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Aspects of Contract and Negligence

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Contents
Introduction......................................................................................................................................2

Task 1...............................................................................................................................................2

1.1 The importance of the essential elements required for the formation of a valid contract.....2

1.2 Impact of different types of contract......................................................................................3

1.3 Analysing terms in contracts..................................................................................................4

Task 2...............................................................................................................................................5

2.1 Applying the elements of contract in the given scenario.......................................................5

2.2 Applying the law on term in the following contracts............................................................5

2.3 Evaluating the effect of terms in the given contracts.............................................................6

Task 03.............................................................................................................................................7

3.1 Contrasting liability in tort with contractual liability............................................................7

3.2 Explaining how liability for negligence can arise & the conditions needed to be met for a
claimant to successfully prove negligence..................................................................................8

3.3 What is vicarious liability & how a business can be vicariously liable.................................8

Task 04.............................................................................................................................................9

4.1 Applying the elements of the tort of negligence and defences in scenario............................9

4.2 Applying the elements of vicarious liability in given business situation.............................10

Conclusion.....................................................................................................................................11

References......................................................................................................................................12

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Introduction
Contract is referred as transaction that contains rules and regulations. Both parties are attended in
the contract and they act as contracting party. Valid contract contains some rules and regulations.
Valid contract includes offer of the party, acceptance of the other party, consideration, and
consent of the both parties and conditions for the contract. In order to make valid contact aspects
of contract must be learnt. Business system suggests various types of business contract. All of the
contracts are agreement but all of the agreements are not contract by nature. What is vicarious
liability, negligence in tort can be understood by contract. The contracting law and examples of
rules and laws are described here.

Task 1
1.1 The importance of the essential elements required for the formation of a valid contract

In order to make something good there is necessity of principles. In order to make contract valid
principles must be followed. There are basic principles that must be followed in order to make
contract agreement with the possible customers such as ability to create legal relation, capability
of the each parties, consideration and acceptance. Following are the description of these items:

Planning for creating legal relation: This is the first and foremost principle of creating valid
contract. In order to create formal and valid contract with the possible customers both parties
must have intention to create legal relation between them. So Peter Abraham must have intention
to create formal and valid contract with the possible customers.

Acceptance of the offer: If one party offers other party to have a business deal, the offer needs
to accept lawfully. Lawful offer and acceptance implies that the offer and acceptance must be
conformed to rules under the contract law. If the cherished party offers Peter Abraham need to
accept the offer in order to create valid contract.

Legal consideration: The contract must be considered legally. If two parties want to make
contract agreement that must be legal, otherwise it will not be valid. The violation of this
principle makes the contract illegal.

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Capability to make contract: The two parties must have capability to make legal relation
between them through valid contract. The parties must have physical fitness, mental fitness and
legal capacity to make a contract. In order to make a contract with the contracting parties Peter
Abraham must have capacity to make contract.

Free approval: The contract between two parties must be coercion free and pressure free and
this condition must be approved by two parties in order to create contract agreement.

The object of the contract must be legal and the conditions available for the contract must be
certain.

1.2 Impact of different types of contract

There are types of contract that affect business organization. There are written contract, online
contract and face to face contract that are needed for specific situations and business aspects are
influenced by these types of contract. Types of contract and their influence on business aspects
are given below:

Written contract: Written contract is based on document contracted between two parties. The
contract between two parties must be documented at first as evidence. Written contract provides
legality of the contract as it maintains evidence for contract done. The written contract
documents when to perform the contract, how to perform the contract and what to perform by the
two parties. Written contract is best for peter Abraham is best because it provides security,
legality and evidence if one party rejects the contract. Contract for building a building is an
example of written contract.

Face to face contract: Face to face contract is not documented, it is done by the consent and
wish of the two parties. The both parties attend physically and offer one party, the party then
accept it. There are problems with this contract in terms of legality. Sometimes one party can
reject the contract term so legal dispute will be created. Personal relation and solid understanding
must be needed between two parties in order to make this contract. In the case of Peter Abraham
this types of contract is not perfect because there is chance to create dispute between him and his
party in terms contractual agreement. Hiring a car for personal issue is an example of face to face
contract.

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Distance selling: These types of contract require online contract in order to make contract
agreement. Legal relationship must be needed between the two parties and both parties must be
obligated to perform and maintain the components of the contract. Telephone, online media are
the way of distance selling. It reduces the time needed for contract and workflow of the
employees increases. There is rule and procedure for online contract and each party lawfully
must follow the rules. There is online document for this contract. Peter Abraham can use this
contract because it will save his time and online evidence is available. Exporting and importing
are the example of online contract.

1.3 Analysing terms in contracts

Contractual terms determine the duties of each of parties under the contract done between them.
Terms of contract are described below and are applied to the case study of Peter Abraham:

Conditions: Condition is important term because it basic principle for the contract agreement. If
the condition is broken, the harmed party can deny the contract agreement and can case harms. It
will be decided by harmed party to happen with the contract agreement, get back harms and
regardless of the apart from the contract. If Peter Abraham becomes harmed party, he can deny
the contract agreement and can claim for recoup harms.

Warranties: Warranty is an important term for the business contract because it doesnt head of
to the base of the contract agreement. The harmed party can claim for remedy if other party
breaks the warranty agreement. Peter Abraham can claim for remedy if other party rupture
warranty agreement and he can revoke agreement with the other party.

Intermediate terms: It is difficult to characterize any terms of contract. It can be condition or


warranty ahead of time. In the light of the outcome of the breach of contract will be surveyed. As
per intermediate terms Peter Abraham can be qualified for revoking the contract if he becomes
the harmed party and extreme misfortune and harm are happened to him. But if the breach of
contract brings minor fortune to him, he can claim for cures but he cannot rupture the contract.

Task 2
2.1 Applying the elements of contract in the given scenario

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Business case scenario 1:

It is seen that student apartment of Carols was unfinished so he noticed an advertisement in the
newspaper about nice brown couch in order to leave the current apartment. He saw that the price
of couch is $600 and he made contract with the seller in order to buy it over phone call.

Here the phone call of Carols is not a contract agreement. So I think it is not contract agreement
because he only called the seller but there the contract agreement is not done between them. He
only made offer but the other party didnt accept it. His phone call doesnt contain any terms of
contract and there is absence of breach of contract. So Carol and the opposite party didnt
perform any contract agreement, it is only an offer but it has lack of contract terms, acceptance
and consent.

Business case scenario 2:

There is an agreement between Devi and Smith & Fogarty Inc. on 2015 and Devi accepted it.
Preston concerned that his son had been hired but his son might not be available so he sent a mail
to George on April 13. He assured if his son being hired by the firm, he will give the IT firm
$150000 as contractual money.

There is breach of contract according to business law. Breach of contract is being fulfilled by this
business case scenario. If the breach of condition is denied, it is not legal to continue the contract
agreement. Thus George cannot insist on the promise. There is a contract between them and he
promised to pay the amount.

2.2 Applying the law on term in the following contracts

Business scenario 3:

An exclusion clause has been happened in this business case scenario. When the person entered
into the hotel, he handed a coat with $500 inside his wallet. After finishing the meal, the person
noticed that there is no money inside his wallet. He made argument with the hotel authority but
he has not right to argue with the authority. The hotel authority relied on exclusion clause that is
contained by money receipt. All valuables will be removed from the wallet as the bill contains
exclusion clause. The authority is not responsible if any items of the customer being stolen or

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missed (Hirobe, 2001). As the person has no authority to make argument with the authority, the
authority relied on exclusion clause as per bill.

Business case scenario 4:

In the contract agreement implied terms are not mentioned usually because it is formed orally.
Here it is seen that Aron rented a warehouse from the warehouse owner Zephra. When they made
a contract between them in terms of renting warehouse they performed oral contract and there
was no written document. Zephra promised that he will increase rent amount for five years. After
the death of Zephra his son became the owner and he demanded extra charge for rent of
warehouse. Now the owner has been changed and the contract was oral contract so there is no
valid document as evidence (Krieken, 1999). Now Aron is responsible for paying extra
compensation as per implied terms of the contract agreement.

2.3 Evaluating the effect of terms in the given contracts

Case scenario 5:

The policy holder applied for policy for his motor in the case scenario 5. The officer asked him
whether he was committed any accident or fault during his motor driving for last five year
records. The answer of policy holder is NO as he didnt face any accident and faulty activities
during his driving for last five years.

The motor vehicle insurance has right to make the policy void. There is written document for this
contract the written format has been followed for this contract so this contract is valid. The both
parties signed in the contract that means each party is agreed (Gores, 1996). For committed
accident this contract is made but not for stolen car and the holder answer NO so the insurance
has right to make the contract void.

Business case scenario 6

The insurance can void the policy from the starting date of the contract shown in the business
case scenario. The insurer officer investigated for the policy and he saw that the parts of the car
such as wheel and spoilers are changed much time and the policy holders husband is not actual

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driver and the person claimed two times for last five years. The insurer asked who will drive and
whether any accident or damage is occurred but the answer is NO.

According to business law the insurance insurer can void the policy from the starting date of
documentation (Rhine, 2015).

Task 03
3.1 Contrasting liability in tort with contractual liability

I have got an employment belongs to the health and safety officer post and I have to talk on
safety in the workplace and its consequence. Here the difference and similarities of liability in
tort is described by me.

Contractual liability: Contractual liability is created when there is two parties engaged in a
contract agreement. Matter of life is usually dealt by these factors. Contractual liability exercise
more freedom than liability in tort. The compensation for the damage will be ensured that is
described in the contract in the time of specific situation (Courtney, n.d.).

Liability in tort: For organizational contract liability in tort is the main part of contract. This
types of liability will occur when one party of the contract does civil wrong or being injured by
other party. So it happens when in the business organization wrongful action takes place. The
other party of the contract becomes victim of personal injury for damages. Civil courts define
these types of persons. Judiciary board of the state formulates this law as it is state law of the
country (Miner, 1982). There are three types of tort used in the business organization such as
strict liability, tort in negligence and international rule and law. If any person commits this tort
liability he must pay compensation to the other party for losses and injuries.

Care duty: Business situation is represented by this contract. During work time group of persons
or workers can harm the organization physically and mentally by the wrong activities of
themselves. So Care duties are customer to producer, employer to employers.

Example: If any worker of the organization is suggested to wear goggles in the eye and other
things for protection at the time of working, the worker should follow the declaration from the
organization. The organization will not bear any personal injury as the worker is suggested for

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personal safety. If the worker neglects the suggestion and any harm is occurred to the worker by
accident, it will be remarked as the negligence of worker. So the organization will not liable for
compensation as per tort liability.

3.2 Explaining how liability for negligence can arise & the conditions needed to be met for a
claimant to successfully prove negligence

Breach of contract: The rupture of business contract by one party for given critical situation is
called breach of contract. Customers can protect problems by breach of contract at the time
business activities. In order to reduce the compensation of the service breach of contract is acted
(Virgo, n.d.).

Case similarity: In order to launch any contract similar cases are needed. Because of the
absence of similar case the contract will not be valid contract.

Case in fact: If any person or party cause harm, losses and damages by being irresponsible to the
other party, it will be referred as liability in negligence. The victim party will be compensated by
the other party who has made damages negligently. In the business organization liability of
negligence will be created if one party is harmed personally by the activities of the other party.
So the victim must show provident that other party occurs damages for their negligence and lack
of proper duty (Gibson, 1937).

Example: One person deposited some money in the bank for few years. After the time finished,
he went to withdraw the money. The bank replied that the money was damaged by their
negligence and lack of proper care. Now the bank is liable for compensating the money to the
depositor as per liability in negligence.

3.3 What is vicarious liability & how a business can be vicariously liable.

Vicarious liability: Vicarious liability is the situation in which one person is responsible for
business activities of other person to the third party. The act of employer will make the employee
liable for his activities. On the other hand the act of worker will make the employer liable for the

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activities of worker. Employers are liable for the activities of the worker as they are given
employment by employer (Spindler, n.d.).

Control taxing: Control testing occurs by the power of employee and it controls over the work
in the business foundation. When the employee set types of works and do it properly and the
procedure for working is called control testing. Whether the product is perfect for serving people
or not is tested by control testing that is occurred in the business organization (Quality control
and management, 1971). The organization will be vicariously liable if there is absence of control
testing. Due to lack of control testing the worker will not produce products and the organization
will be liable for this act.

Combination testing: The product and service is tested by this testing procedure of the
employees of the business production function. The tasks of the employees are improved by this
testing.

Monetary reality testing: The involved contracting parties are described by this process
whether they maintain contract relation or not. If this function is absent, the organization will be
vicariously liable.

Example: If the employees cause harms or losses because of their inattentiveness, the
organization will be vicariously liable for the wrong act of the workers.

Task 04
4.1 Applying the elements of the tort of negligence and defences in scenario

Law of tort negligence: The customer demand or employee demand is ensured by tort
negligence law (http://www.accaglobal.com, 2016). International law orients tort law. If any
employees or workers are engaged to harms, losses of the organization, damages and personal
injury, the tort negligence law will be applied to the organization. In order to protect or prevent
injury and personal losses tort negligence law is applied.

(a) The responsibility of hospital for their negligence: In this scenario it is seen that Mr.
Brown went hospital for his chest and breathe problems. But there was no available at that time
so the nurse phoned doctor for visit. The doctor neglects the problems and suggests giving pain

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killer as medicine. Mr. Brown died for this negligence of hospital doctor. Now the hospital is
responsible for the death of Mr. Brown as they it is occurred for their negligence (Study.com,
2016).

Protection of tort negligence: The procedure for protecting employees and other persons from
personal injury, losses and damages is called protection of tort negligence.

(b) When hospital isnt responsible for negligence: This scenario showed that the doctor didnt
give proper treatment and broke tort negligence law so the hospital is liable for his death. If the
doctor gave proper service, the patient might not be died. Then the hospital will not be
responsible for negligence.

4.2 Applying the elements of vicarious liability in given business situation

Case 8:

Here it is seen that executive of Chauffeur company sent a driver in the airport to receive a client
and bring him in the company. After receiving the client the driver started to drive toward the
company. The driver then wanted to drink wine and the car was crashed into a lamp post as the
driver was drunkard. The client suffered injury. As the driver works for Chauffeur Company the
company is responsible for the damage caused by the driver. According to business law the
company is liable to compensate the client for his injury.

Scenario 9

This case scenario showed clear form of vicarious liability. It must be declared that health and
safety responsibility will be delegated to other party in the contract. Mr. Jon works for
supermarket as a driver. One day he was carrying pallets into his truck and in the way the pallets
fell over and a college student became injured. The college student demanded for compensation
for his treatment cost. But the responsibility of health and safety was vested on other hand of the
contract. The importer of the product was responsible for this issue but the student demanded
compensation to the supermarket. It is example of vicarious liability so the supermarket didnt
take the responsibility for the injury and the other party of the contract is liable for this injury
(Investopedia, 2011).

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Conclusion
In order to make contract valid principles must be followed. There are basic principles that must
be followed in order to make contract agreement with the possible customers such as ability to
create legal relation, capability of the each parties, consideration and acceptance. Written
contract is based on document contracted between two parties (Forbes.com, 2016). The contract
between two parties must be documented at first as evidence. Written contract provides legality
of the contract as it maintains evidence for contract done. Face to face contract is not
documented; it is done by the consent and wish of the two parties. The both parties attend
physically and offer one party, the party then accept it. Condition is important term because it
basic principle for the contract agreement. If the condition is broken, the harmed party can deny
the contract agreement and can case harm (Forbes.com, 2016). If persons phone the other party
for contract it will not be contract because it is just an offer but the other can reject it. If the other
party rejects it, it will not be contract. The rupture of business contract by one party for given
critical situation is called breach of contract. Customers can protect problems by breach of
contract at the time business activities. In order to reduce the compensation of the service breach
of contract is acted. Vicarious liability is the situation in which one person is responsible for
business activities of other person to the third party. The act of employer will make the employee
liable for his activities.

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References

Courtney, W. (n.d.). Contractual indemnities.

Forbes.com. (2016). Forbes Welcome. [online] Available at:


http://www.forbes.com/forbes/welcome/ [Accessed 21 Jul. 2016].

Gibson, C. (1937). Surgeon's Liability for Nurse's Negligence. BMJ, 1(3967), pp.146-147.

Gores, J. (1996). Contract null & void. New York: Mysterious Press.

Hirobe, I. (2001). Japanese pride, American prejudice. Stanford, Calif.: Stanford University
Press.

http://www.accaglobal.com, A. (2016). The tort of negligence | F4 Corporate and Business Law


| ACCA Qualification | Students | ACCA Global. [online] Accaglobal.com. Available at:
http://www.accaglobal.com/sg/en/student/exam-support-resources/fundamentals-exams-
study-resources/f4/technical-articles/tort-negligence.html [Accessed 21 Jul. 2016].

Investopedia. (2011). Vicarious Liability Definition | Investopedia. [online] Available at:


http://www.investopedia.com/terms/v/vicarious-liability.asp [Accessed 21 Jul. 2016].

Krieken, P. (1999). Refugee law in context. The Hague: T.M.C. Asser Press.

Miner, J. (1982). Tort liability in educational institutions.

Quality control and management. (1971). Non-Destructive Testing, 4(2), p.89.

Rhine, S. (2015). Void contract. [United States]: CreateSpace Publishing.

Spindler, J. (n.d.). Vicarious Liability for Managerial Myopia. SSRN Electronic Journal.

Study.com. (2016). Negligence Torts: Definition and Cases - Video & Lesson Transcript |
Study.com. [online] Available at: http://study.com/academy/lesson/negligence-torts-
definition-and-cases.html [Accessed 21 Jul. 2016].

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Virgo, G. (n.d.). Personal and Proprietary Remedies for Breach of Confidence: Nearer to Breach
of Fiduciary Duty or Breach of Contract?. SSRN Electronic Journal.

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