Four Elements of a Valid Business Contract - Assignment Example

 ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESS Four Elements of a Valid Contract A contract is termed as the bidding agreement between two parties in a deal. There are four essential elements that are must to have in a contract. The elements are - offer, acceptance, consideration and intention (Bagshaw & McBride, 2008). All these four elements are essential for a valid contract and the importance of these four elements is explained below: Offer: This is the initial stage of contract formation or bidding, which forms the base of the actual contract. Through this the service provider offers a service to the bidder. Without this initial step no contract can be formulated. Acceptance: This is the second step of formulating a contract. After the offer is being made by the service provider – both bidder and the service provider need to come to a common ground and accept each other’s offer then only a contract can be formulated. Consideration: Consideration is another key element of a valid contract. It can be regarded as the mutual consent between the parties of in the contract. It is expected from both the parties that certain special aspects would be considered in the contract to make it strong. Intention: The last but the most important element is intention. If any one of the parties do not have intention to do business with the other, it is impossible to formulate a contract between them. Different Types of Contracts There are many types of contracts that can be entered in the UK. There are four types of contracts that can be entered in the UK (Elliott & Quinn, 2007). All the four types of contracts are important and impactful in any business. Verbal Contract: As the name suggests this contract is a contract that is expressed in words. This contract is in contrast of other contracts, which is implied by the actions of the parties. There are two ways by which it can be implied – one is implied in fact and the other one is implied in law. A verbal contract is a frequently misused expression. Written Contract: This is another form of contract that is suggested by the court of law in the UK. This is the most commonly used form of contract and known to be more impactful compared to other types of contracts as all the clauses for the business are well written, understood and signed by the parties of the business. On-line Contract: The on-line contract is nothing but the contract formation and shared via email or website. In this type of contract the sign is made electronically. This form of contract saves both time and money for the parties in the contract. Contracts by deed: This is another form of legal document that is written, confirms and passes to the parties with the jurisdiction seals. A deed contains all the clauses for the business and carefully written that impacts the business and its operations. Terms and Conditions of Terms: The classification of the contractual terms is made in two ways, which are as follows: Condition or Warranty: Condition is the base of any contract (Steele, 2007). It is regarded as the root of a contract and breaching of which may lead to the termination of the contract by either parties. Warranty is less imperative than that of a condition and breaching of either condition or warranty can damage a contract. Innominate Terms: This is another form of term that can be included in a contract. This is not that impactful terms of a contract and it may or may not go deep into the root of the contract depending upon the nature of the breach. Application of Contract Elements Scenario 1: The contractor did not have any intention to train the worker with the new heavy equipment and the same was also not mentioned in the contract that both the parties formulated. Hence the evidence of the workers not using the equipment does not hold good in any court of law as it was not a part of the contract of employment. Scenario 2: In London when the grocery shop owner sells the expired products to the customer at 50% discount it shows the shop owner does not consider the ethical requirements to be mentioned in the licensing contract, which allows the owner to sell the expired products to the customers. Time of Performance As per the certification of Work Manager 85% of work has been completed and as per the contract the Contractor needs to pay an amount of $175 per day for non-completion, otherwise it will be breach of contract. For the non-completion of the project on time not only the other but also the general people of Dubai also get suffered as the project work results in diversion of traffic to a different route, which may take longer time (Simpson, 1987). Hence it was important to complete the project on time and if not the fined amount to be collected as the compensation for the inconvenience caused to general public for the construction. Car Supply Contract Scenario 1: Though the term is innominate the court would treat this as a breach of contract. It was mentioned in the contract that the cars would be immediately roadworthy in the UK. But the cars were completely illegal and there are modifications possible to make it legal (Atiyah, 2000). In this case the breach comes under defective performance where the service provider promised something and delivered something else. Scenario 2: In case if the adjustment could take less than 5 minutes per car for 30 cars it might take less than 150 minutes the court might advise the buyer to make those adjustments as the current engine does not comply with the current EU environmental laws. Along with that the court might order the supplier to take the lead in order to make those adjustments since the right product is not supplied to the end user as per the contact. Scenario 3: In this circumstance where adjustment needs longer time the court might order the supplier to take the lead to make those adjustments and might also order to pay a compensation for the time lost for the buyer. The supplier has breached the contract and has not supplied the right product for which the contract was formulated. The buyer has to invest time in order to make the adjustments to the engines to comply with EU environmental law, which will be a loss of productive time for the buyer. Liabilities The main difference between an individual and business liability is that in the individual liability an individual is responsible for any kind of financial obligation that may arise in the contract and the business liability includes all the financial liability incurred by the business to another business or individual (McKendrick, 2010). The liability in negligence is the state where a person is responsible for the damage of the property, public or private, which was not done with any prior intension and caused due to sheer negligence. Whereas liability in contract signifies when there is breach of terms made by any of the parties mentioned in the contract. Importance of ‘Donoghue v Stevenson 1932’ The Donoghue v Stevenson case in 1932 is regarded as the foundation case in English Tort Law and Scots Delict Law. This case had led to the foundation of modern concept of negligence. In this case it was because of sheer negligence that made the consumer ill by consuming ginger beer containing dead snail (Wylie, 2012). Stevenson, the manufacturer of ginger beer did not have any contractual agreement with neither Donoghue nor Minghella. If there had been any contractual agreement that no negligence would be tried in the court of law, this could be avoided. Thus referencing this case general principles were set out, which states that one person would owe duty of care to another person (Todd, 2012). Lord Atkin’s neighbour principle states that people should be taking good care so that no one would get hurt by their action or inaction and if it happens so the offender would be questioned by the lawyer posed to Jesus. Mrs. Donoghue saw success in the same that is she won her appeal in the House of Lords on the ground that the consumer suffered a personal injury due to the negligence of the manufacturer of the product and the case established neighbour test and also the modern law of negligence. Vicarious Liability The term vicarious liability in English law refers to the doctrine of English tort law, which imposes strict liability to the employer for the fault or any wrongdoing committed by the employee. In this case Sideline (automation) Ltd. can impose a case of vicarious liability on Top Tool Plc because Peter had caused damage to a property of Sideline Automation. Frozone, the service provider for the climate control unit should not work on the fault as Sideline Automation has not followed the warranty contract and Frozone does not have liability on Sideline Automation. In case of the pedestrian though Peter was off duty but using the van of Top Tool Plc for his personal and the accident also involved the same van, the pedestrian also has the right to file a law suit against Top Tool Plc on the ground of vicarious liability (Williams, 1982). Duty of Care Case 1: Smith does not have a claim against the holiday par owner. This case does not fall under the law of negligence and the sense for duty of care. The reason is this was the first of a kind of accident and there were no accidents occurred in the past from the fence. Thus there was no reason for the owner to look at the inadequacy of the fence height and safety. Case 2: Though Allen was a trespasser and he has the habit of going for swimming in the harbor it was duty for the municipality to remove the obstacle. If the municipality was not aware of the obstacle and Allen got injured then Allen could not file a law suit as a claimant. But as the municipal is aware of the obstacle and did not do anything to remove it Allen can file a law suit on the duty of care and negligence. Task 9 Case 1: In this case both Bill and XYZ Dairies should be sued for negligence. The reason is first the boy is not an adult that is less than 18 years of age. Though XYZ Dairies had informed Bill not to appoint the 14 year old boy the employer should also be sued under vicarious liability ground as it is the employer of Bill since there is no written contract between Bill and his employer about not employing the 14 year old boy. Case 2: The owner of the vehicle will not be held liable for the damage of Mrs. Smith’s car because the driver is just a friend of the owner of Vintage Vehicle Museum and not the employee. If the driver was employee of the owner then the owner could be held liable under vicarious liability (Bernstein, 2008). But here there is no such relation between the driver and the owner. It is only the driver who is liable for his own wrongdoing. References Atiyah, P. S. (2000) An Introduction to the Law of Contract. London: Clarendon. Bagshaw, R. and McBride, N. (2008) Tort Law. Harlow: Longman. Bernstein, D. E. (2008). Freedom of Contract. George Mason Law & Economics Research Paper No. 08-51. Elliott, C. and Quinn, F. (2007) Tort Law. Harlow: Longman. McKendrick, E. (2010) Contract Law: Text, Cases and Materials. London: OUP. Steele, J. (2007) Tort Law: Text, Cases, & Materials: Text, Cases, and Materials (Paperback). London: Oxford University Press. Simpson, A. W. B. (1987) A History of the Common Law of Contract: the Rise of the Action of Assumpsit, Oxford: Clarendon Press. Todd, S. (18 August 2003) "Slug's Trail To Silver Screen". BBC News. [Retrieved 26 April 2014]. Wylie, A. F. "The Paisley Snail MiniTrial". Donoghue v Stevenson Digital Resources. Scottish Council of Law Reporting. Retrieved 18 September 2012. Williams, G. (1982) Learning the Law. Eleventh Edition. New York: Stevens. p. 9. Read More