Understanding the essential elements of a valid contract in a business context
P1. 1. Explain the significance of the essential elements required for the formation of a valid contract.
There are several important elements in order to form a valid contract.
1. Offer and Acceptance
In order to create a valid contract, there must be a 'lawful offer' by one party and 'lawful acceptance' of the same by the other party.
2. Purpose to Create Legal Relationship
In case there is no intention on the part of parties.
There is no contract. Agreements of societal and domestic nature do not consider legal relations. Case: Balfour vs Balfour (1919)
3. Legal Consideration
Consideration has been defined in different ways. According to Blackstone, "Consideration is recompense given by the party promising to another." In other words, as Pollock puts it, "Con...
sideration is the price for which the promise of another is bought." Consideration is also known as quid pro quo or something in return.
4. Capacity of Parties
The parties to an agreement must be competent to contract. If either party lacks the capacity to contract, the contract is invalid. The following individuals are incompetent to contract: a) miners; b) persons of unsound mind; c) persons disqualified by law they are subject to.
5. Lawful Object
The object of an agreement must be valid.
When one hires a house for usage as a gaming house, the object of the contract is to run a gaming house. The legal formalities of the contract are valid, even if it is unwritten, unless there is a requirement for written documentation by a legislative act. In India, written documentation is required for instances of sale.
mortgage rental and gift on immovable property. negotiable instrument etc
Agreements whose meaning is uncertain or incapable of being made certain are void.
8. Possibility of Performance
If the act is impossible in itself physically or legally, it cannot be enforced by law. For example, Mr A agrees with B to find treasure by magic.
Such understandings are not legally binding. P1.2. Discuss the impact of different types of contract. A contract is a mutual agreement between two parties that must include an offer, an acceptance, and a consideration. Moreover, there exist diverse types of contracts employed for varying objectives.
In different legal jurisdictions, the popularity of certain types of contracts may vary. Throughout the world, there are common types such as bilateral and one-sided implied, voidable, executory, and unwritten contracts. Among these, bilateral contracts are the most commonly created and they involve two parties who must either perform or abstain from an action. An example of a bilateral contract is a contract for the sale of goods.
The purchaser agrees to buy the merchandise and, in exchange, the seller agrees to deliver it. P1.3. Analyze terms of contract regarding their meaning and impact. The terms of a contract may be so unclear and vague that there is no actual agreement at all (Scammell v Quston (1941)).
The presence of an obscure term will not necessarily result in a fatal outcome in every case. The contract itself may specify how any discrepancies regarding the implementation of the agreement can be resolved (Foley V Classique Ltd (1934)). A court can determine the terms of a contract by referring to a trade usage or a series of past agreements between the parties (Hillas & Co Ltd V Arcos Ltd (1932)). A
meaningless term that is secondary to the main agreement can be disregarded while the rest of the contract is enforced.
(Nicolene Ltd V Simmonds (1953). Express footings are the specific details of a contract that have been agreed upon by the parties. (Harling V Eddy (1951).
In a standard contract, there are various terms that can affect the contract. These terms include freedom clauses, liquidated damages clauses, and price fluctuation clauses. One example is the liquidated damages clause, which states the specific amount of damages that must be paid if there is a breach of contract.
The concept of cancellation charges demonstrates a liquidated damages clause. Implied terms refer to additional terms that are understood in an agreement. These can be established through usage (Hutton v Warren, 1836) or common law (The Moorcock, 1889).
By legislative act, the sale or supply of goods Act 1979 is the most common means of regulating contracts. To be able to handle various business scenarios, it is important to understand and apply the elements of a contract. In business scenario 1, during an auction sale, the auctioneer's call for bids serves as an invitation to handle.
The commands are offers. The auctioneer selects the highest command and credence is completed by the autumn of the cock. (Payne v Cave ( 1789)). Advertising an extroverted auction sale does not amount to an offer to keep it.
According to the case of Harris v Nickerson (1873), an offer can be revoked at any time before the acceptance, but it will only be effective when the offeree becomes aware of it. Furthermore, it is not required for the offeror to personally inform the offeree about the revocation. This
was emphasized in the case of Dikinson v Dodds (1876).
The case study reveals that the offerer was Montblanc auction and Harry. Miss Kaur, the oferee, expressed her intention to make an offer for a fountain pen at Montblanc auction. She was also willing to travel to Manchester for it. Additionally, she expressed her intention to purchase the fountain pen from Harry, although she was not yet fully committed to the decision.
Therefore, even if the offer was stated to be free until after lunch break, it can be cancelled before the time limit expires because Miss Kaur did not agree with the offer. A promise to keep an offer open will be binding if it can be enforced as a separate contract. A legally binding option will be formed if the oferee gives something in return for the offeror's promise to keep the offer open.
In the Mountford v Scott (1975) case, Miss Kaur could have made a deposit to ensure she could still possess the pen fountain. There was mutual consideration between Harry and Miss Kaur, with each side promising something to the other party. However, this was not the case in the Mountblanc Auction.
Despite the fact that the auction for the pen collection was supposed to be open, the parties did not enter into a consideration. The law does not concern itself with purely domestic or social agreements. The parties must have intended their agreement to have legal effects.
The Mountblanc auction originally planned to include a fountain pen for bidding. However, this particular item was unexpectedly canceled. Meanwhile, Harry had intended to wait for Miss Kaur after lunch. Unfortunately, since there was no
written contract between them, this plan did not come to fruition.
Charles decided to sell his fountain pen for a higher price of 1000, breaking the informal agreement he had with Miss Kaur. In terms of the contract, Miss Kaur cannot take any legal action against the auctioneer for her travel expenses to the auction, nor can she take any action against Harry for not selling the pen to her. This scenario demonstrates the agreement between Charles.
There is a proprietor of a house and Murphy, who is supposed to do redevelopment in the house for a set sum of money (50.000) on a specific day of the month. Second.
Consideration is demonstrated in the case study, where both parties agreed to exchange something of value. Charles agreed to pay ?50,000 for the redevelopment of the house, and Murphy initially agreed to this amount.
The text highlights a situation where Murphy initially asks for a salary increase to complete a task on time. However, Charles agrees at first but later reneges on the offer, only abiding by the legal terms of the contract. Consequently, Murphy is unable to take any legal action against Charles.
Both parties in this instance were able to fulfill their commitments. Charles paid for the service and Murphy was capable of providing the service.
Genuine consent appeared between parties when the initial contract was formed. This provided Murphy with the opportunity to request an increase in salary, but not at a later date.
The contract includes a provision affirming its legality and compliance with public policy. P2. 2. Discuss the case law concerning clauses in various contracts.
A standard form contract, commonly known as an adhesion or boilerplate contract,
is a mutual agreement between two parties where one party sets forth the terms and conditions of the contract.
Standard form contracts involve a power imbalance between the parties involved, with one party having more bargaining power and the other having limited ability to negotiate. As a result, the latter party is left with two options: accepting the terms as they are or rejecting them. Examples of standard form contracts include insurance policies, where only the insurance company determines the terms and wording of the agreement, and contracts with government agencies that must include specific clauses. MetLife insurance company serves as a prime example of this situation.
The contract's terms are stated in a written document, which ensures that the parties involved understand what they have agreed to. This helps minimize the likelihood of later disagreements. For example, MetLife may offer a life insurance contract with a minimum amount of ?7, with the client being aware of the standard terms and conditions outlined in the contract. Negotiating individual terms with each customer would be very time-consuming for the company, as they are providing a standardized service to a large number of people. This is why they use a standard form.
The written document stating the terms of the contract ensures understanding between parties and reduces chances of future disputes. For instance, MetLife offers a life insurance contract starting at ?7 while clients acknowledge and accept the standard terms mentioned in it. Negotiating unique agreements with each customer would be too time-consuming for MetLife due to their provision of standardized services to numerous individuals. Hence, employing a uniform form is necessary for efficiency purposes.
Business-to-consumer contracts are crucial
for effectively distributing goods and services to the general public. They offer a chance to lower transaction costs by eliminating the requirement of negotiating contract specifics for every sale or service request. However, these contracts can also potentially deceive or exploit consumers due to the unequal bargaining power between the involved parties.
For example, when an ordinary consumer enters into a standard signifier contract with a sales representative of a transnational corporation, they are usually unable to negotiate the terms. For instance, the MetLife representative often lacks the authority to modify the terms, even if both parties were capable of comprehending all the details in the fine print. These contracts are typically drafted by corporate attorneys who are located far away from where the underlying consumer and vendor transaction occurs.
The risk of accepting unfair or unethical terms is highest when deceptive contract creators offer consumers appealing conditions based on visible factors, such as price and quality. However, they then include hidden clauses in fine print that favor the seller and are less likely to be noticed or comprehended by consumers.
MetLife offers accident protection to its clients, although coverage is limited to specific types of accidents. In some cases, clients may not be aware of these coverage details until after a transaction has taken place.
Some marketers exploit the fact that consumers may not read or make decisions based on unfair terms (Standard Form of Contracts, 2014).
P2.3. The impact of different terms in contracts can be assessed. In this business scenario, the specified terms in the contract are the payment for the research assistant (25000) and the working hours, which are defined as "whatever hours are necessary to
complete the assignments given to her." Section 1 of the Employment Rights Act 1996 actually mandates employers to disclose the number of hours worked by employees.
The contract included specific provisions to handle disciplinary matters. For instance, if Miss Y chose to wear pants instead of a dress on June 2nd, she would receive multiple warnings before being suspended or dismissed. These terms were added to the contract in response to her behavior.
Miss Y has the option to utilize the grievance process to address any dissatisfaction with any aspect of her employment at Enchantress. If she is dismissed for asserting her rights, it is automatically considered unjust and there are no service requirements as stipulated in Section 104 of the ERA 1996.
; A ; Allen. V. (2011). According to the Employment Act 2002, Miss Y has the right to claim compensation for unjust dismissal. Additionally, she can also make a claim under the Working Time Regulation (SI 1998/1833).
Where is it stipulated that the employee has an upper limit of 48 hours of work per week, a daily rest period of at least 11 consecutive hours in a 24-hour period, and a work rest break of 20 minutes for those working more than 6 hours daily. Miss Y. could also claim compensation and rights under the Health and Safety at Work Act 1974 if the court determines that she requires medical treatment for depression resulting from her work environment. Understand the rules of liability in negligence in business activities.
P3. 1. Compare liability in tort with contractual liability
Tort liability arises from a civil wrong, for example, individuals who conduct business as sole owners or in a partnership are
responsible for the wrongs committed by themselves and for the wrongs committed by their agent and/or partners in the course of business.
Choosing the right entity, such as a corporation or limited liability company, can help avoid liability for the actions of business associates. This decision is believed to have potential benefits in terms of limiting liability. Regardless of the type of business organization chosen, individuals are responsible for any wrongdoing they commit. For instance, if they negligently operate a company vehicle and cause an accident, whether operating as a corporation or not, the other party would be held liable.
The idea of contractual liability is about safeguarding personal assets for a corporation or limited liability company if the operator acquires substantial contractual liabilities during business operations (Business Law, 2014).
To illustrate, a building contractor signs a contract to construct an office building for a business client but fails to meet the agreed-upon deadline. As a result, the business client holds the contractor responsible for significant damages, including lost profits during the time when the client cannot occupy the new building. This is especially true in the construction industry, where contractual liability may exceed the contracted price. It is important to note that this liability applies as long as one does not personally guarantee the contract of the business entity.
When a person operates a corporation or LLC, their personal assets are protected. Any assets owned outside of the corporation or LLC are also protected, as the corporate operator is not personally liable for the corporate debts, contracts, or contractual liabilities. This is often the case.
Despite this, individuals dealing with corporations insist on the personal guarantee of the corporation's
principals for the contracts. (Business Law. 2014).
P3. 2. The nature of liability in carelessness can be explained as follows: it arises when the claimant is able to prove that the suspect had a legal duty of care towards them, that the suspect breached this duty, and that the claimant suffered harm or loss as a result of this breach. (Riches.
S. & A ; Allen. V. 2011:348). A manufacturer of goods may be liable to a consumer for any loss and harm resulting from their faulty merchandise, under the civil wrong of negligence.
A consumer expects that the maker has a duty of care towards him. This duty of care was established in the case of Donoghue v Stevenson (1932) by the House of Lords, stating that a maker must exercise care towards anyone who may come into contact with their products. The breach of this duty occurs if certain factors, such as foreseeability of harm or injury, are present.
The text discusses various factors that need to be considered when determining liability for harm or injury. These factors include the seriousness of any harm, the cost and ease of taking precautions, and the societal demand for the activity. The case of Balton v Stone (1951) is cited as an example. In order to successfully make a claim, the claimant must prove that they suffered harm. This harm could be caused by a negligent misstatement, as seen in the case of Hedley Byrne & A ; Co Ltd V Heller and Partners Ltd (1963), or it could be a result of foreseeable physical harm or damage to property, as demonstrated in the case of Junior Brooks Ltd v
Veitcho Co Ltd (1982).
P3. 3. Explain how a concern can be vicariously apt
An employer may be held vicariously liable for negligent or negligent acts or omissions by their employees in the course of employment, even if the employer did not authorize or was unaware of the acts in question. To successfully defend against such liability, an employer must prove either that the employee was not negligent or that the employee was acting independently and unrelated to the employer's business. In certain circumstances, employers may also be liable for the violations committed by their independent contractors or workers employed by a third party.
For example, in situations where the employer authorizes or has an overall duty that cannot be delegated, an employee working for a catering agency may engage in wrongful actions while assigned to a client.
The bureau may be responsible for various tasks. The key factor in determining which employer has the responsibility for a sub-contractor or bureau worker is "control". The employer who gives directions and instructions for the work to be performed is usually the one held responsible for any wrongdoings committed during that work. If multiple employers can be identified as having control over the employee's work, the rule of double vicarious liability may apply. This rule was established by Lord Justice May in the recent case of Via Systems (Tyneside) Limited V Thermal Transfer (Northern) Limited & Others. The case involved compensation for a flood at a mill caused by a sub-contractor's sub-contractor.
In his opinion, Lord Justice May ruled that multiple employers could be held liable for a claim and that any awarded damages should be divided equally unless it can be
proven that one party had a greater duty than the others. This bold decision challenged the established rule in Laugher V Pointer in 1826, which stated that only one employer could be held vicariously liable. (Vicarious Liability. 2014)
Being able to apply rules of liability in cases of negligence in various business situations.
P4. 1. Applying the components of the tort of negligence and defenses in diverse business scenarios.
The tort of negligence deals with specific types of careless actions that result in harm or loss to others. As elucidated in task 3. 2.
There are three factors to consider in this scenario. First is the responsibility of attention. If this responsibility is breached and the other party suffers any damages. In Business Scenario 5, it is presented that a UK ship was loading oil in Sydney seaport, spilling oil into the water. Due to a spark, it ignited a wharf that was 200 paces away.
The text demonstrates that safety measures were implemented, but it does not provide details on how these measures were carried out. One could argue, therefore, that the UK ship failed to fulfill its duty of care by not taking sufficient precautions to prevent harm to its neighbors. The suspect is considered to have breached their duty of care since the likelihood of an accident like this could have been anticipated.
On the other hand, it can be argued that the suspect can claim "res ipsa loquitur," which means that the facts speak for themselves. It can be proven to the tribunal that the UK ship took adequate safety precautions to avoid any accident. As a result, the suspect would not be deemed negligent.
The necessary conditions
for RESs ipsa to come into play are as follows: the event causing the accident must have been under the defendant's control, which can be argued in this case. Additionally, the accident must be of a nature that would not have occurred if proper care had been taken by the defendant, and it can also be argued that the ship had taken enough safety precautions. The harm resulting from this accident was damage to the claimant's pier. Therefore, the claimant must prove in court that this damage was caused as a result of the actions of the UK ship in the seaport.
In Business Scenario 6, Shell was at fault for not providing protective goggles to Bell while he was working, despite this not being a regular practice. However, employee Bell was also negligent because he should have taken extra precautions to protect himself, especially considering he had lost one eye.
Despite Bell's implied responsibility for vehicle care, Shell failed to exercise sufficient caution in their actions. In accordance with the Consumer Protection Act 1987, considering Bell's work with materials such as metals, appropriate protection should have been provided by the company.
Due to the employee's carelessness towards him, the individual can claim compensation. This is because he sustained an injury while working at Shell Company. As per P4.2, the concept of vicarious liability states that an employer is responsible for any harm caused by their employee while they are carrying out their work.
The employer, although not at fault, is apt. Despite appearing unjust for the employer, this regulation is grounded in law and policy. In the Business Scenario 7 and 8, the employer and employee are considered
"associated parties" within the company.
Alf and Amos Bridge breached their contractual responsibilities while working. Because of this, the tribunal automatically sees the employer as being guilty.
- Business Law. Available at: hypertext transfer protocol: //pullman-wa. com/law/businessLaw. htm. [ Accessed on 12. 03. 2014 ]
- Riches. S.
& A ; Allen. V. (2011). Keenan and Riches’ BUSINESS LAW.
10th (erectile dysfunction). Pearson: London
- Vicarious Liability. Available at: hypertext transfer protocol: //www. uktrainingworldwide. com/BB/VicariousLiability. htm ; [ Accessed on 13.
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