon the parties to a contract. On the basis of the cited case scenario, express terms are involved in the contract. Express terms may be defined as those in which both parties give their mutual consent to the terms and conditions which are inserted in the contract (Sutton, 2010). It provides the right to sue the innocent party if the defendant party defaults in their performance. In the given case Xs and Country Pine gave their mutual consent upon the 5% rise in prices as well as no liability for defects clause. It is recognized as an express term of the contract. As per this aspect, if Xs does not perform in accordance with the terms of the contract then the Country have the right to sue him for the loss which is suffered by the claimant. Thus, if Xs make a default in his performance then Country Pine has the right to claim compensation ion against to defendant party.

5. Applying the terms of law in different contracts

Different terms of the contract place different effects upon the parties to the contract which are enumerated below:

Express terms: It refers to the terms and conditions inserted by the parties to a contract with their mutual consent. In accordance with such terms, competent parties are obliged to perform their duties and responsibilities as per the contract (Platz, 2007). If the defendant party defaults in their performance then the innocent party have the right to sue them for compensation.

Implied terms: Implied terms refer to rules which are included by-laws and legislation in the contract (Treitel, 2002). These terms are also known as default rule which provides safety to the innocent party against to the defendant party.

Innominate terms: Innominate terms may be defined as contractual terms which may either be conditions or warranties. These aspects are highly dependent upon the type or nature of contract which is made by parties to a contract. Condition and warranty have different effects on the competent parties. In case of breach of condition, the claimant possesses the right to repudiate the contract or claim for damages which are suffered by the innocent party. Further, in warranty right of an innocent party is limited to a claim for compensation. In this, the claimant does not have the right to repudiate the contract.

As per the cited case scenario, there is express terms are mentioned in the contract. In contract, exclusion clauses are mentioned by Country Pine. It is the mistake of Xs that he did not read the clauses which are included by Country Pine. Thus, Xs is not entitled to claim damages against Country Pine.

TASK 2

1. Stating the differences between obligation in contract and in negligence

There is a significant difference between the obligation in contract and in negligence. In the case of contractual liability rights, duties and responsibilities are determined by parties to a contract with their mutual consent. On the other hand in negligence, rights and duties are determined by legal authority (Overgoor et al, 2015). Along with it, contractual liability occurs when parties to a contract fail to perform their duties and responsibilities according to the terms and conditions of the contract. Contrary to this, tort liability occurs when competent parties do not perform their roles and responsibilities as per the standards. In addition to this, under contractual liability competent parties build legally binding relationships with their mutual consent (Granger, 2015). On the other hand in tort liability, a legal relationship is formed between the parties to a contract by legal authority. On the basis of such aspects, it can be stated contractual liability highly differs from tort liability.

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2. Stating the nature of liability in case of negligence

Negligence consists of the situation in which loss or injury is suffered by the employee or guest due to the failure of the employer to make proper health and safety arrangements. As per the case scenario, Country Pine manufactures the furniture and employs forty employees within an organization. There are several key elements which provide support to the innocent party against to defendant which are enumerated below:

Duty of care: On the basis of this aspect employer has the liability to make proper health and safety arrangements for their employees. If an employer fails to perform the duty of care it causes damages to the innocent party. In this case, the employee possesses the right to sue the employer for compensation (Handford and McGivern, 2015). Besides this, the employer is also entitled to compensate the claimant to the extent to which loss is suffered by him.

Breach of duty: It refers to the failure of the employer in relation to the performance of duty. If the employer or company breaches their duty then the employee has the right to sue for damages.

Foreseeability: This element emphasizes that if the loss is easily foreseeable by the employer then he fails to make the proper safety arrangements for the same (Haripriya and Haripriya, 2014). Then, the employee has the right to sue the employer for the damages.

The remoteness of damages: If the claimant has evidence which proves that physical injury is suffered by the claimant due to the negligence of the employer (Nijem and Galpin, 2014). In the cited case scenario Fiona slipped due to the negligence aspect of Country Pine. On the basis of this aspect, Fiona possesses the right to sue CP for physical injury.

The above-mentioned aspects provide support to the claimant against to defendant if they succeed in satisfying all the above-mentioned aspects.

3 and 4. Applying the elements of the tort of negligence and defences in the different business situations

As per the cited case scenario in February Fiona had visited the CP showroom with the intention to purchase some beds for her bed and breakfast business. During this, Fiona slipped due to some water spill. Unfortunately, Fiona had fallen down and her leg was also breaking down. In this situation, Country Pine is entitled to compensate Fiona for the physical injury suffered by her. As per the case of negligence, Fiona has evidence of physical injury in terms of a broken leg. It is the responsibility of the employer to make proper safety arrangements for their guest. Due to the failure of Country Pine loss is suffered by Fiona. On the basis of this aspect, Fiona has the right to claim damages against Country Pine. Thus, Fiona needs to sue upon defendant's party. Besides this, CP is also entitled to compensate the innocent party to the extent to which loss is suffered by her.

In addition to this, an employee who operates the machine has the work to cut and assemble the furniture. Sanding machine is installed by Country Pine within an organization which helps in finishing the woods before its assembling. In order to maintain the health and safety standards Country Pine had repeatedly informed their employees in relation to the removal of safety guards. The company had informed that employees should not remove the safety guard when a wood jam occurs. On the basis of the case scenario, Bob was operating the sanding machine with the intention to meet the customer's demands on the occasion of Christmas. During his work the wood became jammed.

In order to remove such blockage Bob had separated the safety guard from the sanding machine. Due to the removal of the safety guard, Bob got heavily injured. His hand and arms had been adversely affected due to such injury. As per the aspects of negligence, Country Pine had repeatedly informed their employees in relation to the causes of the removal of the safety guard. By this, they had performed their duty of care to a large extent. Loss is suffered by Bob due to his own negligence in relation to the health and safety aspects. Bod had totally ignored the information provided by Country Pine in relation to the ways of operating the machine. Thus, Country Pine is not accountable to Bob and his damages. In accordance with the principles of negligence, Country Pine is not liable for the loss which is suffered by Bob.

5. Stating the doctrine of vicarious liability

Vicarious liability consists of the situation in which an employer is held accountable for the irresponsible or undesirable act of their employees or another person. Under vicarious liability, the employer has the responsibility to exert control over their employees (Tadros, 2014.). Moreover, the employer has the responsibility to frame strict policies and rules in order to restrict undesirable actions of employees. By introducing penalties and other types of punishment companies can easily control the undesirable activities of their employees within an organization. Employers and employees have contractual relationships with each other (Orne, 2015). Thus, he is obliged to give compensation to another party for the illegal acts of their employees. On the basis of principles of vicarious liability employer is not liable to compensate the third party in the following situations:

  • The employer is not held accountable for the loss suffered by a third party if employees perform illegal activities in order to restrict the undesirable act of a third party (Raine, 2014). In this case, the third party does not have the right to sue the employer.
  • The claimant party is able to claim compensation if they fail to prove the activities of the employee as illegal or immoral.

Thus, Country Pine is held accountable for the compensation only when the claimant succeeds in proving the undesirable act of employees.

6. Ways through which business can be vicariously liable

On the basis of the cited case scenario employees have responsibility in relation to the supply of furniture driving rashly due to the pressure of meeting deadlines. On the occasion of Christmas Jason was delivering a large consignment of furniture to a number of retail outlets. With the aim to meet the deadline, Jason was driving over the speed limit. In order to avoid the accident of child Jason's crashed into a shop. It may cause damage to the owner of the shop.

On the basis of the case scenario, Jason is not in control of his employer. Thus, Country Pine is not held accountable for the illegal activity of Jason. The owner of the shop can claim against Country Pine when a contractual relationship exists between the employer and employee. Therefore, the owner of the shop is not in a position to claim against Country Pine as per the vicarious liability act.

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Conclusion

From this project report, it has been concluded that competent parties need to undertake all the essentials in order to form a valid contract. Besides this, it can be inferred that Xs has no right to revoke the contract as per the express terms of the contract. It can be seen in the report that different types of contracts have different impacts on the competent parties. In addition to this, it can be concluded that Fiona can claim compensation against to Country Pine. Further, it can be concluded that Country Pine is not entitled to compensate Bob for the damages which are suffered by them. It can be concluded that Country Pine is not held accountable for the undesirable act of Jason.

References

  • Appleman, J. A., Appleman, J. and Holmes, E. M. 2013. Excuses for Nonpayment and Defenses to Actions for Premiums(5). Appleman on Insurance Law and Practice.
  • Chen-Wishart, M., 2012. Contract law. Oxford University Press.
  • DeMitchell, T. A., 2006. Negligence: What Principals Need to Know about Avoiding Liability. Rowman & Littlefield Education.
  • Granger, B., 2015. Known Injuries Vs. Known Risks: Finding The Appropriate Standard For Determining The Validity Of Releases Under The Federal Employers 'liability Act. Hous. L. Rev.
  • Handford, P. and McGivern, B., 2015. Two Problems of Occupiers' Liability: Part The Occupiers' Liability Acts and the Common Law. Melb. UL Rev.
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