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ASPECTS OF CONTACTS AND NEGLIGENCE FOR BUSINESS

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Table of Contents
Task 01......................................................................................................................... 3
1.1............................................................................................................................ 3
1.2............................................................................................................................ 3
2.1............................................................................................................................ 4
1.3 & 2.3.................................................................................................................... 5
Task 02......................................................................................................................... 8
2.2............................................................................................................................ 8
Task 03......................................................................................................................... 9
3.1............................................................................................................................ 9
3.3............................................................................................................................ 9
Task 04....................................................................................................................... 10
3.2.......................................................................................................................... 10
4.1 & 4.2.................................................................................................................. 10
Reference List............................................................................................................... 11

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Task 01
1.1
A contract is an agreement between two or more parties that is legally binding (Chen-Wishart,
2005). For a contract to be valid, it contains certain principles that must be followed.
Requirements for the formation of a valid contract
Legal A contract to be valid must be legal and must contain legal terms. Agreements that are
done for illegal purposes do not constitute a legal and valid contract (Bix, 2012).
Form of Contract For a contract to be valid, it must be in a form that is legal. The proper form
of contract is written however verbal contract are also acceptable based on the type of the
contract and the laws of the state (Bix, 2012).
Capacity Capacity refers to the capabilities of the parties in entering into a legal contract.
Some of the capacities that count are legal age, sound mind and own free will (Bix, 2012).
According to Minors Contracts Act (1987), minors cannot enter into contract unless it is for
necessities and as prescribed by the law.
1.2
The given case scenario implies that it is a void contract surmounted by the fact that Doris makes
a window offer which is not a valid offer and as per express contract an offer must be in written
or verbal form (Calamari and Perillo, 2004). Eddie accepts the offer but as his acceptance has not
reached Doris, this is not a valid acceptance and as per implied contracts, there is no evidence of
any activity or conduct that may advise otherwise (Austen-Baker, 2011).

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But when Frank visits Doris shop he agrees to pay 400 and this gives rise to a fresh offer which
Doris rejects, making the contract void. As per partly executed contract, one party must confirm
to the offer and accept it but it is not the case here (Calamari and Perillo, 2004). Thus, there is no
form of any lawful contract among Doris, Eddie and Frank.
2.1
In order to advice Eddie and Frank whether or not they have a claim against Doris for the Vase,
the first thing needed is to prove that all elements of a valid contract are present. In the given
case scenario, Doris is making an offer for a vase for 500. Now, an offer in a contract is a legal
term which is bounded by lawful response. A window display by Doris does not necessarily
amount to a legal offer but it is an invitation by Doris to people to make a counter offer
(Netk.net.au, 2015), as mentioned in Fisher v Bell (1961). Now when Eddie accepts the offer of
Doris and agrees to buy the vase at the stated price of 500, this amounts to acceptance of the
offer (Chen-Wishart, 2005). Here acceptance is in written form and postal acceptance, and for an
acceptance to be valid, Doris must know about the acceptance by Eddie as mentioned in R v
Clarke (1927) (Webstroke.co.uk, 2015). But before Eddies letter could reach Doris, Frank visits
the store and offers 400 for the vase which Doris disagrees to but agrees to accept Franks offer
if he gives 450, but Frank disagrees. This leads to lawful consideration where Eddie and Frank
are willing to give money in exchange for the vase offered by Doris. Later, Frank writes to Doris
that he will accept Doriss offer of 450 and writes a letter accepting the offer.
In the case, both Eddie and Frank accept the offer of Doris but Doris is not aware of the
acceptance and this cannot be termed as a valid offer and acceptance. There is no valid contract
until the letter arrives. It is up to Doris to decide which offer to accept based on the arrival of the
letter (Davison, 2003). Therefore, Eddie and Frank do not have any claim as there is no valid
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contract between them and will only amount to contract if Doris accepts whomever letter reaches
first.
1.3 & 2.3
Type of Term
Express Terms

How does it come to be part of the contract?


An express term is a part of a contract because it is done at the very start
of the contract. An express term are the terms that are clearly mentioned
and indicated in the contract, and upon which all the parties of the contract
agree upon. An express term can be in written or verbal form which may

Implied Terms

give validation to a contract (Chen-Wishart, 2005).


Apart from express terms in a contract, a contract also constitutes some
implied terms which are not generally expressed or indicated in the
contract. An implied term is a part of a contract by the sense of
understanding which has been made a default part of the contract and need
not be expressed. Implied terms can be made part of the contract through
courts or statutes (Austen-Baker, 2011). As mentioned in Wilson v Best
Travel (1993), implied terms are terms of common understanding such as
guarantees.

Type of Term
Condition

What can I do if its broken?

I know this because of the

A condition is one of the root

following case:
Poussard v Spiers (1876) 1

causes for the basis of a

QBD 410

contract and any case of


breach or in case its broken,
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the party not at fault has full


rights to end the contract. The
innocent party can also claim
for damages against the party
at fault (O'Sullivan and
Hilliard, 2006).
Warranty

Warranties are additional

Bettini v Gye 1876 QBD 183

terms of a contract which are


not the basis of its existence.
Any breach of warranty or any
instance if its broken, the
party not at fault can claim for
damages but has no right to
end the contract (O'Sullivan
and Hilliard, 2006).
Innominate term

Innominate term looks at the

Hong Kong Fir Shipping v

degree of the breach. In case

Kawasaki Kisen Kaisha

the innocent party has lost the

[1962] 2 QB 26

total of the benefits from the


contract, then it may deem an
end to the contract and claim
for damages. If there is no

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total loss of benefits, then the


innocent party can only claim
for damages but not an end to
the contract (O'Sullivan and
Hilliard, 2006).

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Task 02
2.2
Exclusion clauses are one of the most common forms of unfair terms whereby one party
willingly tries to exclude their liability arising out of the contract. Exclusion clauses are express
terms and are included in a contract in case of breach of contract or negligence (Stone, 2009).
But there are inherent problem associated with exclusion clause as these are subject to statutory
and judicial control. Any breach that is covered by an exclusion clause will be decided by the
court about the contractual validation of the clause. According to the Unfair Contract Terms Act
(1977), when exclusion clauses are formed to cover a certain liability that it sought to exclude
then, the court will decide upon the clause itself by the use of contra proferentem rule
(Legislation.gov.uk, 2015). The court will consider whether the clause has been incorporated in
the contract [Interfoto Picture Library v Stilletto (1989) QB 433] and whether it covers all the
loss that the bone of contention in the contract [Ailsa Craig Fishing v Malvern (1983) 1 WLR
964].
According to the case scenario, Mix-o-Crete has incorporated exclusion clause in its terms of
contract and as to the loss covered in the clause, Bob has full faith in the concrete mixer of Mixo-Crete. Any loss arising will be decided by the court and mix-o-Crete cannot rely upon the
exclusion clause as the court will look into the wordings of the clause and also interpret it.
Incorporation in the contract does not make the clause valid but it can be considered while
counting the loss incurred by Bob in the future.

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Task 03
3.1
The general tortious liability is a civil liability based on the principle of performing ones duty of
care. Any wrong or mishap in ones duty of care to act in a reasonable manner and causing harm
to others will amount to tort (Osborne, 2007). Contractual liability on the other hand is a lawful
agreement between two or more parties and any failure to comply with the conditions of the
contract will amount to contractual liability (Stone, 2009). Most tortious liabilities are the result
of negligence, i.e. failure to carry duty of care but some are intentional (Osborne, 2007). In
contrast, contractual liabilities are mostly intentional with one or more party not complying with
the terms of the contract (Stone, 2009). Both the general tortious liability and contractual liability
will amount to claim for damages in cases of breach. The most important difference between the
general tortious liability and contractual liability is that the duty of care in torts is fixed by law
whereas in contracts it is fixed by the parties.
3.3
According to the case of Wilson and Clyde Coal Co. V English (1938), it is the personal liability
of an employer to look after the safety and security of its employees, even after the employees
are themselves entrusted with the duty of care (Barrett, 1999). Personal liability amounted to
providing safe environment to work, safe equipment and also competent staff. Vicarious liability
on the other hand makes the employer liable to court case even if he is not directly responsible
(Barrett, 1999). For a fault of a criminal employee, the employer will also be held liable in court.
In relation to this, Health and Safety at Work Act (1974) was implemented to impose duty of care

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on both the employer and the employee and any breach of the regulations will amount to civil
action to the parties involved (Legislation.gov.uk, 2015).

Task 04
3.2
For a successful claim for negligence a claimant must be able to prove three things:
The claimant must prove that the defendant owed a duty of care towards them.
The claimant must prove that the defendant breached that duty of care.
The claimant must prove that the breach by the defendant caused damage to the claimant
which was a foreseeable consequence of the breach (Arnheim, 2004).
4.1 & 4.2
In the given case scenario, the rules of negligence apply to both Jerry and Asif. It was Jerrys
negligence of his duty of care when he speeded his car to 50mph in a 30mph zone and his lack of
duty of care to his company and to others that caused him to crash his van into Asifs car. Asif on
the other hand was not wearing his seat belt and this amounted to his lack of negligence in his
duty of care to the general public (Arnheim, 2004).
Vicarious liability will be considered only to Asif who was severely injured and harmed because
of the fault of Jerry (Barrett, 1999). There was no fault of Asif in all this but lack of negligence in
wearing his seat-belt will reduce his chances to claim for injuries.

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Reference List
Arnheim, M. (2004). Principles of the common law. London: Duckworth.
Austen-Baker, R. (2011). Implied terms in English contract law. Cheltenham, UK: Edward Elgar.
Barrett, B. (1999). Note. Personal and vicarious liability under the Health and Safety at Work
act. Industrial Law Journal, 28(1), pp.100-104.
Bix, B. (2012). Contract law. Cambridge [UK]: Cambridge University Press.
Calamari, J. and Perillo, J. (2004). Contracts. St. Paul, MN: Thomson/West.
Chen-Wishart, M. (2005). Contract law. Oxford [UK]: Oxford University Press.
Davison, R. (2003). Evaluating contract claims. Oxford, UK: Blackwell.
Legislation.gov.uk, (2015). Health and Safety at Work etc. Act 1974. [online] Available at:
http://www.legislation.gov.uk/ukpga/1974/37 [Accessed 14 Nov. 2015].
Legislation.gov.uk, (2015). Unfair Contract Terms Act 1977. [online] Available at:
http://www.legislation.gov.uk/ukpga/1977/50 [Accessed 14 Nov. 2015].
Netk.net.au, (2015). Contract Law Casenote: Fisher v Bell 1961. [online] Available at:
http://netk.net.au/Contract/Fisher.asp [Accessed 14 Nov. 2015].
Osborne, P. (2007). The law of torts. Toronto: Irwin Law.
O'Sullivan, J. and Hilliard, J. (2006). The law of contract. Oxford: Oxford University Press.
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Stone, R. (2009). Contract law, 2009-2010. Abingdon, Oxon [UK]: Routledge-Cavendish.


Webstroke.co.uk, (2015). R v Clarke [1927] | Case Summary | Webstroke Law. [online] Available
at: https://webstroke.co.uk/law/cases/r-v-clarke-1927 [Accessed 14 Nov. 2015].

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