The Formation of a Valid Business Contract - Essay Example

 Aspects of Contract and Negligence for Business The formation of a valid contract is supported by some essential elements. The factors are imperative because they are the facts that individuals observe when forming a valid contract. The definition of a contract is an understanding that is concluded by two or more parties agreeing on a particular issue and hence creating a binding obligation on all the parties. The legality of the contract is enforced by several conditions. The conditions include an offer, an acceptance and consideration. The conditions are what support the formation of a valid contract (Stevens 2004). The offer The most essential element of the contract is an offer. It is an important ingredient because it defines the relationship and key issues in the contract. In order for the offer to stand as a legal entity, communication is a vital factor. The parties must communicate and accept the offer in the best terms available. Effective communication is essential in order to facilitate the receiving party with knowledge of whether to agree or reject the offer (Stevens 2004). In the case a person signs a contract without reading the terms of the contract, he is liable to the effects of miscommunication. A valid offer must be supported by certainty and validity on precise terms. The terms are considered definite in a situation where a reasonable person understands the terms. The clarity of the terms is reviewed basing the review on four pillars which are parties to the contract, duration of time for performance, value and subject matter/scope of services (Stevens 2004). Acceptance The validity of acceptance of a valid offer must be unequivocal and unqualified. In simple terms, the acceptance must conform to all the terms of the offer (Stevens 2004). Consideration A contract is considered enforceable when if the parties to the contract engage in an exchange of valuable price. Consideration is consideration when there is mutuality. That is to mean that the parties to the contract must have valuable prices in exchange. The price is not only restricted to money but any other valuable consideration (Stevens 2004). There are many types of contracts, and all the types have an impact to the parties. There are those contracts that create impact on the basis of creation. For example, express contracts. Words spoken or written make the contract. Another example is implied contracts where the contract is dependent to the conduct of a person or rather the circumstances under a particular case (Stevens 2004). The other example is a tacit contract where the contract depends on the conduct of parties. The impact of these contracts is that one party is left without a choice other than obey the contractual terms. One individual assumes risks under the conditions of the contract. There are those that create impact on the basis of execution (Stevens 2004). Examples are executed contracts, executor contracts, partially executed and partly executor contracts and unilateral contracts. The impacts of these contracts are that both parties assume risks under the contracting terms. The third types of contracts create impact on the basis of enforceability (Stevens 2004). Such contracts include valid contracts, void contracts, void agreements, voidable contracts and illegal agreements. The impact of these contracts is lack of liability to any legal obligations. The contracting parties are not legally bound under the contract law (Stevens 2004). The terms of the contract are defined according to the forum presented under the contract. For instance, business law defines a contract as an agreement between two or more parties. The contract is legally bound and is enforceable in a court of law. In a contract there exists a remedy. A remedy is the price that causes the agreement. The consideration in the contract is regarded as the bargaining exchange (Stevens 2004). Case study The discussions above are in respect to the case study presented in the question paper. About Jess and Mr. Powell, there is an existing contract that binds both the parties. After Powell introduces an offer, Jess considers the term of the offer and decides to enter into an agreement not to sell the van until Powell arrives after three days and views the van. The offer is the price of 450 pounds in advance. There is a contract between the two because the three factors of a contract are present (offer, acceptance of the offer, and consideration). The contracts result suggests that the two parties have a binding risk. Powell needs to reach the destination of the van in three days while Jess needs to halt the sales of the van for Powell. In the second case, there still exists a contract. Barry is confronted with an offer to go into the park and lend a seat for 50p. He accepts and pays the price indicating that he has conformed to the three factors of the contract. Even so, he does not read the ticket terms to decide whether to pursue the contract. In a contract, for as long as the party concedes to the parts of the contract, any liabilities incurred are not shifted. Barry was ignorant, so there are no claims under the contract. Question 2.1, 2.2, 2.3 In the business law, the main controlling factor is the common law. In a court of law, the determination of the case is based on previous case determinations (Feinman 2010). The essence of the law prevails through several factors. It states that the case is determinable through the scrutiny of factor such as where the contract was performed, and where the contract was executed. In a typical set up, the parties to the contract are responsible for the establishment of state law within the contract itself. Set standards govern the law of commerce in the uniform commercial codes. The regulations do not apply when it comes to the contracts of services. Its main concern is the sale of goods and secured transactions (Feinman 2010). In the case study, the local council has an upper hand in the bargaining of the contract. The consideration set under the contract is chairs for hire, and the price is a 50p per hour. A ticket effects the signing of the contract. When the other party is issued with a card, it means that the parties have come to a contracting agreement. On the consideration, the party offering the services must clearly indicate the terms of the agreement in order for the other party to make a decision. Under this case study, Barry was not fully equipped with the terms of the contract. The local council puts the clause in the ticket instead of issuing it earlier before a party consent to the contract. In the light of the issue, the consideration fails to meet the terms of the offer. Even so, the challenging part is that under the business law of contract, Barry does not stand a chance for claims. The reason is that he did not red the terms of the contract and went ahead to use the services of the local council. He had an obligation to read the ticket’s terms in order completely to agree to enter into an agreement. The effects of terms under different contracts are many. Under adhesion contracts, the impacts are that one party has the upper position as witnessed in the local council contract with Barry. The party with a lesser position (such as Barry) is left no choice but to either accept the terms of the contract or reject the contract. Such a contract is mostly a business contract because the bargaining power is limited. There may not exist a mutual understanding between the parties and in a court of law, the party can be offered a remedy under the mutuality clause of the contract. Question 3.1, 3.2, 3.3 If a party under contractual agreements fails to comply with the contracting principles, then the party is liable to contractual liability. A tort is defined as where one party fails to perform his obligations and in the end the actions create harm to another person (Deakin et al. 2003). In most cases, tort occurs due to negligence whereas other occurs due to international actions. A contract and the tort of law are both areas of civil law. The characteristics are almost similar in both. One of the characteristics is that the claimant will instigate an action to the defendant (Deakin et al. 2003). The validity of the claim is justified beyond reasonable doubts in a balance of probability. Awarding of remedies is done on the basis of claimant’s loss and the loss must not be too remote. The remedies are supposed to compensate for the loss of the claimant but not for the intentions of punishment towards the defendant. In order to claim under the negligence tort, the first step is to identify a contractual connection between the parties whether they are known to each other or not (Deakin et al. 2003). The nature of liability under negligence is clearly stated in the tort of negligence. The negligence cases do not form a contracting relationship between the parties. The obligation is not agreed upon by the parties but rather imposed by operational laws (Deakin et al. 2003). Unlike a contract, in negligence, causation and remoteness issues are considered separately. In any negligent cases, the complainant must prove the existence of negligence. There are about four factors considered in order to come up with a case of negligence. One of the factors is a duty of care. The other factor is the breach of the duty (Deakin et al. 2003). The defending should owe the complainant care duty of which he went ahead to breach the duty knowingly. The other factor is factual causation. After the claimant establishes the two factors mentioned above, the next step is to prove and show that the defendant’s actions are the results of the sufferings. The last part is damages. One party must have suffered actual injury due to the actions of the defendant. In negligence, the biggest task is proving that it existed in the actions of one party to the other (Deakin et al. 2003). A business is said to be vicariously liable when it owes a duty of care to another party and yet it breaches the duty. For instance, a company may be vicariously liable if it sells expired wares that may harm the customer. A business is said to be vicariously liable when it engages in unlawful action on a third party (Deakin et al. 2003). Case study A. Neil is a gardener in the same house where Roger is employed. He does not owe roger a duty of care when it comes to a safe working environment B. No. Collins actions directly affect Roger and the two owe each other a duty of care in the kitchen. C. Yes. The security of customers is a duty of care to the populace especially when the customers are in the compound of the hotel D. Yes. Mark read the note but went ahead and ignored it. The resultant effects are not as a failure of the hotel to warn him, but his actions to ignore the hotel notice of warning. E. Yes. Only in the case where he was mugged in the hotel room. The hotel owed him a duty of care by providing enough protection and if not they owed him a duty of care to explain the consequences of his stay in the hotel. F. Yes. Because the hotel accomplished the duty of care by providing notice. G. Yes. The hotel did offer care to mark when it came to security. All the aspects of neglect are presented in the case. Question 4.1, 4.2 In a business situation, elements of the tort of negligence are shown in the case of Caparo Industries plc v Dickman (1990). Caparo was a shareholder of the company and the defendant were the company’s auditors. The claimant purchased more shares in the company, as a result, of interpretation of the audited accounts of the company. The claimant purchased shares that enabled him to take over the company. He then realized that the audited accounts did not present the actual value of the company’s worth. The company had made losses instead of the profit indicated in the reports. The House of Lords under a business consideration of the negligence in the law of tort involved a foreseeable harm, proximity between the claimant and the defendant and a fair, just and reasonable imposition of a duty of care to the defendant. The defendant was not liable because their duty of care was to shareholders of the company and not potential investors, and Caparo was a potential investor (Feinman 2010). In vicarious liability, an employer can be held vicariously liable in case he acts in a manner to suggest negligence of omission on the part of the employees with or without knowledge (Feinman 2010). Reference List Deakin, S., Angus, J., & Basil, M. (2003) Markesinis and Deakin's Tort Law. Oxford University Press. Feinman, J. (2010) Law 101. New York: Oxford University Press. Stevens, R. (2004) The Contracts (Rights of Third Parties) Act 1999. 120  Law Quarterly Review 292 Read More