Y/601/0563 Aspects of Contract and Negligence for Business (ACBN), HND in Business


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Contracts form a central doctrine in terms of partnership between two persons or organisations. Compliance to the levied terms and conditions enhances this partnership. Viewing it from another perspective, breach of contract destroys the stability between the two parties. This action establishes negativity to the contract and spoils its true essence. This assignment speculates the basic aspects related to the contracts, which helps in analysing its effect on the organisational operations.

Task 1: An insight into contract formation

1.1 Contractual elements

A contract is formed of certain elements, absence of which turns it into an invalid one. Adherence to these elements would help Peter to build his career as a self-employed building contractor (Clarke and Lancaster, 2013, p.222).

Agreement is one of the essential components for a contract to be a valid one. In this element, an offer is proposed by a party, which is accepted by the opposite party. The earlier sentence projects two important subparts of agreement, that is, offer and acceptance (Schulze and Staudenmayer, 2016, p.29). The acceptance of the proposed offer leads to the agreement between the two parties. Viewing it from another perspective, agreement projects the adherence to the ethics of the contract. In case of breach of contracts, the opposition party possesses full right to expose disagreement to the proposed offer. This sentence bear’s resemblance with the understanding of Peter that he can be sued for any kind of damages that might arise during the tenure of the contracts.

One of the other elements is consideration. Consistency within the proposed guarantees makes this element into a worthy one (Callea et al. 2014, p.400). This contractual element proves useful for Peter is he encounters breaches of contract regarding his property, cash and other administrative losses.

Capacity is one of the other crucial components in terms of a valid contract. The parties possessing adequate understanding of the terms, conditions and liabilities are benefitted through this element. This understanding provides them the access to enter into contracts with their partners. This element might not be of any help for Peter at the initial stage, however, achieving adequate understanding about the dynamics of contracts would aid him in engaging into contracts with builders or property dealers (Davis et al. 2016, p.730).

Consent holds equal importance in the formation of a valid contract. Without the consent of the statutory bodies of law, no persons can enter into a contract. This condition is applicable for the parties involved in the contract. Finding the adoption of illegal means by any of the parties turns the contract into an invalid one. This action needs courtly intervention into the contract and results in cancellation of the contract. Upon encountering any such means undertaken by the opposition party, the other party possess full right to reject the proposed offer. This action possesses two connotations (Ralston and Weber, 2014, p.253). One it projects the understanding of the opposite party regarding the terms and conditions of the contracts. On the other hand, it reflects the conscious attitude towards remaining true to the ethics of the contract.

Exposure of consent to the proposed offer enhances the clarity of the parties towards the terms and conditions of the contracts. This motive establishes authenticity into the execution of the contracts.

1.2 Different contractual impacts

Performance of every task with efficiency results in the achievement of positive results. On the contrary, expose of lackadaisical attitude compels an individual to get negative outcomes. The same can be applied to the activity of contracts. Presence of variety within the contracts simultaneously possesses various effects (Kirichenko, 2016, p.175).

Contracts are mainly of two types, bilateral and unilateral. The name unilateral itself projects the presence of one single entity. In this type of contracts, the terms and conditions levied by the court is abided by the person intending to indulge into the contract. This type of contracts needs the understanding and capability of the promissory to fulfil every criteria of the contracts. Entering into these types of contracts after attaining adequate experience would prove helpful for persons such as Peter.

In case of bilateral contracts, there are two parties, who are bound to abide by the terms and conditions of the contracts (Mateescu, 2015, p.255). Breaches of contracts put the blame on the culprit party and provide the opportunity to the victim party to file suit against the opposition party. Presence of two parties strengthens the base of the contract and qualifies it as a valid one.

1.3 Meaning and effect of the contractual terms

Compliance to the regulation of a contract results in the fulfilment of the contractual needs. This action reflects the true essence of the contractual term, condition. Deviation from these condition compels the statutory body of law to interfere into these contracts and declare it as an invalid one. As compared to conditions, warranty possesses less importance (Fargion, 2016, p.47). However, breach of warranty period provides the opposition party to file claims for lost honour. This comparison places conditions prior to warranty.

Another contractual element is intermediate terms. Assessment of the outcome of a contract, based on these terms is difficult. However, performance of both the parties at the initial stages might help the statutory bodies to estimate the outcome. Presence of breaches during the tenure of the contract ceases its successful completion (Kirichenko, 2016, p.175). Along with this, it provides the victim party with the right to file a suit against the encounter loss and damages. This sentence possesses flexibility in terms of restoring the lost reputation of the victim party.

Summation contracts prove helpful for commercial purposes. Effective adherence to the terms and conditions results in the efficient execution of the business activities. Along with this, it also preserves the rights of the consumers as well as the employees and organisational personnel as a whole (Mateescu, 2015, p.255).

Task 2: Application of elements of contracts in the business situations

2.1 Application of the contract elements in the given business scenarios

In the law of contract, the forwarded offer of contract and the incidence of acceptance are both relative to the conventionality of acknowledgement. The elements of proposing an offer and the factuality of acceptance incorporate the entire process of offering, accepting the terms and conditions of the offer and corresponding between the involved legal parties and the stakeholders (Boundy, 2016).

In the provided case scenario, it can be observed that the primary phase of the formulation of any contract is acquiring shape. In the provided case situation, Miss Carole had opted to acquire furniture for her student apartment and she had selected the online classified advertisement agency “Gumtree” and had contacted the agency through the utilisation of the available online contact number through electronic mail and had expressed her interest in purchasing the offer of a brown leather couch for a price of £600.

The case of Miss Caroe is based on the determination that the online advertisement has been formulated and posed for the sale of the furniture, in this case the couch, by the owner of the object (Hargreaves and Price,2015). This same advertisement could be identified as the offer of intention to represent the decision of putting the object up for sale and it is thus not possible to be comprehended only as the notification concerning the offer to sale. The advertisement is in the format of the formulation of an invitation to expected reception of offer in this regard. When Miss Carol would be approaching the seller, the online advertisement reference could be provided as the classification of the offer that has been made for the same price as had been advertised for (Hiles and Hon, 2016). The same has to be accepted by the seller to formulate the legal basis of the contract. If the contractual terms are not accepted then no formal constitution of the legal contract could be made possible. Thus it could be observed with legal certainty that no contract has been formed and the contract formulation completely is reliant upon the acceptance of the initial terms could be determined (Gergen, 2013).

In the provided second case scenario, the Mr. Preston had made the offer of providing the designated contract of £150,000 to the IT Company George, Smith & Fogarty, Inc. on 13th of April, 2015. The included terms and conditions regarding the promise of offering the contract to the IT organisation involved the conditionality of hiring the son of Mr. Preston, Devi as an employee to the business organisation. The promissory note contained in the letter was formulated on the date of 13th of April while it was unbanned to Mr. Preston that his son Devi had been selected at the It organisation prior to that formulation of the promissory letter on 12th of April, 2015.

The case study implies that the IT firm had launched a hiring spree cyber security experts and this was the reason that Devi had applied to be interviewed by the Human Resource Organisation department of the IT organisation and he had qualified for the job profile that he had applied for at the first time (Stim, 2016). The offer of joining the IT organisation had been accepted by Devi on 12th April 2015 and he had also made sure that his well reputed and influential father, Mr. Preston should not remain in the loop of knowledge regarding the hiring process and this was the reason that Mr. Preston did not know of the fact that Devi had already joined the aforementioned IT organisation. The offer of the provision of the contract to the IT company was made by Mr. Preston on the specificity of the pretext of the conditionality of hiring his son, which, according to the provided case conditionality, had not been known to the father that his son had already joined the IT organisation, the George, Smith & Fogarty, Inc. the day prior to the day of the formulation of the offer letter. So, it could be determined from the legal standpoint that no tort of breach of any contract or confidence could be detected in this case as no contract has been created between the father and the IT Company (Pathak, 2013).

2.2 Application of the legal terminology in the provided contracts

In the provided case scenario, the situation could be analysed that the restaurant had asked the couple to deposit their overcoats at the reception while they were going to reach their pre-booked table. The couple had handed over their coats at the reception and received the acknowledgement receipt that had the exclusivity clause imprinted at the back of it (Fried, 2015). By the declaration of the authorities of the restaurant, the owners of the restaurants had abjured any responsibility of safekeeping of any valuable material that would have been left accidentally with the clothing. The reception of the restaurant had provided the couple with the ticket that mentioned that after they had checked it, the restaurant would never accept the responsibility of any loss occurring from the presence of any valuable possession that could have been left with the coats at the reception. In this case, the wallet of the person was accidentally left with the coat and that was discovered to be missing from the clothing after the couple had finished their dinner and had come to take their depositions back at the restaurant (Babu, 2017). In this case, the responsibility of the loss of the wallet was not undertaken by the restaurant. The clause that has been mentioned in the case study and which was also mentioned at the back of the acknowledgement receipt is the clause associated with exclusion. In this case scenario, the contract that was created between the couple and the restaurant was the booking of the table and the additional exclusivity clause had never been mentioned at the specific point of the formulation of the contract which is enforceable by law (Monaghan, 2015). In this respect, it could be observed that the clause of exclusion could never be valid as it was included after the creation of the contract. In this case also the responsibility was incumbent on the party who came up with the exclusion clause to have informed officially the other party about the existence of the same. This did not take place. So it is not valid for the restaurant to include and utilise the exclusion clause and the responsibility of the loss of the wallet would have to be accepted by the restaurant (Meiners, Ringleb and Edwards, 2014).

In case of the next case study, it could be determined from the provided case study that the involved parties are legally associated to the terms and conditions of the tenancy agreement. The improvement and fixation of the property premises had caused the expenditure of some hefty amount of money to the tenant and the terms and conditions which are implied in the agreements associated with tenancy make the parties of the agreement, specially the landlord, legally liable to reimburse the amount that has been spent on the improvement of the entire premises. In the provided case scenario, the previous landlord had made the promise that in return to occurrence of expenses on part of the tenant, the rent of the property would be kept low for the period of five years. With the death of the previous landlord and the coming of the new landlord, the contract terms got altered and the new landlord had increased the rent amount disregarding the promise made by the previous landlord to the tenant. Under such conditions, from a legal perspective it would be possible to promulgate that the tenant would be legally entitled to claim the amount that has been spent by him and would be able to terminate the lease as it is not anymore the one that had been agreed to while the creation of the agreement on tenancy. Under the new conditions the landlord would have to formulate a new lease or would have to renew the old one as the previous one had gotten terminated with the demise of the previous landowner (McKendrick, 2014).

2.3 Evaluation of the effects of the provided terminology in the given contracts

According to the provided case scenario, it could be assessed that the insurance provider company had provided a formal document regarding the terms and conditions of the policy to the insurance recipient. Under the specific legal promulgations regarding such contracts, this document would be definitely considered as the invitation to offer. This document, as and when it was filled and sent back to the insurance provider, could be considered to be the finalisation of the offer that had been accepted by the interested party (Hazard, Hodes and Jarvis, 2014). It is evident from the provided case study that the offer had been accepted by the policy company and this would have made this initial offer into a valid policy statement. The policy documents had contained the necessary conditions and warranties as well. One such term was the previous claim of theft or loss of the vehicle made by the owner within the previous five years. It was not adhered to by the insurance policy recipient as the relevant information was not provided to the insurer and this term or inquest was answered with falsehood. As the term is directly related with the policy standards, so it is considered to be a determining condition regarding the policy as well. This term has been utilised as a misleading and misrepresented one by the owner of the motor vehicle and for this reason, the insurance provider is liable to void the contract regarding the policy.

The provided case study exhibits that the insurance company issued the policy statement as an invitation to offer. It was done to permit the interested parties to forward the offer by filling up of the statement policy form which could then be reverted back to the company. The policyholder had responded falsely to two of the questions. The term regarding the previous claim that was associated with the consideration of theft and regarding the authenticity of the vehicle part are always considered as the policy terms which had been falsely responded to. This determines that the terms that had been violated are both conditions and warranties. The condition is related to that of the previous claim as it is directly related (Armouret al.2017). The term which is related with the originality and authentication of the parts could be considered to be that of the warranty. The misrepresentation is associated regarding the original nature as it had been concealed to falsify the claim and mislead the insurance provider. If the same could have been formulated as the terms of a contract then it would have been legalised as formal contractual agreement and the term would have been associated with it. The breach has occurred with the misrepresentation of both of the terms. It could thus be specified that the company would be able to claim for the damages on the breach of warranty and void the contract for the breach of the condition.

Task 3: The principles of liability in negligence in business functionalities.

3.1 Contrast liability in tort with contractual liability

The factor of liability that could arise under the implications of any legal contract is always different from the aspects of the tortuous law. The reason could be identified as the tort conditions do not permit anyone to establish or prove the wrong that the aggrieved party has supposedly suffered but only the establishment of the occurrence of the wrong is permitted and could be thus established. This has been evident in the provided case studies as well.

The laws associated with that of the tort and that of the contracts imply a strict liability architecture where the creation of the liability which is legally discernable would have to be fulfilled by the person who would be committing the breach of the contract or confidence, mostly without having any specific and prior knowledge of it. Under the terms and conditions of the Civil Liability Law, the element of performance of any infringement of legal entitlements would be considered the same through the circumstances and the liability features may constantly vary according to the variables associated with such conditions (Owen, 2014). The difference that could be identified as present between the mostly two categories of liability is that the liability that arises under the contract with the inclusion of the specific parties and in such cases the arising liability would always be incumbent on the society. The liability under the contractual agreements and laws is always determined based on the amount considered and the liability under the tort is always determined by the decision of the law courts. The breach of any right under the contract is the right of the personnel but the right that is breached under the tort conditions are not so. The legal contracts permit the involved stakeholders and the parties to discuss the terms and the conditions regarding the breach of the confidence or the legal agreements but under the tort conditions no such discussion is undertaken by any of the involved parties or stakeholders. The liability which arises under the contractual agreements is always decided to be based on the elements which are fundamental to the formation of the contract but in case of the liability that arises out of the tort conditions, this determination is performed based on the elements of the committing of the wrongful act. Finally the liability that arises out of the contractual agreements is always predetermined but in case of the liability that arises under the tort conditions this is decided by the situational constraints and circumstantial imperatives (MacCormick and Summers, 2016).

3.2 Explain the nature of liability in negligence

The tort associated with that of negligence is committed out of the breach of the duty that had been in presence already in the society. The duty of care is required to be undertaken when a person is in the process of performing any specific act that could be, under the usual circumstances, be detrimental or dangerous to the safety of the others who could be present around the place where this act could be under progression. The propensity of occurrence of risk of damage to property or to people necessitates the implementation of the duty of care. If the duty of care is either not undertaken due to the wilful negligence, unmindfulness, ignorance or forgetfulness of the involved responsible people then the legal repercussions regarding the breach of the duty of care shall be evoked.

The breach would have to be serious enough to affect the involved people by causing damage severe enough to be comprehended in monetary terms or through the physical or psychological loss suffered by others associated with the situation. This type of liability could be recognized as the tort of negligence identified under the tort law.

As an example of the incidence of the liability of negligence that can arise, the case of Donoghue vs. Stevenson could be highlighted. The liability of the manufacturer had been established in that case. It was demonstrated in the court of arbitration that as the manufacturer had provided a product to the market segment under which it had been performing, it was the liability of the manufacturer to ensure that the interested and the necessary parties could avail the product properly and the responsibility squarely lay on the manufacturer. In this regard, it could be observed that the liability for the consumers actually involves the entire market chain of product propagation. The occurrence of breach of duty of care on part of the manufacturer entails for the consumer or the customer to claim for the reimbursement of damages. It is determined that the liability as it would arise would be validated if it could contain the element of any proper negligence.The harm caused by the effect of negligence would have to be direct in nature to derive the actual liability under the tort conditions.

3.3 Explain how a business can be vicariously liable

The liability that arises under the tort considerations can differ in nature as it may not be considered incumbent upon the person that had committed it. If the person who had perpetrated the act had not benefited in any manner from the performance of such an act then it would never be, on part of the person to be liable for the act. The person who could be the beneficiary of the effects of the wrongful act would be charged with the vicarious liability. The reason behind such consideration would be the fact that the person who had perpetrated the act and the person who had benefitted from it are not the same. The vicarious liability could be most effortlessly found in the cases of the employee and employer professional relationships. The vicarious liability becomes incumbent on the employer as the employer is the one who benefits from the performance of the employee.

The notion of vicarious liability also implies that under the Health and Safety at Work Act, every employer would be held liable for the responsibility of conforming to the legal guidelines to make the workplace a healthy one to work and to safeguard the wellbeing of the employees.

For this purpose the employer has to ensure the availability of the medical amenities, has to arrange the proper drinking water and facilities of sanitation in the work premises to ensure the health and safety of the employees.

Task 4: Be able to apply principles of liability in negligence in business situations

4.1 Apply the elements of the tort of negligence and defences in different business situations

According to the provided case study, it could be deduced and understood that the patient, Mr. Brown, was suffering from serious chest pains. This had made him to approach the hospital for reception of the necessary treatment. The doctor on duty was responsible to treat him properly but did not have the necessary time for it. The subsequent pain killer which had been prescribed by him was available easily. The patient suffered fatality the next day out of pneumonia. The doctor who had been on duty and had prescribed the medicine to Mr. Brown was the employee at the hospital. As the patient had approached the hospital, the institution of medicine had become responsible for the wellbeing of the patient as a concerted and unified unit. The doctor could be identified as a professional who was in possession of the specific knowledge regarding medication. This actually implies that the doctor was entrusted with the specific responsibility and the duty to undertake the duty of care which was independent from the responsibility of the hospital. It brings the liability of dual responsibility on the doctor as being a doctor and a hospital employee. The cause of death as it has been specified in the case study is not directly related with any dereliction of responsibility or of negligence that could have emerged on part of the doctor. In this regard, the doctor would be held responsible for the negligence of the professional responsibility towards his patients and the hospital would be liable for the negligence to the patient as it had been caused while the employee of the hospital, the doctor, was performing the official duties according to the vicarious liability conditions.

4.2 Apply the elements of vicarious liability in given business situations

The driver in this case study is the employee of the company and it was his entrusted duty to receive the client from the airport and despite this responsibility that was entrusted to him by his employees, he had neglected the duty of care to ensure the health and safety of the passenger that he had gone to the airport to receive and had got drunk in the process and this was the cause of the accident in the first place.

Thereby, it could be determined that the driver made a deliberate decision to create risk factors for his passenger. It was not something that the employer had made the choice regarding the effects of the acts of the driver.It would be considered to be a clear case of vicarious liability as the damage had been caused while doing the professional duty provided to the driver by the employer company. The company is liable for the losses that had taken place due to the accident.

The provided case scenario explains that the duty to ensure the health and safety of the employees and the associated people had been delegated to another company by the Supermarket. As the accidental injury involves the acts of an employee of the Supermarket then it is determinable that the original employer is the Supermarket and the entity has the direct performance influence regarding the working schedules and the job profiles in the premises of the working area.Therefore, the supermarket will be held vicariously liable towards the injuries that had been caused to the employee and the principle reason behind such a consideration lies in the fact that it had occurred during the performance of the provided official responsibilities by both the employees of the same Supermarket.


The creation of any contract demands the presence of the founding elements. These important elements are invaluable to provide the standardisation of the contract. The elements are included to ensure the validation of the contract in the legal format and it becomes more important when the breach of contract occurs due to any reason and the elements of the contract formulation ensure that the breach of contract could be evaluated and proved in terms of the breach of the conditions and the terms of the contract. Such breaches are covered by the Civil Legalities such as the liability of tort conditions.


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