Aspects of Contract and Negligence for Business - Assignment Example

Aspects of contract and Negligence for Business and Aspect of Contract and Negligence for Business Task 1: Elements of Valid Business Contracts Q1.1: What are the essential elements of forming a valid contract? Explain the importance of each element by providing relevant legal principles derived from decided cases For a contract to be valid, it has to have elements of an offer, acceptance, capacity, intention, legality, and consideration (Miller, 2012). An offer is an expression by a party to another of an intention to enter into a contract. It has two parties, the offeror who expresses an intention to contract and an offeree, whom the offer is made to. In Scammel and Nephew Ltd v. Ouston (1941), an offer that referred to “hire purchase terms” over a period of two years was declared void due to uncertainty over the meaning of “hire purchase terms’’, offeree would not have understood what he was purporting to accept and should, therefore, be clear. An offer can be conditional or unconditional and can be made to the public. Acceptance is the external sign of consent by the offeree and could be express or implied from the conduct of the offeree. Acceptance in a legal sense takes place when the offeree mentally accepts the offer as that is when the minds for the parties meet. There have to be a capacity to contract, which refers to the legal capability of a party or parties to enter into a contractual relationship. Usually all persons have capacity to enter into a contract but the law of contracts restricts the ability of some people such as persons below 18 years, drunken persons, persons of unsound mind, and undischarged bankrupts. A contract must be categorized by an intention in the part of the parties to create a contract. This is because an agreement is unenforceable unless the parties to it so intended, hence an intention is one of the elements of a contract. Whether or not parties intended to create a legally binding agreement is a question of fact. The contract ought to be for engaging in activities that are legally approved or allowed. The purpose for which an agreement is entered must be lawful. A contract to promote an unlawful purpose is unenforceable. In addition, at common law, a simple contract is unenforceable unless supported by some consideration. It is the bargain element of the contract and is nothing but mutuality. Q1.2: Describe different types of contract usually undergone in a business context. Critically analyze the legal impact of distance selling contract. There are three types of contract, which include specialty contracts, contracts of records, and simple contracts. Specialty contracts are contracts that are executed in a special way, that is, they are written, signed, and sealed. Contracts of records include such as court orders while simple contracts are agreements that are enforceable by the courts and include sales and purchase of a business agreement, partnership agreements, leases, and employment agreements. A sales and purchase agreement refers to allows a buy and seller to participate in trade. A partnership agreement is legal contract between partners. A lease refers to a legal contract that allows an individual, called a leasee, the right to own and use property of another person, called a lessor, for certain duration of time. An employment agreement refers to a legal contract between employers and their employees. It has to provide information that is clear, specific, and appropriate to the distance communication means applied. The seller should also ensure its name is disclosed, features of its product, price of a product, arrangement and delivery with costs included and allowing for cancellation. It also has to have the terms and conditions of the agreement or contract. Q1.3: Analyse the contrasting aspects of the different kind of terms generally used in a commercial contract. Terms of a contract are conditions and warranties. Condition is a term of major stipulations in a contract and is part of the central themes. Failure to adhere may lead to cancellation or suing for damages. Conditions ‘goes to the root of the contract’ and means that the aggrieved party attach so much importance to the term that, if he or she had known that there would be a breach of it, he would not have entered into the contract. A warranty is a requirement that does not go to the basis of a contract and breach of it does not enable the innocent party to treat the contract as at an end. Warranty of quiet possession of goods, each of warranty entitles the innocent party to sue for damages, but the contract remains enforceable. ‘Implied terms are more sensitive to deal with than express terms in a business contract’ – how far would you agree with this comment? The terms of a contract are said to be express terms if the parties themselves adverted to them at the time of negotiations, agreed upon them and incorporated them into the contract either verbally or in writing. Implied terms refer to terms that the parties did not expressly incorporate into the contract but are deemed part of the terms of the contract by implication. Alternatively, an Act of Parliament may imply the terms. Task 2: Application of Contracts in Business Situations Q2.1: (a)Advice Green Pharma about the possible legal consequence. Justify your comments with reference to similar case precedents. This offer is open and the offeror, Green Pharma, could withdrawal it at any time. This is because no specific date was given and Green Pharma was free to revoke or withdrawal the offer at any time before the Mr. Khan placed an order. An express notice of withdrawal was, therefore, not required. The offer could have been sold to some other persons before Mr. Khan came to purchase the new moisturizing creams. It is also an offer to sell goods, and they are sold to another party before the offeree accepts the offer. In Dickinson v. Dodds (1976), it was held that the offeror can withdrawal an offer even when it is declared open for a certain period because he or she can change his or her mind. (b) Can you enforce this promise? I cannot because this is a promise, which is a mere gentlemen promise and it was made after the task was completed. The promise did not influence the person being promised to work extra hard. In addition, the promise was oral and informal, therefore, could not be binding. The promise, therefore, relies upon the honour of Tania to fulfil it but cannot be enforced. (c) Would this contract be legally enforceable? Justify your answer with legal arguments. Joe cannot enforced it because the agreement to give me a lift in return for petrol cost is illegal. This is because he is an employee of Green Pharma and has not been allowed to carry passengers by his employer. He is acting beyond his limit and such a contract are not legal even if exercised within a legal frame. Q2.2: Advise to Alban. Alban cannot void the contract. This is because the contract between Alban and Brenda’s Garage Ltd was valid. In addition, there was an exchange of consideration. Alban has been using the car for his business activities and not personal uses. Since he is a business development manager, he is dealing as business and not a consumer. In addition, his business is not about automobiles so it can also be seen as a consumer. Brenda’s Garage Ltd gave him a guarantee of £350 for three months, which shows that the garage was confident the vehicle was roadworthy. The car has been used for four months and if had major defects, Alban should have discovered when he inspected it. In addition, the guarantee was for three months and Alban is in the fourth month with the vehicle. In Karsales Ltd. V. Wallis (1956), it was held that if there was something important that was wrong such as engine missing, then it would not count as a car. However, in this case the damage was not rigorous because seize up of the engine and gearbox could result from improper use of the car. Would your answer differ if he bought the car only for his personal use? If he bought the car for personal use then his case could be more valid. This is because he would be a consumer and would use the car less often and wear and tear on the car could not be simply clarified. It would mean that the car had problems when it was bought. Q2.3 (a) Effect of breach of conditions, warranty and innominate terms, (b) A breach of a condition entitles the buyer to treat the contract as at an end and to sue for damages. (Sharma, 2007). In Poussard v. Spiers (1876), it was held that Pousssard was in breach of condition and Spiers were free to annul the contract. Warranties refers to immaterial terms in a contract and when a party violates a warranty, the aggravated party may ask for compensation but cannot end the contract. Where there is a breach of contract by Green Pharma, the buyer is not entitled to reject the goods on that account. He or she can take legal action against Green Pharma for compensation for the breach of warranty. In Bettini v. Gye (1876), it was held Bettini was in breach of warranty and employer was not entitled to end the contract because failing to go for the rehearsal did not go to the basis of the contract. Innominate terms refer to implied terms of a contract that are neither conditions nor warranties. It seeks to find the effect of the breach and questions whether an innocent party to the breach was deprived of significantly the entire benefit of the contract (Koffman and Macdonald, 2010, p.152). In Hongkong Fir Shipping v. Kawasaki Kisen Kaisha (1962), it was held that the defendants were liable for unfair repudiation. Task 3: Principles of Liability in Business Negligence . Q3.1: In what aspects, liabilities in tort are different from contractual liabilities? Give examples of ‘duty of care’ in the context of some day- to- day situations. Explain the concept of ‘causation’ and ‘remoteness’ in the tort of negligence. Law fixes tort liabilities while the parties fix contract liability. The duty is owed to persons in tort liabilities, but it is owed to the parties to the contract in contact liabilities. The remedies in tort liabilities are few and restricted, but they are wider in contract liabilities. Duty to care is the responsibility to take reasonably cares to avoid harm to another individual, whom it can be foreseen, might be harmed from a failure to act or action. Example include physical safety, need to break confidentiality such as a doctor to a patient, an employer to an employee or lawyer to a client, an independent contractor dealing with hazardous circumstances, or work which from its very nature, poses a danger to other persons. Causation means that there must be a link between the plaintiff loss and the defendant’s breach of the contract failing which damages are said to be too remote and irrecoverable. Remoteness limits the amount of compensation damage to only those that were reasonably foreseen consequences of the negligence act. In Hadley V. Baxaendale (1864), it was held that the profit could not be recovered and Baxaendale could only be held liable for losses that could be foreseen, therefore, it was very remote. This case is authority for the proposition that the plaintiff is only entitled to recover such loss, as is reasonably foreseeable. Q3.2: Explain the nature of liability in negligence by giving reference to different scenarios. Vicarious liability refers to liabilities that a party is held liable for, on behalf of another party resulting from negligence of the third party. There should be a relationship between the two parties, for instance, the liability of a master for the torts of his vicarious liability generally arises from a contract of service. It can result from negligence of an employer when he or she is liable for acts of negligence from acts of an independent contract, for example, the employer could be negligent or careless in the choice of an incompetent independent contractor who may not be qualified or who advertises his or her services in an informal ways. Employer liability can result where he or she fails to have safety equipment for his or her employees. Failure to provide precautions in a contract where there is a risk of harm unless precautions are taken can make the employer liable for the tort of the contractor. Q3.3: Explain the legal requirements to hold employers vicariously liable for the torts committed by their employees. Unlawful acts or wrong acts of an employee are taken as those of employer if such actions are performed while employee is performing the line of business of his or her employer. Actions that are done by employee but are not in the line of work of employer do not make or her employer vicariously liable. Vicious liability results from the services performed by the employee. For such a contract to be valid it has to have the four characteristics which include the master’s power of selection of his servant, payment of ways or other remuneration, master’s right to control the method of doing the work and the master’s right of suspension or dismissal. An association between employer and employee has to be present. It could also result in hospitals where radiographers, house surgeons, and anesthetics are employees of the hospital authority for purposes of vicarious liability, but visiting consultants and surgeons are not employees of the hospital and, therefore, hospital is not liable. Task 4: Application of Principles of Liability in Business Situations Q4.1: (a) What is the level of duty of care to be shown by (1) a learner driver (2) a Chinese herbal doctor working in England and (3) Junior doctor in a hospital? There should be application of normal standard to the learner driver. This is because his or her instructor knows about his or her inexperience and this can lead to compromised standards. In Nettle v. Weston (1971), it was held that the normal care for a learner driver would be same as for experienced drivers. A junior doctor also applies normal standards because his or her patients also require standard care. In Wilsher v. Essex Area Health Authority (1988), it was held that it was the carelessness of the defendant that had resulted in the injury. The level of duty of care to Chinese herbal doctor is standard. This is because he is working in England and does not attach himself or herself as a practitioner of modern medicine and a client has a choice on whether to go normal hospital or visit the Chinese herbalist doctor. In Shakoor v. Situ (2000), it was held that there was no way the herbs could be established to be toxic and the same standard of care for licensed herbalist should be held same as that of a normal doctor. (b) Discuss Green Pharma’s liability in tort. Green Pharma is not responsible for liabilities arising from visitor being electrocuted. This is because the damage is caused to a visitor due to the poor workmanship by the independent contractor. Since Mr. Ken is the local electrician, it shows that he is competent and Green Pharma cannot be held responsible because it had done all it could to ensure safety of the office. Calling the local electrician, who is acknowledged as competent by people in the local area, the company shows it has acted reasonably and the work was believed to be properly done. Would your answer differ if Green Pharma put the following notice at the entrance: ‘Persons entering these premises do so at their own risk If the notice ‘Persons entering these premises do so at their own risk’ were put at the entrance, it would not remove the legal liability of Green Pharma in case of an accident occurring on a person inside. This is because it is aimed at removing liability from the owner but does not communicate the danger inside and how to avoid it or keep safe. The warning should be clear, specific, visible, and can be understood of risks present and how to shun them. Q4.2: (a) Is Green Pharma vicariously liable? John is responsible for injuring Kelly and the employer has no liability. This is because he was using the van for his own benefit and he parked the van carelessly. Kelly was, therefore, injured when John was acting in an unauthorized way in view of using the van for personal use and careless way of the parking and his employer, Green Pharma is not held responsible. (b) Discuss the potential vicarious liability of Green Pharma. Both Robert and Green Pharma are liable for the assault on Mr. Mattis. Robert is responsible because he ought to have asked the visitor to go away from the head office building or raised an alarm by calling the police. Instead, he chose to assault him intentionally. He is therefore, legally responsible for injuries occurring on Mr. Mattis. Green Pharma can be held liable for negligence security. In most cases, security guards are not able to compensate adequately people who suffer from their injuries and thus the affected party may sue the company for negligence security. In addition, the company had asked Robert to use force when necessary. Bibliography Koffmann, L., and Macdonald, E., 2010. Law of Contract. 7th ed. Oxford University Press. p.152 Miller, R., 2012. Fundamentals of Business Law: Excerpted Cases. 3rd ed: Cengage Learning. Sharma, A., 2007. Business Regulatory Framework. FK Publications. p.200 Read More