Unit 5 Aspects Contract & Negligence for Business Assignment solution
In terms of legal ramifications, a contract can be defined as an agreement that has been signed by the parties who will be held liable for the terms and circumstances of the contract. It’s important to emphasise that a contract that has been lawfully ratified is enforceable under civil law rules. A contract can be made verbally or in writing, though. A written agreement is a better defence against cases of contract breach. One of the key elements in the creation of a contract is the “meeting of minds.” Therefore, in order for a contract to be formed, both parties must have the ability and desire to uphold their end of the bargain by continuing to be bound by the terms and conditions of the agreement.
A person must be at least 18 years old to have the legal competence to enter into a contract; anyone under 18 is not allowed to do so. However, those who are mentally impaired or have a history of drug misuse and are incapable of making their own decisions do not have the capacity to create a contract. An agreement that contains all of the express contractual provisions is also a necessary component for contract formation. The creation of a contract also requires the making of an offer and the acceptance of that offer (Adams, 2008).
Two key components, namely agreement and consideration, make up the aspects that apply to the establishment of contracts. In this sense, an agreement is a declaration made by one person to another indicating that person’s readiness to enter into the specified contract. It should be kept in mind that auctions, advertisements, and showcase presentations of items are not regarded offers but rather a “invitation to treat,” as offer and acceptance to the offer are the two main components of a commercial relationship. One of the key roles in this regard is termination of the contract, which can be accomplished through revocation, rejection, the passage of time, the demise of the offeree, and a failure to satisfy the condition criteria.
Consideration, one of the key components of a contract, is defined as an action or a party’s forbearance with respect to a promise made. Contractual concerns must be communicated from the promisee but must be of a sufficient nature and not pertain to the past. The doctrines of promissory estoppel and promises made under seal, however, are included as exceptions to the criteria of consideration. The primary significance behind the incorporation of contractual principles is that they play an evidentiary and cautionary role, maintain equity, recognise the measure of relief in circumstances of breach, and also help to distinguish between equitable remedies (Adams, 2008).
It follows that before starting a business, Peter Abraham should become properly knowledgeable about the legal implications of business contracts and their terms (both express and implied).
1.2 Face to face: There are several ways for the contracting parties to create their agreement, one of them is through face-to-face discussion. This way of contract generation might be regarded as one of the speediest because agreement is reached considerably more quickly. As a result, a face-to-face agreement comprises verbal pledges exchanged between the parties and is based on trust (Beatty, 2008).
Written agreement: A written agreement is always preferred to a verbal agreement reached through face-to-face interaction or telephone talk. All of the contractual terms and conditions should be spelled out in writing and signed by the contracting parties. It is discovered that written contracts prevent disagreements over who made what promises. Such a contract makes it easier to resolve incidents of breach (Beatty, 2008).
One of the widely used methods of contract generation is distance selling (telephone, internet). Distance selling includes communication via the phone or the internet. In the current digital era, contracts are created between the contracting parties over a phone call, an instant message, or an email exchange.
This specific method of contract construction is a sort of instant communication. In the case of a contract made by the exchange of emails, the postal rule of contract formation cannot be assumed. In this regard, the Entores v. Miles Far East Corporation case from 1955 may be cited (swarb.co.uk, 2015).
1.3 Condition: A contract’s terms and conditions might be seen as being intimately connected to one another. Therefore, a combination of rights and obligations imposed on the relevant contracting parties can be represented as conditions in a contract. If a breach of a contractual requirement is proven, the aggrieved party may terminate the agreement in order to recover damages or be released from further responsibilities (Liuzzo, 2010).
A warranty is a legally binding factual representation given by the warrantor to the warrantee and is frequently included in share or asset purchase agreements. It is crucial to emphasise that warranties in a contract serve as a kind of legal assurance and that damages for a breach of guarantee entitle the claimant to compensating remedies but not to annul the entire contract. A warranty in a contract is different from an indemnity since the latter is advertised as a commitment to compensate the claimant for the loss the claimant experienced (Liuzzo, 2010).
The genesis of the word “innominate term” can be found in the 1962 case of Hong Kong Fir Shipping Co Ltd v. Kawasaki Kisen Kaisha Ltd. An innominate phrase, which is more flexible in nature, can be interpreted as either a contractual condition or a warranty under English contract law. The remedy for a breach of an innominate phrase depends mostly on the type of breach that has taken place, according to Marketing Essentials. It can also be added that the claimant has the right to treat the contract as repudiated and recover damages if all of the advantages have been lost. However, in this situation, contract termination is not appropriate.
Exemption clauses (including legality) – In a contract, an exemption clause may be used to limit or reject one or more of the contracting parties’ duties. Exclusion clauses and limitation clauses are both covered by the usage of an exemption clause. A restriction clause is adopted by a contracting party to restrict their liability in circumstances where a breach of contract is proven, but an exclusion provision is utilised in contracts with the aim of denying all liabilities that are certain for breaches. The legality of the exemption provision is examined in accordance with the Unfair Contract Terms Act of 1977 and the Unfair Terms in Consumer Contracts Regulation of 1999. (Lawmentor.co.uk, 2016).
Case 1- Agreement
Understanding the fundamental distinction between an offer and an invitation to treat with regard to the creation of a contract is essential in order to analyse the provided case scenario. An offer can first be defined as an invitation made by one of the contracting parties to the other with the intent to bind them to a contract in the presence of precise and agreed-upon contractual terms and conditions. In contrast, an invitation to treat is a request made by one of the contracting parties with the desire to engage in further discussion and the overarching goal of formulating an offer. Additionally, it should be noted that when making an offer in a contract, the contractual terms must be specified, although they are not necessary when making an invitation to treaty (Liuzzo, 2010). Advertising, auctions, product displays, and other forms of encouragement to treat should not be mistaken for offers. Case 1 is comparable to the case Gibson v. Manchester City Council (1979), in which a renter of the council indicated interest in purchasing his home. In this instance, the council sent out an invitation to a party, which Mr. Gibson—who was considering buying the house—took as an offer. Despite the claimant’s continued legal proceedings
Similar circumstances can be shown in example 2, when the published advertisement can be recognised as an invitation to treat. Thus, it might be assumed that Carol, who is listed as the claimant in this case, has no contract with the vendor.
Consideration in Case 2
The legal ramifications of consideration in relation to a formed contract can be shown in Case 2. The defendant in this instance is identified as Preston, and the claimant is identified as George, Smith & Forgarty Inc. In accordance with the case, Preston promised to give the claimant £150,000 as long as the business hired his son.
Because consideration cannot be past due and must be of a sufficient type, the claimant cannot legally compel Preston to keep his word in this instance. In addition, it is important to emphasise that consideration must shift from the promisee, but not always to the promisor (MacIntyre, 2007). Review the Coulls v. Bagot’s Executor and Trustee case in this perspective (Australiancontractlaw.com, 2016). Additionally, the case of Lampleigh v. Braithwaite can be examined in order to comprehend that past consideration is not regarded as a good consideration. It is possible to use the White v. Bluett case from 1853 as an illustration to show that consideration is insufficient when a natural duty that is already owed (Casebrief.me, 2016). Exclusion clause in Case 3
The three main types of exclusion clauses are true exclusion clauses, restriction clauses, and temporal limitation clauses. However, it should be emphasised that adequate inclusion of provisions is required for proper use of the exclusion clause with a purpose to limit bearing obligations. Additionally, it should be noted that exclusion clauses are generally upheld by the justice body if they are included in the relevant contract. Therefore, the terms pertaining to the application of the exclusion clause may be integrated by signing, notice, or via the course of prior dealings. To comprehend how the exclusion clause’s terms have been included by notice, the case of Parker v. SE Railway (1877) can be quoted (swarb.co.uk, 2015).
The contractual provisions should be adequately disclosed and brought to the other party’s notice in the context of the topic of discussion to allow for proper and reasonable implication of the exclusion clause. In the matter at hand, it is abundantly clear that the claimant was not properly informed of the terms, despite their incorporation. Additionally, it can be alleged that the restaurant authority failed to alert the claimant to the terms. Therefore, simply printing the contract conditions behind the receipt cannot be regarded as a competent and valid incorporation of the contract terms for the purpose of applying the exclusion clause (Burrows, 2011). Therefore, the concerned restaurant cannot restrict its liability with regard to the claimant’s missing valuables by relying on the exclusion clause included on the reverse of the receipt. The case of La Rosa versus Nudrill Pty Ltd can be brought up in this context as it demonstrated the ongoing concerns over the implications of exclusion clauses.
Fourth case: Implied term
A review of the contractual provisions reveals both express and inferred terms, the latter of which are not found to be specifically or expressly specified in the agreement. Consequently, the explicit contractual terms are expressly stated in the aforementioned contract as opposed to the implicit contractual terms, which are not.
The justification for the use of implied terms is that, in accordance with English contract law, it is preferable to establish default norms for contracts when it is determined that the specified terms have expired. One of the most well-known cases in English contract law history that established the “commercial efficacy” test applicable to common law implied conditions is the Moorcock case (1889). By using this approach, implied contractual terms are evaluated in order to determine whether they are “obvious and necessary” (swarb.co.uk, 2016). In example 4, it is noted that Aaron and Zephra initially entered into a contract, and that the offeree died while the contract was in effect (MacIntyre, 2007). Although Aaron has invested a significant amount in the home covered by the contract, he is ineligible for any remuneration under the implied term because Zephra’s death already brought an end to the original agreement. In this regard, the 1976 court case between Shell UK and Lostock Garage Limited may be noted (E-lawresources.co.uk, 2016). However, the business environment efficacy test can be used to better evaluate whether implied terms apply in the specific situation.
Contractual liability has been defined as the duty to make good any harm that results from failing to carry out one’s obligations under a contract according to the legal principles of English contract law. It is crucial to emphasise that contractual duties have consequences that fall under the purview of the creditor, and that the debtor is also obligated to pay for any resulting damages. Therefore, provided that the parties to the contract have reached an agreement, contractual liability may be regarded as a unique or disparaging liability. Tort liability, in contrast to contractual liability, can be characterised as a forced legal association that results from an unlawful act that causes harm. In this instance, the perpetrator has a right to compensation for the harm done. In addition, parties involved in contractual liability must be parties to the contract in question, but parties involved in tort liability need not be participants to any contracts (Bussani and Palmer, 2004). One of the most important similarities between these two situations is that both involve the requirement that compensation be paid for damages done and that prejudice produced by an illegal act be repaired. As long as a person is involved in a breach and the responsibilities don’t violate someone else’s rights, a tort responsibility may be relevant. In contrast, contractual liability is applicable if the creditor is deemed to have suffered harm as a result of the breach of the contract’s obligations. As a result, these forms are distinct types of liabilities with some points in common and others in contrast.
The legal notion of negligence has been strongly stressed in tort law, and it has been defined as harm brought about by carelessness that is not always an intentional wrong. The Latin word “negligentia,” which literally means “not to take up something,” is where the English word “negligent” first appeared.
A person may also file a lawsuit against the adversary in an effort to recover damages if it can be demonstrated that they experienced considerable harm as a result of the adversary’s negligence. However, it is necessary to demonstrate each component of negligence in order to effectively establish a claim for negligence. Therefore, the essential factors in this regard are duty, violation of duty, cause in fact, proximate cause, and damages (Adams, 2008). In plainer terms, it can be said that a plaintiff can successfully bring a negligence claim if it can be demonstrated that they had a duty of care and that a breach resulted in harm to their interests. Additionally, in this case, the “but-for” causation test is relevant. The extent of a defendant’s obligation in a situation where carelessness has been implicated is deemed to be related to the proximate cause, another potential aspect in this regard. To comprehend the importance of duty of care in establishing negligence, one can refer to the Caparo Industries Plc against Dickman case from 1990. This case also established a “threefold test” for duty of care (E-lawresources.co.uk, 2016). Additionally, the case of Bolton versus Stone (1951) may be studied, in which the plaintiff’s claim of negligence was rejected because the losses the plaintiff suffered were remote from the claimant’s negligence (Casebriefs.com, 2016). The case of Constantine versus Imperial Hotels might help you comprehend what is meant by nominal damages in legal terms.
Task – 4
Case – 7
Understanding the fundamental idea of remoteness of damage with regard to contract law is crucial in the context of the case situation given. Thus, remoteness has been defined in terms of English law as a set of rules that apply to both contracts and torts and that have the effect of capping the amount of compensatory damages for a tort. The loss must be foreseeable in nature and therefore remote in order for a tort or negligence action to be established (Edwards et al., 2012). It is possible to use the Hadley v. Baxendale decision, which established a standard for determining the remoteness of contractual damage.
As was covered in the preceding section, if proven, an employer can be held vicariously liable for the deeds or omissions of a worker while they are on the job. Examining the circumstantial scenario in case 8, it seems clear that the chauffeur service may be held vicariously liable. Although the driver in question drove carelessly and without exercising due care in this situation, because the accident happened while the driver was working, the injured person has a reasonable basis to hold the corporation accountable and seek compensation. It’s important to note that the compensation can vary based on how serious the physical harm was.
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swarb.co.uk. (2016). Balfour Beatty Construction (Scotland) Ltd v Scottish Power Plc; HL 23 Mar 1994 – swarb.co.uk. [online] Available at: http://swarb.co.uk/balfour-beatty-construction-scotland-ltd-v-scottish-power-plc-hl-23-mar-1994/ [Accessed 22 Oct. 2016].
Casebriefs.com. (2016). Bolton v. Stone | Casebriefs. [online] Available at: http://www.casebriefs.com/blog/law/torts/torts-keyed-to-epstein/…/bolton-v-stone/ [Accessed 22 Oct. 2016].
Burrows, A. (2011). A casebook on contract. Oxford: Hart Pub.
Bussani, M. and Palmer, V. (2004). The Frontier between Contractual and Tortious Liability in Europe. Nijmegen [etc.]: Ars Aequi Libri [etc.].
E-lawresources.co.uk. (2016). Caparo Industries v Dickman. [online] Available at: http://e-lawresources.co.uk/cases/Caparo-Industries-v-Dickman.php [Accessed 22 Oct. 2016].
swarb.co.uk. (2015). Entores Ltd v Miles Far East Corporation; CA 1955 – swarb.co.uk. [online] Available at: http://swarb.co.uk/entores-ltd-v-miles-far-east-corporation-ca-1955/ [Accessed 22 Oct. 2016].
Holdingredlich.com.au. (2016). Exclusion clauses in commercial dealings – La Rosa v Nudrill Pty Ltd  WASCA 18 – Holding Redlich Lawyers – Law Firm Melbourne Sydney