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Aspects of Contract and Negligence
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Contents
Introduction:....................................................................................................................................2

LO 1: Understanding the essential elements of a valid contract in a business context...................2

LO 1.1: explain the importance of the essential elements required for the formation of a valid
contract........................................................................................................................................2

LO 1.2: Discuss the impact of different types of contract...........................................................4

LO 1.3 Analyse terms in contracts with reference to their meaning and effect..........................6

LO 2. Be able to apply the elements of a contract in business situations........................................7

LO 2.1 - Apply the elements of contract in a given business scenarios......................................7

LO 2.2 - Apply the law on terms in different contracts...............................................................7

LO 2.3: Evaluate the effect of different terms in given contracts...............................................8

LO3 Understand principles of liability in negligence in business activities...................................9

LO 3.1: contrast liability in tort with contractual liability...........................................................9

LO 3.2: Explanation of the nature of the liability in negligence.................................................9

LO 3.3: Explanation of how business can be liable for business action....................................11

LO 4.1: Apply the elements of the tort of negligence and defences in different business........11

LO 4.2: apply the elements of vicarious liability in given business situations..........................12

Conclusion:....................................................................................................................................12

Reference:......................................................................................................................................13
 Aspects of Contract and Negligence for Business

Introduction: In the civil society all the people are regulated by the law and the legitimate
system of the country. Legitimate authority always try to ensure giving proper right to all the
people and not to be cheated. In the business world every business person have their own ethics.
Everyone has to follow the rules and regulations of the business law and even in coming in
contract with other parties. In the business world written paper is the trust worthy and for this
reason they like come in contract to avoid disturbance from others. In every stage of the business
contract is considered most important for every business. All the agreements those maintain the
criterion of the law are considered as contract. For this reason obligations of law are the most for
the assembly of contract. In this assignment I will try to clarify all the aspects of the contract
mainly on the business perspective with this I will also provide real example to match those
aspects with real life.

LO 1: Understanding the essential elements of a valid contract in a business

context

LO 1.1: explain the importance of the essential elements required for the
formation of a valid contract
In our practical life we have to come in contract with other people in most of the time on
different perspective. An agreement turns into a contract when it follows the rules and
obligations of law or we can say that, an agreement enforceable by law is a contract (Austin,
1975). So we can say that all the contracts are agreements but all agreements are contracts on the
basis of the basic elements of the contracts which are discussed below:

Offer and Acceptance: it is the basic element of every contract. To come in a contract any
individual has to give considerable offer to another party or parties. When another party come to
know this thing, he will consider the offer and then he can accept the offer then it will turns into
a contract. In is the primary step of any contract.

On this perspective we can discuss an example, Harry has a land to be cultivation but he does not
have instrument for cultivation. Potter has power tiller on his own. Harry give offer to Potter to
cultivate his land by taking $200. When Potter come to this thing he accepts Harry’s offer then
they can go for making contract for cultivating the land.

Intention to make legal relationship: In our life we have many relationship with the other
persons of the society. The main objective to come in a contract is to build a legal relationship
with the other party. Without creation of legal relationship contract cannot be enforceable by law
(Sosowsky, 1978).

For example Ron start to go his father’s business as a son. Here no legal relationship is not
created. But when he and his father make the contract to start a new business then there will be a
legal relationship.

Free consent: Consent means the parties must have agreed upon the same thing in same sense
(Robinson and Rousseau, 1994). In making contract if any party influence other party or
misinterpret the object of contract then it will not be a valid contract.

For example Ron went to buy a car from a nearby shop, he ask price of different car at the end of
all he decided not to buy any of those but employee of the shop forced him to buy any of those.
Though he had to come in a buying contract but this is not a contract in the view of law.

Consideration: When the legal consideration is absent from a contract then it will turns into a
void contract. Any type of unlawful consideration or fraud in the contract is the obstacle of
contract.

Mr. Rick went to buy a brand new car from the nearby shop. After buying the car he has
identified the car was a reconditioned one. Here he is cheated by seller with fraud. So the
contract between them will be considered a void contract.

Certainty: Certainty of the object of the contract is very important to come in a contract. All
objective and obligations should be clear so there should not be any chance of confusion (Henn
& Alexander, 1970).

For example Adam makes contract with Jain to repair her restaurant but in the contract his
completing time is not included. This may be a source of problem for both of them in future.
Legal purpose and public policy: With the purpose of unethical task that will harm the people
of the society cannot be considered a valid contract. The objective of the contract must legal on
the basis policy of the country. These type of contracts are considered illegal in the view of law
though all other elements are in these contracts.

On this perspective we can give example that the contract of prostitution, contract of illegal drug
of Aram’s, contract for storing product for price hike, sorting product that can harm people.

On this perspective we can also give another example, Rock make a contract with David that he
will give $1000 to David if England win ICC world cup otherwise David will give him $500.
Here the contract will be considered a void contract as this is for gambling and it is unlawful.

Capacities of parties: To come in the contract both of the party has to competent to perform the
obligations of the contract (Goldsmith, 2001). Mainly the young stars less than 18 years old,
physically disable persons to perform the task of contract, people with mental problem are not
able to enter contract with others on the basis of the law.

Kevin try employ a new driver for his car. On this perspective he make a contract with John to
drive his car for the next five months. John has some sort of mental problem or he become
unbalanced for certain time. Though they come in a contract, this will not considered a valid
contract.

LO 1.2: Discuss the impact of different types of contract.

On the basis of the creation, execution, social recognition and enforceability of law there are
many types of contract in the business world. On the basis of the characteristic a single contract
can be in different type of contract (Matheson, 2006). Though all these contracts are different
from one another, all these are important in different perspective. Here all types of contracts and
their impacts are tried to be discussed in brief:

Express contract: In the express contract all aspects are expressed in written or oral way. For
this reason all the parties related to the contract can clearly understand their part of the contract.
This type of contract is considered more reliable than the implied contract as it is opened and fair
(Manesh, 2013).
Implied contract: In the implied contract the task of the parties have to performed by the
conduct or behavior of them rather than written. They have to realize their part on the basis of
the social affiliation. This type of contract create vague among the parties of the contract and
they may hesitate to perform their task as it is not clear to them.

Executed contract: In the business most of the contracts are executed contract as the both
parties of the contract perform their obligations immediately. For example, cash sales of goods.
Executory contract: In the executory contract the parties involved in the contract perform the
obligations in the later period.

Unilateral contract: most of the contract in the view of law are bilateral contract. When one
party perform his duty or obligations on the other hand the obligations of other party is sacrificed
then the contract can be identified as unilateral contract (Pfeiffer and Glocker, 2000). 

Bilateral contract: In the bilateral contract both parties have to fulfill their obligations. Most of
the times this type of contract is used in business.

Face to face contract: This type of contract’s obligations are performed with the presence of the
two parties (James, 1972).

.Valid contract: In every contract some obligations has to be fulfilled to make it valid in the
view of law. Every contract must be valid and for this it has to contain all the elements of the
contract (List and Pettit, 2002).

Void Contract:

There are some contracts those are unenforceable by law which are better to tell agreement.
Those are considered as void contract though all the elements are in those contract (Corbin,
1917).

Voidable Contract: In this type of contract parties of the contract may reject the part of the
contract but that part is enforceable by law then the contract will be considered as a voidable
contract.

In making contract perspective of the contract has to be considered with care all the obligations
should be included and on the basis of it the type of the contract should be chosen.
LO 1.3 Analyse terms in contracts with reference to their meaning and effect
Overall performance and the objectives of the contract is identified by the terms of the contracts.
Validity of the contract, operation of the contract and condition and warranty are meant by the
term of the contract.

Express terms of the contract:

Conditions: in the term of the conditions of the contract is that a contract can be oral or written,
though the oral contract is easy to make but the written one is reliable. When the written
document is registered then it became more reliable (Guides, 2007).

Warranty: Now many manufacturer provide after sales service. They provide warranty for their
products for a certain time but customer has to follow some obligations to get service.

Timing: In every contract time is an important factor. To fulfill the conditions of the contract
considerable time should be given and it depends on the current law of the society (Howells,
2005).

Implied Terms of the contract:

Implied by court: Legitimate board mainly courts can include any type of terms with the former
terms. These type of terms cannot be identified previously and the parties have follow those
guideline provided by the (Donaldson, & Dunfee, 1994).

Implied by traditions: In the society on the basis of the custom and the tradition parties have to
follow some conditions. Though this terms are not included in the contract, these have to be
maintained.

Mr. Bill is a garments manufacturer. Recently he decided to transfer his facilities to nearby town
to decrease the cost of production. But the employees are not intended to go there mainly for the
problem accommodation. Mr. Bill offer them proper accommodation within one month and he
told them to do this contract in written. Here the implied term of the contract is that with
accommodation he will make arrangements for water supply and power supply.
LO 2. Be able to apply the elements of a contract in business situations.

LO 2.1 - Apply the elements of contract in a given business scenarios.

In this section of the assignment I will discuss the elements of the contract on different business
scenario to make the topic clearer:

On the perspective of the business scenario 1 Miss Kaur is interested in collecting luxury pen
that’s why she made offer to the shop assistant to sell the pen to her. He was agreed with her
offer but he had sold it to another customer before she came. In this case Harry gave a free
consent that made a legal relationship between them. Though the time was not specified but
Harry was agreed not to sell till she returned. Here Miss Kaur has the ability to pay for the pen.
So I can see that all the elements of contract was there so Miss Kaur has right to take legal action
against Harry for breaking the contract.

By analyzing the business scenario 2 we can find that Murphy and Charles come into a new
contract to pay additional $10000 for the accomplishment of renovations on time. But at the end
of the task Charles refused to give that money to Murphy. Though Charles accept the offer of
Murphy, he did not give free consent. At the middle of the task he was forced to increase the
payment that’s why Murphy does not have right to get that money.

By analyzing the business scenario we can find that Hakim and Jane give offer to Mia to
complete their task on a handsome amount of money. This create a legal relationship between
them above the relation of friendship or brotherhood. So Mia can take legal action on them for
his money.

LO 2.2 - Apply the law on terms in different contracts

Terms of the contract helps to identify the obvious duties of the related parties of a contract
which can be expressed or implied. On the basis of the source of law these terms can be
expressed in the form of oral or written. But written evidence helps solve when any problem
arise. It shows the obligations of the related parties. All the terms enforceable by the law are
included in the law (Booch, 2006). For example The Sale of Good Act protect buyers from the
unethical exercise of seller. All the seller of any product has to be concern of this act and they
have aware of their responsibility. To complete this part of the assignment I have chosen the case
of Murphy:

On the basis of the case Charles give the task to complete the guest house to Murphy within
$50000. But at the middle of the task Murphy forced Charles to increase the amount of money.
The term of the contract are shown below:

1. On the basis of the law of contract, offer and acceptance is considered very important.
Here Murphy make the contract without knowing his ability so he will be liable for this.
2. Then the free consent where Murphy gave free consent to complete the task and at the
middle of the task he forced Charles to increase money which is unethical.
3. With the contract, they have built a legal relationship between them, Murphy has to show
respect to it otherwise he has to face the court for it (Novak, 1984).
4. At the last of all I the contract there is certainty and consideration of contract was also
correct.

So it can be said that all the terms are included in the contract and Murphy does not clearly know
about the law of contract that’s way he has done all this things.

LO 2.3: Evaluate the effect of different terms in given contracts

In the contract of Mr. X and Miss Y there are different terms exists. The terms those included in
the agreement of Miss Y and Mr. X are discussed below:

Here the agreement is written, this term clarify the all the matters. In future when any problem
will arise the board of jury can take steps on the basis of this document (Polinsky, 1980).

There are partitioned terms exist in a contract. Miss Y should further reinforcing clear a bit terms
in the later past settling on Agreement with her suppliers need guide delineated beneath:

In the contract the expressed term of dress code clarify by Mr. X to choose her dress that she
instruct to be followed strictly.

In the contract the term of time is not clarified which is very attractive, this may occur problem
in future. Mainly he expect his tasks to be done from her.
On the basis of the implied condition Mr. X has the power to decline the contract with Miss Y
when will find any fault of her.

On the basis of the time and the condition of the contract she has to perform her duty on the right
time as it will hamper the research project of Mr. X. now she has nothing to do on this
perspective.

LO3 Understand principles of liability in negligence in business activities

LO 3.1: contrast liability in tort with contractual liability

With the help of the interest of the two parties a contract can be made. From the parties involving
in the contract one party done trot against other without acknowledgement. Trot of one party
breach contract among them. From the definition of trot we can identify three elements of the
tort which are given below:

 A duty that is fixed by law

 The duty that must be owed generally from the society
 The breach of duty that forced to general damage

In the contract all the parties build the bond with the strength of law and legitimate body give
punishment and penalties for breaking of failing to continue the contract (Anderson, 1945).

In the partnership business all the partners are equally liable for the debt of business that may
create from activities of other partner (Scott & Tribble, 2006). For the trot of one partner the rest
others can be liable. In the view of law crime, tort, breach of contract make others liable. Trot
and the breach of contract is considered civil wrong. But it will not be considered wrong when
principal authorize the activity, when he works to serve the principal and nature of the job.

LO 3.2: Explanation of the nature of the liability in negligence

In the business world all the related person of any service or product has to be concern about
their part. Any type of injury or physical damage by using that product or taking that service they
have to be liable. They will be punished if the legislative body fined any negligence of them.
Most of the time we think and identify the direct negligence. We can identify negligence as the
conduct of careless behaviors and unintentional nature that shows the negligence to the
contractual duty or breaches the duty of contract. On this perspective here I can give an example,
author of a book give the task of proof reading to John. He have to check properly to find out
wrong word and the grammatical mistakes in the proof. After his checking if there is any major
mistakes he will be liable for that mistakes to author. So he has to be concern of his duty to make
it perfect (Thomas, 1948). When the auditor is considered as a negligent, then the client have the
right sue a case against the auditor as he does not exercise the terms of contract reasonable skills
and care. He has to give compensation for the loss or suffering by using that fault product. 
By analyzing aspects of the trot I have identified some main elements of trot of negligence. Here
I will try to go through all the four elements of the trot to get clear idea of negligence.
First of all I would like discuss claimant suffered one type of damage on the basis of law of the
trot.
At the second the defendant breached the duty of care and this type of breach caused the duty of
care of the and finally it can be said that this type of breach caused the claimant reasonably
foreseeable damage (Leflar, 1966). Here we also have to remember that importance of the proof
which will always be on the claimant. Here I have also found the duty of different job, how their
duty can be breach, causation of the breach and damages all are included in negligence. 
Product liability is the most common type of negligence.

All the parties in the product supply line will be liable for any kind of damage or harm of the
user of the product. Mainly the manufacturer, the wholesaler, retailer of the product and the
distributor of the product. All the parties will be liable for the plaintiffs of the product. Even the
supplies of the raw materials are also liable for any kind of damage of the product. As the change
in the proportion of the raw materials or the quality of the raw materials change the internal
quality of the product (Sweet, Maxwell & Austin, 1975). Manufacturer will be liable for using
improper materials in production. Manufacturers are also liable for the negligence of proper
inspection and to warn the parties involved in the supply of the product and most important the
default design. Middle parties will be liable for the damage of the product. Retailer will be liable
for the negligence of providing appropriate instructions and warning of the product to the client.
Besides them persons related to the packaging of the product. That the improper packaging can
make dam the product and internal component of the product can be changed which is
significant. 
For example Mr. Jon bought a car from ABC Company. He fall in an accident because of the
fault of the car. Then all the parties involving in the supply of the car will be liable for the
damage and the injury of him.

LO 3.3: Explanation of how business can be liable for business action

Though businesses organizations are not real person, those are considered as the artificial person
of the business world. Like any other people these organizations can enter into contract with
other persons. These organizations also liable for the negligence to perform the contract or any
part of the contract. On the different types of negligence business organizations have to face
different liabilities (Freedman, 2000). Like people the most common liability is the wrong
commitment of the business organization that cannot be kept. In the business organization all its
activities are performed by its. For the negligence of the employees business organization’s has
to be liable rather than the employees. Most of the time liabilities of the management for the trot
is committed by the employees. On the basis of the law of England all the activities of the
employees, under direct or indirect observation of the organization, organization will be liable
but their personal contract will not be considered under this law (Shavell, 1980). But now the
government try to bring revolution in the law of contract and negligence now the employees will
be liable for their own performance and no business will be liable for the action of its employees.
LO 4: Be able to apply principles of liability in negligence in business
situations

LO 4.1: Apply the elements of the tort of negligence and defences in different
business
On the basis of the business aw tort and negligence are considered same. We can say that the
negligence is the lack of care Tort and negligence is a common word in business law (Eörsi,
1979). Negligence means a filature to exercise the care and tort will be identified that negligence
cause damage.

The tort of negligence’s is given bellow:

Duty: The pitfall of some negligence’s cases the owner of the ship has the duty to the plaintiff.
The owner of ship should leave the place as early as possible and he should prohibited firework.
Bell has the problem of eye and owner of vehicle maintenance neglect his duty that cause Bell
blind.

Breach of Duty: On the basis of the business scenario 6 the owner of vehicle maintenance
breach his duty. He did not force him to wear glasses to protect the eye of Bell.

Cause in Fact: On the basis of the business scenario 5, if there is a single flame then serious
damage of the ship will happen.

Damages: A plaintiff must prove that harm is caused by defended usually in the form of physical
injury to a person or a property. According to the case study 6 Bell has the damage of his eye
while working.

LO 4.2: apply the elements of vicarious liability in given business situations.

On the basis of the business scenario 7 Alf is responsible for sexual abuse of the children. For his
work Safe Home is vicariously liable as he is a worker of the organization. Though I will try to
find out the question whether Alf was acting in a personal capacity, or in the course of their
employment. To avoid this type of problem in future organization can give final warning or
dismiss the Alf.

On the basis of the case 8 AB and Sons garage ltd may be vicariously liable for a tort committed
by its employee Amos Bridge. But at his working period there was no manager and I think he did
not follow the rules of conduct. Mr Alex Khan has right to case against them. AB and Sons
garage ltd is liable for the acts of its employee (Dickson, 1989). To keep the situation under
control the company can give final written warning to Amos Bridge.

Conclusion: Aspects of contract and negligence in business is an enormous topic that I have to
discuss within the short range. I have tried my best to bring pros and cons of the contract. In
completing the assignment I have found the contract, negligence and the tort have close relation.
In completing the assignment I always try to bring real life example to make it clearer. As a
learner of business this assignment helps me to learn most of the aspects of contract.
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