Assignment on

“Aspects of Contract and Negligence for Business”

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Executive summary

This report is about contract and different kind of contractual agreement that creates
contractual relationships between two parties. Several business cases have been used here in
order to meet the learning objectives. Terms and conditions related to contracts and its issues
also discussed here with the help of case law and different examples. Liability incurs and its
different course of actions were also discussed here for better understanding.

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Contents
Executive summary..........................................................................................................................2

Introduction.....................................................................................................................................5

TASK 1:.............................................................................................................................................6

a. Discuss and explain the importance of the four main elements that are required for the
formation of a valid contract in the UK. Include an explanation of what is meant by ‘an
invitation to treat’........................................................................................................................6

b. Describe the various types of contract listed below and also discuss their impact:...............7

c. Explain why terms of a contract are categorized into ‘conditions and warranties’ and
discuss the possible remedies available if a term is breached. Use case law to illustrate your
answer..........................................................................................................................................8

TASK 2:.............................................................................................................................................9

a) Discuss whether a contract exists between Palmyra Ltd and Fried Tucker Ltd......................9

b) Exclusion or exemption clauses are always valid regardless of when introduced into a
contract. You must discuss this statement using case law to explain your answer..................10

c. Explain the difference between ‘implied’ and ‘express’ terms of a contract, and also discuss
how the courts include ‘implied terms’ into any contract........................................................11

TASK 3:...........................................................................................................................................12

a. Explain the difference between how an individual incurs liability in contract law and how
an individual incurs liability under the law of negligence.........................................................12

b. Explain the importance of Donoghue v Stevenson 1938 in the development of the concept
of ‘duty of care’ and the ‘neighbor principle’ in the Law of Negligence...................................13

c. Explain what is meant by ‘vicarious liability’ and give examples of when an employer would
be held responsible for the actions of an employee.................................................................14

TASK 4:...........................................................................................................................................15

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 a. Would Mr. Smith be successful if he sued the taxi company for nervous shock?0..............15

b. Provide your opinion as to whether the usual standard of care is required from Paul or
not?............................................................................................................................................15

c. Can Ayesha Williams be held vicariously liable for the action of Alasdair?...........................15

d. Can Peter be sued for negligence and can Eastham Farms be held vicariously liable in this
situation?...................................................................................................................................16

Conclusion......................................................................................................................................16

Bibliography & References............................................................................................................17

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Introduction

Contract means, when two or more persons comes voluntarily in action, so that an agreement
can be made and it will benefits both parties for their consideration. In UK contract act 1999 is
effective and as par this contract should be in written form, so that validity of the contract can
be ensured and it will contain four basic elements because of that, such as offer, acceptance,
legal intention and consideration. This report will be about discussing several terms and related
issues in order to get done the contract into execution.

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TASK 1:

a. Discuss and explain the importance of the four main elements that are required for
the formation of a valid contract in the UK. Include an explanation of what is meant by
‘an invitation to treat’.

As par contract act in UK, offer is important to be made at first in any agreement so that both
parties can stay clear about their dealings and also they get chances to negotiate about their
need and demand.

Offer

Acceptance
Intention of legal
consequences
Consideration

Figure 1: Essential element of contract.

Acceptance in the contract, let the person know (who offered) about the offered got
acceptance, and he can start work for it right after. These all agreement related activities
should have in written form, so that they can keep track of all these in future and also legal
consideration can be made. For legal base another element is important and that is
consideration, which will express the necessity of contract been taken place and by this what
will be gotten by two parties from this execution of the contract.

Invitation to treat is a term that used after the offer has been made to the party. This gives the
buyers to have the opportunity to negotiate and helping him or her to take the offer for future

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contract making. Here two parties will be having a discussion about changing different terms
and condition in favor of making the deal.

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b. Describe the various types of contract listed below and also discuss their impact:

a. Verbal contract: Usually verbal contract doesn’t mean to be in written form and both parties
mutually agreed in this kind of contract. Both parties should be agreed on terms and conditions
related to the contract, but the contract might not usually get legal consideration as there is no
legal documents that could help claimant to win against defendant, if there is any breach in the
contract. For example, X had seen a mobile phone selling in ebay and he made contact with the
seller. After their price got matched they both met and X purchased that phone directly from
the seller.

b. Written Contract: The legal form of the contract is usually should be in written form and here
both parties can be well aware about terms and conditions of the contract and as a result,
negotiation can be always there for both parties to be agreed on. If any terms and condition get
breached identification can be very easy here. For example, Mr. Jonathan has seen a pre-book
order option for Samsung mobile phone. And for booking purpose he had registered through
postal mail. Samsung assured that his registration had made successfully.

c. On-line Contract: Using internet connection, or even intranet connection this kind of
contracts are taking place now days. Here, both parties gets to use everything in written form
and it doesn’t matter whether they are seeing each other or not. Online contract doesn’t have
boundary issue and this is one of common contract that’s been using worldwide. For example,
Mr. Keith have visited an online bidding site and seen an original paintings been selling there.
After seeing that he made a bid and among other bidders he got the bid finally and the original
painting became his own.

d. Inferred Contract: Sometimes any of contract can comes into agreement automatically
whether both parties might not even had verbal or written agreement for it. This kind of
contract usually assumed to be drawn under different circumstances. For example, Mrs.
Rahman purchased a new home appliances for her home and its expected that the machine will
usually come with a manual for its user always.

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c. Explain why terms of a contract are categorized into ‘conditions and warranties’ and
discuss the possible remedies available if a term is breached. Use case law to illustrate
your answer.

Conditions in the contract is mainly an important part, that makes the contract valid in case of
law and this is also important for both parties to ensure the maintenance properly. Contract
can be into action while conditions in the terms can stay not breached. This is one of the major
part of the contract and both parties should be well aware about this part. Conditions cannot
be breached by any of the party and if it’s been breached then contract should be broken by
the court actions. The possible remedies for this part of the contract can be only possible if the
terms also includes the remedial related terms into the contract. Also for this damages needs to
be paid along with fine. On the other hand, warranties are not that much basic and major but
minor but important at the same time. If warranties in the contract got breached, then contract
cannot be called off but a certain amount of negotiated damages can help to set the contract
back again. This is the reason conditions and warranties are categorized differently.

The case Schuler v Wickman Tools in 1974 can give better understanding in conditions &
warranty case. Schuler manufactures tools and Wickman were appointed by them to distribute
their product in the market. Wickman tools were supposed to send a salesman to the suggested
company for selling the products to them and it was in the conditions of the contract that 1400
in total visits are mandatory. Schuler had later terminated the contract claiming that the
salesman from Wickman were failed in making the total visit and it was as breaching the
contract. The House of Lords has described the situation as warranties being breached but this
terms were termed as conditions in the contract paper.

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TASK 2:

a) Discuss whether a contract exists between Palmyra Ltd and Fried Tucker Ltd.

According to contract act and its essential elements study the contract between Palmyra
limited and Fried Tucker limited exists. To be a valid contract, four basic and essential elements
are needed, such as Offer, acceptance, legal intention and consideration. Here, this business
scenario regarding a business agreement of Palmyra limited and Fried Tucker limited has all
four elements.

Offer was made by Fried Tucker at first for the purpose of selling the fryers, it was containing
price of the fryers. It was in a written form and that gives the legal intention at most. The offer
was also accepted by Palmyra limited through written mail which also has valid legal base. At
the same time, the mail has received by the Fried Tucker and they also let Palmyra know about
the order processing. These all mail and written document gives formal and legal looks in the
contract. And the consideration here would be for Fried tucker is having GBP 200 for each
twenty fryers. The consideration for Palmyra would be having GBP 200 each worth fryers for
business purpose.

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b) Exclusion or exemption clauses are always valid regardless of when introduced into
a contract. You must discuss this statement using case law to explain your answer.

In contract usually both parties have liabilities that needs to be managed by both. This is usually
called contractual liability. Contractual liability can be minimized, cancelled or avoided by
adding exclusion or exemption clauses. This clauses always need to be followed in certain
manner and as par contract act or law. Exclusion or exemption clauses in contract can be
included in the contract terms and conditions in different ways, such as listing up types of loss
that seller won’t be liable for, even setting up the amount of the damages caused by any of the
party.

The exemptions clauses can be introduced in the contract only if there is agreement between
contracts related parties and there will be seal and sign on those clauses as a proof of clauses
being accepted by both parties. Introduction of the clauses into the contract is also important,
where in a last minute clauses cannot be introduced in the contract. If it happens the clauses
will be invalid as par contract law. In the exclusion clause, negligence related clauses can be
included where defendant can be saved for any kind of damages claim that have caused for
his/her negligence. As par case law Glynn v Margeston held in 1893, the contract were having a
clause that the certain ship can stop at any of the seaport. The reason behind this clause is to
allow ships to free from any kind of hassle during the journey. However, the court the decided
that this kind of contract clause should be mentioned clearly and serve the purpose for both
parties to understand easily. Another case law in 1983 can be referred which is known as case
of George Mitchell v Finney Lock Seeds, where George claimed that the seeds supplied by seeds
company were not in good conditions and due to this claimant suffered financial loss. The court
has dismissed the exclusion clause here, mentioning this the conditions here cannot be working
for this kind of seed business and the seed company should have ensure the warrantee of the
seeds instead of placing no liability to bear. The time in this contract were not enforceable for
this kind of contract.

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c. Explain the difference between ‘implied’ and ‘express’ terms of a contract, and also
discuss how the courts include ‘implied terms’ into any contract.

Terms can be two types, such as implied and express terms, and here both are different in its
nature and action. Implied terms can be not written into the contractual terms and contract but
both parties are aware about these terms and conditions. On the other hand express terms
should be in written form and both parties should be known about express contract and act
accordingly.

An example has given here to discuss the ways implied terms used into a contract by courts.
Mr. X starts a sales contract with Mr. Y about selling milk every days at Y’s doorstep. Y assumed
that the Milk will be delivered in good package in healthy conditions. So it wasn’t in the sales
contract. But after 2/3 days Y started seeing the milk delivery is in bad packaging conditions.
According to sales of goods act 1974, a seller might be cautious about this kind of implied
conditions in sales contract. Court can include the implied terms here as par tort law or sales of
goods act for both parties.

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TASK 3:

a. Explain the difference between how an individual incurs liability in contract law and
how an individual incurs liability under the law of negligence.

Individual may face liability in contract if it wasn’t intended to. Under tort law any party cannot
be involved in any activity that can go against civil offense as par contract act. Because of the
act of any party any other party or third party can become liable and this part of the civil law
should be known to both parties so that contract might not get affected because of that. Court
can take monetary loss from the defendant party for this tort law. For an example, A & B comes
into a contractual agreement of selling lemonade in summer time at the neighborhood. But
instead of procuring the lemon for the drinks, A has added artificial flavor to it. A customer
made complain about it and court has got the proof of selling product by mentioning wrong
information to the customer and as par sales good act 1979 this has become an offence in tort
law.

On the other hand, contractual liability in the contract arises after the law of negligence
occurred due to this. In this contract law, parties need to be clear about their liability and due
to that, terms and conditions cannot be broken. Contractual liabilities can be broken because of
the negligence of any of the party and this liability only should be limited within the parties
related to the contract. For an example, X and Y were doing a business and as par terms and
conditions in the contract, it was Y’s responsibility to look after accounts of the business. But he
wasn’t so much experienced about this and due to his negligence at work bad accountancy
happened. For this they had to face audit related problem. Here contractual liability has been
occurred to the individual due to his negligence.

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b. Explain the importance of Donoghue v Stevenson 1938 in the development of the
concept of ‘duty of care’ and the ‘neighbor principle’ in the Law of Negligence.

Case law Donoghue v Stevenson held in 1938, has importance for development of the concept
Duty of care and the neighbor principle. In the law of negligence, this is the duty of parties into
the contract to ensure the safety of the party as a neighbor so that their right cannot be in
danger as par the contract.

Ms. Donoghue was having a beer in a shop and suddenly discovered a snail into the beer can
and that totally freaked her out. Due to this surprise Donoghue become sick and made a
complaint against Stevenson Beer Company. The court then declared that, it’s the duty of the
manufacturer to ensure the liability of the goods although it’s been sold to the customer
already. Proper steps and precautions should be taken by manufacturer so that it will not put
the health of the customers in danger. Neighbor principle here means that, as par social norms
neighbor need to take care of other neighbor and their actions cannot put others in danger. The
idea of this application were developed after this case occurred.

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c. Explain what is meant by ‘vicarious liability’ and give examples of when an
employer would be held responsible for the actions of an employee.

Vicarious liability is a term which refers getting liability for the course of actions of other party.
This kind of liability can be seen in contract. In general terms vicarious liability means when one
party make mistakes or be negligent in their liability and due to that other responsible party
need to take the responsibility. For example, Mr. John is an employee of a men saloon named
“Fashion”. A customer suddenly complains against John that he didn’t give him proper
shampoo and conditioner that he asked for. And due to that he started losing his hair. After the
investigation has done it had proved that, the customer was right and the shampoo and
conditioner weren’t right for him. Due to this mistake of Mr. John, the customer make
complaint against the saloon. Here the Saloon is being vicariously liable because, either the
employee either was careless in his work or weren’t aware enough to provide service to the
customer.

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TASK 4:

a. Would Mr. Smith be successful if he sued the taxi company for nervous shock?0

Mr. Smith here will not be successful if he sue the taxi company for the accident happened. The
reason behind his nervous shock was just for his own liability. The taxi company didn’t tell him
to work for ten hours for the accident happened. Rather he did it from his civil responsibilities.
The best taxi company did here was about appreciating his support the place were accident had
taken place. Here it cannot be said that Taxi Company and Mr. Smith had any contract before
and not the tort law had been broken due to his nervous shock.

b. Provide your opinion as to whether the usual standard of care is required from Paul
or not?

As par the case or scenario, Paul had to have the maximum standard of care for flying the
helicopter. The accident occurred due to his carelessness and less learning about helicopter
flying. That is why he makes the life of a passenger in danger and the helicopter also crashed in
that accident. As a pilot, it was his responsibility to ensure the safety of the passenger and
helicopter and being cautious about flying the helicopter in right way. So here, in this case,
Paul’s negligence can be seen into action and this make him liable for his action.

c. Can Ayesha Williams be held vicariously liable for the action of Alasdair?

Vicariously liability usually happens between employers and employee relationship. Here in this
case, for the fault of Alasdair, Ayesha Williams cannot be vicariously gets liable. Rather the
reason behind the accident is only Mr. Alasdair weren’t being cautious about the driving of the
car. Alasdair was just a friend of Ayesha and obviously there is no employee and employers
relationship can be called here, this is all personal relationship and because of that Ayesha
Williams cannot be called as vicariously liable here.

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d. Can Peter be sued for negligence and can Eastham Farms be held vicariously liable
in this situation?

Due to the fault made my Peter, the Eastham Farms can be called as vicariously liable. Eastham
farms did not allow Peter to use the help from other people but despite of that He had taken
help from a minor child which is against the tort law here. By this kind of activity, Peter had
breached two different contract, such as employment contract and tort law as civil offense. But
since Eastham farms is his employer court will only make the farm liable for this issue. The
activity were against the law and by doing that peter made the farms vicariously liable as par
contract law.

Conclusion

In this report, it can be easily seen that, contract is not just an agreement between two parties,
rather it’s more than that. Here, in this report, two parties need to be cautious about fulfilling
different laws and acts to keep the laws and terms working towards act of contract. Both
parties also need to be aware about different case law and their situation to apply that in
different case of the contract for future.

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Bibliography & References

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