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Executive summary


I would like to express my special thanks of gratitude to my teacher Mr.Shane Davied who gave me the golden opportunity to do this wonderful report on the topic ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESS, Which also helped me in doing a lot of Research and I came to know about so many new things. I am really thankful to them. Secondly I would also like to thank my parents and friends who helped me a lot in finishing this report within the limited time.

I am making this project not only for marks but to also increase my knowledge. THANKS AGAIN TO ALL WHO HELPED ME.

Table of content

Task 1

Elements Necessary for the Formation of a Valid Contract

1) A contract intends to formalize an agreement between parties. The three key elements that should be available for a contract to be valid and enforceable by law are agreement, consideration, and intention to create legal relations. The first element ensures that the parties bound by the contract have made an agreement, which is determined by the rules of offer and acceptance. The second element is that the agreement or obligations assumed by each party must be supported by sufficient consideration from the other party. The third element is the intention of the agreed parties to make their promises legally binding. Capacity Each person or entity must have legal capacity or authority in order to enter into an enforceable contract. Examples of persons who lack capacity are minors, those adjudged legally incompetent, and persons under the influence of mind altering drugs or alcohol.

Offer and Acceptance Every valid and enforceable contract involves an offer followed by an acceptance. There is no contract unless the offer is accepted. When one person signifies to another his willingness to do or abstain from doing anything with a view to obtaining the assent of that other to such act or abstinence he is said to make a proposal. The first step towards creating a contract is that one person shall signify or make a proposal or offer to the other, with a view to obtaining the acceptance of that another person to whom the offer is made. A proposal when accepted becomes a promise. Consideration The third necessary element of a contract is consideration. Consideration is defined as something of value in exchange for something else of value. It can take the form of payment of money for property, goods or services,; the exchange of property or goods for other property, goods or services, or the exchange of services for services.

Legal Purpose and Public Policy The fourth and final essential element of an enforceable contract is that its object must be both legal and consistent with public policy. Contracts for prostitution or for the sale or use of illicit drugs are invalid and unenforceable.

2) Types of contract: Face to face Written Distance selling

Verbal - an oral agreement made between two people Written- contract is written up so that there is an actual copy which can reduce any possible problems which could arise. Majority of contracts are in this form e.g. a contract of employment Standard form- businesses usually use a standard contract that states the terms and conditions of an agreement which are not negotiable. This is common practices as a business would find it extremely inconvenient if not impossible to create contracts specifically for each individual customer. Void and Voidable Contracts can be either void or Voidable. A void contract imposes no legal rights or obligations upon the parties and is not enforceable by a court. It is, in effect, no contract at all. A voidable contract is a legally enforceable agreement, but it may be treated as never having been binding on a party who was suffering from some legal disability or who was a victim of fraud at the time of its execution. The contract is not void unless or until the party chooses to treat it as such by opposing its enforcement. Contracts under Seal Traditionally, a contract was an enforceable legal document only if it was stamped with a seal. The seal represented that the parties intended the agreement to entail legal consequences. No legal benefit or detriment to any party was required, as the seal was a symbol of the solemn acceptance of the legal effect and consequences of the agreement.
Express Contracts In an express contract, the parties state the terms, either orally or in writing, at the time of its formation. There is a definite written or oral offer that is accepted by the offeree (i.e., the person to whom the offer is made) in a manner that explicitly demonstrates consent to its terms. Implied Contracts Although contracts that are implied in fact and contracts implied in law are both called implied contracts, a true implied contract consists of obligations arising from a mutual agreement and intent to promise, which have not been expressed in words. It is misleading to label as an implied contract one that is implied in law because a contract implied in law lacks the requisites of a true contract. Executed and Executory Contracts An executed contract is one in which nothing remains to be done by either party. The phrase is, to a certain extent, a misnomer because the completion of performances by the parties signifies that a contract no longer exists.

Bilateral and Unilateral Contracts The exchange of mutual, reciprocal promises between entities that entails the performance of an act, or forbearance from the performance of an act, with respect to each party, is a Bilateral Contract. A bilateral contract is sometimes called a two-sided contract because of the two promises that constitute it.

Unconscionable Contracts an Unconscionable contract is one that is unjust or unduly one-sided in favor of the party who has the superior bargaining power. The adjective unconscionable implies an affront to fairness and decency.
Aleatory Contracts An aleatory contract is a mutual agreement the effects of which are triggered by the occurrence of an uncertain event. In this type of contract, one or both parties assume risk.

3) What are the terms of a contract? Before entering into a contract, various statements will often be made by one party in order to encourage or induce the other party to enter into the contract. A dispute may later arise as to which of the statements made should be considered a part, or a term, of the contract, and which should be taken as merely pre-contract talk, and therefore not a part or term of the contract. Parties to a contract are bound only by its terms, not by any peripheral statements that may have been made. The courts can look at evidence of intention by one or other of the parties that the statement should be part of the contract. For example, the longer the interval is between the making of the statement and the reaching of the final agreement and contract, the less likely it is that the statement will be considered to be a term of the contract.

Collateral contracts A "collateral contract" is a separate contract which exists alongside the main contract. Generally, where a contract is in writing, the written terms of that agreement form the basis of the contract. In addition, where statements have been made and intended as a promise, and intended to induce the main contract, a collateral contract will be held to exist.

Terms may be conditions or warranties Contracts will always contain different types of terms (said or written), some more important than others. The more important terms are called "conditions", the less important terms are called "warranties". Conditions are so important that without them one or other of the parties would not enter into the contract. Consequently, to make a condition falsely, or to breach a condition, is viewed so seriously that the wronged party will be entitled to treat the contract as void, voidable or at least rescinded. Where the term is a warranty, the wronged party will only be able to seek monetary damages for any loss suffered. The contract itself will remain binding on both parties.

WARRANTIES A warranty is a less important term: it does not go to the root of the contract. A breach of warranty will only give the injured party the right to claim damages; he cannot repudiate the contract CONDITIONS A condition is a major term which is vital to the main purpose of the contract. A breach of condition will entitle the injured party to repudiate the contract and claim damages. The injured party may also choose to go on with the contract, despite the breach, and recover damages instead. VALIDITY Parol evidence may be given about the validity of the contract, eg to establish the presence or absence of consideration or of contractual intention, or some invalidating cause such as incapacity, misrepresentation, mistake or non est. factum. INTERMEDIATE TERMS It may be impossible to classify a term neatly in advance as either a condition or a warranty. Some undertakings may occupy an intermediate position, in that the term can be assessed only in the light of the consequences of a breach.

Exclusion of responsibility terms

It is possible to have a term in the contract which excludes one of the parties from responsibility for something that may go wrong in the performance of the contract or limits that responsibility. It is called an exclusion clause or an exemption clause.

Task 2 1) Purpose of the contract, both sides made and fixes their rights and obligations under the Agreement to establish a protocol. The court must be enforced, because it is determined by a valid contract, unless there is reason to prohibit its enforcement yes. In this scenario Mr. B wont be able to sue singer mega. In here we can consider these two parts, which is offer and acceptance. Offer is an expression of willingness to accept a specific set of terms, made by the offeror with intention to enter into and be obliged to follow the terms of the contract.

Acceptance is an expression of absolute and unconditional agreement to all the terms set out in the offer. It can be oral or in writing. The acceptance must exactly mirror the original offer made.

2) In this scenario Mr.K has claim against PC dealer.

TASK 3 1) Implied as a matter of law within every contract is a covenant of good faith and fair dealing requiring that neither party do anything which will injure the right of the other to receive the benefits of the agreement.' Through application of this covenant, a breach of contract may be found when promissory, by his bad faith conduct, has jeopardized or destroyed a promises opportunity to reap the expected benefit of the bargain, even though that conduct failed to violate expressed provisions of the agreement. Principles of tort Law gives various rights to persons A duty imposed by law to respect the legal right of others When a right is infringed, the wrongdoer is liable in tort e.g. invasion by trespassers into a property When tortes committed, committed, the remedy is an action for damages, i.e. compensation for Infringement Crime, tort and breach of contract

Crime Prohibited by law The state prosecute the offender Punishable by fine or imprisonment Both tort and breach of contract are Civil wrongs The person wronged sues in a civil court for Compensation

Tortuous Liability vs. Contractual Liability In a tortuous claim the defendant may not have any previous transaction or relationship with the claimant however in contrast to that for contractual liability the defendant and claimant must have a purpose to create legal relations. Elaborating on this further there is supplementary sovereignty in contractual law where as in tortuous liability it is more of an imposed nature. The claimant will receive compensation for damages and expected earnings in the case of contractual liability and in comparison to this the claimant is only entitled to damages in the case of tortuous liability

Tortuous and contractual liability They are similar in that Both are civil wrongs; and The person wronged sues in the court for compensation

Differences In a tortuous claim, the defendant may not have any previous transaction or relationship with the Claimant In a contractual claim, the defendant and claimant must be the partys parties to the contract contract

Wrong and damage You have to prove your loss if you want to claim damage No loss, no compensation

Remoteness of damage When a person commits a tort with the intention of causing loss or harm which in fact results from the wrongful act, the loss or harm can never be too remote a consequence. i e.. You are liable to the loss or harm caused by you when you have intention to do so

Damages will be awarded for it

2) Tort of negligence

The word Tort appears to come from the Latin word meaning twisted or turned aside, and the Norman French meaning "a wrong". A tort is a wrongful act that causes injury or damage. So, a person who is the victim of another person's wrongful act can sue the wrongdoer, who is known as the tortfeasor. Examples of torts include death, assault, and injury from a defective product, injury from bad driving and damage or destruction of property.

Negligence is a failure to exercise the care that a reasonably prudent person would exercise in like circumstances (Encyclopedia Britannica, Meriam Webster). The area of tort law known as negligence involves harm caused by carelessness, not intentional harm.

According to the course book, negligence is when the defendant: Causing loss by a failure to take responsible care when there is a duty to do so. the defendant may not wish to inflict injury but by carelessness he allows it to happen. Negligence occurs when: Somebody does not exercise the standard of care that a reasonably careful person would use under the circumstances. (The standard of care is a way of measuring how much care one person owes another. For some people the standard of care is higher than others. Doctors, for example, have a higher standard of care toward others than the reasonable person.) somebody does something that a reasonably careful person would not do under the circumstances. In everyday life, negligence can arise in many situations, including: on the road, medical and health care, at work, at ones property, faulty products, etc. Under the law of negligence there are several special types of liability and some groups are held to a higher standard of care than the average person. For example, consumers can sue a manufacturer of a product if the product is faulty or does not meet a required standard. The area of law that deals with negligence on the part of manufacturers is called product liability.

People who own or occupy property have duty to maintain their property so that no one entering the property will be injured. This legal responsibility is called occupiers liability. Property owners must take particular care to protect children who may be enticed onto their property by an item such as a swimming pool. Items that might entice a child to enter someones property are known as allurements. If found liable, wrong doers must compensate victims in full for losses. On the other hand, if persons by their own fault cause or contribute to their own injuries, they will be held at least partly responsible for their damages under the contributory negligence defense.

3) Vicarious liability is a form of strict, secondary liability that arises under the common-law doctrine of agency respondent superior the responsibility of the superior for the acts of their subordinate, or, in a broader sense, the responsibility of any third party that had the "right, ability or duty to control" the activities of a violator (Source: Wikipedia). A person who did not cause the injury has a particular legal relationship to the person who did act negligently. It is also referred to as imputed negligence. Legal relationships that can lead to imputed negligence include the relationship between parent and child, husband and wife, owner of a vehicle and driver, and employer and employee. Vicarious liability can be defined to be a situation where someone is held responsible for the actions or omissions of another person Acas (2009). Taking into consideration the business context, it can be perceived that an employer can be held responsible for the errors of its employees; provided that it can be evidenced that the laxity was committed in the course of employment. Elaborating on this further, in other words; vicarious liability can be referred to employee negligence at work.