Unit 5 Aspects of Contract Law Negligence in Business Assignment
This aspects of contract law negligence in business assignment report will include a thorough analysis of the various aspects of the formation of legal contracts and its implications, including the terms and clauses that must be included, the liabilities that are imposed on the parties in cases of violations, and the significance of the different types of contracts to both businesses and individuals. The discussion will also include the elements of contract formation, vicariously liability, negligence law, and duty of care. In order to facilitate understanding of the practical implications of the various types of legal principles, these have been studied in the context of both known and likely case scenarios.
1.1 Formation of Contract – elements
A legal relationship between the parties known as a contract is considered to have been formed when two or more parties mutually agree to put their promises to one another in writing and in accordance with the laws that are now in effect. For the contract so created to be legally enforceable, it is essential that its development is comprised of the following elements:
Intention to establish legal responsibilities: In order for a contract to be deemed valid and lawful, both parties must express some degree of desire to formalise their existing commitments to one another.
Offer: The expression of one party’s readiness to enter into a contract with another is referred to as this aspect. Even if this element’s nature is not time-bound, time-bound offers are preferred since, in the latter case, problems that arise during execution are much easier to resolve. Offers cannot be regarded invitations to treat because the latter are interpreted as invitations to offer rather than offers, therefore when the offer is accepted by silence it would not be considered an acceptance of an offer (McLeod, 2011).
Acceptance – The confirmation of the offer aspect lies in the acceptance element, and for the conduct to be viewed as acceptance, performance and acceptance must occur concurrently ( Revak, 2011). The form of acceptance is mutually agreed upon by the contracting parties; failure to do so results in the application of the following rules:
Postal rule: According to the rule, the contract is formed at the moment the letter of acceptance is posted, even if it may experience delays or a loss-in-transit along the way to the party who made the offer (Pryor, 2005).
When a condition of a contract is partially accepted or accepted but not the other requirements, the contract is not legitimate and is considered to be a counter offer, rendering the original offer ineligible ( Smith, 2011).
Consideration: This component is the thing that the parties will receive as compensation for carrying out the contract, and it may take the shape of money, products, or services as agreed upon by the parties. However, even the legitimate performance of the contractual obligations would be rendered useless in the absence of a valid consideration, so the consideration must have legal validity ( Hermalin et al, 2006). When the amount paid for a commodity or service offered is less than its market value and the harmed party is unable to establish any claims for the deficiency in such circumstances, the element’s inadequacy may become apparent.
Capacity – The parties who express a desire to enter into a legal relationship in the form of a contract must be at least 18 years old, in good physical and mental health, and not under the influence of alcohol or drugs at the time the contract is formed. If such a contract is formed, it would be void and would not be enforceable in the event of any future intoxication or inebriation ( Hogg et al, 2008).
1.2 Forms of contract
Although it is necessary for both parties to be present in person and to have indicated their desire to enter into a legal relationship, contracts can also be formed verbally and solely on the basis of the parties’ mutual confidence. Since the element of faith, which is considered to be the most important in the process of contract creation, is present, verbal contracts can also be rendered enforceable (Schmerler, 2008). This was supported in the cases of Winternitz v. Summit Hills Joint Venture and Rowena Williams (as William Batters’ executor) v. Gregory Jones (both from February 25, 2014).
The contracts that are formed in writing are mostly preferred in business and individual agreements across the world because of its extensive documentation that involves the mention of clauses, time frame, terms and other relevant information thus clarifying the outcome of any type of infringements to the parties involved in the contract (Deakin and Morris, 2012). The trait of enforceability in these contracts makes one of the parties liable for damages arising out of any kind of breaches to the other party in the course of executing the contract. The factor of risk gets minimised and the contract becomes more reliable compared to the other forms simply because of the process of documentation.
The platforms of the internet and telephone have been widely used in the current era of online business and dealings and are also chosen over the traditional form of contracts as it is not always possible for the parties to meet in person owing to location and availability constraints. These contracts have all the characteristics of traditional contracts, and the Electronic Commerce Regulations of 2002 hold anyone held responsible for violating them accountable (Ward, 2012). This concept governs the business law actions that take place in the e-commerce sector.
It is crucial for online businesses that they protect online consumers’ privacy and exercise discretion in their commercial interactions (Holmes, 2009). Contracts signed over the phone are regarded as verbal agreements, and if there is insufficient written evidence, it renders the agreement unenforceable in the event of future violations of any kind. The absence of legal limitations subjects the termination of such contracts to the whims and fancies of the involved parties.
1.3 Case of Carlill v. Carbolic Smoke Ball Company (1893) – Contractual terms
The supplied case scenario’s analysis must be comprehended in light of the contract’s provisions, thus it is essential to comprehend all of its facets. The Carbolic Smoke Ball Company advertised in the daily news that its manufactured smoke balls, when used as directed, had the power to treat influenza. It also stated that it has committed to pay 100 pounds to anyone who contracts the illness as a result of using the product. After seeing the commercial, Carlill bought the medication and used it as instructed for three months before complaining of sickness and finally suing the manufacturer for compensation.
Due to the contract between the woman and the business having the characteristics of a valid contract, including an offer that was made to those who would need it and therefore could not be considered an invitation to treat, an acceptance in the form of being accepted by the interested party, payment that satisfies the requirement for consideration, and the intention to enter into a legal relationship with the party through the declaration of 1,000 pounds. Any sickness experienced by the user of the smoke ball is to be treated as a condition, and the company’s failure to pay the amount to the lady when she claimed it on the grounds of her illness would be considered a breach of the conditions and a violation of the entire contract. This express promise was made on behalf of the company. Additionally, the woman had experienced illness despite utilising the smoke ball in accordance with the directions on the product.
2.1 Contractual Elements in case of David and Williams
Williams was looking for a builder to create a gym for him, and David had posted an advertisement through which he was willing to offer his services as a builder. David’s readiness to join into a business connection with any interested parties is made clear through the posting of an advertisement. On the other hand, Williams’ response to David’s advertisement indicates his desire to get into a business arrangement with the latter. As a result, the ad can be viewed as an offer, and Williams and David’s meeting on May 10 to complete their earlier negotiation that they had agreed to on May 1 shows that the offer was accepted. The consideration in this legal relationship between the two parties might be referred to as David’s compensation or fees, which totaled 18,000 pounds for building Williams’ gym. Thus, communication between the parties, which may be seen as the establishment of a contract between the two, has indicated the presence of all the necessary ingredients for forming a contractual connection between David and Williams. On the other hand, there was no deadline by which David would have to finish creating the gym for Williams. Since David has been kept in the dark regarding the time requirement for doing his job, there could be a crisis over the course of the contract’s execution as a result of the time not being included in the agreement. The drafting of this contract exhibits non-transparency in the process of documenting the facts that are thought to be relevant for its successful execution because the aim of Williams has not been made clear in the contractual provisions.
2.2 Formation of Contract between David and Williams
Since David has been kept in the dark regarding the time requirement for doing his job, there could be a crisis over the course of the contract’s execution as a result of the time not being included in the agreement. The drafting of this contract exhibits non-transparency in the process of documenting the facts that are thought to be relevant for its successful execution because the aim of Williams has not been made clear in the contractual provisions.
2.3 Effects of Terms
a) Contractual term Violation
In the hypothetical example presented, David cannot be charged with breaking the terms of the contract because Williams made no reference to or provided any information regarding the deadline for the gym’s construction in their contract, which was signed on 10.05.16. Due to Williams’ concealment of this information at the time the contract was formed, there was a lack of clarity on the time component of the agreement. Although Williams told David verbally about the time frame throughout the course of the task after 10 days, this act cannot be interpreted as a contractual term. Williams expected David to finish the project by July 31 in this case.
3.1 Contractual and Tort Liability – Differences
The following hypotheses can explain the foundation of the tort law principle:
Wider and Narrower Theories: If the act was acknowledged and justified in the eyes of the law, damages may not be awarded; otherwise, the accused’s harm to the victim would be regarded as a tort ( Shapo and Shapo, 2003).
Pigeon-Hole Theory: According to the scope of this theory, only a select few specified torts are covered by the application of the tortuous responsibility principle, and those that are not covered would not be considered torts.
Contractual obligations turn into liabilities when one of the parties fails to act in accordance with their agreement, putting the other party on the hook for the violation. For instance, if B fails to deliver the furniture to C after receiving the agreed price, within the time period specified in the contract, a liability of infringement to the extent of the price of the furniture is imposed on B for failing to comply with the term of the time in the contract.
4.1 Comparative study of Verdicts of case scenarios
It is crucial to have a thorough grasp of both the trials before doing a comparative analysis of the decisions in the cases of Hill v. Chief Constable of West Yorkshire (1989) and Donoghue v. Stevenson (1932).
One of the parents of the most recent victim had accused the police in West Yorkshire of failing to take the necessary precautions to safeguard the locals from the ripper attacks in the 1989 case of Hill v. Chief Constable of West Yorkshire. The police were charged with failing to exercise reasonable caution in apprehending the outlaw, which amounted to a violation of their obligations.
The House of Lords upheld the high court’s decision, which stated that the police may be exempt from liability arising from lack of care if the closeness between the police and the criminal is not established. However, the high court ruled that the police authorities cannot be held accountable for lack of care in situations where a member of the public attacks another. When the defendant has either escaped or is being held by law enforcement, the case of no proximity is taken into account (Bishop., 2005).
The different features of contract creation and the legalities involved in the process have been thoroughly explored in this components of contract law negligence in business assignment report, along with the potential outcomes in cases of any type of breaches by any of the parties. The utilisation of a variety of case scenarios has made it possible to comprehend how legal ideas are applied in real-world situations. The report also discusses the importance of the concepts of vicarious liability, negligence, and care obligation.
The manner in which the conversation above was conducted makes clear the following facts, which, if followed and adhered to, would guarantee a trouble-free legal connection between the parties desiring to enter into a contract with one another:
The terms that have been mutually agreed upon by the contracting parties must be stated in the contracts between the parties with transparency and clarity.
The conditions and limitations, as well as the repercussions if any of the parties violate them, must be mentioned in the documentation.
Legal requirements must be followed in the formation of the contract in order to avoid its later annulment.
The parties to the contract must make sure that they act fairly throughout the execution procedure.
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