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 Eddie’s letter could reach Doris, Frank visits

the store and offers £400 for the vase which Doris disagrees to but agrees to accept Frank’s 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 Doris’s 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 How does it come to be part of the contract?

Express Terms 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

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

Implied Terms 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 What can I do if it’s broken? I know this because of the

following case:

Condition A condition is one of the root

causes for the basis of a

Poussard v Spiers (1876) 1

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contract and any case of

breach or in case it’s broken,

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).

QBD 410

Warranty Warranties are additional

terms of a contract which are

not the basis of its existence.

Any breach of warranty or any

instance if it’s broken, the

party not at fault can claim for

damages but has no right to

end the contract (O'Sullivan

and Hilliard, 2006).

Bettini v Gye 1876 QBD 183

Innominate term Innominate term looks at the

degree of the breach. In case

the innocent party has lost the

total of the benefits from the

Hong Kong Fir Shipping v

Kawasaki Kisen Kaisha

[1962] 2 QB 26

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contract, then it may deem an

end to the contract and claim

for damages. If there is no

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 Mix-

o-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 one’s duty of

care. Any wrong or mishap in one’s 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

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care 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 Jerry’s

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 Asif’s 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.

Stone, R. (2009). Contract law, 2009-2010. Abingdon, Oxon [UK]: Routledge-Cavendish.

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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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